FarmPolicy

March 4, 2015

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.

(more…)

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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Monday Morning Highlights: West Coast Ports, Budget, and, the Ag Economy

West Coast Ports

Laura Stevens reported in today’s Wall Street Journal that, “West Coast ports are finally working at full speed again—for the most part— but it will likely take months for the backlog to clear, port officials and logistics experts said.”

The Journal article added that, “Port and logistics experts estimated it could take anywhere from about two to six months to get the U.S. supply chain—which makes sure T-shirts end up on shelves and auto parts are available for manufacturing—back on track.

“Port problems have been causing widespread pain for shippers, retailers, meat and poultry companies and manufacturers across the country. Farmers couldn’t get produce to Asia, leaving some fruit rotting in containers, and some auto manufacturers were forced to fly in parts to keep plants running.”

Today’s article noted that, “Farmers producing crops including oranges, potatoes, Christmas trees and soybeans have all been hard hit, as cargo arrived spoiled in Asia or couldn’t get there at all, said Peter Friedmann, executive director of the Agriculture Transportation Coalition. U.S. farmers are already competing with similar crops being grown around the world as the dollar strengthens, and the slowdown has been a tough blow, he said.

Farmers may have a hard time winning back customers lost over the past couple months, he said, adding, ‘People who are sourcing these products can’t afford a lack of dependability.'”

Sec. of Labor Tom Perez discussed his role in the port dispute resolution on MSNBC and CNBC on Monday morning.

Budget

Michael A. Memoli reported in today’s Los Angeles Times that, “Republicans were hammered over the 1995-96 government shutdowns, losing House seats in the next election and boosting President Clinton’s sagging approval ratings.

“They shot themselves in the foot again with the 16-day government shutdown in 2013 over Obamacare, although their record-low public approval ratings rallied in time to dominate the 2014 midterm election.

Now it appears the party is heading toward another budget-related standoff, this time over immigration policy and the Homeland Security Department, which is scheduled to run out of funding Saturday.”

The article noted that, “But buoyed by a Texas federal judge’s order last week to temporarily halt the president’s immigration plan, other Republicans are betting heavily that this time things will end differently for the party.

“They predict Democrats will shoulder the blame if the Homeland Security Department runs out of money and see no reason to drop their demand that renewed funding include amendments blocking President Obama from implementing his program to defer deportation for millions of immigrants in the country illegally.”

Kristina Peterson reported on the front page of today’s Wall Street Journal that, “In one of the first signs of movement, Senate Republicans, still mulling their options, are most likely to end up supporting a short-term extension of the agency’s current funding, potentially for one or two months, according to GOP aides. But that would meet some conservative opposition in the chamber, and a short term deal also could face hurdles passing the House, where many Republicans are demanding legislative steps to block the president’s immigration policy.”

Today’s article added that, “Many Senate Republicans would like to avoid a lapse in national-security funding at a time of high-profile global threats from Islamic State militants, cybersecurity concerns and other unrest. Homeland Security Secretary Jeh Johnson, speaking on Sunday morning news shows, raised concerns about the funding impasse coming amid fresh terrorism threats, such as a video from Somali terrorist group al-Shabaab purportedly calling for an attack on the Mall of America in Minnesota.

“If funding were to lapse, though, Mr. Johnson said most of the agency’s 240,000 employees, including airport-screening and border-control agents, would still have to work because they are considered essential. He said 30,000 employees would be furloughed, and he said none of the employees would be paid until an agreement was reached.”

Agricultural Economy

Christian Berthelsen reported in today’s Wall Street Journal that, “The rebound in the cotton market is showing signs of wear.

Cotton prices have gained 13% since touching a 5½-year low of 57.30 cents a pound in late January as the U.S. had been selling more of the fiber overseas. But prices faltered Friday after weekly government data showed a large number of orders for U.S.-grown cotton were canceled.

“The news came one day after federal forecasters said growers would likely plant more acres with cotton this spring than an industry group had previously projected.”

And Mitsuru Obe reported today at The Wall Street Journal Online that, “Japanese agriculture minister Koya Nishikawa abruptly resigned over a fundraising scandal Monday, depriving Prime Minister Shinzo Abe of his point person on widely anticipated agriculture reforms only months after he was chosen for the job.

“Mr. Nishikawa’s resignation comes as Mr. Abe’s Liberal Democratic Party is expected to submit legislation to parliament next month that would drastically scale back the political power of small farming co-operatives, helping pave the way to the sector’s overhaul.”

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.”

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Monday: How labor secretary helped broker dock deal- MSNBC

From the MSNBC Morning Joe program (Feb. 23)- U.S. Dept. of Labor Secretary Tom Perez joins Morning Joe to discuss Walmart’s plan to increase its wages for workers and a resolution to the West Coast dockworkers labor dispute.

For more details on this issue, see these FarmPolicy.com updates from Saturday and Sunday.

Sec. Perez was also on the CNBC program Squawk Box on Monday:

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Sunday Recap: West Coast Ports; Trade; Dietary Guidelines; Ag Economy; and, Policy Issues

West Coast Ports

A tentative agreement on the West Coast port dispute was reached on Friday, while articles on Saturday cautioned, “that the new contract won’t immediately resolve the delays.” Some lawmakers also weighed in on the developments expressing relief and a need for quick implementation of the agreement. A recap of news from Friday and Saturday can be found here at FarmPolicy.com.

The cautionary tone was amplified in an article by Tiffany Hsu, Andrew Khouri and Peter Jamison on the front page of Sunday’s Los Angeles Times titled, “Despite West Coast ports’ labor deal, normality not yet on horizon.” The writers indicated that, “West Coast ports are emerging from the most contentious labor dispute in more than a decade, but lingering resentment and structural problems may complicate a return to normality.”

For more, see this FarmPolicy.com update.

Trade Issues

President Obama used his weekly address on Saturday to call on Congress to pass Trade Promotion Authority (TPA).

While The Wall Street Journal reported on Saturday that “House and Senate negotiators are converging on a deal” regarding TPA- more details at FarmPolicy.com.

A news release on Friday from U.S. Wheat Associates indicated that, “Several influential countries are not complying with the domestic agricultural support commitments they made as members of the World Trade Organization (WTO). That is the conclusion of a study sponsored by U.S. commodity organizations and introduced to agricultural negotiators Wednesday, Feb. 18, 2015, in Geneva, Switzerland. Those organizations made the point that recognizing the current realities in agricultural support and trade could help improve the chances of finally reaching a Doha Round agreement.

“The study was conducted by DTB Associates, Washington, DC, and updates a similar study conducted in 2011. U.S. Wheat Associates (USW) was one of the sponsors of the latest study indicating that the governments of India, China, Turkey, Brazil and Thailand have dramatically increased trade distorting subsidies for wheat, corn or rice production over the past ten years to levels that exceed their WTO agreements — in most cases by large margins. That information has not been readily available to WTO negotiators.”

The news release noted that, “For more information, visit www.dtbassociates.com/docs/DomesticSupportStudy11-2014.pdf and www.dtbassociates.com/docs/domesticsupportstudy.pdf.”

And Democrat Leader Nancy Pelosi (Calif.), along with several House Democrats, including Collin Peterson (Minn.), just concluded a trip to Cuba, for more on this trip and Cuba issues, see this FarmPolicy update.

Dietary Guidelines

Following Thursday’s release of dietary guidelines from a government advisory committee, reactions from lawmakers and other interested parties have been publicized, including different views from former United States Deputy Secretary of Agriculture Kathleen Merrigan and American Farm Bureau Federation President Bob Stallman on the “sustainability” aspect of the guidelines.

The South Dakota congressional delegation also “expressed their concern about the misleading and inconsistent guidelines on meat consumption in the report.”

More details here, at FarmPolicy.com.

Agricultural Economy

News articles and reports highlighting aspects of the U.S. agricultural economy can be found in this update on Saturday at FarmPolicy.com.

And news release on Friday from the Food and Agriculture Organization of the United Nations stated that, “The model of agricultural production that predominates today is not suitable for the new food security challenges of the 21st century, FAO Director-General José Graziano da Silva said today.”

The release added that, “Agriculture has a potentially large role to play not only in guaranteeing food security but also in building resilience to the affects of climate change and in reducing humankind’s emissions of global warming gases, according to the FAO Director-General.

“‘The impacts of climate change are no longer an anticipated threat. They are now a crystal-clear reality right before our eyes,’ he warned, adding: ‘Climate change will not only affect food production but also the availability of food and the stability of supplies. And in a global, interdependent economy, climate change makes the global market for agricultural products less predictable and more volatile.’”

Policy Issues

The House Ag Committee will hold hearings this week on Wednesday and Thursday regarding Farm Bill nutrition issues; while, on Tuesday, 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.

Recall that earlier this month, the House Appropriations Subcommittee on Ag heard from USDA Inspector General Phyllis Fong.

Meanwhile, Tom Steever reported on Friday at Brownfield that, “The Chairman of the Senate Agriculture Committee says cutting crop insurance subsidies is a non-starter, but the Kansas Republican also expresses the need to convince detractors that the risk management tool has value.

“Senator Pat Roberts says there are people who believe that crop insurance subsidies should be reformed, which he says is the nice way to describe a cut.

“‘Usually they want the money for something else,’ Roberts told Brownfield Ag News at the Western Farm Show in Kansas City Friday, ‘either that or they just do not feel that farmers ought to have subsidized crop insurance.’”

Mr. Steever added that, “Roberts says Obama budget writers see crop insurance subsidies as low hanging fruit where money can be saved.

“‘We’re determined to educate these folks to the value of crop insurance; that’s going to be an ongoing effort, but that’s the way it’s been for years,’ said Roberts.  ‘We’re going to put that down as a top priority.’”

And Ron Nixon reported in Saturday’s New York Times that, “To understand America’s fragmented food safety inspection system, consider a slice of frozen pizza. The pepperoni is examined by the Agriculture Department, the cheese and tomato sauce by the Food and Drug Administration, each agency using its own methods for inspecting and testing.

“If someone gets ill sampling that slice’s tasty goodness, the Centers for Disease Control and Prevention might sound the alarm, but it would fall to the F.D.A. to pressure the pizza maker for a recall.

The Obama administration wants a single new agency to sweep all that away: the Food Safety Administration, a colossus that would be housed within the Department of Health and Human Services to ‘provide focused, centralized leadership, a primary voice on food safety standards and compliance with those standards,’ the administration said in its new budget request.”

Keith Good

West Coast Ports- “Normality not yet on Horizon,” LA Times

A tentative agreement on the West Coast port dispute was reached on Friday, while articles on Saturday cautioned, “that the new contract won’t immediately resolve the delays.” Some lawmakers also weighed in on the developments expressing relief and a need for quick implementation of the agreement. A recap of news from Friday and Saturday can be found here at FarmPolicy.com.

The cautionary tone was amplified in an article by Tiffany Hsu, Andrew Khouri and Peter Jamison on the front page of Sunday’s Los Angeles Times titled, “Despite West Coast ports’ labor deal, normality not yet on horizon.” The writers indicated that, “West Coast ports are emerging from the most contentious labor dispute in more than a decade, but lingering resentment and structural problems may complicate a return to normality.

Activity picked up Saturday at Western harbors after the dockworkers union and employers reached a tentative agreement late Friday on a new five-year contract that will cover 20,000 workers at 29 ports.”

The article added that, “‘I think the parties have an understanding of the impact of this disruption,’ U.S. Labor Secretary Thomas E. Perez said in an interview. ‘They understand that they not only have to restore service, they have to restore confidence.'”

“Trade experts said that it could be months before ports were operating at their normal pace,” the article said; adding that, “Even before the union was accused of slowing operations in November, the ports had struggled with delays for months, experts said.

“A truck trailer shortage and the increased reliance on massive container vessels contributed to the worst freight backlog in a decade at the San Pedro ports. At the Los Angeles port, a single ship now often carries 14,000 containers. Two years ago, a large ship would have held 8,000 to 10,000 of the steel boxes.”

Laura Stevens reported on Sunday at The Wall Street Journal Online that, “West Coast ports are finally working at full speed again, but it will likely take months for the backlog to clear, port officials and logistics experts said.”

The Journal article noted that, “‘Just based on the mathematics, it will be about three months before we return to a sense of normalcy,’ said Gene Seroka, executive director of the Port of Los Angeles.”

Also, Marianne Levine reported on Saturday at Politico that, “Labor Secretary Tom Perez said Saturday that in bringing resolution to a tense labor-management dispute at the West Coast ports he never said President Barack Obama might impose a solution unilaterally.

“‘What I did tell them is they have no time, they have to move forward [and] they’re playing with fire,’ Perez said in an interview with POLITICO.”

The article added that, “Perez said the White House came into the negotiation neutrally and did not have a specific proposal in mind. However, he said the White House was not neutral over the time line to reach a solution.”

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Saturday Update: Highlights on the U.S. Ag Economy

Donnelle Eller reported on the front page of the Business Section in Saturday’s Des Moines Register that, “Deere & Co., the maker of farm and construction equipment, said net income plummeted 43 percent in the first quarter with lower corn and soybean prices reducing demand for big green combines and tractors.

“The Moline, Ill.-based company warned its total farm equipment sales this year will tumble 23 percent, because of continued pressure from low commodity prices and falling farm incomes. The decline is expected to be sharper in the U.S. and Canada this year, falling 25 to 30 percent.”

The Register article added that, “In a conference call, Deere said large farm equipment sales would be hit hardest, pointing to an industry report that indicates U.S. and Canada demand for large tractors and combines will be half as much this year as 2013 levels.”

Also in Saturday’s Register, Christopher Doering reported that, “The amount of corn used to produce ethanol will drop slightly during the 2015-16 marketing year, as consumers drive less, the federal government said Friday.

“The Agriculture Department forecast corn used for ethanol production at 5.2 billion bushels during the marketing year that begins Sept. 1 — a decline of 25 million bushels from the current year. If realized, about 38 percent of the 13.6 billion-bushel corn crop expected to be harvested this fall would go to toward producing the renewable fuel.”

On Friday, USDA’s National Agricultural Statistics Service (NASS) released its monthly Cattle on Feed report, which stated in part that, “Cattle and calves on feed for slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 10.7 million head on February 1, 2015. The inventory was slightly above February 1, 2014.”

And with respect to U.S. milk production, NASS indicated in its monthly Milk Production report on Friday that, “Milk production in the 23 major States during January totaled 16.5 billion pounds, up 2.1 percent from January 2014.”

Meanwhile, AP writer Kourtney Liepelt reported on Saturday that, “The nation’s dairy goat herd climbed 2 percent in the past year to 365,000 animals, but producers said their annual sales are rising even faster — up by 15 percent or more. In Iowa, the number of goat farms has climbed from less than 20 a decade ago to about 200, behind only Wisconsin and California.

“Sheep and goat milk accrued $92.2 million in sales in 2012, according to the most recent figures available from the U.S. Agriculture Department’s census, with combined sales about a third higher than in the previous 2007 census…[M]uch of the new demand appears to be due to increased interest in artisan cheeses and populations that are more accustomed to goat milk, such as Hispanic and Jewish communities, Cornelius said. In much of the world, goat milk is more common than cow milk.”

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CBS News: Record West Coast drought shows no signs of easing

From CBS News on Friday, “The flip side to the frigid weather in much of the U.S. is record warmth in the West. Parts of Alaska hit the mid-50s this week.

“And it’s dry — 93 percent of California is in a severe drought that’s going on four years.”

The CBS update noted that, “And in Oregon, the snowpack on Mount Hood is so low, farmer Jon Laraway fears water rationing come spring.

“‘Growers may have to go on a schedule basis, where they can’t irrigate as much,’ Laraway says. ‘We’ve never had to do that on this side of the valley.'”

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Saturday Update: President Calls on Congress to Pass Trade Promotion Authority

From the White House, “In this week’s address, the President underscored the importance of continuing to grow our economy and support good-paying jobs for our workers by opening up new markets for American goods and services.

“While America’s businesses, ranchers, and farmers are already exporting goods at record levels, there’s more room for growth with 95 percent of the world’s customers living outside our borders. In order to pursue new trade agreements, the President called on Congress to pass trade promotion authority so that the U.S. — not China — can play a leading role in negotiating 21st century trade deals that protect our workers, support good wages, and help grow the middle class.”

A complete transcript of the President’s remarks can be found here.

Reuters news reported on Saturday that, “Congressional Republicans have been supportive of trade deals. Senator Orrin Hatch, the Republican chairman of the Senate Finance Committee, has said he hopes to introduce a ‘fast track’ bill in February.

“Senate Majority Leader Mitch McConnell said in a statement that Obama needed to ‘continue what must be a sustained effort to move his own party forward’ on working on trade legislation.

Labor and environmental groups allied with Democrats have been pushing hard against the idea. Even among the Obama-friendly crowd at the Democratic National Committee on Thursday, several people wore ‘Stop Fast Track’ stickers.”

William Mauldin reported in Saturday’s Wall Street Journal that, “House and Senate negotiators are converging on a deal to ease the passage of trade agreements, a key step in putting the divisive issue before the full Congress as the White House pursues a sweeping trade pact in Asia.

“The legislation, known as trade promotion authority or fast track, comes as the Obama administration is seeking to conclude negotiations on a 12-nation Pacific trade deal—the economic centerpiece of the president’s rebalancing of U.S. policy toward Asia.”

The Journal article stated that, “Aides to congressional committee leaders Sen. Orrin Hatch (R., Utah), Sen. Ron Wyden (D., Ore.) and Rep. Paul Ryan (R., Wis.) have settled most disagreements over the legislation, say people familiar with the talks.

“One remaining issue—a technical but crucial element—is how Congress would be able to remove an unacceptable trade deal from the fast track process, these people say. Complications on that issue or others could still delay or unravel any agreement, they say.

“A deal to introduce the legislation could be reached in days, observers say, after Mr. Ryan returns from a trade-focused trip to Asia.”

Mr. Mauldin noted that, “Mr. Hatch on Friday called a hearing next week of his Senate Finance Committee to discuss trade policy and potentially the new bill. But Mr. Wyden, the top Democrat on the panel, said a hearing is ‘premature’ because a final deal hasn’t been struck yet. Mr. Ryan said Thursday in Japan that a deal is ‘very close.’

“Many Democrats, labor unions and environmental groups oppose the legislation, saying it is a way for the administration to push a deal with unacceptable provisions through Congress.”

Meanwhile, Vicki Needham reported on Friday at The Hill Online that, “Negotiators of a massive trade deal spanning from Latin America to Asia are scheduled to meet next month in Hawaii.

“The U.S. Trade Representative’s office said Friday that the United States will host a chief negotiators meeting from March 9-15 to continue hammering out the details of the Trans-Pacific Partnership (TPP).”

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Saturday Update: West Coast Ports- Tentative Five-Year Agreement Reached

Laura Stevens reported on Friday night at The Wall Street Journal Online that, “West Coast port employers and their union came to a tentative five-year agreement on a new contract late Friday night, a union spokesman said, bringing an end to a nine-month negotiation process which resulted in significant slowdowns at the ports.”

Andrew Khouri, Chris Kirkham and Peter Jamison reported in Saturday’s Los Angeles Times that, “Shipping companies and dockworkers reached a tentative deal late Friday on a new labor contract, avoiding a shutdown of 29 ports that would have choked off trade through the West Coast.

“The agreement, which still needs approval from union members and individual employers, should start easing severe congestion that’s been building for months at the nation’s busiest ports, in Los Angeles and Long Beach, along with other major gateways.

“Details of the proposed five-year contract for about 20,000 West Coast dockworkers were not released. The dockworkers have been without a contract since July. The two sides had been negotiating since May.”

The article added that, “Trade experts cautioned that the new contract won’t immediately resolve the delays, particularly at L.A. and Long Beach, which together handle roughly 40% of the nation’s incoming container cargo.

It will take weeks, if not months, just to clear the current backlog, port officials said.

The congestion stems in part from issues unrelated to the labor dispute. Before slowdown accusations surfaced in early November, the L.A and Long Beach ports already were struggling with the worst freight backlog in a decade, in large part because of a truck trailer shortage and the increased use of mammoth container vessels that hold more cargo.”

A separate U.S. Department of Labor tweet indicated that:

Jack Healy reported in Saturday’s New York Times that, “But analysts said the deal would not immediately resolve the congestion that has cost businesses millions of dollars and left goods stranded on ships, waiting to be unloaded, or in warehouses, waiting to be shipped to Asian markets. Even as normal operations resume here at the ports of Long Beach and Los Angeles, the busiest in the nation, analysts said it would take months to clear the backlog.”

The Times article added that, “The disputes brought crippling delays that cascaded beyond the 29 West Coast ports that were affected and through the wider American economy. California broccoli, oranges and lemons bound for markets in China, Japan, South Korea or Australia began to rot in storage.”

House Majority Leader Kevin McCarthy (R., Calif.) tweeted on Friday:

And House Ag Committee Member Dan Newhouse (R., Wash.) indicated on Saturday that, “I am encouraged that a resolution to this devastating labor dispute may finally be in sight. For nine long months, the two parties held trade-dependent communities hostage by crippling the movement of goods at our ports. Even if an agreement is imminent, the domino economic effect of the port slowdown on businesses and agricultural producers will continue even after the backlog at the ports is cleared. The loss of market share and confidence of overseas trading partners will not be restored overnight, and it is appropriate to evaluate all options that would end the economic threat posed by such disputes in the future.”

“Last week, Rep. Newhouse, Rep. Dave Reichert (R-WA), Rep. Kurt Schrader (D-OR), and Rep. Jim Costa (D-CA) introduced a bipartisan resolution in the House urging an end to the contract negotiation between the PMA and the ILWU.”

House Ag Committee Member Rep. Pete Aguilar (D., Calif.) indicated on Saturday that, “I’m very pleased to hear the news that an agreement was reached between the International Longshoremen and Warehouse Union and the Pacific Maritime Association. I applaud both organizations for working together to see this through, as well as U.S. Labor Secretary Perez for assisting with negotiations. As our nation is just in the early stages of economic recovery, reaching an agreement was pivotal for the stability of California’s economy and the United States as a whole. Again, I commend both groups for their cooperation and look forward to getting our ports and trade operations back on track.”

Sen John Thune (R., S.D.) indicated on Saturday that, “Despite the unnecessary impacts of this prolonged labor dispute, I urge swift adoption so that agricultural producers and businesses can regain the full use of ports on the West Coast to ship goods overseas and receive necessary shipments of merchandise. There’s no question the slowdown has cost billions of dollars through unnecessary harm to American businesses and consumers.”

And American Soybean Association President Wade Cowan noted on Saturday that, “Disruptions like the one we saw out west have the potential to throw the country’s farm economy into disarray. A devastating impact like that isn’t a bargaining chip. It goes without saying that we are relieved to see a resolution to the dispute, and we encourage both parties to ratify this new contract and get back to work as quickly as possible.”

Previous developments from Friday below.

In the ongoing labor dispute that is disrupting the operation of several West Coast Ports, Laura Stevens and Melanie Trottman reported on Friday at The Wall Street Journal Online that, “Negotiations between West Coast port employers and workers came to a head on Friday as the U.S. Secretary of Labor threatened to force the parties to resume talks in Washington, D.C., if they didn’t reach a new contract agreement by day’s end.

“Secretary Thomas Perez told West Coast mayors on a conference call Thursday night said that if the two groups couldn’t come to a resolution within 24 hours, they would be invited to the nation’s capital.”

The Journal writers noted that, “The U.S. president doesn’t have legal authority to summon the parties to Washington and such meetings rarely occur, ‘but it would be extremely difficult for either party to refuse to go,’ said Seth Harris, a former acting labor secretary and former deputy labor secretary in the Obama administration who is now a lawyer in Washington for law firm Dentons. ‘To not go would be an acceptance of blame that neither party would want,’ Mr. Harris said.”

“As of Friday morning, 27 ships were at anchor outside the ports of Los Angeles and Long Beach, three fewer than Thursday. On a typical February day last year, no ships were in line,” the Journal article said.

Bloomberg Photo–Ships wait to unload cargo at the Port of Los Angeles in Los Angeles, California, on Feb. 18, 2015. Photographer: Patrick T. Fallon/Bloomberg

James Nash and Alison Vekshin indicated on Friday that, “The impasse in talks toward a five-year contract between the International Longshore and Warehouse Union and the Pacific Maritime Association threatens to close seaports responsible for more than 40 percent of U.S. trade. Perez arrived in San Francisco on Feb. 17, dispatched by President Barack Obama after a federal mediator failed to bridge the gap between the two sides.”

A news release Friday from House Ag Committee member Rep. Dan Newhouse (R., Wash.) stated that, “Last week U.S. Congressman [Newhouse], Congressman Reichert (R-WA), Congressmen Schrader (D-OR), and Congressman Costa (D-CA) introduced a bipartisan resolution in the House urging an end to the contract negotiation between the Pacific Maritime Association (PMA) and the International Longshore and Warehouse Union (ILWU). Now, just a week later, the resolution has been signed by 61 members of Congress.”

Rep. Newhouse discusses impact of ports dispute for local growers.

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Friday Update: Policy Issues, Ag Economy; Trade; and, Biofuels

Policy Issues

In addition to the House Ag Committee hearings next Wednesday and Thursday on food stamp issues, on Tuesday, the Senate Ag Committee will hold a hearing on Farm Bill implementation and Farm Credit Administration nominations.

Secretary of Agriculture Tom Vilsack is scheduled to address the Senate panel; however, the Committee will hear from producers first.

In a discussion this week on the Kansas Ag Network Online with Kelly Lenz, Senate Ag Committee Chairman Pat Roberts (R., Kan.) noted that, “I have concerns about the direction of the farm policy, but we’re not going to open up that bill. We are going to take a look at some of the glitches.”

He added that, “But after every farm bill you have a technical correction or you have some things that you can take care of with administrative action.”

(more…)

USDA Report- Farms and Land in Farms

On Thursday, USDA’s National Agricultural Statistics Service (NASS) released its annual Farms and Land in Farms report for 2014.

The report stated that, “The number of farms in the United States for 2014 is estimated at 2.08 million, down 18 thousand farms from 2013. Total land in farms, at 913 million acres, decreased 1.03 million acres from 2013. The average farm size for 2014 is 438 acres, up 3 acres from the previous year.”

The AP reported on Thursday that, “The U.S. Department of Agriculture says in a new report that the number of farms and ranches in Nebraska continues to slide.

“In an annual report released Thursday the USDA says Nebraska farms fell to 49,100 last year, 500 fewer than the year before. The small farm category, those with annual sales of less than $100,000, fell by 800 farms while larger farms exceeding $100,000 in sales increased by 300.”

A separate AP article indicated that, “Kansas farms averaged 754 acres, up 8 acres from the previous year.”

With respect to North Dakota, the AP noted that, “Land in farms and ranches in North Dakota totaled 39.3 million acres, unchanged from 2013. But the average size of operation was up 21 acres from the year before, at 1,297 acres.”

And in Iowa, a report indicated that, “The number of Iowa farms has fallen 1.2 percent since 2010, while the average farm size is up 1.2 percent in the same period, a reflection of national trends.”

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West Coast Ports- Los Angeles Times- Thursday; Lawmakers Weigh In

On Thursday, the Los Angeles Times continued its detailed coverage of the West Coast port dispute (See articles from Saturday, Sunday, and Wednesday).

On the front page of the Business section, Andrew Khouri and Tiffany Hsu reported that, “The labor dispute that has stalled dozens of massive ships off the ports of Los Angeles and Long Beach isn’t limited to the nation’s busiest cargo complex.

“The high-volume harbors at Oakland, Seattle and Tacoma, Wash., also have battled severe bottlenecks for months as the International Longshore and Warehouse Union and employer group Pacific Maritime Assn. have wrangled over a new contract for 20,000 dockworkers at ports from San Diego to Bellingham, Wash.

“U.S. Labor Secretary Thomas Perez met with both sides Wednesday, the second straight day of direct White House involvement to break the stalemate.”

The article noted that, “For exporters such as Sage Fruit in Yakima, Wash., the delays have caused pain.

Packages of apples, cherries and nectarines have arrived in Asia as much as eight weeks late, said sales manager John Onstad.

“‘They certainly weren’t in the condition the customers were expecting,’ he said.

“As the latest holiday weekend shutdown loomed, ‘we had a lot of customers who simply said, ‘We don’t even want to purchase your product,” Onstad said.

And the Los Angeles Times editorial board opined on Thursday that, “Let’s hope Perez can talk some sense into the two sides, which together are holding American businesses and the Southern California economy hostage…[T]o protect their competitive advantage, L.A. and Long Beach must scale up to accommodate larger ships that carry twice as many containers as the ports are used to handling.

“The important work of preparing for a changing industry is stalled while the shipping companies and dockworkers are locked in a dispute. It’s time to make a deal.”

Meanwhile, a news release on Thursday from Sen. John Thune (R., S.D.) indicated that, “Senate Committee on Commerce, Science, and Transportation Chairman [Thune], Commerce Subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety, and Security Chairman Deb Fischer (R-Neb.), Senate Health, Education, Labor, and Pensions Committee Chairman Lamar Alexander (R-Tenn.), Health, Education, Labor, and Pensions Subcommittee on Employment and Workplace Safety Chairman Johnny Isakson (R-Ga.), House Committee on Transportation and Infrastructure Chairman Bill Shuster (R-Penn.), Transportation Subcommittee on Coast Guard and Maritime Transportation Chairman Duncan Hunter (R-Calif.), House Education and Workforce Committee Chairman John Kline (R-Minn.), and Education and Workforce Subcommittee on Health, Employment, Labor, and Pensions Chairman Phil Roe, M.D. (R-Tenn.) have sent a letter to President Barack Obama urging action on the unnecessary gridlock of goods at 29 West Coast shipping ports.”

A separate news release Thursday from Sen. Dianne Feinstein (D., Calif.) stated that, “U.S. Senators [Feinstein] and Barbara Boxer (both D-Calif.) today called on both parties in the West Coast ports dispute to act swiftly to reach a final agreement. In a letter to International Longshore and Warehouse President Robert McEllrath and Pacific Maritime Association President and CEO James C. McKenna, the Senators expressed their concern that despite a narrowing of differences, the parties have not been able to resolve the labor dispute because they cannot agree on the selection of an arbitrator.”

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USDA Outlook: Crop and Livestock Prices, Production- Land Values

In a presentation today at the USDA Outlook Forum in Arlington, Va., USDA Acting Chief Economist Robert Johansson indicated that, “Row crop prices have declined significantly from record highs in recent years, but remain well above levels seen in the early 2000s. Consecutive record crops have trimmed prices for many crops. Further price reductions are expected for the 2015/16 crop year, falling near Farm Bill reference prices for many crops. Wheat prices for 2015/16 are estimated at $5.10 per bushel, a decline of 15 percent from the current year; the PLC reference price for wheat is $5.50 per bushel. Corn prices are projected to fall to $3.50 per bushel for 2015/16; the reference price for PLC is $3.70 per bushel. Soybeans prices are forecast at $9.00 per bushel in 2015/16; the reference price for PLC is $8.40 per bushel. The all-rice price is forecast at $13.10 per hundredweight for 2014/15 (the reference price for long-grain rice is $14.00 per hundredweight). Cotton prices are projected at 60 cents per pound (cotton it is not covered by the PLC program).”

Note that separate analysis from land grant institutions puts the 2015/16 prices of corn and soybeans at slightly higher levels: $3.87, $9.27 and $3.97, $9.84.

For additional crop price analysis, see this presentation from University of Illinois agricultural economist Darrel Good from December, which included the following slide with a low $4 projection:

Dr. Johansson also noted that, “In 2015, U. S planted area for the 8 major crops is expected to decline modestly, falling by 3.3 million acres to 254.6 million as falling crop prices and narrowing production margins push some acres out of production even as Conservation Reserve Program (CRP) area continues to decline.” He added that, “Overall corn and soybean acreage is expected to total 172.5 million acres, down 1.8 million acres from last year. Corn area shows the single largest reduction with area expected to fall 1.6 million acres in 2015 to 89.0 million acres, down 8.2 million acres from its recent peak in 2012. Soybean area is expected to fall modestly from its record area in 2014 to 83.5 million acres, with movement out of soybeans tempered by its lower operating costs and forward marketing opportunities in the past few months.”

Note this related Bloomberg article, as well as this tweet from University of Illinois agricultural economist Scott Irwin.

Gregory Meyer reported on Thursday at The Financial Times Online that, “The USDA’s forecasts issued on Thursday deviated slightly from long-term projections published this month, with the latest corn acreage figure 1m acres higher than before and soyabean acreage 0.5m acres lower. Final crop production is a function of acres harvested and yields per acre.”

With respect to livestock, Dr. Johansson indicated that, “Turning to the livestock, dairy and poultry sectors, we project that total meat and poultry production will be at a record high of 95 million pounds in 2015, mostly due to record pork and broiler production. Milk production is also projected to be at record levels in 2015, at 211.5 billion pounds.”

More specifically, Dr. Johansson pointed out that, “Cattle numbers have been trending down since the 1970s, and drought and other adverse impacts on forage in the South over the past 5 years have driven even larger declines in the cattle herd than might otherwise have been expected. 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.”

While addressing livestock related prices, Dr. Johansson stated that, “As a result of increased production and falling export demand in 2015, prices for pork, broilers, and dairy products are projected to fall from last year’s levels. Hog prices are expected to fall to $56 per hundredweight, down 26 percent from last year’s record prices. Broiler prices are expected to remain high, although down 4 percent from last year’s record prices. In contrast, steer prices are expected to increase and are forecast at record levels in 2015 due to continued tight supplies and the time required to expand production. Milk prices are expected to fall 26 percent from last year’s records.”

And Dr. Johansson added that, “Land values are expected to decline by less than one percent overall in 2015.”

For more details on land values see recent reports from the Federal Reserve Banks of Chicago and St. Louis, as well as the Federal Reserve Bank of Kansas City.

-Keith Good


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