FarmPolicy

January 29, 2015

U.S. Agriculture Coalition for Cuba

From C-SPAN (Jan. 8)- Agriculture Secretary Tom Vilsack, congressional lawmakers, and food industry lobbyists announced the formation of the U.S. Agriculture Coalition for Cuba, which sought to expand food trade between the two nations.

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Policy; Immigration; Biotech; Biofuels; Ag Economy; Trade; and, Regulations

Policy Issues

Secretary of Agriculture Tom Vilsack was a guest on yesterday’s AgriTalk radio program with Mike Adams, where the conversation focused on beef checkoff issues, COOL (Country of Origin Labeling), Farm Bill implementation, and trade with Cuba (audio replay here, MP3- 11:30). An unofficial FarmPolicy.com transcript of yesterday’s discussion is available here.

On the checkoff issue, Sec. Vilsack indicated that, “Well, Mike, it was fairly obvious that the industry was not interested in having a second checkoff, and obviously the only reason we proposed it was because I believe, and I think most in the industry believe, that we need additional resources for promotion and research in the beef industry. This is an industry that faces some interesting challenges at home, and some great opportunities abroad, and there is an opportunity, I think, with increasing the checkoff and increasing investment in the checkoff, to do more research and more promotion and more marketing.

“But the industry made the decision that they were not interested in a second checkoff, and they have been unable to reach consensus on how to increase the existing checkoff, so when the writing is on the wall, you basically have to pay attention to the attitude of the folks you’re trying to serve. And it’s an unfortunate circumstance. My hope is that the industry will take an opportunity now to reach consensus, to figure out a way to strengthen the beef checkoff program.”

And in comments regarding beef imports, Sec. Vilsack pointed out that, “But if there is an equivalency determination, which is to say that the processes are equal to or better than what the U.S. does, and if it comes from an area where we’ve already done a risk assessment and find little or no risk, and that there are protections, then the science and the international rules basically say we have to open up our market opportunities, and then that allows us to go to other countries who are creating barriers to our beef products and be able to articulate and say very clearly we live by these rules and we think that—and we live by the science, and we think everyone should live by the rules and the science so that you have a much more objective system, rather than a subjective one.”

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Trade; Ag Economy; Immigration; Biofuels; and, Policy Issues

Trade Issues

Jeevan Vasagar reported yesterday at The Financial Times Online that, “A small grilled sausage from Bavaria has become the unlikely symbol of German resistance to the transatlantic trade deal being negotiated between the EU and the US, after the country’s agriculture minister warned that ‘not every sausage can be protected’ in the trade talks.

Christian Schmidt, Germany’s agriculture minister, said in an interview with Der Spiegel: ‘If we want to seize the opportunities of free trade with the enormous American market then we can’t carry on protecting every sausage and cheese speciality.’

“Food producers, politicians and campaigners against the trade deal seized on his remarks as evidence that the protection of regional brands would be sacrificed to globalisation.”

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Trade; Ag Economy; Policy Issues; and, Political Notes

Trade Issues

DTN Ag Policy Editor Chris Clayton reported yesterday that, “Agriculture Secretary Tom Vilsack sees trade negotiations taking up a bigger chunk of his time in 2015, particularly now that the farm bill is deep into implementation by USDA staff.

“In a year-end interview with DTN, the agriculture secretary said he believes he and other Obama administration officials will be working to complete the 12-country Asian trade deal called the Trans Pacific Partnership. The secretary seemed confident a deal could soon be struck.

“‘The hope is the Trans Pacific Partnership negotiations conclude soon in the new year so that we can go about the business of articulating the need for Trade Promotion Authority for the president,’ Vilsack said.”

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Biotech; Policy Issues; Ag Economy; Biofuels; and, Political Notes

Biotech

Andrew Pollack reported on the front page of the Business section in today’s New York Times that, “Its first attempt to develop genetically engineered grass ended disastrously for the Scotts Miracle-Gro Company. The grass escaped into the wild from test plots in Oregon in 2003, dooming the chances that the government would approve the product for commercial use.

“Yet Scotts is once again developing genetically modified grass that would need less mowing, be a deeper green and be resistant to damage from the popular weedkiller Roundup. But this time the grass will not need federal approval before it can be field-tested and marketed.

Scotts and several other companies are developing genetically modified crops using techniques that either are outside the jurisdiction of the Agriculture Department or use new methods — like ‘genome editing’ — that were not envisioned when the regulations were created.

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Policy Issues; Ag Economy; Trade; Biotech; and, Regulations

Policy Issues

Jenny Hopkinson, Helena Bottemiller Evich, Bill Tomson and Chase Purdy reported yesterday at Politico that, “The Obama administration is becoming increasingly involved in what Americans put on their dinner plates and in their cereal bowls, from requiring school children to be served fruit to eliminating trans fats in doughnuts. But the new Republican Congress is already laying the groundwork to push back in 2015.”

Yesterday’s article noted that, “Rep. Robert Aderholt (R-Ala.), chairman of the House Appropriations Agriculture Subcommittee, has been leading the charge on school lunch, along with Sen. John Hoeven (R-N.D.), a key member of the Senate Appropriations Agriculture Subcommittee. But their cause is about to be picked up by the House Education and Workforce Committee, chaired by Rep. John Kline (R-Minn.), and the Senate Agriculture Committee, chaired by Sen. Pat Roberts (R-Kan.), as they begin work to reauthorize the law governing school nutrition programs.

“Both Kline and Roberts have been openly critical of the 2010 Healthy Hunger-Free Kids Act, a bipartisan law that included many reforms that are now sparking complaints among schools and Republicans who argue the rules are too prescriptive and costly.”

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Biofuels; Agricultural Economy; Grocery Issues; and, Regulations

Biofuels (Cellulosic Feedstocks, Oil Prices)

Christopher Doering reported in yesterday at The Des Moines Register Online that, “Iowa made a record 3.9 billion gallons of ethanol in 2014, but output of the fuel faces uncertainty next year as the U.S. government debates the future of a controversial rule mandating the blending of ethanol in gasoline, a trade group said Monday.

“Iowa, the largest ethanol producing state, accounted for roughly 27 percent of country’s production this year. The increase in production in 2014 was the first noticeable one in years after output hovered at about 3.7 billion annually since 2011, according to Iowa Renewable Fuels Association.”

Mr. Doering noted that, “For the first time, a small amount of the ethanol production came from cellulosic feedstocks such as corn stover and corn kernel fiber. Despite falling short of cellulosic production goals in recent years, producers of the nascent fuel are starting to show signs of delivering. In 2014, Poet-DSM opened its $275 million facility in Emmetsburg. DuPont plans to open its $225 million cellulosic ethanol plant in Nevada next year.

“IRFA said the ethanol industry is facing uncertainty in Congress where some lawmakers are considering legislation that would change or repeal the Renewable Fuels Standard that requires increasingly more ethanol to be included in the country’s gasoline supply. Growth is further hindered by the inability of consumers to have access to higher blends of ethanol, such as gasoline containing 15 percent of the largely corn-based fuel, the group said.”

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Policy Issues; Drought; Trade; Immigration; Biotech; Ag Economy; and, Political Notes

Policy Issues

David Pierson reported in today’s Los Angeles Times that, “If your eggs seem a little pricier, consider the recent changes on Frank Hilliker’s ranch.

“In the last six months, the third-generation egg farmer in central San Diego County has reduced his flock by half and embarked on a $1-million overhaul of his henhouses to make them more spacious. Customers are now paying about 50% more for a dozen eggs from Hilliker’s family business at around $3 a carton.

It’s all to comply with a landmark animal welfare law that takes effect in California on New Year’s Day. Voters overwhelmingly approved Proposition 2 in 2008 to effectively abolish the close confinement of farm animals in cramped cages and crates — a practice that animal advocates say causes needless suffering and boosts the likelihood of salmonella contamination.”

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Agricultural Economy; CFTC (MF Global); Policy; and, Budget Issues

Agricultural Economy

Reuters writers Polina Devitt and Maha El Dahan reported earlier this week that, “Russia’s grain exports have stopped due to curbs brought in to protect domestic supply, putting big deals at risk, an influential farm lobby group said on Wednesday.”

The article indicated that, “Moscow imposed informal grain export controls with tougher quality monitoring and limits on railroad loadings earlier this month, as it tackles a financial crisis linked to plunging oil and Western sanctions.

“‘Since last Thursday not a single vessel, which had been due to sail under contracts, has left,’ Arkady Zlochevsky, the head of Russia’s Grain Union, the farmers lobby group, said.

“Officials also plan to impose duty on grain exports. Zlochevsky said its exact level was an unimportant detail, as he was sure it would be prohibitive.”

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Biotech; Policy Issues; and, the Agricultural Economy (Food Prices)

Biotech

Lucy Hornby reported yesterday at The Financial Times Online that, “In a speech a year ago, Xi Jinping backed China’s development of genetically modified crops as a means of strengthening food security. But even he hedged a little, warning: ‘Be bold in research, careful in promotion.’

“China’s pro-GM camp is now counting on the president’s support to unblock a bureaucratic stalemate that has stalled development of the crops by the world’s largest food consumer.

“After waves of state funding, researchers have developed a number of crops and are now just waiting for the green light to commercialise them. But approval will be slow in coming as long as public opinion — and more importantly, officialdom — remains firmly anti-GM.”

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Policy Issues; Cuba; Agricultural Economy; and, Regulations

Policy Issues

DTN Ag Policy Editor Chris Clayton reported yesterday that, “Congress wants USDA to operate like a business, but Agriculture Secretary Tom Vilsack is complaining that Congress is willing to spend $1.5 million on outside studies to duplicate work his department has already finished.

“Vilsack, in a phone interview with DTN on Thursday, expressed his frustration with some of the policy riders in the $1.1 trillion funding bill Congress approved. The policy restrictions ranged from blocking the secretary from creating a new beef checkoff to preventing the Farm Service Agency from eliminating its smallest offices nationally.

“‘I would say that it’s somewhat puzzling when Congress says ‘operate USDA like a business’ and then doesn’t give you the tools and flexibility to do so,’ the secretary said.”

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Agricultural Economy; Cuba Issues; and, Regulations

Agricultural Economy

Joel Aschbrenner reported on the front page of the Business Section in Friday’s Des Moines Register that, “Iowa farmland prices fell 8.9 percent in the past year, the largest annual decline in 28 years, according to a report released Thursday by the Center for Agricultural and Rural Development at Iowa State University.

But the average price of $7,943 per acre is still more than double what it was a decade ago, and economists say they expect farmland values to level off.”

The article noted that, “‘Commodity prices and farm income are settling back to more expected levels, and I think land values will probably move sideways for a while,’ Michael Duffy, a retired Iowa State economics professor who conducted the survey, said in a news release.”

“‘Many people think this report indicates the beginning of another farm crisis, but land values are still considerably higher than they were just a few years ago.’”

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Cuba Policy; Trade Issues; Biotech (Labeling); Ag Economy; and, Policy Issues

Cuba Policy

Karen DeYoung and Carol Morello reported on the front page of today’s Washington Post that, “In the wake of President Obama’s historic decision to mend diplomatic ties with Cuba, U.S. businesses and potential tourists scrambled to figure out what new opportunities will be available on the island and to position themselves at the head of the line.

“The political conversation sparked by Obama’s Wednesday announcement grew in both volume and dogmatism. Some hailed the opening as the dawn of pragmatic diplomacy. Others denounced it as a presidential sellout.”

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Cuba Policy; China (Trade-Biotech); and, the Agricultural Economy

Cuba Policy

Geoff Dyer and Marc Frank reported yesterday at The Financial Times Online that, “The US is to open talks with Cuba about establishing full diplomatic relations and reopening an embassy in Havana, potentially bringing to an end more than five decades of hostility and one of the last vestiges of the Cold War.

“The dramatic move to thaw relations began with a prisoner swap on Wednesday, including three Cuban agents held in US jails and Alan Gross, an American development worker who has been in a Cuban prison for five years on spying charges. The US said an unnamed Cuban man who had provided ‘critical’ intelligence to the US had also been released from a Cuban jail after almost 20 years.”

The FT article explained that, “The push to ease ties with Cuba could bring to an end more than 50 years of US economic sanctions which were put in place just after the Cuban Missile Crisis of 1962 in a bid to isolate the island and contain its ambitions to export communism.”

“‘These 50 years have shown that isolation has not worked. It’s time for a new approach,’ Mr Obama said in a televised address. ‘It does not serve America’s interests, or the Cuban people, to try to push Cuba towards collapse,’ he said. ‘Let us leave behind the legacy of both colonisation and communism, the tyranny of drug cartels, dictators and sham elections.’

US officials said that the administration was relaxing some restrictions on commerce with Cuba, although bigger steps to unwind the embargo would require the approval of Congress,” the FT article said.

Dyer and Frank added that, “Marco Rubio, the Florida senator who is the son of Cuban immigrants, immediately denounced the initiative and said he would work to block efforts at opening trade and commerce with Cuba.”

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Tax Extenders- Budget; Policy Issues; Trade; Ag Economy; and, Regulations

Tax Extenders- Budget

Michael A. Memoli reported yesterday at the Los Angeles Times Online that, “A turbulent lame-duck session of Congress came to a sudden end Tuesday as the Senate rushed to clear a lingering tax bill and some key presidential nominations in a late-night flurry of final votes.

Lawmakers signed off on a deal to extend $45 billion worth of tax breaks through this calendar year, ensuring that businesses and individuals can claim the deductions in their next IRS filings. The 76-16 vote also approved what had been a separate bill to create new tax-free accounts that can be used for the care of disabled family members.”

The article explained that, “The agreement sent lawmakers home earlier than many had expected just a few days ago, when Sen. Ted Cruz (R-Texas) forced members into a marathon weekend session as he made a final, unsuccessful effort to derail President Obama’s new immigration policy during consideration of the $1.1-trillion spending deal.

Congress passed the bill Saturday and Obama signed the package into law without ceremony Tuesday night, the White House announced.”

Mr. Memoli stated that, “The Senate formally adjourned shortly before midnight. The House, which has already wrapped up its work, will follow suit this week.”

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ERS: Food accounts for 13 percent of American households’ budgets

ers

From the U.S. Department of Agriculture’s Economic Research Service (ERS)- “With a 12.9-percent share, food ranked third behind housing (33.6 percent) and transportation (17.6 percent) in a typical American household’s 2013 expenditures. Breaking down food spending further, 7.8 percent of expenditures were spent at the grocery store and 5.1 percent at restaurants. Price changes for the items in the different budget categories relative to each other play a role in the categories’ shares of annual household consumer expenditures. Over the last 10 years, retail food price inflation has often outpaced economy-wide inflation. Between 2004 and 2013, prices for all U.S. goods and services rose an average of 2.4 percent per year, while food prices increased an average of 2.8 percent. Despite higher food price inflation, food’s share of consumer expenditures fell slightly (0.4 percentage points) over the decade, as the budget shares for health care and housing rose. This chart appears in the ERS data product, Ag and Food Statistics: Charting the Essentials. More information on ERS’s food price forecasts can be found in ERS’s Food Price Outlook data product.”

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