October 31, 2014

Ag Economy; Policy Issues; Biofuels; Biotech; and, Climate

Agricultural Economy

Reuters writer Julie Ingwersen reported yesterday that, “U.S. corn futures rose 3.6 percent on Monday, the second-biggest single-day jump of 2014, as rains in the Midwest interrupted the harvest and slowed the arrival of a record-large crop into marketing channels, traders said.

“Soybeans and wheat followed corn’s lead, with a weaker dollar supporting grains, making them more attractive to those holding other currencies.

“‘Rains should be widespread and heavy across all but far northwestern portions of the Midwest today and tomorrow, which will stall corn and soybean harvesting,’ MDA Weather Services said Monday in a daily note.”


Ag Economy; Farm Bill; Regulations; and, Immigration

Agricultural Economy

On Friday, USDA’s National Agricultural Statistics Service (NASS) released its Crop Production report, which indicated that, “Corn production is forecast at 14.5 billion bushels, up less than 1 percent from the previous forecast and up 4 percent from 2013. Based on conditions as of October 1, yields are expected to average 174.2 bushels per acre, up 2.5 bushels from the September forecast and 15.4 bushels above the 2013 average. If realized, this will be the highest yield and production on record for the United States [related graph].”

The NASS report added that, “Soybean production is forecast at a record 3.93 billion bushels, up slightly from September and up 17 percent from last year [related graph]. Based on October 1 conditions, yields are expected to average a record high 47.1 bushels per acre, up 0.5 bushel from last month and up 3.1 bushels from last year.”

Also on Friday, the World Agricultural Outlook Board (WAOB) released its monthly World Agricultural Supply and Demand Estimates (WASDE) report, which incorporated the NASS production report.

The WASDE report included this overview table of corn supply and demand variables, and stated that, “Corn ending stocks are raised 79 million bushels to 2,081 million. The projected range for the season-average farm price is lowered 10 cents on each end to $3.10 to $3.70 per bushel.”

Likewise, Friday’s WAOB report included this overview table of soybean variables, and explained that, “U.S. soybean exports and crush for 2014/15 are unchanged this month. Soybean ending stocks are projected at 450 million bushels, down 25 million on reduced supplies. Prices for soybeans, soybean oil, and soybean meal are unchanged.”

With respect to wheat, Friday’s WASDE update added that, “The projected range for the 2014/15 season-average farm price is narrowed 5 cents on both the high and low end to $5.55 to $6.25 per bushel.”


Ag Economy; Farm Bill; Biotech; Biofuels; Regulations; and, Immigration

Agricultural Economy

Reuters News reported yesterday that, “World food prices fell to their lowest since August 2010 in September as prices of all major food groups except meat dropped, led by a sharp decline in dairy prices, the UN’s food agency said on Thursday.

“The Food and Agriculture Organisation’s (FAO) price index, which measures monthly price changes for a basket of cereals, oilseeds, dairy, meat and sugar, averaged 191.5 points in September, down 5.2 points or 2.6 percent from August.

“The figure was 12.2 points or 6.0 percent below September 2013 [related graph].”


Ag Economy; Biotech; Farm Bill; Regulations; and, Political Notes

Agricultural Economy

Reuters writer Karl Plume reported yesterday that, “The top U.S. rail regulator ruled on Wednesday that all Class 1 railroads operating in the United States must provide detailed weekly freight service reports, a decision that cited months of congestion that has hit the grain and power industries particularly hard.

Carriers must submit detailed data on average train speeds, dwell times and other service metrics on a temporary basis beginning on Oct. 22, the Surface Transportation Board said. They must also jointly submit a narrative summary of operating conditions at the Chicago gateway, a busy rail hub that is a choke point in the national network.

“The ruling was a victory for the agriculture and power industries, which have argued for more transparency from rail carriers about the products they carry on their networks. Some have accused railroads of prioritizing crude shipments from shale oil fields in North Dakota over grain and coal, a charge the carriers deny.”


Policy Issues; Ag Economy; and, Regulations

Policy Issues- Farm Bill

New York Times political correspondent Nicholas Confessore penned an article that was posted yesterday at the paper’s webpage titled, “How School Lunch Became the Latest Political Battleground” (the article is from the October 12 edition of the Sunday Magazine).

A twitter generated summary of the lengthy and detailed article provided this general overview: “Inside the Obama administration’s standoff with Republicans, the food industry and the nation’s lunch ladies over the future of the cafeteria.”

Meanwhile, Gary Schnitkey, Jonathan Coppess, Nick Paulson (University of Illinois) and Carl Zulauf (Ohio State University) indicated yesterday at the farmdoc daily blog (“Information for 2014 Farm Bill Decisions”) that, “Deadlines for making commodity program decisions for each Farm Service Agency farm are well into the future. February 27, 2015 is the deadline for yield updating and acre reallocation decisions. March 31, 2015 is the deadline for program choice decisions. Market outlook and projected program payments will be clearer as deadlines approach. As a result, there is no need to rush these decisions. However, obtaining the necessary information to make decisions for each farm is a good task for now. FSA sent a letter in August containing current base acres, program yields, and acres planted from 2009 through 2012. In addition, yields from 2009 through 2013 will be needed when making commodity program decisions.

“In August, the FSA sent a letter to each landowner and farm operator having an interest in an FSA farm (click here for a video describing the letter). Following the letter, there was a series of data sheets giving current base acres, program yields, and planted acres for each FSA farm.”

Yesterday’s farmdoc update added that, “More detail on information needs is provided in Step 1 of the ARC-PLC Decision Steps. Currently, efforts focused on two areas will have value. First, make sure that FSA documents are available and have the correct information. Second, determine and document 2009 through 2013 yields for each FSA farm.”

Note also that the farmdoc team will be hosting a free webinar Friday on Farm Bill Decision Aids and Programs.


Policy Issues; Ag Economy; Biotech; Biofuels; Regs; and, Immigration

Policy Issues

Marcia Zarley Taylor reported yesterday at DTN that, “The ghost of the Southwest’s mega-drought continues to haunt growers even after a few rain showers this last growing season. Producers there have been used to paying dearly for each dollar of crop insurance coverage, but the cost-benefit ratio could reach a breaking point in 2015.

“‘Under old farm policies, lenders would look at your portfolio and see how much crop insurance guaranteed in gross revenue, than add in direct payments and that was the basis for your crop loans,’ said Matt Huie, a 38-year-old crop producer from Beesville near the Gulf Coast rim of Texas. ‘Now we’ve seen our basis for loans erode because of drought and erosion in commodity prices.’

“Texas state climatologist John Nielsen-Gammon describes prolonged drought in the Corpus Christi area as one of the two most severe in the region’s recorded history. Only the epic drought of the 1950s to the early 1960s matches it.”


Policy Issues, Ag Economy; and, Regulations

Policy Issues

Matthew Patane and Donnelle Eller reported on the front page of Saturday’s Des Moines Register that, “A California law that bars eggs from states that fail to provide roomier cages for hens could lead to beef, pork and other Iowa products being banned from the West Coast state, Iowa agricultural leaders say.

A federal judge threw out a six-state case late Thursday that asked the court to strike down a California statute barring the sale of eggs there that were produced by hens in cramped cages. Iowa, the nation’s largest egg producer, was part of the suit.”


ERS: Top U.S. agricultural export markets located in Asia and North America


From USDA’s Economic Research Service (ERS)- Most of the largest individual country markets for U.S. agricultural exports are in Asia and North America. China, with its strong demand for soybeans, cotton, cattle hides, tree nuts, and other horticulture products, has become the largest single U.S agricultural market, with annual U.S. exports averaging $23.5 billion during 2011-13. Canada (with 2011-13 average U.S. exports of $20.3 billion) and Mexico ($18.5 billion) are the second and third largest markets, with trade in a broad range of agricultural commodities aided by reforms introduced by the 20-year-old North American Free Trade Agreement (NAFTA). Japan ($13.2 billion) is the fourth largest U.S. market, and the next five top ranked markets are also in Asia: South Korea ($6.0 billion), Hong Kong ($3.5 billion), Taiwan ($3.3 billion), Indonesia ($2.7 billion), and the Philippines ($2.3 billion). Total U.S. agricultural exports were a record $144.1 billion in 2013, and averaged $140.6 billion during 2011-13. Find this chart and more in Selected Charts 2014, Ag and Food Statistics: Charting the Essentials.


Policy Issues; Ag Economy; Biotech; and, Biofuels

Policy Issues- Farm Bill

Sabrina Tavernise reported in today’s New York Times that, “The amount of antibiotics sold for use in livestock rose substantially in recent years, according to the Food and Drug Administration, a pattern that experts said was troubling given the efforts to battle antibiotic resistance in humans.

“In an annual report posted online on Thursday, the agency said the amount of medically important antibiotics sold to farmers and ranchers for use in animals raised for meat grew by 16 percent from 2009 to 2012.

“Most troubling, health advocates say, was a rise in the sale of cephalosporins, a class of drug that is important in human health, despite new restrictions the F.D.A. put into place in early 2012. The report showed an 8 percent increase in the sale of those drugs in 2012, confirming advocates’ fears that the agency’s efforts may not be having the desired effect. Sales of those drugs rose by 37 percent from 2009 to 2012.”

The article noted that, “The National Chicken Council, an industry group, said in a statement that the sale of antibiotics did not necessarily correlate with antibiotic resistance trends. It said that most antibiotics used in chicken production were not used in human medicine.

“The report did not differentiate by species; it included all animals raised for meat.”


Farm Bill; Ag Economy; Biotech; Regulations; and, Political Notes

Farm Bill- Policy Issues

Aaron Stanley reported yesterday at The Financial Times Online that, “The US and Brazil agreed on Wednesday to resolve a decade-long feud over cotton subsidies, marking an end to one of the highest-profile disputes in the history of the World Trade Organisation

“‘Today’s agreement brings to a close a matter which put hundreds of millions of dollars in US exports at risk,’ said Mike Froman, US Trade Representative. ‘The United States and Brazil look forward to building on this significant progress in our bilateral economic relationship.’”

The FT article stated that, “Under the agreement [Memorandum of Understanding Related to the Cotton Dispute], the US will pay a lump sum of $300m to Brazilian cotton farmers and modify its support for domestic cotton programmes. Brazil will forfeit $829m in WTO-granted sanctions against US goods and services annually – a portion of which had been allocated for cross-retaliation against US intellectual property rights.

The $300m price tag for resolving the dispute is ‘small beer for the US’, said Frank Samolis, a trade lawyer with Squire Patton Boggs, adding that the agreement clears the slate for trade relations between the two countries after Brazil’s presidential elections, due this weekend.”


Farm Bill; Ag Economy; Biotech; and, Regulations

Farm Bill

Reuters writer Alonso Soto reported yesterday morning that, “The United States and Brazil are close to settling a decade-old trade dispute over cotton subsidies, three Brazilian sources close to the talks told Reuters, in what would be the first concrete step to repair ties hurt by an espionage scandal.

Washington is within hours of reaching an agreement with Brazilian cotton producers demanding compensation for cotton subsidies enjoyed by U.S. growers, a senior Brazilian government official said. He asked not to be named because negotiations are ongoing.”

The article explained that, “In 2004, Brazil won a challenge against U.S. cotton subsidies at the World Trade Organization, giving it the right to impose $830 million in sanctions against U.S. products. Brazil agreed to suspend the penalty if the United States paid into an assistance fund for Brazilian cotton farmers [related background here and here].

“The United States stopped paying the monthly compensation in October due to budget disagreements in Congress, prompting the Brazilian government to threaten to slap higher tariffs on U.S. products. The retaliation would have deepened diplomatic tensions between both countries, officials and experts said at the time.”

Leslie Josephs and William Mauldin reported last night at The Wall Street Journal Online that, “Brazil and the U.S. have reached an agreement to settle a more than decade-old dispute over U.S. cotton subsidies, people familiar with the negotiations said Tuesday.

“U.S. Agriculture Secretary Tom Vilsack and U.S. Trade Representative Michael Froman will sign the agreement with their Brazilian counterparts on Wednesday, a person familiar with the agreement said.”


Farm Bill; and, the Ag Economy

Farm Bill

House Ag Committee Ranking Member Collin Peterson (D., Minn.) was a guest yesterday on the AgriTalk radio program with Mike Adams, where the conversation focused on the Farm Bill (audio replay here, MP3- 10:17). An unofficial transcript of yesterday’s discussion is available here.

With respect to USDA Farm Bill implementation, Rep. Peterson noted that, “The Department has put a pretty heavy focus on getting this thing done. There’s been some controversy over the APH decision, which affects Texas and down in that part of the world, that I’ve heard about. The dairy stuff I think could have got going a little bit sooner, but that’s now being actively rolled out. We have our first meeting today in my district with the FSA folks and the University of Minnesota, and I’m going to attend one of those tomorrow to kind of see how that’s all going.

“We had the Secretary here last Thursday in Minnesota, and he’s announcing at that time the PLC/ARC signup. And that’s going to take some real study on the part of farmers to make sure that they understand the implications and have as much information as they can get before they have to make the decision probably sometime after the first of the year.”


ERS: Crop receipts forecast to fall, livestock receipts could set new records in 2014


From USDA’s Economic Research Service (ERS): “Crop receipts are expected to decline 7 percent in 2014, the second annual decrease following a record high in 2012. Even with record corn production projected, cash receipts for corn are expected to decline by over 20 percent due to a significant decrease (-32 percent) in the annual average corn price. Declines in receipts are also expected for most other major crops including fruits and nuts, wheat, soybeans, and vegetables/melons. A notable exception is cotton, which is projected to recover from a significant decline in 2013. Conversely, record livestock prices are projected to drive a 15.3-percent increase in livestock cash receipts. Despite expected declines in beef production, cattle/calves receipts are expected to set a record in 2014 due to higher prices. Hog production is also expected to decline, but higher expected annual average prices drive the forecast increase in hog cash receipts. Wholesale milk and broiler receipts are expected to benefit from higher production and record annual average prices. See the Farm Income and Wealth Statistics data product for more information on USDA’s 2014 forecast for the farm economy, released on August 26, 2014.”


Farm Bill; Ag Economy; and, Biotech

Farm Bill

On Friday, Don Wick, of The Red River Farm Network (RRFN), spoke with Secretary of Agriculture Tom Vilsack about Farm Bill issues.

An audio replay of the RRFN discussion can be found here, while an unofficial transcript of the conversation with Don Wick and Sec. Vilsack is available here.

In part, Sec. Vilsack indicated that, “As you know, direct payments, Don, are gone, replaced by a real focus on crop insurance and these new safety net programs, the Agricultural Risk Coverage program and the Price Loss Coverage program. Producers will have, starting Monday, the opportunity to reallocate—I should say the owners of the property have the opportunity to reallocate base acres and to adjust yields, and they’ll have that opportunity from September 29th to February 27, 2015. Starting on November 17, 2014, and continuing at least until March 31st of 2015, they’ll have the opportunity to make the election as to which of these safety net programs is best for their operation.

“To aid them in making that decision between now and the time they make the decision, we are also announcing the availability of an online tool that has been developed by several land grant universities and food policy councils that will allow producers to plug in numbers that are very specific to their own operation.”


Farm Bill; Ag Economy; and, CFTC

Farm Bill

AP writer David Pitt reported yesterday that, “Farmers can start as early as next week on signing up for new safety net programs that U.S. Agriculture Secretary Tom Vilsack said replaces the much-criticized direct payments with government payouts based on the risks farmers face.

“Vilsack traveled to St. Paul, Minnesota, to hold a news conference to announce the rollout of the programs on Thursday. He held a conference call with reporters to further discuss the programs and answer questions. The programs were established in the 2014 farm bill and will allow farmers to protect themselves against commodity price drops and from lower revenue in poor crop years.

Payouts this year could be significant since anticipated record corn and soybean harvests have sent prices plummeting. At current prices many farmers are likely to lose money, a scenario that will enable them to collect government payments.”


Policy Issues; Ag Economy; Biotech; Biofuels; Climate; and, Regulations

Policy Issues

Jonathan Oosting reported yesterday at the MLive Media Group Online that, “Some 150,000 Michigan families are poised to lose an average of $76 in food stamp benefits this fall due to federal cuts that many other states have taken action to avoid.

“The latest farm bill, signed into law here in Michigan last winter, scaled back the Supplemental Nutrition Assistance Program, which includes a provision affording extra food benefits to families who also receive assistance with heating bills.

“Some families who rent don’t have utility bills, but states had been able to help them qualify for extra food stamps by providing just $1 in heating assistance. Under the new farm bill, the minimum ‘heat and eat’ payment is jumping to $21.”


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