Adam Nagourney reported on the front page of today’s New York Times that, “Gov. Jerry Brown on Wednesday ordered mandatory water use reductions for the first time in California’s history, saying the state’s four-year drought had reached near-crisis proportions after a winter of record-low snowfalls.
“Mr. Brown, in an executive order, directed the State Water Resources Control Board to impose a 25 percent reduction on the state’s 400 local water supply agencies, which serve 90 percent of California residents, over the coming year. The agencies will be responsible for coming up with restrictions to cut back on water use and for monitoring compliance. State officials said the order would impose varying degrees of cutbacks on water use across the board — affecting homeowners, farms and other businesses, as well as the maintenance of cemeteries and golf courses.
“While the specifics of how this will be accomplished are being left to the water agencies, it is certain that Californians across the state will have to cut back on watering gardens and lawns — which soak up a vast amount of the water this state uses every day — as well as washing cars and even taking showers.”
Today’s article explained that, “Owners of large farms, who obtain their water from sources outside the local water agencies, will not fall under the 25 percent guideline. State officials noted that many farms had already seen a cutback in their water allocations because of the drought. In addition, the owners of large farms will be required, under the governor’s executive order, to offer detailed reports to state regulators about water use, ideally as a way to highlight incidents of water diversion or waste.
“Because of this system, state officials said, they did not expect the executive order to result — at least in the immediate future — in an increase in farm or food prices.”
Vicki Needham and Mike Lillis reported yesterday at The Hill Online that, “A trade war is erupting between Democrats and the Obama administration over efforts to pass ‘fast-track’ legislation that would smooth the way for two major trade deals.
“Dozens of House Democrats are expressing deep reservations about the White House’s trade agenda, putting themselves on a collision course with President Obama over concerns that the deals will benefit big business at the expense of U.S. workers.”
The article noted that, “Speaker John Boehner (R-Ohio) said earlier this month that the legislation will need at least 50 Democratic votes since there will be some GOP opposition.”
David Kesmodel reported in today’s Wall Street Journal that, “While many U.S. farmers grappled with lower grain prices last year, Mike Baker had an ace up his sleeve: sorghum.
“The grain, long overshadowed by more-plentiful crops, suddenly is in high demand [related graph] thanks to China’s soaring appetite for animal feed and a shift in its buying preferences away from foreign corn. A 15-fold increase in imports of U.S. sorghum by China over the past year has pushed its price above corn’s in parts of the U.S., a rarity that highlights how policy shifts by Beijing can have a far-reaching impact on the global grain trade.”
Brian Knowlton reported earlier this week at The New York Times Online that, “President Obama, in an interview broadcast on Sunday, said he rejects Republican criticism that he has exceeded his authority in moving to spare millions of undocumented immigrants from deportation, adding that he has been ‘very restrained’ in his use of executive authority.
“Angry Republican lawmakers have accused Mr. Obama of unconstitutional, even imperial, overreach. They have pointed to past remarks in which he himself suggested that his powers to act were limited.”
The Times article added that, “Mr. Obama has framed his action not as an amnesty for some undocumented immigrants but as a directive, in part, to federal agencies to focus their attention on those with criminal records, not on law-abiding, taxpaying, longtime immigrants. In all, about five million of the estimated 11 million undocumented immigrants would be protected.”
Kristi Boswell, Director of Congressional Relations for the American Farm Bureau Federation, was a guest yesterday on the AgriTalk radio program with Mike Adams, where the conversation focused on immigration issues (audio replay here, MP3- 10:18). An unofficial FarmPolicy.com transcript of yesterday’s discussion is available here.
Tennille Tracy reported yesterday at the Washington Wire blog (Wall Street Journal) that, “Rep. Mike Conaway (R., Texas), the newly appointed chair of the House Agriculture Committee, is pledging to undertake a ‘thoughtful’ review of food stamps.
“Mr. Conaway, a certified public accountant, has been critical of the food stamp program, formally known as the Supplemental Nutrition Assistance Program or SNAP. He defended Republican-led efforts to eliminate billions from the program and supports tougher work requirements for able-bodied adults without children.
“‘The committee will conduct a thoughtful review of all programs under its jurisdiction,’ Mr. Conaway said in an e-mail. ‘It’s only natural for much of that review to focus on nutrition programs as they account for almost 80% of the spending within the jurisdiction of the committee.’”
Joby Warrick reported in today’s Washington Post that, “The Obama administration has no intention of backing down on major environmental initiatives to fight climate change and improve air and water quality, EPA chief Gina McCarthy said Monday, dismissing Republican threats to thwart proposed regulations by starving the agency of money.”
The Post article noted that, “McCarthy appeared to be rejecting statements by Sen. Mitch McConnell (R-Ky.), the presumptive Senate majority leader in the next Congress, who last week accused President Obama of waging war against the coal industry and vowed to fight the administration’s environmental proposals ‘in any way that we can.’”
“McConnell joined other key Republican lawmakers in suggesting that the new Congress would use its budget authority to block controversial proposals intended to scale back greenhouse-gas emissions and reduce pollution levels in air and water,” today’s article said.
Legislative Agenda: Keystone, Budget- Immigration Link, and Trade
Ashley Parker and Jeremy W. Peters reported in today’s New York Times that, “As newly victorious and recently vanquished members of Congress descended Wednesday on Capitol Hill, defeated Democrats trudged in for some of their final votes, ebullient Republicans toured their new digs, and the denouement of Election Day continued to play out as the House and the Senate scheduled dueling votes to try to influence the outcome of the lone unresolved Senate race in Louisiana.
“But Wednesday’s activities — or lack thereof — after a six-week absence from the Capitol underscored how much inertia still rules. Despite larger fights over funding the government, operations in Syria, and executive action on immigration, the only votes in the Senate on Wednesday were procedural steps on a pair of federal court nominees.”
Chase Purdy reported yesterday at Politico that, “‘Kansas Republican Pat Roberts, the likely next chairman of the Senate Agriculture Committee, says he has no plans to reopen the farm bill to make any substantial changes,’ Pro Agriculture’s Bill Tomson reports this morning. ‘Roberts, who sought far bigger cuts to food stamps and opposed the price-based subsidies in the 2014 farm bill, stressed in an interview with POLITICO Monday that it would be a mistake to expose the massive five-year, $500 billion piece of legislation to others who would seek to make changes.’
“‘I do not intend to open up the farm bill,’ Roberts assured. ‘That would be irresponsible.’”
Grant Gerlock reported yesterday at The Salt blog (National Public Radio) that, “U.S. farmers are bringing in what’s expected to be a record-breaking harvest for both corn and soybeans. But for many farmers, that may be too much of a good thing.
“Farmers will haul in 4 billion bushels of soybeans and 14.5 billion bushels of corn, according to USDA estimates. The problem? Demand can’t keep up with that monster harvest. Corn and soybean prices have been falling for months. A bushel of corn is now worth under $4 — about half what it was two years ago.”
The update noted that, “That means a glut of corn and soybeans and the lowest prices in at least five years. To make matters worse, the oil boom in North Dakota is tying up the railways used to ship grain. Trains for things like coal or imports are also running behind. Bruce Blanton at the U.S. Department of Agriculture says the wait means some of the harvest could go to waste…[S]ome farmers will have so much grain to sell, they’ll still manage to make some money. Others will lean on saving or subsidized crop insurance. Low prices could even trigger a new set of government safety nets in the Farm Bill.
“Cory Walters, an agricultural economist at the University of Nebraska-Lincoln, says rising costs for everything from seeds to fertilizer make these low commodity prices harder to handle.
“‘Does that mean we’re going to have multiple years of low prices and it’s all doom and gloom? No, I don’t buy that right now,’ Walters says. ‘Because there’s a lot of changes could happen from year to year on acreage, weather.’”
Marcia Zarley Taylor reported on Friday at DTN that, “A Halloween forecast by Purdue University paints a grim outlook for the grain economy through at least 2015, and possibly the next three or four years.
“Indiana grain farm incomes are expected to tumble 30% in 2014 and another 35% in 2015, even including government payments under the new farm bill, Purdue Economist Chris Hurt said. He gauges the state’s grain incomes at $1.1 billion for 2015, down from the recent high of $3.4 billion in 2011.”
The DTN article noted that, “In a webinar on the changing business climate for agriculture, Hurt and other Purdue economists emphasized that cash rents and farm input costs have been slow to adjust to the new realities of commodity markets. The main problem is that production costs need to fall by about 20% to realign with the current price outlook.
“The crop production system could be vulnerable for the next three or four years and possibly beyond that, Hurt said. ‘We have a cost structure that’s built on $5 corn and $12 soybeans, but the reality is the market is only going to offer $4 corn and $9 to $10 soybeans,’ Hurt said. ‘For some growers it will mean trauma or failure, but most will make the adjustments, given enough time.’”
Yesterday, the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri provided an update on crop price projections reflecting information available in mid-October.
A summary of the FAPRI update indicated that, “The projected corn price for the 2014/15 marketing year was reduced slightly this month, to $3.40 per bushel. The record U.S. corn crop got even bigger in USDA’s October estimates, and carry-in stocks were also greater than had been estimated in September.
“Corn acreage could decline in 2015, and more typical growing conditions would result in lower yields next year. Projected prices increase to $3.74 per bushel for 2015/16, and to $4.20 per bushel by 2018/19.”
Yesterday’s update added that, “USDA soybean production estimates also increased slightly this month, but this was offset by a reduction in carry-in stocks, leaving total supplies marginally reduced from September estimates. The projected 2014/15 soybean price is little changed from last month, at $9.95 per bushel.
“Soybean acreage could stay near this year’s record in 2015 and the resulting large soybean supplies cause projected 2015/16 prices to drop to $8.93 per bushel, before recovering to $10.50 per bushel by 2018/19.”
In part, yesterday’s report noted that, “Lower corn prices continued to benefit poultry and livestock producers that rely on corn for feed” (Atlanta District); “Livestock and dairy producers continued to benefit from lower feed costs and high output prices” (Minneapolis District); “Cattle prices continued to be at a record high while feed prices fell, boosting profitability for cattle producers” (Dallas District) and “low corn prices and stable fertilizer and machinery prices benefited dairy and feedlot operations” (San Francisco District).
The Chicago District noted that, “Crop income was lower than a year ago as higher yields were insufficient to offset lower prices. Crop insurance will cover some of the lost income, but farmers already are planning to trim costs for next year, particularly spending on farm equipment and other capital purchases.”
And the Kansas City District added that, “Crop insurance and some pre-selling of this year’s crop at higher prices earlier in the year may help mitigate the effect on overall farm incomes of recent spot price declines…The demand for farm operating loans has risen substantially from last year as more crop producers borrowed to pay for operating costs. Bankers also reported a rise in requests for agricultural loan renewals and extensions and noted that loan repayment rates have edged down from the high levels seen the past few years. Despite the sharp drop in crop prices, farmland values were typically holding at high levels.”
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.”
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.”
Gregory Meyer reported yesterday at The Financial Times Online that, “Illinois is at the centre of an astonishing rebound in global grain supplies. After almost a decade of shortfalls and price rises, agricultural commodities have declined to the cheapest in four years. The new abundance will have broad effects, weakening incomes of farmers and companies that supply them, fattening profit margins at food and biofuel companies and – eventually – slowing food price inflation for consumers in rich and poor countries alike.
“As the largest agricultural exporter, the US sets the direction for world markets, traders say. Illinois and other states in America’s Midwestern ‘corn belt’ are on track to produce a record US corn harvest for a second consecutive year. The soyabean crop will also be the largest ever, the government predicts.”
Tom Meersman reported over the weekend at the Minneapolis Star-Tribune Online that, “The prospect of a bin-busting crop has driven corn prices to their lowest levels in four years and raised fears of a prolonged slump for crop farmers in Minnesota and elsewhere.
“After three years of profits, analysts are calling 2014 a break-even year, at best. Some think prices could drop more and stay low into 2015.”