FarmPolicy

August 30, 2014

Regulations; Ag Economy; Climate; Immigration; and, Political Notes

Regulations

Todd Neeley reported yesterday at DTN that, “Farm groups are using mapping technology in their latest effort to block EPA from finalizing new regulations under the Clean Water Act.

“A map of the state of Iowa virtually is covered in red — a color that has agriculture groups burning mad at an image that represents all the waters that could be considered jurisdictional if the proposed Clean Water Act rule becomes finalized. An image from the South Dakota Farm Bureau maps the same waters painted green across easily two-thirds of that state — mostly covering South Dakota’s western half.

“A number of ag groups including the American Farm Bureau Federation, the National Pork Producers Council, National Corn Growers Association, National Cattlemen’s Beef Association, among others, have been undertaking the seemingly impossible task of mapping those waters that could be in EPA’s control. In addition, this week the House Committee on Science, Space and Technology is set to post online similar maps of all 50 states provided to the committee by EPA.”

With respect to the Science, Space and Technology Committee action regarding EPA maps, in a separate update yesterday at DTN, Mr. Neeley reported that, “A House committee is pressuring EPA to release more information about an October 2013 agency contract to create waters and wetlands maps of all 50 states, including making those maps part of the official record on the proposed Clean Water Act rule.

“Along with posting EPA maps to its website Wednesday, House Science Space and Technology Committee Chairman Rep. Lamar Smith, R-Texas, asked EPA Administrator Gina McCarthy to release other documents related to the agency’s spending of taxpayer dollars to hire a consultant to develop the maps.”

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Ag Economy; Farm Bill; Political Notes (Farm Bill); Climate; and, Regs

Agricultural Economy

Yesterday, USDA’s Economic Research Service (ERS) updated its 2014 Farm Sector Income Forecast, which stated that, “Net farm income is forecast to be $113.2 billion in 2014, down 13.8 percent from 2013’s forecast of $131.3 billion. If realized, the 2014 forecast would be the lowest since 2010, but would still remain more than $25 billion above the previous 10-year annual average. After adjusting for inflation, 2013’s net farm income is expected to be the highest since 1973; the 2014 net farm income forecast would be the fifth highest [related graph].

ERS noted that, “The annual value of U.S. crop production is expected to decline 10.6 percent in 2014 from 2013’s predicted all-time high. Expected declines in cash receipts are especially large for feed crops such as corn. Corn receipts are expected to experience the largest dollar decline in 2014 receipts among farm commodity categories…Declines in soybean receipts are anticipated as higher production and quantities sold are more than offset by large price declines (11.3 percent) [related graph].”

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Farm Bill; C.O.O.L.; Ag Economy; Climate; and, Regulations

Farm Bill

A news release yesterday from the U.S. Department of Agriculture (USDA) stated that, “[USDA] today announced continued progress in implementing provisions of the 2014 Farm Bill that will strengthen and expand insurance coverage options for farmers and ranchers. The new Supplemental Coverage Option (SCO), available through the federal crop insurance program and set to begin with the 2015 crop year, is designed to help protect producers from yield and market volatility.”

The release explained that, “SCO will be available for corn, cotton, grain sorghum, rice, soybeans, spring barley, spring wheat, and winter wheat in selected counties for the 2015 crop year. Producers should contact their crop insurance agents to discuss eligibility in time to sign up for winter wheat coverage. RMA plans to make SCO more widely available by adding more counties and crops. Information on SCO for 2015 winter and spring wheat is available on the RMA website at www.rma.usda.gov. Selected counties for other commodities will be released later this summer.”

Chris Clayton reported yesterday at the DTN Ag Policy Blog that, “USDA announced on Tuesday where farmers growing winter wheat would be eligible to buy the new Supplemental Coverage Option crop insurance this fall.

“SCO, created in the 2014 farm bill, is a supplemental county insurance that could cover a portion of a farmer’s deductible revenue on a countywide plan. A farmer buys the insurance as an enhancement to an individual policy.

Winter wheat farmers would effectively be the first ones who get the option of buying SCO for their 2015 crop. However, not every winter wheat farmer will get the option of buying the policy. Farmers in counties reflecting about 80% of the overall winter wheat acreage would get the option of enrolling. Almost all of Kansas, excluding a couple of counties, would be able to enroll, as would farmers in the western half of Oklahoma, southern and western Nebraska, parts of South Dakota, Colorado, Montana, Idaho, Oregon and Washington State would get to enroll, as well as farmers in sections of California, Arkansas, Missouri, Illinois, Ohio, Michigan and Wisconsin as well as a few counties in both North and South Carolina, New Mexico, Wyoming, New York and Pennsylvania. For a full map, go to http://dld.bz/…

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Regulations; Farm Bill; Ag Economy; Biofuels; and, Climate

Regulatory Issues

A news release yesterday from Sen. Kirsten Gillibrand (D., N.Y.) indicated that, “United States Senators [Gillibrand], Elizabeth Warren (D-Mass.), and Dianne Feinstein (D-Calif.) sent a letter today to Food and Drug Administration (FDA) Commissioner Margaret Hamburg requesting information about the FDA’s efforts to curb the overuse of antibiotics in food animal production.

“‘The use of antibiotics in food-producing animals must be reduced as part of the effort to preserve the efficacy of antibiotics,’ the senators wrote. ‘Research has shown that antibiotic resistant bacteria are most likely to develop when antibiotics are used continuously at low doses – the type of regimen used frequently in food animal production.’

“In their letter, the senators noted steps the FDA has taken to begin addressing this issue, including issuing guidance on inappropriate antibiotic use for growth promotion, calling for pharmaceutical companies to voluntarily remove these uses from product labels, and requiring more veterinary oversight of antibiotic use in food animals. The senators explained, ‘While these new policies are important first steps, we remain concerned that they may not be sufficient to effectively curtail the routine use of dangerously low doses of antibiotics for the duration of an animal’s life. . . . The benefits of this change will be negligible . . . if the same animals can continue receiving the same antibiotics at the same doses.’”

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Ag Economy; Regulations; Farm Bill; Climate; CFTC; and, Political Notes

Agricultural Economy

University of Illinois agricultural economist Gary Schnitkey indicated yesterday at the farmdoc daily blog (“Prospects for Grain Farm Incomes in 2014”) that, “Average grain farm incomes in 2014 likely will be much lower than 2013 incomes. Corn prices near $4.20 per bushel combined with above average yields could result in average incomes on grain farms in Illinois around $45,000 per farm, slightly below the average for the years from 1996 through 2005. A scenario that would result in average incomes near $134,000 per farm, the 2013 level of average income, would be above average yields combined with corn prices near $4.80 per bushel. This is a large range ($45,000 to $134,000), and it represents the likely range of average grain farm incomes over the next several years, with lower incomes possible if low commodity prices occur [related graph].”

Yesterday’s update noted that, “While grain prices and yields are far from certain, most current projections of prices and yields result in much lower incomes for 2014.”

In conclusion, yesterday’s farmdoc update indicated that, “Corn prices in the low $4.00 range likely will result in incomes below $50,000. Corn prices in the high $4.00 range will result in average incomes above $100,000. If corn prices average around $4.50 over the next several years, average incomes likely will be in the above range for the next several years. Lower incomes are possible with corn prices below $4.00 per bushel.”

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Ag Economy; Climate; CFTC; Data; Immigration; and, Policy Issues

Agricultural Economy

Donnelle Eller reported yesterday at The Des Moines Register Online that, “Storms over the past week have damaged thousands of crop acres in northwest Iowa, officials say, leaving farmers uncertain whether they’ll be able to replant.

“‘I don’t ever remember seeing this much standing water,’ said Joel DeJong, an Iowa State University field agronomist in northwest Iowa for over two decades. ‘There’s a lot of standing water.’

Hail and wind also damaged Iowa corn and soybeans. And farmers on the western state border have rising river waters.”

The article noted that, “Farmers will assess over the coming days whether crops can be replanted.”

Cheri Zagurski reported yesterday at DTN (link requires subscription) that, “Corn and soybean conditions worsened slightly and winter wheat harvest more than doubled to 33% complete in the week ended June 22, according to USDA’s latest Crop Progress report.

Seventy-four percent of the nation’s corn crop is rated good to excellent, compared to 76% last week…Seventy-two percent of the soybeans are rated good to excellent, compared to 73% percent last week.”

The DTN article added that, “Winter wheat harvest is at 33%, compared to 16% last week and a five-year average of 31%. Winter wheat condition is holding steady at 44% poor to very poor and 25% good to excellent.”

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Climate; Biotech; Ag Economy; Appropriations; and, Regulations

Climate Issues

Coral Davenport reported in today’s New York Times that, “The Obama administration on Monday will announce one of the strongest actions ever taken by the United States government to fight climate change, a proposed Environmental Protection Agency regulation to cut carbon pollution from the nation’s power plants 30 percent from 2005 levels by 2030, according to people briefed on the plan who spoke anonymously because they had been asked not to reveal details.”

The Times article added that, “It is also likely to stand as President Obama’s last chance to substantially shape domestic policy and as a defining element of his legacy. The president, who failed to push a sweeping climate change bill through Congress in his first term [related FarmPolicy update from June 27, 2009- a measure passed the House, but not the Senate], is now acting on his own by using his executive authority under the 1970 Clean Air Act to issue the regulation.”

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Farm Bill; Legislative Issues; Climate; Ag Economy; and, Immigration

Farm Bill

Marcia Zarley Taylor reported yesterday at DTN that, “Producers of bulk commodities like corn, soybeans and wheat have made crop insurance a staple of their risk management plans, insuring about 85% of eligible acres nationwide. Unfortunately, specialty crops like fresh sweet corn lag far behind at a mere 21% of planted acres and fresh green beans at 3%. Now the Risk Management Agency hopes attractive new features in a Whole-Farm Revenue Protection policy will aid risk management for diversified specialty crop and livestock producers [related graph].

“‘Crop insurance provides a tremendous safety net for core crops,’ Risk Management Agency Administrator Brandon Willis told DTN. ‘This is just another example if someone wants crop insurance, we have something for them.’

“The new program combines elements of the existing Adjusted Gross Revenue (AGR) and Adjusted Gross Revenue-Lite (AGR-Lite) programs targeting farms selling two to five commodities. It also expands eligibility to new counties and states starting in 2015. In 2014, only 802 of those policies had been sold nationwide, a participation rate Willis hopes to significantly improve.”

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Ag Economy; Tax Extenders (Biofuels); Immigration; CFTC; and, Climate

Agricultural Economy

Yesterday, the Food and Agriculture Organization of the United Nations (FAO) released its biannual report on global food markets.

Titled, Food Outlook, the report stated that, “Early prospects for 2014 cereal crops point to a decline from the previous year’s record level, but output is nevertheless expected to be the second largest ever. Based on conditions of crops already in the ground and planting intentions for those to be sown later this year and assuming normal weather for the remainder of the season, FAO’s first forecast puts world cereal production in 2014 at around 2 458 million tonnes (including rice in milled terms), some 2.4 percent down from 2013. Wheat and coarse grains would account for the reduction. Total cereal utilization in the new season (2014/15) is forecast to increase by 1.9 percent, which compares with a 4.0 percent rise in 2013/14 [related graph].”

The UN update noted that, “Global wheat production in 2014 is forecast at some 702 million tonnes, 1.9 percent below last year’s record, but still the second largest ever. Much of the reduction is anticipated to be concentrated in Canada, but smaller harvests are also expected in Australia, Morocco, the Syrian Arab Republic, the Russian Federation, Ukraine and the United States, which would more than offset larger outputs in Argentina, Brazil, India, Mexico and Pakistan [related graph].”

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Climate; Ag Economy; Policy Issues; and, Biotech

Climate Change- Agriculture

Justin Gillis reported in today’s New York Times that, “The effects of human-induced climate change are being felt in every corner of the United States, scientists reported Tuesday, with water growing scarcer in dry regions, torrential rains increasing in wet regions, heat waves becoming more common and more severe, wildfires growing worse, and forests dying under assault from heat-loving insects.

“Such sweeping changes have been caused by an average warming of less than 2 degrees Fahrenheit over most land areas of the country in the past century, the scientists found. If greenhouse gases like carbon dioxide and methane continue to escalate at a rapid pace, they said, the warming could conceivably exceed 10 degrees by the end of this century.”

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Farm Bill; Ag Economy; Climate; Census; Tax Issues; and, Immigration

Farm Bill

Mikkel Pates reported on Friday at Agweek Online that, “The U.S. Department of Agriculture isn’t likely to announce the fine points of the farm bill commodity title any time soon, two key congressional staffers said.

“Because the payment options are decoupled from planting decisions, the programs farmers choose won’t have bearing for 2014 planting. Bart Fischer, chief economist for the Republican-led U.S. House Agriculture Committee, and Matt Schertz, senior professional staff member, spoke to about 150 people in a two-hour ‘farm bill implementation seminar’ in Fargo, N.D., on May 2. The seminar was organized by U.S. Rep. Kevin Cramer, R-N.D.

“The two largely discussed the evolution of the farm bill and spent the last 20 minutes of the meeting discussing implementation. Cramer said farmers and their advisers need to know how to make decisions with multi-year consequences under the farm bill, which took four years to create and was signed into law on Feb. 7.”

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Climate- EPA Water Rule; Biofuels; Farm Bill; Ag Economy; FDA; and, Immigration

Climate, EPA Water Rule

DTN Ag Policy Editor Chris Clayton reported yesterday that, “Demonstrating some of the complications involved in agriculture and climate change, U.S. Agriculture Secretary Tom Vilsack disputed Republican views on the Obama administration’s work with dairy producers to reduce methane while the secretary also dismissed a study raising doubts about carbon emissions from cellulosic biofuels.

“Vilsack spoke at an Earth Day forum on climate change held at Drake University and co-sponsored by the magazine New Republic and the League of Women Voters.

“USDA also used the forum to announce $6 million in grants to 10 universitiesto study the effects of climate change on agriculture. The universities are designated as USDA’s ‘climate hubs’ to help producers adapt to changing climate conditions.”

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Farm Bill; Ag Economy; Biofuels; Regulations; and, Climate

Farm Bill

David Rogers reported yesterday at Politico that, “After the buckets of political blood spilled over food stamps this past year, the Congressional Budget Office has quietly lowered its cost estimate for the nutrition program by $24 billion over the next decade.

“The ‘technical’ adjustment is tucked into a report issued Monday and reflects revisions in how CBO calculates what the average beneficiary receives each month under food stamps, formally known as the Supplemental Nutrition Assistance Program.

It’s just a 3 percent change but more than a little ironic after the fighting over fewer SNAP dollars that dogged the recently enacted five-year farm bill. Indeed, having announced the adjustment, CBO’s report then goes out of its way to say as little as possible about the rest of the farm bill’s costs, even with the drop in grain prices.”

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Ag Economy; Farm Bill- Policy Issues; Climate; and, Data

Agricultural Economy

Donnelle Eller reported in yesterday’s Des Moines Register that, “More than ever, Craig Boot says there’s little room for error this year as Iowa farmers prepare to plant this spring.

“Prices for corn and soybeans are improving, but depending on land and other expenses, they’re close to production costs for many farmers.”

The article indicated that, “‘We’ll take care of the things we need to take care of … but as far as buying something new and green, there won’t be any big-ticket items like there were in the last few years,’ said [Jerry Mohr, who farms in eastern Iowa near Davenport] recently as he applied fertilizer on fields where he will grow corn and seed corn.

“The federal government projects that U.S. farm income this year will drop 26.6 percent from last year, hurt by lower corn and soybean prices.”

“Add to farmer concerns: Drought conditions encompass about three-fourths of the state, and continued cool temperatures have meant lingering frost in much of Iowa,” yesterday’s article said.

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Climate- Policy Issues; COOL; Ag Economy; Biofuels; Immigration; Biotech; and, EPA

Climate Issues- White House Proposal, and Farm Bill Issues

Justin Gillis reported on the front page of today’s New York Times that, “Climate change is already having sweeping effects on every continent and throughout the world’s oceans, scientists reported Monday, and they warned that the problem is likely to grow substantially worse unless greenhouse emissions are brought under control.

The report by the Intergovernmental Panel on Climate Change, a United Nations group that periodically summarizes climate science, concluded that ice caps are melting, sea ice in the Arctic is collapsing, water supplies are coming under stress, heat waves and heavy rains are intensifying, coral reefs are dying, and fish and many other creatures are migrating toward the poles or in some cases going extinct.”

Chapter Seven of the report, which is available here, is titled, “Food Security & Food Production Systems.”

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Ag Economy; Farm Bill; Biofuels; Climate; and, Political Notes

Agricultural Economy

Paul Davidson reported this week at USA Today Online that, “Prices are rising for a range of food staples, from meat and pork to fruits and vegetables, squeezing consumers still struggling with modest wage gains.

Food prices rose 0.4% in February, the most since September 2011, the Bureau of Labor Statistics said Tuesday. Beef and veal shoppers were socked with some of the biggest increases, as prices jumped 4% from January.”

The article explained that, “Droughts, unusually cold winter weather, rising exports and a virus outbreak in the hog population are among the causes of food inflation, which is expected to accelerate in 2014. The Agriculture Department expects grocery store prices to increase as much as 3.5% in 2014, up from 0.9% last year.”

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