“Ethanol makers are bracing for a drop in earnings as cheap crude pushes down the prices they fetch from refiners to blend the corn-based fuel additive into gasoline. Ethanol producers also face a recent jump in the price of corn, their main raw material.
“Falling profit margins for the $40 billion U.S. ethanol industry may cause some companies to scale back production in 2015, analysts and industry executives say. Still, many observers think ethanol demand may remain steady or even rise if cheap gasoline spurs U.S. motorists to drive more, tempering the hit to ethanol earnings.”
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.”
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.”
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.
An update yesterday from the Food and Agriculture Organization of the United Nations stated that, “Latest indications confirm that world cereal production will reach an all-time record of more than 2.5 billion tonnes in 2014.
“Buoyed by bumper crops in Europe and a record maize output in the United States of America, this year’s cereal output should reach 2.532 billion tonnes, including rice in milled terms, or 0.3% higher than 2013, according to FAO’s latest Crop Prospects and Food Situation Report.
“The record global cereal harvest in 2014 will outpace projected world cereal utilization in 2014/15, allowing stocks to rise to their highest level since 2000 and pushing the worldwide stock-to-use ratio, a proxy measure for supply conditions, to rise to 25.2 percent, its highest level in 13 years, according to FAO.”
Yesterday, lawmakers on Capitol Hill held three separate hearings on important topics germane to U.S. farm and food policy. The hearings highlighted issues associated with biotechnology, biofuels and the Commodity Futures Trading Commission.
Biotechnology, GMO Food Labeling
AP writer Mary Clare Jalonick reported yesterday that, “The food industry is likely to find a receptive Congress come January in its fight against mandatory labeling of genetically modified foods.
“Republicans and Democrats on a House Energy and Commerce subcommittee questioned Wednesday whether requiring a label on any packaged food including genetically modified organisms — or foods grown from seeds engineered in labs — would be misleading to consumers since there is little scientific evidence that such foods are unsafe. The food industry has made a similar argument.
“Congress has shown increasing interest in getting involved in the labeling debate as the food industry has faced a potential patchwork of state laws requiring it. The hearing previewed GOP efforts to push legislation next year that would reaffirm that such food labels are voluntary, overriding any state laws that require them. The bill, introduced by Rep. Mike Pompeo, R-Kansas, has the backing of the food industry.”
Agricultural Economy- Trade Issues- Biotech, and Transportation News
Anthony Faiola reported on the front page of today’s Washington Post that, “On a velvety green patch of the French countryside, organic farmer Jean Cabaret gave a little shudder. A looming trade deal with the United States, he fears, may make his worst culinary nightmare come true: an invasion of Europe by American ‘Frankenfoods.’
“‘Hormone-boosted beef. Chlorine-washed chicken. Genetically altered vegetables. This is what they want for us,’ warned Cabaret, standing before his majestic herd of free-range cows. ‘In France, food is about pleasure, about taste. But in the United States, they put anything in their mouths. No, this must be stopped.’
“In Europe, this is a season of angst — even paranoia — over a historic bid to link the United States and the 28-nation European Union in the world’s largest free-trade deal.”
Jacob Bunge and Jesse Newman reported in today’s Wall Street Journal that, “Illinois farmer Darrel Gingerich harvested a huge corn crop this autumn thanks to near-flawless weather. Now, he is stashing it away.
“‘I didn’t sell any more than we had to in order to cover our costs for this year,’ the 53-year-old said.
“Mr. Gingerich is one of many Midwestern farmers who decided to hold on to their crops as they watched prices languish over the summer. Their collective strategy has since paid off, helping to fan a 15% rise in corn futures and a 10% jump in soybean futures since September that is also the result of a slow U.S. harvest and gains in other agricultural markets. Corn’s gain over the roughly two-month harvest period of October and November was its largest for that span in eight years and second largest in more than three decades, while soybeans’ climb was the biggest in five years.”
Ashley Parker reported in today’s New York Times that, “Congressional Republicans returning to Washington on Monday found themselves facing a treacherous 10 days as they try to balance their desire to fight President Obama’s executive action on immigration with the political imperative not to shut down the government.
“Congress must pass a broad spending bill before Dec. 11 to prevent a government shutdown. But Mr. Obama’s executive action last month, which could allow up to five million people now in the country illegally to live and work without threat of deportation, has inflamed Republicans and complicated their calculation over what has often been a routine spending fight.”
The U.S. Department of Agriculture’s Economic Research Service (ERS) updated its 2014 Farm Sector Income Forecast yesterday, and noted that, “Net farm income is forecast to be $96.9 billion in 2014, down 21.1 percent from 2013’s estimate of $122.8 billion. The 2014 forecast would be the lowest since 2010, but would remain $16 billion above the previous 10-year average ($80.8 billion) [related graph].”
Chris Casteel reported yesterday at The Oklahoman (Oklahoma City) Online that, “Rep. Frank Lucas spent several years working his way to the top spot on the House Agriculture Committee. Once he became chairman, in 2011, he fought for three years to get a sweeping farm bill passed; it was arguably the most significant legislation in the past two years that made it through both houses and got signed into law.
“The western Oklahoma rancher will lose his chairmanship in the next Congress, which begins in January, because of the term limits House Republicans impose on those positions. But he isn’t bemoaning the loss of power and prestige. He said his blood pressure has improved considerably.”
The article added that, “As for the Agriculture Committee, Lucas said that he’ll remain active but won’t bug the next chairman, Texas Republican Mike Conaway.
“‘I would like to give my successor an opportunity to develop his own perspective,’ Lucas said.”
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 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.”
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.”
Late last week, Ron Hays, of The Oklahoma Farm Report and Radio Oklahoma Network, spoke with House Ag Committee Chairman Frank Lucas (R., Okla.) about Farm Bill issues.
An audio replay and summary of the Chairman’s remarks from Thursday can be found here, while an unofficial FarmPolicy.comtranscript of the conversation with Ron Hays and Chairman Lucas is available here.
The Reuters article explained that, “But drought conditions in California and other states could further drive up prices of fresh produce and beef, the USDA warned.
“The agency forecast wholesale pork prices to jump by 10 percent to 11 percent in 2014, hurt by declining supplies after a virus has killed some 7 million piglets in the past year.
“Wholesale beef prices are forecast to jump by 8 percent to 9 percent in 2014, although rising imports are helping to offset some of the decline in domestic supplies.”
Friday’s article added that, “‘The ongoing drought in California could potentially have large and lasting effects on fruit, vegetable, dairy and egg prices, and drought conditions in Texas and Oklahoma could drive beef prices up even further,’ the USDA said.”