FarmPolicy

September 19, 2014

Policy Issues; Ag Economy; and, Political Notes- Friday

Policy Issues

Tennille Tracy and Thomas M. Burton reported in today’s Wall Street Journal that, “The White House unveiled new measures on Thursday to try to preserve the effectiveness of infection-fighting drugs as strains of bacteria become increasingly resistant to the existing arsenal of antibiotics.

“The moves signal a growing concern over drug-resistant infections, which are linked to two million illnesses and 23,000 deaths in the U.S. each year, according to the Centers for Disease Control and Prevention. Some infections are almost entirely untreatable because the appropriate antibiotics have been rendered powerless.”

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

Policy Issues

A news release yesterday from the House Ag Committee stated that, “Today, Chairman Frank Lucas held a public hearing to review the implementation of state pilot projects under the Supplemental Nutrition Assistance Program (SNAP) of the Agricultural Act of 2014. SNAP is designed primarily to increase the food purchasing power of eligible low-income households to help them buy a nutritional, low-cost diet. One of the reforms in the 2014 Farm Bill included new Employment and Training pilot projects. They allow for up to ten states to develop and test methods to help adults secure employment and job training and reduce their dependency on SNAP.”

Chairman Lucas noted at yesterday’s hearing that, “The Agricultural Act provides up to ten states, with up to $200 million, to operate pilot projects designed to help SNAP recipients prepare for and go to work. The law explains that the approved pilot projects must cover a range of geographic areas, include a mix of voluntary and mandatory participation, and include an assortment of methods designed to promote work.”

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Policy Issues; Ag Economy; Biotech; and, Regulations

Policy Issues

Emma Dumain, Megan Scully, and Matt Fuller reported yesterday at Roll Call Online that, “After postponing consideration last week of a stop-gap spending measure to fund the government past Sept. 30, House GOP leaders are poised in the days ahead to bring that same piece of legislation to the floor.”

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

Biotech

Neil Hume and Gregory Meyer reported on Friday at The Financial Times Online that, “Cargill, one of the largest suppliers of agricultural products and food, is seeking damages from Syngenta in a state court in the US over a biotech seed it claims has almost brought the country’s corn trade with China to a halt.

“Late last year, China started to turn away imports of US corn on the grounds they could contain a genetically modified seed that had not been approved for use in the country.

“The product called Agrisure Viptera had been developed by Syngenta and was designed to protect crops from common pests.”

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Ag Economy; Policy Issues; and, Political Notes

Agricultural Economy

Yesterday’s Crop Production report from the USDA’s National Agricultural Statistics Service (NASS) noted that, “Corn production is forecast at 14.4 billion bushels, up 3 percent from both the August forecast and from 2013. Based on conditions as of September 1, yields are expected to average 171.7 bushels per acre, up 4.3 bushels from the August forecast and 12.9 bushels above the 2013 average. If realized, this will be the highest yield and production on record for the United States [related graph].”

The report added that, “Soybean production is forecast at a record 3.91 billion bushels, up 3 percent from August and up 19 percent from last year. Based on September 1 conditions, yields are expected to average a record high 46.6 bushels per acre, up 1.2 bushels from last month and up 3.3 bushels from last year [related graph].”

Incorporating the NASS production estimates, the World Agricultural Outlook Board yesterday also released its monthly World Agricultural Supply and Demand Estimates (WASDE) report.

A summary of key variables for corn from yesterday’s WASDE report is available here, while a soybean summary can be found here.

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Ag Economy; Biofuels; and, Policy Issues

Agricultural Economy

AP writer Joan Lowy reported yesterday that, “Senators and shippers complained Wednesday that widespread delays in freight rail shipments are hurting a wide array of industries and driving some companies out of business, and they expressed doubt that the railroad companies are doing all they can to fix the problem.

“The delays, which escalated late last year and continued through the spring and summer, appear to be the result of too few rail cars and too much demand from shippers, officials representing the agriculture, auto and chemical industries told a hearing of the Senate Commerce, Science and Transportation Committee. Lawmakers displayed a photo of a giant mound of wheat standing in the open because North Dakota farmers can’t get a railroad company to ship it.

Shipping rates are 90 percent higher than they were in 2002, but service has drastically diminished, said Calvin Dooley, president of the American Chemistry Council.”

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Policy Issues; Ag Economy; and, Regulations

Policy Issues

AP writer Steve Karnowski reported yesterday that, “The U.S. Department of Agriculture announced $328 million in funding Monday to protect and restore farmlands, grasslands and wetlands across the country.

The initiative, using money provided in the new five-year farm bill, will buy conservation easements from farmers to protect the environment, help wildlife populations and promote outdoor recreation, the USDA said in its announcement. The agency selected 380 projects nationwide covering 32,000 acres of prime farmland, 45,000 acres of grasslands and 52,000 acres of wetlands.”

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Policy Issues; Ag Economy; Immigration; Regulations; and, Political Notes

Policy Issues

Michael R. Crittenden reported in today’s Wall Street Journal that, “Lawmakers returning to Capitol Hill on Monday hope to quickly deal with a government funding measure and several other must-address items before decamping to the campaign trail ahead of November’s midterm elections.

“After a five-week summer break, legislators have given themselves a tight window to pass a stopgap measure to keep the government running beyond Sept. 30, as well as decide how to handle other-deadline driven issues such as the U.S. Export-Import Bank and a long-standing moratorium on Internet access taxes.”

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Ag Economy; Policy Issues; and, Political Notes

Agricultural Economy

Robert Wright reported yesterday at The Financial Times Online that, “Senior executives from two of North America’s biggest rail operators on Thursday pleaded with regulators not to force them to take other operators’ trains on their networks in areas of the northern plains plagued by severe freight delays.

“The executives from BNSF, operator of the US’s second-biggest rail network, and Canadian Pacific were speaking at a Surface Transportation Board field hearing in Fargo, North Dakota.”

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

Agricultural Economy

Reuters writer Naveen Thukral reported today that, “Chicago corn futures slid for a third consecutive session on Wednesday to their lowest in three weeks, while soybeans eased after a U.S. government report showed further improvement in crop conditions.”

The article pointed out that, “U.S. corn was rated 74 percent good-to-excellent, up from 73 percent a week ago and 56 percent at this time of last year, according to the U.S. Department of Agriculture.

Soybean conditions were 72 percent good-to-excellent, up from 70 percent a week ago and 54 percent last year.”

Today’s article also noted that, “Commodity brokerage INTL FCStone on Tuesday raised its forecast of U.S. 2014 corn production to 14.595 billion bushels, from 14.455 billion in its previous monthly report.

“The firm raised its corn yield estimate to 174.1 bushels per acre, from 172.4 last month.

“It raised its forecast of U.S. 2014 soybean production to 4.0 billion bushels, from its August forecast of 3.865 billion. The firm forecast the average soybean yield at 47.6 bushels per acre, up from its August estimate of 46.0 bushels.”

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Farm Bill; Ag Economy; and, Political Notes

Farm Bill

Neil Shah reported in today’s Wall Street Journal that, “After soaring in the years since the recession, use of food stamps, one of the federal government’s biggest social-welfare programs, is beginning to decline.

“There were 46.2 million Americans on food stamps in May, the latest data available, down 1.6 million from a record 47.8 million in December 2012. Some 14.8% of the U.S. population is on the Supplemental Nutrition Assistance Program, or SNAP, down from 15.3% last August, U.S. Department of Agriculture data show.

Food-stamp use remains high, historically speaking. The share of Americans on the benefit—which lets them buy basics like cereal and meat and treats like cookies, but not tobacco, alcohol or pet food—is above the 8% to 11% that prevailed before the financial crisis.”

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Ag Economy; Policy Issues; Immigration; Climate; and, Political Notes

Agricultural Economy

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.”

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

Farm Bill- Policy Issues

Chris Clayton reported yesterday at DTN that, “Dairy farmers can sign up for the new federal Dairy Margin Protection Program starting Tuesday, Sept. 2.

“The Market Protection Program is an insurance option for dairy farmers that is being run through the Farm Service Agency. The Margin Protection Program will pay indemnities to farmers when the difference between the price of milk and feed costs falls below a coverage level selected by the farmer.

“Enrollment begins Tuesday and will run until Nov. 28 for the 2014 and 2015 calendar years.”

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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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Ag Economy; Rural America; Farm Bill; and, Biotech

Agricultural Economy

An update yesterday from the Federal Reserve Bank of Minneapolis stated that, “Farm incomes fell from April through June, according to results of the Minneapolis Fed’s second-quarter (July) agricultural credit conditions survey. Capital spending decreased, while household spending held roughly steady, lenders responding to the survey indicated. Falling incomes pushed the rate of loan repayment down slightly, while renewals and extensions increased, though most lenders reported that both were flat. Respondents noted further signs that cropland values were moderating, with prices falling in some areas, though the volume of land sales appears to have decreased. The third-quarter outlook is for continued contraction, with survey respondents predicting further decreases in income, capital expenditure and household spending.”

Yesterday’s update added that, “Recent quarterly surveys have indicated that land prices have moderated following a multiyear period of strong growth, and the second-quarter results continue this trend; values decreased in some cases, along with cash rents. The average value for nonirrigated cropland in the district fell by almost 2 percent from a year earlier, according to survey respondents. Irrigated land fell slightly more (between 2 percent and 3 percent), while ranchland values increased 4 percent, likely owing to strong livestock and dairy prices. The district average cash rent for nonirrigated land fell 6 percent from a year ago, more than the decrease in value. Rents for irrigated land decreased 4 percent, while ranchland rents, which had continued growing in recent quarters, fell by nearly 2 percent.”

The Minneapolis Fed update also noted that, “Not surprisingly, expectations are slightly pessimistic, on balance. Across the district, 52 percent of lenders predicted that farm income will decrease in the third quarter of 2014, compared with 12 percent forecasting increases.”

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

Agricultural Economy

AP writer David Pitt reported on Saturday that, “In an interview Friday with The Associated Press, U.S Secretary of Agriculture Tom Vilsack gave his views on topics ranging from low commodity prices this year to dysfunction in Washington and his future.

“Vilsack spoke after touring Iowa Choice Harvest, a Marshalltown company that processes Iowa-grown food.”

Excerpts from the AP “Q and A” article included: “With corn and soybean prices largely below the cost of production are you concerned about farm profitability?

“Many farmers throughout the United States have forward contracts where they’re going to get paid maybe $4 or $5 for a bushel of corn, maybe $13 or $14 for a bushel of soybeans so I think you have to be careful not to conclude that because prices have come down that there isn’t going to be profitability in agriculture.

You also have to recognize as these prices have come down it has created opportunities for other producers, livestock producers in particular, who have been challenged over the course of the last many years with high feed costs now see their cost of doing business coming down. They’re looking at record prices for beef and for pork and we’re also seeing an expanded export market.

Also, that’s precisely the reason we have a farm bill. It creates the safety net that if the prices come down below the price of doing business we have mechanisms in place to ensure that folks can still stay in business.”

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