FarmPolicy

January 30, 2015

Ag Economy; Trade; Policy; Biotech; and, Regulations

Agricultural Economy

Reuters writer Christine Stebbins reported yesterday that, “U.S. grain farmers are boosting demand for loans from farm banks as five-year lows in crop prices squeeze operating budgets ahead of spring planting, according to a national survey of farm bankers issued by the Federal Reserve Bank of Kansas City on Wednesday.

“‘Reduced profits in the crop sector persisted in the fourth quarter of 2014, leading to a sharp rise in farm-sector borrowing and a slight decline in cropland values,’ the bank said. ‘Should low crop prices [related graph] and high input costs [related graph] persist, crop sector profit margins may weaken further and strain loan repayment capacity in the coming year.’”

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Farm Bill; Trade; Ag Economy; Regulations; and, Political Note

Farm Bill Issues

DTN Ag Policy Editor Chris Clayton reported yesterday that, “Corn farmers may not be looking as closely at the potential government payment for corn this year as some observers might think.

“Despite estimates of $70-per-acre payments for corn farmers in as many as 16 states for this year’s corn crop, the Congressional Budget Office released a new projection Monday showing only 37.5% of corn acreage will enroll in the new Agricultural Risk Coverage-County program.

The CBO forecast appears to run counter to the argument from Midwest agricultural economists that the Agricultural Risk Coverage-County program is the better option for corn farmers.”

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Policy; Ag Economy; Trade; Biotech; and, Regulations

Policy Issues

Jonathan Weisman reported in today’s New York Times that, “The federal budget deficit will continue to inch downward through next year, but even with the economy on an upward trajectory, the government’s red ink will begin to rise in 2017 and expand with an aging population, the Congressional Budget Office said Monday.”

Yesterday’s CBO report indicated that, “Mandatory spending for agricultural programs totaled $19 billion in 2014. The relatively high spending last year included significant payments for livestock disaster assistance for drought-related losses since 2012 and crop insurance payments for crop losses in 2013. Spending for agricultural support is projected to average $15 billion per year between 2015 and 2025 based on the assumption (specified in the Deficit Control Act) that the current programs that are scheduled to expire during that period will be extended” (at page 72).

“Technical updates led CBO to boost its projections of outlays for several other mandatory programs, by $4 billion for 2015 and by $48 billion over the 2015–2024 period. CBO now projects that spending for the agricultural programs of the Commodity Credit Corporation will be $18 billion higher over the 2015–2024 period than it projected in the August baseline, primarily because of lower estimated crop prices and higher estimates of spending for livestock disaster assistance” (at page 113).

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Policy Issues; Ag Economy; Trade; and, Biofuels

Policy Issues

A recent update at the Red River Farm Network Online indicated that, “Minnesota Congressman Collin Peterson, who is the ranking member on the House Agriculture Committee, says the heavy lifting is done for the 2014 farm bill. ‘We’ve got everybody on board now with a position that it is not going to be reopened so now the issue is making sure it is implemented correctly.’ While it won’t be reopened, Peterson says the farm bill will likely be subject to criticism once the costs become known. ‘I think people are going to be surprised at how much this is going to end up costing, which is what I was afraid of at the time we passed the bill,’ said Peterson, ‘For example, Iowa and, probably, Minnesota look like they’re going to sign up for the ARC so you’re going to have corn farmers that were getting $20 an acre in direct payments that are going to get $90 an acre and that will cause a commotion.’”

The full interview with RRFN’s Mike Hergert and Rep. Peterson is available here (MP3- 8:00).

The RRFN update also noted that, “South Dakota Senator John Thune was concerned about retaining the target price, which is now known as the reference price, program when the farm bill was written. ‘With commodity prices now falling, I think people may start farming for the farm program instead the market,’ Thune told RRFN [MP3], ‘I was concerned about that and I think that will increase dramatically the cost of the farm bill.’ Thune worries that may create the temptation to reopen the farm bill and ‘I’m very concerned about that.’”

And recall that late last week, Mike Hergert interviewed House Ag Committee Chairman Mike Conaway (R., Tex.), who noted in part that, “We’ll take an approach that says you want to spend $80 billion a year on food stamps? Let’s take a look at that and let’s see what works, what doesn’t work, and let’s understand the program. Let’s reevaluate how that program is considered successful by looking at how quickly folks can get off the program, back on their own two feet, taking care of their own families, as opposed to the current model that says, you know, it’s successful the longer you stay on it. So we’ll be going through that.”

Mr. Hergert’s full interview with Chairman Conaway is available here (MP3- 6:00); see also this photo from the House Ag Committee’s Instagram webpage with a caption that noted: “I had a blast talking with Mike Hergert with the #RedRiver #Farm Network. Ag reporters like Mike who ask good questions & get the facts right provide a service to our democracy & specifically to our #farmers & #ranchers. The farmers in #NorthDakota & #Minnesota are lucky to have Mike working for them

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

Trade

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.”

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Video: Crop Insurance Must be Viable

Categories: Farm Bill

From National Crop Insurance Services- Private companies are integral to crop insurance’s future because they shoulder risk that would otherwise be borne by taxpayers and because they maintain the system used to efficiently provide assistance to farm families following disasters.

However if the business does not remain viable, private-sector participation could wane, which would weaken America’s farm policy, according to a new video released today by National Crop Insurance Services (NCIS).

“Key to this viability is a reasonable rate of return for insurers on the infrastructure they built to deliver farmers’ most important risk management tool,” the video explained. “An adequate return on investment enables insurance providers to routinely reinvest in technology, infrastructure efficiency, and service improvements for farmers and ranchers. Unfortunately, adequate returns don’t always happen.”

Among the factors that have made crop insurance less viable in recent years:

· Weather disasters and crop price volatility since 2011 have resulted in record loss payments from crop insurance providers;
· $1.2 billion a year in federal funding was cut in 2008 and 2011; and
· Farm policy opponents are targeting crop insurance for further funding reductions.

The 2014 Farm Bill took steps towards improving crop insurance by expanding coverage, by bringing new customers into the system, and by providing new tools to continually minimize waste, fraud, and abuse.

Tom Zacharias, president of NCIS, applauded Congress’ actions and said it will be important to continue making improvements by reducing regulatory burdens, avoiding further funding cuts, and keeping crop insurance actuarially sound. And he believes that all Americans have a stake in the future of crop insurance.
“After all, not everyone farms, but everyone eats. So everyone depends on a strong farm policy,” the video concluded.

The NCIS video, which can be viewed here, is the last in a three-part series dedicated to the key policy attributes essential to crop insurance’s continued success. Previous pieces examined the importance of making crop insurance widely available and affordable to farmers.

Policy; Trade (Cuba); Ag Economy; and, Regulations

Policy Issues

Michael Moss reported on the front page of today’s New York Times that, “At a remote research center on the Nebraska plains, scientists are using surgery and breeding techniques to re-engineer the farm animal to fit the needs of the 21st-century meat industry. The potential benefits are huge: animals that produce more offspring, yield more meat and cost less to raise.

“There are, however, some complications.

Pigs are having many more piglets — up to 14, instead of the usual eight — but hundreds of those newborns, too frail or crowded to move, are being crushed each year when their mothers roll over. Cows, which normally bear one calf at a time, have been retooled to have twins and triplets, which often emerge weakened or deformed, dying in such numbers that even meat producers have been repulsed.”

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Policy Issues; Agricultural Economy; Immigration; and, Regulations

Policy Issues

Todd Neeley reported yesterday at DTN that, “USDA is changing the way it funds conservation.

“Calling it a ‘historic moment’ in conservation, U.S. Secretary of Agriculture Tom Vilsack Wednesday pointed to the way $372.5 million in funding would be spent as something unlike anything USDA has undertaken. Funds approved for some 115 conservation projects in all 50 states are aimed at both national- and local-scale projects. Each project includes on average 11 partners, with some larger projects including as many as 46 partners.

“The announcement comes at a time when Des Moines Water Works in Iowa announced it was suing three nearby counties for ongoing nutrient problems in the city’s drinking water system. The DMWW has claimed those counties have not done enough to cut back nutrient runoff, costing the city’s water ratepayers some $7,000 a day to filter the water.”

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Policy Issues; Drought; Trade; Immigration; Biotech; Ag Economy; and, Political Notes

Policy Issues

David Pierson reported in today’s Los Angeles Times that, “If your eggs seem a little pricier, consider the recent changes on Frank Hilliker’s ranch.

“In the last six months, the third-generation egg farmer in central San Diego County has reduced his flock by half and embarked on a $1-million overhaul of his henhouses to make them more spacious. Customers are now paying about 50% more for a dozen eggs from Hilliker’s family business at around $3 a carton.

It’s all to comply with a landmark animal welfare law that takes effect in California on New Year’s Day. Voters overwhelmingly approved Proposition 2 in 2008 to effectively abolish the close confinement of farm animals in cramped cages and crates — a practice that animal advocates say causes needless suffering and boosts the likelihood of salmonella contamination.”

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Agricultural Economy; CFTC (MF Global); Policy; and, Budget Issues

Agricultural Economy

Reuters writers Polina Devitt and Maha El Dahan reported earlier this week that, “Russia’s grain exports have stopped due to curbs brought in to protect domestic supply, putting big deals at risk, an influential farm lobby group said on Wednesday.”

The article indicated that, “Moscow imposed informal grain export controls with tougher quality monitoring and limits on railroad loadings earlier this month, as it tackles a financial crisis linked to plunging oil and Western sanctions.

“‘Since last Thursday not a single vessel, which had been due to sail under contracts, has left,’ Arkady Zlochevsky, the head of Russia’s Grain Union, the farmers lobby group, said.

“Officials also plan to impose duty on grain exports. Zlochevsky said its exact level was an unimportant detail, as he was sure it would be prohibitive.”

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Policy Issues; Cuba; Agricultural Economy; and, Regulations

Policy Issues

DTN Ag Policy Editor Chris Clayton reported yesterday that, “Congress wants USDA to operate like a business, but Agriculture Secretary Tom Vilsack is complaining that Congress is willing to spend $1.5 million on outside studies to duplicate work his department has already finished.

“Vilsack, in a phone interview with DTN on Thursday, expressed his frustration with some of the policy riders in the $1.1 trillion funding bill Congress approved. The policy restrictions ranged from blocking the secretary from creating a new beef checkoff to preventing the Farm Service Agency from eliminating its smallest offices nationally.

“‘I would say that it’s somewhat puzzling when Congress says ‘operate USDA like a business’ and then doesn’t give you the tools and flexibility to do so,’ the secretary said.”

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Cuba Policy; Trade Issues; Biotech (Labeling); Ag Economy; and, Policy Issues

Cuba Policy

Karen DeYoung and Carol Morello reported on the front page of today’s Washington Post that, “In the wake of President Obama’s historic decision to mend diplomatic ties with Cuba, U.S. businesses and potential tourists scrambled to figure out what new opportunities will be available on the island and to position themselves at the head of the line.

“The political conversation sparked by Obama’s Wednesday announcement grew in both volume and dogmatism. Some hailed the opening as the dawn of pragmatic diplomacy. Others denounced it as a presidential sellout.”

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Tax Extenders- Budget; Policy Issues; Trade; Ag Economy; and, Regulations

Tax Extenders- Budget

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.

Congress passed the bill Saturday and Obama signed the package into law without ceremony Tuesday night, the White House announced.”

Mr. Memoli stated that, “The Senate formally adjourned shortly before midnight. The House, which has already wrapped up its work, will follow suit this week.”

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Ag Economy; Biotech; Biofuels; Policy Issues; and, Budget Developments

Agricultural Economy

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.”

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Budget; Policy Issues; and, the Agricultural Economy

Budget

Ashley Parker and Jonathan Weisman reported in today’s New York Times that, “Congressional leaders reached a deal Tuesday on a more than $1 trillion spending package that would fund most of the federal government through the current fiscal year.

“But because negotiations on the package dragged over policy details, House lawmakers also prepared to move on a short-term spending measure that would avert a government shutdown if Congress cannot pass the larger bill by Thursday, when the current funding expires.”

The Times article explained that, “The spending bill would fund nearly all of the federal government through September 2015, except for the Department of Homeland Security, which it would fund only through February, in retaliation for President Obama’s unilateral action to defer the deportation of as many as five million undocumented immigrants. Congressional Republicans plan to take up funding for the agency — which has primary responsibility for carrying out the president’s immigration directive — early next year, when they will control both chambers of Congress and believe they will have more leverage.”

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Ag Economy; Budget- Immigration; Policy Issues; and, Biofuels

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 angsteven paranoia — over a historic bid to link the United States and the 28-nation European Union in the world’s largest free-trade deal.”

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