October 25, 2014

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


Tim Devaney reported yesterday at The Hill Online that, “The Environmental Protection Agency’s (EPA) water rule passed a crucial test Thursday, gaining the approval of the agency’s internal review board.

“The EPA’s Science Advisory Board noted in a peer review of the rule that there is ‘strong scientific support’ for the agency’s proposed Waters of the U.S. regulation.”


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

Agricultural Economy

Marcia Zarley Taylor reported yesterday at the DTN Minding Ag’s Business blog that, “Given the abrupt drop in commodity prices this year, ‘the solvency of some farm customers could shift quickly,’ David Lynn, a senior vice president for Farm Credit Mid-America cautioned ag economists attending a conference in Louisville this month.

“Indeed, University of Illinois economists now estimates 2014 gross revenues in northern Illinois will run about $300/acre below the 2011-2013 average of $1,100/acre. That’s even counting robust yields, which won’t totally compensate for the steep collapse in corn prices this season. Projections for 2015 look worse, although it’s still early in the process.

“Lynn urges his association’s 97,000 farm customers to be proactive about this reversal of fortune and to develop habits that will persuade lenders they remain good long-term risks, even if potential 2014 and 2015 losses reflect a temporary setback.”


Farm Bill; Ag Economy; and, Regulations

Farm Bill

Chris Clayton reported yesterday at DTN that, “A provision to exclude yields from Actual Production History for farmers affected by severe weather will go into effect for some select spring crops in 2015, USDA announced Tuesday.

USDA’s rollout comes too late to boost insurance coverage for winter-wheat producers who have been some of the most vocal proponents of the provision. Some wheat growers could pursue litigation over the department’s delayed implementation.

“The provision for the 2014 farm bill essentially waives Actual Production History yields that collapsed due to extreme weather. The APH exclusion would adjust a farmer’s actual yields for crop insurance in counties where the average planted-acre yield tumbled at least 50% below a 10-year county average. Under the provision, farmers could exclude yields for up to six years of crops. Growers in contiguous counties would also qualify.”


Trade Issues- Ag Economy; Policy Issues; Biotech; Regs; and, Political Notes

Trade Issues (COOL)- Agricultural Economy

DTN Ag Policy Editor Chris Clayton reported yesterday that, “Congress and the Obama administration will once again have to decide whether labeling meat with the country of origin is worth the trade headaches it causes.

“The World Trade Organization publicly released its latest ruling Monday on the U.S. Country of Origin Labeling law and rule by USDA. The global trade panel found that changes made to COOL in 2013 by USDA actually made livestock trade between the U.S., Canada and Mexico more difficult.

The ruling is a victory not only for Canada and Mexico, but U.S. meatpackers that have long opposed labeling the origin of meat products at retailers. Opponents of the law urged both the Obama administration and Congress to eliminate the rule or change it.”


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

Policy Issues

DTN Ag Policy Editor Chris Clayton reported on Friday that, “Without giving any indication how the next World Trade Organization ruling on Country of Origin Labeling will come down, Agriculture Secretary Tom Vilsack said Thursday the COOL decision could become public within a few weeks, if not days.

“Vilsack spent Thursday with his Mexican counterpart, Enrique Martinez, secretary of fisheries and agriculture, showing Martinez some climate research facilities at Iowa State University before holding a joint forum at the 2014 World Food Prize Borlaug Dialogue.

“In a press conference late Thursday afternoon, Martinez said through an interpreter that the ruling on COOL would affect producers in both countries. Martinez also noted the U.S. Congress created the law to label the country of origin for meat.”


Ag Economy; Farm Bill; Regulations; and, Climate

Agricultural Economy

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.”


ERS: Family farms dominate U.S. agriculture


From USDA’s Economic Research Service (ERS)- “The United Nations has designated 2014 as the ‘International Year of Family Farming’ to highlight the potential family farmers have to help feed the world. But what is a family farm? USDA’s [ERS] defines family farms as those whose principal operator, and people related to the principal operator by blood or marriage, own most of the farm business. Under the ERS definition, family farms represent 97.6 percent of all U.S. farms and are responsible for 85 percent of U.S. farm production. Other definitions rely on who supplies the labor. Large farms often rely heavily on hired labor, but farm families who own the farm and provide most of the farm’s labor still account for 87.1 percent of U.S. farms, with 57.6 percent of farm production. Some farms also hire firms to perform some farm tasks. If we account for the labor provided by those firms, family farms that provide most of the labor used on the farm still account for 86.1 percent of farms and nearly half of production. This chart can be found in ‘Family Farming in the United States‘ in the March 2014 Amber Waves.”


Ag Economy; Farm Bill; Biotech; and, Regulations

Agricultural Economy

Reuters writers Tom Miles and Krista Hughes reported yesterday that, “India broke World Trade Organization rules by blocking imports of U.S. poultry and other farm products because of unsubstantiated bird flu fears, a WTO dispute panel ruled on Tuesday, potentially opening up an estimated $300 million a year export market for the United States.

“India had claimed its import restrictions, imposed in 2007, were justified by international rules on animal health, but the panel agreed with the United States and found that India’s measures were not based on international standards and were discriminatory.

“‘This is a major victory for American farmers,’ said U.S. Trade Representative Michael Froman, who termed the poultry decision ‘the fourth major WTO victory’ for the United States this year. ‘Our farmers produce the finest, and safest, agricultural products in the world.’”


Ag Economy; Policy Issues; Biofuels; Biotech; and, Climate

Agricultural Economy

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.”


Ag Economy; Farm Bill; Regulations; and, Immigration

Agricultural Economy

On Friday, USDA’s National Agricultural Statistics Service (NASS) released its Crop Production report, which indicated that, “Corn production is forecast at 14.5 billion bushels, up less than 1 percent from the previous forecast and up 4 percent from 2013. Based on conditions as of October 1, yields are expected to average 174.2 bushels per acre, up 2.5 bushels from the September forecast and 15.4 bushels above the 2013 average. If realized, this will be the highest yield and production on record for the United States [related graph].”

The NASS report added that, “Soybean production is forecast at a record 3.93 billion bushels, up slightly from September and up 17 percent from last year [related graph]. Based on October 1 conditions, yields are expected to average a record high 47.1 bushels per acre, up 0.5 bushel from last month and up 3.1 bushels from last year.”

Also on Friday, the World Agricultural Outlook Board (WAOB) released its monthly World Agricultural Supply and Demand Estimates (WASDE) report, which incorporated the NASS production report.

The WASDE report included this overview table of corn supply and demand variables, and stated that, “Corn ending stocks are raised 79 million bushels to 2,081 million. The projected range for the season-average farm price is lowered 10 cents on each end to $3.10 to $3.70 per bushel.”

Likewise, Friday’s WAOB report included this overview table of soybean variables, and explained that, “U.S. soybean exports and crush for 2014/15 are unchanged this month. Soybean ending stocks are projected at 450 million bushels, down 25 million on reduced supplies. Prices for soybeans, soybean oil, and soybean meal are unchanged.”

With respect to wheat, Friday’s WASDE update added that, “The projected range for the 2014/15 season-average farm price is narrowed 5 cents on both the high and low end to $5.55 to $6.25 per bushel.”


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

Agricultural Economy

Reuters News reported yesterday that, “World food prices fell to their lowest since August 2010 in September as prices of all major food groups except meat dropped, led by a sharp decline in dairy prices, the UN’s food agency said on Thursday.

“The Food and Agriculture Organisation’s (FAO) price index, which measures monthly price changes for a basket of cereals, oilseeds, dairy, meat and sugar, averaged 191.5 points in September, down 5.2 points or 2.6 percent from August.

“The figure was 12.2 points or 6.0 percent below September 2013 [related graph].”


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

Agricultural Economy

Reuters writer Karl Plume reported yesterday that, “The top U.S. rail regulator ruled on Wednesday that all Class 1 railroads operating in the United States must provide detailed weekly freight service reports, a decision that cited months of congestion that has hit the grain and power industries particularly hard.

Carriers must submit detailed data on average train speeds, dwell times and other service metrics on a temporary basis beginning on Oct. 22, the Surface Transportation Board said. They must also jointly submit a narrative summary of operating conditions at the Chicago gateway, a busy rail hub that is a choke point in the national network.

“The ruling was a victory for the agriculture and power industries, which have argued for more transparency from rail carriers about the products they carry on their networks. Some have accused railroads of prioritizing crude shipments from shale oil fields in North Dakota over grain and coal, a charge the carriers deny.”


Policy Issues; Ag Economy; and, Regulations

Policy Issues- Farm Bill

New York Times political correspondent Nicholas Confessore penned an article that was posted yesterday at the paper’s webpage titled, “How School Lunch Became the Latest Political Battleground” (the article is from the October 12 edition of the Sunday Magazine).

A twitter generated summary of the lengthy and detailed article provided this general overview: “Inside the Obama administration’s standoff with Republicans, the food industry and the nation’s lunch ladies over the future of the cafeteria.”

Meanwhile, Gary Schnitkey, Jonathan Coppess, Nick Paulson (University of Illinois) and Carl Zulauf (Ohio State University) indicated yesterday at the farmdoc daily blog (“Information for 2014 Farm Bill Decisions”) that, “Deadlines for making commodity program decisions for each Farm Service Agency farm are well into the future. February 27, 2015 is the deadline for yield updating and acre reallocation decisions. March 31, 2015 is the deadline for program choice decisions. Market outlook and projected program payments will be clearer as deadlines approach. As a result, there is no need to rush these decisions. However, obtaining the necessary information to make decisions for each farm is a good task for now. FSA sent a letter in August containing current base acres, program yields, and acres planted from 2009 through 2012. In addition, yields from 2009 through 2013 will be needed when making commodity program decisions.

“In August, the FSA sent a letter to each landowner and farm operator having an interest in an FSA farm (click here for a video describing the letter). Following the letter, there was a series of data sheets giving current base acres, program yields, and planted acres for each FSA farm.”

Yesterday’s farmdoc update added that, “More detail on information needs is provided in Step 1 of the ARC-PLC Decision Steps. Currently, efforts focused on two areas will have value. First, make sure that FSA documents are available and have the correct information. Second, determine and document 2009 through 2013 yields for each FSA farm.”

Note also that the farmdoc team will be hosting a free webinar Friday on Farm Bill Decision Aids and Programs.


Policy Issues; Ag Economy; Biotech; Biofuels; Regs; and, Immigration

Policy Issues

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.”


Policy Issues, Ag Economy; and, Regulations

Policy Issues

Matthew Patane and Donnelle Eller reported on the front page of Saturday’s Des Moines Register that, “A California law that bars eggs from states that fail to provide roomier cages for hens could lead to beef, pork and other Iowa products being banned from the West Coast state, Iowa agricultural leaders say.

A federal judge threw out a six-state case late Thursday that asked the court to strike down a California statute barring the sale of eggs there that were produced by hens in cramped cages. Iowa, the nation’s largest egg producer, was part of the suit.”


Policy Issues; Ag Economy; Biotech; and, Biofuels

Policy Issues- Farm Bill

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.”


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