FarmPolicy

June 20, 2019

Reuters: Food Prices & Doha; Wash. Post- “Harvesting Cash” Revisited

Commodity / Food Prices in the News

A news release issued on Friday by the United Nations Food and Agriculture Organisation (FAO) stated that, “The cereal import bill of the world’s poorest countries is forecast to rise by 56 percent in 2007/2008. This comes after a significant increase of 37 percent in 2006/2007, FAO said today.

“For low-income food-deficit countries in Africa, the cereal bill is projected to increase by 74 percent, according to the UN agency’s latest Crop Prospects and Food Situation report. The increase is due to the sharp rise in international cereal prices, freight rates and oil prices.

“International cereal prices have continued to rise sharply over the past two months, reflecting steady demand and depleted world reserves, the report said. Prices of rice increased the most following the imposition of new export restrictions by major exporting countries. By the end of March prices of wheat and rice were about double their levels of a year earlier, while those of maize were more than one-third higher, according to the report.”

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Agricultural Economy – Commodity Prices

Tom Polansek reported in Saturday’s Wall Street Journal that, “Minneapolis Grain Exchange wheat futures stormed to new highs for the second consecutive day as traders scrambled to ensure that farmers plant enough spring wheat next year to replenish supplies.

“Spot-month MGE December wheat soared well above $10 per bushel to break its own record for the highest price at which wheat has ever traded at a U.S. exchange. The contract closed 30 cents higher at $10.43” (see related graph from article).

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Senate Farm Bill: “Next Week at the Earliest”

DTN Political Correspondent Jerry Hagstrom reported yesterday (link requires subscription) that, “Senate Majority Leader Harry Reid, D-Nev., and Minority Leader Mitch McConnell, R-Ky., both indicated Monday that some progress has been made on farm bill negotiations over how many and what kind of amendments would be allowed on the bill.”

Mr. Hagstrom added that, “Reid spokesman Jim Manley confirmed a statement by Senate Budget Committee Chairman Kent Conrad, D-N.D., that Reid had proposed a farm bill deal to McConnell under which the Republicans could offer 10 amendments including two non-germane amendments while the Democrats would offer only five amendments. The Reid spokesman said in an email that no agreement had been reached, but he added, ‘We have made huge progress on working through the universe of amendments and will continue to plug ahead in the hope that we can complete Senate action this year.’”

Philip Brasher reported yesterday at The Des Moines Register Cash Crops Blog that, “A leading Republican said today that the farm bill won’t come up in the Senate before next week at the earliest. Sen. Saxby Chambliss, who is the top Republican on the Senate agriculture committee, says there are ongoing talks about amendments.

“The truth is that Congress has a lot of other priorities in its final days of work of the year.”

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Washington Post: “Harvesting Cash” Series Continues- Focus on Sugar

CORRECTION: Yesterday’s FarmPolicy.com update erroneously stated that, “The Congressional Budget Office (CBO) issued a ‘Cost Estimate’ for the Senate Ag Committee’s Farm Bill. The CBO document was dated October 29, 2007, but was just posted yesterday.”

Actually, the CBO Cost Estimate cited in yesterday’s update was for the Senate Finance Committee’s “Heartland, Habitat, Harvest, and Horticulture Act of 2007,” a package dealing with agricultural tax measures that was passed on October 4. Although related to the Farm Bill, this was not the Senate Ag Committee’s Farm Bill proposal.

CBO released a Cost Estimate for the Senate Ag Committee Farm Bill, “The Food and Energy Security Act of 2007,” yesterday. This document was dated November 1.

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Dan Morgan, writing in today’s Washington Post, reported that, “When U.S. sugar farmers needed help this summer defending a $1 billion, 10-year subsidy plan in a new House farm bill, they found it in some surprising places.

“Among the 282 lawmakers siding with Midwest and Gulf Coast growers on a key vote was Rep. Carolyn B. Maloney (D-N.Y.), who represents Queens and Manhattan’s East Side. The only sugar refinery in the New York area is well outside her district.

“Four days after she voted against a measure that would have derailed the new subsidy plan, Maloney hosted a fundraising event at Bullfeathers restaurant on Capitol Hill that netted $9,500 in contributions from sugar growers and refiners, according to Federal Election Commission records and Maloney’s election attorney, Andrew Tulloch. Tulloch called the timing of the July 31 fundraiser — dubbed a ‘sugar breakfast’ on the campaign finance report of one group — a ‘pure coincidence.’

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Ethanol & Energy Policy- Impact on Farm Bill?

Dan Morgan, writing in today’s Washington Post, reported that, “Corn farmer Jim Handsaker has found a slew of ways to ride the heartland boom in biofuels that is reshaping the economy of rural Iowa.

“He sold some of his 2006 crop this year for more than $4 a bushel, the highest price in a decade. His stake in two nearby ethanol plants brought in several thousand dollars more in dividends. Meanwhile, soaring farmland prices have pushed the value of the 400 acres he owns to around $2 million.

“Even so, come October he will get a subsidy check from the government, part of a $1.6 billion installment that the U.S. Department of Agriculture will send to corn farmers.”

Yesterday, USDA indicated that corn prices, although on a slight downward trend, remain relatively high by historic standards. Meanwhile, the graph below, from The Wall Street Journal Online, demonstrates that ethanol prices are heading in the opposite direction.

The Post article indicated that, “Those annual automatic payments to Handsaker and thousands of other prospering corn growers have long been controversial. But coming at a time when taxpayers are already subsidizing the ethanol industry to the tune of $3 billion a year, the double-barreled support system for those who grow corn and those who turn it into fuel has begun to draw fire in Congress.”

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Washington Post: “Harvesting Cash” Series Continues

Reuters writer Doug Palmer reported today that, “Trade powers launched an eleventh-hour effort to rescue global trade talks on Tuesday as negotiators prepared for what the United States called a critical week…U.S. Trade Representative Susan Schwab, leaving the first of five days of closed-door talks in Germany with counterparts from the European Union, Brazil and India, told reporters that this was ‘a critical week’ for the talks, and that the U.S. was prepared to do its part to make progress.”

I. Farm Bill Update
II. Doha
III. Washington Post: “Harvesting Cash”

I. Farm Bill Update

A news release issued yesterday by the House Ag Committee stated that, “The Subcommittee unanimously approved an amendment offered by Chairman [Bob Etheridge of North Carolina] that substituted an extension of the 2002 Farm Bill language for the commodity programs under the Subcommittee’s jurisdiction in the place of the discussion draft considered by the Subcommittee. This retains the basic farm safety net by extending marketing assistance loans, direct payments and counter-cyclical payments and keeps intact the percentage of base acres for which farmers may receive payments. The committee also considered and rejected amendments representing alternative Farm Bill proposals.”

The release also noted that, “‘Today the subcommittee began to chart the direction that the Agriculture Committee should take with the Commodity Title of the Farm Bill,’ said Chairman Etheridge. ‘Every member on the subcommittee is sincerely interested in improving the safety net for our nation’s hard-working farmers. Our challenge is to accomplish that goal with a smaller baseline and without any new resources. As we move to the full committee we will continue to strengthen the safety net to ensure that farmers can provide a plentiful food supply for the American family’s table.’”

In addition, three days of previously scheduled full Committee work on the Farm Bill that was to take place next week has been postponed.

Dan Morgan, writing in today’s Washington Post, reported that, “Setting the stage for a contentious congressional debate over farm subsidies, a House panel voted unanimously yesterday to extend for five years the current system of payments to farmers and rejected a series of proposed changes.

“The action left in place the system of income supports and guaranteed prices that has cost taxpayers more than $70 billion since 2002. Environmental groups, the Bush administration and budget watchdogs say that the program is too generous to big commercial farmers in a few states. But yesterday’s vote by the House Agriculture subcommittee on general commodities signaled that the farm bloc is geared to defend the subsidies, despite record profits and soaring prices for commodities and farmland.”

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The Urban East Coast Press as Bogey Man

On Tuesday, the editorial board at The Forum (North Dakota) noted that, “As Congress cranks up the machinery for work on a new farm bill, the urban East Coast press is having a field day. Those shrill voices will make the fight over extending the best parts of the 2002 Farm Bill all the more difficult.

“In addition to misleading articles, editorials urging an end to federal farm supports are coming from newspapers with usually divergent views, including the Wall Street Journal and Washington Post. Both papers (and others in large urban centers) espouse knee-jerk anti-farm stances that reflect either an ideological bias against farm programs or ignorance of how farm programs work in farm country – or both.

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House & Senate Ag Committee Hearings

Reuters writer Missy Ryan reported yesterday that, “U.S. Trade Representative Susan Schwab said on Tuesday discussions in the Doha round of trade talks are accelerating, but cautioned it is too early to tell if negotiators can reach a breakthrough in coming weeks…’We definitely have picked up the pace. There is definitely a sense of momentum … Does that translate into a successful outcome in the next several weeks? I think it’s too early to tell,’ Schwab said.”

I. Hearings
A. House
B. Senate
II. Ag Disaster Spending
III. Doha
IV. Food Safety

I. Hearings

The House and Senate Agriculture Committees both held hearings yesterday on Capitol Hill regarding U.S. farm policy.

A. House

A news release issued yesterday by the House Ag Committee stated that, “Today, the House Agriculture Subcommittee on General Farm Commodities and Risk Management held a hearing to review the crop insurance industry. Congressman Bob Etheridge from North Carolina is Chairman.

President George W. Bush issues a statement Tuesday, May 1, 2007, regarding his veto of the Iraq War Supplemental which contained $3.5 billion in farm disaster aid (From the White House webpage).

“‘I am a believer in crop insurance, and I want to ensure that farmers, and taxpayers, are getting the best product for their dollar,’ said Chairman Etheridge. ‘As this Subcommittee takes up the task of reauthorizing federal farm programs, it is important to examine how crop insurance works with farm programs. We have seen a host of proposals to dramatically change the current three-legged stool that is our basic farm program and we must tread carefully so as not to inadvertently harm the ability to provide adequate risk management tools that are available through crop insurance.’”

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Farm Bill: Hearings Continue, USDA Releases Legislative Language

The Washington Post editorial board noted today that, “The United States is, by far, the largest donor of food in the world. But the U.S. Agency for International Development might feed many more people if it didn’t have to comply with several troublesome congressional mandates…USAID must buy only American-grown foodstuffs and cover the cost of transporting them abroad. Even worse, three-quarters of food aid must be transported by American carriers. This arrangement is great for some domestic agricultural and shipping firms but is grossly inefficient for almost everyone else involved, including the American taxpayer. In a report released this month, the Government Accountability Office calculated that only about 35 percent of USAID’s food-aid expenditures actually go to purchasing food. It also takes an average of four to six months for the food to travel from American farms to needy foreign communities. The process is far too cumbersome to respond rapidly to large-scale humanitarian emergencies.”

I. Farm Bill
II. Food Aid

I. Farm Bill

Yesterday, the Senate Ag Committee held their third hearing regarding the economic challenges and opportunities facing American agricultural producers. The Senators focused specifically on farm programs and the commodity title of the farm bill in yesterday’s discussion.

A complete list of witnesses who appeared before the Committee yesterday is available here, while an archived video of the hearing can be viewed here.

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Johanns: “Is the Money There?”- Secretary Comments on Ag Budget

Speaking yesterday at the Informa Economics Food & Agriculture Policy Conference in Arlington, Secretary of Agriculture Mike Johanns provided greater clarity and explanatory background on the Bush administration’s 2007 Farm Bill proposal. In addition to educating the Informa audience, Sec. Johanns also sought to persuade the group that the proposal represented an effective reform package that should be embraced.

I. Sec. Johanns / Farm Bill Issues
II. WASDA Report

I. Sec. Johanns / Farm Bill Issues

Speaking yesterday at the Informa Economics Food & Agriculture Policy Conference in Arlington, Secretary of Agriculture Mike Johanns provided greater clarity and explanatory background on the Bush administration’s 2007 Farm Bill proposal.

In addition to educating the Informa audience, Sec. Johanns also sought to persuade the group that the proposal represented an effective reform package that should be embraced.

Chief among his arguments was the issue of the federal budget.

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Washington Post: “Harvesting Cash” Series Continues

Alexei Barrionuevo reported in today’s New York Times that, “For more than 2,000 years, the Chinese have turned soybeans into tofu, a staple of the country’s diet…But as its economy grows, so does China’s appetite for pork, poultry and beef, which require higher volumes of soybeans as animal feed. Plagued by scarce water supplies, China is turning to a new trading partner 15,000 miles away — Brazil — to supply more protein-packed beans essential to a richer diet.”

I. “Harvesting Cash”
II. Farm Bill Issues
III. Brazil

I. “Harvesting Cash”

Gilbert M. Gaul and Sarah Cohen, writing on the front page of today’s Washington Post, in an article datelined from Provincetown, Mass., reported that, “Although Cape Cod is only a short trip from Boston and Providence, R.I., and is home to some of the wealthiest beach towns in the United States, to the Agriculture Department it meets the definition of rural America. That means it qualifies for aid originally intended for farmland and backwoods areas that were isolated and poor, struggling to keep their heads above water.

“‘Provincetown is many things to many people, and to USDA we’re rural,’ said Keith A. Bergman, the town manager. ‘We’ll take it.’”

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Trade Developments

I. Canada Corn Action
II. Doha
III. Farm Bill Points

I. Canada Corn Action

Yesterday afternoon, The Mulch Blog pointed to a news release from Canada, which stated that, “The Honourable David Emerson, Minister of International Trade, and the Honourable Chuck Strahl, Minister of Agriculture and Agri-Food and Minister for the Canadian Wheat Board, today announced that the Government of Canada has requested consultations with the United States at the World Trade Organization (WTO) on subsidies provided to U.S. corn growers, as well as on the total level of U.S. trade-distorting agricultural support.”

The release added that, “‘The United States has been providing subsidies to its agricultural producers that create unfair market advantages,’ said Minister Emerson. ‘We hope to see the U.S. live up to its WTO obligations, particularly given that it has the opportunity to do so when it rewrites its Farm Bill this year.’

“‘Canada is concerned that these U.S. subsidies continue to cause economic harm to our corn farmers,’ said Minister Strahl. ‘That’s why we took the action we did, in order to provide the best possible support for our producers by pushing for a level playing field so that they can compete.’”

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Farm Bill Dynamics

I. Farm Bill Dynamics
II. Ethanol
A. Political Support
B. Production & Economic Issues
III. Doha

I. Farm Bill Dynamics

The Washington Post editorial board noted in today’s paper that, “The last time Congress took a long look at America’s wasteful system of agricultural subsidies, we had to endure bushels of shallow rhetoric about how billions in largess would save the great American family farm. With this hefty crop of disingenuous sentimentality and equally hefty lobbying efforts from powerful agricultural interests, the result was a federal giveaway that did more to hurt small farmers than it did to help them.

“The law that authorizes a range of unnecessary and ill-targeted agriculture programs is set to expire in September. So expect fronts for agribusiness, rural banks and farm insurers (and the members of Congress who accept their campaign contributions) to try and sell the same line again this year: Extend the programs or nail the coffin shut on America’s heartland. It’s about time to nail the coffin on that tired line instead.

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“Harvesting Cash” Continues

I. “Harvesting Cash” Continues
II. Ethanol
III. Food Safety

I. “Harvesting Cash” Continues

Washington Post reporters Dan Morgan, Sarah Cohen and Gilbert M. Gaul provided another update in the ongoing “Harvesting Cash” series in today’s paper (“Powerful Interests Ally to Restructure Agriculture Subsidies”).

“There may be no better sign of the changing debate over the nation’s farm subsidies: A Midwestern governor running for president calls for cuts in a system that has steered hundreds of millions of dollars a year to his state,” the Post said.

“‘I didn’t get much of a reaction from farmers,’ said Iowa Gov. Tom Vilsack (D), ‘because deep down most of them know the system needs to be changed.’

“Politicians such as Vilsack have joined a host of interest groups from across the political spectrum that are pressing for changes in government assistance to agriculture. They want the money moved from large farmers to conservation, nutrition, rural development and energy research. Vilsack, for example, favors programs that improve environmental practices on farms.”

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Washington Post: "Harvesting Cash" Series Continues

I. Post: Harvesting Cash
II. President Bush on Ethanol
III. Appropriations Issue- Conservation
IV. Brazil
V. Australia

I. Post: Harvesting Cash

Gilbert M. Gaul, Sarah Cohen and Dan Morgan continued their Washington Post series, “Harvesting Cash,” with an update published in today’s paper entitled, “Federal Subsidies Turn Farms Into Big Business.”

“The cornerstone of the multibillion-dollar system of federal farm subsidies is an iconic image of the struggling family farmer: small, powerless against Mother Nature, tied to the land by blood,” the authors noted.

“Without generous government help, farm-state politicians say, thousands of these hardworking families would fail, threatening the nation’s abundant food supply.

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