FarmPolicy

March 3, 2015

Sunday Afternoon Update: Policy Issues; Trade; Ag Economy; Biotech; and Regulations

Policy Issues

A news release on Friday from USDA’s Farm Service Agency stated that, “Agriculture Secretary Tom Vilsack announced today that a one-time extension will be provided to producers for the new safety-net programs established by the 2014 Farm Bill, known as Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC). The final day to update yield history or reallocate base acres has been extended one additional month, from Feb. 27, 2015 until March 31, 2015. The final day for farm owners and producers to choose ARC or PLC coverage also remains March 31, 2015.”

Also on Friday, Senate Ag Committee Chairman Pat Roberts (R., Kan.) stated that, “‘USDA heard the concerns directly from producers earlier this week at our first Committee hearing and took action as a result,’ Chairman Roberts said. ‘I would encourage all producers to visit their local FSA office as soon as possible to make sure they have enough time and information to make these important decisions.’”

Reuters writer Christine Stebbins reported on Friday that, “Crop insurance price guarantees for U.S. corn, soybeans and spring wheat in 2015 will fall 10 percent or more based on futures settlement prices for February, grain analysts said on Friday.

“The U.S. Department of Agriculture’s (USDA) Risk Management Agency (RMA), which oversees the multibillion-dollar crop insurance program, by law uses the average price in February for harvest-time grain futures contracts to set the ‘floor’ price that private insurers must guarantee farmers who sign up…[B]ased on Friday’s futures closes, the RMA is expected to set the floor price for corn at $4.15 a bushel, down 10 percent from last year’s $4.62, and for soybeans at $9.73 a bushel, down 14 percent from last year’s $11.36.”

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FarmPolicy.com Recap (Tuesday)- Trade; Ag Economy; Regulations; and, Immigration

Trade Issues

Labor related disputes at some West Coast ports continue to hamper container product movement, with one consequence being negative implications for the agricultural sector. The port issue was front-page news in Sunday’s Los Angeles Times as well as Tuesday’s Wall Street Journal.

Mickey Kantor, a former U.S. trade representative and secretary of Commerce, noted in Tuesday’s Los Angeles Times that, “If the West Coast’s 29 ports are not returned to full operation soon, it will create a shock wave that reverberates across the economy, derailing a promising economic recovery that is creating jobs and restoring a sense of economic security for the nation…[F]or American farmers, the cost of a shutdown is equally crippling, as orders for many agricultural products are already taking a hit because of the uncertainty over whether they can be delivered in time.

“The Washington, D.C.-based Agriculture Transportation Coalition, which tracks ocean shipping issues, estimated in December that nationwide the lost sales for fruits, vegetables and meats totaled more than $400 million per week. In California, citrus growers are being hit especially hard. Their trade association reckons reductions in sales to Asian markets are already down 25%, costing growers an estimated $125 million.”

Amb. Kantor added that, “President Obama has directed Labor Secretary Thomas Perez to engage in the dispute to revive negotiations, which is a welcome sign. He is scheduled to meet Tuesday with the employer group, the Pacific Maritime Assn., and with the International Longshore and Warehouse Union. But the president must be prepared to use his bully pulpit — and all other means at his disposal — to ensure that our nation remains open for business.”

An update on Tuesday at The Japan News Online indicated that, “Prime Minister Shinzo Abe expressed on Tuesday his desire for an early conclusion of the Trans-Pacific Partnership free trade agreement.

“‘[The negotiations] are in their final phase. I’ll seek the road that best serves the nation’s interests by protecting what needs to be protected and pushing for what we want,’ Abe said about the TPP negotiations during a question-and-answer session at the plenary session of the House of Councillors.”

Adam Behsudi reported at the Tuesday Politico Morning Trade newsletter that, “The Senate is likely to be the first chamber to consider key legislation for getting the landmark Trans-Pacific Partnership agreement and other trade deals easily passed in Congress, House Ways and Means Chairman Paul Ryan said Friday. ‘Our calendar is pretty crowded, and they, I believe, have reserved calendar space to do that, so I literally think it’s a legislative calendar issue,’ the Wisconsin Republican said in a briefing with reporters.

The introduction of a ‘trade promotion authority’ bill could come as soon as next week following the Presidents Day recess. But if the Senate passes the legislation first, a new procedural step would have to be added to the process.”

For a more detailed look at the political play regarding TPA, TPP and currency related issues among lawmakers, and between the executive and legislative branch, see “Currency Battle Is Tethered to Obama Trade Agenda,” by Jonathan Weisman, which was published on the front page of the Business Section in Monday’s New York Times.

 

Agricultural Economy

Recent reports of a growing U.S. hog herd have been noted, while simultaneously, anecdotally related articles regarding citizen concerns  and litigation over the potential negative environmental impacts of some large scale animal operations have also been published in recent days.

With respect to market information, in mid-December, the University of Illinois held an agricultural outlook meeting that included a detailed Agricultural Commodity Price Outlook by Darrel Good, as well as a presentation by Scott Irwin titled, “Can One Monster Crop End the New Era of Grain Prices?

Darrel Good also took a closer look at soybean market variables in a brief report on Monday.

 

Regulations

Meanwhile, new FAA rules regarding drone use were noted on the front page of Tuesday’s Des Moines Register, it appears that at least for now, one primary use of drones in the ag sector is for detailed and efficient crop scouting.

Jack Nicas and Andy Pasztor reported on the front page of the new “Business and Tech” section of Tuesday’s The Wall Street Journal that, “Long-awaited federal rules proposed for commercial drones should pave the way for thousands of U.S. businesses to fly the devices in industries like filmmaking, farming and construction, but drone proponents worried that limits in the regulations would stifle other possible uses like package delivery.”

The Journal writers added that, “Ted Ellett, a former FAA chief counsel who represents companies that want to use drones, said the proposal ‘seems to be close to a home run’ for many of his clients and their peers.

Drones for farming would likely thrive under the proposal, he said, but the FAA’s proposed limits still would allow the agency to block drone flights if they pass ‘over a single farmer on his tractor in the middle of a 100-acre field in Iowa.’”

And, Katy Burne reported in Tuesday’s Wall Street Journal that, “U.S. regulators are poised to introduce measures that would ensure anonymity for traders in the $700 trillion market for swaps, said people familiar with the discussions, a flip-flop that would hand a victory to hedge funds and speedy trading firms while dealing a blow to banks.

“The planned action from the Commodity Futures Trading Commission would encourage trading among any and all market participants, mirroring futures markets that the agency also oversees, and would raise the chance of traders dealing directly with one another, potentially bypassing banks that have historically been major providers for these complex transactions, the people said.

“The CFTC measures could be unveiled as soon as next month and may come as a rule change or as staff guidance, the people familiar said. The Wall Street Journal reported in November that the CFTC was scrutinizing identity disclosures in swaps. A spokesman for the agency declined to comment.”

 

Immigration

Fred Barbash reported on Tuesday at The Washington Post Online that, “A federal judge in Texas last night temporarily blocked the Obama administration’s executive actions on immigration. The judge, responding to a suit filed by 26 Republican-run states, did not rule on the legality of immigration orders but said there was sufficient merit to the challenge to warrant a suspension while the case goes forward.”

Issues regarding immigration and the budget for the Department of Homeland Security also continue to percolate.

Keith Good

Policy Issues; Trade; Agricultural Economy; Regulations; and, Immigration

Policy Issues

Earlier this week, Politico’s Jason Huffman and Bill Tomson sat down with Secretary of Agriculture Tom Vilsack “to celebrate the one-year anniversary of the 2014 Farm Bill.” A video replay of this discussion is available here, while an unofficial FarmPolicy.com transcript of the interview can be found here.

In part, Sec. Vilsack indicated that, “I think basically what Congress had a difficult time determining is when a non-farm family individual is actively engaged in farming enough so that they qualify to participate in some of the safety net programs. This is a notion of actively engaged, who is actively engaged in terms of providing management responsibilities.

“This involves a very narrow percentage of folks who are in the business of farming, primarily limited partnerships, general partnerships. It doesn’t involve family farms, it doesn’t involve family farm corporations. So our expectation is that probably one to two percent, or perhaps even fewer of the overall farmers are going to be impacted by however we define actively engaged.”

Sec. Vislack added that, “We’re working through that process and I think we have a pretty good handle on it. We’re working it through the regulatory process right now, and I would anticipate and expect sometime in 2015, relatively shortly, we’ll be coming out with how we define it and asking for comment on whether or not we’ve got it right or not.

“The reality is that this has been a loophole that has been utilized by folks in partnerships to allow for many, many, many people to qualify as actively engaged, when in fact they might be only engaged in a conference call or in a very narrow sense participating in the decision-making in a farming operation. So we will close that loophole to the extent that we can, but Congress is not giving us a whole lot of room to do that.”

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

Policy Issues

Evan Halper reported on the front page of yesterday’s Los Angeles Times that, “The political clash over climate change has entered new territory that does not involve a massive oil pipeline or a subsidy for renewable energy, but a quaint federal chart that tries to nudge Americans toward a healthy diet.

“The food pyramid, that 3-decade-old backbone of grade-school nutrition lessons, has become a test case of how far the Obama administration is willing to push its global warming agenda.

“The unexpected debate began with a suggestion by a prominent panel of government scientists: The food pyramid — recently refashioned in the shape of a dinner plate — could be reworked to consider the heavy carbon impact of raising animals for meat, they said. A growing body of research has found that meat animals, and cows, in particular, with their belching of greenhouse gases, trampling of the landscape and need for massive amounts of water, are a major factor in global warming.”

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Cuba; Ag Economy; Policy Issues; Immigration; Biofuels; and, Regulations

Cuba- Trade Issues

Karen DeYoung reported on the front page of today’s Washington Post that, “The Obama administration announced new rules easing travel and trade restrictions against Cuba on Thursday, moving quickly to implement steps the president ordered less than a month ago when he said the United States would reestablish diplomatic relations with the island’s communist government.

“Freed from cumbersome requirements to obtain a Treasury Department license, individual Americans will be able to travel to Cuba provided they say the trip is intended to serve religious, educational or other approved purposes under the still-standing U.S. embargo. When they return, they can bring up to $400 in Cuban goods, including $100 worth of alcohol and tobacco.”

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

Biotech

Christian Oliver reported yesterday at The Financial Times Online that, “The EU has sought to resolve years of acrimony over the status of genetically modified crops by giving each of its 28 member states the final say over whether they can be grown within their borders.

“While GM crops are common in America and Asia, they remain divisive in Europe. Brussels has repeatedly insisted that US companies such as Monsanto will not be able to use a transatlantic trade deal under negotiation with Washington to push Europe to buy more GM crops.

At the European Parliament in Strasbourg on Tuesday, lawmakers voted that each national government should be allowed to ban the planting of GM crops, even if they had been declared safe by Brussels. This rare opt-out from Europe’s hallowed single market showed how intractable positions had become.”

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

Agricultural Economy

Gregory Meyer reported yesterday at The Financial Times Online that, “US grain silos are bulging with the most corn on record after last year’s huge harvest, adding to the drag on commodities markets suffering weakness from agriculture to oil.

“Government statisticians counted 11.2bn bushels (285m tonnes) of corn stocks in domestic storage as of December 1, up 7 per cent from a year earlier, the US Department of Agriculture said on Monday. The figure was slightly above a market expectation of 11.123bn bushels and Chicago grain futures fell.

“The US is the world’s biggest producer of corn, used in products from pig feed to ethanol fuel. A record crop of 14.2bn bushels last autumn has served to rebuild low inventories after several years of erratic weather. Ample stocks tend to damp market volatility, as consumers feel comfortable they will not run out of supply.”

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

Policy Issues

Philip Brasher reported on Friday at Agri-Pulse Online that, “A top lobbyist for food and beverage giant PepsiCo Inc. who was formerly a top aide to Senate Agriculture Chairman Pat Roberts is taking over as the Agriculture Committee’s chief of staff as it prepares to rewrite federal child nutrition policy.

Joel Leftwich, a native of Wellington, Kansas, worked for Roberts, R-Kan., as deputy staff director for the committee before becoming senior director for PepsiCo’s public policy and government affairs team in March 2013.

One of the committee’s main orders of business this year will be to reauthorize the law that sets standards for school meals and the Women, Infants and Children nutrition program. The programs have a broad impact on the food and beverage industry. First lady Michelle Obama has made it a top priority to preserve higher school nutrition standards that USDA imposed under the expiring law, the Healthy, Hunger-Free Kids Act.

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Ag Economy; Policy Issues; Immigration; and, Trade

Agricultural Economy

Emiko Terazono reported yesterday at The Financial Times Online that, “Global food prices fell to the lowest level in four years in 2014, as plentiful supplies of cereals, dairy products, sugar and vegetable oils pushed markets lower.

“The UN Food and Agricultural Organization said its December food price index fell more than 9 per cent from a year before. In 2014, the index averaged 202 points, down 3.7 per cent from 2013, the third consecutive yearly fall.”

The FT article pointed out that, “Dairy products faced the largest declines, thanks to a rise in exports and demand falling among some of the leading importers, such as China and Russia. Prices, which started the year at record highs, fell 34 per cent in December from a year before, helped by declines in milk powders, butter and cheese.”

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

Policy Issues

Secretary of Agriculture Tom Vilsack was a guest on yesterday’s AgriTalk radio program with Mike Adams, where the conversation focused on beef checkoff issues, COOL (Country of Origin Labeling), Farm Bill implementation, and trade with Cuba (audio replay here, MP3- 11:30). An unofficial FarmPolicy.com transcript of yesterday’s discussion is available here.

On the checkoff issue, Sec. Vilsack indicated that, “Well, Mike, it was fairly obvious that the industry was not interested in having a second checkoff, and obviously the only reason we proposed it was because I believe, and I think most in the industry believe, that we need additional resources for promotion and research in the beef industry. This is an industry that faces some interesting challenges at home, and some great opportunities abroad, and there is an opportunity, I think, with increasing the checkoff and increasing investment in the checkoff, to do more research and more promotion and more marketing.

“But the industry made the decision that they were not interested in a second checkoff, and they have been unable to reach consensus on how to increase the existing checkoff, so when the writing is on the wall, you basically have to pay attention to the attitude of the folks you’re trying to serve. And it’s an unfortunate circumstance. My hope is that the industry will take an opportunity now to reach consensus, to figure out a way to strengthen the beef checkoff program.”

And in comments regarding beef imports, Sec. Vilsack pointed out that, “But if there is an equivalency determination, which is to say that the processes are equal to or better than what the U.S. does, and if it comes from an area where we’ve already done a risk assessment and find little or no risk, and that there are protections, then the science and the international rules basically say we have to open up our market opportunities, and then that allows us to go to other countries who are creating barriers to our beef products and be able to articulate and say very clearly we live by these rules and we think that—and we live by the science, and we think everyone should live by the rules and the science so that you have a much more objective system, rather than a subjective one.”

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Trade; Ag Economy; Immigration; Biofuels; and, Policy Issues

Trade Issues

Jeevan Vasagar reported yesterday at The Financial Times Online that, “A small grilled sausage from Bavaria has become the unlikely symbol of German resistance to the transatlantic trade deal being negotiated between the EU and the US, after the country’s agriculture minister warned that ‘not every sausage can be protected’ in the trade talks.

Christian Schmidt, Germany’s agriculture minister, said in an interview with Der Spiegel: ‘If we want to seize the opportunities of free trade with the enormous American market then we can’t carry on protecting every sausage and cheese speciality.’

“Food producers, politicians and campaigners against the trade deal seized on his remarks as evidence that the protection of regional brands would be sacrificed to globalisation.”

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

Policy Issues

Damian Paletta and Mark Peters reported on the front page of today’s Wall Street Journal that, “A large number of Republican governors are pushing to reshape social-welfare programs with drug testing or other requirements, arguing that the new rules better prepare recipients for employment and assure taxpayers that the benefit money is well spent.

“Gov. Scott Walker of Wisconsin, fresh off his re-election, said he would propose his state join several others in mandating drug screening for people seeking nutrition or cash assistance. Utah Republicans want to require that certain residents allow the state to assist them in finding a job if they want to collect benefits through Medicaid, the health-care program for low-income and disabled Americans. Indiana Gov. Mike Pence is proposing Medicaid recipients kick in at least a few dollars a month as a condition for receiving benefits.”

The Journal writers noted that, “The drug-test push is part of a wave of changes that Republican governors are eyeing for Medicaid, cash assistance, unemployment and nutrition assistance, programs run jointly by federal and state governments.”

Paletta and Peters also explained that, “Drug-screening rules, though they have disqualified relatively few people from benefits, have proved to be the most contentious. Earlier this month, a federal appeals court struck down a 2011 Florida law that required drug screening for people seeking benefits through the Temporary Assistance for Needy Families program, saying the requirement was unconstitutional and that the state hadn’t demonstrated that recipients have more of a drug problem than the general population.

This year, the U.S. Agriculture Department blocked a drug-screening requirement in Georgia for the state’s food-stamp program, which it oversees.”

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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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