FarmPolicy

September 17, 2014

Trade Issues; Ag Economy; Farm Bill; Biotech; Rural America; and, Regs

Trade Issues

Paul Sonne and Anton Troianovski reported in today’s Wall Street Journal that, “Russia banned imports of a wide range of U.S. and European foods on Thursday in response to Western sanctions, confronting Russians with a type of economic isolation largely unseen since the Soviet era.

“Prime Minister Dmitry Medvedev outlined the products subject to the one-year ban—beef, pork, poultry, fish, fruit, vegetables, cheese, milk and other dairy products from the U.S., Canada, the European Union, Norway and Australia—in a radical response to penalties imposed on Russia over the crisis in Ukraine.”

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Trade Issues; Farm Bill; Ag Economy; Biotech; Regs; and, Biofuels

Trade Issues

Gregory L. White and Laurence Norman reported in today’s Wall Street Journal that, “Russian President Vladimir Putin fired back at Western sanctions on Wednesday, ordering bans on imports of food and other products from the nations that imposed the restrictions, in the latest sign of Kremlin defiance of efforts to force an end to its support for separatists fighting in Ukraine.”

Today’s article explained that, “Several waves of Western sanctions, including last week’s that affected entire sectors such as finance, oil and defense, have helped tip Russia’s slowing economy toward recession and fueled capital flight. But the Kremlin has shown no sign of changing direction. Russian officials said Wednesday they planned to step up food imports from Brazil and other countries that hadn’t joined the sanctions.

“Mr. Putin spelled out his retaliatory measures on Wednesday in a presidential decree ordering partial or complete bans lasting one year on a range of food and farm products, as well as raw materials, from countries that imposed sanctions, including the U.S., the European Union, Japan and Australia. RIA Novosti, the state news agency, quoted a Russian official saying all U.S. agricultural imports and that all EU fruits and vegetables would be banned.

“A final list of banned products is expected to be released in coming days. A Russian official familiar with the plans said they would cover some fruits, vegetables, dairy products and cheese, as well as liquor, meat and poultry.”

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Ag Economy; Farm Bill; Regulations; Immigration; and, Africa Issues

Agricultural Economy

Purdue University agricultural economist Chris Hurt indicated yesterday at the farmdoc daily blog (“Where Will Beef Cows Expand?”) that, “It is getting to be a well repeated story. Beef cow numbers are at their lowest level since 1962. Cattle and feeder cattle prices are at record highs and feed prices have dropped. Beef consumers continue to eat beef and are rewarding the beef industry with very profitable returns. So when are beef producers going to expand the breeding herd and in what regions of the country will that occur?

“To answer those questions we first look at the areas of the country that had the biggest reductions in beef cow numbers due to drought, high feed prices, and financial losses. Since 2007, beef cow numbers dropped by 12 percent totaling 3.8 million head. The biggest declines were in the region with the most cows-the Southern Plains- which accounted for 1.6 million of the decline. Texas, the big beef cow state, had a reduction of 1.4 million head, an astonishing 36 percent of the nation’s total decline. That region’s expansion opportunities are very mixed due to lingering drought. About one-third of Texas remains in the three highest drought categories, D2-D4. Importantly, parts of cow-dense eastern Texas are now out of drought and the National Weather Service is forecasting some continued drought abatement by this fall for the region. In conclusion, lingering drought in the Southern Plains will tend to mean a slow expansion there.

“The second most important region for beef cows is the Southeast, which had an 822,000 head beef cow reduction since 2007, or 21 percent of the nation’s total. The biggest reductions were in Tennessee and Kentucky and accounted for 59 percent of the region’s decline. The Southeast is generally in good shape for pastures as the impacts of the 2012 drought have passed.”

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Ag Economy; Farm Bill; Biofuels; and, Immigration

Agricultural Economy

A news release on Friday from USDA’s National Agricultural Statistics Service (NASS) indicated that, “U.S. farmers spent $367.3 billion on agricultural production in 2013, a 2.0 percent increase from 2012, according to the Farm Production Expenditures report, published today by [NASS].

“Per farm, the average expenditures total $175,270 compared with $171,309 in 2012, up 2.3 percent [related graph]. Crop farms account for the majority of production expenditures in 2013. The average expenditure per crop farm totals $211,659 compared to $143,521 per livestock farm.”

Donnelle Eller reported on Friday at The Des Moines Register Online that, “The cost to farm last year climbed, with Iowa growers spending nearly $30 billion on expenses such as rents, feed, livestock and fuel, the U.S. Department of Agriculture said today.

“It was a 3 percent increase, or $835 million more than 2012, the federal government data showed.

U.S. farmers spent $7.2 billion more last year, with expenses rising 2 percent to $367.3 billion.”

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Ag Economy; Regs; Farm Bill; Biofuels; and, Immigration

Agricultural Economy

Joseph Serna reported yesterday at the Los Angeles Times Online that, “More than half of California is now under the most severe level of drought for the first time since the federal government began issuing regular drought reports in the late 1990s, according to new data released Thursday.

“According to the U.S. Drought Monitor report, in July roughly 58% of California was considered to be experiencing an ‘exceptional’ drought — the harshest on a five-level scale.

“This is the first year that any part of California has seen that level of drought, let alone more than half of it, said Mark Svoboda, a climatologist with the National Drought Mitigation Center, which issued the report.”

See also this graphical sequence of the three year California drought from Bloomberg News, as well as this excellent series of graphs from The New York Times, “Mapping the Spread of Drought Across the U.S.

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Policy Issues; Ag Economy; and, Regulations

Policy Issues

Benjamin Goad reported yesterday at The Hill Online that, “Legislation introduced Wednesday in the House would establish a tax on soda and other sugar-sweetened drinks, reprising a national debate over the role of government in shaping the diets of Americans.

“The bill authored by Rep. Rosa DeLauro (D-Conn.) would amend the Internal Revenue Code to establish an excise tax on the beverage. The revenue would be directed toward prevention, treatment and related public health research.”

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Ag Economy; Trade Hearing; Policy; and, Regulations

Agricultural Economy

Yesterday, the Federal Reserve Board released its Summary of Commentary on Current Economic Conditions. Commonly referred to as the “Beige Book,” the report included several observations with respect to the U.S. agricultural economy.

The Chicago District indicated that, “The District’s corn and soybean crops made up ground after a late start to planting as favorable weather helped plants emerge more quickly than the five-year average. The consensus among contacts was that the corn and soybean crops were in excellent shape, but were unlikely to set records when harvested because of the late plantingsHog prices moved higher as disease affected supplies.”

The St. Louis District noted that, “Over 90 percent of the District’s corn, cotton, rice, sorghum, and soybean crops were rated in fair or better condition.”

The Kansas City District pointed out that, “The corn and soybean crops were in good condition overall, and improved growing conditions led to a drop in prices for both crops. Cattle prices continued to rise, but feeder cattle prices have recently increased much faster than fed cattle prices and narrowed margins for feedlot operators. The cumulative effect of reduced piglet numbers due to the swine virus and strong export demand for pork supported further gains in hog prices, even though pork production forecasts were raised due to heavier dressed weights and higher than expected slaughter in the second quarter.”

And, the Dallas District added that, “Widespread rains greatly improved prospects for row crops, especially cotton, but came too late to aid the Texas wheat crop, which is expected to be down 20 percent this year.”

A summary of all of the ag related notes from yesterday’s Fed report can be found here, at FarmPolicy Online.

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

Agricultural Economy

Gregory Meyer reported yesterday at The Financial Times Online that, “The chances of finding a bull in a maize field are near zero right now. With each passing week, a blockbuster harvest of corn in the US – the world’s largest producer – is looking more and more likely.

“Spot corn prices have responded. They are down a third in the past year and weighing on commodity indices. On Monday the market for the most widely traded grain will face a further test when the government issues a pair of crucial supply and demand reports.”

The FT article noted that, “It is too early to make precise harvest forecasts with confidence. Two years ago, a complacent market caught fire as extreme heat descended on the Midwest and lingered throughout corn’s sensitive pollination stage. The end result: a decimated crop and prices above $8 per bushel.

“Joel Widenor, meteorologist at Commodity Weather Group, says a similar heatwave this year would cause problems. But soils now are more moist than in 2012, making plants more resilient and damping the hottest daytime temperatures, he adds. For now, excessive heat is not predicted.”

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Farm Bill; Appropriations; CFTC; Ag Economy; Regs; and, Biofuels

Farm Bill, Executive Branch Bee Initiative, Labeling Issue

Bradley Lubben and James Pease indicated recently at Choices Magazine Online (“Conservation and the Agricultural Act of 2014”) that, “While overall conservation spending is projected to decline from baseline levels under the new Act [The Agricultural Act of 2014 (the Act), or commonly the 2014 Farm Bill], the allocation of spending among conservation programs provides insights into the changing focus of conservation efforts. Analysis from the U.S. Department of Agriculture (USDA) Economic Research Service illustrates the changing conservation priorities since the 1996 Farm Bill (USDA Economic Research Service, 2014). Figure 1 shows the share of conservation spending by 2014 Farm Bill major program area (and their predecessors). Reduced spending for the conservation title primarily comes from reductions in CRP funding resulting from a lower enrollment acreage cap. While the CRP has been the largest single component of conservation spending since its creation in 1985, working lands programs (EQIP and CSP) are projected to comprise the majority of spending over the fiscal and program years 2014-2018. Working lands program funding is projected to continue its growth throughout 2014-2018, but at slower rates than the pre-Act baseline. And ACEP easement programs are expected to receive less funding under the 2014 Farm Bill than their predecessor programs received under the 2008 Farm Bill.

“Reduced conservation program funding could reduce conservation efforts nationally, although the extension of conservation compliance requirements to crop insurance program participants should expand the requirements for maintaining at least minimal conservation practices on agricultural land across the country.”

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Ag Economy; Appropriations; Policy Issues; Senate Hearing; and, Political Notes

Agricultural Economy

Reuters writer Lucia Mutikani reported yesterday that, “U.S. consumer prices recorded their largest increase in more than a year in May as costs for a range of goods and services rose, likely easing the Federal Reserve’s concerns that inflation was running too low.

“The Labor Department said on Tuesday its Consumer Price Index increased 0.4 percent last month, with food prices posting their biggest rise since August 2011.”

The article noted that, “Food prices increased 0.5 percent in May, the fifth consecutive monthly increase.”

More specifically, the CPI report indicated that, “The index for meats, poultry, fish, and eggs rose 1.4 percent in May after a 1.5 percent increase in April, with virtually all its major components increasing.”

Bloomberg writer Megan Durisin reported yesterday that, “U.S. ground-beef prices are up 76 percent since 2009 to the highest on record, after a seven-year decline in the herd left the fewest cattle in at least six decades, government data show. Meat costs are rising faster than any other food group, eroding profit margins at Hormel Foods Corp. and forcing Costco Wholesale Corp. and Chipotle Mexican Grill Inc. to raise prices.

Supply probably will remain tight. It can take three years to expand the herd, and a prolonged drought in Texas, the top producer, parched pastures needed to raise young animals. The government says the U.S. will become a net beef importer in 2015. Cattle futures already up 22 percent in the past year in Chicago may rally 8.3 percent to $1.578 a pound by the end of December, a Bloomberg survey of five analysts showed.”

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Farm Bill- Policy Issues; Ag Economy; CFTC; and, Political Notes

Farm Bill- Policy Issues

Justin Sink reported yesterday at The Hill Online that, “First lady Michelle Obama on Monday blasted back at critics of her school lunch program, arguing parents should ensure their children eat healthy meals.

“Obama said parents and school leaders can’t let children make the call to eat pizza and burgers for lunch every day.

“‘If I let my kids dictate what we have for dinner every day, it would be French fries, chips and candy, but we don’t run our households like that, and we can’t run our schools like that,’ the first lady said in an interview with MSN.”

Yesterday’s update noted that, “House Republicans are expected to hold a floor vote this week on a bill that would waive tougher nutritional standards on school lunches if the school shows it has operated at a net loss over six months.”

The White House has backed a compromise agreement adopted by the Senate Appropriations Committee. Under that deal, tougher requirements on sodium levels would not be implemented, although requirements for schools to offer fruits and vegetables would be kept,” the Hill article said.

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Ag Appropriations; EPA Water Hearing; Trade Hearing; Ag Economy

Agricultural Appropriations- House Action

Yesterday, the House took up the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2015 (H.R. 4800). Although a final vote on the measure has yet to take place, several amendments to the spending bill were considered on the floor yesterday.

A chronological recap of yesterday’s House activity is available here, while a list of amendments that lawmakers considered can be found here.

More specifically, Cristina Marcos reported yesterday at The Hill Online that, “The House on Wednesday adopted a proposal from Rep. Barbara Lee (D-Calif.) to boost funding for school breakfast equipment grants.

Approved by voice vote, Lee’s amendment to the 2015 Agriculture appropriations bill would increase funding for the school breakfast grant program by $8.1 million by offsetting the same amount from the Agriculture secretary’s administrative accounts. The amendment would bring total funding for school breakfast equipment grants to $35 million, which aligns with the Obama administration budget request.”

The Hill update noted that, “The House is considering the 2015 Agriculture appropriations bill under an open rule, which allows members to offer an unlimited number of amendments. Passage is not expected until Thursday.”

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Rep. Smith- Nebraska Exports Benefit World Consumers

In response to questions from Congressman Adrian Smith (R-NE), panelists at a Ways and Means Trade Subcommittee hearing discuss how protectionist trade policies hurt consumers.

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Ag Appropriations; Ag Economy; Regs; Water Bill; and, Political Notes

Agricultural Appropriations- Policy Issues

Today the House will consider the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2015 (H.R. 4800), which will be debated under a “Modified Open Rule.” (“The rule provides for one hour of general debate and makes in order any amendment offered that complies with the House rules. Additionally, the Rule provides for 10 minutes of debate per amendment equally divided between the proponent and an opponent and up to 10 pro forma amendments for the purpose of debate offered by the Chair and Ranking Member or their designee.”)

Bloomberg writers Alan Bjerga and Derek Wallbank reported yesterday that, “House Republicans today will try to roll back school-lunch nutrition requirements — passed in 2010 with the backing of First Lady Michelle Obama — saying the rules bust local budgets and micromanage what children eat.

The vote, over a provision in the U.S. agriculture spending bill, is a proxy for a larger debate between Republicans, who call the rules a massive government overreach, and Democrats, who say the opposing party is trying to protect the interests of big food producers.”

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House Legislative Agenda; Farm Bill; Biotech; and, the Ag Economy

House Legislative Agenda- Ag Appropriations, CFTC

Matt Fuller reported on Friday at Roll Call Online that, “Majority Leader Eric Cantor laid out a busy legislative agenda for the remainder of June in a memo to House Republicans sent Friday, scheduling floor time to address issues at the Department of Veterans Affairs, three appropriations bills, three tax extender bills, and legislation to make gas and other energy prices cheaper. Notably absent from the agenda: any mention of immigration, an unemployment extension or the expiring Export-Import Bank.”

Cantor’s memo indicated that Agriculture was one of the three appropriations bills that would be considered.

More specifically, the Majority Leader’s schedule for this week noted that the Agriculture Appropriations measure was listed under the heading, “Tuesday, June 10th and the Balance of the Week;” and, a notice from the House Rules Committee indicated that the Agriculture Appropriations bill would be addressed at a hearing scheduled for Tuesday afternoon.

Recall that the Appropriations Committee passed the fiscal year 2015 Agriculture Appropriations bill on May 29, and that debate on the measure centered around controversial nutrition provisions regarding the allowance of “school districts a one-year waiver to opt out of improved nutrition standards promoted by Michelle Obama.”

Interestingly, as this appropriations issue potentially moves to the House floor this week, the Senate Agriculture Committee will also be holding a hearing Thursday titled, “A National Priority: The Importance of Child Nutrition Programs to our Nation’s Health, Economy and National Security.”

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Ag Economy; and Farm Bill Issues

Agricultural Economy

DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “Pork producers who have hogs testing positive for porcine epidemic diarrhea virus now will be required to report the outbreak to USDA and develop a strategy for improving biosecurity measures on their farm.

“USDA issued a federal order on Thursday requiring pork producers to notify the department when their hog herds test positive for PEDV. Producers must notify their veterinarians or the state veterinarian’s office about positive cases.

“While mandating producers report the disease, Agriculture Secretary Tom Vilsack told pork producers at the World Pork Expo that the federal order does not require herd quarantines or restrictions on the movement of animals. Those issues had been major concerns by industry leaders when USDA announced in April that it would get more engaged in trying to stem the spread of PEDV.”

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