FarmPolicy

November 23, 2014

Policy Issues; Ag Economy; Trade; Tax Extenders; Regs; Biotech; and, Immigration

Policy Issues

Bill Tomson reported yesterday at Politico that, “‘It’s never too early to start on the next farm bill,’ said Rep. Mike Conaway, the next chairman of the House Agriculture Committee.

“The Texas Republican, whose position in the top agriculture post was confirmed Tuesday by the House Republican Steering Committee, told POLITICO in an exclusive interview Friday that he’s already thinking about the 2019 farm bill, planning an in-depth review of the food stamp program and ready to help get an immigration reform bill done to help farmers.

“It’s too early to judge the major new subsidy programs in the 2014 farm bill — the five-year, $500 billion blueprint for U.S. agriculture policy that was only signed into law in February — but the next House Agriculture Committee chairman said he expects to begin drafting the next bill by 2017 or 2018 at the latest.”

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Policy Issues; Immigration; Ag Economy; Trade; Tax Extenders; and, Regulations

Policy Issues

A news release yesterday from Rep. Mike Conaway (R., Tex.) indicated that, “[Congressman Conaway] issued the following statement after the House Republican Steering Committee selected him as the 50th chairman of the House Committee on Agriculture.

“‘I am humbled and honored to be selected as the 50th chairman of the storied House Committee on Agriculture. The work that farmers and ranchers do is part of our country’s foundation. They feed, fuel, and clothe our nation. I look forward to building on the bipartisan work of the chairmen who have led this committee for the past two centuries.

“‘I represent, and love, rural America. It’s the backbone of our country. The values and concepts that make America great are stored in rural America, and I want to protect that. There are fewer and fewer voices representing rural America, and I am honored to be one of those voices. That is my overarching drive as the Committee moves forward.’”

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

Agricultural Economy

Jesse Newman reported on Friday at The Wall Street Journal Online that, “Farmland values rose in the third quarter in parts of the Midwest and southern U.S. despite declining farm incomes, according to a report Friday by the Federal Reserve Bank of St. Louis.

“The average price of ‘quality’ farmland in the St. Louis Fed’s district, which includes parts of Illinois, Kentucky and Mississippi, gained 11.8% from the second quarter to its highest level since the bank launched its survey of agricultural conditions two years ago.

“The findings contrasted with reports Thursday from other Fed banks in the Midwest that showed declines in their districts’ farmland values in the third quarter, as falling U.S. crop prices pinched demand for cropland.”

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Ag Economy; Policy Issues; Trade; Immigration- Budget; and, Biotech

Agricultural Economy

Jesse Newman reported yesterday at The Wall Street Journal Online that, “Farmland values declined across much of the Midwest in the third quarter, continuing a slowdown driven by two years of lower U.S. crop prices, according to Federal Reserve reports on Thursday.

“The average price of farmland in the Federal Reserve Bank of Chicago’s district, which includes Illinois, Iowa and other big farm states, fell 2% from the second quarter, the largest quarterly drop since the end of 2008, the Chicago Fed said.”

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Legislative Agenda; Farm Policy; Biotech; Regulations; and, Climate

Legislative Agenda: Keystone, Budget- Immigration Link, and Trade

Ashley Parker and Jeremy W. Peters reported in today’s New York Times that, “As newly victorious and recently vanquished members of Congress descended Wednesday on Capitol Hill, defeated Democrats trudged in for some of their final votes, ebullient Republicans toured their new digs, and the denouement of Election Day continued to play out as the House and the Senate scheduled dueling votes to try to influence the outcome of the lone unresolved Senate race in Louisiana.

“But Wednesday’s activities — or lack thereof — after a six-week absence from the Capitol underscored how much inertia still rules. Despite larger fights over funding the government, operations in Syria, and executive action on immigration, the only votes in the Senate on Wednesday were procedural steps on a pair of federal court nominees.”

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Policy Issues; Ag Econ; Biotech; Trade; Immigration; CFTC; and Climate

Policy Issues- Farm Bill, Tax Extenders

Chase Purdy reported yesterday at Politico that, “‘Kansas Republican Pat Roberts, the likely next chairman of the Senate Agriculture Committee, says he has no plans to reopen the farm bill to make any substantial changes,’ Pro Agriculture’s Bill Tomson reports this morning. ‘Roberts, who sought far bigger cuts to food stamps and opposed the price-based subsidies in the 2014 farm bill, stressed in an interview with POLITICO Monday that it would be a mistake to expose the massive five-year, $500 billion piece of legislation to others who would seek to make changes.’

“‘I do not intend to open up the farm bill,’ Roberts assured. ‘That would be irresponsible.’”

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

Policy Issues: Farm Bill; Tax Extenders; and Budget

Pat Westhoff, the director of the Food and Agricultural Policy Research Institute at the University of Missouri, indicated in a column on Saturday at the Columbia Daily Tribune (Mo.) Online that, “Our current set of farm and food policies only can be understood in the context of past budget debates. Although many other factors will drive future farm policy decisions, it’s a safe bet that budgetary concerns will continue to play a central role.

In 2011, Congress was considering a large budget deal, and the leaders of the House and Senate committees in charge of writing farm legislation put together a package designed to reduce federal spending on farm and nutrition programs by $23 billion over the next 10 years.

“That budget deal fell apart, but the agricultural and nutrition provisions that were intended to be part of that deal became the basis for what eventually became the 2014 farm bill. Indeed, the final farm bill still targeted the same $23 billion in savings initially proposed more than two years previously.”

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Broad Policy Issues; Farm-Food Policy; Ag Economy; and, Regulations

Broad Policy Issues- Budget, Taxes, Immigration, and Trade

Budget, and Taxes

Lori Montgomery and Ed O’Keefe reported in today’s Washington Post that, “Before ceding full control of Congress to the GOP in January, Senate Democrats are planning to rush a host of critical measures to President Obama’s desk, including bills to revive dozens of expired tax breaks and avoid a government shutdown for another year.”

The Post writers explained that, “Republican leaders, too, are inclined to clear the legislative decks of must-pass bills so they can start fresh in January, when they will have control of both chambers of Congress for the first time in eight years. Leaders from both parties are due at the White House for a lunch Friday to begin discussing the parameters of the possible in a new era of Republican domination.”

Today’s article noted that, “House and Senate negotiators have been at work for weeks on a comprehensive bill to fund federal agencies through next September, and aides said they hope to bring the measure to a vote before the Dec. 11 deadline.

Some conservatives are agitating for a temporary measure that would allow Republicans to revisit agency funding levels when they take charge early next year. But Republican leaders, including Sen. Mitch McConnell (Ky.), would rather get the bills for fiscal 2015, which began in October, out of the way so they can focus on crafting a budget for fiscal 2016.”

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Post Election Policy Issues; and, the Ag Economy

Post Election Policy Issues: Farm Bill, Tax Extenders, and Food Labeling

AP writer Steve Karnowski reported yesterday that, “U.S. Rep. Collin Peterson anticipates being able to work out compromises on agricultural issues in the next Congress, but said Wednesday he has concerns about the makeup of the next Senate Agriculture Committee.”

The article noted that, “Peterson worked closely with the Republican chairman of that committee, Rep. Frank Lucas of Oklahoma, to assemble and pass a compromise 2014 farm bill earlier this year. He doesn’t foresee any problems developing a similarly good working relationship with whoever replaces Lucas, who is term-limited under House GOP rules. Peterson said…[R]epublicans will take control of the Senate in 2015, and Kansas Sen. Pat Roberts, who survived a re-election fight, is considered to be the leading candidate to become the next chairman of the Senate Agriculture Committee, Peterson said. He pointed out that Roberts used his position as chairman of the House panel in 1996 to pass the ‘Freedom to Farm’ act, which was designed to wean farmers off subsidies in exchange for more flexibility in deciding what to grow. Roberts also voted against this year’s farm bill.

“‘He has made some noise about opening up the farm bill if he gets to be chairman, which is a very bad idea, and puts everything we worked for in jeopardy,’ Peterson said.”

Mr. Karnowski added that, “Peterson’s priorities in the next Congress will include implementing the farm bill; reviving stalled legislation to reauthorize the Commodity Futures Trading Commission through 2018, which passed the House but has not come up in the Senate; a five-year transportation bill; and changes to immigration law to address the need for more farm workers.”

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Ag Economy; Policy Issues; Regs; Biofuels; Climate; and Political Notes

Agricultural Economy

Grant Gerlock reported yesterday at The Salt blog (National Public Radio) that, “U.S. farmers are bringing in what’s expected to be a record-breaking harvest for both corn and soybeans. But for many farmers, that may be too much of a good thing.

“Farmers will haul in 4 billion bushels of soybeans and 14.5 billion bushels of corn, according to USDA estimates. The problem? Demand can’t keep up with that monster harvest. Corn and soybean prices have been falling for months. A bushel of corn is now worth under $4 — about half what it was two years ago.”

The update noted that, “That means a glut of corn and soybeans and the lowest prices in at least five years. To make matters worse, the oil boom in North Dakota is tying up the railways used to ship grain. Trains for things like coal or imports are also running behind. Bruce Blanton at the U.S. Department of Agriculture says the wait means some of the harvest could go to waste…[S]ome farmers will have so much grain to sell, they’ll still manage to make some money. Others will lean on saving or subsidized crop insurance. Low prices could even trigger a new set of government safety nets in the Farm Bill.

Cory Walters, an agricultural economist at the University of Nebraska-Lincoln, says rising costs for everything from seeds to fertilizer make these low commodity prices harder to handle.

“‘Does that mean we’re going to have multiple years of low prices and it’s all doom and gloom? No, I don’t buy that right now,’ Walters says. ‘Because there’s a lot of changes could happen from year to year on acreage, weather.’”

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

Agricultural Economy- Farm Income, Prices, and, Cost Variables

Marcia Zarley Taylor reported on Friday at DTN that, “A Halloween forecast by Purdue University paints a grim outlook for the grain economy through at least 2015, and possibly the next three or four years.

Indiana grain farm incomes are expected to tumble 30% in 2014 and another 35% in 2015, even including government payments under the new farm bill, Purdue Economist Chris Hurt said. He gauges the state’s grain incomes at $1.1 billion for 2015, down from the recent high of $3.4 billion in 2011.”

The DTN article noted that, “In a webinar on the changing business climate for agriculture, Hurt and other Purdue economists emphasized that cash rents and farm input costs have been slow to adjust to the new realities of commodity markets. The main problem is that production costs need to fall by about 20% to realign with the current price outlook.

The crop production system could be vulnerable for the next three or four years and possibly beyond that, Hurt said. ‘We have a cost structure that’s built on $5 corn and $12 soybeans, but the reality is the market is only going to offer $4 corn and $9 to $10 soybeans,’ Hurt said. ‘For some growers it will mean trauma or failure, but most will make the adjustments, given enough time.’”

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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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