FarmPolicy

February 28, 2015

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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Agricultural Economy; CFTC (MF Global); Policy; and, Budget Issues

Agricultural Economy

Reuters writers Polina Devitt and Maha El Dahan reported earlier this week that, “Russia’s grain exports have stopped due to curbs brought in to protect domestic supply, putting big deals at risk, an influential farm lobby group said on Wednesday.”

The article indicated that, “Moscow imposed informal grain export controls with tougher quality monitoring and limits on railroad loadings earlier this month, as it tackles a financial crisis linked to plunging oil and Western sanctions.

“‘Since last Thursday not a single vessel, which had been due to sail under contracts, has left,’ Arkady Zlochevsky, the head of Russia’s Grain Union, the farmers lobby group, said.

“Officials also plan to impose duty on grain exports. Zlochevsky said its exact level was an unimportant detail, as he was sure it would be prohibitive.”

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Biotech; Policy Issues; and, the Agricultural Economy (Food Prices)

Biotech

Lucy Hornby reported yesterday at The Financial Times Online that, “In a speech a year ago, Xi Jinping backed China’s development of genetically modified crops as a means of strengthening food security. But even he hedged a little, warning: ‘Be bold in research, careful in promotion.’

“China’s pro-GM camp is now counting on the president’s support to unblock a bureaucratic stalemate that has stalled development of the crops by the world’s largest food consumer.

“After waves of state funding, researchers have developed a number of crops and are now just waiting for the green light to commercialise them. But approval will be slow in coming as long as public opinion — and more importantly, officialdom — remains firmly anti-GM.”

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Policy Issues; Cuba; Agricultural Economy; and, Regulations

Policy Issues

DTN Ag Policy Editor Chris Clayton reported yesterday that, “Congress wants USDA to operate like a business, but Agriculture Secretary Tom Vilsack is complaining that Congress is willing to spend $1.5 million on outside studies to duplicate work his department has already finished.

“Vilsack, in a phone interview with DTN on Thursday, expressed his frustration with some of the policy riders in the $1.1 trillion funding bill Congress approved. The policy restrictions ranged from blocking the secretary from creating a new beef checkoff to preventing the Farm Service Agency from eliminating its smallest offices nationally.

“‘I would say that it’s somewhat puzzling when Congress says ‘operate USDA like a business’ and then doesn’t give you the tools and flexibility to do so,’ the secretary said.”

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Agricultural Economy; Cuba Issues; and, Regulations

Agricultural Economy

Joel Aschbrenner reported on the front page of the Business Section in Friday’s Des Moines Register that, “Iowa farmland prices fell 8.9 percent in the past year, the largest annual decline in 28 years, according to a report released Thursday by the Center for Agricultural and Rural Development at Iowa State University.

But the average price of $7,943 per acre is still more than double what it was a decade ago, and economists say they expect farmland values to level off.”

The article noted that, “‘Commodity prices and farm income are settling back to more expected levels, and I think land values will probably move sideways for a while,’ Michael Duffy, a retired Iowa State economics professor who conducted the survey, said in a news release.”

“‘Many people think this report indicates the beginning of another farm crisis, but land values are still considerably higher than they were just a few years ago.’”

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Cuba Policy; Trade Issues; Biotech (Labeling); Ag Economy; and, Policy Issues

Cuba Policy

Karen DeYoung and Carol Morello reported on the front page of today’s Washington Post that, “In the wake of President Obama’s historic decision to mend diplomatic ties with Cuba, U.S. businesses and potential tourists scrambled to figure out what new opportunities will be available on the island and to position themselves at the head of the line.

“The political conversation sparked by Obama’s Wednesday announcement grew in both volume and dogmatism. Some hailed the opening as the dawn of pragmatic diplomacy. Others denounced it as a presidential sellout.”

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Cuba Policy; China (Trade-Biotech); and, the Agricultural Economy

Cuba Policy

Geoff Dyer and Marc Frank reported yesterday at The Financial Times Online that, “The US is to open talks with Cuba about establishing full diplomatic relations and reopening an embassy in Havana, potentially bringing to an end more than five decades of hostility and one of the last vestiges of the Cold War.

“The dramatic move to thaw relations began with a prisoner swap on Wednesday, including three Cuban agents held in US jails and Alan Gross, an American development worker who has been in a Cuban prison for five years on spying charges. The US said an unnamed Cuban man who had provided ‘critical’ intelligence to the US had also been released from a Cuban jail after almost 20 years.”

The FT article explained that, “The push to ease ties with Cuba could bring to an end more than 50 years of US economic sanctions which were put in place just after the Cuban Missile Crisis of 1962 in a bid to isolate the island and contain its ambitions to export communism.”

“‘These 50 years have shown that isolation has not worked. It’s time for a new approach,’ Mr Obama said in a televised address. ‘It does not serve America’s interests, or the Cuban people, to try to push Cuba towards collapse,’ he said. ‘Let us leave behind the legacy of both colonisation and communism, the tyranny of drug cartels, dictators and sham elections.’

US officials said that the administration was relaxing some restrictions on commerce with Cuba, although bigger steps to unwind the embargo would require the approval of Congress,” the FT article said.

Dyer and Frank added that, “Marco Rubio, the Florida senator who is the son of Cuban immigrants, immediately denounced the initiative and said he would work to block efforts at opening trade and commerce with Cuba.”

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

Tax Extenders- Budget

Michael A. Memoli reported yesterday at the Los Angeles Times Online that, “A turbulent lame-duck session of Congress came to a sudden end Tuesday as the Senate rushed to clear a lingering tax bill and some key presidential nominations in a late-night flurry of final votes.

Lawmakers signed off on a deal to extend $45 billion worth of tax breaks through this calendar year, ensuring that businesses and individuals can claim the deductions in their next IRS filings. The 76-16 vote also approved what had been a separate bill to create new tax-free accounts that can be used for the care of disabled family members.”

The article explained that, “The agreement sent lawmakers home earlier than many had expected just a few days ago, when Sen. Ted Cruz (R-Texas) forced members into a marathon weekend session as he made a final, unsuccessful effort to derail President Obama’s new immigration policy during consideration of the $1.1-trillion spending deal.

Congress passed the bill Saturday and Obama signed the package into law without ceremony Tuesday night, the White House announced.”

Mr. Memoli stated that, “The Senate formally adjourned shortly before midnight. The House, which has already wrapped up its work, will follow suit this week.”

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ERS: Food accounts for 13 percent of American households’ budgets

ers

From the U.S. Department of Agriculture’s Economic Research Service (ERS)- “With a 12.9-percent share, food ranked third behind housing (33.6 percent) and transportation (17.6 percent) in a typical American household’s 2013 expenditures. Breaking down food spending further, 7.8 percent of expenditures were spent at the grocery store and 5.1 percent at restaurants. Price changes for the items in the different budget categories relative to each other play a role in the categories’ shares of annual household consumer expenditures. Over the last 10 years, retail food price inflation has often outpaced economy-wide inflation. Between 2004 and 2013, prices for all U.S. goods and services rose an average of 2.4 percent per year, while food prices increased an average of 2.8 percent. Despite higher food price inflation, food’s share of consumer expenditures fell slightly (0.4 percentage points) over the decade, as the budget shares for health care and housing rose. This chart appears in the ERS data product, Ag and Food Statistics: Charting the Essentials. More information on ERS’s food price forecasts can be found in ERS’s Food Price Outlook data product.”

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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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ERS: Bulk commodity prices pull down U.S. agricultural export forecast

ers

From the U.S. Department of Agriculture’s Economic Research Service (ERS)- “Fiscal 2015 U.S. agricultural exports are forecast at $143.5 billion, $9.0 billion below fiscal 2014, primarily because of the outlook for lower bulk commodity prices. Grain and feed sales are forecast down 18 percent from fiscal 2014 as lower prices, as well as reduced volumes, reduce the value of corn and wheat exports. Lower prices are expected to reduce oilseed and product exports by 15 percent, despite the outlook for larger export volumes. In contrast, horticultural product exports are forecast to grow 11 percent to $37 billion, making them the largest category of U.S. agricultural exports for the first time. Livestock products are also forecast to grow about 3 percent in fiscal 2015, primarily due to higher meat prices. The trade outlook indicates a decline in U.S. agricultural exports across global regions. Lower prices are expected to reduce the value of exports to China, the largest U.S. agricultural market, by about 7 percent to $24.0 billion. Sales to Canada, the second largest U.S. market, are forecast to hold steady at about $21.8 billion, while sales to Mexico slip about 4 percent to $18.7 billion. Find additional analysis in Outlook for U.S. Agricultural Trade: December 2014.”

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Budget; Biotech; Agricultural Economy; and, Policy Issues

Budget

Ashley Parker and Robert Pear reported in yesterday’s New York Times that, “After moments of high drama, dry process and acrimony, the Senate passed a sweeping $1.1 trillion spending package Saturday night, abruptly ending several days of chaotic legislative maneuvers and clearing the bill for President Obama to sign.

“The legislation, which will fund most of the government through the fiscal year that ends in September, passed in a bipartisan vote, 56 to 40, after a turbulent process — a fitting coda for a governing body that has often failed to govern.”

Robert Pear reported on the front page of today’s New York Times that, “Health insurance companies preserved their tax breaks. Farmers and ranchers were spared having to report on pollution from manure. Tourist destinations like Las Vegas benefited from a travel promotion program.

“Also buried in the giant spending bill that cleared the Senate on Saturday and is headed to President Obama for his signature were provisions that prohibit the federal government from requiring less salt in school lunches and allow schools to obtain exemptions from whole-grain requirements for pasta and tortillas.

“The watered-down standards for school meals were a setback for the first lady, Michelle Obama, who had vowed to fight ‘until the bitter end’ for tougher nutrition standards. But they were a victory for food companies and some local school officials, who had sought changes in regulations that are taking effect over several years.”

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Ag Economy; Biotech; Biofuels; Policy Issues; and, Budget Developments

Agricultural Economy

An update yesterday from the Food and Agriculture Organization of the United Nations stated that, “Latest indications confirm that world cereal production will reach an all-time record of more than 2.5 billion tonnes in 2014.

“Buoyed by bumper crops in Europe and a record maize output in the United States of America, this year’s cereal output should reach 2.532 billion tonnes, including rice in milled terms, or 0.3% higher than 2013, according to FAO’s latest Crop Prospects and Food Situation Report.

“The record global cereal harvest in 2014 will outpace projected world cereal utilization in 2014/15, allowing stocks to rise to their highest level since 2000 and pushing the worldwide stock-to-use ratio, a proxy measure for supply conditions, to rise to 25.2 percent, its highest level in 13 years, according to FAO.”

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Biotech; Biofuels; CFTC; Policy Issues; Budget; and, Ag Economy

Yesterday, lawmakers on Capitol Hill held three separate hearings on important topics germane to U.S. farm and food policy. The hearings highlighted issues associated with biotechnology, biofuels and the Commodity Futures Trading Commission.

Biotechnology, GMO Food Labeling

AP writer Mary Clare Jalonick reported yesterday that, “The food industry is likely to find a receptive Congress come January in its fight against mandatory labeling of genetically modified foods.

“Republicans and Democrats on a House Energy and Commerce subcommittee questioned Wednesday whether requiring a label on any packaged food including genetically modified organisms — or foods grown from seeds engineered in labs — would be misleading to consumers since there is little scientific evidence that such foods are unsafe. The food industry has made a similar argument.

“Congress has shown increasing interest in getting involved in the labeling debate as the food industry has faced a potential patchwork of state laws requiring it. The hearing previewed GOP efforts to push legislation next year that would reaffirm that such food labels are voluntary, overriding any state laws that require them. The bill, introduced by Rep. Mike Pompeo, R-Kansas, has the backing of the food industry.”

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Budget; Policy Issues; and, the Agricultural Economy

Budget

Ashley Parker and Jonathan Weisman reported in today’s New York Times that, “Congressional leaders reached a deal Tuesday on a more than $1 trillion spending package that would fund most of the federal government through the current fiscal year.

“But because negotiations on the package dragged over policy details, House lawmakers also prepared to move on a short-term spending measure that would avert a government shutdown if Congress cannot pass the larger bill by Thursday, when the current funding expires.”

The Times article explained that, “The spending bill would fund nearly all of the federal government through September 2015, except for the Department of Homeland Security, which it would fund only through February, in retaliation for President Obama’s unilateral action to defer the deportation of as many as five million undocumented immigrants. Congressional Republicans plan to take up funding for the agency — which has primary responsibility for carrying out the president’s immigration directive — early next year, when they will control both chambers of Congress and believe they will have more leverage.”

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Budget; Policy Issues; Agricultural Economy; and, Biotech

Budget

Ed O’Keefe reported in today’s Washington Post that, “Plans to quickly approve a $1.1 trillion spending package to keep most of the federal government open through the end of the fiscal year fell apart late Monday, increasing the chance lawmakers will miss a Thursday deadline.

“Just in case, top appropriators said Monday that they were ready to pass a short-term extension of a few days in order to give the House and Senate more time to pass the final bill and end the least productive congressional session in modern history.

“Top leaders spent most of Monday reviewing the final details of the massive spending bill, but hopes of unveiling the legislation by midnight were dashed amid last-minute disagreements over the renewal of a terrorism insurance program.”

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