Keith Good: Farm Bill Funds Rise for Organic Farmers, Fruit Growers

    Farm Bill

    Jennifer Steinhauer reported in yesterday’s New York Times that, “Within [the farm bill signed by President Obama last month] is a significant shift in the types of farmers who are now benefiting from taxpayer dollars, reflecting a decade of changing eating habits and cultural dispositions among American consumers. Organic farmers, fruit growers and hemp producers all did well in the new bill. An emphasis on locally grown, healthful foods appeals to a broad base of their constituents, members of both major parties said.”

    The article noted that, “While traditional commodities subsidies were cut by more than 30 percent to $23 billion over 10 years, funding for fruits and vegetables and organic programs increased by more than 50 percent over the same period, to about $3 billion.

    “Fruit and vegetable farmers, who have been largely shut out of the crop insurance programs that grain and other farmers have enjoyed for decades, now have far greater access. Other programs for those crops were increased by 55 percent from the 2008 bill, which expired last year, and block grants for their marketing programs grew exponentially.”

    Ms. Steinhauer added that, “In addition, money to help growers make the transition from conventional to organic farming rose to $57.5 million from $22 million. Money for oversight of the nation’s organic food program nearly doubled to $75 million over five years.

    “Programs that help food stamp recipients pay for fruits and vegetables — to get healthy food into neighborhoods that have few grocery stores and to get schools to grow their own food — all received large bumps in the bill.”

    Meanwhile, Bloomberg writers Derek Wallbank and Alan Bjerga reported on Friday that, “Congress last month passed a revamp of agriculture and food policy that was supposed to save the U.S. government $8.6 billion in food-stamp costs over a decade.

    “That may not happen now that some states are finding a way to avoid the cuts.

    “New York, Connecticut and Pennsylvania are triggering extra nutrition spending by adding money to a home-heating subsidy tied to increased food-stamp aid. The move feeds needy families while thwarting spending-reduction goals.”

    The article explained that, “Deficit watchers say they’re disappointed, while anti-hunger activists are lobbying other states to do the same. If more follow, the federal government would have to spend much of the $8.6 billion it planned to save, as states reduce spending on other programs to meet the new mandate.

    “‘Some states will be able to do it, some states will not be able to — no one knows for how long they’ll be able to do it,’ Connecticut Democratic Representative Rosa DeLauro said in an interview at the Capitol. ‘They have jumped into the breach where the federal government abdicated its responsibility.'”

    Also regarding this issue, The Wall Street Journal editorial board noted in Saturday’s paper that, “Governor Dannel Malloy last week announced that Connecticut would ‘expend $1.4 million in available federal energy assistance funding’ to raise minimum Liheap payments for 50,000 beneficiaries, or about a quarter of its food-stamp rolls. The increase to a nice round $20.01 from $1 will ‘preserve approximately $66.6 million’ a year in food-stamp benefits. So Connecticut will leverage $1 in additional federal Liheap funds to reap $48 more from Washington for food stamps.

    “Mr. Malloy’s neighbor Andrew Cuomo jumped for the free lunch the next day by declaring that New York would ‘dedicate approximately $6 million in additional federal’ heating assistance to maintain $457 million in food-stamp payments.”

    The Journal stated that, “Democrats made this swindle possible by adding some $169 million in additional heating assistance to cold-weather states to this year’s omnibus spending bill, including $50 million for New York. Meantime, 15 Democratic Senators have written to Health and Human Services Secretary Kathleen Sebelius begging for even more heat rub to assuage the food-stamp non-cuts. They were joined last week by 18 big-city mayors including Eric Garcetti from the Los Angeles tundra and Greg Stanton of the Phoenix arctic.

    “Republicans should have foreseen this Democratic cheat and eat, but many cared more about preserving fat subsidies for farmers than fixing food-stamp abuses. Once again, national taxpayers are footing a bipartisan meal ticket.”

    Holly Yeager reported in today’s Washington Post that, “At issue is the Special Supplemental Nutrition Program for Women, Infants and Children, known as WIC, which provides monthly vouchers to low-income pregnant women, mothers and children, and specifies which foods can be bought with the funds.

    “The new rule made several changes, including adding more whole grains and allowing yogurt as a partial substitute for milk. It also increased the amount allocated for fresh fruit and vegetables to $10 for women and $8 for children. But it left unchanged a provision that has been in place since 2009 that explicitly excludes white potatoes — and only white potatoes — from the list of permissible fresh produce.”

    The Post article noted that, “‘We have a problem when USDA tells a WIC participant that potatoes aren’t good enough to be purchased using a WIC voucher,’ said Mark Szymanski of the potato council, adding that the group is less concerned with the economic impact of the rule than with how it might damage perceptions of its product.”

    In other policy news, The New York Times editorial board opined yesterday that, “California voters and lawmakers have decided that, starting next year, all eggs sold in that state must come from hens that can stand up, lie down and extend their wings fully without touching another bird. This is a perfectly reasonable effort to improve, at least for one creature, the deplorable conditions associated with modern industrial farming. It could also improve public health. Astonishingly, the attorney general of Missouri, Chris Koster, has decided to sue to overturn the rule in federal court. The court should dismiss the case.”

    The Times added that, “California has long led the country in raising standards in many areas, like food safety and the fuel efficiency of cars. Federal courts have generally upheld the state’s rules, even when they have affected businesses elsewhere in the country. Last year, the United States Court of Appeals for the Ninth Circuit ruled in favor of a California law that banned the sale of any foie gras products made by force-feeding birds. Courts have also upheld the state’s auto standards, which have encouraged automakers to build more fuel-efficient cars.”

    In developments regarding regulations, Ben Goad reported on Saturday at The Hill’s RegWatch Blog that, “The Obama administration is forging ahead with plans to overhaul the nation’s poultry inspection program despite major concerns from Congress, public interest circles and government officials.

    “President Obama’s 2015 budget, unveiled last week, contains millions of dollars worth of projected savings attributed directly to regulations that would remove some federal inspectors from poultry plants and allow the industry to speed up production lines.”

    Mr. Goad explained that, “Rolling out the USDA’s budget request, Agriculture Secretary Tom Vilsack touted a proposed $9 million funding cut for FSIS, almost $7.5 million of which stems from the poultry inspection modernization.

    “‘So there’s been an aggressive effort focused on this,’ Vilsack told reporters. ‘The savings that’s in this budget is a result of a proposal to modernize poultry inspection, which has not really changed much in the last 60 years. I think we know a lot more about where pathogens attach, what pathogens are most of concern, and how we might be able to improve the inspection process, while at the same time … saving money.’

    “The regulations would move the focus of federal resources away from ‘evisceration lines’ at chicken and turkey slaughter plants in favor of more emphasis on off-line sampling for pathogenic microorganisms in poultry bound for commerce.”

    (Note that Sec. Vilsack will testify on the USDA budget this Friday, March 14, at the Agriculture Subcommittee of the House Appropriations Committee).

    Tim Devaney noted on Friday at The Hill’s RegWatch Blog that, “The Commodity Credit Corporation is moving forward with a rule that will make it easier for farmers to obtain small loans.

    “The agency announced Friday that it is raising the loan amount for which farmers will be required to employ additional security measures to $100,000 from $50,000. This is expected to save farmers money, because they will be able to get larger loans without having to pay additional money for security.

    “This existing rule only applies to loans that are secured with collateral which doesn’t have a resale value, the agency said.”

    In other news, Marco Santana and Jason Noble penned an article on the front page of yesterday’s Des Moines Register titled, “Broadband Internet: Challenges remain to connecting rural Iowa.”

    Agricultural Economy

    Kelsey Gee reported in today’s Wall Street Journal that, “Asia’s growing thirst for milk is spilling over into the U.S. market, pushing up prices for consumers and pressuring profits for some food makers.

    “U.S. exports of milk powder and other dairy products to China, Indonesia and Vietnam have surged in the past year, as drought curbed production in rival New Zealand, historically a big dairy supplier to Asia.

    “The record-setting exports are boosting incomes for American dairy farmers and sending milk futures soaring [see related graph].”

    Ms. Gee noted that, “But the price jump is squeezing some dairy processors, including Dean Foods Co. DF, the largest U.S. milk processor by sales, that are caught between higher ingredients costs and still-tepid U.S. consumer demand for milk.”

    “The average price for milk paid to U.S. dairy farmers in February reached a record 24.7 cents a pound, up 27% from a year earlier, according to the U.S. Department of Agriculture  [related graph].”

    And Bloomberg writer Supunnabul Suwannakij reported yesterday that, “Corn extended its retreat from a six-month high on speculation that exports from Ukraine, set to be the third-biggest shipper, will be unaffected by Russia’s military intervention in Crimea.”

    The article pointed out that, “Corn has rallied since Russia’s incursion into Ukraine’s Crimean peninsula, increasing risks of an escalating conflict and disruption of supplies from the region. Odessa and four other Black Sea ports, which handle 87 percent of Ukrainian grain exports, are a long way from Crimea and shipments are unlikely to be disrupted, Morgan Stanley said in a March 4 report. Western Bulk ASA, which operates more than 120 commodity ships, said last week cargo movements were unaffected.”

    Reuters writers Rod Nickel and David Ljunggren reported late last week that, “Canada’s government took the drastic step on Friday of forcing the country’s two major rail companies to each ship at least 500,000 tons of grain per week to ease a massive backlog that is hurting farmers.

    “Record crops of wheat and canola, along with frigid weather, have overwhelmed Canadian National Railway Co and Canadian Pacific Railway Ltd, resulting in overdue orders for tens of thousands of grain cars.”

    Meanwhile, AP writer M.L. Johnson reported on Saturday that, “The big pens and electronic feeding systems at Fair Oaks Farms in Indiana could be the future of the pork industry as consumers pressure farmers to move pregnant pigs out of individual stalls too narrow for the animals to turn around. The switch from gestation stalls is not as simple as many consumers believe, however. It’s expensive, there are debates over pen designs and it takes time to train pigs to use feeders and other equipment. In short, farmers are spending millions of dollars with no certainty yet that the changes are best for the animals.

    “Most bacon, ham and chops come from hogs that never spend time in the narrow breeding stalls, though the hogs’ mothers almost certainly did — if only a few days for insemination. More than four out of five sows in the U.S. remain in the stalls after they become pregnant, according to a 2012 study done for the National Pork Producers Council.

    “But a growing number are being moved into group pens as industry giants like Smithfield Foods and Cargill try to protect their brands from criticism by animal rights activists. Other major pork processors who have not required farms to convert are seeing some do so because image-conscious buyers, such as McDonald’s, Oscar Mayer and Safeway, have called for an end to gestation crates.”

    Also with respect to pork production, an update Friday at USDA’s Economic Research Service Chart Gallery webpage stated that, “In recent weeks there is evidence indicating acceleration in the rate of Porcine Epidemic Diarrhea Virus (PEDv) cases in the U.S. swine herd, currently leading to modest impacts on USDA forecasts of 2014 U.S. pork production [related chart].”

    And DTN writer Russ Quinn reported on Friday (link requires subscription) that, “Scientific testing cannot confirm a link between feed containing blood plasma and porcine epidemic diarrhea virus infections, the Canadian Food Inspection Agency announced earlier this week. Despite the lack of findings, hog industry experts believe this news will help researchers learn more about the disease and how it is spread.”

    Orlan Love reported yesterday at The Gazette (Cedar Rapids, Iowa) Online that, “Nutrient concentrations are going down in several major Iowa rivers.

    “Recent analyses show declining trend lines for nitrates in both the Raccoon and Iowa rivers, and a third analysis shows declines in both nitrates and phosphorus in the Upper Iowa River.

    “Those results bolster hopes that the state’s voluntary nutrient reduction strategy eventually will succeed in cutting by 45 percent the volume of nutrients flowing from Iowa.”

    Adam Nagourney reported on the front page of Saturday’s New York Times that, “There are scenes all across California that illustrate the power of the drought. A haze of smog, which normally would be washed away by winter rains, hung over Los Angeles this week. Beekeepers near Sacramento said the lack of wildflowers has deprived bees of a source of food, contributing to a worrisome die-off. Across the rich farmland of the San Joaquin Valley, fields are going unplanted.

    “But for 17 small rural communities in California, the absence of rain is posing a fundamental threat to the most basic of services: drinking water. And Lake of the Woods, a middle-class enclave 80 miles from downtown Los Angeles, a mix of commuters, retirees and weekend residents, is one of the most seriously threatened. Signs along its dusty roadways offer stark red-on-white warnings of a ‘Water Emergency’ and plead for conservation.”

    George Skelton indicated yesterday at the Los Angeles Times Online that, “Fallowed crops [in California] include tomatoes, melons, onions, broccoli and lettuce. And 1,100 acres of older almond trees have been chopped down to save the water for younger orchards.”

    In trade related news, Reuters writer Krista Hughes reported on Friday that, “The United States is finding talks with Japan on opening its agricultural market ‘extremely tough’, a senior U.S. trade official said on Friday, as the two countries prepared for another round of bilateral negotiations.

    “Japanese officials will visit Washington next week in a bid to break a deadlock over tariffs on farm and industrial products, which is drawing out plans to conclude a wider free trade agreement among 12 Pacific Rim nations, the Trans-Pacific Partnership (TPP).”

    The article stated that, “U.S. Acting Deputy Trade Representative Wendy Cutler said Japan was moving very slowly, despite a commitment to work towards a comprehensive and high-standard agreement when it joined the TPP talks last year.”

    Damon Kitney reported today at The Australian Online that, “The US government’s most senior official in Australia says Australian concerns about a new super regional trade agreement, the proposed Trans-Pacific Partnership, will be addressed when a final deal is concluded.

    “In an interview at the annual Australian-American Leadership Dialogue in Miami, US Ambassador to Australia John Berry said he was confident the final deal would win the support of the US congress.”

    The article added that, “While Mr Berry declined to comment on specific proposals under discussion, he said: ‘When those things come out there will be progress addressing Australia’s key concerns’…’I am very optimistic that recent progress by our Congress in multiple events – the passage of this year’s budget, the debt ceiling, the farm bill, all with historic margins and bipartisan compromise support – will show the way to the eventual securing of the passage of the TPP agreement,’ Mr Berry said.”

    And a transcript of a discussion on trade issues with Sec. of Agriculture Tom Vilsack and U.S. Trade Representative Michael Froman from Friday is available here.

    With respect to the TPP, Ambassador Froman noted that, “So, what I always say is, the timetable of the negotiations will be dictated by the substance. We want a good deal -it is a very high standard deal, it is an ambitious deal, it’s got to be comprehensive. We’re working very hard to open Japan’s market. We’re going to be working very hard to open Canada’s market, and we’ve got to make progress on that front before we can bring a deal home.”


    An update on Friday at the China Real Time Blog (Wall Street Journal) indicated that, “China has long faced unfavorable food math: It feeds a fifth of the world’s population on a seventh of its available land–and not the world’s most fertile, Beijing often complains. So the question in global agriculture markets has often been, Why not speed up use of genetically modified food?

    “Part of the answer came Thursday. China is trying to get in the GMO market, but is keener to develop its own technologies to meet rising agriculture demand, the country’s agriculture minister said at the national parliament.

    “China already allows some GMO imports, including in its sensitive grain category, but not for human consumption–only as animal feed. The population remains skeptical about allowing more.”


    An update on Friday at the U.S. Energy Information Administration Online indicated that, “The number of retail fueling stations offering motor fuel that can be up to 85% ethanol, known as E85, has grown rapidly since 2007. According to the Alternative Fuels Data Center (AFDC), Minnesota continues to lead the nation, with 336 E85 retail locations. However, in recent years, states outside of the Midwest have experienced some of the fastest growth. Currently, 2% of all retail stations in the United States offer E85, serving the approximately 5% of the U.S. light-duty vehicle fleet capable of running on E85 [see related graphs here and here].”

    Seth Meyer, Senior Economist in the USDA’s Office of the Chief Economist and University of Illinois Agricultural Economist Nick Paulson indicated on Friday at the farmdocDaily blog (“Export Markets for US Ethanol“) that, “While the lowering of biofuel mandates from legislated levels in the EPA’s proposed rule for the RFS in 2014 was seen as a blow to domestic ethanol and corn producers, strong ethanol exports have proven to be a bright spot for the industry. Strong margins have kept significant capacity in ethanol production, contributing to stable corn grind demand as covered by Darrel Good in a post last week. Current expectations for the 2013/14 crop year are for around 5 billion bushels of corn-for-ethanol demand. Depending on domestic ethanol use and the final RFS rule ethanol exports, continued strength in foreign demand could lead to ethanol exports in the range of 600 million to 1 billion gallons.”

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