Agricultural Economy
Kelsey Gee reported in Saturday’s Wall Street Journal that, “China has imposed tougher restrictions for imports of live pigs from the U.S. amid concerns about a fatal swine virus, according to the U.S. Department of Agriculture and livestock-industry officials.
“China, the world’s largest consumer of pork, has asked the USDA to conduct testing and provide certification that live hogs come from herds that are free of porcine epidemic diarrhea, or PED, virus. The disease has expanded to nearly 30 U.S. states and killed millions of young pigs since it was first identified in the country last spring, according to industry estimates [additional background here].”
Reuters writer Tom Polansek reported on Saturday that, “The U.S. Department of Agriculture is ‘capable and willing’ to establish testing and certification protocols for live animals exported to China, said Joelle Hayden, spokeswoman for USDA’s Animal and Plant Health Inspection Service.
“The United States also is working with the Chinese government to remove the requirements, she said.”
Mr. Polansek added that, “Some veterinarians in the United States think the U.S. outbreak can be traced back to China, which had its own outbreak of PEDv in 2010, said Chris Hurt, an agricultural economist at Purdue University.
“‘Any country would be very, very hesitant to be importing live animals from the United States at this point,’ he added.”
A news release late last week from University of Missouri Extension noted that, “Missouri pork producers are stepping up biosecurity measures to keep the porcine epidemic disease virus (PEDV) from spreading. University of Missouri Extension swine nutrition specialist Marcia Shannon said these efforts have kept Missouri numbers lower than national figures.”
Bloomberg writer Elizabeth Campbell reported on Friday that, “Hog futures posted the biggest weekly decline in more than four years as confirmed cases of a piglet-killing virus slowed amid speculation that high pork prices are eroding demand.”
Meanwhile, Bloomberg writer Jeff Wilson reported on Friday that, “It’s been a double-whammy winter for wheat farmers in the U.S., the world’s largest exporter.
“With drought already sapping soil moisture across the Great Plains, the biggest growing region, a polar vortex in early 2014 draped fields in a deep freeze, killing more plants than normal. Since crops began going dormant in November, conditions deteriorated by the most in five years, according to grain brokers Jefferies Bache LLC and CHS Hedging Inc [additional background here].”
Isabella Steger reported on Friday at The Wall Street Journal Online that, “The price of U.S. cheese has jumped to a record high thanks in part to an appetite for pizza and junk food from emerging markets like South Korea [related graph].
“Koreans have developed a taste for cheese, particularly on pizzas, turning the country into the second-biggest importer of cheese from the U.S. after Mexico. The Asian nation imported 49,000 metric tons in 2013, 25% more than the previous year, according to data from the U.S. Dairy Export Council. In dollar terms, U.S. cheese exports to South Korea rose to $348 million last year from $276 million the year before, having surpassed Japan and Canada in 2010.”
Also, a news release on Friday from Sen. Pat Roberts (R., Kan.) stated that, “U.S. Senators [Roberts] and Tammy Baldwin (D-Wis.), joined by Patrick Toomey (R-Pa.), Rob Portman (R-Ohio) and others, today fought attempts by the European Union (EU) to impair U.S. trade by restricting the ability of U.S. producers to use the common names of meat products like bologna and black forest ham at home and abroad.”
Also on Friday, Reuters writers Niu Shuping and David Stanway reported that, “China has still not approved a gene-modified strain of corn known as MIR162, the government said on Friday, prolonging a ban that has seen nearly 1 million tonnes of the U.S. grain turned away from Chinese ports since November.
“Asked if its biosafety panel had made a final decision, the agriculture ministry said it was still evaluating materials related to the strain that had been submitted late last year by developer Syngenta.”
And in an interesting discussion with The Wall Street Journal’s Sara Murray on Friday (video replay here), Cargill executive chairman Gregory Page discussed the impact of global warming on the nation’s food supply, rising food prices and the battle over labeling genetically modified foods. In part, Mr. Page noted that: “We can’t expect to feed 9 billion increasingly prosperous people using Medieval farming practices.”
Also, Tony C. Dreibus and Bob Tita reported on late last week at The Wall Street Journal Online that, “U.S. ethanol and railroad industry groups clashed Thursday over transportation constraints that have triggered soaring prices for the biofuel in recent weeks.
“Renewable Fuels Association President Bob Dinneen said in a letter to the Association of American Railroads that the “sheer chaos” of the rail system has pushed up prices for ethanol–a corn-based biofuel that is blended into gasoline–and caused consumers to pay more at the pump. The higher costs, he argued, have damaged the image of the ethanol industry.”
Immigration
Ed O’Keefe and David Nakamura reported in Saturday’s Washington Post that, “One of the few House Republican proposals aimed at allowing some undocumented immigrants to become legal U.S. residents was blocked Friday by a powerful committee chairman, who said he would not allow the measure to move forward in his bill.
“The decision by House Armed Services Chairman Howard ‘Buck’ McKeon (R-Calif.) further lowers the odds that any immigration reform proposal will pass in the Republican-controlled House this year.”
And The New York Times editorial board indicated yesterday that, “If President Obama means what he says about wanting an immigration system that reflects American values, helps the economy and taps the yearnings of millions of Americans-in-waiting, he is going to have to do something about it — soon and on his own. It has been frustrating to watch his yes-we-can promises on immigration reform fade to protestations of impotence and the blaming of others. All Mr. Obama has been saying lately is: No, in fact, we can’t, because Republicans and the law won’t let me.”
Farm Bill- Policy Issues
Ron Hays, of The Oklahoma Farm Report and Radio Oklahoma Network, spoke on Saturday with House Ag Committee Chairman Frank Lucas (R., Okla.) about the Farm Bill and farm policy variables at an agriculture town hall during the Oklahoma City Farm Show.
An audio replay and summary of the Chairman’s remarks from Saturday can be found here , while an unofficial FarmPolicy.com tran
Chairman Lucas walked the crowd through a brief overview of the development of the 2014 Farm Bill including some of the political realities that contributed to “a two and a half year process of passing a Farm Bill” that “should have taken six months.”
Ron Hays asked Chairman Lucas specifically about the failure of the Farm Bill to pass on the House floor in June of 2013: “What went through your mind? We’ve seen a picture of you on the floor after the vote was finished, kind of had the head down a little bit. What was going through your mind?”
(Here is the picture from The Washington Post that Mr. Hays was referencing).
Chairman Lucas noted that, “You would almost think I was standing in front of church after a funeral taking condolences from both sides. And the reporter from The [Washington] Post, which is not generally supportive of ag issues, was fascinated that with the intensity of the debate and the way it had all been handled, the fact that my colleagues on both sides of the room were expressing their condolences to me.”
On the crop insurance issue, Chairman Lucas indicated on Saturday that, “When people say that we’ve spent too much money on crop insurance, remember, crop insurance is like any other insurance now. It’s only there when you need it. If you look at the last ten years, 70% of the policies that have been issued, or 70% of the premiums that cover the policies, generated no return. We had a terrible year in ’11 and ’12. In corn country they had a terrible year in ’12. That’s why we see these payments in recent times.
“So insurance is there not because you’re gonna get something out of it every year. You don’t. You don’t want your house to burn down when you buy property insurance. You don’t want your teenager to wipe out your car when you buy car insurance. But you pay the premium. So that’s a point.
“Another point. Between the 2008 Farm Bill–once again, I was not Chairman or Ranking Member–between the money they took out of the crop insurance fund then and when the White House renegotiated–the Administration is a better way to put that–renegotiated the reimbursement rates for the crop insurance in 2010, between those two, they took out $17 billion. Crop insurance has given rather heavily already in the process.”
In reference to a recent measure that has been introduced in the Senate dealing with a cap on crop insurance premiums, Chairman Lucas explained that, “This bill is sincerely wrong. It is being pushed… . The group in the Capitol Building that pushes this, stepping away from the members, are what I refer to as the professional environmentalists. They don’t like crop insurance because they don’t like farming. So if you take away part of the safety net, you discourage farming.”
Meanwhile, Secretary of Agriculture Tom Vilsack was a guest Friday on the Iowa Press television program (video replay and transcript here) where he was asked: “The Iowa House this past week passed a resolution calling for the repeal of a California law that deals with the production of eggs. In other words, the space in which the hens are kept in the houses for laying the eggs. What, in your view, is the proper role of the federal government in dealing with this California law?”
Sec. Vilsack noted that, “At this point in time I was in favor of the agreement that had been worked out between the egg producers and the Humane Society that would have resulted in the passage of federal legislation that would have created a single federal standard. For whatever reason there was not sufficient support for that in the Congress, which I think is unfortunate.”
In response to a separate question on the egg production issue, Sec. Vilsack added that, “I think there’s obviously litigation and I think we’re going to have to wait and see what the courts ultimately decide and how they might be able to work through this. I think eventually we’re going to get to a point where we’re going to get back to where the Humane Society and the egg producers were. I think the reason why that was not supported was because other producers in the country were concerned that it might extend to their production processes and I think that was not necessarily a well-founded concern. I think this is a pretty isolated circumstance where people sat down and worked things out. It’s unfortunate it didn’t get worked out.”
During the Iowa Press discussion, Sec. Vilsack was also asked about a recent FDA rule “that would regulate spent grain from distilleries and ethanol production,” an issue that Sen. Roy Blunt (R., Mo.) discussed with FDA Commissioner Margaret A. Hamburg in a detailed conversation last week at a Senate Agriculture Appropriations Subcommittee hearing- related audio here (MP3- 2:55).
And in response to a question about the a recently proposed EPA rule relating to the Clean Water Act, Sec. Vilsack stated that, “But we have worked with the EPA on the Clean Water Act and what we did was ensure that in this act, first and foremost, the exemptions for normal farming activities continue. That can’t be underemphasized in this discussion. Normal farming activities are not subject to the Clean Water Act. Secondly, we asked the EPA to make sure thatthey didn’t do anything to make more difficult the regulations on ditches, on tile drainage, on lagoons, on storm water ponds, on artificial ponds that are created for some production processes like rice. They were happy to do that. And then finally, finally they listed 56 specific conservation activities for which there is no notification or permitting required. This is a new effort on the part of EPA to be quite specific about what is and what is not regulated in the Clean Water Act. So, I think we have still conversation to work through and I think it is very easy for people to get stirred up about a regulation. If they really read the regulation, if they really spend some time thinking about it I think what they’re going to find is that this is a significant improvement over what we had before.”
Chairman Lucas offered a different perspective on the EPA proposed water rule in his discussion on Saturday with Ron Hays in Oklahoma City, a portion of the Chairman’s comments on this issue can be read here in this unofficial FarmPolicy.com
More specifically on the agricultural economy, Sec. Vilsack noted on the Iowa Press program that, “I think the ag economy is still strong. We had a record year last year in income. This year is going to be slightly less than the record but still way above the ten year average for income. We are continuing to see very strong exports, looking at potentially another record year in exports, record highs in beef, poultry and pork exports.”
Sec. Vilsack added that, “There are challenges no question and you have mentioned the pig virus [porcine epidemic diarrhea, or PEDv], which is a big, big deal and a concern for all of us, and we are really focused on trying to provide producers with the best information on how to minimize the losses. We’re working through our Ames laboratory and trying to figure out how we might be able to create a vaccine for this. But obviously it is worrisome.”
And on the vaccine issue, the former Iowa governor explained that, “Well, it could happen any day or it could be quite a while, quite a ways away. This is a virus that started in Europe and China, it’s been around for quite some time. It came to the U.S., it spread very quickly. We think we have some best practices in terms of mitigating the consequences but we haven’t quite figured out what causes it or how to stop it.”
In other policy news, the House Appropriations Agriculture Subcommittee held a hearing Friday and heard testimony from Doug O’Brien, the USDA Deputy Under Secretary for Rural Development, and on Tuesday, the same Subcommittee will hear from USDA Under Secretary for Farm and Foreign Agriculture Services Michael Scuse, along with the Administrators of the Farm Service Agency, Risk Management Agency and Natural Resources Conservation Service.
Also on Tuesday, the Senate Ag Committee will hold a hearing titled, “Advanced Biofuels: Creating Jobs and Lower Prices at the Pump.”
On Wednesday, EPA Administrator Gina McCarthy will testify at the Senate Appropriations Interior, Environment Subcommittee.
In more specific news relating to the Farm Bill, Marcia Zarley Taylor reported on Friday at the DTN Minding Ag’s Business Blog that, “[F]arm operators and their landowners will need to make an irrevocable, five-year commitment to one of several Farm Bill program options for the 2015 crop. Agriculture Risk Coverage (ARC) provides protection when crop revenue falls 14% below a five-year rolling Olympic average revenue benchmark. The producer chooses whether the benchmark is based on 85% county yield x the crop’s season-average cash price or 65% of his or her individual crop yield x season-average price. (If this sounds a lot like the old ACRE program, or the more familiar county-based GRIP insurance policies, you’re getting the picture).”
The DTN update noted that, “Your irrevocable 2014 farm bill decisions are getting complicated by this spring’s surprise price rally. While it was widely assumed commodity prices were headed for a multi-year crash when the farm bill was being drafted, few experts considered what your best risk management options would be if markets stayed near levels achieved over the last two months.”
Friday’s update added that, “‘At the moment, there’s little chance that Price Loss Coverage (PLC) will pay on wheat in the first year [of the five-year program] and it’s unlikely PLC will ever pay on soybeans and corn even in later years,’ Kansas State University economist Art Barnaby told webinar attendees Friday. He’s maintains that if we stay in the realm of these recent prices, ‘crop insurance will be what carries you and it will be very much like marketing grain. You’ll only know what you should have done after the fact.'”
Nick Paulson, Jonathan Coppess and Todd Kuethe of the University of Illinois indicated late last week at the farmdocDaily blog (“2014 Farm Bill: Updating Payment Yields“) that, “One of the decisions the new farm bill provides to landowners is whether to update the payment yields used for the farm in calculating Price Loss Coverage (PLC) payments. Previous posts have reviewed the programs in the new farm bill and the different decisions that need to be made beginning with the 2014 crop year (more information can be found here). This post looks more closely at the decision to update payment yields.”
Meanwhile, AP writer Steve Karnowski reported on Saturday that, “Wildlife and environmental groups are claiming victory for conservation practices in the new farm bill, where two of their top priorities made it into law.
“Farmers will be required to use good conservation practices on highly erodible lands and protect wetlands to qualify for crop insurance subsidies. And the law requires ‘sodsaver’ protections to discourage farmers from plowing up native grasslands in several Plains and Midwest states.”
And in more livestock related news, DTN Ag Policy Editor Chris Clayton reported on Friday (link requires subscription) that, “A federal appeals court has opted to hold a hearing for all of its judges following a ruling last week by a three-judge panel in favor of USDA’s country-of-origin labels for meat.
“The ruling and new court hearing add another twist in the long-simmering battle between advocates and opponents of labeling the nationality of a beef ribeye or pork butt.
“The U.S. Court of Appeals in the District of Columbia on Friday issued an order vacating last week’s three-judge ruling that had denied a preliminary injunction against USDA’s enforcement of the COOL rule. Now, the entire group of judges in the U.S. Court of Appeals will hear the case in May. The three-judge panel had suggested the case be heard ‘en banc,’ or before all the judges.”
The Los Angeles Times editorial board opined on Saturday that, “Skeptics scoffed late last year when the Food and Drug Administration issued guidelines to restrict the use of antibiotics in livestock… . [S]o far, the results are much rosier. In just the last four months, 25 of the 26 pharmaceutical companies that make antibiotics that are important for human as well as veterinary treatment have agreed to new drug labels prohibiting their use for growth promotion in livestock. (The 26th company is a small firm that caters to the fish farming industry.) In addition, the drugs must be prescribed by a veterinarian rather than sold over the counter; that will end the practice of adding them to feed… . It’s an extraordinary achievement for the FDA… .”
And Kimberly Kindy reported on the front page of Saturday’s Washington Post that, “An alliance of food activists and anti-regulation libertarians is battling to legalize raw, unpasteurized milk, despite warnings from health officials about the rising toll of illnesses affecting adults and children alike… . [D]uring this legislative session, 40 bills have been introduced in 23 state capitals, all seeking to legalize unpasteurized milk within state borders.
“And in Congress, Rep. Thomas Massie (R-Ky.), who raises grass-fed cattle and says he grew up drinking unpasteurized milk, introduced two bills last week that would get the Food and Drug Administration out of the business of policing raw milk sales.”
