Regulations
DTN writer Todd Neeley reported yesterday that, “American Farm Bureau Federation President Bob Stallman said in a statement Thursday that the industry’s attempts to reach out to EPA officials have been unsuccessful on many of the issues of concern for agriculture in the proposed Clean Water Act rule.
“This comes on the heels of EPA Administrator Gina McCarthy’s trip to Missouri last week, during which she met with farmers and gave a speech in front of agribusiness representatives, in an attempt to begin to calm the waters on the proposed rule.”
The DTN article noted that, “The AFBF released to Congress a 16-page response Wednesday evening to a July 7 blog written by EPA Acting Assistant Administrator Nancy Stoner, ‘Setting the Record Straight on Waters of the US,’ countering her point by point. In a news release Thursday, AFBF said that Stoner had made ‘numerous inaccurate and misleading comments’ about the proposed rule.
“One of the main concerns expressed by farmers and farm groups is that the 56 conservation practices listed in an interpretative rule released along with the larger CWA rule, essentially would narrow those practices exempt from the law by requiring farmers to follow Natural Resource Conservation Service specifications on those practices.”
Meanwhile, Jonathan Coppess and Barrett Kirwan of the University of Illinois posted an update yesterday at the Policy Matters blog (“Exploring Environmental Regulation of Agriculture“) which noted in part that, “Recently the U.S. Environmental Protection Agency (EPA) grabbed attention when it attempted to clarify the Clean Water Act by defining the term ‘waters of the United States.’ Many in agriculture have raised concerns about the definition and how it would impact farming and property owners, adding a new chapter to the long-running debate regarding environmental regulation of agriculture and land use. This article begins the exploration of environmental regulation, voluntary conservation and farming in America in an attempt to better understand the overall issues involved in this frequent and intense debate. The most direct environmental regulatory issue for agriculture involves water, and it provides the point of departure for this series with a look at the Clean Water Act.”
A news release yesterday from the National Farmers Union (NFU) stated that, “In a letter sent today to U.S. Environmental Protection Agency (EPA) Administrator Gina McCarthy, [NFU] President Roger Johnson asked for more information about which bodies of water would be deemed jurisdictional under the proposed Waters of the United States (WOTUS) rule.
“The letter was a follow-up to a conference call held this week between the Administrator and members of the NFU board of directors, which consists of Farmers Union state and regional presidents.”
Also yesterday, Timothy Cama reported at The Hill Online that, “Bob Perciasepe, deputy administrator of the Environmental Protection Agency (EPA), will resign next month to lead an energy and climate advocacy group, the agency announced Thursday.
“Perciasepe has been the agency’s second-highest official since 2009, but his total tenure at the EPA is 13 years, Administrator Gina McCarthy said in an internal email to staff.”
And on a separate issue, Tim Devaney reported yesterday at The Hill Online that, “The U.S. Department of Agriculture (USDA) is backing down from a GMO disclosure rule that would have provided state regulators with critical information about the genetically modified organisms that farmers use to spray their crops.
“In February 2013, the USDA’s Animal and Plant Health Inspection Service proposed sharing information with state regulators about genetically engineered organisms that are released in their jurisdictions. But the USDA withdrew the rule Thursday, because it said it found ‘potential vulnerabilities’ that would have put farmers’ businesses at risk.
“‘We have decided to withdraw the proposed rule to ensure that our ability to protect confidential business information from disclosure is maintained,’ the USDA wrote in the Federal Register.”
The Hill update stated that, “Farmers that want to use or import GMOs must register with the USDA and apply for permits. Through this process, the USDA receives information about farmers’ GMO use.
“But the agency is second-guessing a rule that would have allowed it to provide state regulators with this information, because it would serve as a business disruption for farmers. The information farmers provide to the USDA is supposed to remain confidential, but if the agency shares it with state regulators that could be an issue.”
Farm Bill
A news release yesterday from USDA indicated that, “[USDA] announced today that approximately $13 million in Farm Bill funding is now available for organic certification cost-share assistance, making certification more accessible than ever for small certified producers and handlers.”
University of Illinois agricultural economists John Newton and Todd Kuethe indicated yesterday at the farmdocDaily blog (“Mapping the Size of Dairy Safety Net Programs: Comparing MILC and the Margin Protection Program“) that, “In today’s article we will review the historical performance of the Milk Income Loss Contract (MILC) program using data provided by USDA Farm Service Agency (FSA). Then, we will demonstrate how the Margin Protection Program (MPP), by increasing production coverage to be more accommodating to all U.S. dairy producers, offers a larger safety net program and is capable of providing considerably more production coverage than the existing, and soon to be expired, MILC program.”
Livestock
Kenneth Mathews indicated yesterday in the most recent Livestock, Dairy, and Poultry Outlook (USDA- Economic Research Service) that, “Production forecasts for the corn and soybean crops to be harvested this fall indicate the potential for ample feed supplies[related graph]. As a result, corn prices are declining. The recent rains have also improved pasture conditions in most of the northern half of the United States. Despite recent improvements, most of the Southern Plains, Southwest, and West remains under serious drought conditions.”
Yesterday’s report also noted that, “USDA adjusted 2014 and 2015 pork production lower, based on losses from Porcine Epidemic Diarrhea (PEDv) reported in the Quarterly Hogs and Pigs. For 2014, hog prices are expected to average almost 25 percent above prices last year. Pork exports in May were slightly ahead of a year ago. Russia bought 20.7 million pounds of ractopamine-free U.S. pork in May.”
With respect to the dairy sector, yesterday’s ERS update indicated that, “Milk production is reduced fractionally from June based on lower expected yield per cow. Slightly lower production combined with firm domestic commercial use and exports act to keep milk and dairy product prices high this year. Cow numbers are forecast to rise 2015, based on improved producer returns, leading to higher production. Higher milk production next year will likely lead to lower milk and dairy product prices in 2015.”
The July Dairy Market Report (from Dairy Management Inc. and the National Milk Producers Federation) stated in part that, “The price of corn received by farmers, as reported by the National Agricultural Statistics Service (NASS), fell by $0.34 per bushel from May to June, reflecting a similar drop in corn futures contract average settlement prices over the same time. Corn futures prices have dropped in the wake of USDA reports showing larger-than-expected corn stocks and generally good growing conditions. This has raised expectations for record corn yields this fall and generated price projections around $4 per bushel for the crop year. The Agriculture Department also reported larger-than-expected stocks and planted acres of soybeans, which has generated continued pressure on soybean meal prices. NASS reported a slight easing in June from May’s record farm price for alfalfa hay. These price reductions equate to a $0.52- per-hundredweight reduction in the 2014 farm bill monthly feed cost formula price from May to June.
“The farm bill monthly milk-price-over-feed-cost margin calculation for June was $0.38 per hundredweight less than a month earlier. A $0.90-per-hundredweight drop from May to June in the all-milk price exceeded the smaller drop in monthly feed costs. The CME futures indicate the margin will move back up for July and August, with grain costs dropping as the harvest approaches. For the Margin Protection Program established in the new farm bill, the margin formula will be based on the two-month averages for January-February, March-April, May-June, July-August, September-October, and November-December. For the bill’s Dairy Product Donation Program, the margin will be determined monthly. Final regulations for the MPP program are expected by the beginning of September.”
And Elizabeth Williams reported yesterday at DTN that, “It seems almost sacrilegious to support higher interest rates in a capital-intensive industry such as agriculture. But attendees at the Kansas City Federal Reserve Bank’s Agricultural Symposium this week agreed with bank President Esther George’s statement that ‘getting interest rates off zero relatively soon is appropriate in terms of current economic conditions.’ George noted as Federal Reserve asset purchases come to an end, ‘It will be important to lay the groundwork for a more-normal rate environment.’
“‘Zero interest rates are appropriate in a crisis. The crisis is over,’ said Max Wake, president of Jones National Bank in Seward, Neb.”
The DTN article noted that, “How would agriculture weather a bump up in interest rates? ‘About 75% of our real estate loan portfolio is locked into fixed rates (10-, 15-, 20-year term) at around 4%-5%, which is a historically low rate,’ reported [Doug Stark, president of Farm Credit Services of America, based in Omaha]. ‘Also, the loan-to-value ratio on our real estate loans averages less than 50%. So, we could see a 30% to 35% drop in farmland values before we would be underwater on our loans.'”
Yesterday’s update also indicated that, “No one is expecting interest rates to jump in the near-term. The best economic news is the labor market is improving with unemployment now at 6.1% — the lowest in six years. But George noted we have yet to see a significant bounce in the economy since the recession ended about five years ago. Most analysts don’t expect the Fed to raise rates before mid-2015.”
In other news, Christopher Doering reported earlier this week at The Des Moines Register Online that, “Cargill said independent farms that supply it with turkey would stop giving the birds growth-promoting antibiotics.
“Cargill, which worked with the Agriculture Department to develop a three-part verification standard for its turkey production, said some of its products will be free of growth-promoting antibiotics by Thanksgiving with the rest of its flocks following by the end of 2015. Antibiotics would still be used to treat illness and prevent disease.”
Around the World
Alastair Stewart reported yesterday at DTN (link requires subscription) that, “When Brazil first exploded on the international grain markets in the 1980s and 1990s, it was the potential for expansion across the country’s vast Cerrado savannas that grabbed the world’s attention.”
The DTN article pointed out that, “The expansion continues — Brazilian soybean acreage rose 9% last year and will grow around 5% in 2014-15 — but new investments in logistics and technology are now overshadowing the outlay on clearing land.
“‘Investment is now much more concentrated on transporting produce to market and producing efficiently than clearance,’ said Anderson Galvao, CEO of Celeres, a local farm consultancy.
“The largest one-off sums are being spent by international trading companies, building new port facilities in the north and on barge, road and rail facilities to supply them.”
The DTN article explained that, “Ports such as Santarem, Miritituba, Belem and Sao Luis are closer to the Cerrado, but also to Europe and China, and allow exporters to completely bypass the overstretched infrastructure of Brazil’s southeast.
“These routes are absolutely vital to the continued growth of Brazilian grain production, which is expected to double during the next 10 to 20 years. They also promise to reduce the cost of freighting beans and corn from the Cerrado, which is deep in Brazil’s vast interior. That’s significant as Brazilian transport costs can be as much as four times greater than those in the U.S.”
In related news, Reuters writer Anthony Boadle reported this week that, “Brazil hopes that during a visit by Chinese President Xi Jinping it can boost ties with its biggest trade partner beyond the exchange of commodities for manufactured goods, but that may be wishful thinking.
“Accords China will sign with Brazil when Xi meets with President Dilma Rousseff on Thursday focus on improving infrastructure to make sure raw materials China is hungry for make it to port, with railways a top priority.”
The article added that, “Trade between China and Brazil soared to $83.3 billion last year from $3.2 billion in 2002, with iron ore, soy and oil making up the bulk of Brazilian exports.
“The Chinese have been making investment promises for years and failed to deliver. Three years after announcing plans to invest $2 billion in a soy-crushing plant and a giant storage hub in western Bahia, Chongqing Grain Group Corp has only managed to bulldoze a 100-hectare (250-acre) field.”
“Brazilian officials say China wants to enter partnerships to build railways to ship grains and minerals to Brazilian ports,” the article said.
In other news regarding Brazil, Reuters news reported yesterday that, “An impasse between U.S.-based Monsanto Co and soybean buyers in Brazil over royalty payments on a new seed technology may complicate the country’s sales of the upcoming oilseed crop.
“Monsanto has fought farmers over royalty payments for its seed technology in courts around the world. In Brazil, it now wants commodity trading firms to ensure farmers pay the proper fees for its new South American seed, Intacta RR 2 Pro.”
Meanwhile, In-Soo Nam reported today at The Wall Street Journal Online that, “South Korea said on Friday it will scrap rice-import caps starting next year, opening its market for the staple grain to foreign competition for the first time.
“The shift has long been expected as a 20-year-old agreement on rice import quotas with the World Trade Organization expires at the end of this year.
“Because an import duty will replace import limits, a surge of imports is unlikely. Government officials and industry experts have said the duty would likely be about 300% to 500%, though it isn’t final yet. Such a level would bring prices for imported rice largely in line with local grain.”
The Journal article added that, “Farmers have fretted that the high tariffs would eventually fall because of free-trade deals with other countries, thus opening the door to more imports and hitting domestic growers.
“The government said rice has been excluded from the free-trade agreements it has signed so far and no concessions will be made in future negotiations.”
Lastly today, Reuters writer Will Dunham reported yesterday that, “As far as agricultural genome research goes, this may be the best thing since sliced bread – wheat bread, that is.
“An international team of scientists on Thursday unveiled a genetic blueprint of wheat in an accomplishment that may help guide the breeding of varieties of the vitally important food crop that are more productive and more hardy.
“Researchers who are part of the International Wheat Genome Sequencing Consortium, formed in 2005 by a group of wheat growers, plant scientists and breeders, unveiled what they called a chromosome-based draft genome sequence of bread wheat, also known as common wheat.”
