Regulations
AP writer Mary Clare Jalonick reported yesterday that, “Faced with tougher and more resistant weeds, corn and soybean farmers are anxiously awaiting government decisions on a new version of a popular herbicide — and on genetically modified seeds to grow crops designed to resist it.”
The article pointed out that, “The Environmental Protection Agency is expected to rule this fall on Dow AgroSciences’ application to market Enlist, a new version of the 2,4-D herbicide that’s been around since the 1940s. It’s partly a game of catch-up for the agriculture industry, as many farmers are dealing with weeds that have become resistant to glyphosate, an herbicide commonly used on corn and soybeans now.
“If approved, the 2,4-D would be used in combination with glyphosate.
“An Agriculture Department decision on the company’s genetically modified seeds also is expected this fall. In the department’s final environmental review released last week, the USDA recommended approval. The agency said that if both the seeds and herbicide are approved, the use of 2,4-D could increase by an estimated 200 to 600 percent by the year 2020.”
Farm Bill
DTN Executive Editor Marcia Zarley Taylor reported yesterday at the Minding Ag’s Business blog that, “Great Plains wheat growers were howling over USDA’s decision to postpone a big promise in the 2014 farm bill, as DTN’s Chris Clayton and Jerry Hagstrom reported last week (see ‘Vilsack Resists APH Update‘).
“Growers victimized by years of severe Great Plains drought had fought for a provision to update their crop insurance Actual Production History, or APH, to exclude years in which county yields fell more than 50% below the 10-year average. Under such dire countywide conditions, growers were supposed to be able to delete their own low performance year from their APH history and divide their averages by nine. This was a way for grain producers with near zero yields to retain some semblance of insurance coverage, but prevent fraud since the county would need to suffer a disaster before an individual could erase low yields. Growers in adjacent counties would also be eligible for yield forgiveness.”
The DTN update noted that, “Failure to implement the rule in 2015 will affect both crop insurance coverage and the new Supplemental Coverage Option (SCO) available to producers who elect Price Loss Coverage, he [Kansas State University economist Art Barnaby] adds. SCO is triggered by county yield but payments are then based on the individual’s APH.
“USDA counters it didn’t have enough resources to implement the crop insurance rule for 2015, and calls the county and individual calculations ‘complex’ and IT intense. Barnaby suspects crop insurance companies objected that insurance rates would need to be adjusted to take the relaxed APH formula into account, something he thinks could have been accommodated administratively.
“What’s more, it’s not just Texas, Oklahoma, Kansas
Also yesterday, agricultural economists Carl Zulauf (Ohio State University) and Gary Schnitkey (University of Illinois) indicated at the farmdocDaily blog (“ARC-CO and PLC Payment Indicator Using August WASDE U.S. Yield and Price“) that, “The 2014 farm bill gives Farm Service Agency (FSA) farm owners the option to choose their crop program for the 2014 through 2018 crop years. A factor, perhaps key factor that will influence this decision is the payment by the program choices for the 2014 crop year. This article uses the just released U.S. yield and price estimates in the August 2014 World Agricultural Supply and Demand Estimates (WASDE) to calculate an indicator of potential payments by the Agriculture Revenue Coverage – county program (ARC-CO) and the Price Loss Coverage (PLC) program. The indicator estimates are for the 2014 crop year for barley, corn, oats, long grain rice, medium (and short) grain rice, sorghum, soybeans, and wheat. These are indicator estimates because they use U.S. yield not county yield or farm payment yield, as ARC-CO and PLC use, respectively. AR-CO payments, for example, will vary across counties, with some counties having no payments due to high yields and some counties having large payments due to low yields. Thus, this article is not estimating payments that an individual FSA farm owner would receive. Nevertheless, the indicator estimates using U.S. yields should help frame questions and perspectives for FSA farm owners regarding program choices.”
After additional explanation, the farmdoc daily update noted that, “Using the midpoint of the WASDE range of prices for the 2014 crop year, ARC-CO payments are indicated for corn and sorghum. PLC payments are indicated for barley, long grain rice, and sorghum. The highest indicated payment is long grain rice from PLC at $90 per acre, with the second highest being corn from ARC-CO at $41 per acre. The only crop with indicated payments from both programs is sorghum at $3 from ARC-CO and $15 from PLC [see related graph]. Remember, actual payments depend upon county yield for ARC-CO and FSA farm payment yield for PLC, and payment is made on only 85% of base acres (65% for ARC-IC).”
“When the low price in the range of crop year prices projected by WASDE is used, only medium/short grain rice and soybeans have no payment indicated. ARC has no payment indicated for long grain rice. PLC has no payment indicated for oats and wheat. Both programs have payments indicated for barley, corn and sorghum. ARC has the higher payment indicated for corn. PLC has the higher payment indicated for barley and sorghum. The highest per acre payment indicated is $120 for long grain rice by PLC, with the next highest being $79 for corn by ARC-CO [see related graph].”
Meanwhile, a news release on Tuesday from USDA’s Risk Management Agency (RMA) stated that, “[RMA] today announced that the Stacked Income Protection Plan (STAX) will be available to upland cotton producers through the federal crop insurance program beginning with the 2015 crop year. STAX is one of several new risk management options created by the 2014 Farm Bill that will help protect farmers from events beyond their control such as weather disasters.”
Crop Watch
Bloomberg writer Ranjeetha Pakiam reported today that, “Corn dropped for the first time this week as forecasts for rain in the U.S. are seen aiding crops estimated to reach a record. Soybeans retreated for a fourth day to the lowest since 2010.”
Roberto A. Ferdman reported yesterday at the Wonkblog (Washington Post) that, “Healthy American harvests are driving prices down significantly. Corn, wheat, and soybean prices have fallen by 35 percent, 12 percent, and 13 percent, respectively, this year, and are forecast to fall even further in 2015 [related graph].”
Beyond the U.S., DTN China Correspondent Lin Tan reported yesterday (link requires subscription) that, “China’s state-owned corn reserves have reached burdensome levels, especially when faced with the prospect of another good corn harvest this fall, a Chinese official told DTN.
“‘Corn production in China is expected to be 230 million metric tons (9.1 billion bushels) this year, an increase of 4 mmt from last year,’ said Qiangmin Shang, the director of China National Grain and Oil Information Center.”
Also this week, University of Illinois agricultural economist Scott Irwin briefly discussed the potential impact of lower commodity prices on cash rents in this one-minute segment from USDA’s Radio News Service.
Bloomberg writer Liezel Hill reported yesterday that, “[Deere & Co.] said agricultural-equipment sales will be flat or worse in each of its regional segments, with a decline of about 10 percent seen in the U.S. and Canada, which together are the company’s largest market. Falling commodity prices are contributing to a reduction in farm income, which in turn is putting pressure on demand for farm equipment, it said.”
Reuters writer James B. Kelleher reported yesterday that, “The prospect of a bumper crop has sent corn and soybean prices plummeting and soured farmers on making new capital investments in their operations.”
With respect to the drought in California, AP writer Fenit Nirappil reported today that, “Driven to action by the state’s historic drought, California lawmakers on Wednesday voted to place a $7.5 billion water plan before voters in November.
“The measure marks the largest investment in decades in the state’s water infrastructure and is designed to build reservoirs, clean up contaminated groundwater and promote water-saving technologies.”
A news release yesterday from Western Growers noted in part that, “Statement by President and CEO of Western Growers Tom Nassif on today’s passage of the $7.5 billion water bond legislation by the California Assembly and Senate:
“‘Western Growers applauds passage of legislation today by the California Assembly and Senate establishing a $7.5 billion water bond that includes $2.7 billion for storage. We are especially pleased that the storage portion of this legislation is a continuous appropriation preventing the legislature from withholding funding. Passage of this legislation is an essential first step in adding capacity to our state’s existing storage infrastructure.'”
A tweet yesterday from NOAA’s National Climatic Data Center (NCDC) included an interesting graph depicting the amount of precipitation required to end the current drought in one month.
In other news, Reuters writer P.J. Huffstutter reported earlier this week that, “Beef Products Inc will reopen a Kansas processing plant on Monday to boost production of ‘lean finely textured beef,’ which critics call ‘pink slime,’ as wholesale beef prices soar with a shrinking U.S. cattle herd. The reopening of the Garden City, Kansas, plant comes more than two years after it was shuttered following a national media controversy about the BPI product.”
And Reuters writer Edward McAllister reported yesterday that, “The millions of Americans that use propane to heat their homes, dry crops or keep livestock warm expect another tough winter this year as a fragmented supply network of pipelines, trains and trucks struggles to keep pace with spiking demand.
“Last winter’s brutal cold forced supply rationing across large swathes of the country, pushed prices to record highs and dented farming productivity as distributors struggled to get fuel to customers.
“As a result, skittish consumers are buying more fuel this year and buying it earlier; many have ordered more storage tanks to stockpile fuel.”
In news regarding transportation
“‘With the railroad situation the way it is, it almost looks hopeless as far as catching up’ for storage capacity normally at least 90 percent empty at this time, said Wisness, the president of the North Dakota Grain Growers Association.
“BNSF Railway, owned by Warren Buffett’s Berkshire Hathaway Inc., and Canadian Pacific Railway Ltd. (CP) struggled with ‘greater-than-normal’ demand from shippers of coal, oil and Midwest crops, the U.S. Department of Agriculture said last week in a report. Record-high grain and soybean harvests anticipated this year may exacerbate the squeeze in silo space.”
From an international perspective, Reuters writers Maggie Fick and Maha El Dahan reported yesterday that, “After seizing five oil fields and Iraq’s biggest dam, Sunni militants bent on creating an Islamic empire in the Middle East now control yet another powerful economic weapon – wheat supplies.
“Fighters from the Islamic State have overrun large areas in five of Iraq’s most fertile provinces, where the United Nations food agency says around 40 percent of its wheat is grown.”
The article pointed out that, “While Iraq faces no immediate food shortages, the longer term outlook is deeply uncertain.”
Trade Issues
In developments associated with recent agricultural import restrictions imposed by Russia, Christian Oliver, Ian Mount and Kerin Hope reported yesterday at The Financial Times Online that, “Moscow’s embargo in response to last month’s sanctions by the EU and US has compounded problems for Mediterranean peach farmers who were already on their knees, suffering from a supply glut caused by unusual weather conditions.”
The FT article noted that, “Although 10 per cent of EU food exports traditionally head to Russia, officials in Brussels are increasingly confident that the agonies of the stoned-fruit sector will be an anomaly in the latest trade war between Brussels and Moscow. With some assistance, other EU farmers will ride out the storm and find new markets, they argue.”
Yesterday’s article added that, “As the biggest meat exporter to Russia, Germany has struck a defiant tone. Christian Schmidt, agriculture minister, said the effects of Russia’s embargo would be ‘visible’ but that he had ‘no fears of these sanctions causing market upheavals.'”
Marina Koren reported yesterday at National Journal Online that, “Almonds may have surpassed peanuts in popularity in the United States, but peanuts are in a pretty good place right now.
“Peanuts, raw or processed, are not included in a recent Russian ban on food imports from countries that have imposed sanctions against it for the Ukraine crisis, according to the American Peanut Council. The official document announcing the ban includes numeric codes that correspond to affected commodities, such as meat, fish, and cheese. The code for tree nuts, such as almonds, cashews, pecans and walnuts, is listed; the code for peanuts–which are not nuts, but legumes–is not.”
The update explained that, “So why did Russia leave peanuts off the list? It may be because Russia, thanks to its climate, cannot grow peanuts on its own, and depends entirely on imports to meet consumer demand. But Russia can’t grow tree nuts, either, except for pine nuts. In any case, demand in Russia is up for peanuts and all nuts. During the first two months of this year, Russia imported 70 percent more peanuts in volume than it did during the same time period in 2012, according to the U.S. Foreign Agriculture Service.”
In other trade news, an update yesterday at Feedstuffs Online stated that, “Six U.S. processing plants and six cold storage facilities are now ineligible to export pork to China, according to the U.S. Department of Agriculture.
“Among the listed plants include Tyson Foods, Inc. in Iowa and Indiana, Hormel Foods Corp in Nebraska, Triumph Foods in Missouri and Quality Pork Processors in Minnesota.
“China barred pork imports to enforce its ban on the feed additive ractopamine. Currently, China requires third party verification that US pork shipped to the country is free of the feed additive.”
