Keith Good: With Midwest Grain Harvest Looming, Storage Concerns Grow

    Crop Watch

    Bloomberg writers Jeff Wilson, Lydia Mulvany and Megan Durisin reported yesterday that, “The ripening corn and soybean fields stretch for miles in every direction from Dennis Wentworth’s farm in Downs, Illinois. As he marveled at his best-yielding crops ever, he wondered aloud where the heck he’ll put it all.

    “‘Logistics are going to be a huge problem for everyone,’ the 62-year-old grower said, adding that he has invested in boosting output rather than grain bins. When harvesting starts in a few weeks, Wentworth expects his 150-year-old family farm to produce 10 percent more than last year’s record. ‘There are going to be some big piles of grain on the ground this fall.'”

    The Bloomberg writers explained that, “Cheaper grain is bolstering profit for buyers including Tyson Foods Inc. and Archer-Daniels-Midland Co., encouraging some cattle producers in the Great Plains to expand herds, and eroding income for farmers who say increased output will make up for some of the slump.”

    Yesterday’s article added that, “Through Aug. 16, the majority of the Midwest was slightly dry to abnormally moist, according to a weekly Crop Moisture Index from the National Oceanic and Atmospheric Administration [NOAA]. Temperatures that have been cooler than normal will remain average or below average through the end of August, the agency forecasts.”

    This regional map, which was tweeted yesterday by NOAA’s National Climatic Data Center, showed dryness expanding in parts of southern Minnesota, Iowa, Indiana and Missouri, as of August 19.

    Jesse Newman reported yesterday at The Wall Street Journal Online that, “Soybean crops in Iowa and Minnesota are predicted to far exceed last year’s harvest, according to an average of survey results collected by scouts on a yearly tour across the Midwest.”

    Ms. Newman indicated that, “The massive soybean crop due to be harvested this fall will dwarf previous years.”

    The Journal article noted that, “Survey results for corn in the state of Iowa, meanwhile, averaged 178.75 bushels an acre, up nearly 4% from the tour’s estimate of 171.94 bushels last year, but lower than the USDA’s 2014 forecast of 185 bushels.

    “In Minnesota, crop scouts reported an average yield estimate of 170.76 bushels an acre, lower than last year’s tour average but above the USDA’s forecast of 168 bushels for 2014.”

    Yesterday’s update added that, “The USDA in August predicted U.S. corn farmers would harvest more than 14 billion bushels, surpassing last year’s record crop. The promise of a bumper crop has pushed down corn prices near four-year lows this year, after dropping 40% last year.”

    The U.S. Drought Monitor (U.S. map hereindicated yesterday that, “[R]ainfall during the last few weeks has been many times normal in part of the deserts of southeastern California, and severe drought was improved to moderate drought in some of this area where precipitation totals are now above normal for at least the last 6 months. Unfortunately, rainfall in this arid region will have no impact on the water shortages and seriously low reservoir stores reported throughout the state.”

    AP writer Terence Chea reported yesterday that, “California’s record drought hasn’t been sweet to honeybees, and it’s creating a sticky situation for beekeepers and honey buyers.

    “The state is traditionally one of the country’s largest honey producers, with abundant crops and wildflowers that provide the nectar that bees turn into honey. But the lack of rain has ravaged native plants and forced farmers to scale back crop production, leaving fewer places for honeybees to forage.”

    Looking ahead, NOAA’s National Weather Service indicated in a tweet yesterday that, “Drought expected to persist in West, improve in SW Plains & SE thru Nov.” See this related map, “U.S. Seasonal Drought Outlook.”

    Also with respect to drought issues, the AP reported yesterday that, “Central America is having one of its worst droughts in decades, and experts warned Thursday that major farm losses and the deaths of hundreds of cattle in the region could leave hundreds of thousands of families without food.”

    In other developments, the USDA’s Grain Transportation Report from yesterday noted in part that, “On August 18, the Surface Transportation Board (STB) announced there will be a public field hearing in Fargo, ND, on September 4, to give an opportunity for interested parties to comment on rail service problems and for rail carriers to report on their efforts to address problems. This hearing follows up STB’s June 20 announcement directing Canadian Pacific (CP) and BNSF Railway (BNSF) to provide plans for reducing their backlog of unfilled grain car orders, resolve delays, and provide weekly progress updates. Compared to BNSF, STB believes CP has not made considerable progress in reducing its backlog and has been providing indeterminate data that suggest it will not clear its grain car backlog prior to harvest. In the August 18 announcement, STB ordered CP to provide an updated plan to resolve its backlog; and submit additional data in its weekly reports concerning the supply of locomotives to the Rapid City, Pierre, and Eastern Railroad, a shortline railroad passing through South Dakota. That railroad was sold by CP in May but is still dependent on CP for locomotives. BNSF must also include additional data in the weekly reports concerning its plan versus performance for shuttle movements of grain.”

    From a global perspective, Reuters writer Valerie Parent reported yesterday that, “France’s rain-hit wheat crop has delivered the first shock of the 2014/15 season: the EU’s top grower and exporter is buying Lithuanian and British milling wheat to mix with its unusually poor-grade crop to meet contracts signed before the harvest.

    “French exports exceed those of Britain and Lithuania on the world market, but a wet summer has meant France is set to produce more wheat for animal feed and less higher grade bread-making grain this year.”

    Bloomberg writer Jen Skerritt reported yesterday that, “Canadian wheat growers will probably reduce output by 26 percent this year and canola production will also fall, the government’s statistics agency said today.”

    And Reuters news reported yesterday that, “Rabobank, the leading Dutch lender in the agriculture sector, said on Thursday its direct exposure to Russian sanctions was limited but some of its clients were suffering big losses due to a ban on imports of fruit and vegetables.”

    Bloomberg writers Corina Ruhe and Maud van Gaal pointed out this week that, “Russia’s ban on imports of western food could cost the European Union an annual 6.7 billion euros ($9 billion) in lost production, according to ING Groep NV.

    “‘The potential effects of the Russian embargo on imports of Western food go far beyond the effects,’ of fruit and perishable vegetables, economists including Raoul Leering at Amsterdam-based ING said in a research note. Their calculations, which include the ‘value added’ created by international trade, put the number of jobs at stake at 130,000.”

    Meanwhile, Reuters writers Niu Shuping and Dominique Patton reported yesterday that, “Chinese authorities are stepping up checks on U.S. cargoes of sorghum, traders said, potentially curbing shipments from the world’s largest exporter of the corn-substitute.

    “Four traders with direct knowledge of the matter said the country’s quarantine office last month asked local authorities to tighten checks of sorghum and barley, looking for impurities such as pesticide residues and heavy metals.”

    Policy Issues

    Nirmala Menon reported yesterday at The Wall Street Journal Online that, “The U.S. has lost a key round at the World Trade Organization in a trade dispute with Canada and Mexico over meat labeling, according to people familiar with the WTO’s findings.

    “Canada and Mexico opposed a new U.S. rule that requires more information on labels about the origins of beef, pork and other meats, which went into effect in November. They took their case to the WTO, saying the rule hurts their competitiveness. The WTO panel that heard oral arguments in the dispute over the so-called country-of-origin labeling rule earlier this year has decided in favor of Canada and Mexico, according to sources familiar with the panel’s confidential report.

    “The report, which the three governments have received, is expected to be made public in late September or early October, these sources said.”

    The Journal article noted that, “The U.S. Department of Agriculture issued the new rule after a WTO finding in 2012 that an earlier version was discriminatory. But Canada and Mexico said the amended rule was even more onerous, and limited exports of cattle and hogs into the U.S from their countries. The animals end up being sold at a discount to those from the U.S., they said.”

    Ohio State University agricultural economist Carl Zulauf, and Jonathan Coppess, Gary Schnitkey, and Nick Paulson from the University of Illinois, indicated yesterday at the farmdocDaily blog (“2014 Farm Bill Decisions: Payment Limits and Adjusted Gross Income Eligibility“) that, “As with all recent farm bills, payment limits were a hotly debated topic in the 2014 farm bill. This article discusses most of the bill’s provisions that pertain to limits on Title 1 crop program payments as well as the Adjusted Gross Income (AGI) eligibility criterion for payments by crop and other programs. Payments limits are a technical and legal issue. Any decision on the number of entities receiving payments should be made with due diligence, including careful consideration of the business and legal implications, and should be discussed with both FSA and a lawyer who is an expert on payments limits. This article only serves as a starting point for thinking about this issue.”

    An update yesterday from the U.S. Government Accountability Office (GAO) (“Supplemental Nutrition Assistance Program: Enhanced Detection Tools and Reporting Could Improve Efforts to Combat Recipient Fraud“) noted in part that, “The 11 states GAO reviewed employed a range of detection tools, but experienced mixed success investigating and pursuing cases to combat potential Supplemental Nutrition Assistance Program (SNAP) recipient fraud. States reported using detection tools required or recommended by the Food and Nutrition Service (FNS), such as matching recipient data against prisoner and death files. However, most of selected states reported difficulties in conducting fraud investigations due to either reduced or maintained staff levels while SNAP recipient numbers greatly increased from fiscal year 2009 through 2013. Some state officials suggested changing the financial incentives structure to help support the costs of investigating potential SNAP fraud. For example, investigative agencies are not rewarded for cost-effective, anti-fraud efforts which prevent ineligible people from receiving benefits at all.”

    The GAO report stated that, “GAO recommends, among other things, that FNS reassess current financial incentives and detection tools and issue guidance to help states better detect fraud and report on their anti-fraud efforts. Agency officials agreed with our recommendations.”

    Also yesterday, a news release yesterday from USDA’s Food and Nutrition Service stated that, “Agriculture Under Secretary Kevin Concannon today announced additional tools to help schools serve healthier meals and snacks as students return for the new school year.

    “The announcement includes $5.7 million in Team Nutrition grants to state agencies administering the National School Lunch and Child and Adult Care Food Programs. The grants will help states expand and enhance training programs that help schools encourage kids to make healthy choices. Several states will use the grants to increase the number of schools implementing Smarter Lunchroom strategies, which are methods for encouraging kids to choose healthy foods that were developed by child nutrition experts. Research has shown these strategies successfully lead to healthier choices among students. USDA is also funding 2,500 toolkits to provide school districts with the resources they need to take advantage of research on Smarter Lunchroom strategies.”

    In other developments, David Pierson reported yesterday at the Los Angeles Times Online that, “Swiss corporate giant Nestle pledged broad new animal welfare standards for its worldwide suppliers Thursday, becoming the latest major food company looking to limit some of the harmful effects of its global footprint.”

    An update yesterday from Ken Klippen, spokesman for the National Association of Egg Farmers (NAEF), noted in part that, “The [NAEF] representing egg farmers throughout the USA expressed disappointment in the partnership between Nestle and World Animal Protection without the benefit of farmers’ input in defending the science behind their production practices.”

    “NAEF stated that Nestle has effectively invited the ‘fox into the chicken coop’ that will do the opposite of the stated purpose to provide better welfare for the animals among its 7,300 suppliers. Before other companies make the same mistake of Nestle, NAEF urged that farmers must have a seat at the table in the decision making process.”


    An update yesterday from the American Soybean Association (ASA) indicated that, “In letters sent this week to the European Commission and the U.S. Trade Representative, the [ASA] urged that the European Union (EU) take action in September on nine biotech events that have received positive safety reviews and are awaiting final import authorization. ASA was joined on the letters by 18 other farm, commodity, grain processing, grain trade, and biotechnology associations throughout the U.S. agricultural value chain. There are currently nine products, including four soybean products, which have already received positive European Food Safety Authority (EFSA) opinions and completed the subsequent review process, but are still awaiting final authorization for import for food and feed use from the EU’s College of Commissioners.”

    Michael Specter of The New Yorker provided an interesting report relating to biotechnology and genetically modified crops in the August 25 issue of the magazine. The article, “Seeds of Doubt, An activist’s controversial crusade against genetically modified crops,” can befound here.

    Political Notes

    Sam Youngman reported this week at the Lexington Herald-Leader Online that, “In a warm-up for their only scheduled debate this fall, Kentucky’s two major U.S. Senate candidates assailed each other as they discussed farm-related policy at the Kentucky Farm Bureau’s ‘Measure the Candidates’ forum.”

    And John Harwood presented a “Q and A” update yesterday at The Caucus blog (New York Times) titled, “10 Questions for the Iowa Senate Candidates.”

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