Keith Good: Grain Production Losses in Iowa in 2014 Could Reach $2.6B

    Crop Watch

    Donnelle Eller reported on the front page of yesterday’s Des Moines Register that, “As good as the outlook is for cattle producers over the next couple of years, it is about as grim for Iowa corn and soybean growers, thanks to tumbling commodity prices and the stubbornly high cost of growing crops.

    “Lower grain prices have helped cattle, pork and other livestock producers post improved profits. But the price slump also creates economic uncertainty in a state that leads the nation in corn production and ranks second in soybeans. As Iowa grain farmers brace for potential losses, leaders ask: How much will farm income drop, and how far will it ripple?”

    The article noted that, “Chad Hart, an Iowa State University farm economist, estimates that grain production losses in Iowa this year could be as high as $2.6 billion, based on year-end pricing. Farmers who nailed down higher prices earlier in the year will fare better. Overall, improved profits from livestock producers are expected to more than offset grain losses.”

    The Register article added that, “Hart agreed that government subsidies will help mute the effect of lower prices and compensate some Iowa farmers for crop damage this year, such as heavy spring rains in north Iowa. ‘But it doesn’t get you out of the hole,’ he said. ‘It just makes the hole less deep.'”

    Tom Meersman reported yesterday at the Minneapolis Star Tribune Online that, “Strong crop yields in the state — and record-breaking crops nationally— have produced plentiful grain in 2014. However, bountiful supplies mean lower prices per bushel, and some Minnesota growers will lose money or consider themselves lucky to break even.”

    The article explained that, “Robert Craven, a University of Minnesota Extension economist, estimated that corn growers pay a little more than $5 a bushel for seed, fertilizer, land rent and other costs, on average, and they are faced with prices well below $4 a bushel. Average costs to grow soybeans are also higher than current selling prices, he said.”

    Meanwhile, Michael Hiltzik indicated in yesterday’s Los Angeles Times that, “Addressing the drought is complicated, technical and politically charged. Billions of dollars in business investments are at stake, so millions are available to push legislators in one direction or another — especially if the key discussions are held behind closed doors.

    “That’s why it’s probably a good thing that Sen. Dianne Feinstein (D-Calif.) last week abandoned her effort to craft a drought relief bill in haste and through private conversations with Central Valley Republican members of Congress and lobbyists for well-heeled water users. Many of those parties live to overturn the federal Endangered Species Act and Clean Water Act, which they say deprive Central Valley growers of desperately needed water.

    “Feinstein’s original goal was to reach agreement with the Republicans by Dec. 11, when Congress goes home for the holidays. Her plan now is to move a bill through the GOP-majority 2015 Senate under ‘regular order,’ meaning it will be subject to public committee hearings, presumably with testimony from commercial fishers and environmental advocates who complained they were shut out of the earlier talks.”

    Angel Jennings, also writing in yesterday’s Los Angeles Times, reported that, “Get out those rain boots and umbrellas. Forecasters are expecting the biggest rainstorm since February to hit the Los Angeles area… . [S]howers are expected to continue into Wednesday and Thursday, bringing much needed rain to the drought-stricken region.

    “This would be the area’s first major rainstorm since the end of February, when a three-day storm brought 4 inches of precipitation.”

    From an international perspective, Bloomberg writer Aya Takada reported yesterday that, “Japan’s dairies and cake lovers just can’t seem to catch a break.

    “A weakening yen is making it more expensive for farmers to import the U.S. corn their cows eat at a time when record crops have reduced livestock-feeding costs around the world. And while Japanese milk demand is increasing and prices of some dairy products are at record highs, domestic production is the lowest in three decades even as rising output everywhere else creates a global surplus.

    “Prime Minister Shinzo Abe’s bid to revive growth with unprecedented monetary easing sent the yen to a seven-year low against the dollar as Japan has slipped into a recession for the fourth time since 2008. The currency’s slide compounded the profit squeeze on a dairy industry already losing market share to imported cheese and milk, while the government pushes free trade pacts that it says will boost supplies and lower costs.”

    In transportation developments, Reuters News reported on Saturday that, “The Canadian government on Saturday extended the requirement that the country’s two big railways ship a minimum amount of grain per week, but reduced the requisite amount in light of this year’s smaller harvest… . ‘Our government continues to act to ensure that grain and all commodities get to market in a timely manner,’ Agriculture Minister Gerry Ritz said in announcing the new rules, which take effect on Sunday.”

    The article noted that, “But mills and processors based in eastern Canada and the United States that rely on western grains had said they were at a disadvantage as railways maximize volume through the West Coast to meet the government’s targets at the expense of their markets.”

    In other news, AP writer Jonathan Mattise reported on Saturday that, “In Appalachia, beekeepers say reclaimed surface mines make a lot of sense for the trade… . [B]ut for bees, which fly about 2 miles in any direction from their hives, the result sounds pretty good: expansive areas that coal companies restored, replanted and relined. They can grow young flowering plants and trees across hundreds of continuous square acres, all at once.”

    And Quentin Hardy reported in today’s New York Times that, “[Kip Tom, 59, a seventh-generation family farmer], is as much a chief technology officer as he is a farmer. Where his great-great-grandfather hitched a mule, ‘we’ve got sensors on the combine, GPS data from satellites, cellular modems on self-driving tractors, apps for irrigation on iPhones,’ he said.”

    The article noted that, “‘Farmers still think tech means physical augmentation — more horsepower, more fertilizer,’ Mr. Tom said. ‘They don’t see that technology now is about multiplying information.’ With corn prices at almost half the level they have been in the past few years, ‘my growth is going to come from farmers who don’t embrace technology.'”

    The article added that, “Like many farmers Mr. Tom is wary of what big company might own his data. He shares some information with Monsanto, for example, but is careful of others’ policies around data retention. He also worries about how computation is going to change the farm he hopes to leave to his children.

    “‘We and the other farmers could pool all our harvest data in real time,’ he said. ‘You think the big companies would like that? You bet they would. Farmers don’t trust that; they’re independent. Your neighbor is also your competitor.'”


    Steven Mufson reported on the front page of the Business section in yesterday’s Washington Post that, “Just over a year ago, billionaire venture capitalist Vinod Khosla was bubbling with optimism about one of his latest investments: KiOR, a biofuel outfit he said would turn wood chips into hydrocarbons that could be poured straight into a refinery, pipeline or vehicle… . [D]uring its short life, KiOR lost money on every gallon it produced; costs ran $5 to $10 a gallon even without counting the cost of building the plant, according to biofuel industry analysts. According to court papers, KiOR’s revenue totaled just $2.25 million; losses amounted to $629.3 million. Even injections of money from Khosla ($85 million) and Bill Gates ($15 million) in October 2013 could not stave off bankruptcy.”

    The article noted that, “Although Khosla’s track record is mixed, some big companies — including DuPont, corn ethanol giant POET and the Spanish energy conglomerate Abengoa — are close to commercial-scale cellulosic ethanol production. What they will produce will be tiny drops compared with the energy thirst of the entire country, but it represents a start.”

    Samantha Pearson reported yesterday at The Financial Times Online that, “Brazil is set to raise the ethanol component of its petrol, creating demand for an extra 1bn litres of the biofuel a year and providing much-needed relief for the country’s sugar mills.”

    Policy Issues

    Christopher Doering reported on the front page of the Business section in yesterday’s Des Moines Register that, “For now, [Agriculture Secretary Tom Vilsack] and the president show no sign of parting ways.

    “Their bond has grown to include sports trash-talking at Cabinet meetings and ‘wonky’ in-the-weeds political discussions about everything from the farm bill and USDA home loans to bee pollination. They often discuss their families. And Vilsack has appeared at White House Super Bowl parties and recently gathered to watch a film with the president and other staffers about labor and civil rights activist Cesar Chavez.”

    Mr. Doering pointed out that, “Those who work closely with Vilsack, who turns 64 next month, describe him as well-respected, accessible and in tune with the issues relevant to rural America. He’s seen by the White House as a straight-shooter who understands the Agriculture Department’s influence, beyond its traditional scope, on issues such as immigration and health care that affect the well-being of rural residents.

    “Denis McDonough, Obama’s chief of staff, said the president is ‘deeply satisfied’ with Vilsack and has ‘great admiration’ for the job he is doing.”

    AP writer Jill Colvin reported on Friday that, “Republican Gov. Chris Christie has vetoed a politically charged bill that would have banned the use of certain pig cages in his state, a move many observers see as aimed at appeasing Iowa voters ahead of a potential 2016 presidential run.

    “In a veto message issued Friday, Christie called the bill opposing gestation crates a ‘solution in search of a problem.’

    “‘It is a political movement masquerading as substantive policy,’ he said.”

    Reuters news reported on Friday that, “The United States lodged an appeal on Friday to challenge a World Trade Organization ruling it said had failed to bring its meat labelling laws into line with global trade rules.”

    The article noted that, “Canadian Agriculture Minister Gerry Ritz said Ottawa was deeply disappointed by the appeal and called on the United States to drop its ‘blatantly protectionist’ labelling rules.

    “‘We will take whatever steps may be necessary including retaliation to achieve a fair resolution,’ he said in a statement.”

    Wall Street Journal writers Damian Paletta and Paul Vieira reported on Friday that, “The U.S. had 60 days to appeal the decision on its Country of Origin Labeling, or ‘COOL’ policy, and the appeal was filed Friday, the WTO said.

    “No further information was available. An official from the Office of the U.S. Trade Representative confirmed that the appeal was filed, but declined further comment.”

    Meanwhile, the Boston Globe editorial board indicated on Saturday that, “The Supplemental Nutrition Assistance Program, the federal food stamp program, has often struggled with the ‘nutrition’ part of its mandate. The problem is that fresh fruits and vegetables are often too expensive for low-income families to afford, especially if they have to rely on benefits for most of their groceries.

    “The latest farm bill, signed into law earlier this year, offers a simple, innovative solution. The legislation doubles the value of SNAP benefits when they are used to purchase produce bought at local grocery stores or farmer markers who agree to participate.

    “The program, called the Food Insecurity Nutrition Incentive, provides $100 million over the next five years in grants to organizations that help make fruit and vegetables more affordable to SNAP recipients.”

    The Globe noted that, “Any program that helps the country’s neediest residents while supporting local farmers is worth supporting.”

    Meanwhile, Jennifer Steinhauer reported on the front page of Saturday’s New York Times that, “Alcohol may not be single-handedly saving state and local budgets from the red, but it is certainly helping… . The company [Wild Turkey] paid over $778,000 in real estate and property taxes to Anderson County this year, twice what it paid in 2010, making it the biggest taxpayer by far.”

    The Times article indicated that, “‘In 2012, craft brewing contributed $33.9 billion to the U.S. economy and more than 360,000 jobs total,’ [Bart Watson, the chief economist at the Brewers Association] said. ‘This in an industry that didn’t exist 40 years ago.’

    “Even hops farmers are benefiting, largely because craft beers use more and different varieties of hops in production. Over 72 million pounds of hops have been produced this year, a 26 percent increase in just under the last decade, according to the Department of Agriculture.

    “All of this can be a boon to state and local governments struggling to get back in the black. Nine states increased excise taxes on alcohol to help fill budget holes between 2005 and 2011.”

    Immigration – Budget Issues

    Carl Hulse and Jeremy W. Peters reported on the front page of today’s New York Times that, “As Congress returns from recess on Monday facing a Dec. 11 deadline for funding the government, [House Speaker John Boehner] and his fellow Republican leaders are working to persuade the rank and file — furious over President Obama’s executive action on immigration — that engaging in a spending confrontation is the wrong way to counter the White House. That would set the wrong tone, they argue, as Republicans prepare to take over Congress and fulfill promises to govern responsibly.”

    The article noted that, “A spending agreement would represent a significant victory for the party establishment over more conservative lawmakers and activists spoiling for a shutdown confrontation. It would also put his new House on a potential path to enacting the kinds of big legislation — on budgetary issues, tax reform and energy policy — that he envisions.”

    Kristina Peterson reported on the front page of today’s Wall Street Journal that, “Lawmakers returning to Capitol Hill on Monday will have less than two weeks to figure out how to keep the government funded amid an acrimonious fight between Republicans and the White House over immigration.

    “With government funding set to expire Dec. 11, top Democrats and Republicans had hoped to pass a so-called omnibus measure that would tie together tailored spending bills to fund the government through September 2015, the end of the fiscal year.”

    The Journal article stated that, “But it is unclear what Republicans will do to satisfy conservatives who want to express their anger over President Barack Obama ‘s decision to shield millions of illegal immigrants from deportation. Some of these lawmakers, emboldened by the GOP’S midterm-election victories, see funding bills as a way to oppose the president on immigration and other issues, while some also are likely to object to spending levels they deem too high.”

    The article added that, “Republicans are still considering their options for responding to Mr. Obama’s immigration plan and are expected to discuss them in a closed-door meeting Tuesday, GOP aides said.”

    In other budget related news, Jim Puzzanghera reported in Saturday’s Los Angles Times that, “The incoming Republican majority in Congress is preparing to give number-crunching a controversial twist, and the new math could make it easier for the GOP to cut taxes…[R]epublicans, however, want two key congressional offices to use complex models to try to predict the broader effect of hikes and cuts on the economy. The process is called dynamic scoring.”

    And with respect to the tax extenders issue, Brian Faler and Rachael Bade reported last week at Politico that, “Immigration politics and Democratic infighting came together to doom the $400 billion deal even before it had made it into print. The brinkmanship threatens to disrupt the lives of millions of taxpayers who rely on the mishmash of expired provisions the plan was trying to revive…[I]nterviews with the key players showed that the two tax-writing panels in the Senate and House had for weeks been making solid progress toward a final tax package that looked like it would include the breaks for low- and middle-income people sought by the president.

    “But the deal fell apart just as it seemed to be coming together.”


    Georgina Gustin reported yesterday at Roll Call Online that, “When 400,000 people in Ohio were told by authorities to stop drinking their tap water for two days this August, the warning centered attention on something most people assumed only troubled creatures lower down the food chain.

    “But the waters of Lake Erie, near Toledo, had become so ripe with toxin-producing algae — potentially dangerous to humans — that residents, regulators and lawmakers had to take notice.”

    The article indicated that, “Now members of Congress are responding. In the week before Thanksgiving, Ohio Republican Rep. Bob Latta introduced a bill (HR 5753) that would amend the Safe Drinking Water Act (PL 93-523), ordering Congress to develop a strategic plan for ‘assessing and managing risks associated with cyanotoxins in drinking water provided by public water systems.’ That legislation came on the heels of a House Energy and Commerce subcommittee hearing on cyanotoxins.”

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