Economic Matters
Kelsey Gee reported yesterday at The Wall Street Journal Online that, “Bacon lovers breathe easy: the hog shortage that sent prices to new highs is over.
“In the futures market, U.S. hogs are trading at four-year lows as herds bounce back from a virus that has killed millions of pigs since the spring of 2013. The outbreak of porcine epidemic diarrhea virus, or PEDv, set off a rally that sent prices to record highs last year.”
The Journal article stated that, “The supply bulge comes at the same time that demand is slowing, as U.S. pork exports have fallen in recent months-a development that some credit, at least in part, to last year’s surge in prices. U.S. pork exports in November, the most recent data available, fell 18% from a year ago, according to the U.S. Meat Export Federation, a nonprofit trade group.”
Reuters writers Alexandra Harney and Yuka Obayashi reported this week that, “First it was European infant formula, then New Zealand milk. Now Chinese consumers are adding Japanese rice to the list of everyday foods they will bring in from abroad at luxury-good prices because they fear the local alternatives aren’t safe.”
And AP writer Mary Clare Jalonick reported yesterday that, “Herding cattle. Counting fish. Taking an animal’s temperature. Applying pesticides.
“When it comes to drones, ‘your imagination can go pretty wild in terms of what would be possible,’ says Roger Johnson, president of the National Farmers Union.
“This month, the Federal Aviation Administration issued the first permit for agricultural use of unmanned aerial vehicles.”
In transportation related news, Reuters news reported yesterday that, “Canada’s two big railways are failing to meet demand for moving grain from farms to ports and North American buyers, despite government intervention, a report by a coalition of farmer and industry groups said on Monday.”
And an update yesterday from the Senate Commerce Committee indicated that, “U.S. Sen. Deb Fischer (R-Neb.) will convene the Subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety, and Security on Thursday, January 29, 2015, at 10:00 a.m. for its first hearing of the 114th Congress entitled, ‘Improving the Performance of our Transportation Networks: Stakeholder Perspectives.'”
Trade
Reuters writer Krista Hughes reported yesterday that, “U.S. pork producers on Monday hailed ‘significant progress’ in Asia-Pacific regional trade talks and urged lawmakers to give the White House authority to fast-track trade deals, a sign that a deadlock with Japan may be softening.”
Ms. Hughes added that, “In another sign of progress, the Nikkei business daily reported on Sunday Japan had offered to import more rice from the United States in a compromise aimed at pushing forward the deal, and the United States had dropped its request that Japan ease safety standards on car imports.”
The National Chicken Council and National Cattlemen’s Beef Association also urged renewal of trade promotion authority yesterday.
In a statement yesterday, Secretary of Agriculture Tom Vilsack noted that, “It is no surprise that agricultural producers are joining the chorus of voices calling on Congress to renew Trade Promotion Authority. The past six years were the strongest period for agricultural exports in the history of our nation, despite the fact that many other countries’ markets are not as open to American products as our markets are to theirs. New trade agreements that help level the playing field for agriculture will build on the success we’ve seen in the agricultural economy since 2009 and help producers create more new jobs across the country. What makes the agricultural economy stronger makes our entire nation’s economy stronger. It is imperative that Congress act on Trade Promotion Authority early this year.”
AP writer Nicholas K. Geranios reported yesterday that, “For the first time, all varieties of apples from the United States will go on sale in China, the U.S. Department of Agriculture said Monday.”
Also yesterday, Justin Sink reported at The Hill Online that, “President Obama unveiled $4 billion in new federal initiatives designed to boost trade between the U.S. and India during a summit with top business leaders Monday in New Delhi.
“The president said the countries have ‘got to do better’ to take advantage of an economic relationship ‘defined by so much untapped potential.'”
Recall also that U.S. Trade Representative Michael Froman will testify before the Senate Finance Committee this morning, and before the Ways and Means Committee this afternoon.
Policy Issues
Jonathan Weisman reported in today’s New York Times that, “The federal budget deficit will continue to inch downward through next year, but even with the economy on an upward trajectory, the government’s red ink will begin to rise in 2017 and expand with an aging population, the Congressional Budget Office said Monday.”
Yesterday’s CBO report indicated that, “Mandatory spending for agricultural programs totaled $19 billion in 2014. The relatively high spending last year included significant payments for livestock disaster assistance for drought-related losses since 2012 and crop insurance payments for crop losses in 2013. Spending for agricultural support is projected to average $15 billion per year between 2015 and 2025 based on the assumption (specified in the Deficit Control Act) that the current programs that are scheduled to expire during that period will be extended” (at page 72).
“Technical updates led CBO to boost its projections of outlays for several other mandatory programs, by $4 billion for 2015 and by $48 billion over the 2015-2024 period. CBO now projects that spending for the agricultural programs of the Commodity Credit Corporation will be $18 billion higher over the 2015-2024 period than it projected in the August baseline, primarily because of lower estimated crop prices and higher estimates of spending for livestock disaster assistance” (at page 113).
More specifically with respect to farm programs, this CBO baseline document provided an overview of corn supply and use estimates, as well as this summary of corn program outlays.
CBO soybean supply and use estimates can be found here, while soybean program outlays are in this CBO table.
Crop insurance information from CBO’s updated baseline yesterday can be found in this table.
With respect to nutrition programs, CBO noted yesterday that, “Outlays for SNAP fell by 8 percent in 2014 to $76 billion after having risen each year since 2008, when the most recent recession began. CBO estimates that the program’s spending will rise modestly this year, to $78 billion, and that 46 million people will receive those benefits. CBO expects that the number of people collecting SNAP benefits, which increased dramatically in the wake of the most recent recession, will gradually decline over the coming years. Average per-person benefits, however, will increase each year because of adjustments for inflation in prices for food. Based on the assumption that the program will be extended after it expires at the end of fiscal year 2018 (as provided in the rules governing baseline projections), CBO projects that by 2025, 33 million people will be enrolled in SNAP and the program’s outlays will total $75 billion” (at page 71).
More specific CBO baseline information on SNAP can be found here, while 2015 baseline information for Child Nutrition Programs is available here.
In other developments, Brady Dennis reported in today’s Washington Post that, “The Obama administration wants to double the amount of federal funding dedicated to combating antibiotic-resistant bacteria, a mounting problem that causes an estimated 2 million illnesses and 23,000 deaths annually in the United States.”
Today’s article added that, “The Agriculture Department itself would receive an additional $77 million, in part, to help develop alternatives to the antibiotics used in farm animals, which account for the vast majority of antibiotics sold each year in the United States.”
Kelsey Gee reported yesterday at The Wall Street Journal Online that, “For hog farmers, the burgeoning shift away from controversial gestation crates is presenting some hefty challenges.
“Consider Bob North, a 61-year-old Missouri pork producer. When he added a hog barn in 2009 that housed pregnant sows in group pens instead of individual stalls, he quickly found the animals got injured more often and he needed more employees to manage them. Hogs establish social hierarchies and can shove and bite each other when competing for shared resources, including food.”
The Journal article noted that, “Though he added the new barn to meet rising demand in the food industry for pork produced without the use of gestation crates, Mr. North said he prefers to work with pigs in the stalls. The animals are easier to manage, require less attention and typically produce larger litters, he said.”
Jacob Bunge and Kelsey Gee reported in today’s Wall Street Journal that, “Animal-welfare advocates are courting a new Wall Street ally as they take on big U.S. meatpackers: proxy advisory firms.
“Groups such as the Humane Society of the U.S. for years have sought to build support among large companies’ shareholders to push for changes in animal treatment, often finding little traction. Now, some pitches are being tailored to win backing from increasingly influential firms that advise investors on how to vote their shares, including Institutional Shareholder Services Inc. and Glass, Lewis & Co.”
Bunge and Gee pointed out that, “The Humane Society earlier this month landed the endorsements of ISS and Glass Lewis for its shareholder proposal that Hormel Foods Corp., the maker of Spam, detail the financial risks that could arise from the meatpacker’s reliance on hog farmers who house pregnant sows in enclosures called gestation crates.
“Proxy advisers are more receptive to hearing about the issue with meatpackers such as Hormel and Tyson Foods Inc. partly because restaurants and retailers–the meatpackers’ big customers–have been tightening their own animal-welfare policies in response to consumer pressure, hence a risk of lost business.”
The Journal writers also explained that, “Gestation crates have been among the most-controversial animal-welfare issues facing the food industry. And though many companies have sought to jettison their use, research is mixed on whether the sows’ welfare improves in group pens, according to scientists and veterinarians.
“Farmers say they long have used the stalls because they prevent injuries among sows, which establish social hierarchies and can harm each other when competing for shared resources such as food. The crates make it easier to tailor individual meals and improve worker safety, they add. ‘Sows can be nasty,’ said Janeen Salak-Johnson, professor and researcher of stress and behavior of food animals at the University of Illinois at Urbana-Champaign.”
And Matt Hamilton reported earlier this week at the Los Angeles Times Online that, “Avian flu has been detected among a flock of turkeys at a Central Valley ranch operated by Foster Farms, authorities said.
“The influenza virus was found at one of the company’s facilities in Stanislaus County. In a statement, the company said no products on the market were affected by the outbreak, and the particular strain poses no risk to the public.”
Biotech
Reuters writer Chris Arsenault reported yesterday that, “Campaign groups and the biotech industry are digging in for a new round of conflict, following the European Union’s decision to allow member states to set their own rules on growing genetically modified organisms.
“Environmentalists who favor a GMO ban say the crops have not been properly tested – posing health risks for consumers and giving a small group of corporations too much control over food supplies. The biotech industry says farmers should be free to grow whatever crops they want, and GMOs are a safe way to boost food production and feed the planet’s growing population.
“Since the European Parliament vote on Jan. 13, neither industry nor campaigners have claimed victory.”
Regulations
Reuters writer Tom Polansek reported yesterday that, “U.S. futures market regulators should review the sharp drop in crude oil prices to gain a better understanding of the slide as they pursue rules to crack down on speculation in commodities, a top official said on Monday.
“The Commodity Futures Trading Commission is considering regulations to rein in speculation in energy, grain and metals markets with new rules on position limits. However, the agency needs more data to justify sweeping changes, Commissioner Christopher Giancarlo told a commodities conference in Miami.
“A review of oil’s decline could help determine what is driving market moves, he added. Oil prices have fallen almost 60 percent since June.”
Late last week, Sen. Jerry Moran (R., Kan.) spoke on the Senate floor to call for a vote on an amendment he offered to the Keystone XL Pipeline Act that would “delist the lesser prairie-chicken as a threatened species under the Endangered Species Act of 1973.”
A video replay of Sen. Moran’s remarks can be viewed here.
