Farm Bill; Ag Economy; Regulations; Immigration; and, Political Notes- Friday Posted By Keith Good On August 29, 2014 Farm Bill- Policy Issues Chris Clayton reported yesterday at DTN that, “Dairy farmers can sign up for the new federal Dairy Margin Protection Program starting Tuesday, Sept. 2. “The Market Protection Program is an insurance option for dairy farmers that is being run through the Farm Service Agency. The Margin Protection Program will pay indemnities to farmers when the difference between the price of milk and feed costs falls below a coverage level selected by the farmer. “Enrollment begins Tuesday and will run until Nov. 28 for the 2014 and 2015 calendar years.” Mr. Clayton explained that, “Dairy farmers who sign up for MPP will choose the level of milk production to cover, ranging from 25% up to 90%. Then they choose the level of the milk price-to feed margin they wish to protect, which could range from $4 per cwt up to $8 per cwt, in 50-cent increments. With the way the milk production levels and feed margins are paired together, dairy farmers will effectively have 126 different combinations to choose from for coverage. “Agriculture Secretary Tom Vilsack hosted a conference call Thursday with Sen. Patrick Leahy and Rep. Peter Welch, both Vermont Democrats, to tout the program. The National Milk Producers Federation also praised USDA for the program’s rollout.” AP writer M.L. Johnson reported yesterday that, “Dairy farmers have struggled in recent years even with good milk prices. Feed costs rose because of demand for corn from the ethanol industry and droughts, including one in 2012 that covered two-thirds of the nation. “The price for benchmark December corn on Thursday as $3.67, compared to about $5.90 two years ago. “U.S. Sen. Patrick Leahy, D-Vermont, warned farmers not to be complacent. In 2009 and 2012, milk gluts sent prices tumbling below the cost of production.” The AP article explained that, “‘Dairy prices are very high right now … but you only have to have about a 1 or 1.5 to 2 percent surplus, and every dairy farmer knows that can go into a tailspin,’ said Leahy, who joined Vilsack in announcing the program. “The U.S. Department of Agriculture has an online tool to help farmers figure out how much insurance they need.” An update at the farmdoc daily blog yesterday (“Introducing the USDA Sponsored Margin Protection Program for Dairy Decision Tool”) provided an overview of several features of the new MPP Decision Tool for producers. And an update yesterday from the House Ag Committee Democrats noted that, “‘The Margin Protection Program is significant reform, creating a strong safety net that will help dairy farmers better manage their risk,’ [House Agriculture Committee Ranking Member Collin Peterson (D. Minn.)] said. ‘Reforming dairy programs was a top farm bill priority for me, and I’m pleased to see USDA moving ahead with implementation. Dairy farmers should visit the website and their local FSA offices, to learn more and enroll in the new program.’ “Shortly after dairy prices collapsed in 2008, Peterson began working with dairy farmers across the country to develop a new safety net that would address the realities of today’s dairy industry. These conversations formed the basis of the farm bill’s Margin Protection Program.” Senate Ag Committee Chairwoman Debbie Stabenow (D., Mich.) noted yesterday that, “‘We cannot afford to have our dairy farmers go bankrupt when there are sudden market swings, which is why we put together this new program,’ Stabenow said. ‘Families need a reliable supply of dairy products at the grocery store, and that means we need farmers who can keep producing some of the very best dairy products in the world.’” National Farmers Union President Roger Johnson also commended USDA on its timely rollout of the new dairy program. In other developments, Ohio State University agricultural economist Carl Zulauf indicated yesterday at the farmdoc daily blog (“Resolution of U.S. Crop Year Price Uncertainly and Its Implications for the 2014 Farm Program Decision”) that, “The 2014 farm bill gives Farm Service Agency (FSA) farm owners a 1-time decision to elect their Title 1 crop program for the 2014 through 2018 crop years. FSA has not yet released the sign up dates, but sign up likely will not end until sometime in 2015. By this time, farmers will have good information on 2014 crop yields. The related question, ‘How much uncertainty about 2014 U.S. crop year prices will have been resolved by the time sign up ends?’ is examined in this article. U.S. crop year prices are used to determine payments by the Agriculture Risk Coverage – county (ARC-CO), ARC – Individual (ARC-IC), and Price Loss Coverage (PLC) programs.” Also yesterday, Kathy Baylis and Jonathan Coppess indicated at the Policy Matters blog (“Evaluating Use of Conservation Policies for Pollinators”) that, “In general, while its heartening to see moves to support the increase in quantity and quality of available pollinator habitat, there may be room to move to programs targeted at protecting wild pollinator species and specifically to introduce habitat in landscapes with little habitat or nutritional diversity at the moment. By all appearances, the programmatic and policy tools are available or in some cases have existing flexibilities that would permit their use for such an effort. Further work with FSA by local and state organizations, including governmental and non-governmental, as well as producers, may lead to some creative solutions that could benefit pollinators and all of us that eat as a result of their good work.” Agricultural Economy The Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri released a report yesterday titled, “August 2014 Baseline Update for U.S. Agricultural Markets,” which stated that, “In a major reversal of fortunes, prices for cattle, hogs and milk are at record highs in 2014, but prices for grains, oilseeds and cotton have declined sharply from recent peaks. This report provides an update of the 2014 FAPRI‐MU long‐term baseline to reflect information available in mid‐August 2014.” The FAPRI report added that, “Corn prices fall to $3.89 per bushel for the 2014 crop. Even with a projected decline in 2015 U.S. corn production, prices remain around $4 per bushel in 2015 and beyond…[and]…large U.S. and global supplies cause soybean prices to decline to $10.30 per bushel for the 2014 crop and below $10 per bushel for the crop harvested in 2015.” “Reduced cattle numbers, animal disease problems and strong international demand are among the factors causing record cattle, hog and milk prices in 2014. Supply response to these high output prices and lower feed costs contribute to lower meat and dairy prices in 2015,” the FAPRI report said. More broadly, Gregory Meyer reported yesterday at The Financial Times Online that, “Nearly perfect weather in the US grain belt has been echoed across much of the northern hemisphere. Across most of Europe, ‘conditions for summer crops are good to excellent,’ the European Commission says. Even as political crisis engulfs Ukraine, farmers in the top-three corn exporter are forecast to reap a hefty crop. “In China– the second-largest corn producer – the government has been struggling to manage surplus inventories as its farmers also eye a record harvest. Joseph Glauber, chief economist at the US Department of Agriculture, says: ‘Right now it looks like the world is going to have great crops.’” Donnelle Eller reported on the front page of yesterday’s Des Moines Register that, “The bad news for [farmers Paul Werner and Jason Solberg] and many of the 150,000 [Farm Progress] show visitors: Corn and soybean prices are unlikely to rebound within the next year or two, said Chad Hart, an Iowa State University farm economist, fielding questions a few blocks down from Deere & Co.’s exhibit. “And worse: Even though crop prices are falling, the cost to grow next year’s crops is not. It will push many Iowa and U.S. farmers into the red and could push some growers out of farming. “‘Profit margins are getting pinched,’ Hart said.” Jacob Bunge reported in today’s Wall Street Journal that, “Major seed companies don’t plan to cut prices for the next growing season despite sliding corn and soybean prices, which are expected to dent U.S. farmers’ incomes.” “Pinched profits for farmers have raised concerns among analysts that seed, pesticide, fertilizer and tractor makers could face weaker sales,” the Journal article said. Also, Leslie Josephs reported yesterday at The Wall Street Journal Online that, “Cotton prices posted their biggest drop in more than two weeks on Thursday, as U.S. growers gear up to harvest what the government expects to be the largest crop in four years.” Ms. Josephs added that, “U.S. cotton farmers this year will likely harvest 17.5 million bales of cotton this season, a crop more than one-third larger than last year’s, according to the U.S. Department of Agriculture. “The expected increase in the cotton supply weighed on prices, countering a report of higher demand for the fiber.” More specifically with respect to prices, yesterday, USDA’s National Agricultural Statistics Service (NASS) released its monthly Agricultural Prices report, which stated in part that, “The corn price, at $3.70 per bushel, is down 35 cents from last month and $2.51 below August 2013 [graph]…the soybean price, at $12.20 per bushel, decreased 90 cents from July and is $1.90 below August 2013 [graph]…[and]…the August hog price, at $88.30 per cwt, is down $5.00 from July but up $14.10 from a year ago [graph]. The August beef cattle price of $160 per cwt increased $4.00 from last month and is $39.00 higher than August 2013 [graph].” The NASS update added that, “The August all milk price of $23.70 per cwt is up 40 cents from last month and $4.10 higher than August 2013 [graph].” Also yesterday, USDA’s Economic Research Service (ERS) released its Outlook for Agricultural Trade report, which stated that, “Fiscal 2015 agricultural exports are projected at $144.5 billion, down $8 billion from the revised $152.5 billion forecast for fiscal 2014. Oilseeds and products are down $5.1 billion as a result of lower expected soybean and meal prices. Grain and feed exports are down $4.9 billion from fiscal 2014 on both lower export volumes for corn and wheat and expected lower unit values.” The ERS report added that, “Agricultural exports to China are forecast down $3.0 billion from fiscal 2014, but China is expected to remain the top U.S. market for agricultural products. Exports to Russia are projected to fall $800 million to total $400 million in fiscal 2015 as a result of trade restrictions against the United States. Russia’s share of U.S. agricultural exports would decline from 0.8 percent in 2014 to about 0.3 percent in 2015.” And a news release yesterday from the U.S. Grains Council stated that, “Exports of U.S. coarse grains and co-products to the Middle East and North Africa have rebounded dramatically this marketing year due to price, world market conditions and consistent trade servicing.” Meanwhile, Jim Carlton reported in today’s Wall Street Journal that, “With groundwater levels falling across the Golden State—causing dried-up wells, sinking roadbeds and crumbling infrastructure—the state legislature is considering regulating underground water for the first time. “Californians have long battled over rights to rivers, lakes and other surface-water supplies, but the drought is finally shifting the focus to groundwater, which accounts for about 40% of water used in normal years—and up to 60% in drought years, as other sources dry up.” The U.S. Drought Monitor indicated this week that, “In California, recent showers and thunderstorms in the Mojave Desert (southeastern California) led to a one-category improvement in an area of Severe Drought (D2). Otherwise, conditions in California remained unchanged on the map.” In news regarding transportation, USDA’s weekly Grain Transportation Report stated yesterday that, “On August 22, CP updated its plan to resolve the backlog of unfilled grain car orders in response to an August 18 STB order. CP is transitioning to a new grain-car request system, which it believes will provide a more accurate reflection of the grain backlog. As a first measure, shippers removed 16,256 unneeded open requests from the system, bringing the new estimate of the backlog down to 11,989 open requests. CP expects this number to fall significantly in the next few weeks as customers continue to remove unneeded open requests and as grain operations improve 15 to 20 percent under the new system. In addition, CP plans to modify and improve its planning process for small shipments, increase employees, deploy a new shuttle service, improve routing options with customers, and supply additional locomotives to the Rapid City, Pierre, and Eastern Railroad operating in South Dakota.” A news release yesterday from Sen. Heidi Heitkamp (D., N.D.) stated that, “[Sen. Heitkamp] today called out Canadian Pacific Railway CEO E. Hunter Harrison for his company’s new, yet seriously flawed, system to handle the delays of agriculture shipments in North Dakota. “Specifically, the company’s new rail car order and shuttle train system ignores the current number of unfulfilled requests from grain elevators, and forces North Dakota’s farmers and grain operators to start from scratch in the middle of the state’s harvest season. It’s making grain elevators essentially leave massive quantities of crops on the side of the road while the railroad will only transport new grain orders.” And Rep. Kevin Cramer (R., N.D.) issued a statement yesterday “on reports surrounding the new Canadian Pacific Railway ordering system for grain cars: ‘It was brought to my attention earlier this week North Dakota grain elevators are being asked by Canadian Pacific to cancel existing grain car requests in order to participate in a new shuttle program. I will not tolerate bullying tactics of any kind, especially given the pressures already placed on our agriculture industry. I have brought these reports to the Surface Transportation Board, and this serious matter will be a specific part of my inquiry during next week’s hearing in Fargo.’” Regulations Timothy Cama reported yesterday at The Hill Online that, “The Environmental Protection Agency (EPA) hit back Thursday after a top Republican accused it of trying to take over large pieces of private land and water. “Tom Reynolds, the agency’s top spokesman, wrote a blog post to respond to what he said were ‘myths and misunderstandings’ about the Waters of the United States rule.” The Hill update added that, “The rule was proposed earlier this year to clarify the EPA’s jurisdiction for the Clean Water Act. “‘This law has nothing to do with land use or private property rights, and our proposal does not do anything to change that,’ Reynolds wrote in a blog post Thursday, referring to the Clean Water Act.” “The day before the post, Rep. Lamar Smith (R-Texas), chairman of the House Science Committee, released a series of maps that he said show the EPA’s plans to expand its power over waterways.” A news release yesterday from Rep. Kristi Noem (R., S.D.) stated that, “[Rep. Noem] today called on the Environmental Protection Agency (EPA) to define which waters would be under EPA jurisdiction if the proposed Waters of the U.S. Rule was adopted. The announcement comes in the wake of new EPA maps (see the South Dakota map here) that were only recently made available after pressure from Congress. These maps have raised additional questions about how extensive the EPA’s regulatory authority could become.” Immigration Reuters writer Roberta Rampton reported yesterday that, “President Barack Obama said on Thursday that he still planned to take steps on his own to improve the U.S. immigration system but that his timeline for taking action has been affected by the need to deal with a flood of migrant children from central America. “Obama had previously said he planned by the end of summer to find ways to change immigration regulations, unilateral action he said was made necessary by the failure of Congress to pass comprehensive reforms. “But at a news conference on Thursday, Obama was circumspect about the timing of his announcement, which will be controversial ahead of November midterm elections where Democratic control of the U.S. Senate is at stake.” Political Notes Cameron Joseph reported yesterday at The Hill Online that, “California’s Central Valley is in the midst of a drought of near-biblical proportions, and Rep. David Valadao (R) is praying his response to the crisis can keep him in office this fall. “The freshman Republican has been campaigning hard on water issues in this agriculture-heavy swing district, trumpeting his work on a water bill that passed the House earlier this year that he says would go a long way to helping the region.” AP writer Erica Werner reported yesterday that, “Raul Garcia has a question for Kevin McCarthy, the House’s No. 2 Republican: ‘While we are waiting for you on immigration reform, who should be harvesting America’s food?’ “It’s a provocative query and the foundation of Garcia’s long-shot challenge to McCarthy, a four-term incumbent who rose to power after another GOP leader thought unsinkable, Virginia’s Eric Cantor, fell to an unknown candidate in a primary.” An update yesterday at the Atlanta Journal-Constitution noted in part that, “U.S. Senate hopefuls David Perdue and Michelle Nunn are meeting separately with the Georgia Farm Bureau today in Macon, as the agriculture community takes measure of who will succeed U.S. Sen. Saxby Chambliss — an unquestioned friend to the industry.” -- Keith Good President FarmPolicy, Inc. Champaign, IL FarmPolicy is a FREE newsletter and is underwritten and made possible by the generous support of McLeod, Watkinson & Miller- Attorneys at Law. Office accommodations for FarmPolicy are provided by Bartell Powell LLP- Attorneys at Law, located in downtown Champaign, Il. To subscribe to the FarmPolicy Email, send a note to, [email protected]. To unsubscribe, send a note to, [email protected]. FarmPolicy is also on: Twitter, Instagram, YouTube and Google+
Posted on: Fri, 29 Aug 2014 10:43:36 +0000
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