Monday, February 27, 2012
Keith Good Farm Policy: Corn Prices Could Drop 20 Percent, Report Says
By Keith Good
Reuters writers Tom Polansek and Christopher Doering reported yesterday that, “The price of corn, the big daddy of the major U.S. crops, could fall 20 percent this year and because of expanding production globally, the corn stockpile would double.
“It is a significant shift after corn prices reached a record high near $8 a bushel last summer on concerns about strong demand draining inventories. The surge in prices is expected to encourage an expansion in planting of crops this year.”
The article added that, “Farmers are expected to go all out to get their seeds in the ground this spring, especially with the mild winter that is now coming to a close. The USDA estimates they will plant 94 million acres (38 million hectares) of corn, about 2 million acres more than last year and the largest area since 1944.
“Still, Jon Caspers, a producer of about 8,000 hogs a year in Iowa, is not breathing a sigh of relief due to high gasoline prices and lingering uncertainty about demand.”
And Liam Pleven reported in Saturday’s Wall Street Journal that, “Having benefited from high prices last year, farmers are becoming more choosy about when they sell their corn. Right now, some are opting to stockpile some of their harvest, rather than sell it, a decision analysts say is helping keep corn prices relatively high.
“Farmers now hold about 64% of the nation’s corn in storage, up from 62.7% a little over a year ago and the highest in two years, according to the latest quarterly government survey.”
The Journal article noted that, “The increase, while modest, comes as the U.S. Department of Agriculture projects global corn stockpiles will drop to the lowest level since the 1973-74 crop year, in terms of days of use.
“This is causing an unusual supply squeeze in parts of the Midwest, driving prices higher for grain processors, livestock ranchers and ethanol makers. The added cost could pinch buyers’ profit margins and could spur them to try to pass the added costs onto customers.”
Farm Bill and Policy Issues
Paula Peterson reported late last week at the Altus Times Online (Altus, Okla.) that, “With the deficit exploding, [House Agriculture Committee Chairman Frank Lucas (R., Okla.)] said we need a safety net for our food system. This Farm Bill will be different, with a focus on crop insurance. The Direct Payment plan is not ‘do-able’ anymore. Some are talking about having revenue insurance, but that’s hard to make equitable for all regions.
“Lucas said conditions in Washington are not conducive to getting things accomplished right now. The House is controlled by the Republicans, the Democrat President is on the liberal side, and the Senate is 53 to 47.”
Senate Agriculture Committee Member Amy Klobuchar (D., Minn.) penned an opinion column on Friday at the Worthington Daily Globe (Minn.) which stated in part that, “This month we are holding a series of hearings in Washington to begin crafting the 2012 Farm Bill. As we move forward, my top priorities will be:
“Preserving and strengthening the farm safety net: From our dairy farmers to our sugar beet growers, Minnesota’s agriculture leaders need to know that they won’t lose everything in the event of a market failure or natural disaster, like the heat waves or floods we experienced last summer. This means a strong crop insurance program, improved dairy program, beginning farmer and rancher incentives, continuation of the sugar program and disaster assistance.”
Sen. Klobuchar went on to discuss other policy priorities in Friday’s column.
Deborah Buckhalter reported on Friday at the Jackson County Floridan Online (Marianna, Fla.) that, House Agriculture Committee Member Steve Southerland (R., Fla.) recently held a constituent meeting on the Farm Bill in Jackson County.
The article noted that, “Pointing out that the Farm Bill and its provisions account for only one-half of one percent in federal budget spending each year, [Director of National Affairs for Florida Farm Bureau, Adam Basford] said farmers aren’t asking for unreasonable risk management provisions.
“They only want ‘safety nets, not hammocks,’ he said, such as crop insurance and other supplemental protections that can help them keep prices stable for consumers even as they, as growers, deal with rising fuel costs and other expenses associated with production.”
Sara Waite reported on Saturday at the Journal-Advocate (Sterling, Colo.) that, “Rep. Cory Gardner (R., Colo.) held a series of Agricultural Forums in various locations across the Fourth Congressional District this week.
“On Tuesday, Feb. 21, he was in Yuma and Greeley, then traveled to Lamar on Wednesday to finish the tour.” The update added that, “Commodity prices, farm subsidies and crop insurance were a big part of the conversation at the Yuma forum.”
Nathan Hansen reported on Friday at the Winona Daily News Online (Minn.), “[Al Juhnke, a staff member for Sen. Al Franken, D-Minn.] also predicted an end to direct payments for farmers growing crops such as corn and soybeans, payments he hopes will be replaced by a strong insurance program.
“While some farmers raised concerns about the proposed change, Winona County Farm Bureau president Glen Groth said he supports replacing direct payments with an insurance system.”
And Marc Heller reported on Saturday at the Watertown Daily Times Online (N.Y.) that, “In New York, crop insurance isn’t just for corn anymore. But growers who now use it to protect against losses of apples and other specialty crops find the program falls short of their needs — and crop insurance is in line for an $8.3 billion cut over 10 years in President Barack Obama’s proposed budget for next year.
“Farm groups and some lawmakers warn that cutting crop insurance will weaken a safety net for farmers just as government payment programs are being phased out.”
Mr. Heller explained that, “In New York, crop insurance was long a footnote in agriculture policy, not a major piece of business for dairy farmers who grew corn mainly for silage to feed cows. But the U.S. Department of Agriculture and Congress have expanded insurance offerings in the Northeast over the years, applying it to specialty crops such as grapes, onions and apples — cash crops for which New York ranks in the top states nationally.
“The number of insured acres of crops in New York grew from 478,583 acres in 1997 to 942,902 acres last year, the U.S. Department of Agriculture reported, as the number of acres nationally has grown as well. And as an indication of the role specialty crops play, 74 percent of the state’s apple acreage was covered in 2011, and 80 percent of onion acreage, the USDA reported, compared to less than a third of acres planted with corn.
“But last year’s floods in the Hudson Valley and Southern Tier exposed weaknesses in the program, according to New York Farm Bureau. The organization has made crop insurance reform one of its top priorities for the 2012 farm bill, which outlines farm programs for five years, officials said Thursday.”
Saturday’s article pointed out that, “[Kelly Young, a Farm Bureau lobbyist] said Farm Bureau wants Congress to create new crop insurance options for farms that grow multiple crops and is pushing New York lawmakers to press for such changes.”
“Leaders of the House and Senate Agriculture committees have each said they dislike the cuts to crop insurance [contained in the President’s proposed budget.]”
Meanwhile, Sue Roesler reported yesterday at the Farm & Ranch Guide Online that, “[Scott Stofferahn, farm policy specialist for U.S. Sen. Kent Conrad, (D., N.D.] said Conrad, a member of the Senate Agriculture Committee, will probably make his farm proposals very soon for the 2012 Farm Bill.
“Committee hearings on the farm bill have begun in the Senate, and Conrad is working closely with Sens. John Hoeven, R-N.D., John Thune, R-S.D., and Max Baucus, D-Mont., so that this Northern Plains region is together on their farm bill proposal before they try to present it to a larger audience, he said.”
Dan Piller reported on Friday at The Des Moines Register Online that, “Bitter political rivals Leonard Boswell [D., Iowa] and Tom Latham [R., Iowa] have said tough things about each other in television ads, but when they shared a stage Thursday, both spoke carefully about conservation compliance in the new farm bill.”
Mr. Piller noted that, “The issue of making conservation compliance mandatory in order to qualify for federally subsidized crop disaster and revenue insurance has become the most sensitive tripwire in the early stages of debate on the farm bill that is to be written this year.”
The article added that, “Since 1996, recipients of direct federal payments have been required to comply with various conservation requirements, such as building terraces and grass strips, to qualify for payments.
“But with the near certainty that the politically unpopular direct payments will be eliminated in the new farm bill, conservation advocates have raised an alarm that farmers will be left unchecked.
“The Iowa and American Farm Bureau federations have opposed tying conservation compliance to crop insurance, which draws about $7.4 billion in federal subsidies annually.”
On the idea of linking conservation requirements to crop insurance eligibility, David Rogers reported today at Politico that, “Many in the farm establishment are sure to resist. Just last month, American Farm Bureau delegates voted against linking crop insurance to conservation compliance. And as a rule, producers see crop insurance as a business arrangement with real out-of-pocket costs to them — however much subsidized by taxpayers.
“At the same time, poll after poll shows that soil conservation is a goal farmers share. And there’s genuine concern in both agriculture and wildlife circles that crop prices have gotten so high that Great Plains producers are dropping out of commodity-support programs so as to get around sodbuster or wetlands restrictions that were part of the 1985 compact.
“Administration witnesses are sure to be asked about these enforcement issues Tuesday before the Senate Agriculture Committee, the second in a series of farm bill hearings called by Sen. Debbie Stabenow (D-Mich.), the panel’s chairwoman. Her counterpart, House Agriculture Committee Chairman Frank Lucas (R-Okla.) is beginning his own series of field hearings next month in New York, Illinois, Arkansas and Kansas.”
The Politico article also referenced a paper released today by the Environmental Working Group on farm conservation issues.
And a letter Friday from several farm organizations, including the American Farm Bureau Federation and American Soybean Association, to the leaders of the Senate Agriculture Committee stated in part that, “We write to express our support for the framework for Title II, the Conservation Title, developed as part of the Joint Select Committee on Deficit Reduction process. That framework, as we understand it, contained provisions strongly supported by the farmers our organizations represent: simplification, flexibility, and consolidation.
“The number and complexity of USDA conservation programs is daunting to many growers. Your success in consolidating 23 programs into 13 – reducing the number almost by half – is welcome news. We applaud your efforts to simplify these programs, keeping the same tools but merging them into fewer programs.
“We also support your efforts to focus on working lands conservation. These programs have grown to be the largest in the conservation portfolio, and for good reason. Farmers value their ability to partner with USDA in protecting and conserving soil, water and other natural resources, particularly as a tool to help them prevent and/or comply with regulation. Agricultural conservation programs truly provide a win-win in this respect.”
In other news, Chris Hubbuch reported on Friday at the La Crosse Tribune Online (Wis.) that, [Chairman of the Senate’s agriculture appropriations subcommittee] Herb Kohl [D., Wis.] says organic farming is good for the earth and the economy and vowed to support it throughout his final year in office.
“‘In my experience in the Senate, nothing has been more satisfying for me than to see the growth and development of organic farming,’ Kohl told the nation’s largest organic farming conference Friday in La Crosse. ‘You can count on my everlasting support for what you do.’”
The article added that, “Kohl would not say whether he supports subsidies for crops such as corn, soybeans and cotton, saying only that he would be ‘selective’ in the current budget environment.”
In news regarding nutrition, Secretary of Agriculture Tom Vilsack spoke to the National Governor’s Association yesterday in a session addressing issues and programs on childhood hunger.
And the Congressional Research Service recently published a report on the 2012 Farm Bill titled, “Previewing the Next Farm Bill,” a copy of that report is available here.
In other policy news, the AP reported on Friday that, “Congress members from the largest rice-growing states are urging Iraq to resume buying U.S. long-grain rice, saying the country’s ‘unreasonable’ quality standards put American farmers at a competitive disadvantage.”
And with respect to issues impacting animal agriculture, Tom Webb reported on Saturday at The Pioneer Press Online (St. Paul, Minn.) that, “For good or for ill, the general public is getting a larger voice in how farm animals are raised. And agriculture is being forced to adjust.
“Not so long ago, animal-welfare activists had little success at getting either the industry or lawmakers to ban disputed practices. But then those groups started winning ballot initiatives in states like Florida, Arizona and California. Pressure on consumer food companies followed.”
The article added that, “‘In 2005, virtually no restaurant chains or food companies were using cage-free eggs,’ said [Josh Balk, the Humane Society's director of corporate policy]. ‘If we fast-forward to today, virtually every major restaurant chain in the country, and every major food manufacturer, is using some cage-free eggs, including Kraft, General Mills and Unilever.’”
The article also referenced recent legislation supported by the United Egg Producers and the Human Society of the United States regarding egg production standards.
Regulations (MF Global)
Brent Kendall reported in today’s Wall Street Journal that, “Republicans on the campaign trail have long bashed President Barack Obama’s environmental regulations. This week the battle moves to the courtroom, where several industries and GOP lawmakers are trying to overturn the administration’s rules for reducing greenhouse gases.
“Industry groups, including those representing chemical, energy, farming and mining interests, have brought several challenges to the Environmental Protection Agency’s first-ever rules limiting carbon-dioxide emissions.”
Azam Ahmed and Ben Protess reported in today’s New York Times that, “Federal investigators examining the final days at MF Global and how customer money went missing are poring over scores of wire transfers in and out of the brokerage firm, including the possible movement of $325 million that may have belonged to customers, according to people briefed on the matter.
“The suspicious transfer, which until now has not been made public, was first discovered in the early hours of Oct. 31, the day the firm filed for bankruptcy. Initially, the firm attributed a shortfall of more than $1 billion in customer money to an ‘accounting error,’ records show. But after hours of searching, executives acknowledged to regulators in the firm’s offices in Chicago that the shortfall was real — and may have been caused in part by the $325 million transfer, said one of the people briefed on the matter.”
The Wall Street Journal editorial board opined today in a lengthy item that, “Almost four months after the bankruptcy of futures giant MF Global, clients still haven’t been made whole and still haven’t been told what happened to $1.6 billion of their money. Nor has anyone been charged with civil or criminal offenses. But a Journal report casts new doubt on the Congressional testimony of former CEO Jon Corzine.”
Also today, Mark Bittman penned an opinion column in today’s New York Times titled, “Regulating Our Sugar Habit.”
Copyright ©2011 FarmPolicy.com, Inc. All rights reserved.
P.O. Box 3201 - Champaign, IL 61826