Keith Good Farm Policy: Midwest Farmers Roll Dice, Plant Corn Early
Reuters writer Michael Hirtzer reported yesterday that, “Ethan Cox is sowing corn on his 5,000-acre Illinois farm earlier than ever this year, betting that the premium he may collect for delivering an early crop is worth the risk of a damaging late-spring frost.
“Lured into the fields by what is so far the warmest March since records began in 1871, Cox is toiling alongside dozens of farmers across the Midwest who have begun seeding what may be a record crop weeks earlier than usual, according to agronomists, farm managers and analysts who keep close tabs on farm activity.
“His crop may miss the peak summer heat of July and reap an extra 60 cents a bushel in September if his gamble pays off. Robust ethanol demand and years of low domestic inventories have placed a near-record premium on corn that can be delivered at the end of summer, when grain bins are empty and before the main harvest.”
The article noted that, “But the risks are high too: planting so early means forsaking some types of crop insurance; and despite the exceptionally mild winter, odds favor another chill at least once this year. Only once in the last century has the Midwest avoided frost between mid-March and mid-April.
“‘It’s going in good but we have fear that it might come too quick and a frost will come and kill it,’ Cox said as he took a break from seeding the first 400 acres on his farm in Greene County southwest of Springfield.
“While the vast majority of farmers will opt to wait until nearer April 15, the average last freeze date, anecdotal reports suggest a record number have already begun.”
And Bloomberg writer Alan Bjerga reported yesterday that, “Competition for increasingly scarce water in the next decade will fuel instability in regions such as South Asia and the Middle East that are important to U.S. national security, according to a U.S. intelligence report.
“An all-out water war is unlikely in the next 10 years, as nations will be more likely to use water as a bargaining chip with each other, according to the report from the Director of National Intelligence released today. As shortages become more acute, water in shared basins will increasingly be used as leverage, and the adoption of water as a weapon by states or terrorists will become more likely after 10 years, it found.”
The Bloomberg article stated that, “‘These threats are real, and they do raise serious security concerns,’ Secretary of State Hillary Clinton said in a speech today at the State Department, which requested the report. The study was drawn from a classified national intelligence estimate.
“The report, drafted principally by the Defense Intelligence Agency, reflects a growing emphasis in the U.S. intelligence community on how environmental issues such as water shortages, natural disasters and climate change may affect U.S. security interests. It assumes no major changes in water-management practices.”
Farm Bill Issues: Budget
David Rogers reported yesterday at Politico that, “Did no one learn anything from last summer? Did 2011 not happen?
“It can seem that way in Congress these days as Republicans bring their new budget resolution to the House floor next week, hoping to push the reset button on Medicare reform and score a trifecta by rewriting the debt deal struck with President Barack Obama last August.”
Mr. Rogers stated that, “Leading the charge is House Budget Committee Chairman Paul Ryan, who is most passionate about getting Washington refocused on long-range entitlement changes. But to protect himself on the right, the Wisconsin Republican risks taking the House in the opposite direction, back to the same divisive fights over appropriations that consumed much of last year.
“In a single stroke, Ryan would unilaterally lower the spending caps set for 2013, shift billions more to defense than prescribed under the 2011 Budget Control Act and roll back across-the-board spending cuts due in January by substituting a new formula — also designed to shield the Pentagon.”
The Politico article noted that, “Obama’s 10-year appropriations spending request in his own budget in February was down about $1 trillion from last year, reflecting the debt accord. But the GOP is making new demands now for $548 billion more in nondefense cuts. And when $578 billion in additional highway and transportation cuts are factored in to the equation, the reductions from nondefense discretionary spending are closer to $1.1 trillion — essentially doubling last summer’s deal.”
Yesterday’s update added that, “Nonetheless, both parties have a stake in finding some solution, and Ryan is proposing a lightning strike in which six House committees would report back savings recommendations by April 27 to substitute for the automatic cuts in January.
“An estimated $97 billion in appropriations would be vulnerable then, and Ryan would argue that his decision to lower the 2013 caps by $19 billion can be counted toward this goal. But all of this money is from the domestic side of the ledger. And the House Armed Services Committee is exempt from coming up with any savings, meaning the burden will fall on health care programs, farm and food subsidies and federal workers.”
The Washington Insider section of DTN reported yesterday (link requires subscription) that, “This time around, [House Agriculture Committee Ranking Member Collin Peterson (D., Minn.)] says that even though the House Republican Budget Resolution has little chance of becoming the final budget, it still matters. If the House and Senate fail to agree, he believes that the House Republicans could later try to ‘deem’ their own Budget Resolution as effective for purposes of enforcing House budget rules, as they did in 2002, 2004 and 2006, and that even if the House Republican Resolution is rejected by the Senate, it could be used to force the House Agriculture Committee to cut nearly $180 billion from agriculture programs if the Committee hopes to pass legislation, such as a new farm bill.
“As a result, his conclusion is quite blunt. ‘The process outlined by the House Republican budget all but guarantees there will be no farm bill this year.’ he told the press. ‘The Ryan budget proposes significant cuts in the farm safety net and conservation programs, and slashes spending on nutrition programs that provide food for millions of Americans. It is appalling that in an attempt to avoid defense cuts the Republican leadership has elected to leave farmers and hungry families hurting.’”
The DTN item indicated that, “So far, the Ryan budget is being interpreted as an active threat to re-start the budget wars that were thought to have been at least temporarily halted last fall. And, to be fair, there has long been at least the suggestion that the $23 billion in cuts the Ag Leaders offered up last fall would prove to be far too little in the actual farm bill debate.
“So, while the two Agriculture committees may believe that all they have to do is to complete their hearings and mark up a bill for floor debate, the real issues of what programs and policies can survive in this time of tight budgets and highly politicized issues remain to be addressed. Even given the importance of nutrition programs in the modern USDA, a proposal that cuts four times as much from nutrition programs as it does from commodities seems unlikely to generate much of the urban support necessary to pass expensive programs, especially at a time when farm prosperity far exceeds that of the rest of the economy. As a result, the proposed approach probably makes Rep. Peterson’s judgment of farm bill timing closer to the mark than that of many other, more hopeful observers, Washington Insider believes.”
Ranking Member Peterson was a guest on yesterday’s AgriTalk radio program with Mike Adams, where the two discussed the budget situation and the Farm Bill in more detail (Related audio (MP3- 7:13), unofficial transcript).
In expressing his reaction to Chairman Ryan’s budget outline, Rep. Peterson stated that, “Well, I think it’s going to cause big problems, because they’re requiring a reconciliation process so they can avoid these defense cuts and so forth, and apparently that’s going to have to happen before we actually start writing the farm bill. And the other problem is in the Super Committee bill we cut 850 million in the first year, and what they’re going to apparently tell us in the instructions for reconciliation is we have to cut 8.2 billion in the first year, and I don’t know how you do that.
“I think we were fifty-fifty trying to get a farm bill done this year. I think this lowers the odds significantly. I think this is going to cause a big problem. And what’s really sad about it is that generally, when you do a reconciliation, there’s an agreement between the House and Senate to both sides are going to do a reconciliation. This is a reconciliation that’s not going to be done in the Senate. This is being done strictly to get enough Republican votes to pass a budget, so it has no effect on anything, at the end of the day, other than to cause a lot of trouble for the Ag Committee in the meantime. So it’s highly problematic what they’re doing.”
Rep. Peterson added that, “We could get to September and not have this done, and then there’s even a question, I think, the last time, remember in ’07, when I did the farm bill, we had to extend various authorities to the Secretary five different times in order to finally get the bill done because they couldn’t get the Senate to take it up. But this time we’re hearing rumors that they won’t extend the current farm bill, the different parts of the farm bill, without insisting on further cuts, which basically sets you in the position of having to write a farm bill which, if we get to September, means we weren’t able to do anyway.
“So it’s very unclear. All I would… It looks to me, by interjecting this reconciliation into the process without agreement from the Senate, is just going to almost guarantee that you’re not going to get a bill done.”
Later in the discussion, Rep. Peterson brought attention to the defense funding issue, pointing out that, “And frankly, I have a real problem, because they’re requiring us to cut our budget, our baseline, in order to hold the military harmless from any cuts. And I have a real problem with that. And they’re doing this so they can get the military guys to vote for the budget. And so this is not… They’re going through this whole process just so they can get enough votes to pass the budget.
“And frankly, this budget committee has become so partisan on both sides, no matter who’s in charge, that I am ready to sponsor a bill to get rid of the Budget Committee. They’re not necessary, they’re not helping anything, they’re causing trouble. And I’ve had it with them. So that’s part of the problem. I just don’t agree with what they’re doing over there. They’re proposing $187 billion worth of cuts in the overall budget. This is over and above the $33 billion in reconciliation, so this is way out of line, I think.”
Also on the budget issue, Marc Heller reported yesterday at the Watertown Daily Times Online (N.Y.) that, “The spending plan proposed by House Republicans this week could disrupt farm programs even though it won’t become law, Rep. William L. Owens said Wednesday.
“Mr. Owens, D-Plattsburgh, warned that the plan from House Budget Committee Chairman Rep. Paul Ryan, R-Wis., would tie lawmakers into slashing far more from farm programs than they already agreed to do,effectively derailing the five-year farm bill that is due for renewal this year.
“The cuts Mr. Ryan envisions, totaling more than $30 billion, are about $10 billion more than the House Agriculture Committee has been working with, Mr. Owens said. And because the Budget Committee is likely to pass the budget first, the Agriculture Committee will start with a smaller pot of money, he said.”
The article stated that, “Mr. Owens said he is concerned about the effects on crop insurance, which Mr. Ryan targeted for cuts. Democrats also have criticized cuts to the supplemental nutrition program formerly known as food stamps.”
In other Farm Bill developments, a news release this week from Senator John Hoeven (R., N.D.) stated that, “[Sen. Hoeven] today met with Dave White, Chief of the USDA Natural Resources Conservation Service (NRCS) to call for consistent and sensible rules governing compliance with wetland conservation requirements. Hoeven also invited Chief White to come to North Dakota this spring to meet with area producers and find workable policies for determining wetlands designations.
“Since the 1985 Farm Bill, producers need certifications from the NRCS in order to make certain improvements to their land that could affect wetlands. Recently the NRCS has begun the process of creating a new regional policy to ensure consistent implementation of existing requirements, and White said the agency expects to issue new guidance in the coming weeks.
“‘There are good conservation programs like the Conservation Stewardship Program (CSP) and the Environmental Quality Incentives Program (EQIP) to name two, and I think it’s critical that, like these programs, conservation policies work with farmers, not against them,’ Hoeven said.”
A news update Wednesday from Rep. Steve King (R., Iowa) noted that, “Today, [Rep. King] met with members of the Iowa Farm Bureau during their visit to Washington, DC. The group was in town during their annual trip to Capitol Hill to discuss various legislative and public policy issues with members of Iowa’s Congressional delegation. Among the items discussed during today’s meeting were the upcoming reauthorization of the Farm Bill, Estate Tax reform, and EPA regulatory reform.”
Deb Gau reported yesterday at the Marshall Independent Online (Minn.) that, “Discussion of the upcoming Farm Bill continued in Marshall on Wednesday morning, as staff members for U.S. Sen. Amy Klobuchar, DFL-Minn., had a listening session at the Marshall-Lyon County Library. The crowd at the event was small, but included representatives from a fairly wide range of interests, including area farmers, conservationists and the food industry.
“The meeting began with a video message from Klobuchar, outlining the senator’s goals for the 2012 bill. Klobuchar said her priorities will include strengthening safety net programs for farmers, incentives for homegrown energy sources, reducing regulatory burdens on farmers, and conservation.
“In the video, Klobuchar acknowledged that the new Farm Bill will have to be passed in ‘a difficult budget climate.’”
In other policy news, the AP reported yesterday that, “As pork producers build new barns and retrofit old ones to give hogs more space, they say consumers opposed to keeping pregnant sows in tight cages can expect to pay for their clearer consciences with higher food prices.
“Under pressure from animal rights activists and sensing a shift in consumer sentiment, several major pork producers have agreed to phase out gestation crates and switch to more open pens. Major pork buyer McDonald’s Corp. recently announced its suppliers will have to stop using them as well.
“‘The McDonald’s announcement was a tipping point in the debate about gestation stalls versus pens. … That announcement has fundamentally changed the way people are looking at this debate,’ said Dennis Treacy, executive vice president and chief sustainability officer for Smithfield Foods Inc., the world’s largest pork producer.”
The article added that, “But the move to group pens requires building new barns and renovating old ones, more labor and more training for workers. Veterinary costs can go up because sows tend to fight and sometimes injure each other. Experts say at least some of those expenses are likely to be passed on in the price of ham, bacon, chops and sausage.
“‘We may as a society be in the process of deciding we’re more than willing to pay those costs, but people ought to know what’s involved in their decisions,’ said Blake Hurst, president of the Missouri Farm Bureau and a former hog farmer.”
And Dina ElBoghdady reported in today’s Washington Post that, “A federal court on Thursday ordered the FDA to follow through on a 35-year-old proposal that would have banned the use of certain antibiotics in animal feed because the agency was concerned that these drugs were overused in livestock and helped develop drug-resistant bacteria that can infect people.
“The concern is that some antibiotics given to treat illnesses in people are widely used on animals to promote disease prevention and weight gain, as well as compensate for crowded conditions on ranches and farms. The prevalence of those antibiotics in livestock has been linked in several studies to the creation of drug-resistant ‘superbugs’ that can spread to humans who work with or eat the animals.
“In 1977, the Food and Drug Administration proposed banning the use of penicillin and two forms of tetracyline for growth promotion. But the proposal has been in limbo ever since. The agency never held hearings or took any further action, prompting the Natural Resources Defense Council and four other health and consumer advocacy groups to sue the government in May 2011.”
Today’s article indicated that, “A federal district court in Manhattan ruled in favor of the plaintiffs on Thursday, compelling the FDA to press forward with its initial plan to start proceedings that could lead to a withdrawal of the drugs. The decision handed a major victory to consumer advocates.”
The cotton market experienced a very fun and exciting week as trading focused on strong fundamentals factors, both of the bullish and bearish variety. Many have been left perplexed with