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    Tuesday, May 1, 2012

    Keith Good Farm Policy: Commodities Prices Soaring on Tightening Supplies


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    Agricultural Economy

    Javier Blas reported yesterday at The Financial Times Online that, “If rising oil prices were not enough, investors now have to contend with a bigger risk: a repeat of the 2007-08 spike in food prices.

    “Prices of commodities ranging from soybeans and corn to rapeseed and feeder cattle are soaring as bad weather and strong demand in China combine to tighten supplies and trigger food inflation fears.”

    The USDA’s National Agricultural Statistics Service released its monthly Agricultural Prices report yesterday, which stated in part that, “The corn price, at $6.14 per bushel, is down 21 cents from last month and 22 cents below April 2011 [related graph]; The soybean price, at $13.80 per bushel, increased 80 cents from March and is 70 cents above April 2011 [related graph]; and, the April price for all wheat, at $6.87 per bushel, is down 32 cents from March and $1.14 below April 2011 [related graph].”

    Cheri Zagurski and Anthony Greder reported yesterday at DTN (link requires subscription) that, “Fifty-three percent of the nation’s corn crop was planted as of April 29, according to USDA’s latest weekly Crop Progress report. That is nearly twice the speed of planting during an average year.”

    “Soybean planting was reported at 12% complete, compared to 2% last year and a 5% average,” the DTN article said.

     

    Farm Bill: Lawmaker Perspectives

    news release yesterday from the Senate Agriculture Committee stated that, “Senator Debbie Stabenow, Chairwoman of the U.S. Senate Committee on Agriculture, Nutrition and Forestry, led the Committee in considering and approving the Agriculture Reform, Food and Jobs Act of 2012, last Thursday with broad bipartisan support. The bill reforms food and agricultural policy by eliminating direct payments, consolidating programs and ending duplication, and cracking down on abuse in food assistance programs. This new Farm Bill saves $23 billion while strengthening crop insurance and other initiatives that help create American agricultural jobs.”

    The release went on to include statements by Senators “from both sides of the aisle, praising the bill for its major reforms, and for the collaborative, inclusive and exceptionally bipartisan process of drafting it.”

    Deborah Mcdermott noted yesterday at the Sea Coast (Portsmouth, NH) Online, with respect to the passage of the Farm Bill out of the Senate Ag Committee, that, “‘It’s a significant step,’ said Maine [Democrat] Congresswoman Chellie Pingree, who has championed the small farmer in her work on the House Agriculture Committee. ‘I feel great about what’s in the bill.’

    “Pingree, lead sponsor of the Local Farms, Food and Jobs Act, which has more than 70 co-sponsors in the House, was on the other side of the Capitol last week, working the Senate Agriculture Committee to get portions of her bill into the Senate version of the Farm Bill.”

    Ms. Mcdermott added that, “Senate Agriculture Committee chairwoman Debbie Stabenow of Michigan is ‘a great champion’ of the small farmer and ‘very good on organic,’ Pingree said. ‘But every little thing is a negotiation. We couldn’t get everything we wanted.I’m ready to overhaul agriculture tomorrow, but we made some strides. It’s the old way clashing with the new way, and sometimes that takes a while.’”

    news release yesterday from Rep. Pingree stated that, “The Senate Agriculture Committee passed a farm bill late last week that contained a number of provisions to support local and organic farms. All of those provisions were included in the Local Farms, Food and Jobs Act, introduced by Pingree earlier this year.

    “‘I was glad to see that this bill adopts some key programs that will support smaller farmers and organic farmers and make it easier for consumers to have access to local food,’ Pingree, a member of the House Agriculture Committee said today. ‘Local food is good for the economy and good for families. Consumers want access to local food and it’s time our agriculture policy start catching up with that.’”

    Yesterday’s release indicated that, “Pingree said while the bill does provide support for local food, it doesn’t go far enough.

    “‘This is a first step and we have a long way to go still. I was disappointed the Committee didn’t include the no-cost common sense farm to school programs contained in the Local Farms, Food and Jobs Act. And while I’m pleased that the bill includes elimination of direct automatic subsidy payments it doesn’t go far enough in reforming the current crop insurance program,’ Pingree said.”

     

    Farm Bill Issues: Southern Concerns, Conservation, Dairy and Nutrition Issues

    David Bennett reported yesterday at the Delta Farm Press Online that, “After a farm bill passed out of the Senate Agriculture Committee on April 26, focus has shifted to the House version. That’s especially true in the South, where agriculture leaders expect the House bill to be friendlier to the region than what will soon hit the Senate floor.

    “‘I think it’s pretty telling that four of the five ‘no’ votes on the (Senate Agriculture) Committee were from southern senators,’ said Randy Veach, Arkansas Farm Bureau President, the day after the bill’s passage. ‘That sends a message that this bill does not contain an adequate safety net for southern agriculture.’”

    An update posted yesterday at the National Sustainable Agriculture Coalition (NSAC) Blog stated that, “We are thrilled to report that the Senate Agriculture Committee’s version of the Farm Bill, as passed out of Committee on April 26, includes a nationwide Sodsaver provision to protect native prairie across the country.  The Sodsaver provision was originally filed as an amendment on April 23 by Republican Senators John Thune (R-SD), Mike Johanns (R-NE) and Democratic Senator Sherrod Brown (D-OH) and subsequently was accepted into the revised draft bill presented by Chairwoman Debbie Stabenow (D-MI) and Ranking Member Pat Roberts (R-KS) on April 25.  NSAC commends these Senators for their commitment to conserving our most valuable natural resources.

    “While the Sodsaver provision in the Senate bill does not, as we had proposed, deny all crop insurance subsidies on newly broken out land, it does provide for a 50 percent reduction in the subsidy.  It also includes two important provisions that prevent people from gaming the system to increase their revenue insurance coverage at the expense of taxpayers and the environment.  One keeps the newly broken out land isolated from other crop acres the producer may have when calculating insurable yields.  The other requires the operator to take a percentage of the county average yield until being able to show a multi-year yield history.”

    The NSAC update noted that, “While the Senate bill does reattach attach highly erodible land and wetland conservation requirements to Title 1 commodity payments, conservation program payments, and federal loan programs, we are disappointed to report that it does not do so for the largest of all farm payment categories, federal crop insurance subsidies.”

    With respect to dairy issues, Gary Truitt reported yesterday at Hoosier Ag Today (HAT) Online that, “The focus on the Farm Bill has been on the commodity title, but the recently advanced Senate Ag Committee bill also contains reform in US dairy policy. Chuck Conner, with the National Council of Farmer Cooperatives, which represents many dairy co-ops, says the dairy section of the Farm Bill is a step in the right direction.  He said it will help dairy producers continue to grow dairy exports, ‘The new policies in the Farm Bill reflect the dairy industry becoming more focused on markets, particularly international markets.’   Currently, dairy exports account for about 15% of dairy product demand.

    “Conner told HAT the goal of the new policy is to provide some economic stability to the dairy market and give producers a way to deal with extreme price volatility. He said, going forward, the market will provide great economic opportunity for dairy producers, but also great risk, ‘Our policy must provide a safety net for when the volatility drops dairy prices to very low levels.’  The Senate legislation includes a new, voluntary, margin protection program endorsed by the National Milk Producers Federation (NMPF) meant to safeguard farmers against disastrously low margins, such as those generated by the low milk prices and high feed costs that cost dairy farmers $20 billion in net worth between 2007 and 2009.”

    Meanwhile, Kevin Concannon, the undersecretary for food, nutrition and consumer services at USDA, penned a column yesterday at Politico (“Cutting food stamps hurts poor”) which stated that, “The Agriculture Department published new research this month that further cements the significant positive impact of the Supplemental Nutrition Assistance Program, or food stamps, in combating poverty’s effects on low-income Americans. The report’s implications are clear: Lives of the 46.5 million Americans — primarily children, the elderly or disabled — who rely on this critical lifeline are better because they have a safety net to help them meet basic nutrition needs when times are tough.”

    Mr. Concannon pointed out that, “In addition to its profound anti-poverty effects in reducing hunger, evidence demonstrates that SNAP is a well-managed investment. More than 96 percent of the time, states pay the correct amount of benefits to eligible participants. This is the highest payment accuracy rate in program history. It underscores more than 15 years of improvement in wisely managing taxpayer dollars.

    “This is also one of the highest payment accuracy rates among all federal means-tested programs. But we are still not satisfied. The Agriculture Department is now working with states to improve this rate even more.

    “The department also continues to be aggressive in its pursuit of fraud and abuse. Though any amount of fraud is unacceptable, the rate of trafficking in food stamps remains about 1 percent — a historical low.”

    Yesterday’s column added that, “That’s why it’s so puzzling that the House Agriculture Committee passed more than $33 billion in additional cuts to SNAP — at a time when the program has never been more urgently needed by Americans, and its operation is highly efficient.”

     

    Policy Issues: Animal Agriculture

    A separate column yesterday at Politico (“Antibiotics threaten public health”), penned by Rep. Louise Slaughter (D-N.Y.), lead sponsor of the Preservation of Antibiotics for Medical Treatment Act; Robert Lawrence, the Director of the Johns Hopkins Center for a Livable Future; and Caroline Smith DeWaal, the Director of the food safety program at the Center for Science in the Public Interest, stated that, “The Food and Drug Administration concluded in 1977 that feeding antibiotics daily to healthy livestock, chickens and hogs could promote antibiotic-resistant bacteria, capable of infecting people.

    “Instead of addressing this growing public health threat, the FDA dragged its feet for more than three decades. But a federal judge ruled in March that the agency must finally take action. The court ordered the FDA to withdraw approval for the use in animal feed of two antibiotics important for human health.

    “This decision — in a case brought by consumer groups like the Natural Resources Defense Council and the Center for Science in the Public Interest — is a landmark victory in ending the misuse of antibiotics.”

    The column added that, “But the fight is not over. Without a timeline, the FDA and the drug industry can continue to delay action for months — even years.

    “So Congress must take action by passing new legislation that would ban the use of antibiotics critical for human health in animal feed — while preserving the ability of veterinarians to treat sick animals.”

    news release last week from the National Pork Producers Council indicated that, “Domino’s Pizza shareholders last Wednesday rejected – by a majority vote of 80 percent – a resolution from the Humane Society of the United States (HSUS) requiring its pork suppliers to stop the use of gestation stalls. The National Pork Producers Council hailed the move as a vote for common sense.

    “Animal activist groups recently have influenced several prominent foodservice companies, including McDonald’s, Wendy’s and Burger King, to make poorly informed decisions on sow housing.

    “‘The vote to reject the HSUS resolution was a vote for common sense,’ said NPPC President R.C. Hunt, a pork producer from Wilson, N.C. ‘We appreciate Domino’s belief that America’s farmers, veterinarians and other animal agriculture experts are better suited than activist groups to determine what the best animal care practices are.’”

     

    Regulations

    DTN writer Todd Neeley reported yesterday that, “Both sides in a federal lawsuit that could affect the use of hundreds of pesticides may be getting closer to striking a settlement agreement, according to a status report filed in a California court Friday.

    “Both sides have asked for an extension of the negotiation deadline from May 4 to July 13, indicating they are making progress.”

    Mr. Neeley explained that, “On Jan. 20, 2011, the Center for Biological Diversity and other environmental groups filed suit in the U.S. District Court for the Northern District of California, alleging EPA violated the Endangered Species Act by not consulting federal wildlife officials about the potential effects that pesticides and other ag chemicals would have on hundreds of species.

    “The lawsuit names some 300 registered pesticides and other ag chemicals, and their potential effects on about 200 species. The lawsuit could affect some 30,000 ag chemical-endangered species combinations in all 50 states.”

    Meanwhile, Jacqueline Palank reported yesterday at The Wall Street Journal Online that, “A bankruptcy judge shot down an attempt by an MF Global Holdings Ltd. commodities customer to block the firm’s executives, including former Chief Executive Jon S. Corzine, from accessing millions of dollars in insurance proceeds.

    “Judge Martin Glenn of the U.S. Bankruptcy Court in Manhattan on Monday denied Sapere Wealth Management LLC’s request for an injunction that would block MF Global’s executives from drawing $30 million in available insurance funds while Sapere appeals their right to payment. The insurance covers the costs the executives may face defending themselves against ‘wrongful act’ lawsuits.”

    Also on the MF Global issue, Jeremy Bernfeld of Harvest Public Media filed a report late last week titled, “MF Global crisis leaves rural brokers stuck in the middle.”  The report noted that, “The Lefflers [Tom and Patty of Augusta, Kan.] and other rural brokers are caught in the middle of a tug-of-war they can’t control.

    “‘It’s one of these situations which you always hear about: The big boys caused the problem. It’s the little guys that have to pick the pieces up, have to talk to everybody and explain to them what happened,’ Leffler said. ‘Even though we didn’t have anything to do with it, we’ve got to explain it.’”

    Trade

    news release on Friday from Rep. Adrian Smith (R., Neb.) stated that, “[Rep. Smith] today sent a letter to U.S. Trade Representative Ron Kirk and U.S. Secretary of Agriculture Tom Vilsack asking they work with the Colombian government to remove its unjustified sanitary and phytosanitary (SPS) requirements on certain pork imports. This unscientific trade barrier would cause U.S. pork producers not to realize the full economic benefits possible under the recently-passed Colombia Free Trade Agreement.”

    The “Washington Insider” section of DTN reported yesterday (link requires subscription) that, “However belatedly, the House Ways and Means Committee is planning to hold a hearing on whether the United States should grant permanent normal trade relations status to Russia after that country becomes a member of the World Trade Organization. No specific date for the hearing has been set, but committee Chairman Dave Camp, R-Mich., indicated it would be sometime in June.

    “Russian officials continue to believe their legislature will approve the legal steps needed to join the WTO before the end of summer. If the United States fails to grant PNTR (also known as most-favored nation) status to Russia, Russia would be able legally to discriminate against U.S. products once it is a WTO member. The effect would be to punish U.S. exporters and reward their foreign competitors who would gain a foothold in the Russian market.”

    news release yesterday from the Coalition for Sugar Reform stated that, “In a letter sent today to U.S. Trade Representative Ron Kirk, 15 major business organizations urged USTR to include all agricultural commodities in the ongoing Trans-Pacific Partnership (TPP) negotiations and to drop the longstanding and outdated protection of the very profitable and influential U.S. sugar industry.”

    And Enda Curran reported yesterday at The Wall Street Journal Online that, “Canada is confident it can win the backing of Australia and New Zealand to join a proposed Asia-Pacific trade pact despite differences over concessions to agriculture, Trade Minister Ed Fast said Tuesday.

    “‘We’re still in ongoing consultations with Australia but I am confident that based on the merits of the case, which we believe is quite compelling, that we will have a positive result,’ Fast told Dow Jones Newswires.

    “Canada’s minister is on a swing visit through Australia and New Zealand to shore up backing for the country’s bid to join negotiations on the Trans-Pacific Partnership, which aims to eliminate all tariffs among member nations within 10 years.”

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