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    Wednesday, May 30, 2012

    Keith Good Farm Policy: Corn Crop Stressed by Warm, Dry Weather


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    Agricultural Economy

    Bloomberg writer Jeff Wilson reported yesterday that, “The condition of the U.S. corn crop deteriorated last week after warm, dry weather increased stress on plants in parts of the Midwest and South. Spring-wheat ratings rose, and soybean planting moved closer to completion.

    “About 72 percent of the corn crop was in good or excellent condition as of May 27, down from 77 percent a week earlier, while up from 63 percent from a year earlier, the U.S. Department of Agriculture said today in a report. An estimated 92 percentof the seeds emerged from the ground, up from 76 percent a week earlier and the average in the previous five years of 69 percent.”

     

    With respect to some issues associated with potential corn yields, see this brief update from yesterday, “The Season for Determining Corn Yields is Underway,” by University of Illinois Agricultural Economist Darrel Good.

    And an update posted yesterday at USDA’s Economic Research Service Charts of Note webpage stated that, “As of May 6, 2012, 71 percent of the 2012 U.S. corn crop had been planted, compared with an average of 47 percent between 2007 and 2011 and 32 percent in 2011.  As of the same date, 32 percent of the expected crop had emerged, compared with a 2007-11 average of 13 percent and 6 percent last year. Subsequent Crop Progress reports showed the pace continuing at an advanced rate with 96 percent planted as of May 20th compared to a 2007-11 average of 81 percent.  Early planting boosts the projected yield for 2012 above the yield trend (which is based on actual yields from 1990 to 2010) to 166.0 bushels per acre, compared with last year’s weather-reduced yield of 147.2 bushels per acre. Rapid planting and emergence could also lead to an early harvest of some of the 2012 corn crop, potentially reducing estimates of feed and residual disappearance for the last quarter (June-August) of the 2011/12 marketing year. This chart comes from Feed Outlook, FDS-12e, May 2012.”

    Farm Bill and Policy Issues

    Jerry Hagstrom reported yesterday at Agweek Online that, “As the Senate appears ready to take up a farm bill that would make payments to farmers when their revenue goes down, House Agriculture Committee ranking member Collin Peterson, D-Minn., says after spending a week in his district, he is determined to put a target price and countercyclical payment program in the House version of the bill.”

    Mr. Hagstrom explained that, “The core of the commodity title that Senate Agriculture Committee Chair Debbie Stabenow, D-Mich., and Senate Agriculture Committee ranking member Pat Roberts, R-Kan., have written is a program that would make payments to farmers for some of the losses not covered by crop insurance. But those payments would be based on the difference between a farmer’s revenue and a five-year Olympic average of revenues in past years. Peterson said this system would mean that if there were several years of low prices, the farmer’s base revenue would decline and so would any support. Therefore, he contends, the system of target prices that would trigger countercyclical payments should be continued and the target prices should be raised to levels in line with current commodity prices and the cost of production.

    “Peterson said in a May 24 telephone interview that the farmers in his district ‘almost universally think (the target price and countercyclical program) is the preferred option.’ Peterson noted that the Minnesota Corn Growers Association ‘are on board with target prices,’ which puts them at odds with the National Corn Growers Association, which favors the revenue approach.”

    “House Agriculture Committee Chairman Frank Lucas, R-Okla., is also in favor of including the target price option as well as the revenue option in the farm bill, which assures that target prices will be in the House bill,” yesterday’s article said.

    The Agweek article added that, “It’s unclear whether any senators will try to offer a target price option amendment on the Senate floor when that bill comes to the floor in June. Sens. Kent Conrad, D-N.D., Max Baucus, D-Mont., and John Hoeven, R-N.D., included a target price program in their farm bill, but did not object to the Senate bill moving forward without it.

    “In Washington, the battle between a revenue approach and target prices has been seen as a north-south battle because rice and peanut growers have said the revenue approach does not work for them and they want a target price. But Peterson and Lucas have stressed that they do not consider this to be a regional battle because they think all farmers should have a choice of a revenue approach or a target price.”

    news release Friday from Rep. Tim Walz (D., Minn.) stated that, “Today, Reps. [Walz] and Collin Peterson (D-MN) met with local leaders and farmers to gather input and provide an update on the 2012 Farm Bill reauthorization process. Peterson is the Ranking Member of the U.S. House Agriculture Committee. Walz sits on the committee as well.”

    The release quoted Rep. Peterson as saying, “I’m optimistic that the House and Senate Agriculture Committees will continue their bipartisan work so we can get a farm bill done in the coming months.”

    Yesterday, the Congressional Budget Office released a brief one-page update titled, “Supplemental Information: Crop-Level Detail for the Estimated Change in Commodity Payments Under Title I of S. 3240,” which contained, “Change in commodity payments under Title I of S. 3240 [Agriculture Reform, Food, and Jobs Act of 2012], as introduced on May 24, 2012, compared to CBO March 2012 baseline.”

    Meanwhile, a news release yesterday from the Specialty Crop Farm Bill Alliance stated that, “On May 25, 83 members of Congress representing key specialty crop interests sent a message to House agriculture leadership about the need to defend specialty crop programs and to swiftly pass the Farm Bill. The letter, addressed to Chairman Frank Lucas and Ranking Member Collin Peterson requests ‘full and fair consideration to the research, pest management and trade assistance programs’ that are vital to the specialty crop industry.

    “‘This letter shows the leadership of the House of Representatives that there is strong support for the specialty crop industry and that there is a strong desire to pass the Farm Bill before it reaches its September 30 expiration date,’ said Robert Guenther, secretary of the Specialty Crop Farm Bill Alliance. ‘The signatories recognize the value of specialty crops in their districts and for the entire country, and we appreciate their willingness to work towards a stronger specialty crop industry.’”

    And an update posted yesterday at the National Sustainable Agriculture Blog noted that, “Last week, the Northeast Sustainable Agriculture Working Group (NESAWG), New England Farmers Union Educational FoundationWholesome Wave, and others released A Northeast Farm Bill Agenda: Priorities for the 2012 Farm Bill.  Given the diversity of size, scale, and environment in the Northeast, coupled with high population density, the agenda outlines polices that would create better farming and food solutions for the region.  The platform’s policy and funding priorities are broken into four categories: Economic Development and Local and Regional Farm and Food Infrastructure; Food and Nutrition; Conservation and Renewable Energy; and Research.

    “Certain key priorities from the agenda include:

    “Improve crop insurance programs by making them more accessible and appropriate for various types and scales of farms; and extend conservation compliance requirements to all recipients of federally subsidized crop insurance.”

    Erik Wasson reported yesterday at The Hill’s On the Money Blog that, “Conservative groups have made it official — they hate the Senate farm bill and will push Tea Party fiscal hawks in Congress to defeat it.

    “Heritage Action and Club for Growth on Tuesday told The Hill they will ‘key vote’ the Senate farm bill that is coming up for passage in early June, punishing members on their annual scorecards for voting in favor of the bill.”

    The Hill update added that, “Senate Agriculture Committee Chairwoman Debbie Stabenow (D-Mich.) said last week she has the 60 votes she needs to get a farm bill approved, but commodity groups are worried farm subsidies could be curtailed through conservative amendments.

    “In the House, conservative group opposition could scuttle plans to bring a farm bill to the floor before the current farm law expires Sept. 30. A farm bill was not on the summer agenda memo released last Friday by House Majority Leader Eric Cantor (R-Va.).”

    In other policy developments, a news release yesterday from USDA’s Farm Service Agency stated that, “The U.S. Department of Agriculture (USDA) announced today its decision on Farm Service Agency (FSA) county office consolidations proposed in January as part of USDA’s Blueprint for Stronger Service. In total, FSA will consolidate 125 of the 131 offices originally proposed for consolidation with other USDA service centers, consistent with provisions of the 2008 Farm Bill. Under the Blueprint for Stronger Service, USDA is modernizing and accelerating service delivery while improving the customer experience through use of innovative technologies and business solutions. The Blueprint included USDA’s plan to close or consolidate 259 domestic offices including the FSA offices, additional facilities and labs, and seven foreign offices.”

    On a separate policy issue, Andrew C. Revkin reported earlier this week at the Dot Earth Blog (The New York Times) that, “I love moments when common interests create accord between factions in our society that are otherwise deeply divided. Here’s some news along these lines in a joint release from the United Egg Producers and the Humane Society of the United States about a Senate bill that would, among other things, double the space allotted for each hen in the country’s massive egg industry.”

    And Tim Carman reported in today’s Washington Post that, “About 12 years ago, whenever she took a flight somewhere, Temple Grandin would turn her seatmates into impromptu survey subjects. The noted animal scientist showed them two sets of photos: one in which sows were confined in gestation crates and another in which the female pigs roamed in indoor barns. None of the photos were inflammatory or designed to manipulate emotions, she says.

    “Grandin says two-thirds of the 30 or so people who saw the pictures had ‘a real problem with gestation crates,’ those tightly confining steel cages that often don’t provide enough room for pregnant sows to roll over. ‘No one in the general public thought it was wonderful,’ Grandin says of the crates. Public referendums, she adds, would later confirm her informal survey, as with the 2008 ballot proposition in California where residents voted to ban, among other confinement systems, the gestation crate. The law passed with 63 percent of the vote.

    “It would appear that corporate America is catching up to public opinion. Since December, a string of fast-food chains, pork producers and other major companies have committed to raising sows without gestation crates or buying meat from suppliers that have dumped the confinement system. It started late last year when Smithfield Foods, the nation’s largest pork producer, announced that 30 percent of its own sows would be moved from gestation crates to group housing by the end of 2011, a sign the company was at last fulfilling a pledge it had made in 2007.”

    The Post article noted that, “In January, Hormel Foods decided to jump on board, announcing it would convert all of its company-owned farms to group sow housing before 2018. A month later, McDonald’s promised to work with its suppliers to eliminate gestation crates, and two of the fast-food giant’s competitors, Burger King and Wendy’s, soon followed suit. Others have joined the movement this year as well: Denny’s, Safeway and two food-service companies, the Compass Group and Bon Appetit Management.

    “Participants inside (and outside) the pork and restaurant industries say this seemingly sudden movement against gestation crates actually has been in the works for years, the result of a number of factors. Prime among them, as Grandin indicates, is public opinion. To date, eight states have passed laws prohibiting the crates, including Florida, Arizona, Colorado and Michigan. Some of those laws were approved in public referendums, like California’s, which garnered more than 60 percent of the vote.”

    Today’s article added that, “But just this year, a U.S. Department of Agriculture report quoted an often-cited 2004 study (itself an aggregation of 35 other studies) that concludes ‘gestation stalls or well-managed pens generally . . . produced similar states of welfare for pregnant [females] in terms of physiology, behavior performance, and health.’

    “What’s more, both the American Veterinary Medical Association and the American Association of Swine Veterinarians recognize gestation crates as valid animal husbandry tools, notes Dave Warner, director of communications for the National Pork Producers Council. He says any problems are more about worker training than housing systems.

    “‘If you don’t have the right care given to the animals, they’re going to suffer,’ he says. ‘That’s really the key.’”

    Budget Issues

    Robert Rubin, a former U.S. Treasury secretary and co-chairman of the Council on Foreign Relations, noted in a column in yesterday’s Wall Street Journal that, “Congress’s failure to reach a fiscal ‘grand bargain’ last summer manifested the deep economic-policy divide separating Democrats and Republicans. Fortunately, the so-called fiscal cliff will soon create an extraordinary second opportunity for a breakthrough compromise.”

    Mr. Rubin noted that, “Soon after November’s election several events will put serious pressure on both parties, possibly providing the impetus for a serious fiscal program. The critical decision-making period will be Congress’s lame-duck session after the election, and the first two or three months of the new Congress.

    “These events are already understood: The 2001 and 2003 tax cuts for middle-class and upper-income taxpayers, and the payroll tax holiday, will expire at the end of 2012. The dramatic mandatory reduction in spending (‘sequestration’) required by last year’s debt-ceiling deal will take place in January 2013. And the debt ceiling will need to be raised again in late 2012 or early 2013.

    “Each of these events is unacceptable for one or both political parties.”

    After additional observations, Mr. Rubin stated that, “Whatever the outcome of the elections in November, our political leaders will encounter an extraordinary set of circumstances that we are unlikely to see again. Those circumstances will create a historic opportunity to reshape America’s long-term economic outlook for the better. Let’s hope they take it.”

    Regulations

    news release yesterday from Rep. Adrian Smith (R., Neb.) stated that, “Congressman [Smith] today joined Reps. Jeff Fortenberry (R-NE), Lee Terry (R-NE) and Sens. Ben Nelson (D-NE) and Mike Johanns (R-NE) in sending a letter to Environmental Protection Agency (EPA) Administrator Lisa Jackson inquiring about the EPA’s use of aerial surveillance of livestock operations in Nebraska.

    “‘Farmers and ranchers in Nebraska pride themselves in the stewardship of our state’s natural resources,’ wrote the Nebraska lawmakers.  ‘As you might imagine, this practice has resulted in privacy concerns among our constituents and raises several questions.’”

    Bloomberg writers Andrew Zajac and Hans Nichols reported earlier this week that, “Barack Obama boasts that he’s issued fewer rules than George W. Bush, and his officials say regulatory rollbacks are expected to save more than $10 billion.

    “The administration has postponed decisions on several regulations, including a proposal to require rearview cameras in cars and a draft plan to cut ozone emissions that may cost as much as $90 billion. If the president is betting on that record working to his advantage with business groups in an election year, the odds are against him, say industry lobbyists and analysts.”

    The article noted that, “‘There’s still a lot of nervousness,’ William Kovacs, senior vice president for regulatory affairs at the U.S. Chamber of Commerce, the largest business lobbying group, said in an interview. ‘They’re making the right statements on marginal items. There hasn’t been any statement that they’re not going forward on big issues that haven’t been concluded — it just leaves us uncertain.’”

    Trade

    news release yesterday from the U.S. Trade Representative’s Office stated that, “The U.S.-Georgia High-Level Dialogue on Trade and Investment met today, convened by Deputy United States Trade Representative Miriam Sapiro, and Chief Advisor to the Prime Minister of Georgia Tamar Kovziridze. The officials discussed a range of options for increasing bilateral trade and investment, including the possibility of a free trade agreement, an updated investment agreement, and other measures that could facilitate trade and investment.”

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