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    Tuesday, July 23, 2013

    Keith Good: Corn, Soybean Conditions Decline; Beef Reversing Trend


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    Agricultural Economy

    Cheri Zagurski and Anthony Greder reported yesterday at DTN (link requires subscription) that, “Corn condition worsened across the U.S. as 43% of the crop was silking as of July 21, according to USDA’s latest weekly Crop Progress and Condition reports.

    “This week 11% of the nation’s corn crop was rated very poor to poor, compared to 9% last week. Forty-three percent of the crop is silking, compared to 16% last week and a five-year average of 56%.”

    The DTN writers noted that, “Soybean conditions also fell, dropping to 28% fair, compared to 27% last week. That extra percentage point moved out of the good category.”

     

    Meanwhile, Purdue University Agricultural Economist Chris Hurt indicated yesterday at the farmdocDaily blog (“Beef Industry About to Make a Slow Turn”) that, “The beef industry is about to reverse a downward trend in numbers, but expansion is expected to start slowly. The number of beef animals has been in a downward spiral since 2007 due to drought which has ravaged pastures and due to high prices of corn, soybean meal, and forages. Now, prospects are brightening for a renewal of pastures and for a welcomed reduction in feed prices.”

    And with respect to biofuels, DTN Political Correspondent Jerry Hagstrom reported yesterday (link requires subscription) that, “As a House Energy and Commerce subcommittee prepares to hold two hearings this week on the Renewable Fuel Standard this week, the National Corn Growers Association has learned that support for the RFS in Congress is not as strong as they hoped.

    “About 200 members of the corn growers met in Washington last week for their summer Corn Congress and lobbied members of the House and Senate or their aides.

    “When the corn growers reported back to their leaders on Thursday, about half said they would support the RFS, a quarter said they would not and another quarter was not sure, Martin Barbre, a Carmi, Ill., grower who is the incoming NCGA president, told DTN.”

    Mr. Hagstrom noted that, “Pam Johnson, the outgoing president, who is from Floyd, Iowa, said the level of support for the RFS was lower than expected, but NCGA members had not limited their contacts to the Corn Belt. Johnson said the corn growers viewed their visits with legislators from California and other states where the RFS is not so popular as the start of a conversation.”

    Also, Bloomberg writer Aya Takada reported earlier this week that, “Prime Minister Shinzo Abe’s drive to double farm income and expand Japan’s feed-rice output eightfold over the next decade may accelerate a decline in corn imports, according to the farm ministry.

    “‘Demand for rice as a corn substitute is potentially huge,’ said Tsuyoshi Yoshida, assistant director at the grain division of the Ministry of Agriculture, Forestry and Fisheries.The ministry will consider increasing subsidies to growers of rice for animal feed, Yoshida said in an interview on July 17, after the ruling Liberal Democratic Party set an annual output target of as much as 1.5 million metric tons by 2023. Output was 183,400 tons last year and as little as 9,500 tons in 2008.”

    The Bloomberg article stated that, “Corn imports by Japan, the world’s biggest buyer, fell for the last seven years as prices in Chicago surged as much as fourfold since 2006. The yen’s depreciation since Abe became leader in December is increasing costs for feed makers in the third-largest economy, which imports almost all its corn.

    “The government pays 80,000 yen ($800) annually to farmers for the equivalent of every 1,000 square meters of land they cultivate with feed rice under a supply agreement with feed makers. Any increase in the payment would be the first since 2010, Yoshida said.”

    Farm Bill

    The “Washington Insider” section of DTN reported yesterday (link requires subscription) that, “Democratic members of Congress continue their drumbeat for an official conference, but GOP House leadership and House Ag Chairman Frank Lucas, R-Okla., say an attempt is being made to see if a separate nutrition funding and reform bill can be developed.

    “Some House Democratic members want a hearing on the topic, but Lucas said extensive farm bill-related discussions on the matter have already been held. What few observers admit at this stage is that any solo farm bill conference report would not likely make it through both chambers. But an agreement at the leadership level beyond the Ag panels to attach any agreement to another conference report, such as an increase in the debt limit, could stand a chance for the farm bill to be completed.

    “Absent that, another extension of current law, perhaps a two-year extension, is the likely outcome. One suggestion for food stamp funding cuts has been to backload any cuts, and then do a study to determine if those cuts and reform measure would significantly and negatively impact the program.”

    Perry Beeman reported yesterday at The Des Moines Register Online that, “U.S. Agriculture Secretary Tom Vilsack said in Ames today that if Congress doesn’t pass a Farm Bill soon, it will miss the chance to offer farmers the five-year plan they need.

    “Lawmakers would miss the chance to save money, too.

    “Vilsack has become increasingly frustrated over dragged out negotiations that still have not produced what he calls a ‘food, farm and jobs bill.’”

    Mr. Beeman added that, “Vilsack later told reporters later that if Congress misses this window to approve the Farm Bill, recesses and impending elections will make it difficult to pass one at all. That would create widespread problems in programs.”

    Meanwhile, a news release yesterday from USDA indicated that, “[Sec. Vilsack] today announced that [USDA] will accept 1.7 million acres offered under the 45th Conservation Reserve Program (CRP) general sign-up. The Department received nearly 28,000 offers on more than 1.9 million acres of land, demonstrating CRP’s continuing appeal as one of our nation’s most successful voluntary programs for soil, water, and wildlife conservation. Under Vilsack’s leadership, USDA has enrolled nearly 12 million acres in new CRP contracts since 2009. Currently, there are more than 26.9 million acres enrolled on 700,000 contracts.”

    An update yesterday at the National Sustainable Agriculture Coalition blog noted that, “High crop prices and soaring land and rental values are dictating the decline in program acreage, with more money to be made in cultivation than in collecting government rental checks for land retirement.”

    Also yesterday, Ginger Gibson reported at Politico that, “House Democrats are targeting Republicans who receive farm subsidies but opposed a stripped-down farm bill with no food stamp assistance.

    “Fourteen GOP lawmakers have received a total of $7.2 million in farm subsidies, according to the available data since 2004, but all voted for an amendment that would have decreased the Supplemental Nutrition Assistance Program according to a report Rep. George Miller (D-Calif.) is releasing Monday.”

    In a broader look at the current political environment, Patrick O’Connor reported yesterday at The Wall Street Journal Online that, “For four decades, the Heritage Foundation was a stately think tank that sought to define conservative thinking for Republicans.

    “Now, in one of the more significant transformations in the capital’s intellectual firmament, it has become an activist political operation trying to alter the course of conservative thinking. It now challenges establishment Republican leaders as much as it informs them, making waves in the process.”

    The Journal article noted that, “The latest dust-up arose earlier this month when Heritage Action opposed a revised version of the farm bill. Some Republicans were incensed because GOP leaders had bowed to the group’s demand to strip out money for food stamps and other nutritional programs.

    “‘We went into battle thinking they were on our side, and we find out they’re shooting at us,’ said Mick Mulvaney (R., S.C.), a conservative who also lobbied to split food stamps into a separate measure in hopes of enacting changes to the programs. He said Heritage Action’s refusal to back the farm bill even after food-stamp funding was removed ‘undermines the credibility of the organization.’”

    The Journal article added that, “‘I don’t even look at those scores from Heritage and Club for Growth,’ said Rep. Ted Yoho (R., Fla.), a conservative who regularly votes against party leaders. He said the combined farm bill that Heritage Action helped kill included a large set of conservative provisions, ending the direct-payment program to farmers and cutting $20 billion over 10 years from food stamps.

    “‘They’re overlooking what we’re here for,’ he said, of these outside conservative groups. ‘We’re here to legislate.’”

    Mr. O’Connor pointed out that, “House Agriculture Chairman Frank Lucas (R., Okla.), an author of the farm bill, accused Heritage Action of criticizing Republicans just to raise money—a complaint echoed by other GOP lawmakers. Critics contend that Heritage Action and other groups pick policy fights in order to tap a conservative donor base that remains skeptical of party leaders, and that it relishes these internecine battles.”

    Budget Issues

    David Rogers reported yesterday at Politico that, “Straining to meet their budget targets, House Republicans proposed a new round of deep cuts from environmental, arts, and wildlife programs Monday, going billions of dollars beyond the across-the-board reductions already ordered by sequestration in March.

    “The $24.3 billion natural resources bill represents a $5.5 billion reduction from what Congress had approved only last spring and is about $4 billion below what the agencies have been living with since March.”

    Mr. Rogers added that, “An estimated $1.5 billion in emergency funding is added to meet fire-fighting costs and the Forest Service’s budget would grow chiefly because of wildfire prevention and suppression programs. But elsewhere the picture is exceptionally bleak.

    “The Environmental Protection Agency is among those hardest hit, with its annual funding reduced by about a third to $5.5 billion. The much smaller Fish and Wildlife Service is also cut 27 percent below what had been enacted earlier this year.”

    Also, Edward-Isaac Dovere reported yesterday at Politico that, “President Obama knows there are Republicans in Congress who want to avoid a government default or shutdown, White House press secretary Jay Carney said Monday, but wouldn’t say whether Obama currently believes House Speaker John Boehner is definitely among them.

    “Carney told reporters at the White House briefing that the president agrees with Boehner’s public comments about wanting to avoid a default, but the speaker needs to take the lead to avoid a repeat of the hit to the economy and downgrading of the nation’s bond rating caused by the 2011 debt ceiling showdown.

    “Carney said only Boehner could decide whether to stop adhering to the Hastert rule and bending to the tea party elements of his caucus–and he refused to answer specifically when asked if the president felt Boehner was heading into the fall negotiations in good faith.”

    More specifically with respect to the EPA, Julian Hattem reported yesterday at The Hill’s RegWatch Blog that, “A group of Republican senators suggest the Obama administration may be purposefully overstating the benefits of new environmental rules by more than $2.2 billion to make them seem more valuable.

    “The Environmental Protection Agency (EPA) is undergoing an ‘apparent attempt to deliberately inflate benefits calculations in order to justify the high cost of a rule,’ the senators wrote in a letter to the head of EPA’s water office on Monday.”

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