Keith Good: PEDv Pathway to U.S. May Never be Determined, USDA Says

    Porcine Epidemic Diarrhea Virus

    Reuters writer Tom Polansek reported earlier this week that, “Investigators may never determine how a highly contagious virus that has killed an estimated 10 percent of U.S. pigs entered the country for the first time last year, the U.S. Department of Agriculture’s top veterinarian said Monday.

    “Porcine Epidemic Diarrhea virus (PEDv) has wiped out an estimated 7 million pigs, infected farms in 30 states, and helped push pork prices to record highs since the first case was found in Ohio in April 2013. A second strain of the virus and a separate disease called Swine Delta Coronavirus also have been discovered.

    “‘That pathway that it came in on, and the same pathway that Delta Corona came in, is very concerning to us,’ USDA’s Chief Veterinary Officer John Clifford told Reuters. ‘We’re doing all that we can to try to identify that. We may not identify it, though.'”

    And on TuesdayMr. Polansek reported at Reuters that, “The U.S. Department of Agriculture still has no clear idea about how PEDv entered the United States. With each passing day, veterinarians, hog producers and meat processors fear that other diseases may be finding the same pathway that allowed in PEDv.

    “‘I know that people are concerned about the pathways and feel like we haven’t done enough,’ John Clifford, the USDA’s chief veterinary officer, told Reuters. ‘It’s hard. It’s like looking for a needle in a haystack.'”

    The article added that, “Veterinarians have criticized the USDA for waiting a year to require farmers to report outbreaks to the government. The agency still has not laid out guidelines for compliance with the new requirement.

    “Clifford noted the agency at first deferred to international standards, which do not require mandatory reporting of PEDv cases. He declined to comment on when Agriculture Secretary Tom Vilsack will lay out details of the agency’s reporting requirements.”

    DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “More than a year after the first case of porcine epidemic diarrhea virus showed up in U.S. pork herds, the disease has a strong foothold in the country and is proving difficult to control.

    “A year ago, the industry had reported PED cases in 103 barns across 11 states. This year, more than 4,700 cases have been found in 30 states. Between 150 and 200 positive cases are found each week.

    “Anecdotally, it looks like the disease has peaked, but the weekly volume of confirmed cases remains high. Industry veterinarians told reporters Wednesday at the World Pork Expo that summer could curb the number of cases because the virus is susceptible to excessive heat.”

    The DTN article stated that, “In addition, industry officials continue to wait for USDA to roll out some initiatives announced in April to try to control PED.”

    Mr. Clayton indicated that, “The pork industry still has not seen information from USDA on a tracking program announced in mid-April. It is possible Secretary of Agriculture Tom Vilsack could provide more details when he speaks to pork producers Thursday at the expo. But there are several industry forums throughout the World Pork Expo to educate producers about the disease and biosecurity measures.”

    Also yesterday, Reuters writer Tom Polansek reported that, “The impact of a deadly pig virus on U.S. trade is mounting, with 11 countries limiting imports of live hogs and one banning pork imports, the U.S. Department of Agriculture’s top veterinarian said on Wednesday.

    “El Salvador, Guatemala and South Africa have banned imports of live U.S. hogs following the discovery of Porcine Epidemic Diarrhea (PEDv) in the United States last year, John Clifford, the USDA’s chief veterinary officer, said.

    “China, Japan, the European Union and Russia have restricted hog imports, while four other countries have imposed unofficial limitations, he said.”

    Purdue agricultural economist Chris Hurt indicated on Monday at the farmdocDaily blog (“Hog Prices Take Big Drop: What’s Next?“) that, “Speculation that the PED virus had greatly reduced pig numbers took lean hog futures prices to astounding heights. Now, markets have a better understanding that while the PED virus certainly did its damage, death loss may have been over anticipated in February and March and that producers have been able to compensate for a substantial portion of lost animals by much higher weights.”

    The farmdoc update added that, “The pork industry is in the midst of record profits in the second and third quarter of this year with profits for those not strongly impacted by PED-V over $70 per head on average for the six month period. Those profits are expected to decrease in the final quarter of 2014 to about $40 per head. Prospects for the first three quarters of 2015 also appear positive with estimated profits at about $20 on average. Sharp declines in soybean meal prices this fall are expected to be an important contributor to lower costs. However, with a continued buildup of the breeding herd, and reduced impacts from PED-V next winter, hog prices could drop back to levels that are closer to breakeven by late 2015 and into 2016.”

    Beige Book

    Yesterday, the Federal Reserve Board released its Summary of Commentary on Current Economic Conditions.  Commonly referred to as the “Beige Book,” the report included several observations with respect to the U.S. agricultural economy.

    The Minneapolis District indicated that, “Hog producers continued to lose large numbers of animals to a virus, pushing up prices for pork, as well as poultry. Cattle producers enjoyed record beef prices, as overseas demand grew and efforts to rebuild the U.S. herd kept cattle from going to slaughter.”

    The Kansas City District noted that, “Profit margins for livestock operators improved further as low cattle and hog supplies pushed prices higher and feed costs remained flat.”

    And the San Francisco District added that, “In general, dairy operations benefited from low feed costs. Pork production remained weak as a fatal virus swept through pig farms in some areas.”

    A full recap of the agricultural related portions of yesterday’s Beige Book report have been posted here, at Online.

    Weather- Ag Issues

    The Climate Prediction Center recently indicated in its U.S. Monthly Drought Outlook report that, “Drought is expected to persist or worsen in the West, the southern Rockies, and the Plains from eastern Colorado and northern Oklahoma southward through Texas. This broad area includes most of the nation’s areas of extreme to exceptional drought (D3 to D4 on the Drought Monitor). Modest drought expansion is forecast in parts of Texas that are already abnormally dry (D0 on the Drought Monitor) where odds favor below-normal June rainfall [related graph].”

    In other developments, Max Claybaker, a farmer and a crop insurance agent from Blackwell, Oklahoma, indicated recently at The Oklahoman that, “In some parts of Oklahoma, it seems like wheat farmers just can’t catch a break.

    “A late spring freeze, combined with excessively dry or extreme drought conditions throughout the winter and into spring have left many of the state’s wheat fields badly stressed or a complete bust. I’d say this is the worst I’ve ever seen, and I started farming in the mid-1950s.”

    The column added that, “Last year, Oklahoma farmers spent more than $93 million to purchase the peace of mind of crop insurance. Crop insurance allows individual farmers to purchase the coverage they need, tailored to their farms, financial standing and tolerance to risk.

    “For farmers who rely on loans to operate–and that’s a lot of farmers–crop insurance has become a bank’s best friend. In fact, the best collateral you can take to a bank when you are seeking a loan is your crop insurance policy.”

    Also this week, University of Illinois agricultural economist Gary Schnitkey indicated at the farmdocDaily blog (“Non-Land Costs for Corn Increased in 2013“) that, “Summaries of farms enrolled in Illinois Farm Business Farm Management (FBFM) indicate that 2013 non-land costs for producing corn were $615 per acre in central Illinois for high-productivity farmland. The $615 per acre cost in 2013 was $34 per acre higher than in 2012. Since 2006, non-land costs for producing corn more than doubled from $302 per acre in 2006 to $615 per acre in 2013. Non-land costs may decrease in 2014 due to fertilizer price declines. However, non-land costs in the high $500 and low $600 range likely will occur for the foreseeable future.”

    In trade related news, yesterday, the U.S. Trade Representatives Office released a new summary of U.S. objectives with respect to the Trans-Pacific Partnership.

    And a news release yesterday from USDA indicated that, “The White House Rural Council today held the first ‘Made in Rural America’ regional export forum with business owners and local leaders in Canonsburg. The one day meeting was hosted by the Appalachian Regional Commission (ARC) and Secretary of Agriculture Tom Vilsack delivered the keynote address. The forum kicks off a series that will include four additional forums to be headlined by Secretary of Commerce Penny Pritzker, Small Business Administration Administrator Maria Contreras-Sweet, Export-Import Bank Chairman Fred Hochberg, and United States Trade Representative Michael Froman.

    “The series of forums are part of the Obama Administration’s Made in Rural America Export and Investment Initiative that was created earlier this year by President Obama to help rural businesses and leaders take advantage of new investment opportunities and access new markets abroad. This first forum will provide business-to-business learning opportunities and federal, state, and local expertise for rural business and community leaders. The next forum, hosted by the Delta Regional Authority and keynoted by Secretary Pritzker, will be held in the Memphis region on July 18.”

    Policy Issues

    Reuters writer Patricia Zengerle reported earlier this week that, “Two U.S. lawmakers will introduce legislation on Tuesday to end restrictions on international food aid programs, which they say would free up hundreds of millions of dollars per year and get aid to some 9 million more hungry people around the world.

    “U.S. Senators Bob Corker of Tennessee, the top Republican on the Senate Foreign Relations Committee, and Democrat Chris Coons of Delaware, chairman of the Africa subcommittee, are jointly introducing the ‘Food for Peace Reform Act of 2014,’ according to a copy of the bill obtained by Reuters.”

    The Reuters article explained that, “The program is restricted by laws requiring that most food be produced in the United States rather than purchased locally, which means it can cost more and take months to reach needy people, often arriving too late to be of much help in case of famine or disaster.

    “Half must also be transported on U.S. vessels, which can also add time and double the cost. That restriction was loosened two years ago. Before 2012, three-quarters of all food aid had to be sent on U.S. ships.

    “The Corker-Coons bill would allow both U.S. and locally or regionally procured commodities, vouchers or cash transfers to be used for aid, depending on which is the most cost effective option.”

    In addition, Dan Glickman and Peter McPherson noted yesterday at Politico that, “In the coming weeks, Senators on the Commerce, Science and Transportation Committee will have a choice to make: Give a $75 million subsidy to the maritime shipping industry, or ensure that several million people in impoverished and war-torn countries have food to eat.

    “At issue is how the Senate will address a provision quietly tucked into the House-approved version of the Coast Guard and Maritime Transportation Act. The obscure provision would raise the percentage of U.S. food aid that is required to be transported on privately owned, U.S.-flagged commercial vessels from 50 to 75 percent. This would effectively deny 2 million people in countries like Haiti, South Sudan and the Central African Republic access to lifesaving U.S. food assistance.”

    Meanwhile, Michael M. Grynbaum reported in today’s New York Times that, “New York City’s battle over sugary drinks is entering its endgame. But much more than soda is at stake.

    “A plan to limit the sale of large, high-calorie beverages, championed by former Mayor Michael R. Bloomberg as a novel way to fight obesity, went before the State Court of Appeals here on Wednesday, the city’s final recourse after a lower court judge struck down the proposal last year.

    “But health advocates and legal experts say they are less concerned about the fate of two-liter Coca-Cola bottles than something more consequential: how far local governments can go to protect the health of their citizens.”

    Stephanie Strom reported earlier this week in The New York Times that, “A new study of how taxes might be used to curb consumption of sugary drinks suggests that applying a tax based on the amount of calories contained in a serving rather than its size would be more effective.”

    And Donald G. McNeil Jr. reported in The New York Times this week that, “Nearly 30 percent of the world’s population is overweight or obese, and not one country has reduced its obesity rate in 33 years, according to a new study combining three decades of data from 188 countries, published in The Lancet last month.”

    CFTC- Commodity Futures Trading Commission

    Andrew Ackerman and Kristina Peterson reported this week at The Wall Street Journal Online that, “Senate lawmakers Tuesday confirmed all three of President Barack Obama’s nominees for the Commodity Futures Trading Commission, restoring the top U.S. swaps regulator to a full slate of commissioners.

    “The Senate, by voice vote, approved senior Treasury Department official Timothy Massad to head the five-member agency, and brokerage executive J. Christopher Giancarlo for an open Republican seat at the CFTC. Mr. Massad will succeed Gary Gensler, who stepped down as CFTC chairman in January.

    “The Senate also confirmed securities lawyer Sharon Bowen to fill a vacant Democratic slot. Ms. Bowen was confirmed by a vote of 48-46, largely along partisan lines.”

    Gina Chon and Gregory Meyer reported on Tuesday at The Financial Times Online that, “Market participants are eager to know whether Mr Massad, a former Treasury official, will continue in Mr Gensler’s reformist vein or make changes as dozens of rules reshape the $400tn US over-the-counter derivatives market.

    “Since Mr Gensler stepped down at the start of the year, the CFTC has signalled a softer tone. Last month it took steps to ease record keeping requirements for certain transactions. It has also solicited more public comment on a measure to clamp down on commodities speculation.”

    House Ag Committee Chairman Frank Lucas (R., Okla.) indicated in a statement yesterday that, “I am pleased the CFTC will be operating at full strength once again.  I am hopeful that Chairman Massad will lead by consensus, which will be better for America’s economy in the long run.  Specifically, I am hopeful that he will reverse recent Commission actions that seem to ignore the concerns of our farmers and ranchers, as well as pursue commonsense reforms that will bring certainty to the marketplace for America’s manufacturers, energy firms, and utilities.

    “The House Agriculture Committee just passed a wide-ranging, bipartisan CFTC reauthorization bill that makes numerous reforms, including improving the operations of the agency, protecting futures customers, and reducing regulatory burdens on job creators.  Chairman Massad can start there if he needs a blueprint for action,” said Lucas.

    Political Notes

    Janet Hook and Beth Reinhard reported in today’s Wall Street Journal that, “Sen. Thad Cochran is the underdog as he heads into a likely three-week runoff campaign in Mississippi’s Republican primary, hampered by anti-Washington sentiment and an enthusiasm gap in the fight against his tea-party-backed rival, analysts from both camps say.

    “His opponent, state Sen. Chris McDaniel, emerged from the inconclusive Senate contest Tuesday with a hair’s-breadth lead and momentum on his side for the next round of balloting.

    “Typically, a challenger brings more energy to a runoff. ‘No doubt, we are swimming upstream in the current political environment,’ said Mississippi Republican committeeman Henry Barbour, who has helped lead a super PAC backing Mr. Cochran. ‘We have to make sure Mississippi voters understand what is at stake.'”

    Nick Corasaniti and Jonathan Martin reported in today’s New York Times that, “Senator Thad Cochran’s supporters opened Mississippi’s Republican Senate runoff on Wednesday by signaling that they would treat the race like a general election and seek the votes of Democrats and independents during the three-week campaign against State Senator Chris McDaniel.

    “‘I don’t care if you’re from Yazoo City or the Coast, or if you are white or black,’ said Henry Barbour, a Republican activist who runs Mississippi Conservatives, a pro-Cochran political action committee. ‘We’re going to make certain that everybody knows they have a stake in this, and the state needs somebody to represent the interest of all three million Mississippians.’

    “The runoff election is June 24, and ‘every registered voter in Mississippi has a stake in this, and needs to show up,’ he added.”

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