Keith Good: Fight Against PED Virus Accelerates as Pork Prices Climb

    Livestock- PEDv

    Kelsey Gee reported in today’s Wall Street Journal that, “Drug companies are racing to create vaccines to stifle a deadly swine virus that has roiled the U.S. meat industry and pushed pork prices to record highs.

    “Two companies — tiny Harrisvaccines Inc. and larger animal-health firm Zoetis Inc. — received conditional regulatory approval this summer to market vaccines for porcine epidemic diarrhea virus, which has spread to 31 states and killed millions of young pigs since it was first identified in the U.S. in April 2013. At least two other drug makers– Merck & Co. and Germany’s Boehringer Ingelheim GmbH–say they are researching potential vaccines for PED.

    “Hog farmers and meatpackers hope the vaccines can slow a disease that has confounded scientists and regulators, who remain uncertain of its causes and all of the pathways by which it spreads. The virus is fatal only to young pigs, and poses no threat to human health or food safety, according to scientists. PED has reduced U.S. hog supplies, raising costs for meat processors, retailers and consumers. Average retail pork prices jumped 12% in the 12 months through August to a record $4.20 a pound, according to federal data.”

    Ms. Gee explained that, “According to industry estimates, roughly eight million pigs have died from the virus since it was first discovered in the U.S., with some farms experiencing repeat outbreaks. U.S. pork production has fallen 1.8% this year, according to the USDA, lifting futures prices for slaughter-ready hogs to a record $1.33875 a pound in July. Prices have eased in the past two months, in part because fewer PED outbreaks occurred this summer compared with the start of the year. That is likely because warmer temperatures make it harder for the virus to survive, according to veterinarians.”

    Bloomberg writers Megan Durisin and Lydia Mulvany reported yesterday that, “Two years ago, Iowa farmer Bill Tentinger considered quitting the hog business he began in 1969 as surging grain costs led to losses. Now, profits are the highest ever, and he is about to boost output to a record.

    “‘Why not take advantage of that to help heal up some of the wounds in the past?’ Tentinger, 65, said by telephone from Le Mars, Iowa. With pork prices near records and corn feed tumbling below $3 a bushel from $7.50 in 2012, Tentinger plans to boost annual pig output by 50 percent to 24,000 from 16,000.

    “The U.S. hog herd, at an eight-year low on March 1, rose in the three months ended Sept. 1 by the most since 1991, government data show. After two years of losing money, hog producers are getting a boost from record corn and soybean harvests just as tight meat supplies send pork and bacon prices to all-time highs and erode profit for buyers including Hormel Foods Corp. and Cracker Barrel Old Country Store Inc.”

    Crop Watch

    Reuters news reported yesterday that, “Goldman Sachs lowered its three- and six-month price forecasts for Chicago Board of Trade soybeans to $8 a bushel, below the current spot price near $9, the investment bank said in a note to clients dated Tuesday.”

    The article added that, “Goldman forecast a three- and six-month CBOT corn price of $3 per bushel and a 12-month price of $3.75. The figures compare to the bank’s July 28 forecasts of $4 per bushel for all three time periods.

    “The bank put the U.S. 2014 corn yield at 175 bushels per acre and production at 14.552 billion bushels, above the USDA’s estimate of a 14.395 billion-bushel crop with a yield of 171.7.”

    Regarding transportation issues, a news release yesterday from Sen. John Thune (R., S.D.) stated that, “U.S. Senators [Thune], Ranking Member of the Senate Commerce, Science, and Transportation Committee, and Amy Klobuchar (D-Minnesota) today sent a letter to U.S. Department of Agriculture (USDA) Secretary Tom Vilsack calling on USDA to conduct an economic analysis of the rail service challenges facing agricultural shippers. Thune and Klobuchar’s letter cites recent testimony from USDA’s own Deputy Administrator of the Transportation and Marketing Program, Arthur Neal, who testified before the Senate Commerce Committee on September 10th and stressed the significance of these crucial issues to many of America’s agriculture producers and grain elevators.”

    Biotech

    Christopher Doering reported yesterday at The Des Moines Register Online that, “The consumption of genetically modified feed by livestock has not had any impact on the productivity or health of the animals, according to a study by researchers at the University of California-Davis.”

    Farm Bill- Policy Issues

    Aaron Stanley reported yesterday at The Financial Times Online that, “The US and Brazil agreed on Wednesday to resolve a decade-long feud over cotton subsidies, marking an end to one of the highest-profile disputes in the history of the World Trade Organisation

    “‘Today’s agreement brings to a close a matter which put hundreds of millions of dollars in US exports at risk,’ said Mike Froman, US Trade Representative. ‘The United States and Brazil look forward to building on this significant progress in our bilateral economic relationship.'”

    The FT article stated that, “Under the agreement [Memorandum of Understanding Related to the Cotton Dispute], the US will pay a lump sum of $300m to Brazilian cotton farmers and modify its support for domestic cotton programmes. Brazil will forfeit $829m in WTO-granted sanctions against US goods and services annually – a portion of which had been allocated for cross-retaliation against US intellectual property rights.

    “The $300m price tag for resolving the dispute is ‘small beer for the US’, said Frank Samolis, a trade lawyer with Squire Patton Boggs, adding that the agreement clears the slate for trade relations between the two countries after Brazil’s presidential elections, due this weekend.”

    Yesterday’s article explained that, “The case was first filed at the WTO dispute resolution arm in 2002 and was decided in 2004, when a panel ruled that US support for domestic cotton farmers – including direct payments, crop insurance and export credit programmes – wasillegal under the WTO agreement… . [T]o ward off the reprisal, the US struck a temporary deal in 2010 to pay the Brazilian cotton industry $12.3m per month until a new farm bill could be passed that modified the illegal subsidy programmes. However, gridlock in Congress delayed the farm bill passage by several years, while automatic federal budget cuts – also known as sequestration – forced the payments to be ceased in late 2013.

    “While Brazilian cotton growers had been aggressively pushing for retaliation, Brazil’s foreign ministry and many in the country’s greater business community had urged caution. They argued that provoking a trade war with the US and enacting protectionist measures would hurt Brazil’s sluggish economy.”

    Jeffrey T. Lewis and Leslie Josephs reported yesterday at The Wall Street Journal Online that, “The U.S. will cut the maximum length of credits available to cotton exporters to 18 months from 36 months, and raise the interest rates exporters pay for the loans, a spokeswoman for Brazil’s foreign ministry told The Wall Street Journal.”

    The Journal added that, “Under the new agreement, the U.S. will make the one-time, $300 million payment to the Cotton Institute, which will be able to use the funds to finance a wider range of activities than those permitted under the original agreement, the foreign ministry spokeswoman said.

    “In return, Brazil agreed it won’t launch new complaints about the cotton export subsidy program as long as the current U.S. Farm Bill is in force and the U.S. meets the terms of the bilateral agreement with Brazil.”

    Bloomberg writer Alan Bjerga pointed out yesterday that, “The new farm bill included modified cotton programs designed to mollify Brazil’s concerns.”

    news release yesterday from the National Cotton Council (NCC) noted that, “NCC Chairman Wally Darneille reiterated that the U.S. cotton industry has undertaken extensive efforts to resolve this case. He said the NCC offered comprehensive reform of cotton policy as part of the new farm law.

    “‘The new U.S. farm bill includes several necessary changes to cotton policy and the GSM export credit program,’ Darneille said. ‘When compared to previous programs, cotton policy is more market-oriented with the primary safety net conveyed through insurance products that must be purchased by the producer.'”

    In a statement yesterday, American Farm Bureau President Bob Stallman noted in part that, “This agreement brings certainty to cotton growers and all U.S. farmers that the current structure of commodity programs will remain intact. Farm Bureau worked diligently with Congress to ensure that the nation’s safety net programs for agriculture were WTO compliant. Today’s agreement validates that approach.”

    Peter Urban of Stephens Media reported yesterday at the Times Record (Fort Smith, Ark.) Online that, “Rep. Rick Crawford, R-Jonesboro, and Sen. John Boozman, R-Ark., played key roles in crafting the 2014 farm bill. Both served on a conference committee that negotiated the final version of the farm bill.

    “‘Knowing our nation potentially faced damaging trade retaliations from Brazil, my colleagues and I on the House Committee on Agriculture reformed the 2014 farm bill’s cotton programs to an insurance-based mechanism,’ Crawford said. ‘This mechanism provides an adequate safety net for our cotton growers while hampering Brazil’s assertion that U.S. cotton programs have disadvantageously distorted the market price for cotton.’

    “‘This is welcome news considering that our state is among the leading producers of cotton in the country,’ said Boozman, who serves on the Senate Agriculture Committee. ‘Elimination of these tariffs, along with a new Farm Bill, provides certainty for the cotton industry moving forward. This is a victory for Arkansas cotton producers.'”

    On the other hand, Rep. Rosa DeLauro (D., Conn.) indicated yesterday that, “The United States never should have been in a situation where we have to pay off Brazil while vulnerable families suffer. Our farm subsidies need serious reform and the last Farm Bill simply extends the status quo. The best way to resolve this issue is to remove our market-distorting cotton payments. Taking food out of hungry people’s mouths here at home while we subsidize Big Agribusinesses makes no sense.

    “Congress used to have a bipartisan commitment to funding nutrition programs. We need to return to those days and ensure no American goes hungry.”

    And Rep. Ron Kind (D., Wis.) noted yesterday that, “‘This outrageous waste of taxpayer dollars continues. Our annual payoffs to Brazilian cotton farmers should have been eliminated long ago, but we’re sending them a $300 million payment instead,’ said Rep. Kind. ‘I pushed to resolve this mess when Congress was debating the last Farm Bill, but Congress didn’t act and now we are left with a bad deal that’s paid for by American taxpayers.'”

    “‘We need to get our house in order and reform our subsidies programs in their entirety. Sending a huge payoff to Brazil is not the answer,’ concluded Rep. Kind. ‘If my old boss, the late Senator Bill Proxmire, were still giving out his famous Golden Fleece Awards our policy on Brazilian cotton would be a guaranteed winner.'”

    Meanwhile, Anthony Harrup reported yesterday at The Wall Street Journal Online that, “Mexican Economy Minister Ildefonso Guajardo said Wednesday that Mexico is seeking a negotiated settlement to a dispute over Mexican sugar exports to the U.S., but that failure to reach an accord could lead Mexico to take the case to the World Trade Organization.

    “The U.S. government in August imposed preliminary tariffs on Mexican sugar imports following complaints by U.S. sugar growers that the Mexican government subsidizes the domestic industry, allowing Mexico to flood the U.S. market with cheap sugar, harming U.S. producers.

    “Mr. Guajardo told reporters Wednesday that Mexico is aiming for an agreement before the Mexican sugar cane harvest begins, and before the U.S. government decides later this month whether to impose duties as a result of allegations that Mexico is dumping sugar in the U.S.”

    Raymond Zhong and Vibhuti Agarwal reported yesterday at The Wall Street Journal Online that, “India insists that it needs the unfettered ability to subsidize its farmers and stockpile food for its needy and malnourished citizens, but that stance is threatening to roll back decades of progress on global trade agreements.

    “The tussle has weighed on U.S.-India relations. This week’s highly anticipated meeting between President Barack Obama and Prime Minister Narendra Modi didn’t resolve the dispute.

    “The standoff has cast unflattering light on India’s food programs themselves, which for years have been dogged by waste, corruption and bureaucratic fumbling. India might not need to spend $19 billion this year alone to feed its poor, critics say, if it ran existing programs more efficiently.”

    The Journal writers explained that, “India in July blocked passage of a World Trade Organization deal aimed at harmonizing customs rules and easing international commerce, saying it first wants guarantees that it won’t face WTO limits on its purchases of grain for food-distribution programs. Because these purchases are made at above-market prices, they risk breaching WTO ceilings on subsidies that encourage overproduction and thereby distort trade.”

    With respect to implementation issues of the new U.S. Farm Bill, Chris Clayton penned an update yesterday at the DTN Ag Policy Blog titled, “CRP, Base Acres and Proof for Yield Updates.”

    Also yesterday, AP writer Mary Clare Jalonick reported that, “Americans like to talk about food, and they certainly like to eat. But they don’t normally think about food policy when they vote.

    “A group of food advocates is trying to figure out how to change that. They’re putting money and organizational effort into elections for the first time, including an effort this fall to defeat Rep. Steve Southerland, R-Fla., over his drive to increase work requirements for food stamp recipients.

    “The push against Southerland is a test of how to make food policy stick in the political arena ahead of the 2016 presidential and congressional races.”

    Regulations

    Tim Devaney reported yesterday at The Hill Online that, “A fight is breaking out inside the Obama administration over the Environmental Protection Agency’s (EPA) proposed water regulation.

    “The Small Business Administration’s Office of Advocacy on Wednesday urged the EPA to withdraw the Waters of the U.S. rule, which seeks to clarify the agency’s authority to regulate smaller bodies of water like streams and rivers.”

    The Hill update added that, “SBA said it is ‘extremely concerned’ by the rule.

    “‘Advocacy advises the agencies to withdraw the rule,’ SBA wrote in a letter to EPA Administrator Gina McCarthy. ‘The rule will have a direct and potentially costly impact on small businesses.'”

    An update yesterday at the National Sustainable Agriculture Coalition Blog indicated that, “The U.S. Environmental Protection Agency (EPA) is getting pressure from environmental and sustainable agriculture organizations and members of Congress to investigate and restrict the use of neonicotinoids, a class of pesticides linked to declining pollinator populations…[O]n September 30, 2014, Representatives Earl Blumenaur (D-OR), John Conyers (D-MI), and 58 other Democratic Representatives co-signed a letter urging the EPA to restrict neonicotinoid use.”

    Political Notes

    Mark Peters reported yesterday at The Wall Street Journal Online that, “A Kansas district court ruled Wednesday that the state’s Democratic Party doesn’t have to name a new candidate for the U.S. Senate, a setback for the re-election hopes of Republican Sen. Pat Roberts.

    “The decision issued Wednesday is the latest in a continuing legal battle over the Senate ballot in Kansas that started last month when Democrat Chad Taylor dropped out of the race. His exit set up a head-to-head contest between Mr. Roberts and an independent candidate,Greg Orman, with the outcome likely to affect the national fight between Democrats and Republicans for control of the Senate.

    “A three-judge panel wrote in its ruling that replacing a candidate is up to the discretion of the party and isn’t required.”




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