Keith Good: Ag Economy; Trade; Regulations; Policy Issues

Agricultural Economy

Bloomberg writer Megan Durisin reported yesterday that, “In the U.S., the country that made the hamburger a global icon of American fast-food cuisine, beef is about to fall another spot on the meat scale.

“For the past two decades, chicken has outranked beef as the most produced meat, and now pork is about to surpass it as well. Hog herds have rebounded from a deadly virus last year, while record-high meat prices and cheaper feed led to breeding of more sows and bigger pigs. As pork output in 2015 jumps 4.6 percent to a record, cattle ranchers have yet to recover from a 2012 drought, and beef production is headed for a 22-year low, the U.S. Department of Agriculture estimates.

“When porcine epidemic diarrhea virus killed millions of piglets across the country in 2014, prices for bacon and pork chops surged to all-time highs as supplies tightened. With more hogs arriving in recent months and demand increasing, costs are dropping for buyers including Domino’s Pizza Inc. and Hormel Foods Corp.”

Recall also that Wall Street Journal writer Kelsey Gee reported over the weekend that, “The U.S. cattle herd expanded in 2014 for the first time in eight years, offering hope to consumers that beef prices could start to subside after soaring to a series of records.”

AP writer Candice Choi reported yesterday that, “Coke is coming out with premium milk that has more protein and less sugar than regular. And it’s betting people will pay twice as much for it.

“The national rollout of Fairlife over the next several weeks marks Coca-Cola’s entry into the milk case in the U.S. and is one way the world’s biggest beverage maker is diversifying its offerings as Americans continue turning away from soft drinks.

“It also comes as people increasingly seek out some type of functional boost from their foods and drinks, whether it’s more fiber, antioxidants or protein. That has left the door open for Coke step into the milk category, where the differences between options remain relatively minimal and consumption has been declining for decades.”

From an international perspective, Lucy Hornby reported yesterday at The Financial Times Online that, “Chinese stockpiles of agricultural commodities have hit historically high levels, according to the country’s most senior agricultural adviser. He said the stockpiles were complicating efforts to phase out state buying policy without causing a steep fall in prices.

“Government buying of cotton, wheat, corn, soya, sugar and rice at above market prices has encouraged Chinese farmers to grow strategic crops. But this has led to bloated warehouses, smuggling and an increase in cheaper imports from overseas producers.

“This has led to the ballooning of Chinese stockpiles. For example, China has amassed 60 per cent of the world’s cotton stocks, prompting an announcement by Beijing last year that it would release its cotton holdings.”

The FT article noted that, “The bigger Chinese stockpiles grow, the harder it is for Beijing to extricate itself without dumping the glut into the market. The move will reverberate into international markets as China has become a large buyer of agricultural commodities.

“Chinese policy makers fear that releasing its inventories would depress prices and push farmers towards more lucrative cash crops, ultimately increasing China’s reliance on imports.”

Recall that Sen. Johnny Isakson (R., Ga.) raised concerns about China’s domestic cotton support at a Finance Committee hearing last week with U.S. Trade Representative Michael Froman, “Isakson Raises Concern Over Decline in Trading Price of Cotton, Points to Harmful Impact of China’s Stockpiling Program.”

Also with respect to cotton, a separate Financial Times item from yesterday stated that, “A byword for luxury, Egyptian cotton is famed the world over. In Egypt, the so-called ‘white gold’ has been celebrated in songs and films, funded family weddings and allowed the settling of debts in the fertile Nile Delta.

“But the former mainstay of Egypt’s economy and the source of many a trader’s fortune has been declining for years due to changing government policy, a shrinking domestic market and the vagaries of international cotton prices.

“Now a decision by the Egyptian government to end a subsidy to cotton growers introduced only last year has angered farmers and prompted warnings they may stop growing the crop.”

In other news, Reuters writer Mayank Bhardwaj reported yesterday that, “India looks likely to harvest a bumper wheat crop this year, its eighth in a row to exceed demand, possibly encouraging the government to allow exports from overflowing grain bins.”

And Olga Razumovskaya reported yesterday at The Wall Street Journal Online that, “Russia has lowered its forecast for grain exports to between 28 million and 30 million metric tons this year, Agriculture Minister Nikolai Fyodorov said Tuesday, Russian news agencies reported.

“The ministry had previously forecast more than 30 million tons of grains would be exported.”

Rebecca Howard reported earlier this week at The Wall Street Journal Online that, “Fonterra Cooperative Group Ltd., the world’s biggest dairy exporter, has been tripped up by U.S. bureaucracy.

On Monday, the dairy cooperative–made up of 10,500 farmers–said its U.S. operations had inexplicably missed a deadline when preparing paperwork for imports of New Zealand cheese this year, with the result that it has now been locked out of the U.S. market.”


Edward-Isaac Dovere reported yesterday at Politico that, “Democratic leaders in Congress haven’t been too receptive to President Barack Obama’s push for new trade deals — so he’s turning to a freshman.

On Tuesday, Obama sent a letter directly to Rep. Ruben Gallego (D-Ariz.), arguing that reaching new trade agreements is the only way to stop China from dominating the global markets and letting its lax standards run the world.”

And Burgess Everett reported yesterday at Politico that, “Marco Rubio wanted an answer: Would the United States limit its meetings with democracy activists as a condition for the Cuban government allowing an embassy in Havana?

“The new Cuban-American chairman of the Senate Foreign Relations Committee’s Western Hemisphere panel, in his first hearing with a gavel, was determined Tuesdayto get a commitment from the State Department’s Roberta Jacobson that this would not happen as the U.S. steps toward normalizing relations with Cuba.

“The potential 2016 presidential hopeful asked Jacobson three times to respond to remarks this week from a Cuban official who said one condition for opening a full-fledged embassy would be an agreement to restrict the movement of U.S. diplomats. Could Jacobson state definitively that the U.S. would never limit its meetings with democracy activists as part of a deal?”

The article noted that, “Indeed, he took aim at the efforts of Obama and a bipartisan group of senators now pushing to eliminate all travel bans between Cuba and the United States. Drawing a direct link among the owner of Cuba’s largest hotel chain, the Cuban military and the Castro regime, Rubio wondered aloud: Wouldn’t we just be filling the coffers of a corrupt government by allowing Americans to travel there?”


Todd Neeley reported yesterday at the DTN Ag Policy Blog that, “Ahead of a scheduled joint hearing Wednesday of the Senate Environment and Public Works and House Transportation and Infrastructure committees on the waters of the U.S. rule to be finalized this spring, one congressman is pressing the U.S. Environmental Protection Agency to fully respond to a request for information about the agency’s efforts to map potential waters of the U.S. that could become jurisdictional with the new rule.

In a letter to EPA Administrator Gina McCarthy Tuesday, Rep. Lamar Smith, R-Texas, chairman of the House Committee on Science, Space and Technology, said the agency still hasn’t completely complied with a request by his committee for information about EPA mapping efforts. The agency took heat last year for previously not disclosing detailed maps of all 50 states showing waters that could potentially become jurisdictional, although members of Congress asked for the information.”

Timothy Cama reported yesterday at The Hill Online that, “The new chairman of the House Oversight Committee has big plans to root out what he sees as pervasive and growing problems in management and overregulation at the Environmental Protection Agency.

“Rep. Jason Chaffetz (R-Utah), who took the Oversight role from Rep. Darrell Issa (R-Calif.) last month, said EPA officials have been ‘the poster children’ of federal waste, fraud and abuse, and his first hearing as chairman will try to expose the agency’s bad behavior through its internal watchdog.

“‘They’ve had significant, ongoing personnel issues, not isolated to just one or two people,’ Chaffetz told The Hill on Monday.”

And in a separate article yesterday at The Hill Online, Timothy Cama reported that, “The Environmental Protection Agency (EPA) has improved its relationship with its internal watchdog, but it is still impeding with some investigations, its inspector general said.

“EPA Inspector General Arthur Elkins provided the House Oversight Committee Tuesday with an update to his complaint last year that the EPA’s homeland security office is withholding information from the Office of Inspector General (OIG) and interfering with cases that OIG is handling.”

Also yesterday, Jonathan Coppess of the University of Illinois penned an update yesterday at the Policy Matters blog titled, “Environmental Regulation of Agriculture: The Des Moines Water Works Issue.”

Policy Issues

news release yesterday from Rep. Steve King (R., Iowa) stated in part that, “[Rep. King] released the following statement after introducing the Protect Interstate Commerce Act (PICA). Last Congress, PICA was adopted by voice vote in the House Agriculture Committee to be included in the 2014 Farm Bill [note that a transcript and video replay from the House Ag Committee mark up of the PICA bill is available here].

“‘Open and unrestricted commerce between the states is a vital component for a thriving economy,” said King. ‘The Constitution gives Congress the power to ‘regulate commerce among the several states’. The Constitution explicitly grants Congress the authority to regulate trade. My legislation would prevent states from enacting laws that would prohibit trade of an agricultural product from other states based on its means of production.

“On January 1, 2015 California began a state-wide ban on the sale of eggs based on the facilities in which the hens live. Just within the last month in anticipation of the new law coming into effect, California experienced a 79% increase in egg prices. Outside of California, the Midwest has seen a 35% increase since January 2014 in anticipation of these new requirements. If my legislation is enacted, it would not affect the fact that eggs are already regulated by the Federal Egg Inspection Act, and my legislation would allow their sale even if they aren’t produced by a specific state’s standards. This issue goes far beyond the California egg issue. Restricting interstate trade would create a great deal of confusion and increased costs to manufacturers. This would create a patchwork quilt of conflicting state regulations erected for trade protectionism reasons.”

Recall also that The Wall Street Journal editorial board addressed this issue late last month, “California’s Scrambled Eggs.”

Also yesterday, a news release from Sen. Pat Toomey (R., Pa.) indicated that, “U.S. Senators Jeanne Shaheen (D-NH) and [Toomey] today introduced bipartisan legislation that would save taxpayers more than two billion dollars by capping federal crop insurance premiums for the largest farm businesses. The bill would cap crop insurance premium subsidies at $50,000, which the Congressional Budget Office estimates would reduce the deficit by about $2.2 billion over 10 years.”

The release noted that, “The cost of the federal crop insurance program has dramatically increased in recent years, and the program currently contains no dollar limitation on the amount of premium subsidy an individual business can receive from the federal government.”

Meanwhile, AP writer Mary Clare Jalonick reported yesterday that, “Ostracized by health officials for several years, the white potato is back in favor.

“The prestigious Institute of Medicine said Tuesday that pregnant women and moms should be allowed to buy white potatoes with subsidies from the government’s Women, Infants and Children program. An IOM panel said people aren’t getting enough starchy vegetables or potassium and fiber, nutrients that are plentiful in potatoes.

“That’s a reversal of a 2006 IOM report that recommended against including white potatoes in the WIC program, saying people were eating too many of them. WIC gives needy pregnant women and mothers government-subsidized food vouchers to ensure good nutrition for their families.”

An update yesterday from Rep. Kevin Cramer (R., N.D.) indicated that, “Cramer has strongly advocated for the inclusion of fresh white potatoes in the WIC program. In addition to communicating his concerns to the U.S. Secretary of Agriculture, Tom Vilsack, he supported a successful provision in the 2015 omnibus spending bill which ensures white potatoes are eligible for WIC, and institutes science-based requirements to determine which vegetables will be allowed for purchase in the program.

“‘In the omnibus spending bill, we were able to get the inclusion of fresh white potatoes in the WIC program codified into law. This position reversal from the National Academy of Sciences is a further victory for sound, science-based decision making,’ said Cramer.”

Philip Brasher reported yesterday at Agri-Pulse Online that, “The House Agriculture Committee will take another look at the idea of severing nutrition programs from the rest of the farm bill as part of its upcoming review of the Supplemental Nutrition Assistance Program, said the panel’s chairman, Mike Conaway.

“The Texas Republican said supporters of the food stamp program no longer have a reason to support farm programs unless there’s the prospect of increased spending for it.

“‘We’re going to have to create an urban-rural alliance that helps us pass the next farm bill that’s not based or held together by the SNAP program,’ Conaway told the National Association of State Departments of Agriculture on Tuesday.”

Recall that the current Farm Bill was passed narrowly in a procedural two-step; on July 11, 2013 the House passed a “farm only” Farm Bill (vote of 216-208), and then on September 19, 2013, the House passed the nutrition portions of the Bill (vote of 217-210).  On January 29, 2014, the House passed a Farm Bill conference report that included both portions of the overall Farm Bill (vote of 251-166).

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