Policy Issues, Ag Economy; and, Regulations- Monday Posted By Keith Good On October 6, 2014 Policy Issues Matthew Patane and Donnelle Eller reported on the front page of Saturday’s Des Moines Register that, “A California law that bars eggs from states that fail to provide roomier cages for hens could lead to beef, pork and other Iowa products being banned from the West Coast state, Iowa agricultural leaders say. “A federal judge threw out a six-state case late Thursday that asked the court to strike down a California statute barring the sale of eggs there that were produced by hens in cramped cages. Iowa, the nation’s largest egg producer, was part of the suit.” The Register article indicated that, “‘One of the reasons the U.S. is prosperous is because we have free trade between the states,’ said Dermot Hayes, an agriculture economist at Iowa State University. ‘This opens the doors for states to put barriers against other states. “‘And you can always say those barriers are driven by environmental or social restrictions. But in reality you just want to protect your own producers,’ Hayes said Friday. “The California law is intended to ensure animals are treated humanely, its supporters say. Many farmers view the law as interfering with efficient, scientifically sound production practices.” Saturday’s article added that, “Iowa had joined Alabama, Kentucky, Missouri, Nebraska and Oklahoma in pursuing the lawsuit earlier this year, claiming the California law violated the interstate commerce clause of the U.S. Constitution. “U.S. District Judge Kimberly Mueller dismissed the suit, saying the states did not prove California’s law would hurt their citizens, only some egg producers. “‘It is patently clear plaintiffs are bringing this action on behalf of a subset of each state’s egg farmers … not on behalf of each state’s population generally,’ Mueller wrote in her decision.” The article pointed out that, “‘Just find something you don’t like about a state’s production practices’ and vote to put up a barrier, Hayes said. ‘Say we want to get rid of California wine. All we have to do is say you shouldn’t use ground water for irrigating crops. Then we can stop them from exporting their wine to us.’” Jacob Bunge reported in Saturday’s Wall Street Journal that, “A federal judge has dismissed a lawsuit challenging a California law that requires all eggs sold in the Golden State to come from hens housed in roomier cages. “The ruling deals a blow to a joint effort by a half-dozen farm states, including Missouri and Iowa, whose attorneys general have argued the law overstepped California’s legal authority and violated principles of interstate commerce enshrined in the U.S. Constitution. “The law, which takes effect Jan. 1, requires all producers selling eggs in California to house egg-laying hens in enclosures spacious enough for birds to lie down, stand up and fully spread their wings. The rules stem from a voter-approved 2008 ballot initiative covering California farmers and a 2010 state law that extended the standards to all producers selling eggs in the state.” A news release on Friday from Rep. Steve King (R., Iowa) indicated that, “[Rep. King] released the following statement in response to the California Egg Law lawsuit being rejected. This lawsuit was filed by the state of Missouri, along with five others, to eliminate a California law that prohibits the sale of eggs laid by hens held in cages they deem ‘too small.’ Mr. King’s Protect Interstate Commerce Act (PICA), which the California lawsuit originates from, was attached to the House Farm Bill during markup in the House Agriculture Committee last year but was ultimately not accepted with the final Farm Bill Act of 2014 [Note that a video replay and transcript of the discussion on this issue from a House Ag Committee markup of the Farm bill can be found here]. This act would prohibit any state from enacting laws that place restrictions on the means of production for agricultural goods that are sold within the state but are produced in other states. “‘It is not surprising that the egg lawsuit was rejected by the 9th Circuit on a technicality. California’s law regulating egg producers in other states is unconstitutional and anti-consumer,’ said King. ‘It is trade protectionism for California egg producers who are handicapped by a foolish California policy that would regulate them out of business without protection from competition from Iowa and other states…[I] think I can do without California wine longer than they can without our eggs.” In other policy news, an update on Friday from USDA’s Risk Management Agency (RMA) indicated that, “[RMA] today announced that a premium subsidy has been established to offer more affordable protection to eligible diversified farm operations, as part of the new Whole-Farm Revenue Protection insurance policy. “Whole-Farm Revenue Protection, required by the 2014 Farm Bill, will be offered through the RMA managed federal crop insurance program. The new policy will offer fruit and vegetable growers and producers with diversified farms selling commodities to wholesale markets, local and regional markets, farm identity preserved markets, or direct markets, more flexible, affordable risk management coverage options.” The release noted that, “‘Crop insurance options continue to adapt to meet the farm safety net needs of today’s farmers,’ said RMA Administrator Brandon Willis. ‘Whole-Farm Revenue Protection insurance will expand options for specialty crop, organic and diversified crop producers, allowing them to insure all the crops at once instead of one commodity at a time. That gives them the option of promoting crop diversity and helps support the production of a wider variety of healthy foods.’” Meanwhile, University of Illinois agricultural economist Gary Schnitkey indicated on Friday at the farmdoc daily blog (“Modest Crop Insurance Payments Likely in Illinois for 2014: Calculation of Break-even Yields”) that, “Harvest prices used in calculating revenue on corn and soybean crop insurance policies will be much lower than projected prices used in calculating crop insurance guarantees. Lower prices decrease revenues potentially causing crop insurance payments. However, yields will be above average over much of Illinois. Even with high yields, revenue crop insurance payments will occur for some farmers insuring at high coverage levels. Overall, crop insurance payments likely will be low in Illinois. In contrast, payments in the western corn-belt will be higher than in Illinois as yields in the western corn-belt are not expected to be as high as in Illinois.” And the AP reported on Friday that, “Oklahoma wheat growers are calling on the U.S. Department of Agriculture to implement a Farm Bill provision they say would address the ongoing drought that’s plagued the state and others for the past several years. “The provision allows farmers to maintain enough crop insurance to cover expected production in exchange for paying a higher premium to cover any additional liability. “Although the fix went into effect Feb. 7 when the Farm Bill was signed into law, wheat growers say the federal agency is dragging its feet on the provision because of politics, not because it’s too difficult to enact.” Alexandra Wexler reported yesterday at The Wall Street Journal Online that, “Cotton futures have stabilized at around five-year lows as the U.S. harvest ramps up, but a federal loan program for farmers is raising uncertainty about how soon the new supplies will hit the market. “The U.S. cotton harvest was 10% complete as of Sept. 28, according to the U.S. Department of Agriculture, which estimates this season’s crop will be 28% larger than the previous year. Bigger production in the U.S., the top cotton exporter, and lower demand from China are expected to lead to the largest global glut of the fiber in history at the end of the season on July 31, 2015. “Cotton futures have tumbled 26% this year and slid to 61.37 cents a pound last week, the lowest closing price since Oct. 2, 2009.” The Journal article explained that, “To help farmers with operating expenses, the U.S. government offers cotton growers nine-month loans at a rate of 52 cents a pound that are secured with the fiber. The USDA’s adjusted world cotton price—a proxy for the physical price—fell to 49.27 cents a pound for the week that began Friday, the second consecutive week that the price has been below the loan rate. “When the USDA’s world price is below the loan rate, the government allows cotton farmers to pay back their loans at the world price rather than the higher price at which they took the loans. Farmers also have the option to forgo a loan and simply receive a payment that equals the amount by which the loan rate exceeds the USDA’s world price when they sell their cotton. Three such payments, totaling $2,080.47 for 514 bales, have already been made, according to the USDA website. “The loan program takes some of the pressure off growers to sell their cotton right away, analysts said.” Agricultural Economy An update on Friday at AgriMoney indicated that, “US corn and soybean harvests will set records by an even bigger margin than had been thought, according to Informa Economics, which became the latest in a series of commentators to upgrade forecasts. “Informa raised by 371m bushels to 14.395bn bushels its forecast for the US corn harvest, the world’s biggest. “The estimate for US soybean output was lifted by 260m bushels to 4.017bn bushels.” And a recent update at the Red River Farm Network Online stated that, “FCStone now estimates the national average corn yield at 178.4 bushels per acre, well above USDA’s 171.7 yield estimate. FCStone’s yield would produce a corn crop of over 14.9 billion bushels. FCStone pegs the soybean crop at just over four billion bushels, with a yield of 48.4 bushels per acre. That’s almost two bushels per acre above USDA’s estimate.” And a separate update on Friday at AgriMoney indicated that, “Rabobank cut its expectations for corn and, in particular, soybean prices, citing expectations for record large crops – but was actually most bearish about prospects for wheat. “The bank cut its estimate for corn futures by up to $0.55 a bushel, citing the dent to values from a US harvest which it forecast coming in at 175 bushels per acre, although with the potential for a 178-180 bushels-per-acre result. “The US Department of Agriculture estimates the yield at 171.7 bushels per acre, already a record high.” Wet and cool weather in parts of the Corn Belt, particularly in Illinois, could have an impact on harvest progress. Rainfall totals for portions of Central Illinois from October 1-3 can be found at this National Weather Service webpage and this tweet yesterday from the National Weather Service Weather Prediction Center included this graphic and stated that, “Rainfall forecast for the next 7 days. Heavy rain possible from Plains to OH Valley. Tropical moisture in Southwest” A tweet on Saturday from the National Weather Service in Lincoln, Il pointed out that, “Much colder than normal conditions to continue today and tonight in central Illinois. Highs 50s, lows 30s” Meanwhile, Bettina Boxall reported yesterday at the Los Angeles Times Online that, “A few years ago a group of researchers used computer modeling to put California through a nightmare scenario: Seven decades of unrelenting mega-drought similar to those that dried out the state in past millennia. “‘The results were surprising,’ said Jay Lund, one of the academics who conducted the study. “The California economy would not collapse. The state would not shrivel into a giant, abandoned dust bowl. Agriculture would shrink but by no means disappear.” Brianna Sacks reported on the front page of the Business Section in Friday’s Los Angeles Times that, “Dust whips across the toasted soil where Tom Barcellos usually plants corn for his 800 dairy cows. This season, there was no water to plant the crop. “The third-generation dairy farmer was forced to idle a quarter of his 1,200 acres in Tulare County, land that once also bristled with wheat and alfalfa. Now he is buying feed from out of state, paying record-high prices to contractors in Nevada, Texas and as far as Australia for alfalfa hay and corn silage. “Tulare, like most of the state, is struggling through a prolonged and deepening drought. Water is in such short supply that Barcellos paid $150,000 to drill a new well to ensure that his cows have enough to drink.” The article indicated that, “California dairy farmers lead the nation in dairy production, churning out 21% of America’s milk supply and contributing $140 billion annually to the state’s economy, according to the U.S. Department of Agriculture. “The historic water crisis has been rough on dairies, driving up the cost of feed and water. Consumers are seeing the effects at the grocery store. “Los Angeles shoppers in August paid an average of $3.79 for a gallon of whole milk, including organic and raw milk, up 54 cents from two years earlier, according to A.C. Nielsen, which tracks retail prices for the state. In San Francisco, the average cost was $4.76 a gallon, up 89 cents.” “California has lost 1% to 2% of its dairy industry in the last three years, said Lesley Butler, a dairy economist at UC Davis. About 100 dairies go out of business every year waiting for rain,” the article said. In news regarding transportation, Bloomberg writer Jen Skerritt reported last week that, “Even with a grain harvest falling below last year’s record, Western Canadian farmers can’t find enough rail cars in the right places to move their crops. “Wet, cool weather across parts of the Canadian prairies has reduced the amount of high quality grain available, helping to fuel another showdown between shippers and the nation’s largest railways. While the crop is 20 percent smaller than last year’s, it will be harder to find and move the right grades to match export sales.” Todd Neeley reported on Friday at DTN that, “Federal attempts to improve ethanol and crude oil tanker-car safety in light of a number of accidents in recent years may compound what already has become a transportation nightmare for agriculture and other commodities. “That’s the view of a number of agriculture interest groups and others in comments this week on a proposed rule to make tank cars safer. “The U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) is expected to finalize the rule early in 2015. It comes at a time when U.S. farmers are expected to harvest a record corn crop and as U.S. oil production continues to grow — potentially clogging up rail traffic in the coming years.” In trade news, Evan Halper and Don Lee reported on the front page of yesterday’s Los Angeles Times that, “As Europe and the United States pursue a lofty vision of a free trade pact that removes tariffs and eases regulatory burdens, it’s not just disputes over automobile safety and digital privacy that are creating tensions. “It is wine and cheese. And the sausage that goes with it. “European leaders say they can’t allow cheese produced outside Italy to be passed off as Parmesan. Feta? That’s only from Greece. If a wine label says Chateau, they say, it must be fermented in France.” The article noted that, “The aggressive campaign to protect European-designated product names with origins on the continent is gaining traction as countries in Asia and Latin America agree to the terms. “The intellectual property battle has caused near panic in the U.S. agriculture industry and is complicating prospects for a transatlantic trade agreement involving half the world’s economy. “When U.S. trade negotiators met with their European counterparts last week at a conference center in a Washington suburb, the food fight was on the agenda. It will stay there when the talks resume in Europe later this year.” And Reuters writer Rosalba O’Brien reported on Friday that, “Secrecy about trade negotiations between the United States and Japan is hampering progress on a broader Pacific trade pact, a senior Chilean official said on Friday. “Hopes of sealing a deal this year on the ambitious 12-country Trans-Pacific Partnership (TPP) are looking dim, largely because of a deadlock between the pact’s two biggest economies, the United States and Japan, over how widely Japan will open its doors to farm exports.” The article added that, “Other TPP members would like to know more about how those discussions are going, said Chile’s head of international economic relations, Andres Rebolledo, who has overall responsibility for the trade talks. “‘These bilateral negotiations take in two … we don’t know the detailed state of the talks between the U.S. and Japan, for example, and that has been one of the complications,’ he said.” Regulations AP writer Astrid Galvan reported last week that, “The yellow-billed cuckoo has been disappearing from its home in the Western U.S., a decline that prompted the federal Fish and Wildlife Service to announce Thursday that the bird has been listed as a threatened species. “The yellow-billed cuckoo will now be protected under the Endangered Species Act. “The bird resides in 12 western states and in Mexico and Canada, but Arizona has the largest population. There are about 350 to 495 pairs in the U.S., according to the American Bird Conservancy, which says none has been spotted in Oregon, Washington, or Montana recently.” -- Keith Good President FarmPolicy, Inc. Champaign, IL FarmPolicy is a FREE newsletter and is underwritten and made possible by the generous support of McLeod, Watkinson & Miller- Attorneys at Law. Office accommodations for FarmPolicy are provided by Bartell Powell LLP- Attorneys at Law, located in downtown Champaign, Il. To subscribe to the FarmPolicy Email, send a note to, [email protected]. To unsubscribe, send a note to, [email protected]. FarmPolicy is also on: Twitter, Instagram, YouTube and Google+
Posted on: Mon, 06 Oct 2014 10:33:56 +0000
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