Policy Issues: Crop Insurance, CRP, Nutrition, Animal Production (Antibiotics), and Disaster Declaration

Christopher Doeringreported yesterday at The Des Moines Register Online that, "Crop insurance indemnities have risen to a record$17 billion for 2012 crop year, the U.S. Agriculture Department said in its latest report issued on Monday.

"The figure, which was up more than $700 million from the prior week, pushed the total for 2012 to $16.99 billion. The number is higher than2011when a series of natural disasters ranging from a freeze inFloridato drought inTexasprompted insurance companies to pay outa record $10.8 billion to farmers, short of the$12 billion they collected in premiums.

"The 2012 drought spread beyond the Midwest to affect more than 60 percent of the contiguousUnited States, making itthe worst since the Dust Bowl in the 1930s. A sharp drop in crop yields pushed corn and soybean prices to record highs during the summer and costs to feed U.S. livestock soared, forcing ranchers to send their herds to slaughter rather than pay the higher feed costs."

Rob Schultzreported earlier this week at Madison (Wis.) Online that, "The number of state farmers buying crop insurance this year could increase 15 percent after last year's drought showed how well the program worked."

"'Just cropping the land is getting more and more and more expensive, and there's so much more risk out there from the inputs compared to what your return is. That used to be widening, now it's narrowing,' [Michelle Austin, director of insurance services for Badgerland Financial] said."

Meanwhile, anupdate late last weekfrom Rep.Adrian Smith(R., Neb.) indicated that, "Earlier this month,President Obamareleased his budget even though it was due on February 4th. While the House and Senate have already passed 10-year budget resolutions and the President's proposals have little chance of being enacted, it is a revealing look at his priorities and vision forAmerica.Of particular interest to Nebraskans is how the President's proposals would affect agriculture, the backbone of our local economy.

"For example, President Obama's 2014 budgetproposes cuts to the federal crop insurance program. While we need to reduce our deficit and debt,it is counterproductive to undermine producers who manage risk.

"Without crop insurance, only those producers able to purchase their own insurance will be able to afford to farm. Further cuts to this program will discourage participation which could increase premiums for producers and raise the cost of food for consumers.Given the success of crop insurance, and in light of last year's severe drought, we should be working to strengthen this fiscally responsible public-private partnership - not cutting it."

Rep. Smith added that, "SNAP [food stamps] and agriculture programs have been enacted together in the Farm Bill since the 1960's, and more recently food stamp funding has been one major sticking point holding up passage of a long-term Farm Bill.Maintaining the status quo on food stamps while gutting crop insurance only complicates Farm Bill passage."

In other news, a Grand Forks (N.D.) Heraldopinion columnfrom this week indicated that, "CRP [theConservation Reserve Program]acreage likely will take a hit in the Farm Bill's renewal. But even with that,Congress should insist that CRP remain fundamentally strong- because in recent decades, the popular and cost-effective program likely has done more for conservation than almost any other in the federal tool box.

"It's rare that a program wins support from conservation groups, farm groups and sportsmen's groups alike. CRP has done just that. Keeping it at work protecting theNorth DakotaandMinnesotalandscapes should be a priority for the state's delegations, both of which are playing key roles in the Farm Bill's reauthorization and renewal."

An interestingupdate yesterdayat the Economic Research Service (USDA) Chart Gallery Online pointed out that, "In 2011,roughly 31 percent of allU.S.farms received commodity payments, conservation payments, or both.Only 6 percent of farms, however,received both commodity and conservation payments.Fifty-five percentof conservation payments went to farms that did not receive commodity payments, while63 percentof commodity payments went to farms that did not receive conservation payments [related graph]."

More specifically with respect to nutrition issues, anews releaseyesterday from Sen.Pat Roberts(R., Kans.) stated that, "[Sen. Roberts] today said a report released by USDA's Office of Inspector General (OIG) found the$45.5 billionin stimulus funds spent to increase monthly Supplemental Nutrition Assistance Program (SNAP) benefitshave not been evaluated to determine their effectivenessand underscores the need forhis billto restore integrityto the food stamps program."

Yesterday's release added that, "The OIGfoundthat methods used by the FNS [Food and Nutrition Service] to assess the American Recovery and Reinvestment Act (ARRA) spending did not adequately evaluate how additional stimulus spending met the goals of assisting those most impacted by the recession, of stabilizing state government nutrition program budgets or stimulating the economy."

Sid Salternoted in a column posted last week at Gulflive Online (The Mississippi Press) that, "In a systematic effort to bolster efforts to 'primary' any incumbent Republicans who fail to walk the hard right political agenda of the Tea Party and similar groups,some members of Congress are trying to separate the Supplemental Nutrition Assistance Program or SNAP - read that as food stamps - from the 2013 federal farm bill."

The column stated that, "Representing the poorest state in the union, the cerebral [Sen.Thad Cochran(R., Miss.)] has run the political gantlet betweenliberalnational groups that portray him as hard-hearted against the poor and nationalconservativegroups who see his moderate support for the food stamp program as evidence that he isn't conservative enough…[C]ochran's measured stance in favor of including food stamps as part of the nation's overall agriculture and nutrition policies - rather than a stand-alone target of partisan politics - is one that is both defensible and sensible in a state with both Mississippi's depth of poverty and significant agricultural production.

"Mississippi's economy would suffer mightily without the annual $894 million in food stamp spending in this state. Don't think so? Ask a grocer, a farmer or a trucker."

Also, AP writerDavid Gutmanpenned an article yesterday ("W.Va. tries to tackle childhood hunger and obesity")noting that, "West Virginiawill be the first state in the nation to set up a statewide public-private funding partnership to try to improve school meals programs."

In policy news regarding animal production, anews updateyesterday from the National Chicken Council stated that, "TheFood and Drug Administration's (FDA) Center for Veterinary Medicinetoday issueda statementcautioning the interpretation of antimicrobial resistance data. Recently, the Environmental Working Group (EWG) issued a report of its interpretation of the 2011 Retail Meat Annual Report of the National Antimicrobial Resistance Monitoring System (NARMS).

"'While FDA is always concerned when we see antimicrobial resistance,we believe the EWG report oversimplifies the NARMS data and provides misleading conclusions,' FDA noted."

From the executive branch yesterday, anews releasefrom USDA noted in part that, "Agriculture SecretaryTom Vilsacktoday announced an important package of disaster assistance valued at$209 millionto help farmers, land owners and communities recover from the effects of Superstorm Sandy."

Agricultural Economy

Bloomberg writerWhitney McFerronreported yesterday that, "Rain in the northern U.S. Midwest last week spurred flooding along rivers as far south asTennessee,delaying corn planting a year after drought cut production of the grain to a six-year low.

"Areas ofIowaandIllinois, the largestU.S.corn-growing states, were under flood warnings today along theMississippiandIllinoisrivers and tributaries, National Weather Servicedatashow. Flood warnings stretched fromMichiganto northernArkansasand Tennessee.Crests already reached records along parts of theDes PlainesandIllinoisrivers inIllinois, and theMississippi Riveris at moderate to major flood stages across Missouri, AccuWeather Inc. said in an onlinestatement."

AnAP updatein today's New York Times reported that, "The Mississippi River started its slow decline at some spots Monday, but the spring flood was far from over.TheMississippiand other Midwestern rivers were still significantly above flood stage, spurred by heavy rain last week. Levee breaks caused problems inIndiana, and floodwaters flirted with theMichiganStateUniversitycampus. Flooding is blamed in at least three deaths. Some towns in the stretch of theMississippifromQuincy,Ill., toGrafton,Ill., reached 10 to 12 feet above flood stage.An inch of rain forecast into Tuesday over much of theMidwestwas adding to the concern. Spots south ofSt. Louiswere not expected to crest until late this week, and significant flooding is possible in Ste. Genevieve,Mo.,Cape Girardeau,Mo., andCairo,Ill."

Cheri Zagurski and Anthony Grederreported yesterday at DTN (link requires subscription)that, "The only crop that saw much progress in the last week was rice, which saw 10 percentage points more of the nation's crop planted and 6 percentage points more emerged, while corn planting progress only rose 2 percentage points in those 7 days.

"USDA's weekly crop progress reportshowed4% of the nation's corn crop planted in the week ending April 21, compared to 2% last week, 26% last year and a 16% five-year average."

Anews releaseyesterday from University of Arkansas Extension indicated that, "As do-overs go, it's not as bad as it could have been:Less than 10 percent of this year's already-planted corn crops will need to be replanted, according to a University of Arkansas extension service expert.

"It's 'less than what we anticipated a couple of weeks ago,' Jason Kelley, an extension wheat and feed grains specialist for the U of A System Division of Agriculture, said on Monday. 'A lot of the growers may not be seeing perfect stands they wanted, but in most cases, the stands are acceptable.'"

Meanwhile, Purdue University Agricultural EconomistChris Hurtnoted yesterday at thefarmdoc dailyblog ("Will Weak Cattle Prices Continue?")that, "I thought finished cattle prices were going to have a very bullish year with prices well into the $130s by now. Live cattle futures started the year with the same enthusiasm, but have deflated since. What went wrong?

"The mystery can be unraveled by looking at supply and demand. On the supply side, the expectation at the start of 2013 was for athree percent declinein beef production during the first-half of the year. To date, beef supplies have been down closer toone percent. More beef often means lower prices. There seem to bethreedemand components contributing to the weaker than expected cattle prices.First, theU.S.economy may have been weaker so far this year than anticipated.Second, reduced pork and chicken exports have meant that more of those products have been adding to domestic meat supplies.Third, retail beef prices rose to record high levels while retail prices of competitive animal proteins were not rising as much, or even falling."

On trade,an editorialposted yesterday at The Wall Street Journal Online (Review& Outlook Asia) stated that, "Yet recent evidence suggests Japan's entry [into the Trans-Pacific Partnership (TPP)] could prove a mixed blessing if leaders aren't careful. One worry is that Tokyo could use its seat at the table to dilute the deal in areas such asagricultureor trade in services that touch on sensitive political issues back home (food safety standards, for example). Another worry is that other countries could water down a deal to protect their domestic interests from Japanese competition."

The Journal editorial added that, "More troubling is that [Prime Minister Shinzo Abe] still says some agricultural products may be 'spared' liberalization if he has his way.Tokyo would in particular like to keep its 778% tariff on rice, which helps a handful of Japanese farmers at the expense of Japanese consumers."


Alan K. Otareported yesterday at Roll Call Online that, "Majority LeaderHarry ReidofNevadaand his team are preparing to turn up the pressure on Republicans over abudget conference committeeaimed at reaching a broad debt deal.

"Senior aides said the top Democrat was expected to seek a deal with the GOP this week to formally appoint Senate budget conference negotiators. They said the move was a response to the statement by SpeakerJohn A. BoehnerofOhiolast week that he will not name House conference negotiators unless both chambers can first work out a framework for agreement."

Also,Doug Elmendorfprovided a brief update yesterday at the Congressional Budget Office Online titled, "CBO To Release Analysis of the President's FY 2014 Budget and Updated Baseline Projections in May."


Gregory Meyerreported yesterday at The Financial Times Online, in a detailed and lengthy news analysis item ("Commodities: Against the grain") that, "TheUSis not the only country where biofuels have stalled. Ethanol pioneerBrazil's production peaked in 2010.Europeis meanwhile pondering a limit on grain-based ethanol use. Global biofuel output is 'certainly flattening', says Christoph Berg of consultancy FO Licht, an authority on the sector. 'The engine is spluttering, to say the least.'

"After years of double-digit increases,world ethanol production fell in 2011 and 2012 and - excludingBrazil- will probably shrink again this year, according to FO Licht. The smallerbiodieselmarket expanded by 1 per cent last year.

"TheUSis the biofuel engine's main combustion chamber.Washingtonwill be crucial in determining whether it regains momentum.Without policy changes, some analysts see a range of dire outcomes from higher petrol prices to a global vegetable oil supply squeeze. The oil and renewable fuels industries, two of the most powerful lobbies inAmerica, are battling over the best way to avert these scenarios."

The FT article noted that, "In a potentially perverse turn, the slowdown in demand for corn-based ethanol could even have the effect of straining supplies of vegetable oil and animal fats, the main source for biodiesel used in trucks, according to economists at the University of Illinois.As stocks of ethanol RINs are depleted and petrol demand wavers, fuel companies may be forced to meet the mandate with biodiesel instead.

"'In 2015, the United States would need to use every gallon of fats and oils in the production of biodiesel to meet the mandate, with tremendous pressures on vegetable oil and fats prices around the world,' saysScott Irwin,UniversityofIllinoisagricultural marketing chairman. He recommends freezing the mandate at 2013 levels for the next two years."


DTN Ag Policy EditorChris Claytonreported yesterday (link requires subscription)that, "Hearings on the comprehensive immigration bill in the U.S. Senate are shedding more light on the divide among Republicans on the Senate Judiciary Committee over legalizing farm workers.

"The Judiciary Committee held ahearing Mondayon 'The Border Security, Economic Opportunity and Immigration Modernization Act,' or S. 744, a bill that could legalize an estimated 11 million people now living in the country illegally. The hearing was streamed live on the committee's website."

The DTN article noted that, "The issues of agriculture got to lead off the day-long hearing.Chuck Conner, president and CEO of the National Council of Farmer Cooperatives,testified thatagriculture hasserious challenges, both in the volume of undocumented workers employed in the industry and the lack of an effective guest-worker program. 'Agriculture admits the reality that a majority of our current workface is undocumented.' Conner said. He added shortly after, 'This is not a realization that has come about just in the last few months. We have known we've had a problem for a very long time.'

"Under the bill, an estimated 800,000 to 1.1 million people working now in agriculture illegally would become legal through a 'blue card' program. Farm workers who worked at least 100 days on a farm in 2011 or 2012 could get an agricultural working permit, or blue card, that also would give them mobility to move from job to job. After working for up to seven years onU.S.farms, those blue-card workers could apply to be permanent residents."

Mr. Clayton added that, "Senators on the committee fromVermont,Arizona,MinnesotaandCaliforniaalso all cited the difficulties dairy farmers have in finding year-round legal workers. Under the bill, the guest-worker program would allow a farm worker to stay in the country for up three years at a time, which would help some farmers who rely on hired hands year round."

Reuters writerCharles Abbottreported yesterday that, "TheUnited Stateswill become more reliant than ever on imported food if it does not pass immigration reforms to assure there are enough workers to harvest fruit and vegetable crops and milk cows, a farm coalition told senators on Monday.

"The Agriculture Workforce Coalition pointed to estimates that thousands ofU.S.farms could go out of business, slashing farm income by as much as$9 billion a yearwithout an adequate labor supply."

Yesterday's article noted that, "'Production will move offshore,'Charles Conner, co-chair of the workforce coalition, said at a Senate Judiciary Committee hearing on border security. 'We do have crops going unharvested.'

"Conner saidCaliforniahas lost about 80,000 acres of land formerly devoted to fruit and vegetable production because of labor shortages.Those goods are now imported."