Posted on | December 6, 2013 | No Comments
Growing upon a farm near the small town of LaMoure, N.D., agriculture has been a vital part of my life. And my involvement in organizations such as the North Dakota Farmers Union has embedded a passion for agriculture into my life. I was raised around farming and I have always taken an interest in aspects of farm policy. From the day that I was given my first toy tractor, I knew that agriculture was something that I wanted to be a part of. After going through the entire Farmers Union youth program, and working there for the past three summers as a camp director, I was definitely looking to continue my involvement with the organization. When an opportunity to intern for the National Farmers Union presented itself to me, it was one that I could not overlook.
Overall, the experience that I have gained at National Farmers Union has taught me more about lobbying than I could have ever learned in a classroom. One major factor that I can take away from all of the meetings I have attended with numerous powerful people in D.C., is that unfortunately, being successful in Washington is not about what you know, it’s about who you know. The networking available within the 60 square miles that make up the District of Columbia outmatches that of anywhere else. I made sure that when I came out here, one of my goals would be to build my professional network, and to hopefully move myself up on the totem pole. And I can say that I truly have built relationships that will benefit me down the road. NFU has given me more face-to-face time with Representatives and Senators than any of the hill interns will ever come close to. I always joke with my roommates that I get more face time with their bosses than they do, and it’s the truth.
Aside from the endless networking opportunities, my experience in D.C. has been a great one. It was awesome to finally live in a place with things to do besides study and watch hockey. There we many things about home that I did miss though. It was hard to live for three months without having my best friends to hang out with. And I really missed being able to see North Dakota sunsets without having them blurred out by city lights and a metropolitan skyline. But upon my return to the University of North Dakota where I will continue my education, I bring with me a stronger set of professional skills, a greater understanding of the hard work that goes on in Washington, D.C., and an intensified appreciation for all that the family farmers and ranchers NFU represents do for this country.
Posted on | December 5, 2013 | No Comments
America’s farmers and biofuels supporters are in a battle with Big Oil over the Renewable Fuel Standard (RFS), our nation’s principle biofuels policy. The oil industry, arguably America’s most powerful lobbying force, recently convinced the Environmental Protection Agency (EPA) to lower total biofuel requirements for 2014. The RFS calls for increasing amounts of biofuels to be produced each year. This is the first time since the RFS went into effect that the EPA has lowered the requirement, reducing the total target by an astounding 16 percent. The specific corn ethanol and total advanced biofuels requirements were slashed to levels below current production. The industry accomplished this through a PR and lobbying campaign based on misinformation. The lower biofuel requirement will hurt rural America, decrease current and future investments, and kill jobs. The misinformation needs to stop now.
Among the myths propagated by Big Oil is the so-called “blend wall.” This is the oil industry’s term for the limit at which they can blend ethanol into our nation’s fuel supply. Renewable fuels currently constitute roughly 10 percent of all gasoline sold in the United States, and the oil industry maintains that it cannot increase that percentage. However, the RFS was not intended to be convenient for the oil industry. It is intended to provide consumers a choice at the pump and to increase our nation’s energy security. As the most profitable and powerful industry in the world, the oil industry’s claim that it can’t blend an increased amount of ethanol is fallacious. The truth is that Big Oil is simply attacking the renewable fuels industry because it threatens oil’s market share. So, they have decided to refuse to let ethanol into the market.
The EPA’s proposal to lower the 2014 RFS targets would have a devastating effect on the biofuels industry, corn prices, and the farm economy. Investors in advanced biofuels, an industry that is just getting off the ground, are spooked and may well take their investments elsewhere if the EPA does not raise the targets. Billions of dollars in investment have already been lost due to the proposed targets.
If the EPA does not raise the targets, the United States will lose ground in the global race to dominate the advanced biofuels market.
Corn farmers and rural economies will also suffer. At $4.17, the corn price is already below the break-even point for many farmers. By reducing the corn ethanol target, corn prices will fall even more due to decreased demand. At a time that the U.S. Department of Agriculture is expecting a record corn crop, the lower targets are a kick in the gut for corn farmers and rural economies. In addition, there is a lot of corn out in the countryside that has yet to be sold, so any further decreases in price will continue to hurt farmers’ bottom lines. Farmers and ranchers are the bedrock of rural economies. It is vital that the Obama administration reverse course and go back to supporting farmers, ranchers, and a biofuels industry that employs 400,000 Americans nationwide.
Posted on | December 4, 2013 | No Comments
For months, Canadian officials and meatpackers have been lobbying U.S. policymakers on a particular U.S. law they don’t like — Country-of-Origin Labeling (COOL). Recently, Canada’s Agriculture Minister Gerry Ritz embarked on a whirlwind tour of the United States to decry the alleged evils of COOL. However, he has been getting a few facts mixed up along the way.
One of Ritz’s main threats is that unless the United States repeals COOL, Canada will impose retaliatory tariffs not only on meat — the main focus of Canada’s ire — but also on a host of other products that are wholly unrelated to the issue at hand: frozen orange juice, pasta, communion wafers, chocolate, mattresses, wine and wooden office furniture, to name a few. What Ritz doesn’t mention is that this list is merely a scare tactic. Canada has a long road ahead before it could even consider retaliating against the United States.
First, the World Trade Organization (WTO) must give Canada permission to retaliate. The newly revised COOL rules — specifically rewritten to be WTO-compliant — are currently being evaluated at the WTO. This dispute panel will take months to resolve, and any resulting ruling will certainly be appealed by the losing side. This means that there are months, or years, ahead before Canada could even begin to consider retaliation — and that’s only if the WTO finds the new COOL rule to be non-compliant, which both the U.S. Department of Agriculture and the Office of the U.S. Trade Representative have said is unlikely.
Another detail Ritz and other Canadian officials conveniently omit is the fact that Canada itself requires country-of-origin labels on a number of goods, such as dairy products, eggs and imported meat and fish. And we’re going to let them tell us what we can and cannot label?
Despite his claims, Ritz’s disingenuous actions aren’t fooling anyone. And the United States certainly isn’t about to eliminate a law that has been voted on by our Congress six times, is supported by 90 percent of American consumers, and has been the law of the land since 2008 simply because our neighbors to the north think it’s inconvenient.
Posted on | November 29, 2013 | No Comments
Read the original post at agpolicy.org.
It could be worse than we thought. With record corn production in a year with heavy spring rains and late planting problems, the price drop in recent weeks suggests that corn demanders see the crop-reducing effects of 2012 drought as an aberration—since apparently improved seed genetics successfully protected 2013 corn production from moderate drought and planting problems.
Compared to the 2012 corn crop, the November WASDE reports record production, increased crop utilization—both domestically and internationally—and the year-ending stocks increasing by nearly 1.2 billion bushels of corn. The result is a projected season average corn price received by farmers of $4.50 per bushel for the 2013 corn crop, a drop of $2.93 per bushel from a year earlier.
For most farmers, even on the most productive land, $4.50 is getting frighteningly close to their cost of production—and for some-to-many land costs would not be covered. This leaves little margin on the downward side before things get really scary.
And scary it might be. While recognizing that we are talking about the outer edges of the US corn belt, on November 18, 2013 DTN Ag Policy Editor Chris Clayton reported that “DTN’s Market Tracker shows corn for delivery selling as low as $3.17 a bushel in northeast Montana.” He also said, “DTN’s Market Tracker shows corn prices below $3.70 in parts of the eastern Corn Belt, notably throughout parts of Michigan and Ohio. Farther west, prices throughout North and South Dakota are hitting lows below $3.40 a bushel in some places with prices averaging more around $3.50 a bushel.”
Can it get any worse? We think that is a distinct possibility.
Consider the following scenario, suppose that: 1) the USDA has underestimated the corn crop by 100 million bushels and 2) it has also overestimated domestic and export consumption by 200 million bushels. And, as we have further considered the November WASDE numbers, those possibilities seem very real.
If that scenario comes about, total use would decline to 12.750 billion bushels and the 2013 year-ending stocks for corn would increase to 2.187 billion bushels, resulting in a year-ending corn stocks-to-use ratio of 17.2 percent.
The last time we saw the year-ending stocks-to-use ratio at that level was 2005, just before the ethanol boom took off. The price was $2.00 per bushel. As unlikely as that price may be, given today’s production costs, that price would be devastating. Even if the price fell to $3.00 because of forward contracting and other pricing strategies, the effects would still be devastating.
Worse yet, suppose the 2014 corn crop adds 500 million bushels or more to the year-ending corn levels, $2.00 could actually be a possibility. Remember 1998-2001, the LDPs and emergency payments?
We have had a reader argue that “Corn price is now based on its energy value not just on the supply and demand of corn for feed, which has helped hold up the plateau for corn.” To that we would argue “Why didn’t the feed value of corn hold up prices in the 1998-2001 period?”
The answer is that cattle feeders captured the value of the below the cost of production of corn. They had no incentive to pay more than the market demanded and neither do non-farmer-owned ethanol plants.
This reminds us of a discussion Harwood had when he took a conservation class at Ohio State. The professor was getting the students to think about balancing the competing demands for use of dams on Ohio Rivers: flood protection and recreation.
Those wanting flood protection argue for low water levels while recreation users want higher water levels. To which Harwood said, “Why can’t you have both.”
The professor responded, “If you have maximum water levels for recreation users and heavy rainfall and a flood comes, the reservoir might as well be filled with concrete!” There is little remaining room to hold the additional water, he explained.
For the 2013 crop year, WASDE projects that 4.9 billion bushels of corn will be used for ethanol production, a level that we have generally seen since 2010. With ethanol not continuing to consume 500 million extra bushels of corn each year, the 5 billion bushel mark for ethanol production is like water in a full reservoir; it is the same as concrete and any extra corn is like additional water flowing over the top of the dam—existing stable demand provides little or no protection against a flood of additional production and lower prices.
Coming back to what could happen next year if corn production in 2014 outstrips utilization causing year-ending stocks go up by an another 500 million bushels, further depressing prices. Revenue insurance would provide very-little-to-no protection against production costs—because the level of insured revenue would be based on the percentage of a very low price. That leaves some income from LDPs and the hope for $10-$15 billion in emergency payments, especially if direct payments are taken away.
Perhaps writing a farm bill in a year of declining prices will persuade legislators to provide farmers with an adequate safety net. It would be even better if they designed the farm program based on the fundamental characteristics of crop production: the low price elasticity of supply, the low price elasticity of demand, the tendency for supply to grow faster than demand, and the fixity of resources.
Daryll E. Ray holds the Blasingame Chair of Excellence in Agricultural Policy, Institute of Agriculture, University of Tennessee, and is the Director of UT’s Agricultural Policy Analysis Center (APAC). Harwood D. Schaffer is a Research Assistant Professor at APAC. (865) 974-7407; Fax: (865) 974-7298; email@example.com and firstname.lastname@example.org; http://www.agpolicy.org.
Posted on | November 26, 2013 | No Comments
Country-of-Origin Labeling (COOL) was recently misrepresented on “Marketplace Morning Report.” The 10-minute program is heard on public radio stations across the country, and included an interview with Daniel Sumner, an agricultural economist from the University of California at Davis.
· Sumner asserts that “hardly anybody cares” about country-of-origin labels. Multiple studies have determined that more than 90 percent of consumers want to know the origins of their food.
· COOL would cost approximately one-third of a penny per pound. The U.S. Department of Agriculture has found that consumers are already willing to pay more for all-American meat, covering these very modest costs.
· Many farmer, rancher, and consumer organizations with hundreds of thousands of members have spoken up in favor of the new COOL rules, including National Farmers Union, United States Cattlemen’s Association, American Sheep Industry Association, Consumer Federation of America and many others. To minimize the support for COOL, as Sumner did in the interview, is a gross mischaracterization.
A balanced and factual analysis of COOL should be presented to the listeners of “Marketplace Morning Report.” Food labels should be more informational, not less, and that trend continues with the new COOL rules that went into effect last weekend.keep looking »