Farm equipment industry finally has steadied

(DTN) -- Signs indicate that the farm equipment industry finally has steadied after a recent near freefall and is heading upward.John Deere Chairman and Chief Executive Officer Samuel R. Allen, said in April: "We are seeing signs that after several years of steep declines, key agricultural markets may be stabilizing."Stabilized does not mean sales are booming yet. In general, farmers have not started replacing tractors, combines and other equipment they bought during the commodity price boom years of 2011-2013. That has led to layoffs, cutbacks and tight budgets at farm equipment manufacturing sites.Sales numbers from the first quarter offered some hope. For instance, AGCO reported a sales increase of 6.3% in North American, and CNH reported ag sales increases of 10.5%, much of that in the Latin American and Asia/Pacific markets.This week, John Deere released its second-quarter results, and net income was up 62% over the same time last year. However, that 62% increase reflects cost-cutting measures, an uptick in South American income and sales in non-farm sectors. Sales in Deere's Ag and Turf division, meanwhile, were up a modest 1%. Still, the key word might be "up."The under-40 horsepower tractor market has been a bright spot for manufacturers. At the end of the first quarter, the Association of Equipment Manufacturers (AEM) reported that sales for that segment were up 12.5% year to date over 2016. On the other hand, over-100 hp tractor sales were down 11.7% and four-wheel-drive tractors slumped 11% from 2016 sales. Combine sales were off 11.5%.There is not much reason to think aggregate sales numbers will be significantly better soon, according to Charlie Glass, founder of Glass Management Group, which advises investors about the state of farm equipment manufacturers. Annually, he makes estimates in the fall for the sector's performance in the coming year. For 2017, he forecast a 1.5% to 2% increase in sales of large equipment 2017 over 2016. "So far they are well below my forecast," he told DTN/The Progressive Farmer.Several factors contributed to slow sales so far this year. First, farmers still have plenty of relatively new equipment in their yards after the buying sprees of 2011-2013. Second, those looking to upgrade don't have to buy new. That buying spree and some companies' lease programs dumped thousands of low-hour used equipment onto dealers' lots. The used equipment inventory has dwindled (much to dealers' delight) in recent months, but customers still can find bargains. Third, commodity prices are still hovering in low places. That means farmers are struggling to make profits."Everything is dependent on net farm income," Glass said.Everything, that is, but the under-40 hp tractor market. "You have to take that completely out of the farm equipment market," Glass said. "They (under-40 hp sales) are based on the general economy. Dealers selling those tractors are blowing and going."That partly explains some of the optimism farm equipment manufacturers and dealers are expressing. While larger units are stalled, small tractors are flying out the doors.Optimism also arises from comparison with past slumping markets. Glass, who has been in the business more than 40 years, said today's farmers are in much stronger financial condition than farmers in the farm recession years of the mid-1970s, for instance. If farm incomes improve soon, many farmers will be in a solid position to purchase new equipment.Those incomes, of course, are largely dependent on commodity prices, which in turn are dependent on many external forces, Glass said. "Commodity prices are largely controlled by the value of the dollar compared to international currencies. When the dollar gets stronger [as it is now], commodity prices go down. That's all there is to it," he said.With that in mind, Glass made this prediction for the near future: "2017 and 2018 will be relatively flat for net farm income. I think 2017 might be the bottom. In 2018, we might see a slight increase. In 2019, we are going to see some growth back into this thing." The farm equipment market will follow suit.

US Trade Officials to Visit China June 5 to Establish Beef Trade Protocols

Several U.S. trade officials will travel to China June 5 to finalize trade protocols regarding coming US beef shipments to China.Source verification will be one of the requirements, according to Oklahoma State University Extension livestock marketing specialist Derrell Peel. “However, I think that’s pretty doable in what we call a ‘bookend’ system in the U.S. if we can document the original source of the cattle as well as where they ended up at the processing plant, and not necessarily all of the travels in between,” Peel said.Beijing has accepted a U.S. proposal in principle that would require producers to document the locations where cattle raised for beef exported to China are born and slaughtered, USDA said. The system would be less onerous than tracking cattle throughout their entire lives, during which they can be kept at up to four different locations. Peel estimated that US producers trace the movements of less than 20 percent of the nation's cattle.China will also require that beef be free from residue of beta-agonists, the growth promoting feed additive. “The Chinese have been very consistent, in both beef and pork, at not accepting ractopamine — or, in beef, Optaflexx is the same product,” Peel noted. “That’s likely to be the case for us as well. That would be consistent with their agreements with other countries.”Peel said there will likely be restrictions on other growth hormones used in the U.S.Hormone residue testing will be done on beef entering China, but there will be a distinction made between synthetic and naturally occurring hormones. Meat containing synthetic hormone residue will be rejected. Meat containing residue of naturally occurring hormones will only be rejected if the levels are above those naturally occurring in cattle.Other details of the protocol discussions include China’s acceptance of U.S. fresh, chilled beef products, as well as frozen, and beef from animals 30 months or younger.China has agreed to recognize USDA’s certification of processing plants for export, which means plants will not have to be inspected separately by Chinese officials.

Canada: NAFTA Talks to Start in August

Canada’s Foreign Affairs Minister told the nation’s lawmakers this week negotiations over the North American Free Trade Agreement would start in August, the earliest possible by U.S. law. Chrystia Freeland briefed Canadian lawmakers Monday on the negotiation process. She says a time crunch is looming, with the U.S. and Mexico in the biggest hurry to start talks. The Canadian Press reports pre-negotiation consultations will take several months. Then, once talks begin between Canada, Mexico and the U.S., there are only a few months left before political obstacles start popping up, causing potential delays. Those obstacles include the 2018 presidential elections in Mexico and the U.S. midterm election cycle. Currently, the three countries are consulting with domestic partners as they prepare for negotiating positions. Negotiations can begin any time after August 16th, after a 90-day consolation period required by U.S. law.

USDA Political Appointment Nominee’s Expected Soon

Nominee’s for The Department of Agriculture’s political post within the agency are expected within a month or so. Sources close to the Secretary have allegedly told Politico that Perdue has made his picks for key positions within USDA, and those picks could be announced in June. There are nearly a dozen political positions that require confirmation by the U.S. Senate, to go along with near 200-some political appointees within the federal government. No official announcements have been made yet by USDA or Perdue, but several have speculated that Steve Censky, CEO of the American Soybean Association, will be nominated as USDA undersecretary. Other names floated for USDA posts include Iowa Agriculture Secretary Bill Northey, Indiana Agriculture Department Director Ted McKinney, and Sam Clovis, who has served on the USDA transition team.

Secretary Perdue Continues Farm State Travels

Agriculture Secretary Sonny Perdue continues traveling this week as he will attend the Montana Ag Summit Thursday. Senate Agriculture Committee Chairman Pat Roberts is expected to join Perdue at the event that was organized by committee member Steve Daines, a Montana Republican. Also attending is a team of Mexican barley and malt importers, who are visiting the U.S. as part of a trip arranged by the U.S. Grains Council to talk trade. The trip comes ahead of the North American Free Trade Agreement negotiations this fall. Perdue and Roberts are expected to talk about the farm bill, ag technology and bringing youth into agriculture. The trip comes as Perdue enters his second month as Agriculture Secretary and follows a host of trips to farm states in his first month on the job.

TPP Member Nations Moving On

The 11 remaining member nations of the Trans-Pacific Partnership trade agreement are moving on with finalizing the agreement without the United States. Four months after the United States announced it would withdraw from the trade agreement, the remaining 11 TPP countries agreed to “launch a process to assess options to bring the comprehensive, high-quality agreement into force expeditiously, including how to facilitate membership for the original signatories.” The countries agreed on a November 10th deadline at the recent Asia-Pacific Economic Cooperation leaders’ summit in Vietnam. U.S. Trade Representative Robert Lighthizer says the move will not draw the U.S. back to the trade agreement, stressing the need for bilateral negotiations. TPP would be worth an estimated $4 billion to U.S. agriculture, if the U.S. were included in the agreement

FDA Considering Nutrition Facts Panel Delay

The Food and Drug Administration is considering a delaying implementation of a revamped nutrition facts panel on retail goods. Meat industry publication Meatingplace reports the move would follow a request by industry groups that have asked the FDA to delay the new food labels by three years. The updated labels are scheduled to start being used by July of next year. However, industry groups say they need more time to line the nutrition panel up with GMO labeling rules by USDA that are due out next July. In testimony before House Appropriations Committee’s subcommittee on agriculture, FDA commissioner Scott Gottlieb said: "We're going to be taking a hard look at the implementation schedule.” Under the Obama administration, FDA announced the changes to reflect updated science, and to provide an update on serving sizes.

Biodiesel Tax Credit Change Supported by Treasury Secretary

Treasury Secretary Steven Mnuchin said he would support a plan backed by Sens. Chuck Grassley, R-Iowa, and Maria Cantwell, D-Wash., that would provide a tax credit to biodiesel producers rather than to the fuel blenders.“Sounds like a good plan and I look forward to working with you on the details of that,” Mnuchin said May 25 at a Senate Finance Committee hearing about President Donald Trump's proposed Fiscal Year 2018 budget.The plan would boost domestic production of biofuels, rather than subsidize imports, Grassley said. The amount of fuel imported in 2016 doubled from the previous year, he said. During the hearing, Mnuchin largely declined to give specifics about what types of tax policies the administration is interested in, beyond those included in a one-page plan released in April. He said the administration is reviewing all tax ideas and will give more details in the future, after reaching consensus with lawmakers in the House and Senate.The bipartisan bill, the American Renewable Fuel and Job Creation Act of 2017, extends the “clean-fuel incentive” for three years and reforms the incentive by transferring the credit from the blenders to the producers of biofuels. The switch ensures that the tax credit incentivizes domestic production and taxpayers are not subsidizing imported fuel.Grassley told Mnuchin the legislative proposal is “very much aligned with the president's America First agenda.” With biofuel imports nearly doubling from 510 million gallons to almost one billion gallons in 2016, Grassley said “this change is critical to ensure the credit is supporting the domestic industry rather than subsidizing foreign imports that often already receive favorable treatment from their home country.” He told Mnuchin that, “So, it's not really a question, but for you to understand that from Argentina we're getting all this biofuel and the taxpayers of the U.S. are subsidizing that import just like we're – we're attempting to incentivize domestic production. And so, we want to change it so that we don't subsidize that import.”USDA Ups Fiscal 2017 Ag Export Forecast
U.S. agricultural exports are now forecast at $137 billion for Fiscal 2017, up $1 billion from the prior forecast, with the forecast for imports held steady at $114.5 billion, leaving a $1 billion higher trade surplus of $22.5 billion compared to the February outlook, according to USDA's Economic Research Service (ERS).Value of the U.S. dollar previously has been a factor cited by ERS as tempering U.S. agricultural exports. But in the update, ERS noted, "After strengthening 4% between October 2016 and January 2017, the dollar has begun to weaken in recent weeks. It is expected to trend weaker by almost 2% in 2017, but to remain strong relative to the period before the dollar’s dramatic strengthening at the end of 2015." U.S. dollar weakness reflects improved economic conditions in U.S. trading partners and "reduced expectations for fiscal stimulus in the United States."Exports are forecast higher as increases are expected in livestock, grain/feed, and cotton exports, ERS noted. Livestock, poultry, and dairy exports are raised $600 million to $28.7 billion while grain and feed exports are forecast at $29.0 billion, up $400 million. Cotton exports are also forecast at $5.4 billion, up $400 million from the prior outlook and oilseed and product exports are seen up $100 million.Horticultural product exports are seen down $500 million, to $33.5 billion, "lower unit values of tree nuts."The steady import forecast of $114.5 billion comes as expected increases in imports of oilseeds and sugar/tropical products are offset by lower imports of horticultural and livestock/dairy products. "Horticultural product imports are expected to reach a new record of $54.1 billion in Fiscal 2017, though this represents a downward adjustment of $300 million from the previous forecast. Fresh vegetable imports are reduced $300 million, as falling average import unit values drag down total values despite higher expected volumes."

A group of top CEOs has a message for President Donald Trump: Move quickly on an update of the North American Free Trade Agreement

(Dow Jones) -- A group of top CEOs has a message for President Donald Trump: Move quickly on an update of the North American Free Trade Agreement but don't mess with the underlying structure.In a letter to the White House, the top executives of 32 major companies emphasized the benefits they currently get from Nafta. However, they said, they are willing to work with the administration on a "modernization" of the deal that keeps its three-way structure with Mexico and Canada, rather than on an overhaul that starts from scratch.The executives' letter follows the Trump administration's notification to Congress last week that it plans to begin, as soon as August, negotiations on the 23-year-old trade agreement, which eliminates tariffs and sets the rules for trade among the three countries.The letter's signatories include David MacLennan, chief executive of Cargill Inc., which benefits from duty-free agricultural sales to Mexico and Canada; Lance Fritz, chief executive of Union Pacific Corp., which handles about 70% of rail volume traveling to and from Mexico; and Steven Rendle, chief executive of VF Corp., the global apparel and footwear giant that imports many brands bought by American consumers."While this remains open, it creates an environment of uncertainty," said Evan Greenberg, chief executive of insurer Chubb Ltd. "To bring it to a thoughtful conclusion among all three parties is important," he said, adding that Nafta allowed the company to expand and become a dominant insurer in Mexico.The letter was written as an expression of support for the effort but contained a clear warning against harming a pact that the CEOs say supports 14 million American jobs and a trading volume of more than $3.5 billion daily."We encourage the administration to proceed quickly and trilaterally," the executives said. "Uncertainty about the future of America's terms of trade with Canada and Mexico would suppress economic growth and may cause political reactions that undermine U.S. exporters."Mr. Trump has at various times backed everything from a "tweaking" of U.S. trading with Canada and Mexico to a "massive" renegotiation, and he has brought attention to longstanding agricultural battles that could complicate the talks.Robert Lighthizer, the newly confirmed U.S. trade representative, said last week that the administration would seek to preserve the current structure of Nafta. But he didn't make any guarantees and said many issues would be handled bilaterally.Mr. Lighthizer sent Congress an official notification for Nafta talks last week, meaning officials are required under a 2015 trade law to submit in the next two months a set of negotiating objectives, according to guidelines set by Congress.The executives on Thursday backed adhering to the guidelines Congress set in the 2015 law, which allows fast-track approval by Congress of trade deals.Mr. Trump faces political challenges in negotiating and winning congressional passage of a deal. Most Republican lawmakers -- with the backing of businesses, including the ones that signed Thursday's letter -- don't want sweeping changes to the pact.But most Democratic lawmakers, labor groups and much of Mr. Trump's political base want to add new features to balance trade with Mexico as part of the renegotiations for Nafta, which Mr. Trump called a "disaster" in the 2016 campaign.

Roberts/Stabenow: No More Cuts to Agriculture

The Senate Ag Committee heard testimony this week from several economists on the challenges that currently exist in farm country. The Hagstrom Report says Republican Ag Chair Pat Roberts of Kansas and Ranking Democrat Debbie Stabenow of Michigan both came to the same conclusion: no more cuts for farm bill programs. At what he described as the first farm bill hearing in Washington, Roberts did say the nation’s debt is approaching $20 trillion. However, he said between the savings from the last farm bill and the Ag Department’s crop insurance negotiation, “everyone on this committee thinks agriculture has already given at the store.” Roberts emphasized the importance of producers having risk management tools at their disposal. “Let me emphasize that crop insurance is the most valuable tool in the risk management toolbox,” he said. Stabenow focused more on the proposed Trump budget released earlier this week, saying, “It cuts crop insurance by $29 billion which would take away a critical part of the farm safety net when it’s needed most.” A panel of economists and Ag business members testified that economic conditions for farmers and ranchers continue to get worse, but it’s still not as bad as the farm crisis of the 1980s.

Senate Passes Bill to Address Potential Agro-Terrorism

The U.S. Senate passed legislation designed to address the potential threat of agro-terrorism and keep the American food supply safe. Ag Committee Chair Pat Roberts co-sponsored the legislation in the Senate and says an attack on the nation’s food supply would cause irreparable damage. “This legislation reaffirms the important role for the Department of Homeland Security in preventing agro-terrorism,” Roberts said. “Agriculture is the backbone of our economy, and the spread of any deadly pathogen among our livestock and plant populations would be deadly,” House Republican Dan Donovan introduced similar legislation in the House, saying “This bill is essential to enhancing our preparedness against possible agro-terrorism and our emergency response measures.  The Securing our Agriculture and Food Act requires the Secretary of Homeland Security (DHS), through the Assistant Secretary for Health Affairs, to lead the government’s efforts to secure our nation’s food, agriculture, and veterinary systems against terrorism and high-risk events. The bill also authorizes the Secretary to collaborate with other agencies to ensure food, agriculture, and animal and human health sectors receive attention and are integrated into the DHS’s domestic preparedness policy initiatives. After House consideration, the bill would head to the president’s desk for his signature.

Oklahoma Beef Council Embezzler Pleads Guilty

Former Oklahoma Beef Council employee Melissa Mortenson pled guilty this week to embezzling $2.6 million from the beef checkoff over the course of seven years. She now awaits sentencing from the court. The Beef Council Board of Directors says this is a significant step towards bringing the criminal matter to a conclusion. “We are indebted to federal investigators for the speed at which this has moved,” a Board-issued statement says, “We believe this has been due in part to the quality of evidence we have turned over to investigators.” The Board is aggressively pursuing efforts to maximize the $2.68 million dollar restitution awarded by a civil court last month. The board says the matter has been incredibly complicated as it’s moved through civil and criminal courts. They’re limited in the information they can release to the public and will be for a few months as the case moves into the sentencing phase. The Oklahoma Beef Council has taken several steps to strengthen internal mechanisms to ensure accounting integrity and has retained an outside accounting firm to provide additional oversight.

USDA Revises Angus Certification Requirements

The USDA Ag Marketing Service announced this week that it’s revising the live animal specification used for all Angus Certification Programs. The goal is to reflect changes in cattle genetics and marketing, with the proposals to take effect on July 1. A Meating Place Dot Com article says the revised specifications for phenotypic evaluations require that cattle have a main body that’s solid back with no color behind the shoulder, above the flanks, or breaking the midline behind the shoulder. Those color requirements do exclude the tail. The current requirements (Schedule GLA) say that cattle must be 51 percent black, along with other exclusionary criteria. AMS officials say the current Schedule GLA has served the industry well. “As cattle genetics change over time,” the announcement says, “opportunities for updates should be considered that better reflect the current populations and marketplace.”  The goal of the new requirements is to provide more objective criteria for identifying eligible cattle. The agency also mentioned it’s making the changes in response to a request from beef industry stakeholders.

China Issues “Wish List” for U.S. Trade

China has issued a list of concessions that it says can help deliver a “win-win” trade relationship with America. The list is part of a 117-page document released Thursday by the Ministry of Commerce. China would like to improve infrastructure cooperation with the U.S. and accept greater imports of goods ranging from soybeans to aircraft. The report acknowledges the Trump Administration’s grievances with China and with globalization, urging “balanced development” of trade ties in future talks. A 100-day review of the bilateral trade relationship is due to finish up in July. A deal earlier this month allows more U.S. access into the Chinese market for beef, natural gas, and financial services. China would like to increase imports of agricultural products like soybeans and cotton. It would also like to speed up negotiations with the U.S. on traceability, inspection, and quarantine procedures on U.S. beef to be sold in the Chinese market. Bloomberg said the 117-page paper could be seen as China indicating a more stable negotiating environment between the two countries. In return, on the "ask" list, the report argues that the U.S. should stop using the so-called alternative state approach when calculating dumping margins in WTO trade disputes. That would be a big step that could push China toward being considered a market economy by its major trading partners.

Farm Machinery Markets Beginning to Stabilize

A DTN article says signs are showing that the farm machinery industry is starting to stabilize after prices had been free falling for some time. “We are seeing signs that after several years of steep declines, key agricultural markets may be stabilizing,” says Samuel Allen, John Deere Chairman and CEO. That doesn’t mean farmers have started to replace the equipment bought during the most recent boom years of 2011-2013. Lower sales have led to layoffs, cutbacks, and tighter profit margins at farm equipment manufacturing sites. Sales numbers in the first quarter of 2017 offered some hope. AGCO reported an increase of 6.3 percent in North American sales. John Deere released second quarter sales numbers this week showing net income 62 percent higher than this time last year. However, that number does reflect some cost cutting measures taken by the company in recent months as well as non-ag sales numbers. The under-40 horsepower tractor market has been a bright spot for manufacturers. At the end of this year’s first quarter, sales were up 12 percent over the same time last year.

Two congressional committee chairmen want to know why the U.S. Department of Justice is still pursuing a Clean Water Act case against a California farmer

OMAHA (DTN) -- Two congressional committee chairmen want to know why the U.S. Department of Justice is still pursuing a Clean Water Act case against a California farmer who potentially faces millions in fines and penalties from the U.S. Corps of Engineers.John Duarte, who runs a farm and nursery in Hughson, California, has been at the center of a federal prosecution and multiple federal lawsuits against the U.S. Army Corps of Engineers because Duarte tilled vernal pools on farm ground he owns in northern California.Duarte is facing a fine as high as $2.8 million and millions more in mitigation costs as a federal judge's summary ruling against him will lead to a penalty trial now scheduled for August. Duarte had thought federal attorneys and regulators would have dropped the case against him, especially after President Donald Trump's push to dial back the controversial waters of the U.S. rule, followed later by the president's executive order in April calling on regulatory agencies to essentially back off farmers."We believed after the election that when the Trump Justice Department looked at this case, they would dispose of it," Duarte said. "It's just a gross abuse of the Clean Water Act. It should be apparent to anybody with objective reasoning on this that it is just government bullying."On Thursday, House Agriculture Committee Chairman Michael Conaway, R-Texas, and Judiciary Committee Chairman Bob Goodlatte, R-Va., wrote U.S. Attorney General Jeff Sessions about the case. The chairmen informed Sessions that the case appears to violate congressional intent to exempt traditional farming practices from specific Clean Water Act permit requirements.Conaway and Goodlatte want the Justice Department to justify its prosecution to the committees, which includes explaining the "novel or strained interpretation of the underlying statutory authority" used in the case."I have to say I'm very pleased that Congress is standing up for a faithful interpretation of the Clean Water Act," Duarte said. "It was passed with limitations on government and protections for farmers, and it's a great day when Congress will stand up and defend congressional intent against the agencies."Duarte's case began after he bought 450 acres of wheat and grazing land in 2012 and went ahead and planted wheat that fall. He got a call from the Corps warning him that he was illegally "deep ripping" wetlands on the farm. The Corps later sent him a letter declaring he was violating the Clean Water Act. The vernal pools defined as wetlands hold water three or four times a year when it rains heavily, mainly due to clay soils."This happened even though the pools had been farmed through before with probably even deeper tillage than we did, Duarte said.The case helped make Duarte a farmers' spokesman in the campaign against an expanded waters of the U.S. rule and the battle with federal agencies over property rights.Beyond the $2.8 million fine, Duarte could be on the hook for anywhere from $16 million to $33 million in mitigation costs because the Corps wants Duarte to create up to 132 acres of vernal pool mitigation banks."This is for vernal pools that are still there in as good or better condition than when we got the property," Duarte said.In legal filings, the Corps of Engineers argues Duarte is required to get a dredging and fill permit, but did not file one. The Corps pushed an enforcement action against Duarte and his farm, but he also filed his own countersuit against the Corps. A federal judge issued a summary ruling last summer finding Duarte guilty of violating the Clean Water Act. The suit and countersuit are caught up in court motions over appeals even as the courts move to the penalty hearing against Duarte based on the summary judgment against him.To make things worse, once the Corps and Department of Justice got a summary ruling last summer against Duarte, the Department of Justice filed a similar case against the farmer who sold the land to Duarte.Yet, as the congressmen noted in their letter to Sessions, the Clean Water Act states that plowing is considered an exempt farming practice that does not require any kind of discharge permit.A Department of Justice spokesman declined to comment to DTN about the congressmen's letter or the Duarte case.Tony Francois, an attorney for the Pacific Legal Foundation, notes the position taken by the federal government and the judge who ruled against Duarte is that plowing requires a dredging and fill permit because plowing moves soil from side to side."So you have this just bizarre, counterintuitive view of the law over what is allowed by farmers," Francois said. "The letter from the two congressmen is a very important one asking for clarity on it."If the court decision against Duarte eventually stands, Francois said, it could lead other Corps regional offices to bring similar cases against farmers. Further, citizen suits could be filed to demand farmers get permits.Farmers could be required to get such permits when they bring the land out of the Conservation Reserve Program, which is how at least part of Duarte's land had been idled during the 1990s. The Corps argued that the land was idled too long for plowing to be considered a normal farming practice on the property."Everybody in the Conservation Reserve Program needs to know that the emerging view of the Corps of Engineers is that you are going to need a 404 permit to continue farming that property," Francois said.Francois noted a 404 permit to dredge and fill can take close to two years to be granted and can often cost businesses $200,000 to $300,000 for engineering and consulting fees.In addition to the fine, the Department of Justice has asked Duarte for a conservation easement on the property that would prevent it from ever being farmed again, Francois said.A favorable outcome right now, Duarte said, would be for his nursery to accept a small penalty and then go to an appeals court to rule on all of the various legal arguments in the case. Duarte would like to see an appeal that would define what jurisdictional wetland is under the Clean Water Act, as well as ruling on what is a defined agricultural practice. Duarte also thinks due process should be spelled out when agencies declare a violation has occurred."Can you imagine if they get away with this, what can they do to every farmer in America?" Duarte said.

JBS SA said on Friday owners of the company and are ensnared in a corruption scandal that threatens to topple Brazil's President

JBS SA, the world's largest meatpacker, said on Friday that the brothers Joesley and Wesley Batista, who own the company and are ensnared in a corruption scandal that threatens to topple Brazil's President Michel Temer, have resigned from senior posts.Joesley Batista, who unleashed a political crisis in Brazil last week with a plea bargain deal that accused Temer of endorsing the bribing of a witness, resigned as chairman and will leave the board, effective immediately.He will be replaced by Tarek Farahat, a former Procter & Gamble Co executive who is also a member of the JBS board.In Friday's board meeting, the first since the crisis broke, JBS Chief Executive Officer Wesley Batista also resigned from the vice chairmanship of the board.He was replaced by his father, José Batista Sobrinho as vice chairman, but will remain as chief executive and maintain a seat on the board.Reuters reported on Thursday that the Batista brothers were coming under intense pressure from minority shareholders and Brazil's development bank, BNDES, to step back from the company, according to sources familiar with the situation.One of the sources said shareholders demanded that JBS should not foot the bill for any fine as minority shareholders were not responsible for any corruption-related crimes.The Batistas have already agreed to a plea bargain with prosecutors. However, the family holding company J&F Investimentos SA, the controlling shareholder of JBS, remains locked in negotiations over a potential leniency deal for the company itself.J&F's proposal to pay a $1.2 billion fine was rejected by the prosecutors' office on Wednesday.On Friday, the powerful Brazilian Rural Society group said it had sent a letter to development bank BNDES demanding the ouster of the Batista brothers from the board of JBS.In the letter, Rural Society head Frederico d'Avila, the society argued that BNDES Participações SA, equity arm of the bank and JBS's second largest shareholder, should increase pressure to force Joesley and Wesley Batista, respectively chairman and chief executive, to step down.The brothers' testimony, released last week, unleashed a political crisis in Latin America's largest economy which is still worsening. It included allegations that they bribed hundreds of politicians.The head of BNDES, which is also a key shareholder in JBS, Maria Silvia Bastos, resigned on Friday, citing personal reasons.JBS added Farahat will create and chair a new corporate governance committee.

US Cabinet Officials: Farm Exports a Priority in NAFTA

Both U.S. Trade Representative Robert Lighthizer and USDA Secretary Sonny Perdue emphasized that the Trump administration has no intention of jeopardizing U.S. agricultural exports to Canada and Mexico, noting they have specific marching orders to protect current market access for U.S. farm products.“Ag is a big winner from NAFTA and a lot of these agreements. We have to maintain that position,” Lighthizer said.While the Trump administration is interested in negotiating new bilaterals, Lighthizer acknowledged that none of the 11 remaining TPP members have come forward to say that they want a one-on-one trade agreement with the U.S. "But everybody wants to engage,” Lighthizer said after he and Perdue emerged from a closed-door meeting with House Agriculture Committee members.Lighthizer was upbeat about the prospect of eventually negotiating one-on-one deals despite the lukewarm response to the administration’s desire to do so. “We have the biggest economy in the world. We have something we’re offering to people so I’m confident that people will want to talk about our bilateral relationship,” Lighthizer said. “We’ll have FTAs and agriculture will be front and center of every one of them, I’m confident.”After President Donald Trump’s threats to pull out of NAFTA, Mexico started exploring other markets to buy corn and other crops from other countries, including Brazil and Argentina. House Agriculture Chairman Mike Conaway, R-Texas, said he met with producers from Mexico who import US corn last week and reassured them that the relationship is still on solid ground. He also had a meeting with Mexico’s ambassador to the U.S. Geronimo Gutierrez, on Tuesday. “They all want to buy our corn,” Conaway said. “With respect to Canada and Mexico, we have a geographical advantage over anyone else in the world.”Conaway also said he has three main messages for the Trump administration officials: Do no harm to in the NAFTA renegotiations; push aggressively to tear down Canada’s dairy trade barriers and begin negotiating bilateral deals with members of the Trans-Pacific Partnership (TPP), since President Donald Trump decided to pull out of that pact. 

Leaders of the Senate Agriculture said Thursday there should no more cuts to farm bill programs

WASHINGTON (DTN) -- As they heard testimony from economists on the problems in farm country, leaders of the Senate Agriculture said Thursday there should no more cuts to farm bill programs.Committee Chairman Pat Roberts, R-Kan., and ranking member Debbie Stabenow, D-Mich., made the statements two days after President Donald Trump's budget called for massive cuts in money and personnel over the next 10 years.At what he described as the first farm-bill hearing in Washington, Roberts acknowledged that the national debt is approaching $20 trillion, but he said that, between the savings from the last farm bill and a USDA crop insurance contract negotiation, "Everyone on this committee agrees that ag has already given at the store."Whoever negotiated the contract cut to crop insurance on top of the farm bill cut had "some relationship with Lizzie Borden," Roberts said, departing from his prepared remarks. "Farmers, ranchers, and rural families understand fiscal responsibility. But, now is not the time for additional cuts. We need to review what is working and what is not working.""We need to ensure that producers have risk management tools at their disposal. Let me emphasize that crop insurance is the most valuable tool in the risk management toolbox," Roberts said twice -- and then repeated the statement a third time 

NAFA announces its first-ever request for proposals for its U.S. Alfalfa Farmer Research Initiative

Last year, the National Alfalfa & Forage Alliance (NAFA) unanimously voted to start a national checkoff program that would fund industry research. This week, this goal took a big step forward as NAFA announces  its first-ever request for proposals (RFP) for its U.S. Alfalfa Farmer Research Initiative.This initiative is implemented voluntarily by seed brand with an assessment of $1 per bag of alfalfa seed. All of the proceeds raised by this checkoff will funnel into research, with no administrative fees assessed, according to NAFA President Beth Nelson.“This is a watershed moment for NAFA,” she says. “After many years of effort, it’s rewarding to see this finally come to fruition with the release of our first RFP. We’re looking forward to funding research projects that alfalfa farmers view as priorities for the industry.”NAFA has asked researchers to focus on one or more of the following six areas:Yield improvementCutting management strategiesFertility, soil management, soil health and macro/micro nutrientsForage quality improvementsWeed management strategiesInsect management strategiesFunding requests will be capped at $50,000. University, ARS and non-profit researchers are eligible. NAFA is requesting all proposals be received by June 26, 2017.For more information, visit https://alfalfa.org/. 

Experts Expect Down Farm Economy to Continue

A financial expert forecasted to lawmakers Thursday the current agriculture economic conditions will continue. During a Senate Agriculture Committee on the rural economy, Nathan Kauffman of the Federal Reserve Bank of Kansas City informed the committee that a farm crisis does not appear imminent, but there are still risks that could lead to more widespread challenges in the coming years. He noted the downturn began in 2013 during a sharp drop in commodity prices that has lingered. He says reduced profitability in agriculture has gradually intensified the level of financial stress among farm borrowers. Kauffman expects the trends to continue in the near term as global supplies are likely to continue to weigh on agricultural commodity prices and profit margins.

Top Senate Ag Democrat Releases Trump Budget Fact Sheet

A fact sheet released by the Senate Agriculture Committee’s Ranking Democrat highlights the expected impact of President Donald Trump’s proposed budget on agriculture. The fact sheet claims that President Trump is “turning his back on rural America.” Released by Senate Democrat Debbie Stabenow’s office, the fact sheet says cuts included in the proposal to crop insurance and the Supplemental Nutrition Assistance Program, or SNAP, hurts farmers and families. She says other cuts to conservation programs also harm land and water resources. The budget proposal would cut $29 billion from crop insurance while laying off 5,200 Agriculture Department employees. The budget would also cut $193 billion from SNAP and eliminate some conservation programs. The fact sheet by Senator Stabenow's office says "this budget would make a five-year farm bill impossible to pass.”

NPPC White Paper Details Benefits Of NAFTA

New documents released by the National Pork Producers Council Thursday show the benefits of the North American Free Trade Agreement to the U.S., Canada and Mexico. NPPC released a white paper that focuses primarily on trade with Mexico and makes the case for not abandoning the 23-year-old pact. The paper also argues for not disrupting trade in sectors for which the agreement has worked well, including U.S. pork. Mexico is the number two export market for U.S. pork, and Canada is number four. For all U.S. goods and services, Canada and Mexico are the top two destinations, accounting for more than one-third of total U.S. exports, adding $80 billion to the U.S. economy and supporting more than 14 million American jobs. For U.S. agriculture, Canada and Mexico are the second and third largest foreign markets. They imported more than $38 billion of U.S. products in 2016, or 28 percent of all U.S. agricultural exports. Those exports generated more than $48 billion in additional business activity throughout the economy and supported nearly 287,000 jobs.

NAFTA a Success Story for Agriculture

A farmer from Nebraska says the North American Free Trade Agreement is a success story for U.S. agriculture, and warns of the risks involved in renegotiation. In a letter published by the New York Times, Alan Tiemann writes that NAFTA has tremendously benefited U.S. agriculture. Tiemann, a past U.S. Grains Council Chairman, recalled a delegation of Mexican buyers who recently visited Nebraska and Washington, D.C. He says: “Throughout this visit, the message was clear: the Mexican market has demand for quality ag products and want to continue buying from the U.S., but they will look elsewhere should free trade no longer be an option.” Mexico recently inked a deal with Brazil and is expected to import a record amount of corn from Brazil, according to Tiemann. He says since the inception of NAFTA, U.S. ag exports to Canada and Mexico tripled and quintupled respectively. Noting concerns of the renegotiation of NAFTA, Tiemann says farmers “look forward to working with the Administration and Congress to ensure we maintain and build upon our established partnership with Mexico.”

Perdue Echoes Vilsack on Cottonseed Declaration

Agriculture Secretary Sonny Perdue this week echoed his predecessor, telling U.S. House lawmakers the Department of Agriculture does not have the authority to declare cottonseed as an oilseed. Perdue carried the same message former Agriculture Secretary Tom Vilsack offered to lawmakers on the issue, as advised by USDA lawyers. Perdue was asked about the issue during a House Agriculture Appropriations Subcommittee hearing. He said he knew Vilsack “wrestled with that” and added, he is “getting the same legal advice from the general counsel now,” according to the Hagstrom Report. The National Cotton Council and Southern members of Congress have asked both Vilsack and Perdue to declare cottonseed an oilseed so that it would be eligible for oilseed subsidies.

Corn Replant Expected to reach “Historic” Levels

Seed industry leaders are expecting corn replant rates this year to reach historic levels. Ryan Parkin of Beck’s Hybrids told DTN-The Progressive Farmer “this will be a historic replant year, particularly for corn.” Many seed companies say the year ranks first or second in company history for replant demand. Spring rains were far too abundant, leaving fields across the Midwest flooded out and chilled, and plants struggling to emerge. The areas with the most replant demand so far are Arkansas, Indiana, Illinois, Ohio, Missouri and parts of the Great Lakes states, Iowa and Kentucky, according to multiple seed companies. Some farmers are even calling seed dealers for their second replant of the year, after flooded fields in parts of Illinois and Indiana were hit by another ill-timed mid-May storm.  

Woman Pleads Guilty to Bank Fraud In Embezzlement From Oklahoma Beef Council

An Edmond, Okla., woman pled guilty Wednesday to bank fraud and signing a false federal income tax return in connection with a $2.6 million embezzlement from the Oklahoma Beef Council, U.S. Attorney Mark A. Yancey said in a news release. In May, Melissa Day Morton was charged with one count of bank fraud and one count of filing a false federal income tax return. She’d worked for the Beef Council as its accountant from October 1995 until late July 2016.  Morton pled guilty to preparing an unauthorized company check, in the amount of $5,652.25, made payable to herself in February 2016. She admitted she forged the signature of the Beef Council’s executive director on the check and later presented that check for payment against the Beef Council’s bank account at a local bank. As part of her plea, Morton further admitted that she embezzled funds from her former employer from around 2009 through 2016, and stipulated that the total loss to the Beef Council from her embezzlement scheme was $2,681,400.73.  She faces 30 years in prison. 

Border adjustment tax would help make American farmers and exporters more competitive globally

OMAHA (DTN) -- A border adjustment tax would help make American farmers and exporters more competitive globally, the top executive for Archer Daniels Midland told lawmakers Tuesday.Juan Luciano, president and CEO for agribusiness giant ADM, told members of the House Ways and Means Committee that current tax policies favor foreign competitors, which is one reason U.S. export market share for crops such as corn, soybeans and wheat has declined over time.Congress is debating the idea of a border adjustment tax on imported goods as an offset for lowering corporate tax rates. Proposals have suggested implementing a tax on imported goods as high as 20%. Industries have different takes on the possibilities of a BAT, depending on whether the companies rely more on exports or imports.Congress is trying to decide if a border adjustment tax would reduce the trade deficit and increase U.S. jobs and exports.Brian Cornell, CEO for the retailer Target, told lawmakers that an import tax could increase the costs of everyday items for all consumers. Target opposes the border adjustment tax, as Cornell said families would pay more so multinational corporations could pay less.Luciano said ADM competes with a group of well-capitalized competitors globally that gain an advantage by being reimbursed on domestic consumption taxes when those companies export crops such as corn or wheat. Companies exporting out of Ukraine get those consumption taxes -- known as value-added taxes -- reimbursed when they export."A competitive tax code will help us continue providing American-made food and feed to our customers in the United States and abroad in the face of robust, and from a tax perspective, ever-strengthening competition from abroad," Luciano said.He added, "We must have a globally competitive U.S. tax code" and encourage capital to come back to the U.S.Luciano pointed out that the U.S. used to be the dominate grain exporter globally, but now Russia is the top wheat exporter, and Brazil is the leading exporter of soybeans. At least part of that is due to taxes. Tax reform would give American farmers and ranchers a chance to compete, he said."America's antiquated tax system may not be the only reason for this decline, but it clearly contributes," Luciano said.The U.S. remains competitive because it has better infrastructure, Luciano said. He added, "We have lost in wheat to Russia, we have lost it in soybeans to Brazil."ADM just this week announced it had completed a major upgrade to its export terminals in Brazil, expanding the facility's storage facilities and unloading docks.William Simon, former president and CEO of Walmart, told House members he has concerns about a border adjustment tax, but if the tax were phased in over a long adjustment, it could stimulate more manufacturing in the U.S. "With the change, American sourcing will become increasingly viable," Simon said.Simon also suggested the tax could be set up so a rawer product could be exported from the U.S., then reimported at a lower border tax, because it was produced with a U.S. raw material. Simon specifically pointed to American cotton on the international market as a possible example.The hearing also included dueling economists, one of whom had worked on a border adjustment tax for decades. Lawrence Lindsey, who served as an economic adviser under former President George W. Bush, praised the tax, indicating it would bring back more manufacturing and further increase wages for people because of the tight labor market in the country.Competing economist Kimberly Clausing of Reed College, said most trade-law lawyers think the U.S. would lose a World Trade Organization case over a border adjustment tax on imports. "This has given a lot of exporting firms pause in thinking about this proposal," Clausing said.Lindsey countered that European countries are built around value-added taxes and the WTO would be hard-pressed to rule against such a similar tax plan. "Not even the WTO would be so boldfaced to say a border-adjustment tax is OK for Europeans, but not the U.S.," he said.Luciano noted crop production is concentrated between the U.S., South America and Eastern Europe. More jobs could come back to rural towns if the U.S. became more competitive. He later said he worries about losing market share and competitiveness for U.S. products."The issue is a race between South America, eastern Europe and the U.S.," Luciano said. 

U.S. meatpackers are still waiting for final protocols and an official date for restarting beef exports to China

OMAHA (DTN) -- U.S. meatpackers are still waiting for final protocols and an official date for restarting beef exports to China, but the U.S. Meat Export Federation's marketer in Asia expects high demand for American beef.The USMEF held a press call on Wednesday to update reporters on various markets. Most of the discussion revolved around what the expectations are for China. Joel Haggard, senior vice president for the group, said there is "intense buying interest" for U.S. beef as he pointed to the discussion regarding U.S. beef at a trade show last week in China.Haggard noted there are hundreds of five-star hotels in China that may want ribeyes, but a lot of cuts being sent to China will be price sensitive for consumers there. Right now, however, more information is needed about the kinds of cuts that will allowed for import."What range of cuts can a buyer take to China? The more he can take, the better," Haggard said. "I'm confident on the demand side," but starting those exports will be slow and tricky, he said.Until pricing has been put out to the importers, the extent to which China can incentivize U.S. meatpackers to cater to China will be unknown, Haggard said.China also has a basic tariff on chilled and frozen beef imports of 12% and all agricultural imports are assessed a 13% value-added tax. The only beef supplier that would have significant advantage is New Zealand because of a free-trade agreement with China. Australia has a slightly lower tariff as well.The U.S. has been shut out of China since 2003 after the first case of bovine spongiform encephalopathy was found in the U.S. It has been a slog to get beef back into the country, but the U.S. reached an agreement with China earlier this month on a 100-day trade action plan that opened up the market for U.S. beef as early as mid-July.The effort to return U.S. beef to China and increase ag exports to the country could get a boost now that Terry Branstad is officially the U.S. ambassador to China. Branstad resigned as Iowa's governor and was sworn-in as ambassador on Wednesday.For now, U.S. meatpackers are waiting for specific requirements from China on issues such as traceability, which has been a critical issue for other competitors in China."The devil is in the details about what the protocol language is going to be," Haggard said. "Most countries that supply beef to China, there are these written protocols and they spell out what the supplying country must comply with."The industry is waiting on specific language about traceability and other specifications. Some details are already known. USDA stated that China wants full traceability on beef going into the country, down to where the cattle were raised. Beef must come from animals under 30 months of age and from graded animals. China also has a law banning beta-agonists in feed such as ractopamine. Beef for export to China will have to pass residue tests at port showing there is no detectable traces from such growth drugs, USDA stated."The industry should expect China will test our products when it hits the ports," Haggard said.Still, Haggard said there will be other specific protocols that exporters and importers will have to follow to get shipments cleared at ports."Until we see that, it's difficult to say how the U.S. industry is going to organize itself to produce cattle and beef for China and how popular it will become."USMEF expects growing demand once the kinks have been worked out of the import requirements. China imported 600,000 tons of beef last year.Beyond China, USMEF said U.S. beef exports overall are up 15% in volume and a 19% increase in value from a year ago. Volume is up 41% to Japan, 17% to Mexico, 21% to South Korea and 14% to Canada."We have now become the No. 1 exporter of beef in the world, and that's quite a milestone," said Phil Seng, president and CEO of USMEF.The U.S. also sent $30 million in beef to Brazil this past week for the first time in 13 years."We are very encouraged we are able to export to Brazil, and hopefully the velocity of those exports will increase as time goes on," Seng said. 

Trump Budget Proposal Puts Perdue in Awkward Position

The deep cuts to the nation’s agricultural support programs proposed by President Donald Trump have put Secretary of Agriculture Sonny Perdue in an awkward position with both lawmakers and farm groups. Politico’s Morning Agriculture Report says a good example of this is the plan to cut funding for trade promotion programs and to eliminate more than 230 jobs geared toward boosting U.S. exports. These proposed cuts follow a promise from the secretary that the administration would focus on expanding foreign market access to help farmers. The plan also proposes to cut $193 billion from the Supplemental Nutrition Assistance Program over the next decade. However, that idea runs completely opposite of comments that Perdue made about SNAP before the House Agriculture Committee that said, “If it ain’t broke, don’t fix it.” In a budget hearing with reporters on Tuesday, Politico says Perdue didn’t speak much, passing off the telephone to acting USDA Deputy Secretary and Budget Director Michael Young. During the briefing, Young was quick to point out that USDA and the secretary had little to no part in putting together the budget proposal.

Heritage Action Praises Trump’s Budget Proposals

Heritage Action is a conservative think tank known for criticizing programs at the USDA. The Hagstrom Report says the group applauds White House budget proposals released this week. However, the group did say it was disappointed the proposals didn’t include structural changes to Medicare and Social Security. Heritage Action CEO Michael Needham calls budget proposals “visionary documents,” saying that the Trump proposal would put taxpayers first by directing their dollars toward the most effective programs. “It’s the type of document our president promised on the campaign trail,” he says, “including some serious, structural reforms to our nation’s entitlement system.” He added that the failure to address Social Security and Medicare would make it difficult for the nation to address its ever-growing debt. “The Trump budget presents an opportunity for Republicans to unite around fiscally responsible reform for food stamps, disability insurance, and the Earned Income Tax Credit,” Needham says.

Organic Ag Sector Posts New Records in U.S. Sales

The organic sector stayed on an upward trend last year, gaining new market share and setting new records as consumers across the country ate more organic products than ever before. That news comes from the 2017 Organic industry survey that was released during the OTA policy conference this week. Organic sales in the U.S. totaled $47 billion last year, $3.7 billion more than the previous year’s total. The total marked the first time the organic market broke through the $40 billion dollar mark in sales. Organic food sales also make up more than five percent of overall food sales in America, at 5.3 percent. That’s another high water mark for the organic industry. Organic sales increased by 8.4 percent from 2015. The sales growth rate was 8.8 percent higher in 2016, a number that easily surpassed the growth rate of .8 percent in non-organic foods. The $15.6 billion dollar fruits and vegetable market held onto its position as the largest of the organic food categories in 2016. Sales of organic meat and poultry products shot up by more than 17 percent in 2016 to $991 million, the category’s biggest yearly gain ever.

Elanco Seeks Injuction Against Deceptive rbST Advertising

Elanco initiated legal action last week in an eastern Wisconsin U.S. District Court against international dairy conglomerate Arla Foods last Friday. Elanco wants the court to force Arla to stop what it calls a deceptive advertising campaign and false business practices against rbST. It’s a supplement marketed and sold by Elanco under the brand name Posilac. Elanco says the technology has been proven safe and effective since it was first approved by the FDA in 1993. The Arla campaign is called “Live and Unprocessed,” launching across America in late April. The campaign is based upon a child’s understanding of what rbST is and then brings the perception to life as an animated monster with razor-sharp horns and electrified fur. Elanco’s complaint says it believes that Arla is intentionally deceiving the public about the safety of rbST. The product has been used for more than 20 years, with rbST used to help cows give more milk without changing the safety and quality of American dairy products.

AZ Rancher Wants Burden of Federal Regulations Lifted

Arizona rancher David Cook is calling on Congress to remove layers of red tape and federal bureaucracy that have made it much harder to effectively manage and care for public lands. He testified this week before the U.S. House Natural Resources Subcommittee on Oversight and Investigations. Cook told lawmakers he doesn’t believe it was the intent of Congress to disenfranchise communities like his when it enacted the Federal Land Policy and Management Act and the Wilderness Act, but that’s exactly what happened. “The burden of compliances with these regulations, plus the struggle to get our voices heard as stakeholders have become the dominant consumer of time and resources,” he said, “for anyone or entity interacting with federally-managed lands.” Cook and his wife, Diana, own DC Cattle Company and partner with other ranches in their local county. The agreement between the entities covers 4,800 square miles, but less than five percent of that is deeded as private lands. Cook says the delegation of authority from Congress to land management agencies has resulted in unchecked authority over land-use planning and has been abused by administrators and capitalized on by environmental groups through continuous litigation. 

For farm programs, the budget proposes several changes in the farm bill

For farm programs, the budget proposes several changes in the farm bill. They include: -- Cap crop insurance premium subsidy at $40,000, which would save an average of $1.6 billion a year. The proposal would affect about 33,000 farmers, or about 6% of all policies sold. -- Eliminate the Harvest Price option, saving an average of nearly $1.2 billion a year. The White House stated farmers could hedge their risks with unsubsidized harvest price insurance or use futures and options markets instead. -- Eliminate premium subsidies, commodity payments and conservation technical assistance for farmers with adjusted gross income over $500,000. The proposal would save about $100 million a year. The current income cap for farm programs is $900,000 and there is no means testing for crop insurance. The White House stated, "It is hard to justify to hardworking taxpayers why the federal government should provide assistance to wealthy farmers with incomes over a half-million dollars." -- Tighten the Conservation Reserve Program by ending the general signup period through 2020 and rely on continuous signup. In other conservation programs, the White House wants to increase funding by $1.9 billion over 10 years for the Environmental Quality Incentives Program while at the same time end any new acreage enrollment in the Conservation Stewardship Program, saving roughly $7.9 billion over 10 years. -- Eliminate the Market Access Program and Foreign Market Development Program, saving over $1.8 billion over 10 years. -- Reduce the Supplemental Nutrition Assistance Program by $191 billion over 10 years, mainly by shifting up to 25% of the costs to states over the decade. States would also have more latitude about changing food-stamp eligibility. Roger Johnson, president of the National Farmers Union, called the budget proposal "an assault on the farm safety net and rural communities." Senate Agriculture Committee Chairman Pat Roberts, R-Kan., and House Agriculture Committee Chairman Michael Conaway, R-Texas, were among the GOP lawmakers caught opposing a budget plan by a president they support. Roberts and Conaway said in a joint statement they support the president's goal of 3% economic growth. Their vocabulary responding to Trump's plan was more measured than when President Barack Obama proposed to cut farm programs. "As we debate the budget and the next farm bill, we will fight to ensure farmers have a strong safety net so this key segment of our economy can weather current hard times and continue to provide all Americans with safe, affordable food. Also, as a part of farm bill discussions, we need to take a look at our nutrition assistance programs to ensure that they are helping the most vulnerable in our society," Roberts and Conaway stated.   

Brazil Launching Four New Probes Into JBS

Brazil’s securities regulator announced it’s launching four new probes into meatpacker JBS and other companies also controlled by J & F Investments. The probes are looking into suspicious trades made just before markets were rattled by the news of a plea deal by the company’s top executives. The investigation is looking into signs of “possible insider trading” of foreign exchange futures, derivatives, and JBS stock, all ordered by JBS and other companies. According to plea-bargain testimony, the controlling shareholders in JBS say Brazil President Michel Temer (Muh-shel’ Tuh-Mehr’) received approximately $4.6 million dollars in bribes from the world’s largest meat processor. Temer refused to resign last week. The Brazilian real fell 8 percent last week against the U.S. dollar. A report last week says the controlling shareholders in JBS bought over $1 billion in U.S. dollar contracts in the local market hours before news of the plea deal broke.

ChemChina Plans a Second Merger

ChemChina and Sinochem (Sih’-noh-kem) are planning a merger next year. Several senior bankers in Asia say the merger would create the biggest chemicals group in the world with $100 billion in revenues. The merger would come after ChemChina’s $43 billion merger with Syngenta. A Financial Times Dot Com article says China has 1.4 billion people to feed, so the country is looking for more control of technology in seeds, herbicides, and pesticides. The Chinese government is pushing for more control of technology despite widespread domestic opposition to genetically modified crops. Bankers across Asia told the Financial Times that the move is politically driven and intended to make sure that ChemChina has the financial strength to absorb Syngenta. The heavily indebted chemicals conglomerate will have achieved China’s largest overseas purchase when the Syngenta deal is complete.  While bridge financing has been in place for the Syngenta deal for over a year, ChemChina has revealed very little about its financing plans other than a mix of loans, equity, and support. 

White House Budget Proposal Cuts Ag Spending $46 Billion

A Reuters report says President Trump’s budget proposal contains $46.54 billion in cuts to government funding in the Ag sector, with those cuts spread out over ten years. The biggest proposed cut is $38 billion dollars from farm support programs. Those cuts include new limits on federal subsidies for crop insurance premiums and a cap on potential commodity program payments. The president proposes a 36 percent cut in the federally subsidized crop insurance program. That’s a larger cut than what the Obama Administration proposed and was ultimately rejected by farm state lawmakers. Crop insurance cuts would yield the largest savings, including $16.2 billion by limiting the government’s share of premiums. It would also save $11.9 billion by eliminating the harvest-price option. The proposed budget cuts would actually eliminate the Rural Development Program, which provides zero-interest loans to rural utilities and support to rural businesses. It would also reduce government costs for federal inspectors at meat plants in two years by adding $600 million in user fees for the USDA Food Safety and Inspection Service.

Ag Groups Respond to White House Budget Cuts

Several major Ag organizations and lawmakers representing farm states reacted negatively to the president’s budget proposals. American Farm Bureau President Zippy Duvall says agriculture has done more than its fair share to help reduce the deficit over the years. “The Administration’s budget proposal fails to recognize agriculture’s current financial challenges or its historical contribution to deficit reduction,” Duvall says. The National Farmers Union called the president’s budget proposal an assault on the farm safety net and rural communities. “It’s deeply disappointing that the president would propose such cuts, especially in the midst of a farm crisis that has families who’ve lost 50 percent of their farm income over the past few years,” said NFU President Roger Johnson. U.S. Wheat Associates is disappointed that the budget proposal eliminates funding for the USDA’s Market Access Program and the Foreign Market Development Program. “Without funding for these vital programs,” says USW President Alan Tracy, “we would not be able to continue the training necessary to promote our product and our competitors would swoop in and overtake American producers in foreign markets.” He adds that the effect on wheat prices would be obvious.

EPA Is The Top Target for Budget Cuts

Candidate Donald Trump vowed to get rid of the Environmental Protection Agency in virtually every way, leaving only tidbits of what it once was. A Washington Post article says his budget proposal aims to follow through on that campaign promise. The proposed budget from the White House hits the EPA with a 31 percent budget cut, down to $5.65 billion. The plan eliminates several regional programs, including those that restore the Great Lakes, Chesapeake Bay, and Puget Sound. It slashes funding for the Superfund Cleanup Program, which helps restore some of the most polluted sites in the nation. Despite the cut to the Superfund, EPA Administrator Scott Pruitt lists the program as one of his biggest priorities. Pruitt said the president’s budget respects the American taxpayer. “This budget supports EPA’s highest priorities with federal funding for priority work in infrastructure, air and water quality,” Pruitt says, “and it ensures the safety of chemicals in the marketplace.” The proposal does maintain funding for high priority infrastructure investments like grants and low-cost funding for projects that improve drinking water quality and wastewater treatment. 

USW Dismayed by Budget Proposal to Eliminate Trade Development Programs

Arlington, Virginia -- U.S. Wheat Associates is very disappointed that the Administration’s proposed FY 2018 budget eliminates funding for the USDA’s Foreign Agricultural Service Market Access Program (MAP) and Foreign Market Development (FMD) program and severely cuts funding for food aid programs. These cuts and other proposed cuts to the farm safety net would be devastating to wheat farmers who are already facing severely challenging economic conditions. 

“These are the wrong proposals at the wrong time for the wheat farmers we represent,” said USW President Alan Tracy. “Agriculture is truly a global industry and export demand determines the prices U.S. wheat farmers receive. Without funding from MAP and FMD, we would not be able to continue the training, technical assistance and service that is needed to promote this incredibly complex food crop. Our competitors would swoop in to take those markets and the potential effect on wheat prices is obvious.” 

In addition, a major econometric study led by Texas A&M agricultural economists in 2016 on the effectiveness of MAP and FMD showed that eliminating these programs would result in an annual average loss of $14.7 billion in export value, which would hurt almost every farmer in the country. 

“It is very short-sighted to cut out programs that are vital to the health of the entire U.S. agricultural economy,” said Jason Scott, USW Chairman and a wheat farmer from Easton, Md. “Farmers, livestock producers, small businesses and the U.S. government have seen an amazing return on the investment in these highly successful programs. Our farmer leaders agree with the National Association of Wheat Growers President David Schemm who believes MAP and FMD merit an increase in federal funding, not elimination as proposed in this budget.”   

In addition, time-honored U.S. food aid programs have been engines of peace, food security and local economic development in countless countries around the world. Wheat makes up 40 percent of of all in-kind food aid and because almost all food aid recipients are wheat-import dependent, particularly in Africa, wheat donations do not distort local markets. It is not a good time to diminish our ability to promote better lives around the world.” 

For more information about MAP, FMD and the essential role they play in building a more productive agricultural economy, please visit www.AgExportsCount.org. 

USW’s mission is to “develop, maintain, and expand international markets to enhance the profitability of U.S. wheat producers and their customers.” USW activities in more than 100 countries are made possible through producer checkoff dollars managed by 18 state wheat commissions and cost-share funding provided by USDA’s Foreign Agricultural Service. For more information, visit our website at www.uswheat.org.  

Demand remains robust for beef and pork

Judging by the fairly stable level of red meat inventories reported in the USDA’s latest Cold Storage Report, demand remains robust for beef and pork. Poultry supplies on the other hand, were more of a mixed bag, said a Daily Livestock Report analysis by Steiner Consulting Group.Total red meat supplies in freezers as of April 30 were up 4 percent from the previous month but down 4 percent from last year, according to the report. Total pounds of beef in freezers were down 1 percent from the previous month and down 2 percent from last year.Frozen pork supplies were up 9 percent from the previous month but down 6 percent from last year. Continuing the roller coaster ride they’ve been on all year, stocks of pork bellies were up 66 percent from last month but down 53 percent from last year.Output of red meat during April increased significantly and yet supplies in cold storage at the end of the month had largely increased in line with the normal seasonal trends, rather than showing a significant buildup as would be expected.Total frozen poultry supplies on April 30 were up 7 percent from the previous month and up 5 percent from a year ago, the report said. Total stocks of chicken were up 4 percent from the previous month but down 1 percent from last year. Total pounds of turkey in freezers were up 11 percent from last month and up 20 percent from April 30, 2016.Breast meat supplies remain burdensome, up some 36.8 percent compared to the five-year average, according to the analysts. Breast meat stocks increased 5 percent from the previous month while in the last five years breast meat inventories on average declined 1 percent in April.Demand for wings remains stellar, causing wing inventories to drop 4 percent in April while in the last five years stocks on average increased 7 percent for the month.Turkey breast supplies are heavy, which is reflected in the low price in product markets. Turkey breast stocks in cold storage were 106.7 million pounds, 52.3 percent higher than last year and 66 percent higher than the five-year average. 

There is plenty of trade policy uncertainty to worry about

WASHINGTON, D.C. — Even in the face of strong first quarter U.S. beef and pork exports, there is plenty of trade policy uncertainty to worry about, warned U.S. Meat Export Federation officials at a news conference as they gathered here for their annual conference. While U.S. beef and variety meat exports were up 15 percent in the first quarter from a year ago, including gains of 41 percent in Japan, 23 percent in South Korea, 17 percent in Mexico and 14 percent in Canada, USMEF officials pointed to the dip in the Australian cattle cycle as the main contributor, which could evaporate in the coming months.“Their short supply is giving us traction,” said Joel Haggard, USMEF senior vice president, Asia Pacific, but noted that while Australian beef exports are currently down 12 percent, their forecast for the year is a decline of only 3 percent and as their cattle cycle starts to turn, they will return to the market with competitive pricing.With the U.S. withdrawal from the Trans-Pacific Partnership soon after President Donald Trump was inaugurated in January, Haggard and USMEF President Phil Seng both warned that 18 to 24 months from now when Australia can offer beef volume and competitive prices at duty rates that are “double-digit lower than ours,” U.S. exporters will be handicapped.Earlier this month, the White House announced a deal with China that promised after one more round of technical consultations, China would resume imports of U.S. beef starting no later than July 16. “I think it will be a slow start, but it looks very promising,” said Haggard, noting that U.S. grain-fed beef fits well into the types of beef dishes in demand in Chinese foodservice. Haggard said Chinese importers are showing a lot of interest, but pricing will be important and those details have yet to emerge. He said it is also unclear what type of traceability language will emerge from the technical talks, but said it is USMEF’s understanding that China will be accepting beef from cattle that are less than 30 months of age, a condition easily met by most fed slaughtered cattle in the United States.Seng noted that China has agreed to equivalency on determining plant eligibility to export to China, meaning USDA would determine which plants are eligible and China would not be able to unilaterally ban individual plants from exporting to their market.As for pork exports to China, Haggard said while first quarter numbers were strong, even against last year’s strong exports, “We don’t think they are going to have that bump in imports we saw last year, but we think 2017 will still be second-largest import year for China for pork.” Mexico, NAFTAAs the United States, Mexico and Canada prepare to re-negotiate the North American Free Trade Agreement, USMEF Regional Director, Mexico, Central America and the Dominican Republic Oscar Ferrara said Mexico is looking for other sources for meat imports, including from Brazil, Argentina, Chile, Australia and New Zealand.“The main issue is uncertainty,” Ferrara said.Both Ferrara and Seng expressed concerns that agriculture products not be used as bargaining chips in NAFTA negotiations on other issues such as auto parts and other manufacturing industry issues.Seng said USMEF welcomes the NAFTA renegotiation with Canada and hopes those talks with both countries could include improved rules around dispute settlement and the use of science-based data when making trade-limiting decisions.TrendsIn terms of overall export trends, Haggard said Japan is starting to take more beef round cuts, while South Korea has recently started importing more shoulder clods for menu items such as Korean barbeque. Seng said USMEF is also starting to see a lot of interest in Japan and South Korea for thick cuts, such as steaks, including at retail. And thicker cuts mean greater meat consumption. 

China’s Epic Race to Avoid a Food Crisis

China’s 1.4 billion people are building up an appetite that is changing the way the world grows and sells food. The Chinese diet is becoming more like that of the average American, forcing companies to scour the planet for everything from bacon to bananas. But China’s efforts to buy or lease agricultural land in developing nations show that building farms and ranches abroad won’t be enough. Ballooning populations in Asia, Africa and South America will add another 2 billion people within a generation and they too will need more food. That leaves China with a stark ultimatum: If it is to have enough affordable food for its population in the second half of this century, it will need to make sure the world grows food for 9 billion people. 

USTR Wants Data on Expanding NAFTA Agriculture Tariff Cuts

Shortly after informing Congress that he will renegotiate the North American Free Trade Agreement (NAFTA), U.S. Trade Representative Robert Lighthizer requested a new investigation examining what would happen if the agreement were changed to further liberalize trade in certain agricultural goods.Meanwhile, Lighthizer over the weekend was in Hanoi, Vietnam. "Our view as an administration is that we can take actions to stop unfair trade in the U.S. market. There are also a lot of, an enormous amount of non-economic capacity around the world and barriers to trade," he said at the APEC press conference. "The question again is, what steps can be taken to really lead to free trade and to the extent those steps are confused with protectionism we find that unfortunate.""Our view is we want free trade, we want fair trade,” Lighthizer said. “We want a system that leads to greater market efficiencies throughout the world," he added. "That's really the underlying objective of organizations like this and the WTO and others. It's in all of our interests to get to that end. The question is what do you do to get there? For us, it's to defend against unfair trade in our market."Lighthizer held formal bilateral meetings with his counterparts from Canada, Japan, Mexico, Vietnam, China and Australia. 

Crop Insurance Industry Fears Budget Cuts

President Donald Trump’s budget is expected to be released on Tuesday and it’s still not known if or how much the president is expected to cut from farm subsidies and other programs that serve rural areas. Early press reports indicate that farm subsidies will be part of $1.7 trillion in proposed cuts to mandatory spending. House Ag Committee Chair Mike Conaway told the Associated Press it’s “wrong-headed” to cut farm programs. “Production agriculture is in its worst slump since the Depression,” Conaway says, “with a 50 percent drop in net income. They need this safety net.” The crop insurance industry is anticipating that the President’s budget will include cuts but the extent isn’t known just yet. Dozens of agricultural groups sent a letter to Mick Mulvaney, Director of the Office of Management and Budget, asking that the administration looks somewhere other than crop insurance for possible budget cuts. The groups said in the letter, “Crop insurance is a linchpin of the farm safety net and we urge you to break the tradition set by the previous administration and avoid cuts to the crop insurance program.” The Morning Ag Report stressed that the president’s budget is a “wish list” and cuts to crop insurance will meet opposition on Capitol Hill.

Boston Market Commits to GAP Animal Welfare Standards

The rotisserie-cooking chain Boston Market announced plans to source chickens certified by the Global Animal Partnership and processed via a controlled-atmosphere system. A Meating Place Dot Com article says the pledge will take effect in 2024. Chief Executive George Michel said the multi-step process is considered the most comprehensive approach to poultry production. At the same time, it also meets the highest level of animal welfare standards. “We are committed to meeting these objectives in a way that’s sustainable for our business and our suppliers,” Michel said in a statement. Boston Market follows after a number of other chains that have pledged to meet the GAP animal welfare standards for poultry production. Just some of the other chains include Burger King, Quiznos, Jack in the Box, and Ruby Tuesday’s.  Earlier this year, Boston Market announced a “Quality Guarantee,” promising to serve whole chickens that have never been frozen, raised on U.S. farms without added hormones or steroids, and 100 percent free of antibiotics, MSG, and gluten. The antibiotic-free pledge is set to begin early next year. Boston Market has more than 450 locations around the country.

Wildfire Recovery Donations Continue Rising

Donations are continuing to come into the Drovers/Farm Journal Foundation’s Million Dollar Wildfire Relief Challenge. Farmers, ranchers, and industry partners are doing what they can to take some of the burdens off those who were hit hard by the High Plains Wildfires back in March. As of mid-May, over 600 donations totaling more than $350,000 had come in by mail or been made online. Some of the donations came from farmers and ranchers who live several states away from the affected areas. While they were working in their own fields, several wrote notes about wanting to address the needs of farmers and ranchers still trying to recover. The money will help farmers and ranchers trying to replace thousands of miles of fencing lost in the blaze that ran through Kansas, Oklahoma, Colorado, and Texas. The wildfires scorched 1.6 million acres of ground, destroyed cattle, buildings, homes, and machinery. The Howard Buffet Foundation has agreed to match all donations through July 31 of this year, topping out at $1 million. That means the potential is there for the Challenge to raise at least two million dollars.

Consumers Overwhelmed by Conflicting Food Information

American consumers are getting more information about their food than ever before. However, consumers are still short on nutritional literacy and it may be affecting the nation’s health. Those are just a few of the findings from the 12th annual Health and Food Survey conducted by the International Food and Health Information Foundation. Similar to results from previous years, the Foundation notes that Americans are feeling overwhelmed by the sheer volume of conflicting information available. Foundation CEO Joseph Clayton says, “This year, we’re finding troubling signs that the information glut is translating into faulty decisions about our diets and health.” Eight out of ten consumers responding to the survey say they encounter a lot of conflicting information about what to eat and what to avoid. 77 percent of the respondents says they rely in part on family and friends for health information, topping other sources like news programs and the internet. Some of the most trusted sources include registered dietitians, other health professionals, as well as health-focused websites.

Culver’s Donates 238 Blue Jackets to FFA

Culver’s restaurant chain recently donated over $30,000 dollars to the National FFA’s blue jacket program. The donation will cover the cost of 238 blue jackets, which will be presented to kids from all over the nation that likely couldn’t afford one on their own. The blue corduroy jackets are widely known as the official dress code for the National FFA members that total over 649,000 students from Puerto Rico, the U.S., and the U.S. Virgin Islands. "For FFA members who have such a passion for agriculture, wearing the blue jacket is a sign of their commitment to the future of agriculture," says Jessie Corning, senior marketing manager for Culver's. "We're proud to provide jackets to these deserving students.” FFA advisers from all over the country submitted nominations for deserving students. Culver’s will now work with the National FFA Foundation to match deserving students with local restaurants. The blue jackets will be presented to the students at the end of this year. Culver's blue jacket donation is part of their Thank You Farmers™ program, which raises awareness about the importance of the agricultural industry and supports future Ag leaders.  

Talks on restarting U.S. beef exports to China are moving fast

Talks on restarting U.S. beef exports to China are moving fast and final details should be in place by early June, the U.S. Department of Agriculture said on Friday, allowing American farmers to vie for business that has been lost by rival Brazil.As part of a trade deal, U.S. ranchers are set to face tests over the use of growth-promoting drugs to raise cattle destined for export to China and to log the animals' movements, according to the USDA.The two sides are negotiating to meet a deadline, set under a broader trade deal last week, for shipments to begin by mid-July.Finalizing technical details in early June should mean beef companies such as Tyson Foods Inc and Cargill Inc can sign contracts with Chinese buyers to meet the deadline, the USDA said.China banned U.S. beef in 2003 after a U.S. scare over mad cow disease. Previous attempts by Washington to reopen the world's fastest-growing beef market have fizzled out. But now, the quick progress of the latest talks is raising hopes of U.S. farmers."Both sides feel the urgency to get it done by the deadline," said Joe Schuele, spokesman for the U.S. Meat Export Federation, which represents Tyson, Cargill and other meat companies.China's embassy in Washington could not immediately be reached for comment.Brazil WoesThe timing of the new deal allows U.S. producers to benefit as Brazil, the world's top beef exporter, is struggling with scandals and rival shipper Australia is suffering from a drought that is hurting production, analysts said.China accounted for nearly one-third of the Brazilian meat packing industry's $13.9 billion in exports last year.But in March, Beijing briefly banned Brazilian imports after Brazilian police accused inspectors of taking bribes to allow sales of rotten and salmonella-tainted meat.JBS SA, the world's largest meatpacker, was involved in the probe and in separate allegations this week that Brazil's president conspired to obstruct justice with the company's chairman.The food-safety probe hit Brazil's beef exports, which fell by 24.6 percent to $378 million in April from March, according to Abiec, an industry group that represents meat processors accounting for about 90 percent of Brazil's exports."This is a very opportune time for the U.S. to step up," said Derrell Peel, an agricultural economist at Oklahoma State University.Chinese appetite for beef has climbed due to its expanding middle class. In 2003, its imports totaled just $15 million, or 12,000 tons, including $10 million from the United States, according to the USDA.Tracking CattleBrazilian exporters hope China's trade deal with Washington will not inflict more pain on meat companies in the country because U.S. exporters will be targeting different, higher-end customers, said Abrafrigo, an association representing Brazil's small meatpackers.To reopen U.S. trade, Beijing has accepted a U.S. proposal in principle that would require producers to document the locations where cattle raised for beef exported to China are born and slaughtered, the USDA said. The system would be less onerous than tracking cattle throughout their entire lives, during which they can be kept at up to four different locations.Peel, a livestock expert, estimated that U.S. producers trace the movements of less than 20 percent of the nation's cattle.Under another proposed rule, U.S. beef exported to China must pass tests showing it is free from detectable residue of a class of growth-enhancing drugs known as beta-agonists that includes Elanco's Optaflexx, according to the USDA. Elanco, owned by Eli Lilly and Co, declined to comment.A trade group for veterinary drug companies, the Animal Health Institute, said China should accept beef from cattle raised with beta-agonists because they are safe.U.S. beef shipments to China also will have to come from cattle under the age of 30 months, according to the USDA. Most U.S. cattle will meet that requirement, the U.S. Meat Export Federation said.The terms of the deal are a win for the United States over Canada, which is approved to ship only frozen beef to China.China already bans meat from Canadian cattle fed with Optaflexx, according to the Canadian Meat Council. It also requires that Canadian beef be produced from cattle that are less than 30 months old and can be tracked to the farm where they were born. 

Oregon Ranchers Ask For Local Authority To Determine Wolf Kills

Oregon ranchers are once again calling for local authorities to get the final say over what’s considered a wolf depredation.


The request came Friday as part of public testimony over the state’s updated wolf plan at an Oregon Department of Fish and Wildlife commission meeting in Portland.

Currently, the Oregon Department of Fish and Wildlife leads investigations to determine whether dead livestock were killed by wolves.

There is a lot at stake when it comes to determining whether a dead cow or other livestock was killed by a wolf. It factors into whether the owner will receive compensation from the government for the loss. And it can determine whether the state will authorize the killing of a wolf pack that’s been found responsible for too many livestock deaths.

Eastern Oregon ranchers like Joseph’s Jill McLaren say some cases take too long to get started — and they think evidence is being missed. She showed slides of a calf she believed was killed by wolves. Oregon Fish and Wildlife staff determined it was not.

“No one was available to investigate in a timely manner,” she said. “We understand ODFW is doing the best they can and that they are out of town. But wolves do work on the weekends.”

She and other ranchers want a program that certifies local authorities such as county sheriffs to make the final determination on-scene. Their ask comes as state officials prepare to increase the number of depredations that must be confirmed before wolves can be killed.

Russ Morgan, the state’s wolf coordinator, said because the decisions affect how the state manages wolves, ODFW has the final say.

While local officials might be available to investigate depredations more swiftly, ODFW’s wolf biologist have training specific to spotting the signs of a wolf kill.

“It’s really about a level of rigor that we use to be sure, if we say there’s depredation it needs to be depredation,” Morgan said. “Ultimately, ODFW should be the agency that is doing management actions and ultimately that responsibility falls to us.”

Morgan said the agency does work to train local authorities and that he expected the ODFW commission would consider the concept of a local certification.

Several environmental groups also testified at the meeting, and expressed concerns over the fact that under the new wolf plan livestock deaths ruled probable but not confirmed to be wolf-related could be used to justify the killing of wolves.

Quinn Read of Defenders of Wildlife said the wolf plan itself should outline the standard of evidence used in making determinations about wolf kills, to minimize the risk of abuse and ensure consistency regardless of whether ODFW or another agency is making the determination.

Washington Insider: Consumer Spending on Food

One of the proudest reports in USDA’s annual portfolio focuses on the calculation of the share of U.S. consumers’ disposable income spent for food. To a large extent, these figures reflect agriculture’s response to its “social contract” — the nation’s return on its expenditure to promote agricultural efficiency through both public and private spending.Somewhat strangely, this estimate and its implications have become controversial for many who claim to wish for a simpler life—an instinct that is rare in nations where food costs are relatively much higher, or on farms where production is actually more basic. The main reason the comparison is important is, of course, that food expenditures preempt other spending. Thus, in countries like the United States, agricultural efficiency means that consumers have much greater amounts available for spending on other things, including health, education and recreation and much, much more.While households tend to spend more on food as their incomes rise, U.S. food expenditures represent a smaller portion of income, USDA’s Economic Research Service notes. In 2015, U.S. households in the highest income quintile spent an average of $12,350 on food — both from grocery stores and eating out. This spending accounted for 8.7% of their incomes, the lowest average in the world.Still, an important “other side” of that story is that lower income households spent much greater shares for food. For example, middle income households spent an average of $5,799 on food, or 12.4% of their incomes.For those with still lower incomes, the situation was worse. Households in the lowest income quintile spent less, $3,767 in 2015, but their situation was worse because food expenditures required so much of their income, about one-third.Still, USDA notes that the low-income group had a worse situation two years earlier when they were required to spend more than 36.2% of their incomes on food.The “share of income” statistic depends on several factors, including food prices and incomes and ERS notes that while retail food price inflation was relatively low in 2013, income levels were also lower than in 2015, pushing the percent of income spent on food in 2013 by the lowest income households still higher. That ratio also could change in the future depending on retail food prices and commodity prices in the future.In addition, U.S. agricultural sector’s efficiency can be seen in U.S.DA’s comparisons of available calories per capita, as well as the share of income spent for food. The United States is estimated to have 3,639 calories available per consumer per day, far more than other nations, including China, the UK, Brazil, Russia and others. For example, food availability in Kenya is quite low, just over 2,200 calories per person per day—in spite of the fact that Kenyans spend nearly 50% of their disposable household income for food.Not only is the U.S. social compact important, but similar arrangements will be crucial for the world in the future. There are several reasons—a more vulnerable environment, increasingly affected by global warming as well as the need to feed many more people, and to do so without significantly increasing the physical cost of production. Experts say that agriculture can no longer rely on the addition of production area to feed the growing population, but will need much greater efficiency than was developed in the past.Perhaps the strangest aspect of USDA’s current report is that there is so little excitement over the really important result — just another ho-hum development in an already amazing world. Still, it is worth thinking a little about what you might need to do if food costs were two or three times as high as they are, a not unreasonable concept given the reality of much of the world, Washington Insider believes.