Organic Sector Grows 6.4 Percent in 2017

More of America’s grocery carts were filled with organic products in 2017. The Organic Trade Association’s 2018 Industry Survey shows consumers were buying everything from organic produce and organic ice cream to organic fresh juices and organic dried beans. U.S. organic sales totaled a new record of $49.4 billion in 2017, up 6.4 percent from the previous year. That total also reflects new sales of nearly $3.5 billion. Sales of organic non-food products also rose to $4.2 billion, rising 7.4 percent higher to set a new benchmark. The growth rate of organic food sales was below the nine percent pace in 2016. It was impacted heavily by markedly slower growth in the big organic dairy and egg category. However, the pace was still well above that of the overall food market, which was 1.1 percent. Organic increased its penetration into the total food market, now making up 5.5 percent of all food sold in the retail channel. Laura Batcha (Batch-ah), Organic Trade Association President, says, “Organic has arrived and everyone is paying attention. Consumers are loving organic and now we’re able to make organic choices in just about every aisle in the grocery store.” 

Farmers feeling the pinch as fuel costs rise

Farmers worldwide are feeling the pinch as fuel costs rise to near four-year highs just as they plant and harvest their fields, eroding agricultural income already hamstrung by depressed crop prices.The agricultural sector from the United States to Russia, and Brazil to Europe, is seeing profits harmed by the rise in diesel prices. The global oil benchmark, Brent crude LCOc1, touched $80 a barrel for the first time since late 2014 on Thursday.Coupled with local economic issues, the increase is making it even harder for many farmers worldwide to turn a profit in the estimated $2.4 trillion agriculture industry, casting a cloud over future investments.In the United States, fuel accounts for about five percent of farmers’ overall costs, and is hurting margins at a time when farm income is already half that of 2013. Massive harvests have depressed prices of staples such as corn, wheat and soybeans.Diesel fuel is essential for planting, harvesting, and shipping crops to market. In the United States, farmers will spend an estimated $15.25 billion on fuel and oil in 2018, an 8 percent increase from 2017, U.S. Department of Agriculture data showed.The price of ultra-low sulfur diesel used for farming equipment and transporting crops has not been this high in May since 2014. Heating oil futures, the proxy for ultra-low sulfur diesel, traded at $2.29 a gallon on Thursday.Ron Heck, who grows soybeans in Perry, Iowa, said his fuel costs could go up $1,000 to $2,000 during the northern hemisphere’s spring. “You feel the pain right away,” Heck said.In Russia, fuel prices for farmers are up 50 percent compared with a year ago, Arkady Zlochevsky, the head of Russia’s Grain Union, a non-governmental farm lobby, told Reuters. Farmers will need to spend more ahead of harvesting, which starts in about a month in Russia, he said. 

House Defeats Farm Bill as Conservatives Seek Immigration Vote

After dealing with a host of amendments, the final vote on the House version of the farm bill turned out to be a defeat via a 198-213 count, with 17 lawmakers not voting.Democrats held to their promise that they would not support the bill in its current form over provisions in the bill that would make changes to the Supplemental Nutrition Assistance Program (SNAP). Even with some other changes to the bill that came about during the host of amendments that were considered by the chamber, in the end, conservative Republicans were the key to the bill failing to advance.Conservative Republicans kept pushing for a vote on immigration legislation, with their push focusing on getting a vote on that area before the farm bill vote.This is no doubt why House Ag Committee Chairman Mike Conaway, R-Texas, kept saying he was still trying to find the votes for the package right up until the last minute.“We experienced a setback today after a streak of victories all week," Conaway said. "We may be down, but we are not out. We will deliver a strong, new farm bill on time as the president of the United States has called on us to do. Our nation’s farmers and ranchers and rural America deserve nothing less.”The ranking Democrat on the panel, Collin Peterson of Minnesota, said the vote reflected Republicans trying to go it alone to get the bill done. "It’s unfortunate the Republicans chose to take this path, and it’s clear from their inability to get the necessary votes from within their own caucus that there are internal fractures they have to contend with," Peterson stated. "But this is a good opportunity for us to return to the table and fix this bill before we move forward. As I said in my remarks Wednesday, this job is too big for one party. Let’s come together and figure out a bill that works for everyone. We don’t have to let this process be held hostage by the demands of the extremes of our parties. We can and should take the time to get the farm bill right.”From the administration, USDA Secretary Sonny Perdue said, "A farm bill is necessary to provide our farmers, ranchers, foresters, and producers with the stability and predictability they need. Our farmers feed the people of this nation and the world, and they deserve the certainty of a farm bill.”

USDA's McKinney to Lead Trade Mission to South China

An agricultural trade mission to the Southern Chinese cities of Guangzhou and Shenzhen led by USDA Undersecretary for Trade and Foreign Agricultural Affairs Ted McKinney is set to take place May 21-25.McKinney will be joined by agribusiness leaders and officials from the Idaho, Nebraska and Virginia departments of agriculture, according to USDA."Mission participants will connect with potential customers and take part in site visits to learn more about doing business in southern China," USDA's Foreign Agriculture Service (FAS) said.FAS noted Southern China already imports an average of $8 billion worth of U.S. agricultural goods annually, with demand on the rise for many products.

Washington Insider: Immigration Fight and Farm Bill Failure

Washington’s toxic environment appears to have led to a fight over U.S. immigration policy and to the failure of a House version of a new farm bill on Friday, Bloomberg says.The House’s $867 billion farm bill had only a narrow path to passage because Democrats opposed the bill’s work requirements for the Supplemental Nutrition Program. “That left the bill’s fate in the hands of a group of Republican lawmakers demanding new restrictions on legal immigration,” the report said.When the conservative House Freedom Caucus failed to win an immediate vote on immigration legislation that its members favor, some of them joined Democrats to reject the farm bill. The measure is relied on by producers in many states dominated by Republicans.Whether the legislation is revived, perhaps as soon as next week, depends on how – and if – the immigration impasse is resolved, with either a revised bill that could attract Democrats or a GOP deal on immigration.The 198-213 rejection of the draft deepened divisions between the Freedom Caucus and other Republican lawmakers, especially those from rural districts. The vote also underscored the lame-duck status of House Speaker Paul Ryan, R-Wis.The bill actually included a number of lingering fights, including one over sugar policy. While it had already survived an attempt to revamp a sugar program opposed by fiscal conservatives, some lawmakers, with support from candy makers, unsuccessfully sought to eliminate production limits that keep domestic sugar prices higher.With regard to the immigration fight, Republican leaders told Bloomberg that they thought they’d obtained support from the Freedom Caucus by agreeing to vote next month on legislation that would eliminate a “diversity” visa lottery and impose other limits in exchange for temporary protection for young undocumented immigrants who came to the US as children.But several Freedom Caucus members said they didn’t trust the party leadership to hold the vote and instead want it to take place before the farm legislation.“We’ve been promised a vote again and again,” said Scott Perry, a Pennsylvania Republican and member of the caucus.The caucus said one of its goals in blocking the farm bill was to force a vote on the immigration legislation before more moderate lawmakers can secure a vote on three competing measures using a discharge petition.If at least 25 Republicans and all 193 House Democrats get behind the petition, that would force a vote on all four immigration measures. Despite Speaker Ryan’s opposition, 20 Republicans have signed the discharge petition so far, bringing the total number of lawmakers backing the effort to 196.Conservatives argue if the petition is successful, the result might be passage of immigration legislation granting permanent legal status to the young undocumented immigrants, which would anger core Republican voters.Even as some in the party criticize what they see as wasteful farm-program and food-stamp spending, the massive bill is considered vital by many rural Republicans and it’s supported by President Donald Trump who likes the work requirements.The bill’s failure will affect many producers already worried about declining profits who have been disappointed by the Republican Congress and administration, said Representative Jodey Arrington, R-Texas. Current farm programs begin to expire Sept. 30 without new legislation."It certainly will leave a lot of ag producers scratching their heads about our Republican majority and moving these important pieces of legislation through the House,” Arrington said.In addition, some Democrats see an opportunity amid the Republican disarray, saying that if Ryan were willing to eliminate the new food stamp rules, they could help pass a bill. "This is a good opportunity for us to return to the table and fix this bill before we move forward," said Representative Collin Peterson, D-Minn., the top Democrat on the House Agriculture Committee.But throwing out the work requirements remains unlikely because they’re backed by Trump and Ryan. Instead, Republican leaders chose to try to get the bill through the House on their own.The proposed House ag program reauthorization measure would shift some money from food stamp benefits to workforce training, while increasing the number of people required to comply with work requirements. Republicans say the requirements are needed to move food stamp recipients into jobs at a time of worker shortages. Democrats counter that the provisions would reduce benefits and increase paperwork without effectively getting people into the labor force.Steve Scalise of Louisiana, the No. 3 House Republican, said leaders would continue to seek to address Freedom Caucus immigration concerns to get the farm legislation passed. "The farm bill is an important bill. We’re not done with it," he said.Any successful House bill would have to be reconciled with a Senate plan, which has yet to be drafted. Democrats hold more power in that chamber, Bloomberg said.So, the 2018 farm bill debate promises to be as controversial as predicted. Most observers expect that a bill will be passed eventually, although it may be quite different than the one considered in the House last week. Also, the more visible the national issues like immigration and nutrition become, the more difficult it likely will be to predict both the timing and the outcome of the fight, Washington Insider believes. 

House Fails to Pass Farm Bill

The Friday attempt to approve the Agriculture and Nutrition Act of 2018 failed in the U.S. House, 198-213. 30 Republicans voted against the bill, along with 183 Democrats, without a Democrat supporting the legislation, as expected. The House Freedom Caucus refused to budge on its demand that the House considers immigration issues before passing a farm bill, thus voting against the bill. The House Freedom Caucus consists of roughly three-dozen conservatives that have made immigration a signature issue. Democrats in the chamber cheered as the bill failed as the minority party says it was given no chance to provide input on the bill, and objects to changes in the Supplemental Nutrition Assistance Program. House Agriculture Chairman Mike Conaway disagreed, stating on the House floor that Democrats refused to provide input before lawmakers voted down a motion by Democrats to send the bill back to committee.Conaway calls the vote a setback that follows a streak of victories throughout the week leading up to the vote. He says: “We may be down, but we are not out.” The Republican says lawmakers will deliver a new farm bill to the President on time, adding farmers and ranchers “deserve nothing less.” Meanwhile, Ranking Democrat of the House Agriculture Committee, Collin Peterson, says the failure provides “a good opportunity for us to return to the table” and “fix” the bill before moving forward.

Farm Income, Credit, Weakening

Farm income and credit conditions continued to weaken in the first quarter of 2018, but at a slower pace than in previous quarters. According to the Tenth District Survey of Agricultural Credit Conditions, compiled by the Kansas City Federal Reserve Bank, reduced farm income contributed to intensifying cash-flow concerns and tightening lending standards. Cash-flow shortages continued to limit the availability of working capital, and financing needs continued to rise. The report released last week says the decline in the first quarter makes 2018 the fifth consecutive year that bankers have reported lower farm income than the year before. The report says reduced farm income also restricted cash flow and contributed to more farm loan denials than in recent years. In the first quarter, more than eight percent of farm loan requests were denied because of customer cash-flow shortages. And, despite a recent uptick in commodity prices, cash-flow shortages have reinforced concerns about liquidity in agricultural lending.