Farm News and Views 1-29-19

Photo Courtesy of USDA ARS

Good morning. This is Bob Bragg. Welcome to the January 29th edition of Farm News and Views.

The end of the government shutdown is a relief for the 800,000 federal workers who haven’t received a paycheck since the shutdown started on December 21st . At this stage, it is unknown how fast the USDA will get the normal programs back on track, but farmers and ranchers who’ve not been able to negotiate loans, sign up for government crop and conservations programs are ready to get to work on planing for the 2019 growing season.

The ag industry has also been flying blind when it comes to market research reports that livestock and grain traders depend on to conduct their normal course of business. ,

On January 27th, a new report by The Lancet Commission on Obesity stated that “leaders must take a hard line against powerful commercial drivers and rethink global economic incentives within the food system in order to tackle the joint pandemics of obesity, undernutrition and climate change.”

The report was developed over the past three years by 26 experts from 14 countries, representing the University of Auckland in New Zealand, George Washington University in the U.S. and the World Obesity Federation in the United Kingdom, who developed the report over the past three years. The new Lancet Commission is the result of a three-year project led by 26 experts from 14 countries.

Commission co-chair, Professor Boyd Swinburn of the University of Auckland stated that “Until now, undernutrition and obesity have been seen as polar opposites of either too few or too many calories. In reality, they are both driven by the same unhealthy, inequitable food systems, underpinned by the same political economy that is single-focused on economic growth, and ignores the negative health and equity outcomes.”

They are calling for a global treaty to limit the political influence of Big Food, while advocating the redirection 5 trillion dollars in government subsidies away from harmful products, while breakiing policy inertia.

The commission report stated that although food clearly differs from tobacco, because it is a necessity to support human life, unhealthy food and beverage products like energy-dense snacks, confectionery, and sugary drinks are not a necessity, and the damage they cause have some commonality with tobacco.

Let’s shift gears to trade tariff wars with China. They’ve created some strange linkages. For some background, the United States is the number one producer of soybeans, growing 31% of the worlds total production. Brazil is number two with 25% and Argentina is number three, with 15% of the total.

Argentina has not imported beans since they got their domestic production geared up a decade or so ago. However, when China cutback on purchasing U. S. beans, they turned to Brazil and Argentina. Both countries were happy to make up the shortfall from the U. S., so China went on a buying binge in South America. But when the dust settled, Argentinian soybean crushers, who supply the domestic soybean meal and oil demand, found themselves short of beans. Turning to the world market, they found beans from the U. S., at bargain basement prices, caused U. S and China have been in a trade scuffle that started early last summer.

Speaking of trade tariffs, Politico”s Morning Agriculture reported Monday that President Trump’s ability to impose tariffs for national security reasons would be limited under a draft bill expected to be released in each chamber of Congress as soon as this week.

Today’s thought comes from 19th century writer, Robert G. Ingersoll. “The man who does not do his own thinking is a slave, and a traitor to himself and his fellow men.”

Until next week. I’m Bob Bragg

January 22 Radio Script

Colorado Snow Tim McCabe
Photo courtesy of USDA NRCS

Good morning! Welcome to the January 22 edition of Farm News and Views. This is Bob Bragg.

If the cold weather and snow is getting you down, keep in mind that the mountain snow bank is receiving some good deposits that we can withdraw this summer. And, remember, spring will be here in eight weeks!

Thursday and Friday last week, the USDA brought back 2,500 workers, to temporarily reopen some Farm Service Agency offices that have been closed since the government shutdown started in December. Reportedly, Farm Service Agency offices will be open today in Cortez and Montecello, Utah, to help farmers and ranchers with existing loans and provide tax documents, but they won’t process new loan or trade aid applications, or certify 2018 production. FSA Office closures are threatening some farmers ability to buy land, and inputs needed to plant crops this spring.

As we pass the fourth week of the government shutdown, an estimated 800,000 government workers are either laid off or are working without having been paid.

Dr. Harwood Schaffer, Director of the Agricultural Policy Analysis Center, and Dr. Daryll Ray, Emeritus Professor, at the Institute of Agriculture, write Policy Pennings, A Weekly Agricultural Policy Column that’s published in MidAmerica Farmer Grower.  In a recent column, they asked why we need a senate at all, considering that the leadership has stated that they won’t participate in the negotiations to end the government shutdown, nor will they act until the House writes legislation that is acceptable to the President. Schaffer and Ray also pointed out that shutdowns typically involve departmental appropriations or a decision to increase the debt ceiling, with the goal of forcing the other side to cry “Uncle” and capitulate to the demands being made. They believe that policies should be developed to prevent shutdowns that involve the bulk of the federal workforce, because the work they do is critical and shouldn’t be subject to a shutdown.

They suggest that the shutdowns should be shifted to only affect the legislative and executive branches of government and their direct staff. If either the President or Congress wants a shutdown to force the hand of the other, then limit the shutdown to the President and the executive staff of the White House, members of the Cabinet, and members of Congress and their staffs, but don’t include the kitchen staff, groundskeepers, cleaning staff and similar support workers. They also suggested that the shutdown should include salaries and travel, so the disputing parties feel the pain immediately, because if they can’t charge their travel home to office expenses or their campaign, they’’ll be less likely to go home for the weekend and be more likely to hammer out a compromise.

Now for some good news, Farm Credit System lenders predicted last Wednesday, that while some parts of the ag economy are under financial strain, most farmers and ranchers will be able to weather another year of low commodity prices. This network of bankers, who oversee about $260 billion dollars in loans, said they haven’t yet witnessed a spike in delinquencies or a flood of producers leaving the business, with the exception of dairy farmers, who have seen profits drop over the past four or five years due to a a world wide glut of milk, butter and cheese . It remains to be seen whether how fewer dairies wiil affect hay prices in the coming months.

A link to Farm News and Views dot net is on KSJD dot org. Also, a link to the Policy Pennings Column is on the Farm News and Views dot net blog.

Finally, think about this anonymous quote, Congress seems to favor a stable government, judging from the amount of stalling it does.

Until next week, I’m Bob Bragg

Agricultural Trade, Politics or Reality?

During President Trump’s speech at the American Farm Bureau Federation’s Convention in New Orleans on January 14th, he spent most of the time justifying the boarder wall, but he assured Farm Bureau members that trade negotiations were going to result in long term gain for farmers. “We’re doing trade deals that are going to get you so much business that you’re not even going to believe it. Your problem will be, what do we do? We need more acreage immediately! We need to plant!” Trump said. I noticed that the audience was silent after this remark, unlike the standing ovations that he got when listing accomplishments of tax reform, repeal of the EPA Waters of the U. S. rule, modifications to the estate tax, and passage of the farm bill. 

Indiana Corn

President Trump was probably telling farmers and ranchers what he thought they wanted to hear about prospects of trade. However, I suspect that his audience didn’t buy into his somewhat flippant remarks that insinuated that the “trade deals” would be so successful, that they could produce as much as they wanted and the world would come to buy it. The reality is that “trade deals” can’t artificially increase demand for agricultural products.

Producing agricultural commodities is a different game than that of factories manufacturing industrial or consumer goods, or retail establishments that sell items produced in factories, whether it is automobiles, farm and industrial equipment or consumer goods. A farmer or rancher can’t interrupt their production process whenever the market price drops below their cost of production. Factories on the other hand, can shut down assembly lines, lay off workers and stop purchasing inputs when demand is sluggish or prices are unfavorable for making a profit. Retail businesses may lower prices to move inventory, find substitute products or alternative suppliers that will deliver items that allow the business to make a profit.

Farmers and ranchers world wide don’t set prices based on what they have invested in their crops or livestock when it comes time to market what they produce. They are price takers, and farm commodity prices respond more slowly to market signals than other sectors like retail and manufacturing.

For example, a farmer decides in February that he will allocate 400 acres to corn production, and 400 acres to soy beans. Based on potential returns for these crops, he purchases seed for both crops in March and plants corn in April and soy beans in May. If the market price of corn rises substantially in June, and soy bean prices plunge, he can’t allocate more acres to corn because he has already planted the soy beans. Terminating the soy bean crop to plant corn in June would make no sense, because late planted corn would not have time to mature, and the investment in the soy beans would be lost. The only option is to hope that soy bean prices rise after harvest, and that he can sell both corn and soybeans at a profitable level that allows him to pay his debts and provide family living expenses.

Another example is a rancher who decides that she wants to increase the size of her herd by holding back a heifer for breeding that was born in the spring of 2018, rather than sell it for $700 in the fall . She feeds the animal over the winter and exposes the animal to a bull when the heifer is about 15 months of age in 2019. If the heifer is bred after the first exposure, it will calve in March or April of 2020. The heifer’s calf will be weaned and ready to sell in October of that year, hopefully providing a return on the $700 investment she made in 2018. The rancher has some flexibility to sell the heifer sometime before it calves. However, if calf prices are projected to be low when the heifer’s calf is ready to be sold in fall of 2020, the value of the bred heifer will also decline.

While we often hear the mantra, “American farmers feed the world,” in reality, American farmers are an important piece of the world’s food supply chain, but they don’t set prices for agricultural commodities by themselves. U. S. farmers produce 35% of the world’s corn, China is number two, producing 21% of the total, followed by Brazil and Argentina. The U. S. produces 31% of the world’s soybeans, Brazil produces 25% and Argentina produces 15% of the total supply, which when combined, amounts to 10% more soy beans than is produced in the U. S. China produces the most wheat, followed by India, Russia and the U. S., whose production is a third of what China produces. The top pork producer is China, followed by the European Union and the U. S. The U. S. is the largest beef producer, followed Brazil, which is the largest exporter of beef in the world, while India is number two.

All of us have a stake in maintaining sustainable agricultural practices and policies that are not influenced by political rhetoric and wishful thinking. Agricultural trade can’t solve the problem of over supply. We have competition for export markets. Farmers who attempt to mitigate low prices by increasing productivity through the use of expensive inputs to gain a few more bushels of yield are fighting a losing battle. Increased supply without increased demand leads to lower prices.

January 15 Radio Program Script

Healthy soil is more than sand silt and clay. It contains millions of microscopic microbes, thousand of beneficial nematodes and water and carbon absorbing organic material.
Photo by Peggy Greb Courtsey, of USDA

Good morning! This is Bob Bragg. Welcome to the January 15th edition of Farm News and Views.

According to a new Government Accountability Office report published last week, nearly two million College students who may be eligible for food assistance might not be enrolled in the program and it suggests that the USDA should help these students sign up for SNAP benefits. The study found that low-income college students who are potentially eligible for food stamps usually have at least one additional risk factor for food insecurity. This includes being a first-generation college student or they are single parents. The report also encourages college administrators to help students understand that the program is available to them.

Immigration issues have been a hot topic over the past couple of years in Congress. But Senator Dianne Feinstein and Representative Zoe Lofgren from California, plan to introduce companion bills this week, which would overhaul the H-2A visa program that farmers and ranchers depend on for temporary workers . The proposed legislation is aimed at easing labor shortages on farms across the country. Their goal reportedly is to address a slice of immigration reform, instead of taking on a comprehensive approach.

Let’s shift gears and talk about soil health, a topic that has become increasingly popular in agricultural publications over the past two or three years. Since maintaining healthy soils is important for future generations, a recent Successful Farming Magazine article caught my attention. It outlined New Mexico State University molecular biologist David C. Johnson’s research concerning the role that fungi and bacteria play in maintaining productive soils. He believes that having the proper balance between the two groups of microbes is essential, with fungal domination of the microbial community most helpful for soils. When the soil is highly populated with diverse microbes coexisting in balanced communities, plant growth explodes, and soil carbon starts to increase. These processes trigger the building of soil organic matter and sequestration of carbon from the atmosphere.

Johnson has developed a low-cost composting system for manure. He doesn’t turn over the compost, which is normally part of the composting process. He discovered that leaving the composting material in a pile yielded a product highly populated with fungi. When it was applied to test plots in the green house, chili plants yielded double the crop of chilies compared to chilies grown on conventionally produced compost.

Field plots bore out similar results when combined with a couple of years of cover crops. The plots were than planted to cotton and chillies and grown without any fertilizer. He calls his system Biologically Enhanced Agricultural Management, which should include livestock as an important component of this system. He believes that by figuring out ways to align ourselves with nature, we can develop agricultural systems that are self-sustaining.

This brings me to some house keeping. I’ve developed a blog page, Farm News and Views dot net, where I’ll post the radio scripts for this report, as well as links to articles that may be of interest to listeners. I’ll also post an occasional essay that I write about subjects that have caught my attention. So if you want more details about David Johnson’s research, check out the link to the Successful Farming Magazine article at Farm news and views dot net. There is also a link to the Farm News and Views Blog on ksjd dot org.

Considering the current state of our national affairs, a Will Rodgers observation seems to apply. Be thankful that we’re not getting all the government we’re paying for.

Until Next Week, I’m Bob Bragg

Link to Successful Farming Magazine article: