May 2018
Ag Insight

Ag Insight

Proposed Organic Rules Withdrawn by USDA

The U.S. Department of Agriculture has announced the decision to withdraw the Organic Livestock and Poultry Practices final rule published Jan. 19, 2017.

The rule would have increased federal regulation of livestock and poultry for certified organic producers and handlers.

The withdrawal becomes effective May 13, 2018.

USDA officials said significant policy and legal issues were identified after the rule was published in January 2017. After review and two rounds of public comment, the agency determined the measure exceeds its statutory authority, and changes to the existing organic regulations could have a negative effect on voluntary participation in the National Organic Program, including real costs for producers and consumers.

"The organic industry’s continued growth domestically and globally shows that consumers trust the current approach balancing consumer expectations and the needs of organic producers and handlers," said USDA Marketing and Regulatory Program Undersecretary Greg Ibach.

According to USDA reports for 2017, the number of certified organic operations increased domestically by 7 percent and globally by 11 percent. Industry estimates show organic sales in the United States reached almost $47 billion in 2016, reflecting an increase of almost $3.7 billion since 2015.

 

 

United States Share of Rising Chinese Soybean Imports is Unclear

World soybean trade is projected to rise rapidly during the next 10 years, according to USDA’s projections to 2027, climbing 48 million tons (30 percent) to 205 million tons.

China, the world’s leading soybean importer, is expected to increase imports by 41 million tons during the projection period.

What share of that nation’s existing and future soybean imports the United States will supply remains unclear due to possible retaliation to the Trump administration’s threat of tariffs on certain imported Chinese products.

China’s soybean imports have risen steadily since the late 1990s. In 2017, they accounted for about 64 percent of world soybean trade. China’s imports are projected to increase from 102 million tons in 2018 to 143 million tons in 2027, accounting for 86 percent of the increase in trade. Their share of global soybean imports would reach nearly 70 percent by 2027 if the projections are realized.

The outlook assumes China will continue to meet rising demands for edible vegetable oils and protein in feed by importing soybeans, while supporting domestic production of food and feed grains.

China continues to add oilseed-crushing capacity contributing to continued growth in soybean imports. The leading international soybean suppliers are Brazil and the United States, both of which should benefit from the additional demand from China and other trade partners.

 

 

Brazil a Major Producer and Importer of Ethanol

Despite Brazil’s tariff rate quota for ethanol imports, the nation continues to be a major U.S. customer for that product.

Last year, Brazil announced imported ethanol in excess of 600 million liters is subject to a 20-percent tariff.

However, U.S. ethanol has been priced so low it is still an economical alternative in Brazil. Currently, ethanol is $1.50 per gallon at U.S. Gulf Coast ports while Brazil’s is $2.32 per gallon.

Demand for ethanol in Brazil is robust because of widespread use of flex-fuel vehicles and a mandate requiring a minimum of a 27-percent ethanol blend in gasoline. Due to price competitiveness and strong demand, Brazil, the second-largest global ethanol producer, is also the largest overseas buyer of U.S. ethanol.

One contributing factor is the internal distribution of ethanol in Brazil. Ethanol mills are mostly located in the sugar-producing areas of southern Brazil. Because of infrastructure constraints, it is cheaper to ship ethanol by boat from the United State to the northern regions of Brazil than by overland transport through Brazil.

Some new ethanol mills located in Brazil’s northern corn-producing regions eventually could make the U.S. product less competitive.

 

 

Winter Wheat Seedings Projected at Century Low

Winter wheat seedings – those planted for the next marketing year – are projected to be the lowest in 109 years. However, the USDA estimate, based on 82,000 farmer surveys, generally exceeded industry expectations.

Winter wheat seedings for the 2018-2019 marketing year are estimated at 32.6 million acres, slightly below the 2017-18 seeding estimate of 32.7 million acres.

In Kansas, the leading winter wheat-producing state, planted area is up 200,000 acres for the 2018 marketing year. Planted area is also up slightly in Texas. However, gains in these two states are not enough to offset the winter wheat-acreage losses elsewhere.

Reduced profitability and agronomic factors such as delayed seeding due to a late corn harvest, disease challenges and below-average soil moisture levels reduced winter wheat plantings in Colorado and Oklahoma.

The current projection for 2018 is down less than 1 percent from 2017 and down 10 percent from 2016.

Hard red winter wheat planted area is projected to total 23.1 million acres, a decline of 2 percent from 2017, while soft red winter planted area is forecast up 4 percent, year to year, to nearly 6 million acres.

 

Agriculture’s Energy Use Increasing

The agricultural sector consumed 1,872 trillion BTUs of energy, accounting for about 1.9 percent of U.S. primary energy consumption in 2016, the most recent year available for usage figures.

Farms consume energy in many forms: mainly diesel (44 percent of direct-energy consumption), electricity (24 percent), natural gas (13 percent), gasoline (11 percent) and liquefied petroleum gas (7 percent).

Large amounts of natural gas also are required in manufacturing fertilizer and pesticides, so these amounts are categorized as indirect-energy consumption on farms.

Overall, about three-fifths of energy used in the agricultural sector was consumed directly on-farm, while two-fifths was consumed indirectly in the form of fertilizer and pesticides.

Recent increases in diesel and fertilizer consumption come in response to declining oil and natural gas prices. From 2012-15, agriculture became more energy intensive, as energy consumption grew over 10 percent compared to about 6 percent growth in agricultural output.

 

 

Broiler Production on the Rise

U.S. broiler meat production continues to grow, reaching 3.6 billion pounds in January, almost 4 percent higher than the previous year.

For 2018, USDA expects broiler production to reach 42.6 billion pounds, almost 1 billion pounds more than was produced in 2017, and nearly 2 billion more than in 2016.

One of the factors driving higher broiler-meat production is a steady increase in the average weight of the birds slaughtered. Weights in January 2018 averaged 6.26 pounds, about 1 percent above a year ago, and over 4 percent higher than January 2014.

Broiler weights tend to follow a cyclical pattern, peaking during the late fall or early winter and achieving their lowest average weights at the height of the summer, but they have shown yearly increases in most months over the past five years.

 

Rural Roundtables Exploring Opioid Crisis

USDA is hosting a series of monthly roundtables on opioids to address a situation believed critical to the future of rural America.

Sessions already have been held in Pennsylvania and Utah, and are scheduled for Kentucky in May. Similar meetings are to be held in Oklahoma and Maine in June and July, respectively.

Key topics will include challenges associated with substance-use disorder; strategies for prevention, treatment and recovery; and how these measures can be replicated to effectively address the epidemic in other rural communities.

The Center for Disease Control and Prevention estimates, in 2016, nearly 64,000 Americans died from a drug overdose. An overwhelming majority of these overdose deaths involved an opioid.

At 174 people each day, this is more than the number of lives lost in car accidents or gun-related homicides.

While no corner of the country has gone untouched by this issue, the opioid epidemic has hit rural America particularly hard, USDA said.