February 2017
Ag Insight

Ag Insight

Updated plan adopted for Gulf restoration

The Gulf Coast Ecosystem Restoration Council has announced completion of an updated comprehensive plan to guide over $3 billion in investments to enhance the resources and economies of the Gulf Coast in the aftermath of the Deepwater Horizon oil spill. The five Gulf states (Alabama, Florida, Louisiana, Mississippi and Texas); the Departments of Agriculture; the Army; Commerce; Interior; the Coast Guard; and the Environmental Protection Agency have unanimously adopted the revised plan.

The updated strategy commits to working with the public to devote funds from the Resources and Ecosystems Sustainability, Tourist Opportunities and Revived Economies of the Gulf Coast Act of 2012, known as RESTORE, to large-scale ecosystem restoration. It builds upon lessons learned from the council’s initial investments, establishes a 10-year funding strategy and refines the council’s process for making decisions based on public engagement and the best available science.

Since its establishment in July 2012, the council has worked on a number of fronts, including prioritizing over $183 million in restoration investments announced in December 2015. With resolution of the civil claims from the Deepwater Horizon oil spill, the council was able to revise its initial comprehensive plan to reflect lessons learned and the timing and amount of restoration funding.

RESTORE established the council and the Gulf Coast Restoration Trust Fund. It dedicates 80 percent of Clean Water Act penalties resulting from the oil spill to the Trust Fund for restoration projects in the Gulf Coast region.

 

2017 farm exports prediction moves higher

 

U.S. agricultural exports in fiscal year 2017 are expected to reach $134 billion, up 1 percent from the previous forecast in August, largely due to expected increases in dairy and livestock byproduct exports.

U.S. agricultural imports in fiscal year 2017 are projected at $113 billion, down 1 percent from the August forecast. Reduced imports of horticultural, sugar and tropical products are leading this decline. As a result, the U.S. agricultural trade surplus is expected to increase to $22 billion in fiscal 2017.

The forecasted surplus is an increase compared with the expected $17 billion surplus in fiscal 2016, but nearly half the 2011 surplus of $43 billion. The U.S. agricultural sector consistently runs a trade surplus, benefiting the overall U.S. trade balance that has run a deficit every year since 1976.

 

USDA rule to protect producers raises their ire

In the waning days of the Obama administration, the U.S. Department of Agriculture finalized a long-awaited rule that it says will protect a host of pork and poultry producers. But many industry groups are crying foul.

In releasing its Fair Farmers Practices regulations, USDA’s Grain Inspection, Packers and Stockyards Administration said the new rules are intended to level the playing field for contract growers and the companies they supply.

The interim final rule sets standards for proving harm from an alleged violation of the Packers and Stockyards Act. USDA said the previous interpretation of the law was overly broad and required proof of harm across the entire market. The new rule says something can be in violation of the PSA without a legal finding of harm to competition.

Opponents of the rule say, by weakening the standards already in place, it will lead to a flurry of lawsuits because of lighter proof requirements for competitive injury. In response, Agriculture Secretary Tom Vilsack said the new rules are about common sense and consistency, and now put the grower and the meatpacker on the same level.

However, Mike Brown, president of the National Chicken Council, criticized the rules, saying they could lead to rigid, one-size-fits-all requirements on chicken- growing contracts that would stifle innovation, lead to higher costs for consumers and cost jobs by forcing the best farmers out of the chicken business. He also predicted the interim final rule would open the floodgates to frivolous lawsuits.

The 2008 farm bill required the rules, but they hadn’t been implemented due to congressional appropriations riders blocking their funding. Public outcry after HBO comedian John Oliver criticized the contract-farming system on his "Last Week Tonight" program in 2015 led to that provision’s omission from the fiscal year 2016 appropriations bill, allowing USDA to proceed with the regulations.

 

 

U.S. dairy exports show upward trend

No matter how they are measured, dairy exports have grown significantly in recent years even with a recent downturn.

Dairy manufacturers separate and reassemble milk components to produce a variety of products. To analyze aggregate domestic and foreign demand for U.S. milk products, the products are often converted to a common milk equivalent. Two common measures are milk-fat and skim-solids bases.

Depending on the product, the two measures may differ by large amounts. Butter is very high in milk-fat and low in skim-solids, for example, while nonfat dry milk is the opposite. From 1995-2003, dairy product exports averaged 2.2 billion pounds per year on a milk-fat basis and 1.4 percent of total milk production.

Since 2003, milk-fat basis exports have grown, reaching 12.4 billion pounds (6.0 percent of milk production) in 2014, but then falling to 8.8 billion pounds (4.2 percent) in 2015.

Skim-solids basis exports have grown more, increasing from 5.2 billion pounds (3.4 percent of milk production) in 1995 to 39.0 billion pounds (18.9 percent) in 2014, before falling to 37.3 billion pounds (17.9 percent) in 2015.

While both metrics have grown significantly, the larger increase in skim-solids basis exports indicates that products such as nonfat dry milk, whey and lactose have been especially popular on the export market.

   

 

Cover crops popular in southern, eastern states

 

Farmers and ranchers in southern and eastern states are the most likely to use cover cropping as a practice to build or restore soil health, according to data analyzed by USDA’s Economic Research Service.

Farmers plant cover crops or cover-crop mixes between plantings of commodity crops (usually in the winter). Common cover crops include clover, field peas and annual ryegrass.

Cover crops are not harvested and do not provide revenue for a farmer, although sometimes farms get direct value out of a cover crop through grazing of livestock.

Regional differences in the adoption of cover cropping may be related to differences in climate, regional agricultural markets and state incentive programs. For example, Maryland has relatively high rates of adoption because of a program paying farmers to grow cover crops in order to improve water quality in the Chesapeake Bay.

 

U.S. seeks WTO ruling on Chinese price supports

The United States and China have failed in bilateral consultations to resolve a U.S. complaint over Chinese domestic price supports for farmers, setting up the next stage of the dispute with the World Trade Organization scheduled to begin the long settlement process.

The U.S. Trade Representative officially launched a trade enforcement action against China late last summer over its artificially high prices for wheat, corn and rice. Those supports, the United States charged, distort world markets and cause billions of dollars in losses every year to U.S. farmers and exporters.

Almost immediately the two countries entered into consultations in a procedural attempt to settle the dispute. Those talks failed, according to U.S. government sources, and the WTO held – at the request of the United States – the first meeting of a panel under its Dispute Settlement Body in December.

"China is the world’s largest (wheat) producer and also the world’s largest (wheat) consumer. So whatever policies they have are magnified because of that status," said Dalton Henry, vice president of policy for the U.S. Wheat Associates.

When China joined the WTO in 2001, it agreed to maintain a 9.64-million-ton tariff rate quota for foreign wheat imports. That level has never been reached.