October 2015
Ag Insight

Ag Insight

$4.9 million in funding announced for Alabama projects

The U.S. Department of Agriculture has announced $4.9 million in new funding for projects designed to protect public safety and health, improve water and wastewater infrastructure, and create expanded economic opportunities in rural Alabama.

The investments "are vital to protect public health and safety, and improve the economic well-being of the state’s rural residents," Secretary of Agriculture Tom Vilsack said. "USDA is proud to work with Alabama’s state and local leaders to make these projects a reality."

The funding includes grants and loans for some 25 projects around the state, ranging from a $683,500 loan and a $50,000 grant to renovate the natatorium at Wilcox County High School to a $391,100 loan and a $41,000 grant to the Lowndes County Commission to upgrade and replace equipment for the emergency 911 system not currently in operation.

Other project funding includes an $89,000 grant to the Community Foundation of Northeast Alabama to provide technical assistance for faculty and nursing students partnering with KidCheck Plus to provide health screenings to children in Perry and Dallas counties and a $81,219 grant to Cottage House Inc. to purchase a refrigerated truck and pallet jack to help 20 small minority growers transport their produce to processing plants.

 
   

School Breakfast Program participation growing

Participation in USDA’s School Breakfast Program has more than doubled since fiscal 1996 and now provides nutritious morning meals to students at almost 90,000 schools and residential child care institutions.

Some 13.5 million U.S. children participate on an average school day and federal expenditures for SBP were $3.7 billion in fiscal 2014.

Since the program was permanently authorized in 1975, it has targeted low-income students. In fiscal 2014, 85 percent of breakfasts were served for free or reduced price, based on household income, up from 81 percent in 2006. This increase likely reflects more children qualifying for free breakfasts and choosing to participate during the 2007-09 recession and its aftermath, as well as policy changes that simplified access to the program for low-income students.

Drop in livestock prices to affect net farm income

Net farm income is forecast to decline for the second consecutive year, after reaching recent historic highs in 2013.

NFI is expected to fall nearly $33 billion (36 percent) from 2014’s estimate to $58.3 billion in 2015. The 2015 forecast would be the lowest since 2010, and $29.1 billion (in real terms) below the 10-year average.

Crop receipts are expected to decrease by $12.9 billion from 2014, led by a projected $7.1 billion decline in corn receipts and a $3.4 billion decline in soybean receipts. Livestock receipts are also expected to decline, with the largest decreases expected for hog and dairy receipts. Total production expenses are forecast to fall by $1.5 billion in 2015, the first decline since 2009.

Government payments are projected to rise 16 percent ($1.6 billion) to $11.4 billion in 2015.

Despite the decline, Vilsack described the forecast as "heartening for all Americans.

"The past several years have seen unprecedented highs in farm income, and despite the fact that farm income is forecast to be down from record levels, (the income projections) provide a snapshot of a rural America that continues to remain stable and resilient in the face of the worst animal disease outbreak in our nation’s history and while the western United States remains gripped by drought.

"Thanks to its ability to be competitive through thick and thin, American agriculture remains fundamentally sound, supporting and creating good-paying American jobs for millions."

Poultry consumption rising in Middle East, North Africa

Meat consumption is correlated with income around the world, and the Middle East and North Africa region is no exception.

While income levels vary widely across the region, income growth continues to outpace the world average with implications for MENA’s future meat demand, particularly poultry. Per capita meat consumption has more than doubled from around 12 kilograms in the 1990s to about 24 kg in 2010, and USDA’s Baseline Projections suggest this growth will continue well into the future.

As with other commodities, the growth of poultry consumption has exceeded gains in domestic production and leading to rising imports. MENA is now the largest regional importer of poultry products in the world.

Domestic meat production is also growing rapidly; regional poultry production grew by nearly 5 percent annually from 2000 to 2011, leading to growth in demand for animal feeds, primarily corn and soybean meal.

Dairy product prices are declining

U.S. domestic wholesale prices of nonfat dry milk have declined from a record high of $2.090 per pound in March 2014 to $0.837 per pound in July 2015, the lowest price since May 2009.

International export prices for skim milk powder are also declining, reaching $0.792 per pound in July for Oceania and $0.851 per pound for Western Europe. Since the U.S. market for nonfat dry milk is highly dependent upon exports (52 percent of production was exported in 2014), domestic prices track closely with international prices.

The domestic wholesale price for dry whey, which is also highly dependent on exports, fell from 42.5 cents in June to 39.4 cents in July, the lowest level since January 2011. Domestic prices for butter and cheese have not fallen as much since those markets are not as dependent upon exports.

The declining prices reflect weak global demand, particularly from China, and the Russian import ban on dairy products from major producers.

With lower dairy product prices, milk prices are also declining, with the all-milk price currently forecast to average $16.75-$16.95 per hundredweight in 2015, down from an average of $23.97 in 2014.

 
   

Stacked varieties of GE corn show major growth

U.S. farmers have embraced genetically engineered seeds in the 20 years since their commercial introduction. However, the adoption of corn varieties with both herbicide-tolerant and insect-resistant traits – referred to as stacked – has increased sharply, reaching 77 percent of planted corn acres in 2015.

Conversely, use of corn with only the insect-resistant trait dropped from 27 percent of planted corn acreage in 2004 to 4 percent in 2015, while corn with only the herbicide-tolerant trait dropped from 24 percent of planted corn acreage in 2007 to 12 percent in 2015.

Generally, stacked seeds tend to have higher yields than conventional seeds or seeds with only one GE trait.

Getting kids to eat what’s good for them

USDA’s National School Lunch Program has updated its nutrition standards to include more fruit, whole grains and a healthier mix of vegetables. However, the challenge of persuading kids to eat what’s good for them remains.

Recent research in psychology and cognitive cues in decision-making is showing that one answer may be simple, low-cost nudges that promote acceptance of healthy foods.

For example, research funded by USDA’s Economics Research Service at Cornell University leveraged a principle called "confirmatory bias" that says higher expectations for a product lead to a more positive response. The researchers found that giving carrots an attention-getting name such as X-ray Vision carrots increased the percentage of elementary students eating that vegetable from the lunch line.

The research showed between 12 and 15 percent of children ate carrots with no name or called Food of the Day, while 35 percent of children ate the X-ray Vision carrots.

With more than 30 million children eating school lunches each day, implementation of the research has the potential to improve children’s diets, researchers believe.