February 2016
Ag Insight

Ag Insight

COOL regulations due for overhaul after repeal

The U.S. Department of Agriculture has announced it will amend country-of-origin labeling rules for beef and pork in the wake of Congressional approval of legislation repealing the requirement and President Obama’s signing of the legislation.

Enforcement of the current provisions ended immediately after the repeal, included in a spending and tax measure approved by lawmakers and sent to the president in late December.

USDA now must develop new rules to remove the beef and pork labeling requirements from its regulations. However, Agriculture Secretary Tom Vilsack pledged "all imported and domestic meat will continue to be subject to rigorous inspections to ensure food safety."

Repeal of the COOL provisions was needed to avoid more than $1 billion in retaliatory tariffs the World Trade Organization authorized Canada and Mexico to levy against a variety of U.S. products because of the country-of-origin rules, included in the 2002 Farm Bill.

Untouched by the repeal were COOL regulations for poultry. The law’s defenders viewed that as a victory, but said the repeal was a blow to consumer protection.


Sorghum prices fall below corn

Prices for sorghum have returned to their customary level trailing those for corn after an upward spike caused by supply-demand factors.

Corn tends to be preferred over sorghum as a feed ingredient, so sorghum typically sells at a discount compared to corn in global markets. Throughout much of the 2014 marketing year (September-August) this situation reversed.

Due in large part to strong demand from China, sorghum began selling at a premium over corn, at times exceeding 20 percent. As a result, sorghum use for ethanol production declined while acreage for the 2015 harvest increased to result in a record-large U.S. crop.

The size of the 2015 crop, combined with recent changes in China’s import policy that could reduce U.S. sorghum’s export prospects, has greatly increased the availability of sorghum in domestic markets for feeding and ethanol production. Accordingly, the price fell back below the price of corn and is now more in line with historic relationships.

Given these lower prices, sorghum used for ethanol production is expected to expand more than fivefold this year, and U.S. shipments to Mexico, which were hampered by the high prices for the 2014 crop, are expected to at least partially resume during the current marketing year, beginning September 2015.

USDA approves rule on safety-net payments

The USDA has finalized a rule to ensure that safety-net payments go only to active managers of farms that operate as joint ventures or general partnerships.

As called for in the 2014 Farm Bill, the action exempts family farm operations, but closes a loophole where individuals who were not actively part of farm management still received payments.

Since 1987, the broad definition of "actively engaged" resulted in some general partnerships and joint ventures adding managers to the farming operation and qualifying for more payments even if they did not substantially contribute to management.

The new rule applies to operations having more than one farm manager and requires measureable, documented hours and key management activities each year. Some operations of certain sizes and complexity may be allowed up to three qualifying managers under limited conditions.

The changes apply to payments for 2016 and subsequent crop years for Agriculture Risk Coverage and Price Loss Coverage programs, Loan Deficiency Payments and Marketing Loan Gains realized via the Marketing Assistance Loan program.

As required by Congress, the new rule does not apply to family farms or alter regulations related to contributions of land, capital, equipment or labor. The changes go into effect for the 2016 crop year for most farms. Farms that have already planted fall crops for 2016 have until the 2017 crop year to comply.

Producers should consult their local Farm Service Agency office for more details.

Fertilizer dealers get reprieve from OSHA rules

Anhydrous ammonia dealers will not be subject to the Occupational Safety and Health Administration’s Process Safety Management rule – at least not in the near future. The reprieve was another of the miscellaneous provisions in the end-of-session federal spending and tax legislation approved by Congress and signed by President Obama.

Dealers breathed a sigh of relief because without the new measure they would have been subject to what they viewed as a costly requirement having little or no benefit. Under the bill, OSHA won’t be able to apply its PSM rule to agricultural retailers until the Census Bureau establishes a new North American Industry Classification System code for farm supply retailers. In addition, OSHA must hold a rule-making procedure that includes public notice and comment before implementing any new requirements.

In a surprise memo, said to apply to virtually all retailers who store and sell anhydrous ammonia, OSHA last summer had announced plans to apply the PSM rule.


Food insecurity above average in 14 states

Food insecurity is higher than the national average in 14 states, according to data gathered by the USDA.

Food-insecure households are defined as those that had difficulty at some time during the year providing enough food for all their members due to a lack of resources. Food insecurity rates differ across states due to characteristics of the population, state-level policies and economic conditions.

Estimated prevalence rates of food insecurity during 2012-14 ranged from 8.4 percent in North Dakota to 22.0 percent in Mississippi. Data for 2012-14 were combined to provide more reliable state statistics.

The national average of food insecurity was 14 percent. Of the remaining 36 states, 20 had food insecurity rates lower than the national average while 16 states, as well as the District of Columbia, were at or so close to the national average that the differences were not statistically significant.

New workplace safety effort targets industries, including ag

The Departments of Justice and Labor have announced a plan to more effectively prosecute actions that put the lives and the health of workers at risk.

Under the plan, the Justice Department’s Environment and Natural Resources Division and the U.S. attorneys’ offices will work with the Department of OSHA, Mine Safety and Health Administration, and Wage and Hour Division to investigate and prosecute worker endangerment violations.

Statutes included as part of the enforcement effort are the Occupational Safety and Health Act, the Migrant and Seasonal Agricultural Worker Protection Act, and the Mine Safety and Health Act.

Federal officials say on-the-job fatalities, injuries and deaths of workers from diseases caused by exposure to carcinogens and other toxic and hazardous substances while they worked have prompted the effort using criminal prosecution as an enforcement tool.

Worker safety statutes generally provide for only misdemeanor penalties. However, prosecution now is being encouraged under other laws that carry stiffer penalties.

Lower net cash farm income in 2015

U.S. net cash farm income is forecast to drop in 2015, marking the second consecutive year of decline after reaching recent highs in 2012 and 2013. NCFI includes funds available to farm operators to meet family living expenses and pay down debt.

The income figure is expected to drop by $35.6 billion, or 28 percent, to $93 billion in 2015. If realized, the 2015 forecast would be the lowest since 2009 and be $14.7 billion (in real terms) below the previous 10-year average.

The drop reflects a broad decline in commodity receipts. Crop receipts are expected to decrease by $18.2 billion from 2014. Livestock receipts are expected to decline by $25.4 billion, with the largest decreases expected for dairy ($13.9 billion), hogs ($6.6 billion) and broilers ($4.4 billion).

Partially offsetting reduced cash receipts, total cash expenses are forecast to decrease by $7.9 billion in 2015, the first decline since 2009. Government payments are also projected to rise 10 percent ($1.0 billion) to $10.8 billion in 2015.