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FPF Analysis: New USDA Net Farm Income Figures Not Exactly What They Seem

Farm Policy Facts | Posted on October 19, 2017

A new analysis by Farm Policy Facts reveals that the USDA’s projected Net Farm Income (NFI) increase is not exactly what it seems.In fact, according to our analysis, the major takeaway from the report should not be the increase projected for 2017, but the downward adjustment to the 2016 number.The ERS had projected 2016 NFI to be $68.3 billion, but the August 30 update reduced it by 10% to $61.5 billion. These updated figures add up to a 50% drop in 3 years, and farmers and ranchers continue to deal with extremely hard times, thin to negative margins and dwindling reserves and equity that small, projected increases – or increases on paper – may do little to mitigate.Our analysis also takes a look at the difference in nominal dollars, which is often used to record NFI, and “real dollars,” which allows for a more “apples to apples” comparison.When looking at NFI adjusted in real 2017 dollars over time, it is clear that while NFI has remained relatively stagnant, the value of production and expenses have trended upward despite real declines in recent years.In addition, our analysis notes that in NFI reports, national numbers are used, overlooking significant differences from farm to farm and region to region. “By almost any measure, farm income in Missouri and nationally is down sharply from recent peak levels, unfortunately, the prospects for a rapid and full recovery are not good.”

GIPSA, tramps and thieves

Meatingplace (free registration required) | Posted on October 19, 2017

At least it’s one less thing for processors to worry about. Scuttling the proposed GIPSA rules that would have shifted the balance of power between livestock producers and processors simplifies the regulatory landscape a little — a very little, considering issues such as the renegotiation of NAFTA continue to roil the waters. But processors will take it.The package of three regulations — a final rule that would hold that the Packers and Stockyards Act does not require farmers and ranchers with complaints against packers to show injury to the whole sector in order to show they have been the victims of a fraudulent or deceptive business practice, a proposed rule addressing how poultry growers are ranked within the tournament system for calculating farmer pay, and a second proposed rule that would define criteria for preference of one livestock or poultry producer over another — was proposed in the waning days of the Obama Administration and faced a wicked upstream battle right from the start. The rules do arguably overreach in their efforts to regulate the relationship between processors and producers.

Nafta Talks Left Reeling After Aggressive U.S. Proposals Land

Bloomberg | Posted on October 19, 2017

U.S. negotiators in recent days put forth a string of bold proposals -- on auto rules of origin, a sunset clause, government procurement, and gutting dispute panels seen by the other nations as core to the pact. The moves were long-signaled, as was Canadian and Mexican opposition to them.  The proposals have spurred public warnings from prominent U.S. lawmakers and the private sector about the perils of scuttling a deal that over more than two decades has broken down trade barriers, including tariffs, for industries like manufacturing and agriculture.Nafta’s fate may now hang on how flexible the U.S. is about its demands heading into the fifth round of talks, scheduled for Mexico City around the first week of November. While the parties had wanted to reach a deal by December, officials familiar with the negotiations say the talks are likely to drag on for months.

EPA, herbicide makers agree to new limits on dicamba use

Des Moines Register | Posted on October 19, 2017

The Trump administration has reached a deal with three major agribusiness companies for new voluntary labeling requirements for a controversial herbicide blamed for damaging crops. The Environmental Protection Agency announced Friday its agreement with Monsanto, BASF and DuPont regarding the application of dicamba, which is used to control weeds in fields of genetically modified cotton and soybeans. Farmers who don't buy the special resistant seeds sold by the herbicide makers have complained that dicamba sprayed on neighboring properties drifts over and harms their crops, resulting in temporary bans issued last summer by state officials in Arkansas and Missouri."EPA carefully reviewed the available information and developed tangible changes to be implemented during the 2018 growing season," the agency said in a media release. "This is an example of cooperative federalism that leads to workable national-level solutions."Under the deal, dicamba products will be labeled as "restricted use" beginning with the 2018 growing season. New rules will limit when and how the herbicide can be sprayed, such as time of day and when maximum winds are blowing below 10 mph. Farmers will be required to maintain specific records showing their compliance with the new restrictions.

USDA plan to axe livestock pricing rule divides meat producers

Reuters | Posted on October 19, 2017

The U.S. Department of Agriculture (USDA) in a filing on Tuesday said it will dismantle Obama-era rules for buying and selling livestock, a move that has divided the U.S. meat industry. While some of the biggest meat companies opposed the rule, smaller producers fought to keep the regulation in place. Some felt intimidated by the larger processors, who control large segments of the country’s meat industry. Ken Maschhoff, an Illinois hog farmer and National Pork Producers Council president said: ”We’re very pleased that the secretary will withdraw these bad regulations, which would have had a devastating impact on America’s pork producers.“Eliminating the need to prove injury to competition would have prompted an explosion in lawsuits by turning every contract dispute into a federal case subject to triple damages,” Maschhoff said.National Cattlemen’s Beef Association president for government affairs, Colin Woodall, called USDA’s decision to terminate its final rule a victory for the country’s cattle and beef producers.“The proposed rule would have crippled cattle producers’ ability to market their products through the value-added programs,” said Woodall.Conversely, Sally Lee, program director at Rural Advancement Foundation International-USA, said USDA chose to “side with ‘Big Meat’” to the detriment of farmers. Bill Bullard, spokesman for U.S. cattle producers’ group R-CALF USA, said Perdue has now deprived producers of legal protections while helping corporate meatpackers to gain control over the cattle supply chain.“Secretary Perdue must not have received President Trump’s memo about draining the swamp,” in granting multinational meatpackers to “retaliate against cattle producers and engage in unfair and deceptive business practices with impunity.”

How Washington's formula for fighting wildfires makes them worse

The Los Angeles Times | Posted on October 19, 2017

The absurd way in which Washington pays to put out wildfires throughout the West is making a dangerous situation even more so. It’s a rare point of bipartisan agreement in Congress that a fix is urgently needed, particularly as fires grow in duration and intensity. The root problem: the U.S. Forest Service is strapped for cash. Its firefighting budget amounts to a fraction of what it actually costs to fight fires. Not sending firefighters is hardly an option. Even in the wine country blazes, which are not on federal land, the service has sent 1,500 firefighters to help out the California Department of Forestry and Fire Protection, along with dozens of fire engines, air tankers, helicopters and water scoopers.The Forest Service has no choice but to pay for the assistance by raiding funds from other programs in its budget — many of them oriented toward preventing the very fires it is fighting. Prevention efforts are put aside as dollars are funneled to putting out flames.To put it in perspective: About 56% of the agency’s budget now gets consumed fighting fires. In 1995, not even a sixth of its budget was spent there. That is a lot of fire prevention work going undone.

Trump orders EPA to back off RFS changes

Bloomberg | Posted on October 19, 2017

President Donald Trump intervened personally with the Environmental Protection Agency amid pressure from Republicans in the politically important state of Iowa who worried the agency was poised to weaken biofuel quotas, three people familiar with the discussions said. Trump directed EPA Administrator Scott Pruitt to back off any changes that would dilute a federal mandate for biofuel use, the people said.  A top EPA official said Trump’s urging was unnecessary because Pruitt wasn’t planning on weakening the mandate.Nevertheless, the agency was told by the White House to drop two changes that were under consideration: a possible reduction in biodiesel requirements and a proposal to allow exported renewable fuel to count toward domestic quotas, said the people, who asked not to be identified because they were not authorized to speak publicly about the move. The EPA has a Nov. 30 deadline to finalize next year’s quotas, and it may not announce any changes before then.

The state of Trump’s USDA: what you need to know

Civil eats | Posted on October 19, 2017

Shortly after being confirmed in March, Perdue announced he’d be leading the USDA’s first major reorganization since the mid-1990s. The first stage of the reorganization created a new Farm Production and Conservation mission area, and an under secretary role to support it. The mission area encompasses a wide scope of the agency’s work, including risk management, crop insurance, commodity programs, and conservation. Perdue’s reorganization also pioneered the new role of under secretary for trade and foreign Agricultural Affairs, one designed to “ensure USDA speaks with a unified voice on international agriculture issues” and promote U.S. agricultural products.Several trade associations cheered the addition. For instance, the American Soybean Association said in a statement that it and other groups had “long advocated” for an under secretary who would allow the USDA to become an important player in developing Trump’s “big ideas on trade.”The changes that most riled advocates for rural communities—who are credited with giving Trump the support he needed to win—are Perdue’s many changes to the Department’s rural development efforts. He created a new assistant to the secretary in rural development role after receiving vocal pushback from 570 advocacy groups when moving to eliminate the role of under secretary in the department and defunding the USDA’s Rural Development mission area altogether.Anna Johnson, policy programs associate at the Center for Rural Affairs, says that the new assistant secretary role doesn’t appropriately replace a Senate-confirmed under secretary for rural development. If rural development doesn’t get the same treatment as other mission areas in this regard, she says, “we don’t get that chance to get a sense for who the new leader of that enormous portfolio is going to be.” And if rural development doesn’t remain a USDA mission area, Johnson wonders how rural leadership will retain its place at the table.Secretary Perdue announced the second stage of the USDA’s reorganization in September, including moving a program of the Food Safety Inspection Service (FSIS) under the newly-created Trade and Foreign Agricultural Affairs mission area, and creating a new Innovation Center within the Rural Development mission area.Perhaps most controversially, the reorganization moves the Grain Inspection, Packers, and Stockyards Administration (GIPSA), formerly housed across several programs, to the Agricultural Marketing Service (AMS).

Macron calls for French food chain changes to help farmers

Reuters | Posted on October 18, 2017

President Emmanuel Macron called for changes to France’s food chain on Wednesday to ensure that farmers, who have been hit by squeezed margins and a retail price war, are paid fairly.Macron said he supported a new type of contract, based on farmers’ production costs, which would require stronger producer organizations and a change in legislation.

How much debt can a government sustain?

KC Fed | Posted on October 18, 2017

Since the global financial crisis, public debt has risen rapidly in many advanced and emerging market economies. Every country faces a fiscal limit at which taxes and spending can no longer adjust to stabilize debt. But quantifying fiscal limits can be challenging. Different countries have different capacities to service their debt. Moreover, two countries with similar debt levels may face drastically different default risks. Huixin Bi introduces a new, country-specific framework of fiscal limits to quantify the maximum level of debt a government can sustain given its economic and policy environment. She finds that countries with relatively low government expenditures have significantly higher fiscal limits than countries with relatively high government expenditures. She also finds that sovereign default risks rise rapidly during an economic downturn, suggesting that debt levels viewed as safe in good times can quickly become unsustainable.