(February 24, 2009) - The $787 billion stimulus bill approved in mid-February 2009 has been justified in terms of being an essential element in preventing a downturn that could be as serious as the Great Depression. In pushing for the legislation's approval, President Obama argued that while the stimulus package by itself would not prevent a serious collapse of the economy, it would provide a needed 3.5 million jobs.
Opponents argued that the bill was too expensive, did not include their preferred policy elements, and was loaded with too much pork.
All of this got us to thinking. By what measure could one decide whether or not it was too expensive? For instance, how big a hole would we be in if we experienced a repeat of the Great Depression? How many people would be unemployed? What would be the loss in the value of production? What would be the impact of a new depression on agriculture?
Former Secretary of Agriculture Henry A. Wallace-philosopher of the New Deal and architect of traditional farm programs-wrote a book, Sixty Million Jobs, as he finished up four years as Vice President and settled into his new position as Secretary of Commerce.
(February 17, 2009) - We receive a lot of information through the media. The Minneapolis Star Tribune recently sited a study that claimed corn ethanol is not better than gasoline for the environment. My frustration is that from the looks of it, the study just offers criticisms, and does not give the corn ethanol industry credit for producing a clean and non-foreign substitute that is helping the United States take a step toward being less dependent on foreign oil.
Another criticism I have of this study is that it is by the University of Minnesota, and it provides unfavorable information on the corn ethanol industry without offering any suggestions. The University of Minnesota is a land grant college, and many believe the University of Minnesota should work with farm organizations, and commodity groups, and with the great resources we have here in Minnesota to take us one step further in reaching home-grown energy independence.
I wanted to mention that WCCO's Pat Kessler did a "Reality Check" about this story and the study. One thing he pointed out was that the study neglects to mention that both the ethanol and oil industries are subsidized, and that a gallon of E-85 costs about $1.45 a gallon, but without subsidies would be $2.23 a gallon; whereas a gallon of gasoline costs $1.85, and without subsidies would cost $5.85 a gallon.
(February 17, 2009) - Major changes in crop programs are usually accompanied by uncertainty on the part of farmers. The late passage of the 1996 Farm Bill and its radically new provisions had farmers scratching their heads as they struggled to understand AMTA payments (Agricultural Market Transition Act) and the Marketing Loan Program with its Loan Deficiency Payments and Marketing Loan Gain provisions.
By way of contrast, farm bills, like the 2002 legislation, that make only incremental changes are taken in stride. Farmers, along with their bankers and CPAs, know what to expect and the uncertainty is low.
The 2008 Farm Bill included a new program ACRE (Average Crop Revenue Election) that would reduce Direct Payments (by 20%), replace the Counter-Cyclical Payment program, and lower the rate for marketing loan payments (by 30%). Farmers must decide whether to switch to the ACRE program or continue to use the current set of payment programs.
(February 11, 2009) - One of the weekly features broadcast by a local Knoxville, TN television station announces the names of the restaurants that achieved the highest scores on recent health department inspections, They also announce the names, scores, and reasons for those scores of the restaurants that were given the lowest scores by the health department. In addition, the law requires that all restaurants post the latest inspection reports in plain view of the eating public.
While our health department and others around the country have a system in place that makes the results of their inspections of restaurants that serve 100s of people available to the public, the Food and Drug Administration (FDA) has no such system in place for firms that serve hundreds of thousands, if not millions, of people.
When the Georgia Agriculture Department, under contract from the FDA, found serious sanitation problems on one of their inspections of the Peanut Corporation of America facility-the one later found to be responsible for the recent Salmonella outbreak-the plant was not shut down and required to correct the deficiencies. In addition, no word went out to the purchasers of the product from that plant.
(February 8, 2009) - One the biggest drawbacks of living in rural America is the high cost and low quality of connectivity: antiquated dial-up internet speeds, costly satellite television and cellular phone service that cackles more than Grandma's hens.
Congress hopes to address these needs in the Obama stimulus package. Presently, the House-passed version of the plan holds $6 billion in grants to expand America's broadband networks. The Senate plan contains $9 billion in cash.
The bigger fight, however, won't be over how much to spend; it'll be over how best to spend it. And, with billions literally on the table, the battle promises to be a classic rural v. urban match with rural advocates out-lobbied and outspent by industry giants who want most of the loot for themselves and their urban subscribers.
The House plan employs grants to dole out its $6 billion. The U.S. Department of Agriculture's Rural Utility Service is put in charge of half the money, with $1.5 billion or so earmarked specifically for use in "rural areas without sufficient access to high-speed broadband service."
The rest of the House money, $3 billion, would be invested through grants administered by the Commerce Department. Much of it would flow to "unserved' rural areas while the remainder would be spent on better broadband in "underserved" areas.
(February 3, 2009) - Recent news stories have been flush with reports about developments in cellulosic ethanol and other biofuels production. Maybe these reports help provide an understanding of why Informa Economics recently forecast corn prices below $3.00 with wheat prices below $4.00 and soybeans under $7.00
Let's look at the biofuels news first and then see what implications this news has for the long-term pricing of farm grains and oilseeds.
Poet recently announced that its research center in Scotland, SD is producing cellulosic ethanol in its pilot-scale plant. The plant has the capacity to produce 20,000 gallons a year from corn cobs
Poet CEO Jeff Broin said, "After producing 1,000 gallons, we've already been able to validate all of what we learned in the lab and believe the process will be ready for commercialization when we start construction on Project Liberty next year."
(January 23, 2009) - In 2008, Minnesota and National Farmers Union had quite a productive year, and members should be proud of themselves for pushing the Farmers Union message on all levels. There is an opportunity once again, to impact policy. We have our state lobby days coming up on January 27, and February 11. This is a great opportunity to meet with your legislators, and discuss policies that impact life and farming in rural Minnesota. Legislators look forward to seeing their constituents because it gives them guidance when they try to find solutions for the problems in their districts.
On the federal level we had quite a few Farmers Union victories, including:
(January 22, 2009) - One of the recurring discussion topics of this column is food safety. In a recent column, we talked about imported honey. At other times we have talked about melamine in chocolates and wheat gluten, ethylene glycol in toothpaste, and e. coli in beef and field-grown vegetables.
This week we want to look at Salmonella in peanut paste and peanut butter used in commercial settings. The Food and Drug Administration (FDA) has reported a genetic match between the Salmonella found in a batch of peanut butter at an institution in Minnesota and the strain of Salmonella that has caused illnesses in Minnesota and other states.
(January 20, 2009) - The USDA released the new WASDE (World Agricultural Supply and Demand Estimates), http://www.usda.gov/oce/commodity/wasde/latest.pdf, which show a change in corn exports to 1.75 billion bushels, a decline of 250 million bushels from the 2.0 billion bushel exports that were expected last July and a 50 million bushel drop from last month's WASDE estimate. All told, the expected corn exports for the 2008 crop year-the crop year we are in-is expected to be 686 million bushels below the 2.436 billion bushels that were exported in the 2007 crop year. That right, 686 million bushels, which is a 28 percent decline last year.
So what is happening in US corn export markets? To listen to various news reports one could easily conclude that the low exports are the result of the exchange rate-during the early part of the financial crisis, the US dollar strengthened against other currencies like the Euro. The argument is that a stronger dollar makes US corn more expensive, reducing exports.
(January 14, 2009) - More and more of the food offered for sale in the US is produced elsewhere and shipped into the country. Typical is a package of whole yellow and green beans that we saw in a local grocery store in late December. On the back of the package were the words "PRODUCT OF CAN USA CHN."
Until recently we gave little thought to the origin of our food because most of it was produced in the US and subject to national regulations on the use of pesticides and the timing between the last pesticide use and harvest.
Perhaps naively, we assumed that food products coming into the US were subject to inspections to assure that the products did not contain pesticide residue levels above those required of US producers or evidence of pesticides that are banned for use in the US. Deep in our hearts we wanted to believe that even though we suspected that the opposite was true.
Not long ago there was a rash of dead pets poisoned by melamine that was introduced into the pet food as a part of one of the ingredients-wheat gluten. The wheat gluten was imported into the US from China where it was deliberately tainted with melamine to give the false appearance of having a higher protein level.