First ag competition workshop is in Iowa

The first Department of Justice/USDA workshop on competition in agriculture takes place in Ankeny, Iowa Friday.

Agricultural competition is one of those “hot button” topics, one that evokes some very strong emotions.  Corning, Iowa farmer Ray Gaesser, vice-president of the American Soybean Association will be part of a workshop panel discussing seed competition issues.  He says there’s fine line between too much and too little regulation.

“We think there is a need to review what’s going on in our industry—but at the same time, we have concerns that we go too far and stifle innovation,” Gaesser says, “so it’s really a fine line that we must walk on to make sure that we have competition, but at the same time that we don’t over-control and stifle competition.”

How great is the interest in this subject?  DTN reports that, prior to the workshops, Justice and USDA asked for public comments and received more than 15-thousand responses—so many that DOJ has been unable to post all of them.

AUDIO: Ray Gaesser (2 min MP3)

NFU Convention coming up in South Dakota

The National Farmers Union Annual Convention begins this weekend in Rapid City, South Dakota. NFU President Roger Johnson says he’s pleased Ag Secretary Tom Vilsack will be the keynote speaker on Monday, “I expect that he will be talking about climate change, renewable energy, probably all the other things he’s been talking about relative to the farm bill, food and all those sorts of issues that are important to all of us. Certainly, the dairy industry is something that we expect a lot of conversation around.”

In addition, sessions will be held on climate change, renewable energy, health care and other issues important to NFU members as they form their policy for the next year. The 2010 NFU convention is Sunday, Monday and Tuesday.

AUDIO: NFU President Roger Johnson (11 min., MP3)

Dairy exports a mixed bag in January

U.S. dairy exports in January were 222.8 million pounds, up 27 percent from the depressed market of a year ago. Daily Dairy Report notes cheese sales increased 16 percent to 21.2 million pounds, lactose sales were up 27 percent at 37.6 million pounds, butterfat sales up 61 percent to 6.4 million pounds, dry whey shipments were up 35 percent to 42.4 million pounds and whey protein concentrate exports increased 133 percent to 31.3 million pounds.

One disappointing note, nonfat dry milk and skim milk powder exports dropped 41 percent from a year ago to 27.8 million pounds. On a daily average basis, that is the lowest amount in five-and-a-half years. For the month, the U.S. exported 19 percent of our total dairy production, less than half the average rate of the last five years.

A profitable quarter for Smithfield Foods

For the first time since 2008, Smithfield Foods is reporting a quarterly profit. For the quarter ended January 31, the nation’s largest hog producer reports net income was $37.4 million, or 22 cents per diluted share, compared with a loss of $107.5 million, or 74 cents per share, in the same quarter of 2009. Sales fell 14 percent to $2.88 billion due, in part to the quarter being a week shorter than last year and the closing of several plants.

Packaged meat sales for the quarter were $145.3 million compared to $115.9 million a year ago. That was more than enough to offset fresh pork sales which dropped from $13.5 million to $7.5 million.

Smithfield’s hog production unit was able to reduce losses in the third quarter from $253.6 million a year ago to $55.6 million this year. CEO Larry Pope says the ongoing restructuring of the pork business will be completed in April with the closing of the John Morrell plant in Sioux City. He also believes the reopening of the Russian market and hopefully China will help put the division back in the black.

Read the quarterly report here:

FCA changes director election rules

The Farm Credit Administration (FCA) Board has approved a final rule on director elections for Farm Credit System institutions. The purpose of this rule is to strengthen stockholder involvement in the management, ownership, and control of System institutions by increasing stockholder participation in the director election process.

The final rule would revise Farm Credit bank and association director election and voting rules, the requirements associated with holding stockholder meetings, clarifying the duties of nominating committees, and making and accepting floor nominations. The rule also enhances annual meeting and election notices to stockholders.

The final rule will be effective 30 days after publication in the Federal Register.

Read more details from FCA;

Basic Food Flavors knew about salmonella contamination

The Food and Drug Administration says Basic Food Flavors knew of salmonella contamination at its Las Vegas, Nevada plant back in January but kept shipping product anyway. To date, more than 100 products have been recalled but thousands of products could be affected by the contamination of a popular flavor enhancer HVP (hydrolyzed vegetable protein). HVP is often blended with spices to make seasonings used in a variety of food products including hot dogs, soups, salad dressings, chili, sauces, stews, gravies, chips and dips.

According to the FDA, Best Food Flavors had learned that samples from the plant tested positive for salmonella on January 21st. The company tested for and found salmonella twice in January and once in February but never issued a recall or took steps to minimize the risk of contamination. They kept manufacturing and shipping HVP through February 15th.

FDA was notified by a Best Food customer of possible contamination and began investigation of the plant on February 12th. FDA does not have the authority to order a recall so they began negotiating with Best Food Flavors to initiate a voluntary recall of the products which the company did on February 26th.

So far, no illnesses have been linked to the HVP and FDA says the risk is low because most of the products it is used in are cooked at some stage at temperatures high enough to kill the salmonella. The main concern is with ready-to-eat snacks.

Strong support for lifting Cuban ag trade sanctions

A number of ag interests speaking before the House Agriculture Committee on Thursday in support of the Travel Reform and Export Enhancement Act (HR 4645). This is the bill from Ag Committee Chair Collin Peterson of Minnesota and Kansas Congressman Jerry Moran which would lift some U.S. trade restrictions on Cuba including the cash-in-advance requirement, the need for a third-country bank and travel restrictions.

American Farm Bureau president Bob Stallman told the committee, “We have seen the promise this market holds…unfortunately, because of restrictions on U.S exports to Cuba, U.S. farmers have not been able to benefit from the full potential of the market.” Stallman says our competitors have an advantage right now but eliminating the restrictions would give U.S. farmers the advantage.

National Farmers Union president Roger Johnson, who has led eight trade missions to Cuba, noted current U.S. policy hampers our ability to be reliable suppliers. “Agricultural producers in the United States are well positioned to benefit from additional trade in Cuba,” said Johnson. “This will also assure Cubans a source for sustainable, high-quality food for its people.”

American Soybean Association Board member Scott Fritz of Indiana told the committee the sanctions have cost U.S. farmers and businesses billions of dollars in exports. “We can no longer sit on the sidelines and watch our competitors supply a market where we have a natural advantage.”

National Association of Wheat Growers president, Jerry McReynolds testified, “U.S. wheat producers and the industries that support them stand to gain up to $100 million in sales each year if trade and travel restrictions with Cuba are eased.”

John Wilson, senior vice president of marketing and industry affairs for Dairy Farmers of America (DFA) said lifting the restrictions would help the U.S. dairy industry regain some of the ground lost in 2009. He cited a June, 2009 International Trade Commission study which found “that fully eliminating financing and travel restrictions on U.S. exports to Cuba would have boosted 2008 dairy sales to Cuba from $13 million to between $39 and $87 million.”

Most commented that increased travel to Cuba would mean increased income for the country and more money to spend on U.S. goods.

HSUS kicks off anti-confinement campaign

The vote in the Ohio House Wednesday was unanimous in establishing the Ohio Livestock Standards Board that voters approved last fall in the general election. While the measure moves to the Ohio Senate, where it is sure to pass, the Humane Society of the U.S. pushes its campaign to take another stab at Ohio livestock production. The Columbus Dispatch says HSUS director Wayne Pacelle is in Ohio to kick off the group’s signature campaign for a proposed constitutional amendment to ban what HSUS and its supporters call “extreme confinement” of pigs, chickens and other farm animals.  According to the Columbus Disptach, the HSUS claims to have 400-thousand members in Ohio. Just over 402-thousand valid signatures are needed by June 29th to place the statewide proposed confinement ban on the Ohio November ballot.

Soybeans sharply lower on profit taking, South America

Soybeans were sharply lower, hitting one month lows on profit taking, along with technical and speculative selling. Wednesday’s gains were a little overdone and the trade expects a record South American soybean crop this year with Argentina and Brazil expected to see mostly favorable weather over the near term outside of flooding in some areas of Argentina. Argentina’s Buenos Aires Grain Exchange increased its’ projection to 53.5 million tons. Also, weekly old crop export sales were a net reduction following a big cancellation by China, the largest U.S. soybean customer and the leading global buyer of soybeans. China’s attempting to limit inflation and that cancellation may also be a signal that Beijing is switching to South American origin soybeans. Still, the U.S. supply and demand situation remains very supportive and there are delays loading beans out of Brazil. Soybean meal and oil were lower on spillover from beans and the supply and demand implications of a record South American crop.

Corn was very narrowly mixed on consolidation and late short covering. Contracts were lower early, continuing to absorb Wednesday’s USDA supply, demand and production numbers along with smaller than expected weekly export sales. Late support came from that short covering and continued concerns over wet weather delaying planting in some areas of the Cornbelt. Also, May managed to hold on above February’s low and additional support came from traders correcting corn and soybean spreads, buying corn and selling beans. In any event, fundamentals remain negative. Ethanol futures were lower. The Buenos Aires Grain Exchange left its Argentine corn production estimate unchanged at 20.2 million tons with 11.5% of the crop harvested.

The wheat complex was lower on technical and fund selling, along with spillover from beans. Fundamentals are extremely negative with a large world supply and poor demand for U.S. wheat, pushing wheat to new five month and contract lows. However, the dollar was down and contracts are technically oversold, which kept wheat from dropping too hard too fast. European wheat was modestly lower on follow through selling and the negative fundamentals; May Paris was down .8% and May London was 1% lower. The United Kingdom’s Department of Environment, Food and Rural Affairs expects U.K. planted wheat area to be up 11.4% from 2009 and Kazakhstan’s Ag Ministry is projecting a 3% increase in planted area for grains. Japan bought 85,000 tons of U.S. wheat, 42,000 tons from Australia and 25,000 tons from Canada, and Tunisia picked up 25,000 tons of soft milling wheat and 25,000 tons of durum from an unnamed seller.

FAPRI ‘10 baseline “depends on recovery”

Members of Congress were given the FAPRI 2010 Baseline Report Tuesday and authors say the outlook for agriculture depends a lot on the general economy.

“So if we get recovery in the overall economy that should let people have a little more money to spend on things like meat and dairy products and that might help us to see at least a mild recovery in the overall farm economy after a very bad 2009,” says Pat Westhoff, co-director of FAPRI, the Food and Agricultural Policy Research Institute at the University of Missouri. He net farm income is expected to increase somewhat over the next two years mostly due to stronger livestock prices, assuming demand increases. The FAPRI report also projects more corn acres this spring and an increase in corn demand for ethanol production. Slightly lower prices for soybeans and fewer wheat acres are expected this year.

Westhoff says crop insurance will be a more important part of government expenditures on agriculture, “By the end of our 10-year baseline outlook, we’re spending almost as much on the crop insurance program as we are on the basic farm programs funded by the Commodity Credit Corporation.”

Over the next 10 years, the FAPRI report says, direct payments make up the bulk of government payments.

AUDIO: Pat Westhoff, co-director, FAPRI, University of Missouri (5 min., MP3)

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