Daily Ag News Summary 08/10/2017


Cotton Coming Back in Title I?

In response to a Brazil-initiated 2009 World Trade Organization ruling against the United States, cotton was removed as a covered commodity in Title I of the 2014 Farm Bill. This made it ineligible for the Agricultural Risk Coverage (ARC) or Price Loss Coverage (PLC) programs. Cotton remained eligible for the marketing assistance loan program, but the primary safety net was the Stacked Income Protection Plan (STAX) crop insurance policy. STAX is a county-based revenue protection policy that supplements existing cotton crop insurance policies. However, STAX was plagued by adoption rates that only averaged 26 percent and substantially under-performed relative to producer expectations.

In recent years, and in the face of lower cotton prices, there have been several attempts to improve the cotton safety net. These have included cost-sharing programs for ginning and unsuccessful attempts at making cottonseed eligible for Title I commodity support programs – until now. The recent Senate fiscal year 2018 agricultural appropriations provisions that improve the cotton safety net and would make cottonseed eligible as a Title I covered commodity for participation in PLC beginning with the 2018 crop year.

The changes proposed for the cotton industry include: cottonseed would be a covered commodity and eligible for ARC or PLC; the reference price for cottonseed would be $15 per hundredweight; the loan rate for cottonseed would be $8 per hundredweight; the payment yield for a farm for cottonseed shall be equal to 1.4 times the payment yield for upland cotton; and, effective with the 2018 crop year, a farm shall not be eligible for STAX for a crop year for which the cottonseed crop is covered under ARC or PLC.

Importantly, the ability to participate in this Title I program would provide risk management support to cotton farmers as they work through the prolonged period of low prices and depressed market conditions experienced since 2011.

“The magnitude of support for cotton producers remains uncertain” says Dr. John Newton, Director of Market Intelligence with the American Farm Bureau Federation. “PLC makes payments on 85 percent of a farm’s base acres and on 90 percent of a farm’s program yield. Under the cottonseed proposal, the program yield would be increased by 140 percent above the cotton program yield, but the generic base acre reallocation is highly uncertain. How many farmers opt out of STAX is also uncertain. With 17 million acres of generic base and low STAX adoption rates, how many of these acres ultimately convert to cottonseed base, and how many producers continue to purchase STAX, are the million-dollar questions.”

Per Capita Fresh Vegetable Availability Growing

Decade averages of per capita availability of fresh and processed vegetables show that fresh vegetable availability increased from around 90 pounds per person in the 1970s to a high of almost 150 pounds per person in the 2000s. Although per capita fresh vegetable availability is down slightly in the current decade (data are through 2016), average availability is still well above the 1990s and earlier decades.

Processed vegetable per capita availability tells a slightly different story; remaining relatively flat between 110 and 130 pounds per capita since the 1970s. Since the peak in the 1990s, processed vegetable availability has trended downwards. For both fresh and processed vegetable categories, tomatoes and potatoes are the most popular. In the processed category, tomato and potato use have declined steadily since the mid-1990s. Additionally, since 1990, the per capita availability of fresh tomatoes has been steadily increasing, which suggests that some people may be shifting from processed to fresh preparations.

Sides Agree to West Coast Port Labor Contract Extension

Last week, the International Longshore and Warehouse Union (ILWU) announced that its members have approved a three-year extension of the labor contract covering 29 West Coast ports. The contract between ILWU and the Pacific Maritime Association (PMA) now runs through June 30, 2022.

U.S. Meat Export Federation (USMEF) President and CEO Philip Seng explains that “(we are) pleased that ILWU and PMA pursued this early contract extension, which is a positive development for U.S. exporters and for the entire U.S. economy. The severe congestion we saw in the West Coast ports in 2014 and 2015 created major logistical problems for U.S. red meat exporters and prompted some international customers to seek alternative suppliers. The contract extension helps ensure that the United States will continue to live up to its reputation as a reliable red meat supplier. It is very good news for everyone in the supply chain – from farmers and ranchers to processors and traders – and for our customers in key Asian and Latin American markets.”