Farm Production and Conservation (FPAC) Business Center

Hadn't seen this before this public notice of redelegations of authority by the secretary of USDA.  Turns out I'm way way late to the game.

This is what is included in the 2019FY budget for the center.

This is the explanation of the center:

"The Farm Production and Conservation (FPAC) Business Center is a centralized operations office within the FPAC mission area and headed by the Chief Operating Officer (COO), who is also the Executive Vice President of the Commodity Credit Corporation (CCC). The FPAC Business Center is responsible for financial management, budgeting, human resources, information technology, acquisitions/procurement, customer experience, internal controls, risk management, strategic and annual planning, and other similar activities for the FPAC mission area and its component agencies, including the Farm Service Agency (FSA), the Natural Resources Conservation Service (NRCS), and the Risk Management Agency (RMA). The FPAC Business Center ensures that systems, policies, procedures, and practices are developed that provide a consistent enterprise-wide view to effectively and efficiently deliver programs to FPAC customers, including farmers, ranchers, and forest landowners."

It sounds very much like Sec. Glickman's proposal in the late 1990's, a proposal which was killed in Congress.

According to this article on the creation of FPAC from February Bob Stephenson is the head and the initiation of the center is Oct 1.

One of the complications in implementing this is the mixed legal status of NRCS--it's a federal agency working with the Soil and Water Conservations Districts which are established by state law and get funding from states and which have their own organization to lobby Congress.

The Soybean and Grain Embargoes

I remember Jimmy Carter's embargo on grain exports to the Soviet Union.  IIRC farmers didn't like the later, and it played a role in Carter's defeat.  Until I googled, I didn't remember Nixon's embargo on soybeans which was part of his economic maneuvers against inflation, etc.   Earl Butz ate crow over it, according to this piece.

Problem for Trump is that farmers know that patterns of trade can change.  If China puts tariffs on soybeans and switches to other suppliers, even if a trade war is averted, or quickly settled, the effects may be long lasting. 

Don't Tick Off the Farmers: NAFTA

Politico has an article on ag organizations concerns over the Trump's administrations NAFTA renegotiation trade strategy.  I've thought in the past that the drop in commodity prices over the last few years, a big drop from their peaks around 2012, played a role in switching votes from Obama to Trump.  If ag fears come true, will be another headwind for Republicans in 2018.

Grain Surpluses

Illinois farm Policy News reports that 2017 is going to be another year of more grain produced than consumed, the fourth year in a row.

And when focusing on U.S. farmers, the Reuters article explained that, “Even as farmers reap bountiful harvests, U.S. net farm incomes this year will total $63.4 billion – about half of their earnings in 2013, according to a U.S. Department of Agriculture forecast.

20 years ago I predicted grain surpluses once the Russians and Ukrainians got going.  So I was right, right, right!  Just didn't realize they'd be so slow about it.

Factoid of the Day: Dutch Ag Exports

The Times has a good piece on how the Dutch combat the sea, and their efforts to sell their expertise across the world to areas threatened by rising oceans.  But the amazing factoid is this:

"The Netherlands exports nearly $100 billion a year in agricultural products, second only to the United States."

Of course, the reason for the ranking is the high value of their exports of horticultural products, like tulips.

Trade Is NOT Simple: Vietnam Spinning for China

Lyman Stone tweets, but has a day job, which includes this piece on cotton exports to Vietnam, which are part of a complex web of relationships among cotton-producing country, yarn spinning countries, yarn consuming countries (i.e. China) and multilateral trade agreements. 

Some curious facts:

• spinning yarn and weaving cloth don't necessarily occur in the same country--I wonder why--the one is simpler than the other and easier to outsource? 
• US cotton shipped in bales across the wide Pacific is competitive with cotton grown in India. Our growers are currently more efficient than Indian, so able to handle transport costs?
• China used to have reserves of cotton but are now reducing or eliminating them. Wonder why--moving to less government intervention, if so, why?

Stone's summary paragraph: "If duty-free access for yarn is driving increased spinning in Vietnam, then the China-ASEAN Free Trade Agreement could be pushing U.S. cotton exports higher.  Yarn spinning being shifted from producer-countries like India, Pakistan, Uzbekistan, and to some extent China, into duty-preferred importer countries like Vietnam bodes well for U.S. exports.  Because the China-ASEAN Free Trade Agreement does not require that raw cotton inputs be sourced within the area, U.S. exporters are able to derive an indirect benefit from China’s duty-free ASEAN access."

The Granary of the Roman Empire

In my memory that's what Egypt was--why Cleopatra had wealth--Egypt grew wheat and exported to Rome.

This from a Keith Good Farmpolicy post on export issues:

Meanwhile, Emiko Terazono and Heba Saleh reported yesterday at The Financial Times Online that, “For the world’s wheat farmers already reeling from decade-low prices due to bumper crops around the world, it is the last thing they wanted.
“Confusion surrounding quarantine rules in Egypt has effectively taken the world’s largest wheat importer out of the international market, depressing prices, which are already weak from plentiful harvests.

Berries and Cherries

Who knew that South Korea is importing loads of US blueberries and cherries, even more since the recent trade pact?  That's part of this article on Trump's effect on South Korea.

What was striking to me was how cheap the cherries were.  The article doesn't specify the size, but $8 isn't that much more than I'd expect to pay for cherries in my local Safeway.

World Hunger at an End?

The title cheats, because Bloomberg is just saying the world may have too much food, as reported by the World Health Organization in a study:

 "The main takeaway? Excess weight has become a far bigger global health problem than weighing too little. While low body weight is still a substantial health risk for parts of Africa and South Asia, being too heavy is a much more common hazard around the globe."

To someone who remembers famines in India and China, this is incredible (something I seem to be writing more every year).

Japan Agriculture and Cuba Agriculture

A fast check of the CIA factbook shows me that Cuba and Japan have roughly equivalent amounts of arable land.  Cuba is a third the size of Japan, but have about a third of the land arable, while Japan has about 10 percent.  John Phipps points to a piece on Cuba here, which includes the statement that Cuba imports 70 to 80 percent of its food. Meanwhile, Modern Farmer has a piece on Japanese agriculture after the Fukushima tsunami.

Though reforms instituted in the aftermath of World War II had drastically improved the California-size country’s self-sufficiency, the ensuing decades saw farmers abandoning the profession in droves. In 1965, 73 percent of the calories consumed in Japan were being produced there, compared with only 39 percent by 2010. During that same period, the area of land being cultivated had shrunk from 15 million to 11 million acres. The average age of a Japanese farmer climbed from 59 to 66 between 1995 and 2011.[emphasis added]

According to the CIA factbook, Cuba's population is 11 million, Japan's 126 million. Bottom line: Japanese agriculture is several times more productive than Cuba's.

TPP and Agriculture

I suppose if I got into Twitter, I could tweet this link, but I haven't, yet.

Vox has a good piece on the impacts of the TPP (the Pacific trade pact) on segments of agriculture.  Soybean farmers win big, some reductions in trade barriers (Japanese rice, Canadian dairy), etc.

Population Growth Versus Food Growth

According to wikipedia the average rate of growth of world population is 1.1 percent annually.  According to this farmdoc post the big US food crops have increased yield by 1.2 percent (wheat) to 2.0 percent (corn) and 2.4 percent (peanuts) over the last 40+ years.

Mark Bittman, Farmers and Markets

The NYTimes is running a Food Conference, which means Mark Bittman is again writing on food.

He gets one thing half right:

The difference between you and the hungry is not production levels; it’s money. There are no hungry people with money; there isn’t a shortage of food, nor is there a distribution problem. There is an I-don’t-have-the-land-and-resources-to-produce-my-own-food, nor-can-I-afford-to-buy-food problem.

I agree it's a poverty problem, but he goes on to say that poverty often comes from people displacing traditional farmers. The rest is a mish-mash, mostly attacking "industrial model of food production".

IMHO China is simply the latest and most dramatic example of the truth.  Allow private possession of land and provide incentives to increase production  by having a market for agricultural products and to increase productivity by using modern "industrial" methods.  That correlates with agricultural labor moving to cities for higher wages/better living conditions, allowing greater returns to the farmers who remain.  In other words, the city workers get money and the non-traditional farmers get money; money means markets.  The traditional agriculture model has failed to provide people what they want, as shown by what they'll pay for and what they'll move for.

Now having said all that by definition the market doesn't handle bad externalities, it doesn't enforce standards (witness Chinese baby formula) and the structure of the market with multiple producers with no pricing power and few buyers with much power leads to boom and bust. So there's many problems with industrial agriculture, but producing enough food to feed the world is not one of them.

Get Those Kids Off the Farm

That's the lesson of China in recent years, of the US in the late 19th and early 20th centuries, and now of Africa.

Via Chris Blattman, this is the summary of a research paper entitled: "What is driving the 'African Growth Miracle'?

We show that much of Africa’s recent growth and poverty reduction can be traced to a substantive decline in the share of the labor force engaged in agriculture. This decline has been accompanied by a systematic increase in the productivity of the labor force, as it has moved from low productivity agriculture to higher productivity manufacturing and services. These declines have been more rapid in countries where the initial share of the labor force engaged in agriculture is the highest and where commodity price increases have been accompanied by improvements in the quality of governance.

In the US the improvements in machinery after the Civil War, added to the rapid immigration from Europe (including two of my grandparents), enabled us to grow.  

Crop Insurance Abroad

A piece on crop insurance in other countries.  Apparently it's being adopted more and more.  In China:

"China’s comprehensive financial support for its farming sector was $156 billion for the year 2011, which included insurance premiums, disease and fire prevention resources and insurance licenses.  Insurance covers crops and livestock and is typically a combination of compensation offered by the central government, the provincial governments and even some city governments. "

Personally I'd question the dollar figure--it might well be the result of a purchasing power conversion.  However, what's the chances of our getting into an "arms race" on the farm front with the Chinese--i.e., "how can our poor farmers compete when our government only provides X dollars in support when the Chinese provides so much more?"  :-)

Asia Has a Rice Glut?

Only 5 years ago we were worried about high prices and scarcity.  At least for rice in Asia that seems no longer to be a problem

History Repeats: Kenya, Cellphones and I-Cow

Been doing some reading (and a little writing) in the history of USDA, extension, etc.  The theme I see there is that USDA worked for the most literate, most progressive farmers.  That's why I'm struck by this article in CSMonitor on I-Cow in Kenya; an app helps Kenyan dairy farmers manage their herds. 

Kahumbu’s iCow may not be the latest sensation on Wall Street, but experts say it is just the latest example of an innovative high-tech entrepreneurial culture that has started to take hold in Kenya. Following in the footsteps of major commercial successes such as MPESA – a mobile-phone banking application that now rivals Western Union – other Kenyan software developers are setting up shop in Nairobi, creating high-tech solutions for an African market that has long been ignored; universities and private companies are setting up labs and business incubators; and government officials are plotting strategies to transform Kenya into a high-tech hub for the continent.

I'd like to celebrate the progress being made, but we should also have a thought for those who will be left behind in the race to the top, to modernity.

Mistake at the Post on Food

Annie Gowen commits an error in the third paragraph of her piece on declining federal aid for food banks:

Scorching drought and rising demand across the globe have pushed the price of U.S. food exports to record highs this year.

That is good news for American farmers. But it’s bad news for the hungry, especially on the eve of the holiday season.

The booming market means that the federal government does not need to buy as many excess crops from farmers, resulting in a precipitous drop in government donations to food banks.

I may be wrong, but it seems to me the days of the government donating surplus CCC inventory were gone long before recent price rises.

FAO: Whoops, We Were Off

The UN's Food and Argiculture Organization has revised its estimates from its previous 1 billion down to 870 million.  From their new report:

About 870 million people are estimated to have been undernourished in the period 2010–12. This represents 12.5 percent of the global population, or one in eight people. The vast majority of these – 852 million – live in developing countries, where the prevalence of undernourishment is now estimated at 14.9 percent of the population (Figure, below left). Undernourishment in the world is unacceptably high.The updated figures emerging as a result of improvements in data and the methodology FAO uses to calculate its undernourishment indicator suggest that the number of undernourished people in the world declined more steeply than previously estimated until 2007, although the rate of decline has slowed thereafter(Figure, below left). As a result, the developing world as a whole is much closer to achieving the Millennium Development Goal (MDG) target of reducing by half the percentage of people suffering from chronic hunger by 2015. If the average annual decline of the past 20 years continues through to 2015, the prevalence of undernourishment in the developing country regions would reach 12.5 percent – still above the MDG target, but much closer to it than previously estimated

US the Free Trader

Sometimes we think the US uses tariffs on agricultural products unfairly.  Here's a comparison worldwide.