One down

The first ambitious farm bill reform amendment in the Senate has fallen. From the office or Sen. Richard Lugar:

Senate votes against Lugar's FRESH farm bill reform alternative

Tuesday, December 11, 2007

U.S. Sen. Dick Lugar today debated a fiscally responsible, reform farm bill alternative on the Senate floor. Lugar was joined by Sen. Frank Lautenberg (D-NJ) and a group of eight bipartisan colleagues. The Farm, Ranch, Equity, Stewardship and Health (FRESH) Act amendment failed to pass by a vote of 37 to 58.

In his floor speech, Lugar stated, “Agriculture policy is too important for rural America and the economic and budgetary health of our country to continue the current misguided path. Our amendment provides a much more equitable approach, produces higher net farm income for farmers, increases farm exports, avoids stimulating over-production, and gives more emphasis to environmental, nutritional, energy security and research concerns. More importantly, this proposal will protect the family farmer through a strong safety-net and encourage rural development in a fiscally responsible and trade compliant manner.”

· Read Lugar’s floor speech at: http://lugar.senate.gov/farmbill/fresh_floor.cfm

· Listen to Lugar’s floor speech at: http://lugar.senate.gov/farmbill/

· Broadcast quality audio (a 24 megabyte file) is available at: http://lugar.senate.gov/farmbill/media/farm_bill_floor_speech_high.mp3

The FRESH Act would have saved billions in farm payments, while broadening the agricultural safety net. The savings would be invested in other vital programs with $4 billion left over to reduce the deficit.

More specifically, the FRESH Act would have instituted an equitable safety net for ALL farmers, brought America’s agriculture policy into trade compliance, fully funded the nutrition title without budget gimmicks, increased specialty crop funding by an additional $770 million, increased conservation spending by an additional $1.2 billion, provided an additional $1 billion to expand research into new bio-fuels and deployment of rural renewable energy projects and provided $75 million for socially disadvantaged farmers and ranchers.

PR campaign or meaningful reform

Here is coverage from The New York Times on the U.S.-China food safety agreement. From the Dec. 11 story with a Beijing dateline:

China and the United States, seeking to ease the furor over the safety of food exports, signed an agreement today calling for a greater United States role in certifying and inspecting Chinese food exports, including an increased presence of American officials at Chinese production plants.

The accord, part of several aimed at easing economic tensions with China on a number of divisive subjects, would impose new registration and inspection requirements on Chinese food exporters for 10 specific products. The United States government would maintain a public list of the exporters’ records.

Reaction from FDA critic Rep. Rosa DeLauro, D-Conn. about the agreement:

Washington, D.C. – Congresswoman Rosa L. DeLauro (Conn. -3) issued the following statement regarding the announcement that the United States and China signed a Memorandum of Agreement on the safety of food and feed imported into the United States from China.

“At face value, this long-anticipated accord between the United States and China seems to set in motion changes to improve the safety of our nation's food supply system. The idea of creating new registration and certification requirements, as well as ensuring US inspectors have access to production facilities, are significant and are components of legislation I have introduced to improve our nation’s approach to ensuring the safety of imported food.
“However, even Secretary Leavitt has acknowledged that much work needs to be done. Because of the limited scope of the accord – it only applies to 10 specific products – there are very serious questions as to the potential effectiveness of this new agreement. Also, Chinese Deputy Prime Minister Wu Yi told U.S. trade negotiators this week that the American media has exaggerated the food safety issue, which questions China’s willingness to comply with this agreement. I hope that this agreement is not more of the same public relations campaign we have seen in recent months, but rather the beginning of implementing meaningful reforms that will ensure the safety of our food supply.”

Beware the Wal-Mart supplier index

Those were the words of advice of this stock market guru about the FocusShares ISE Revere Wal-Mart Supplier Index Fund, who said that the recent reality of the indexed stock prices of Wal-Mart suppliers outperforming Wal-Mart's own stock might be misleading. It brings to mind a recurring question; do produce suppliers who derive much of their business from Wal-Mart better or worse off than other suppliers? The more apt question, perhaps, is, "Are they better off than Wal-Mart?" The above chart show an index (blue line) of 30 Wal-Mart suppliers (sorry, no list provided) who derive a substantial part of their business from WM, compared with the stock price of Wal-Mart (red line). But don't be fooled, says our stock guru.


Writes the skeptical Roger Nusbaum:

A backtest of the fund's performance sThe first sentence on the WSI web page pitching the fund asks if you have ever gone into a Wal-Mart (WMT - Cramer's Take - Stockpickr - Rating) and wonders if you could somehow buy the companies that generate most of their sales selling to Wal-Marthows the suppliers have done much better than Wal-Mart's common stock from July 2002 through July 2007. Before jumping to any conclusion about what might happen in the future, however, it is important to understand some of the market dynamics during that period.

We are coming off of a multi-year run in which small-cap stocks have wildly outperformed mega-caps like Wal-Mart. Although mega-caps have generally done better this year, Wal-Mart has struggled as Wall Street tries to sort out just how vulnerable the company is to higher gas prices.

Later......

We're always hearing that Wal-Mart's size allows it to demand better pricing. Consider the plight of Cal-Maine Foods (CALM - Cramer's Take - Stockpickr - Rating): It gets 36% of its revenue from Wal-Mart, so if Wal-Mart tells the company to lower its prices by 3%, it might be very difficult to say no.

It strikes me that the relationship between Wal-Mart and its suppliers could be testy at times. Too much reliance on a single customer is often cited as a reason to sell a stock, not buy it. WSI may turn out to be a great product, but for now I am very skeptical.

Mexico's export boom - Hass

Bigger than ever. Mexico seems to have limitless supplies of avocados; from a recent USDA FAS attache report comes this outlook on Mexican avocado exports.

Mexican avocado exports are forecast to reach a record 300,000 MT in MY 2007/08, a nearly 11 percent increase over the MY 2006/07 figure. This increase is due to a combination of factors, including; 1) year-round market access to all 50 U.S. states, 2) the decrease in Chilean production as well as a recent freeze, and 3) recent wildfires in southern California that destroyed approximately 10 percent of the current crop. Reportedly, producers and packers had been concerned for some time that open access to the U.S. market might lead to market saturation, and eventual downward pressure on prices. In order to avoid such a situation, producers and packers limited their exports by harvesting only 2 MT/hectare. However, producers have suspended this practice but only to the extent to which they are still able to avoid market saturation. Michoacan growers currently have the capacity to harvest 10-15 MT/ha if there is no threat of market saturation. Growers and packers have forecast MY 2007/08 avocado exports to the United States at 200,000 MT. Exports to the U.S. in MY 2006/07 were 166,830 MT, while exports in MY 2005/06 were 129,482 MT. As of January 31, 2005, Mexican Hass avocados were granted access to all U.S. states except California, Florida, and Hawaii. On February 1, 2007, Mexican Hass avocados were allowed access into all 50 states on a year-round basis. Currently, 25 packers are officially eligible to export Mexican avocados to the United States under the APHIS export program. The main destinations for Mexican Hass avocados within the United States are: Texas, Illinois, New York, Georgia, Colorado, Arizona, Washington, Massachusetts, Maryland, Indiana, Minnesota, Kansas, Oregon, North Carolina, and Florida. Export figures for MY 2006/07 were revised upward to 270,541 MT due to increased export markets. These higher-than-expected export numbers are due to greater demand from international markets. To this end, growers ceased restrictive harvesting practices once the U.S. market opened January 2005. MY 2005/06 export figures remain unchanged. Although the majority of avocado exports are destined for the U.S., other markets including Japan, Canada, France, and El Salvador are also significant. Unlike the U.S., these markets do not require APHIS accreditation. According to both official and private sources, the export market continues to be profitable to producers, but the domestic market still represents the main business platform for most Mexican avocado farmers. Official data indicates that Mexican avocados were exported mainly to the United States, Japan, Canada, and El Salvador. Exports to Japan and the EU continue to represent a strategic market niche for producers and packers. In September 2005, USDA and SAGARPA signed a work plan to allow access for U.S. Hass avocados into Mexico. For the first 12 months of the work plan, avocados were allowed to export to all states except: Michoacan, Jalisco, Morelos, Puebla, and Nayarit. In September 2006, U.S. avocados were officially allowed to export to all Mexican states, but exports to the non-border states is minimal. Reportedly, Mexico will be importing California avocados for processing and eventual re-export to the United States. As a result, Mexican imports for MY2007/08 are forecast to be slightly up from those of MY 2006/07 at 1,000 MT. MY 2006/07 imports were revised downward to 897 MT due to ample domestic supplies. MY 2005/06 figures remain unchanged.

Not down with NAFTA

More rumblings from Mexico about discontent with the NAFTA. From the USDA FAS attache report from Mexico Dec. 3 comes this translation/summation of a news article published in Mexico:


AT LEAST 1.4 MILLION GROWERS UNDER RISK BECAUSE OF NAFTA

According to Cruz Lopez-Aguilar, leader of the National Farmers Confederation (CNC), at least 1.4 million corn and dry bean growers could be out of business due to the trade opening under the North American Free Trade Agreement (NAFTA) in 2008. He added the CNC will continue to push the GOM to exclude corn and dry beans from NAFTA. They will also request the GOM to establish a mechanism to control imports and exports of both commodities, and that the GOM should honor the addendum in the National Agreement in Agriculture. The CNC will insist that small and medium growers receive support from the Competitive Corn and Dry Beans Fund, which will allow them to have monetary support of at least 10 million pesos. Lopez-Aguilar stated that the CNC, along with other farmer organizations, will restart demonstrations to defend corn and dry bean growers. (Source: Excelsior & La Jornada; 11/28/2007)


Another item.....

Contrary to the opinion of the majority of Mexican agricultural worker’s organizations that have pressured the GOM to renegotiate NAFTA’s agricultural chapter, the Mexican General Union of Industrial and Agricultural Workers (UGOCM) declared that renegotiating the trade agreement is not the solution. Instead, they stated that other measures like competitiveness-enhancement programs, credit and production support, and investments should be established by the GOM. Jose Luis Gonzalez, UGOCM Leader, explained there is no need to use political pressure. However, he stated that a real commitment from the authorities should protect and help the agricultural sector. (Source: Rumbo De Mexico, 11/29/2007)


And another.....

NAFTA DOES NOT BENEFIT THE MEXICAN COUNTRYSIDE
NAFTA has not been good for the Mexican rural communities, agreed researchers. Since NAFTA’s implementation in 1994, trade between Mexico and the United States has tripled. However, farmers have not benefited. “NAFTA’s objective was to stop migration to the states and in that sense NAFTA has been not a success,” said Victor Suarez, President of the Rural Producers National Association of the Northern Border College. Suarez stated that 13,000 rural inhabitants migrate to the U.S. every year, and that, since NAFTA’s implementation, almost two million jobs related to agriculture were lost. Mexican agricultural exports are managed by 12 big foreign companies, but Suarez did not mention names. (Source: El Universal; 11/14/2007)

One more......

UNPRODUCTIVE AGRICULTURE, 48 DAYS UNTIL TRADE OPENING
According to the Center of Economic Studies of the Private Sector (CEESP), it’s unlikely the Mexican agricultural sector can elevate its production levels to compete with the United States, and in less than 48 days, the border will completely open. A CEESP study concluded that Mexico has an agricultural sector that does not produce enough to export or to supply the population's growing necessities. Mexico is the 52nd largest country for agricultural growth, which is why public policies are required immediately. (Source: El Financiero; 11/13/2007)

Overview of Harkin teleconference

The teleconference that Sen. Tom Harkin held this morning visited topics such as whether a cloture vote was scheduled (no), how long debate will last (end of this week or beginning of next week), what issues could derail the bill (funding, non-germane amendments such as immigration and medical malpractice), whether a filibuster is expected on Dorgan-Grassley (no), the junk food in schools amendment being up (coming today or tomorrow), conference committee - when? (not before holiday recess, in January).

Senate agenda - farm bill debate

From the office of Sen. Tom Harkin

Tuesday, December 11, 2007

• The Senate will convene at 10am.

· Morning business for an hour, with Senators permitted to speak therein for up to ten minutes each. The first 30 minutes will be under Republican control; the next 30 minutes will be under Democratic control.

· Following morning business, the Senate will resume consideration of the Farm, Nutrition, and Bioenergy Act of 2007 (H.R. 2419).

· There will be up to three hours of debate, equally divided, on the Lugar-Lautenberg amendment to Harkin-Chambliss substitute #3500, relative to traditional payments and loans (#3711).

· The Senate will recess from 12:30pm until 2:15pm for the Weekly Caucus Lunches.

· Upon the use or yielding back of the debate time on the Lugar-Lautenberg amendment #3711, the Senate will proceed to a roll-call vote in relation to the amendment.

· The following amendments are pending to H.R. 2419:

· Harkin-Chambliss-Baucus-Grassley amendment in the nature of a substitute (#3500)

o Dorgan-Grassley amendment to Harkin-Chambliss substitute #3500 to strengthen payment limitations and direct the savings to increase funding for certain programs. (#3695)

o Brown-Sununu amendment to Harkin-Chambliss substitute #3500 to increase funding for critical Farm Bill programs and improve crop insurance (#3819)

o Klobuchar amendment to Harkin-Chambliss substitute #3500 to improve the adjusted gross income limitation and use the savings to provide additional funding for certain programs and reduce the Federal deficit (#3810)

o Lugar-Lautenberg amendment to Harkin-Chambliss substitute #3500 relative to traditional payments and loans (#3711)

o Cornyn amendment to Harkin-Chambliss substitute #3500 to prevent duplicative payments for agricultural disaster assistance already covered by the Agricultural Disaster Relief Trust Fund (#3687)

o Coburn amendment to Harkin-Chambliss #3500 to ensure the priority of the farm bill remains farmers by eliminating wasteful Department of Agriculture spending on casinos, golf courses, junkets, cheese centers, and aging barns (#3807)

o Coburn amendment to Harkin-Chambliss substitute #3500 to limit the distribution to deceased individuals, and estates of those individuals, of certain agricultural payments (#3530)

o Coburn amendment to Harkin-Chambliss substitute #3500 to modify a provision relating to the Environmental Quality Incentive Program (#3632)

o Salazar amendment to Harkin-Chambliss substitute #3500 to amend the Internal Revenue Code of 1986 to provide incentives for the production of all cellulosic biofuels (#3616)

o McConnell amendment to Harkin-Chambliss substitute #3500 to promote the nutritional health of school children, with an offset (#3821)

o Craig amendment to Harkin-Chambliss substitute #3500, to prohibit the involuntary acquisition of farmland and grazing land by Federal, State, and local governments for parks, open space, or similar purposes (#3640)

o Roberts amendment to Harkin-Chambliss substitute #3500, to modify a provision relating to regulations (#3549)

o Domenici amendment to Harkin-Chambliss substitute #3500, to reduce our nation's dependency on foreign oil by investing in clean, renewable, and alternative energy resources (#3614)

o Gregg amendment to Harkin-Chambliss substitute #3500, to amend the Internal Revenue Code of 1986 to exclude discharges of indebtedness on principal residences from gross income, and for other purposes (#3674)

o Gregg amendment to Harkin-Chambliss substitute #3500, to improve women's access to heath care services in rural areas and provide improved medical care by reducing the excessive burden the liability system places on the delivery of obstetrical and gynecological services (#3673)

o Gregg amendment to Harkin-Chambliss substitute #3500, to strike the section requiring the establishment of a Farm and Ranch Stress Assistance Network (#3671)

o Gregg amendment to Harkin-Chambliss substitute #3500, to strike a provision relating to market loss assistance for asparagus producers (#3672)

o Gregg amendment to Harkin-Chambliss substitute #3500, to provide nearly $1,000,000,000 in critical home heating assistance to low-income families and senior citizens for the 2007-2008 winter season, and reduce the Federal deficit by eliminating wasteful farm subsidies (#3822)

o Grassley-Kohl amendment to Harkin-Chambliss substitute #3500, to provide for the review of agricultural mergers and acquisition by the Department of Justice, and for other purposes (#3823)

o Sessions amendment to Harkin-Chambliss substitute #3500, to amend the Internal Revenue Code of 1986 to establish a pilot program under which agricultural producers may establish and contribute to tax-exempt farm savings accounts in lieu of obtaining federally subsidized crop insurance or noninsured crop assistance, to provide for contributions to such accounts by the Secretary of Agriculture, to specify the situations in which amounts may be paid to producers from such accounts, and to limit the total amount of such distributions to a producer during a taxable year, and for other purposes (#3596)

o Stevens amendment to Harkin-Chambliss substitute #3500, to make commercial fishermen eligible for certain operating loans (#3569)

o Alexander amendment to Harkin-Chambliss substitute #3500, to increase funding for the Initiative for Future Agriculture and Food Systems, with an offset (#3551)

o Alexander amendment to Harkin-Chambliss substitute #3500, to limit the tax credit for small wind energy property expenditures to property placed in service in connection with a farm or rural small business (#3553)

o Burr amendment to Harkin-Chambliss substitute #3500, to amend title 7, United States Code, to include provisions relating to rulemaking (#3771)

o Durbin amendment to Harkin-Chambliss substitute #3500, to provide a termination date for the conduct of certain inspections and the issuance of certain regulations (#3539)

Icy hot

Kansas City is supposed to be getting about an inch of ice tonight and Tuesday, but never mind about that, there is produce to sell. Here are some produce items featured in food ads for the period of Dec. 12 to Dec. 18.

Price Chopper - Dec. 12 to Dec. 18
Sunkist navel oranges - 15 cents each (front page)
New York Empire apples: $1.29/lb
British Columbia peppers: (orange, yellow or red) $2.99/lb
Dole Salads: 2 for $4, 10-12 oz. Just lettuce, Greener Selection or Classic Romaine
Green Giant baby cut carrots: 2 for $5 )32 oz. package
Radish: 99 cents/1 lb bag
Eat Smart Vegetable Tray: $8.99 for 36 ounces
Mann's Veggies: 12 oz., selected varieties: 2 for $3
Mountain King butter gold or red potatoes: 2 for $4
Jumbo sweet yellow onion: 79 cents/lb


Hen House - Dec. 12 to Dec. 18
Large tender asparagus: $2.49/lb (front page)
Navel oranges: 3 lb bag, 2 for $4
Wetherby Cranberries: 12 oz. bag 2 for $4
Blueberries; 4.4 oz. package: 2 for $6
Pacific Rose apples: $1.99/lb
Regal Comice pear: $1.99/lb (pre-ripened, compared by many to the Royal Riveria Pear)
Green Giant whole mushrooms: $1.28/each 8 oz. package
Large red onions: 79 cents/lb


HyVee - Dec. 12 to Dec. 18
Del Monte Gold pineapple: $2.88/lb (front page)
Disney navel orange: 69 cents/lb
Hass ripe avocados: 2 for $3
California kiwifruit: 4 for $1
Green Giant Klondike Rose potatoes: 5 lb bag: $2.19
Grimmway Farms baby carrots: 1 lb bag 88 cents
Washington Extra Fancy apples: Jazz, Pacific Rose or Ambrosia: $1.77/lb (More Matters logo)
HyVee salad blends: 2 for $4: 5 to 12 oz. packages
Rio Star jumbo Texas grapefruit: 3 for $4
Melissa's Brown skin Korean pears: 2 for $5
Melissa's peeled and cooked chestnuts: $4.99/8 oz.
Monterey Grill-a-Bella Mushrooms: $3.48/ 8 oz.
Stemilt jumbo pears: 99 cents;lb
Sunburst tangerines: 3 lb bag/$2.99
Sunkist pistachio nuts: $4.48/16 oz. bag
Organic sweet potatoes: $1.48/lb
Earthbound Farm Organic Romaine Hearts: 2 for $5/3 count

Farm bill crunch

The Organic Farming Research Foundation is seeking to secure a couple of key policy wins in the next few days during the Senate farm bill debate. From the group's latest communication:

Farm Bill Debate Starting Up Today–Last Push for Dorgan-Grassley Amendment!

The Farm Bill had been stalled in the Senate for several weeks, but late last week, Senate leadership finally came to an agreement on the terms of the debate. The Senate began debating the bill on Dec 7, and voting is likely to start on Dec. 11. We wanted to give you two important updates:

• The Dorgan-Grassley Payment Limitations Amendment will likely be debated on Tuesday, Dec. 11 or Wednesday, Dec. 12. This amendment caps commodity payments to farmers at $250,000 and shifts the savings to conservation, sustainable agriculture, and rural development programs. It is the only chance to change the Bill’s unfair Commodity Program, which continues the multi-million dollar payments to the nations largest farms.

The Senate version of the Farm Bill will most likely include a “Sense of Congress” provision urging the USDA Agricultural Research Service (USDA-ARS) to devote a fair-share of research dollars to organic agriculture research. A “fair-share” means that the percentage of USDA-ARS research dollars spent on organic should match organic’s share of the US retail food market. A similar provision was included in the House version of the Farm Bill.


TK: Senators who oppose the Dorgan-Grassley Amendment will point to food security, food safety and the shrinking ag balance of trade as issues to rally around. The Dorgan-Grassley Amendment passed the Senate in 2002 but was stripped out in the House-Senate conference committee.

WIC coverage

I've compiled a few headlines of coverage of the change in WIC food packages,. Though very positive overall, note there is some grumbling in the first story from Delaware about reductions in milk, cheese, eggs and juice.

Healthy changes to WIC program shouldn't depend on food prices - Delaware Online

WIC food program being overhauled - AP

WIC looks to promote healthy living

More plant based and less dairy foods for American WIC National Nutrition Program

Canned fruit and veg part of WIC food packages