FDA teleconference - June 27 - It is tomatoes, isn't it?

TK: Here is the link to the discussion group page with a link to today's FDA teleconference audio file.

A couple of notes from the press conference:
* over 800 victims
* Acheson continues to lower expectations FDA will find "smoking gun"
* Distribution chain also being investigated
* FDA has tested 1,700 samples from Fla. and Mexico so far and found no evidence of salmonella
* fairly extensive discussion of repacking role in fresh tomato industry
* CDC keeping an "open mind" about possible cause of outlook - reporters pressed CDC on this point, and CDC says there is a "strong correlation" with tomatoes. One reporter asked CDC if their concern was increasing that tomatoes were not the commodity as the outbreak continues- CDC said they are concerned they don't have evidence to confirm or refute their theory. CDC refused to list commodities 2, 3 and 4 that might be other suspects....
* "It isn't over yet."
* Acheson on repacking: "We have to examine the whole traceability system as to how to build a system so when we do have a problem we can figure out where it came from." No opinion offered by Acheson on whether legislation is needed or not.


TK: The CDC/FDA desperately needs a "smoking gun" on tomatoes as the source of this outbreak. It doesn't have one yet.

National Retail Report - June 27

Fruits rule food page ads for the July 4 holiday, reports the USDA's National Retail Report for June 27 shows.

Fruits Dominate Ads as Retailers Begin July 4th Sales
Nearly all retailers continued to advertise with summer-time themes and some began advertising this week for the July 4th holiday. Meats for the grill (especially ground beef, chicken, and pork) and fruits (especially berries and stone fruits) commanded much of the front page ad space. Many retailers also took the opportunity during this last week in June to
promote Dairy Month. Fruits dominated the produce ads this week with an increase of 14% over the previous week and accounted for nearly 61% of the total. Overall fresh produce ad activity continued to increase this week with a 4% gain despite a 8% decline in vegetable ad activity. The top 5 items were all fruits and included: peaches, nectarines, grapes, cantaloupes, and strawberries. These 5 items actually made up 53% of all regularly report fruit ads and nearly one-third of the total ads. In addition to the regularly reported items, berries (blackberries, blueberries in pint containers, and raspberries) reported in the seasonal category of this report were also featured quite heavily in both price and “buy-one-get-one-free” ads.


Fruits as Percentage of Total Fruit Ads June 27, 2008
Peaches 13%
Oranges, navel 0%
Pears, bartlett 0%
Nectarines 11%
Mangoes 7%
Grapes, green/red 11%
Grapefruit, red 0%
Limes 2%
Honeydew 1%
Cherries 3%
Cantaloupe 9%
Strawberries 9%
Organic Strawberries, 2%
Watermelon, mini 1%
Watermelon, seedless 8%
Apples, red delicious 1%
Avocadoes, hass 7%
Bananas, organic 0%
Blueberries, 4.4oz 0%
Bananas 0%
Lemons 1%
Pineapple 4%
Plums 9%


Vegetables as Percentage of Total Vegetable Ads - June 27, 2008
Broccoli, organic 1%
Broccoli 3%
Beans, round green 4%
Tomatoes on the vine 9%
Tomatoes 2%
Cabbage 2%
Carrots, baby organic 3%
Carrots, baby 5%
Asparagus 1%
Tomatoes, grape organic 1%
Tomatoes, grape 4%
Celery 0%
Corn 13%
Cucumbers 6%
Lettuce, iceberg 4%
Lettuce, romaine 4%
Mushrooms, white 6%
Onions, yellow 1%
Sweet Potatoes 1%
Squash, zucchini 6%
Potatoes, russet 1%
Peppers, bell red 5%
Peppers, bell green 6%
Onions, sweet 12%

Curb Your Enthusiasm? Nonsense!

You know, I think Karst purposely puts these incendiary missives up here to get my goat & make me blog. But that's just business as usual at Paranoid Rage-a-Holics Anonymous...

RE: the Oil Speculator Curbing, I think I'm a fairly savvy investor (just not this last quarter, thankyouverymuch) and in the past I've tried to relate buying stocks or trading options to what we go through daily as produce folks, where we buy & sell with the added wrinkle of time element added. And I've come to this conclusion, for oil as well as tomatoes: the market is the market is the market, and it cannot be controlled. A 402-19 vote to curb speculation? Overwhelming! Me, I'm with the nineteen that saw the 402 for the grandstanders that they are.

You have your supply. You have your demand. And then...you have your psychology-sentiment-fervor-lack of restraint, whatever the heck you want to call it. Certainly, it feeds on itself. Three or four Novembers ago, the California green tomato deal ended abruptly with early rains, the Palmetto/Ruskin (FL) deal wasn't ready, the backyards had the 'blight' (my Iowa mother-in-law thinks every non-perfect tomato in her garden has 'the blight'), and consequently the market shot up to nearly $40.00 FOB.

And we fed into it. Alan Greenspan, the best in the history of Fed chairmen in my opinion, would no doubt have called it 'unbridled enthusiasm'. We knew beyond doubt that supply was coming. But we still bought when we could & made a long profit as the invoice amounts were growing exponentially.

Then, like a switch, demand stopped. Five bucks a pound for a tomato will do that every time. And like a house of cards, it was implosion time. The market was in the teens within a matter of days, and the street guys were dancing to that old accounting tune, FIFO, first-in-first-out, or more accurately, first-loss-best-loss.

The point of all this, from that trying time that put more than a few grey hairs on this head, is that we couldn't control it. No one can. Sure, factor in some greed in these instances, but smart people know about the day of reckoning that is the flipside. And the oil speculators know full well that buying this high, feeding into the frenzy, has the inherent risk of being caught, leaving them to scramble when the music stops and they've run of chairs.

Have a quiet weekend.

Later,

Jay

Another FDA briefing

I'll call in to report any developments, but it doesn't appear to be a breakthrough news event this afternoon....

WHAT:
A media availability with experts from the U.S. Food and Drug Administration and the Centers for Disease Control and Prevention to answer questions about the ongoing investigation of the salmonella outbreak among certain types of tomatoes.

WHO:
--David Acheson, M.D., associate commissioner for foods, FDA
--Melinda Plaisier, associate commissioner, Office of International Programs, FDA
--Faye Feldstein, acting director, Office of Food Defense, Communication and
Emergency Response, Center for Food Safety and Applied Nutrition, FDA
--Steve Solomon, deputy director, Office of Regional Operations, FDA
--Patricia Griffin, M.D., chief, Enteric Diseases Epidemiology Branch, CDC


WHEN:
Friday, June 27, 2008, 3 p.m. EDT

House to CTFC: Stop excessive oil speculation

Oil prices aren't going down, despite the fact that some economists say that supply and conditions don't warrant $130/barrel pricing. The House Agriculture Committee issued this press release yesterday about a new bill designed to curb "excessive speculation" in the energy futures market. From the House Agriculture Committee:


Today, the House of Representatives passed a bill requiring the Commodity Futures Trading Commission (CFTC) to utilize all its authority, including emergency powers, to take steps to curb excessive speculation in the energy futures markets. H.R. 6377, the Energy Markets Emergency Act passed the House overwhelmingly by a bipartisan vote of 402-19. "A growing number of people believe a flood of speculative money into energy futures is driving the record prices in crude oil," said House Agriculture Committee Chairman Collin C. Peterson of Minnesota during floor debate on the bill. "CFTC must take immediate steps to ensure that index and hedge fund money is not the cause for price manipulation and should take any necessary action to curb excessive speculation in the markets. These steps will help restore consumer confidence and reassure the American taxpayer that the futures markets are unctioning properly."

H.R. 6377 directs CFTC to use all its authority, including its emergency powers, immediately to curb the role of excessive speculation in the energy and swaps futures markets and take other corrective actions as necessary to eliminate any market disturbance that prevents energy arkets from accurately reflecting the forces of supply and demand.

CFTC is the chief regulator of futures and option markets in the United States. It was created as an independent agency in 1974 with the mandate to enforce and administer the Commodity Exchange Act, to ensure market integrity, to protect market users from fraud and abusive trading practices, and to prevent and prosecute manipulation of the price of any commodity in interstate commerce.

Congressional oversight of CFTC is under the jurisdiction of the House Agriculture Committee, chaired by Congressman Peterson. The Farm Bill, enacted into law earlier this month over the President's veto, reauthorizes CFTC through 2013.

In July, the House Agriculture Committee will examine legislative proposals that would affect CFTC's authority over energy futures and swaps markets. Several bills affecting regulation of the energy futures and swaps markets have been introduced and referred to the Committee in the 110th Congress.

"The Committee will thoroughly and carefully examine legislative proposals that would affect regulation of these markets," Peterson said. "Our review will be comprehensive and public so that we may work toward a consensus, bipartisan bill that will strengthen CFTC's ability to identify fraud and manipulation in the markets."

FDA bonus money draws ire

The FDA should be reminded it can't "bonus" its way to an effective food safety system, and Rep. Rosa DeLauro is the one to do it. This just slid across the inbox:

Congresswoman Rosa L. DeLauro (CT-3) issued the following statement regarding the Food and Drug Administration awarding employees more than $35 million in incentive pay for fiscal year 2007, a 29% jump from the previous year. Among the agency's highest-paid officials, 17 made more than $200,000 in 2007, or more than a member of Congress or the U.S. attorney general, according to FDA documents. The figures also show that 28 top FDA officials together received more than $1 million in retention and merit cash bonuses, an average of $35,714. “Over the past several years, consumers have been assaulted with numerous unsafe foods and drugs, so it is extremely disappointing that the FDA would expend such a significant amount of limited resources toward bonuses for upper-level managers. “It would be entirely appropriate if these funds instead were allocated toward retaining key scientists and career employees who make up the backbone of the agency. Providing bonuses to top-level political managers who contribute to the low morale and negative culture at the agency is unconscionable.”

Vegetable and Melon Outlook - Rapid input price increases sqeeze farmers

The June 26 USDA ERS Vegetables and Melons Outlook report is available here. Gary Lucier and Rachael Dettman authored the report and headlined the summary with the discussion of fast-rising input prices:

Vegetable and melon net returns are being eroded by rapidly escalating input prices, particularly for fuel and fertilizer. Based on an index calculated by ERS using items pertinent to vegetable production, average input prices paid by vegetable and melon growers increased 7 percent in 2006, 8 percent in 2007, and are currently running 14 percent above a year earlier so far in 2008. At the same time, average prices received by commercial vegetable growers have not kept pace and are currently running below a year earlier.


More highlights from the report:


Tablestock Russet potatoes shipped from Idaho increased 70 percent to $14.63 per 50 pound carton. Multiple factors may explain increased tablestock prices including quality concerns in the 2007 storage crop, decreased spring acreage, delayed development in summer and fall crops, and increased export volume.
Sweet potato production has risen an average rate of 5 percent annually since 1998, due to improving demand for fresh and processed sweet potatoes. Demand will likely remain strong well into next year due in part to the increased popularity of sweet potato fries, which can now be found on restaurant menus across the nation.

More highlights..or lowlights.....


Fresh vegetables: During the first 5 months of 2008, fresh-market vegetable prices at the point of first sale (e.g., grower or shipping point) averaged 16 percent below a year earlier. Lower average prices were received for vegetable crops such as celery, cucumbers, lettuce, snap beans, and carrots, easily outweighing higher average prices for tomatoes and cauliflower. With a large storage crop last fall, fresh drybulb onion prices were a fraction of the highs of a year earlier through April. Fresh vegetable shipping-point prices will likely be under upward pressure this summer as growers battle higher production costs and water-related issues.
Melons: Similar to the situation a year ago, spring supplies have begun to improve after a late start caused by a combination of cool, wet weather. April-May producer prices for melon crops averaged 17 percent above a year ago. However, although May shipments of watermelon, cantaloup, and honeydew increased seasonally, only watermelon volume managed to exceed year-earlier levels. As a result, average melon prices during May remained near the highs of a year ago.
Mushrooms: During the initial 5 months of 2007, the average import value for fresh agaricus mushrooms declined 9 percent from a year earlier to $1.24/pound. During the same time, the average import value for non-agaricus specialty mushrooms increased 15 percent to $0.84/pound.

More on input prices...

Input prices play a major role in farm production expenses and farm profitability. Over the past decade, prices paid (unadjusted for inflation) by vegetable and melon growers for production inputs have moved steadily higher. An index calculated by ERS using items pertinent to vegetable production (leaves out farm-origin inputs like feed and livestock) indicates that average input prices increased 7 percent in 2006, 8 percent in 2007, and is currently running 14 percent above a year earlier in 2008. This easily exceeds price changes in the general economy over the past few years. At the same time, average prices received by commercial vegetable growers have not kept pace and are currently running below a year earlier. Price changes are not the only factors determining net farm revenue. Over the long run, rising yields can help spread escalating costs over more units, keeping the farm cost per pound of vegetables down. However, when input prices rise sharply over a short period of
time as they have since 2007 (fig. 10), increases in per-acre yields can not overcome these rapid cost increases, pulling net revenue down.

TK: The 41-page USDA report includes a table show second quarter 2008 input costs rising, compared with the second quarter a year ago, by 30% for seed, 64% for fertilizer and 46% for fuels.