Whipsaw Wednesday

Another huge drop in the Dow today, and more activity - this time from the House Ag Committee - on derivatives. From the House Ag Committee:

WASHINGTON - Today, the House Agriculture Committee held a hearing to review the role of credit derivatives in the U.S. economy, and the role they may have played in the recent credit and financial crisis affecting markets around the world.

"We need to get a handle on these credit default swaps and determine the regulatory modifications that are needed to minimize the systemic risk to the economy that I am concerned they pose right now," said House Agriculture Committee Chairman Collin C. Peterson of Minnesota. "There is an estimated $55 trillion in credit default swaps somewhere out there, but no one knows for sure if any of these swaps offset each other, exactly who is on the hook for these swaps, who is trading with who and on what terms; and worst of all, no one has any idea who is solvent and who is upside down. The first step we need to take is to shed some light on just how the unwinding of these obligations will take place."

"Today's hearing was an opportunity for us to learn more about the role credit default swaps play in the marketplace, and how they contributed to the current economic crisis," said Committee Ranking Member Bob Goodlatte of Virginia. "It is important for us to understand how our regulators are addressing this issue and what steps should be considered for providing greater transparency with credit default swaps and reducing systemic risk."

The hearing examined the role of credit derivatives, and credit default swaps in particular, and the role they may have played in the series of recent failures and government takeovers of large financial institutions that engage in credit derivative transactions, including American International Group (AIG), Lehman Brothers, Bear Stearns, and Washington Mutual, among others.

The credit derivative market has grown dramatically over the last 15 years, with credit default swaps accounting for the most widely used derivative product by volume. The notional amount of credit derivatives is estimated to exceed $55 trillion.

The Committee heard testimony from two panels of witnesses, comprised of government regulators, academics, and industry stakeholders. The panelists testified about the current regulatory structure for regulated exchange and over the counter derivatives markets as well as possible arrangements for the clearing of credit default swaps.

Witness testimony is available on the Committee website: http://agriculture.house.gov/hearings/index.html. A full transcript of the hearing will be posted on the Committee website at a later date.

PEI potatoes - disaster assistance coming

Prince Edward Island potato growers have disaster assistance coming; from a recent USDA FAS report.

C$12.4 MILLION IN DISASTER ASSISTANCE FOR P.E.I. POTATO GROWERS: Potato growers on Prince Edward Island (P.E.I.) affected by extreme wet weather during the 2008 growing season are being offered up to C$12.4 million in federal/provincial financial aid to offset losses. Provincial potato specialist fear that placing potatoes in storage that have a high incidence of rot due to the excessively wet conditions could place all storage potatoes at risk, the province said. To reduce the risk to stored potatoes, AgriRecovery aid will be provided to encourage producers to destroy affected areas of their fields. The AgriRecovery program is part of the suite of Business Risk Management programs offered by the federal, provincial and territorial governments designed to provide producers protection in dealing
with the financial risks associated with farming, including weather related disasters. It is cost-shared on a 60-40 basis between the federal and provincial governments. More than 60% of the province’s potato growers have crop insurance and these producers will also be eligible for disaster asistance based on a formula that takes into account their chosen level of crop insurance protection and individual historic average yields. Comment: P.E.I. is Canada’s top producing potato province accounting for about 25% of total Canadian potato production. P.E.I. potato plantings in 2008 are estimated at 93,000 acres, 3.1% lower than last year. The extent of crop loss due to persistent wet weather throughout August and September is not yet known but concerns are rising among industry officials that the economic impact may be significant because the number of acres being abandon is rising as the harvest continues.

Truck rate report - Oct. 15

As diesel prices head lower, truck rates are under pressure. From the USDA weekly truck rate report, the Oct. 15 summary:


A shortage of trucks was reported for the following commodities and regions: onions from Idaho and Malheur County, Oregon and potatoes from Northwestern Washington. A slight shortage of trucks was reported for the following commodities and regions: potatoes from North and East Points Colorado and Upper Valley, Twin Falls-Burley District Idaho, potatoes and onions from Columbia Basin Washington. A slight surplus of trucks was reported for the following commodities and regions: potatoes from San Luis Valley Colorado. A surplus of trucks was reported for the following commodities and regions: sweet potatoes from Atwater Livingston California, carrots and grapes from Kern District California, pears from Sacramento & San Joaquin Valley California, apple pears, grapes, melons, peppers, and apples from San Joaquin Valley California, citrus, bell peppers, strawberries and avocados from South District California, mixed vegetables from South Georgia, sweet potatoes from Louisiana and Mississippi, citrus, avocados and mixed vegetables from Mexico Crossings Through Texas and watermelons from Texas. North and East Points Colorado noted an adequate supply of flatbed trucks and a slight shortage of refrigerated trucks. All other districts reported an adequate supply of trucks.

Most recent visitor locations

Though most of you are as quiet as church mice, your presence here is appreciated. Here are the locations of our most recent visitors. (repeats excluded)

Olathe, KS
Santiago, Chile
White Plains, New York
San Mateo, California
Grand Rapids, Michigan
Buenos Aires, Distrito Federal, Argentina
Marion, Ohio
San Diego, California
Boise, Idaho
Jacksonville, North Carolina
Homestead, Florida
Cheltenham, Maryland
Washington, District of Columbia
Niagara Falls, New York
Bristol, Connecticut
Las Cruces, New Mexico
La Farge, Wisconsin
Superior, Wisconsin
Broomfield, Colorado
Overland Park, Kansas
San Antonio, Texas
Bentonville, Arkansas
Newark, Delaware
Concord, Massachusetts
Newport News, Virginia
Milwaukee, Wisconsin
Gillette, Wyoming
Arlington, Virginia
Austria Innsbruck, Tirol
Warwick, New York
India Madras, Tamil Nadu
Bronx, New York
India Elur, Kerala
Omaha, Nebraska
Boca Raton, Florida
Mexico Guadalajara, Jalisco
Peoria, Arizona
Santa Barbara, California
Manhattan, Kansas
Brewster, Washington
Metairie, Louisiana
Newark, Ohio
Kansas City, Missouri
Salinas, California
Canada Vancouver, British Columbia
Dallas, Texas
Stanford, California
San Diego, California
Las Vegas, Nevada
Davis, California
Little Rock, Arkansas
Goodyear, Arizona
Stow, Ohio
Langhorne, Pennsylvania
Damascus, Maryland
Yonkers, New York
Canada Edmonton, Alberta
Madison, Wisconsin
Viroqua, Wisconsin
Columbus, Ohio
Pepperell, Massachusetts
Bridgeport, Connecticut
Concord, North Carolina

PMA comment - reauthorization of child nutrition programs

From Kathy Means of PMA, the association's comment on child nutrition reauthorization:

October 15, 2008

To: Robert M. Eadie, Chief, Policy and Program Development Branch, Child Nutrition Service, Food and Nutrition Service, Department of Agriculture

From: Kathy Means, Vice President, Government Relations and Public Affairs, Produce Marketing Association

Re: Comments on Request for Public Comments for Use in Preparing for 2009 Reauthorization of Child Nutrition Programs and the Special Supplemental Nutrition Programs and the Special Supplemental Nutrition Programs for Women, Infants and Children; FNS-2008-0011-0001

The Produce Marketing Association (PMA) is pleased to submit these comments to U.S. Department of Agriculture (USDA) in response to the May 20, 2008 Federal Register request for comments on the 2009 reauthorization of child nutrition programs.

PMA is the largest global not-for-profit trade association representing companies that market fresh fruits and vegetables. We represent 3,000 companies, from grower-shippers and supermarket retailers, to hotel and restaurant chains and overseas importers. Within the United States, PMA members handle more than 90 percent of fresh produce sold to consumers.

PMA welcomes the opportunity to submit comments on the upcoming reauthorization of federal nutrition programs, including the Special Supplemental Nutrition Program for Women, Infants and Children (WIC), National School Lunch Program, School Breakfast Program, WIC Farmers Market Nutrition Program. We encourage USDA and will similarly encourage Congress to take an expansive and innovative approach in this reauthorization. The issue of nutrition and the access and quality of the federal programs stand as critical issues to our nation. In the reauthorization, policymakers must address both hunger and obesity and examine the delivery of services through the federal programs.

Congressional reauthorization of child nutrition follows on the heels of 2008 farm bill. PMA joined with a coalition of specialty crop groups to advocate for advances in nutrition and other programs important to our members. In the farm bill, Congress demonstrated its support for increasing consumption of fresh fruits and vegetables in the school lunch and other federal feeding programs by providing for dramatic increases in the Fruit and Vegetable Snack Program and in fruits and vegetables commodity purchases (including via “DoD Fresh”). Congress recognizes that increasing consumption of fresh produce is an important public goal and that focusing nutrition programs on nutritious foods fosters lifetime habits of healthy eating.

The fact that Congress has already endorsed these principles should embolden USDA to develop recommendations that focus on the critical role of fresh fruits and vegetables in a healthful diet. All federal feeding programs must meet the Dietary Guidelines for Americans and the programs should maximize nutrition. There should be additional opportunities to make fruits and vegetables available both inside and outside of the schools. Though challenges exist to make perishable commodities available in schools, the reauthorization process provides the opportunity to address those challenges and increase access. The success of the snack program demonstrates the popularity of fresh fruits and vegetables when they are made available to students and other feeding program recipients.

In addition to improving access to healthy foods, the programs should expand efforts to teach children and feeding program recipients the importance of nutrition. Nutrition education programs can address long-term health issues and work in concert with the feeding programs. WIC is one such program that offers an immediate introduction to fresh and wholesome fruits and vegetables. WIC coupons should encourage the consumption of produce, including white potatoes, while reflecting the cost of today’s food, such as the Institute of Medicine has recommended (which would mean an increase allowances in the fruit and vegetable vouchers). The program, and other feeding programs, meet immediate nutritional needs while also building healthy eating habits.

PMA applauds your efforts to gather public comment in advance of the congressional reauthorization and we look forward to working with you throughout this process.

Which candidate do you support and why?

All readers with a pulse are eligible to answer this question and help me out. I am writing a story about the coming election and have this straightforward query for you. Answer anonymously or not.

Who will you vote for the in the upcoming presidential election and why?

Thanks.....

Senate Ag Committee - derivatives

Here is the link to the statements of panelist at yesterday's Senate Agriculture Committee hearing on the role of swaps and derivatives in the financial crisis. Some of the testimony is below.

Media coverage of the event

Senator warns of regulation

Default Swaps' Role in Global Turmoil `Exaggerated'





When: Tuesday, October 14, 2008
Where: 106 Dirksen Senate Office Building
Time: 9:30 a.m. - 11:30 a.m.
Panel I
Mr. Eric R. Dinallo
SuperintendentState of New York, Insurance Department
New York, NY
Dinallo Testimony

Dr. William K. Black
Associate Professor of Economics and LawUniversity of Missouri
Kansas City, MO 64110
Black Testimony

Dr. Richard Lindsey
President and CEO
Callcott Group, LLC
New York, NY
Lindsey Testimony

Panel II
Mr. Ananda Radhakrishnan
Director
Division of Clearing and Intermediary OversightCommodity Futures Trading Commission
Radhakrishnan Testimony

Mr. Terrence A. Duffy
Executive Chairman
CME Group
Chicago, IL 60606
Duffy Testimony

Mr. Robert Pickel
Chief Executive Officer
International Swaps and Derivatives Association, Inc.New York, NY
Pickel Testimony

Carbon sequestration and lawns

One of the message boards I belong to is a food and climate change group. Recently a discussion thread there addressed the issue of lawn care and carbon sequestration. It brought to mind the reality that perhaps 1% of our population is aware and concerned about problems the other 99% of us are either ignorant of or can't be bothered with. An essential question in all issues such as this; should public policy follow the lead of the 1% or wait for the other 99% to catch up? Obviously, the 1% would hope - perhaps vainly - that public policy would be that progressive. For the benefit of we 99%, I offer this from Lori of the climate change group:

The simplest effort that can reduce fossil fuel consumption associated with healthy lawn care is mowing with a sharp mower blade as it can reduces mower gas consumption by 25% or more: http://www.gardening.cornell.edu/news/mow_sharp.htm The next simplest task is raising the mower blade to it's highest setting (~3 in.) so you mow less often. Even the most avid lawn care enthusiast could live with the beautiful healthy lawn that can be achieved with these simple pesticide free steps. For those looking for more steps for educating the public about eco-lawn care this site has lots to offer: http://www.growinggreenlawns.org/publications/

Roubini: Where do we go from here?

Nouriel Roubini, the New York University professor, was a voice in the wilderness in predicting the financial crisis. Now, his outlook isn't exactly sunny - a 18 to 24 month severe recession - but at least he says we will avoid "systemic collapse." Yee haw! A panel of economists, including Roubini, give their take on the recession and the rescue plan.