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Public/private partnerships build regional food supply chains

U.S. Department of Agriculture deputy undersecretary for rural development Lillian Salerno announced three new public/private partnerships that will create economic opportunities in Elgin, Texas; Fresno, Cal., and Chicago, Ill. The Food LINC (Leveraging Investment for Network Coordination) partnerships will help community leaders and private philanthropic partners develop regional food supply chains that drive job growth and increase farm income while helping to meet consumer demand for regionally produced food.

"USDA investments in regional food have the biggest impact when coordination between producers, processors, distributors and buyers is strong and locally led," Salerno said. "We are excited to add three new locations to the nationwide network of cities that are already leveraging government and private resources to build robust regional food systems, for the benefit of consumers, producers and the economy."

USDA Food LINC partnerships are already working in ten communities to better connect the urban demand for local food and agricultural products with the supply from regional farmers, ranchers and entrepreneurs. USDA's initial investment of $1 million provided the seed capital to attract an additional $2.5 million from 18 philanthropic organizations, plus more than $1.5 million from the Appalachian Regional Commission and the Delta Regional Authority. This expansion establishes partnerships in three new regions:

  • The Texas Center for Local Food will help farmers in the Elgin region receive more for their products, support good jobs in rural communities and improve access to locally produced food. A town of 8,000 people, Elgin is centrally located within a 200-mile radius of nearly 18 million Texas residents, making it an ideal production and transportation hub for the region.
  • Food Commons Fresno will incubate a community food hub and grocery store in South Fresno, a community education space and a processing and distribution facility to develop markets for agricultural producers in California's San Joaquin Valley.
  • FamilyFarmed will help producers from the Midwest take advantage of Chicago's growing demand for regionally sourced, sustainably grown specialty grains.

USDA has partnered with The Wallace Center to document work in each of the 13 Food LINC regions and share best practices with other organizations that are working to grow similar opportunities in their communities. Other Food LINC partnerships include the Louisville Farm to Table Program in Kentucky; the Conservation Fund in North Carolina; Common Market in Georgia; Rocky Mountain Farmers Union in Colorado; La Montañita in New Mexico; Fair Food Philadelphia; Metro Washington Council of Governments in Washington, D.C.; Appalachian Sustainable Development in Virginia; Soul City Hospitality in Mississippi, and Communities Unlimited in Tennessee.

Tonsager named FCA chairman, CEO

Dallas Tonsager has been designated by President Barack Obama as chairman and chief executive officer of the Farm Credit Administration (FCA). The designation was effective Nov. 22.

Tonsager has served as a member of the FCA board and concurrently as chairman of the board of directors of the Farm Credit System Insurance Corp. (FCSIC) since his appointment to the position by Obama in March 2015. His term on the FCA board will expire on May 21, 2020. He succeeds Kenneth A. Spearman, who has served as chairman and CEO since March 13, 2015. Spearman will remain a member of the FCA and FCSIC boards until a successor is appointed and confirmed by the Senate.

Tonsager brings to his position on the FCA board extensive experience as an agriculture leader and producer, and a commitment to promoting and implementing innovative development strategies to benefit rural residents and their communities.

Tonsager served as undersecretary for rural development at the U.S. Department of Agriculture from 2009 to 2013. In this position, he expanded broadband communication in rural America and implemented other key elements of the Recovery Act for Rural America. He dramatically expanded USDA’s water and wastewater programs, expanded funding for first- and second-generation biofuels and funded hospitals and other public facilities in rural America.

In addition, Tonsager worked with the Farm Credit System and others to set up new venture capital investment funds. From 2010 to 2013, he was a member of the Commodity Credit Corp. board of directors.

From 2004 to 2009, Tonsager served as a member of the FCA board as well as a member of the FCSIC board of directors.

From 2002 to 2004, he was the executive director of the South Dakota Value-Added Agriculture Development Center. In this position, he coordinated initiatives to better serve producers interested in developing value-added agricultural projects. Services provided by the center include project facilitation, feasibility studies, business planning, market assessment, technical assistance and education.

In 1993, he was selected by President Bill Clinton to serve as USDA’s state director for rural development in South Dakota. Tonsager oversaw a diversified portfolio of housing, business and infrastructure loans in South Dakota. His term ended in February 2001.

A longtime member of the South Dakota Farmers Union, Tonsager served two terms as president of the organization from 1988 to 1993. During that same period, he was a board member of Green Thumb Inc., a nationwide job training program for senior citizens. In addition, he served on the board of National Farmers Union Insurance from 1989 to 1993, and he was a member of the advisory board of the Commodity Futures Trading Commission from 1990 to 1993.

Tonsager grew up on a dairy farm near Oldham, S.D. For many years, he and his older brother owned Plainview Farm in Oldham, a family farm on which they raised corn, soybeans, wheat and hay. Tonsager is a graduate of South Dakota State University, earning a bachelor degree in agriculture in 1976.

Names in the News

Names in the News
HAMLET PROTEIN INC., Horsens, Denmark — Jill Graham has joined the company as sales manager for the Iowa/Minnesota marketplace. Graham will be responsible for representing piglet nutrition products in Iowa and Minnesota. She was previously with Alltech Inc.

Evonik to acquire METEX technology

Evonik Industries AG of Germany and METabolic EXplorer (METEX) of France have agreed that Evonik will acquire a technology package from METEX to strengthen its biotechnology platform for amino acids, following an agreement signed Nov. 28 in Paris, France.

The package includes METEX’s entire technology portfolio for the fermentative production of methionine, as well as patents, essential bacteria strains and the inoLa brand. METEX considers that this agreement will underscore the relevance of METEX’s alternative technologies and will strengthen its ability to commercialize its other technologies.

The transaction also includes a back license agreement pertaining to certain patents to be transferred to Evonik; this agreement will allow METEX to continue using these patents for activities other than those relating to methionine. Furthermore, the companies intend to explore the possibility of a research and development cooperation agreement on the development of biotechnologically produced amino acids.

The total consideration for the transfer of this technology, including a two-year transfer service agreement, amounts to 45 million euros.

Amino acids produced by fermentation are an important pillar of Evonik’s product portfolio for sustainable animal nutrition. Production process efficiency for Biolys (lysine), ThreAMINO (threonine) and TrypAMINO (tryptophan) has been continuously improved over the past few years, and the portfolio was recently expanded to include ValAMINO (valine).

“Through its fermentative methionine production process, METEX has demonstrated excellent development work and was able to secure wide-ranging patent protection,” said Dr. Emmanuel Auer, head of Evonik’s Animal Nutrition Business Line. “The acquisition of this technology will expand our technological leadership for amino acids produced both chemically and by fermentation.”

“We have been able to show that the fermentation process for manufacturing methionine is a potential alternative to familiar manufacturing routes. For all of the company’s stakeholders, this is a validation of our technical leadership. Proceeds from the sale will accelerate our ability to further develop and market our other technologies,” added Benjamin Gonzalez, chief executive officer of METEX. “The technology will be transferred to Evonik immediately after the required approval of Evonik committees. This is expected before mid-December 2016.”

Founded in 1999 and headquartered in Clermont-Ferrand, France, METEX is an industrial biochemistry company specializing in the development of biotechnology production processes for bio-based substances used in a wide variety of everyday products such as textile fibers and feed additives. In the future, METEX will sharpen its focus on developing environmentally safe production processes for the consumer goods industry, thus catering to consumers’ expectations of sustainable production processes.

With more than 60 years of experience in the production of essential amino acids, Evonik offers solutions for efficient and sustainable animal nutrition to customers in more than a hundred countries around the world. 

Inside Washington: Trump squashes all hopes of TPP

In transitioning from campaign rhetoric to presidential action, president-elect Donald Trump has taken a hard-lined stance on trade and specifically the Trans-Pacific Partnership (TPP). Any hopes of that coming back to life were put to rest earlier this week when Trump made a YouTube address known that within his first 100 days of office he would withdraw from the TPP.

Agricultural groups were correct in their push to have TPP passed in the lame duck. But not only will they fall short, but they may never be able to see TPP cross the finish line. Even though the immediate outlook looks bleak, agricultural groups have their work cut out for them in explaining to the new administration the crucial role trade plays in U.S. farmers’ success and profitability.

Trump continues to say he wants to create jobs for those in the United States. However, if agriculture loses its competitiveness in world trade, more jobs are going to go away. In reaching out to several commodity groups, many did not have a statement on the latest Trump’s statement on TPP, further proving it came as a sucker punch to many in ag. Many did say they’ll continue to educate the new Administration on the importance of trade to agriculture.

Colin Woodall, vice president of government affairs at the National Cattlemen’s Beef Assn., shared that every day TPP is not in effect, U.S. cattle producers lose $400,000. Australia is able to access the Japanese market at a substantially lower tariff rate, which TPP would help level the playing field on.

Trump has stressed the desire for bilateral agreements. However, Woodall said bilateral agreements would be several years away, and what is to say those who are currently involved in TPP negotiations wouldn’t walk away from future bilateral agreements because of all the time and resources that were unable to be capitalized on with the failure of TPP.

Brett Stuart, chief executive officer of Global AgriTrends, said the announcement is disappointing for the pork industry. “I’m sure there are groups that will be regrouping and re-strategizing, but honestly I don’t see it being a major negative shift to the U.S. pork market share in Japan.”

Japan’s market is very lucrative, Stuart said. “Things are good in the market. We would have loved that TPP agreement which would have been able to put us a little more competitive vis-à-vis the domestic production. It would have taken away some of their protection around their domestic industry. But, moving forward, we are going to continue to ship a lot of pork to Japan and it’s going to continue to be a key profit driver for the U.S industry.”

But ag must continue to drive the message that their jobs are dependent on trade. Miranda McDaniel, spokeswoman for the American Feed Industry Assn., said AFIA will be reminding the incoming administration that this trade deal will help secure American jobs, a priority of Mr. Trump.

“One in five jobs in the U.S. today are trade related, and nearly 17 million jobs are related to agriculture. TPP has the potential to increase exports, therefore increasing export-related jobs, which will help boost our rural economies," McDaniel said.

Stuart added when listening to the rhetoric of the President-elect, he’s been very aggressive about trying to build jobs at home. He’s attacked trade because he wants to bring jobs back to the U.S. “Trade is a two-way street. Most of his rhetoric has been about jobs and keeping jobs in the U.S.”

“The U.S. has an incredibly robust globally competitive [agriculture] manufacturing base; it employs millions. It has a trade surplus. No trade deficit; we have a huge trade surplus in agriculture production. And so if you think about the rhetoric of the President-elect, it’s hard to believe that he would be trying to shift trade deals or change trade in a way that’s going to negatively affect a huge U.S. manufacturing base of agriculture. I guess time will tell, but looking at it, I would think the focus on his trade actions are going to be about bringing jobs back. It’s hard for me to imagine a scenario where these trade deals are put in place in a way that really negatively affects the U.S. agriculture manufacturing base. Again, it’s all speculation at this point.”

Woodall said if Trump tinkers with the North American Free Trade Agreement it could definitely jeopardize access with two of the top five agricultural export markets. “We don’t need any additional downward pressure on cattle prices. We have concerns about continued talk to reopen or redo NAFTA. It does not bode well for the U.S. cattle industry,” Woodall said.

Chris Galen, spokesman for the National Milk Producers Federation, said, “While momentum behind specific trade deals such as TPP and TTIP has faded for the time being, the need for farmers to reach overseas markets has not.”

NMPF will continue to tout the benefits to the U.S. dairy sector of access to foreign markets, as the future growth of American agriculture depends heavily on being able to reach overseas markets. “NMPF will highlight how dairy exports are important both to farmers themselves, as well as to thousands of other workers in rural America whose jobs depend on a healthy and growing infrastructure for milk production, processing and marketing,” he said.

EPA finalizes increase in RFS

The U.S. Environmental Protection Agency (EPA) today finalized increases in renewable fuel volume requirements across all categories of biofuels under the Renewable Fuel Standard (RFS) program. In a required annual rulemaking, today’s action finalizes the volume requirements and associated percentage standards for cellulosic biofuel, advanced biofuel, and total renewable fuel for 2017, and for biomass-based diesel for 2018.

“Renewable fuel volumes continue to increase across the board compared to 2016 levels,” said Janet McCabe, the agency’s acting assistant administrator for the Office of Air and Radiation. “These final standards will boost production, providing for ambitious yet achievable growth of biofuels in the transportation sector. By implementing the program enacted by Congress, we are expanding the nation’s renewable fuels sector while reducing our reliance on imported oil.”

Some key elements of today’s action:

•           Non-advanced or “conventional” renewable fuel increases in 2017, meeting the 15 billion-gallon congressional target for conventional fuels.

•           The standard for biomass-based biodiesel – which must achieve at least 50% lifecycle greenhouse gas emission reductions compared to petroleum-based diesel – grows by 100 million gallons. The required volume of biomass-based diesel for 2017 is twice that of the minimum congressional target.

•           Cellulosic biofuel – which must achieve at least 60% lifecycle greenhouse gas emissions reductions – grows 35% over the 2016 standard.

•           The advanced biofuel standard – comprised of biomass-based diesel, cellulosic biofuel, and other biofuel that achieves at least 50% lifecycle greenhouse gas emissions reductions – increases 19% over the 2016 standard.

•           Total renewable fuel volumes grow 1.2 billion gallons from 2016 to 2017, a 6% increase. 

Renewable Fuel Volume Requirements for 2014-2018
 

2014

2015

2016

2017

2018

Cellulosic biofuel (million gallons)

33

123

230

311

n/a

Biomass-based diesel (billion gallons)

1.63

1.73

1.9

2.0

2.1

Advanced biofuel (billion gallons)

2.67

2.88

3.61

4.28

n/a

Renewable fuel (billion gallons)

16.28

16.93

18.11

19.28

n/a

Red meat supplies up slightly from last year

The U.S. Department of Agriculture’s latest “Cold Storage” report showed total frozen poultry supplies on Oct. 31, 2016, were down 9% from the previous month and down 3% from a year ago. Total stocks of chicken, at 774.0 million lb., were up 1% from the previous month but down 10% from last year. Total turkey in freezers was 396.3 million lb., down 22% from last month but up 13% from Oct. 31, 2015.

Total red meat supplies in freezers were down 3% from the previous month but up 1% from last year at 1.17 billion lb., which USDA said was the most on record for the month of October. Total beef in freezers was 532.3 million lb., a 3% increase from the previous month and a 5% increase from last year. Frozen pork supplies, at 598.0 million lb., were down 7% from the previous month and down 1% from last year. Stocks of pork bellies were down 17% from last month but up 16% from last year.

Total natural cheese stocks in refrigerated warehouses on Oct. 31, 2016, were 2% lower than the previous month but 6% higher than last year. Butter stocks were down 15% from last month but were 27% higher than a year ago.

Rabobank: Global food prices set to stay low in 2017

Rabobank: Global food prices set to stay low in 2017

Record-high stock levels are set to keep worldwide food prices low during 2017 even as inflation starts to rise in many developed economies, according to a major report from Rabobank, the leading global food and agribusiness bank.

Staple food commodities like wheat, corn and soybeans – a key part of livestock diets across the world – are being stored in record volumes, weighing on the prices which are expected to be paid to farmers next year.

In the Rabobank Global Outlook 2017 report, which looks at the prospects for 13 crucial food and agricultural commodities, Rabobank highlights the role of China in creating further uncertainty in the market. The world’s most populous country has huge stocks of many key commodities, with estimates suggesting it holds 60% of global cotton supplies, over half of corn, 40% of wheat and 21% of soybeans.

If China decides to begin selling some of these reserves, this could depress global prices for commodities including cotton, sugar, corn, soybeans and vegetable oil, according to Rabobank.

The bank expects U.S. inflation to increase to around 2% during 2017, while prices are also expected to rise in the UK and, to a lower extent, the Eurozone. Even these small increases may be enough to attract attention later in 2017 to commodity index funds, which offer a hedge against inflation while agricultural prices remain low, the report noted.

“After three years of declining prices and extreme weather wrecking crops in many important agricultural regions, 2017 looks set to bring some much-needed stability to food prices,” said Stefan Vogel, Rabobank’s head of agri commodity markets and an author of the Rabobank Global Outlook 2017. “Nevertheless, record global stock levels mean prices are likely to remain stubbornly low – good news for consumers but less so for the world’s farmers.”

The most striking wildcard, according to Vogel, is China. “Given the size of its population, its economic growth and its massive share of global agri commodity imports, it exerts a colossal influence on world food prices. And with huge stocks of many of the most important commodities – including corn, wheat and soybeans – any decision by China’s policymakers to begin selling down these reserves would have a profound effect on world markets as Chinese imports would decline.”

Elsewhere, Rabobank predicts that volatility in the global currency markets will move agricultural commodity prices during 2017, with the euro likely to depreciate as a result of French, Dutch and German elections during 2017.

The potential impact of such currency fluctuations can be seen in the UK where the decline in the value of the pound since the Brexit vote in June has pushed up the price of food imports by as much as 16% while boosting agricultural exports. As a result British grain sales abroad are at their highest level for almost 20 years.

Following the election earlier this month of Donald Trump as president of the U.S., Rabobank is cautious on the outlook for the U.S. During his campaign Trump suggested he may pursue protectionist economic policies. Such action could have wide-reaching effects on American imports and exports of commodities if trade agreements are revised, the bank said.

In terms of individual commodities, coffee prices are expected to decline significantly, with an especially bearish outlook on arabica coffee, while robusta coffee prices are expected to be supported by a large production deficit. However, lower prices are unlikely to find their way through to consumers, the report said.

Rabobank predicts the ongoing shift of developing countries to more meat-based, Western-style diets, which will continue to drive consumption – and therefore support the prices – of soybeans, which play a major role in feeding livestock, pork and beef. Dairy prices should also rise during 2017 as demand steadily increases, according to Rabobank.

 “While farmers, consumers and commodity traders will all be keeping an eye on potentially volatile currency prices during 2017, overall the fundamentals remain strong,” Vogel said. “The global population is growing and prosperity is rising, fueling the switch to more expensive, meat and dairy-rich diets. In our view global food prices should in the main hold up, even if farmers are braced for little or no commodity price growth during the year.”

First published in 2010, the Rabobank Global Outlook report looks closely at the prospects for the following year of 13 key food and agricultural commodities. 

Soybeans, soybean oil bound higher after EPA raises biofuel targets: Podcast

Soybean futures were higher Wednesday for the fifth straight session and the highest since August, helped by a surge in the soybean oil market. Soybean oil rose after EPA on Wednesday raised its targets for biofuel use in 2017.

Ethanol sped higher after the EPA news but quickly retreated to trade about unchanged near midday.

Wheat markets were lower as forecasts show above-normal precipitation next week in the dry Southeast.

Bob Burgdorfer of Farm Futures reporting. Farm Futures is a sister publication of Feedstuffs.

 

LIVESTOCK MARKETS: Milk prices to depend on milk production

LIVESTOCK MARKETS: Milk prices to depend on milk production

Volatile cheese prices have meant volatile Class III milk prices this year, University of Wisconsin-Madison professor emeritus Bob Cropp said. On the Chicago Mercantile Exchange (CME), 40 lb. cheddar blocks averaged a low of $1.3174/lb. in May but rebounded to $1.7826 in August, only to fall back to $1.6035 in October. The result was that the Class III price was $12.76 in May, $16.91 in August and $14.82 in October.

“The good news is that while November cheese prices have had some rather big price increases as well as decreases, overall cheese prices have shown surprising strength in November — to the point that the November Class III could be near $16.75,” Cropp said.

Source: USDA NASS

During November, 40 lb. cheddar blocks started out at $1.80/lb. and got as high as $1.9425, and barrels started at $1.73/lb. and got as high as $1.86. As of Nov. 18, Cropp said prices were lower, with 40 lb. blocks at $1.91 and barrels at $1.75.

“After Christmas season cheese orders are filled, cheese prices are likely to weaken, resulting in a Class III in the low-$16s for December,” he said.

Cropp said the Class III price will average near $14.75 for the year, compared to $15.80 last year and $22.24 for 2014.

Despite adequate cheese stocks, Cropp said the price has increased. Sept. 30 American cheese stocks were 6.5% higher than a year ago, but continued good cheese sales have tightened the availability of fresh 40 lb. block cheddar cheese, while stocks of more aged cheese are much more plentiful, he said.

“Stocks of cheddar barrel cheese have not been as tight, explaining the rather large existing price spread between blocks and barrels,” Cropp added.

Exports didn't provide any help for cheese prices, as September cheese exports were just 0.6% lower than a year ago but 20.5% lower than strong exports of 2014. Cropp said higher cheddar cheese prices may be partially explained by cheese production. While the production of Italian types has been running more than 4% higher than a year ago, Cropp said cheddar cheese production was 0.5% lower in September and 0.8% lower year to date. Total cheese production was 1.6% higher in September and 1.9% higher year to date.

Class IV prices have not been as volatile, according to Cropp. CME butter averaged over $2/lb. January through September before dropping to an average of $1.8239 for October. However, strong buying to build inventory for the peak holiday sales has pushed butter prices up again, he said.

At the start of November, butter was $1.86/lb. and now is $2.03. Nonfat dry milk prices slowly strengthened to reach an average of 91.6 cents/lb. in September but fell back some to 88.52 cents for October and has now increased to 90 cents. The Class IV was a low of $12.68 in April, a high of $14.84 in July, dropped to $13.66 in October and will be near $13.80 for November.

Cropp said interest in U.S. butter picked up in September, with exports 137% higher than a year ago but still 30% lower than September 2014 exports and 73.5% lower than 2014 exports year to date. Nonfat dry milk/skim milk powder exports have held up, with September exports 10% higher than a year ago and year-to-date exports 5% higher than last year and even 3% higher compared to 2014.

Looking ahead into 2017, Cropp said milk prices will depend a lot on the level of milk production. On that note, milk production continues to run well above year-ago levels, with October production up 2.5% (Figure). Milk cow numbers have been declining falling by 6,000 head since peaking in August. Of the 23 reporting states, 11 had fewer cows than a year ago, but more milk per cow is driving the increase in milk production. Milk per cow was 2.3% higher than a year ago. Of the 23 reporting states, just three had lower milk per cow than a year ago.

USDA is forecasting 2017 milk production to increase another 2.1%.

“That is a lot of milk, but we can expect high milk prices from continued good butter and cheese sales, as well as improved exports as we move through next year,” Cropp said.

He said the growth in world milk production has slowed as major exporters — the European Union, New Zealand, Australia and Argentina — all are experiencing lower milk production, with either a decline or relatively small increases for 2017. The U.S. is the only major exporter experiencing increased milk production, Cropp added.

World demand has picked up, with China and other major importers being more active, according to Cropp.

“This tightening of world supply and demand will reduce the buildup of world surplus, increasing world dairy product prices and making U.S. dairy products more competitive on the world market," he said. "World prices are already showing strength. Prices on the Global World Dairy Trade have strengthened for seven of the last eight trades.”

As of now, Cropp said it looks like the Class III price may be in the high $15s at the start of 2017, the low $16s by the end of the first quarter, the mid-$16s by the second quarter, the higher $16s in the third quarter and the $17s as a possibility in the fourth quarter. The average for the year could be near $16.50 — a good improvement over the expected $14.75 this year, Cropp noted.

While he said this is more optimistic than the U.S. Department of Agriculture and some other forecasters are projecting — "USDA has the Class III averaging from $15.30 to $16.20 — but final milk prices will be subject to any rather small changes in milk production, sales or exports.”