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Nitrates in water not linked to corn acreage

As Iowa farmers have planted more acres of corn to meet the demand driven by the corn-based ethanol industry, many models predicted that nitrate concentrations in Iowa streams would increase accordingly. However, recent University of Iowa College of Engineering research based on water monitoring casts doubt on these predictions.

IIHR-Hydroscience & Engineering researchers Chris Jones, Keith Schilling and Kung-Sik Chan, along with colleagues at the Iowa Soybean Assn., evaluated water monitoring results from more than 7,000 water samples collected in the Raccoon River watershed of central Iowa from 1999 to 2014. The team also had access to fertilization data for 700 fields in the watershed.

The information led the researchers to believe that nitrate levels are less dependent on corn production acres than previously thought. As more acres were planted in corn (and fewer in soybeans), fertilizer application increased 24% in the watershed. Interestingly, river nitrate did not increase and may have even decreased slightly at most watershed locations, the announcement said.

The results were published in the Journal of Soil & Water Conservation.

“One might conclude from these data that fertilizer use efficiency improved, (but) we believe that was not the case,” Jones said. "The amount of nitrogen leaving the watershed in the harvested grain actually declined a little bit during our study.”

Where did the additional fertilizer nitrogen go? Jones said clues can be found in the differences between corn and soybean plant growth, soil chemistry and the decay of stalks and other crop residues. Nitrate-nitrogen can accumulate and be immobilized in the soil under corn. On the other hand, dead and decomposing soybean plants can increase the amount of nitrate in the soil that's vulnerable to loss (more so than corn stalks), especially if accompanied by fall tillage.

Also, there is evidence that tile discharge may increase under soybean fields as a result of reduced plant evapotranspiration compared to corn. Therefore, because tile nitrate concentrations are similar under both corn and soybeans, more tile flow under soybeans can mean more nitrate delivered to streams. As a result, Jones said he and his colleagues believe that declining soybean acres may have reduced the cropped areas most vulnerable to nitrate loss — more than compensating for the increased fertilizer inputs on corn acreage.

Subsequent research conducted by Schilling, Jones and Gabriele Villarini also supports this idea. A mathematical model developed by Villarini shows that Raccoon River nitrate is dependent upon the previous year’s soybean area.

“Understanding this process could prove important as we try to reduce the loss of nutrients to Iowa streams as part of the Iowa Nutrient Reduction Strategy,” Jones said. “We know we can’t just focus on fertilization of corn. We need a systems approach to improve water quality. It also demonstrates the power of monitoring water quality. Without these data, we could easily have missed this important and counterintuitive conclusion.”

IIHR is committed to collecting this essential water quality information for Iowa and making it easily available through its web tool, the Iowa Water-Quality Information System (http://www.iwqis.iowawis.org).

IIHR-Hydroscience & Engineering, a unit of the University of Iowa’s College of Engineering, is a world-renowned center for education, research and public service focusing on hydraulic engineering and fluid mechanics.

Cargill to keep protein HQ in Wichita

Cargill said its protein business headquarters will remain in Wichita, Kan., but will relocate from 151 N. Main St. to a new office building that will be built at a yet-to-be-determined site within the city limits.

The company’s decision was made after a thorough analysis of numerous options, including several cities in states other than Kansas. The decision is dependent upon pending approval by the city of Wichita for an agreement between the two entities. Cargill’s move to a new office building is expected to take place by the end of 2018.

“Looking at our current office space situation in Wichita, we determined a change is required to meet our future needs as a customer-focused, talent-seeking, growth-oriented protein business operating in a highly competitive business sector,” said Brian Sikes, Cargill corporate vice president for the protein group. “So, we embarked on a mission to identify the optimal location where the people responsible for success of our business will have the best opportunity to thrive. After an exhaustive review of our options, a collaborative atmosphere evolved whereby Cargill, the city of Wichita and state of Kansas worked together toward creating the type of business environment that will enable the company to meet its customers’ long-term needs by enhancing our ability to attract, retain and develop top talent.”

Other criteria addressed as Cargill explored its options included: quality of life for its employees, minimizing disruption to the business resulting from a relocation, optimizing the use of company resources, perpetuating a culture based on marketplace agility to address the needs of customers and consumers and creating a world-class business setting for all involved stakeholders.

“We have a terrific team of productive, knowledgeable and creative people in Wichita who give a great deal back to the community,” Sikes explained. “We are pleased Cargill employees will remain an important part of the Wichita community and will continue to contribute to the vitality of many organizations throughout the region. We also believe it is beneficial for our protein business to be headquartered in the center of the U.S.”

Kansas Gov. Sam Brownback added, “We are pleased that Cargill will continue to call Wichita, Kan., home for the foreseeable future. This is an investment in our state, a recognition of the quality of the Wichita workforce and the quality of life that can be found in Kansas. We look forward to continuing our strong relationship with Cargill for many years to come.”

For its protein group headquarters, Cargill explored locations throughout the middle third of the U.S. beginning in late 2015. “City and state officials, especially Gov. Sam Brownback, made it crystal clear to us that they were committed to keeping Cargill in Wichita,” Sikes said. “I know from speaking with our employees here that they are relieved to know of this decision, and they are eagerly looking forward to working in a new building that fosters collaboration, efficiency, innovation and excitement. We will continue to focus on growing our protein business, helping our customers be more successful in the protein space and winning in the marketplace.”

Cargill recently acquired a beef plant in Columbia, S.C.; opened a nearly $50 million distribution center at its Dodge City, Kan., beef processing plant; is investing $111 million in a plant conversion for cooked meat products at Columbus, Neb., and dedicated a $27 million egg processing expansion in Lake Odessa, Mich. “Together with our new headquarters in Wichita, these are examples of our long-term commitment to grow our protein business,” Sikes said.

Monsanto calls Bayer proposal 'incomplete'

Monsanto Co. said May 24 its board of directors unanimously views Bayer AG’s acquisition proposal as incomplete and financially inadequate. However, the company said it is still open to continued and constructive conversations to assess whether a transaction that's in the best interest of Monsanto shareowners can be achieved.

Bayer disclosed May 23 that it has made an all-cash offer to acquire all of the issued and outstanding shares of common stock of Monsanto for $122 per share, or an aggregate value of $62 billion. If realized, a deal between the two companies would create the largest agricultural supplier.

“We believe in the substantial benefits an integrated strategy could provide to growers and broader society, and we have long respected Bayer’s business,” said Hugh Grant, Monsanto chairman and chief executive officer. “However, the current proposal significantly undervalues our company and also does not adequately address or provide reassurance for some of the potential financing and regulatory execution risks related to the acquisition.”

Monsanto said there is no assurance that any transaction will be entered into or consummated, or on what terms. The board of directors has not set a timeline for further discussions.

Bayer said it looks forward to engaging in constructive discussions with Monsanto regarding the proposed transaction and reiterated that its $122-per-share all-cash proposal provides full and certain value for Monsanto shareholders.

“We are pleased that Monsanto’s board shares our belief in the substantial benefits an integrated strategy could provide to growers and broader society,” said Werner Baumann, chief executive officer of Bayer AG. “We are confident that we can address any potential financing or regulatory matters related to the transaction. Bayer remains committed to working together to complete this mutually compelling transaction.”

National microbiome data center needed

National microbiome data center needed

Massive amounts of data require infrastructure to manage and store the information in a manner than can be easily accessed for use. While technologies have scaled to allow researchers to sequence and annotate communities of microorganisms within an environment — its "microbiome" — on an ever-increasing scale, the data management aspect has not been developed in parallel.

In a paper published online May 16 in Trends in Microbiology, researchers from the U.S. Department of Energy Joint Genome Institute (JGI) call for the formation of a National Microbiome Data Center to efficiently manage the data sets accumulated globally.

In a study published online May 16 in Trends in Microbiology, Department of Energy Joint Genome Institute researchers call for the formation of a National Microbiome Data Center, which complements the White House's recent launch of a National Microbiome Initiative. Credit: Nikos Kyrpides, DOE JGI.

By integrating and harnessing all available microbiome data and meta-data, researchers could conduct larger-scale comparative analyses in order to address global challenges related to energy, environment, health and agriculture.

"The time is ripe to embark on the greatest endeavor to understand Earth's microbiome," said Nikos Kyrpides, JGI prokaryote super program head and the study's first author. "Biological sequence data should be considered an instrumental tool for the study of biology systems, analogous to the telescope for astronomy and the particle accelerator for high-energy physics."

The publication complements the White House's recent launch of a National Microbiome Initiative focused on comparing microbial communities across ecosystems to identify the "organizing principles" that shape all microbiomes. A national microbiome data center, the team wrote, would "organize, process and serve all available environmental genomic data."

Kyrpides and his colleagues identified three bottlenecks in microbiome research associated with short-sightedness: (1) lack of a grand vision to move beyond "single-use" microbiome data sets to a more cohesive collection, (2) lack of interagency funding models and (3) limited international data standards that hinder the global research community's ability to efficiently conduct comparative analyses.

Several large data management systems already exist to help, including the Integrated Microbial Genomes system and the Genomes OnLine Database system run by JGI scientists. These resources allow researchers to access and analyze publicly available assembled microbial and microbiome data and meta-data, respectively. In addition, JGI has partnered with the National Energy Research Scientific Computing Center to operate in a high-performance computing environment and support the growing community demand.

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Grand vision

"There is a profound lack of a grand vision in appropriate funding to support the extraction of knowledge from big data (i.e., across studies)," Kyrpides said. "Furthermore, the reference data needed to contextualize the myriad microbiome samples is sorely lacking. These data are fundamental for interpretation of how microbiomes function and how they interact within the environments and hosts they inhabit. Systematic decoding of microbes and their environments to fill in the gaps in our databases is a key step towards hypothesis-driven science and enabling a better understanding of microbial life."

DOE has a tradition of taking on massive projects, from the first particle accelerator to its role in initiating the Human Genome Project, and JGI is no stranger to microbiome research, reporting the first genomic characterization of a microbial community in 2004.

Over the past decade, microbiome research has grown in scale, tackling projects such as the termite hindgut, the cow's rumen, the Gulf of Mexico's oil-eating microbiome, prairie soils and permafrost. Through the Community Science Program, the largest data set focused on oxygen minimum zones and what has been described as the "only systematically and quantitatively prepared data set available" for the viral ecology community were developed in collaboration with JGI.

"At the dawn of the third decade of microbial genomics, and well into the information age, the establishment of a national microbiome data center can pave the way to understanding the Earth's microbiome," Kyrpides said.

JGI, a user facility of the Lawrence Berkeley National Laboratory supported by the DOE Office of Science, is committed to advancing genomics in support of DOE missions related to clean energy generation and environmental characterization and cleanup. JGI, headquartered in Walnut Creek, Cal., provides integrated, high-throughput sequencing and computational analysis that enable systems-based scientific approaches to these challenges.

Livestock groups highlight top concerns at hearing

Across the livestock sectors, producer returns have been aided by dramatically lower feed costs. Even so, producer margins will likely remain lower in the next few years compared to the rather good year of 2014, Texas A&M University professor and livestock economist  David Anderson told a House agriculture subcommittee hearing Tuesday morning.

“One thing is clear when looking at the financial picture of the livestock sector: The highs have been breathtakingly high, while the lows have been desperately low,” added Scott Brown, University of Missouri agricultural extension economist.

Extreme livestock market volatility has become expected. “Long-term survival may depend critically on risk management plans adopted by individual operations,” Brown stated.

Brown and Anderson were joined at the hearing by other members of livestock commodity groups to highlight key concerns for different sectors.

GIPSA concerns expressed

One common thread among beef and pork producers was the assertion by Agriculture Secretary Tom Vilsack that he would reinstate the proposed Grain Inspection, Packers & Stockyards Administration (GIPSA) marketing rule that resulted from language included in the 2008 farm bill.

David Herring, vice president of Hog Slat Inc. who testified on behalf of the National Pork Producers Council (NPPC), said NPPC has “grave” concerns that if the U.S. Department of Agriculture finalizes the GIPSA rule, it will repeat what was proposed in 2010. In response to questioning, Herring noted that the GIPSA rules are very concerning because they are so vague and become a “trial lawyer's playground.”

“The rule would have had a devastating impact on livestock producers,” Herring said. According to an analysis of the regulation conducted by Informa Economics, it would have cost the U.S. pork industry more than $350 million annually.

Tracy Brunner, president of the National Cattlemen’s Beef Assn., said through value-based marketing arrangements, many have been able to improve overall quality and demand. He said he relies on these types of arrangements with the packer-processor and, by doing so, consistently achieves premiums of $30-50 over the cash market.

“We have worked for years to find new and innovative ways to market cattle,” Brunner noted. “Alternative marketing arrangements have been studied by USDA and independent groups, and the results show that these alternatives benefit producers and consumers alike. The proposed GIPSA marketing rule would have made USDA the ultimate arbiter of how cattle are marketed and taken away our ability, as cattle producers, to market cattle the way we want. That is why bipartisan appropriations language defunded any additional work on, or implementation of, the proposed GIPSA marketing rule. We do not need USDA dictating how we can or cannot market our cattle.”

NMPF says MPP needs work

A main theme from Randy Mooney, chairman of the National Milk Producers Federation (NMPF), was the need to tweak the current dairy farm bill safety net to better address how feed prices have fallen since the writing of the last farm bill. Mooney said he is confident that the dairy Margin Protection Program (MPP) can be improved in the future.

The program offers dairy farmers the ability to purchase insurance-type coverage against poor margins caused by either low milk prices or high feed costs. However, Mooney noted that "the program is not completely fulfilling its intended objective as an effective safety net. For many farmers, the MPP is simply not enough to protect them in this economic environment.”

Mooney explained that when the farm bill was written, the MPP formula for calculating feed costs was altered, which understated the true cost of feeding a dairy herd. At the same time, while the feed cost element was diminished, the farmer cost of insurance premiums was not reduced. The MPP “has been less effective, as a result,” Mooney said.

“In 2015, many farmers saw that the MPP didn’t pay out much, even at the highest levels of coverage. So, in 2016, they opted for the least expensive – and minimal – level of coverage available. Had Congress not reduced the feed ration, more farmers would have seen benefits in 2015 and participated at higher levels this year,” he said.

House Agriculture Committee ranking member Collin Peterson (D., Minn.) also expressed concerns about MPP during his opening statement.

Groups highlight trade

Many livestock groups represented at the hearing also reiterated support for the Trans-Pacific Partnership (TPP). Herring testified that the benefits of TPP will exceed all past free trade agreements and represent a great opportunity for U.S. pork producers and for the entire U.S. economy.

The TPP negotiations were initiated in late 2008 and concluded last October. It is a regional trade deal that includes the U.S., Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam, which account for nearly 40% of global gross domestic product. The countries combined have more than 800 million consumers.

John Zimmerman, turkey farmer from Northfield, Minn., said a way needs to be figured out for getting unscientific provisions removed from trade deals.

In addition, Zimmerman noted that Indiana’s outbreak of highly pathogenic avian influenza (HPAI) in early January was a small outbreak but a “stark reminder HPAI is looking to strike again.”

Duke Energy inks second deal for swine waste power

Duke Energy announced May 24 that it has finalized a second deal in 2016 to buy captured methane gas derived from swine waste. The planned project will be at farms in Kenansville, N.C.

The project will use captured methane gas to generate carbon-neutral renewable electricity at two power stations. Optima KV will construct a digester at each farm and pipe the captured methane gas to a centralized facility, where it will be cleaned to pipeline-quality specifications and injected into the natural gas pipeline system.

The Duplin County, N.C., location for the proposed facility is in the heart of Smithfield Foods' pork operations. The project should be operational by the summer of 2017. The power will be carbon neutral compared to the emissions that would result if the waste was left to decay at current methods, Duke Energy said.

"We see continued advancement in this technology in North Carolina," said David Fountain, Duke Energy's North Carolina president. "This project has environmental benefits and is cost effective for our customers."

Under North Carolina's renewable energy portfolio standard, Duke Energy companies must meet specific compliance targets for swine and poultry waste. In March, the company announced a project with Carbon Cycle Energy to use swine waste-derived gas at four power plants in North Carolina.

Expanding the utility's renewable energy output, the captured methane will be used at two Duke Energy plants: the H.F. Lee Station Combined Cycle Plant in Wayne County and the Sutton Combined Cycle Plant in New Hanover County, N.C.

"Optima is excited about this partnership with Duke Energy and North Carolina swine farmers," said Gus Simmons, partner in Optima KV and concept designer. "Our on-farm digesters will integrate with and support the farmers' existing operations. By centralizing the gas processing, we can take advantage of cost efficiencies and provide carbon-neutral fuel for Duke's existing power plants. It's a great benefit for the environment and for the economy."

Under a 15-year term, Optima KV is expected to produce about 80,000 MMBtus of pipeline-quality captured methane per year. Duke Energy should yield about 11,000 mWh of renewable energy annually — enough to power about 880 homes for a year. The renewable energy credits generated annually by the effort will help satisfy state mandates.

Since Duke Energy already filed to have the Lee and Sutton plants designated as new renewable energy facilities, amendments to those filings were made with the North Carolina Utilities Commission to include fuel from the new project.

Corn exports add $74.7b to U.S. economy

Exports of U.S. corn and corn products generated $74.7 billion in annual economic output in 2014, with sales of all U.S. feed grain products contributing $82 billion, according to a new analysis conducted by Informa Economics.

According to the analysis, exports of corn and corn products increased U.S. gross domestic product (GDP) by $29.8 billion over the level that would have occurred without such exports. The number of full-time equivalent jobs linked directly or indirectly to corn exports totaled 332,787.

All feed grains examined – corn, corn products, sorghum and barley – increased the U.S. GDP by $33 billion over what would have otherwise occurred and affected 371,536 jobs.

“Corn – whether in the form of feed, ethanol or meat and dairy – is a major driver of the U.S. farm economy. Exports impact not just farmers and ranchers but the entire U.S. economy,” said National Corn Growers Assn. (NCGA) president Chip Bowling, a farmer from Newburg, Md. “That’s why it’s so important that farmers and ranchers have access to international markets and why we need global trade agreements such as the Trans-Pacific Partnership (TPP) that give us a chance to compete.”

The study, commissioned by NCGA and the U.S. Grains Council (USGC), quantifies the economic benefits of grain exports both nationally and to each U.S. state and selected congressional districts, showing results for corn, ethanol, dried distillers grains with solubles (DDGS), corn gluten feed and the corn equivalent of meats, in addition to sorghum and barley.

It found that every $1 in exports of grains and grain products generates an additional $3.23 in business sales across the U.S. The positive economic effects of corn exports benefit not only agriculture but also wholesale trade, real estate, oil and natural gas production and the banking and financial industries.

“Farming is a global business, and this study shows how immense the impact of grain exports is on not just the agriculture economy but our national economy,” said Alan Tiemann, USGC chairman and a Nebraska farmer. “The work our industry does to build new markets and grow our relationships with those overseas who rely on U.S. grains is critical for U.S. farmers’ profitability.”

The study also touched on the negative consequences to reducing exports of grain products, showing that if these exports were suddenly halted, more than 47,000 jobs and $2.8 billion in GDP would be lost in the farming, ethanol production and meat production industries alone.

Bowling said the study underscores the need for TPP, the trade agreement pending with 11 other countries that will expand farmers’ market access to the Asia-Pacific region.

“America’s farmers and ranchers have a lot to gain from new trade agreements such as TPP, but there is also a consequence for not moving forward,” Bowling said. “Every day we delay (ratifying) TPP means lost markets, which this study demonstrates has a ripple effect throughout the farm economy. That’s why Congress needs to act. The sooner TPP is passed, the better for America’s farmers and ranchers.”

Goule named new CEO of Wheat Growers

The National Association of Wheat Growers (NAWG) has selected Chandler Goule as its new chief executive officer. Goule, currently senior vice president of programs at the National Farmers Union, comes to NAWG with 11 years of agricultural policy experience on the House side of Capitol Hill and will assume the role of NAWG chief beginning July 5.

NAWG has been conducting a nationwide search for a new CEO to fill the vacancy left by Jim Palmer, who announced in April his intention to step down to spend more time with family and on his Missouri farm.

“NAWG is very pleased to have Chandler on board,” said NAWG president Gordon Stoner, a wheat grower from Outlook, Mont. “With our industry at a critical juncture, we know that with Chandler’s guidance, NAWG will be in a great position to advocate on behalf of all wheat farmers. We are delighted to have such a talented and experienced person lead our (Washington) D.C. staff.”

In addition to his CEO responsibilities at NAWG, Goule will also serve as the executive director of the National Wheat Foundation (NWF).

“Wheat has many challenges ahead, and we know Chandler is up to meeting them all head-on,” said NWF chairman Phil McLain, a North Carolina wheat grower.

Originally from Texas, Goule holds degrees from Texas A&M University and George Washington University. He served as a subcommittee staff director for the House Agriculture Committee before moving to the National Farmers Union in 2009 as vice president of government relations and then senior vice president of programs in 2014.

“The U.S. wheat industry is poised to reach new heights in both production and quality,” Goule said. “I am thrilled and honored to have this opportunity to work alongside our national wheat grower leaders in positioning NAWG and NWF as pre-eminent wheat advocacy and educational organizations as we begin to develop strategy for making wheat a major player in the drafting of the next farm bill.”

Stoner believes that with the experience Goule gained in his legislative work in congressional offices and his leadership experience on the House Agriculture Committee and at the farmers union, as well as his work on three previous farm bills, Goule will provide beneficial policy and legislative guidance to NAWG as it develops priorities for the next farm bill.

“Chandler Goule is the right person, in the right place, at the right time for the wheat industry,” Stoner added. “NAWG is excited to begin writing the next chapter in advancing the wheat industry.”

WEEKLY GRAIN MOVEMENT: Shipping costs drop

The cost of shipping grain by truck, barge and ocean vessel has fallen in the past year due, in part, to lower fuel costs as well as an overcapacity of ships for ocean freight.

This has lowered the price to land U.S. crops in Asia, Europe and Africa, but these changes have also helped competitors, so the impact on the balance of trade appears negligible.

Here are some numbers for wheat, according to the U.S. Department of Agriculture’s latest "Grain Transportation Report": Wheat shipped from Kansas to Japan via the U.S. Gulf in the first quarter cost $69.89 per metric ton, compared with $76.68 in the 2015 fourth quarter and $79.68 in the 2015 first quarter for a year-over-year drop of 12.3%. Including the cost of the wheat, the total cost of landing the grain in Japan was $221.52 ($6.03/bu.), compared with $282.14 a year ago ($7.68/bu.).

USDA said much of this reduction is due to lower truck and ocean freight rates. Barge rates also are down from a year ago, while rail is unchanged to a little lower.

 “Cheaper transportation costs have lowered the price discrepancy between U.S. wheat originations and our competitors, but we’re still priced out of the big Middle East/North African markets,” said Bryce Knorr, Farm Futures senior grain analyst. “The biggest part of total freight costs comes in ocean rates, and they’re down for everyone.”

Ocean freight rates have moved higher recently because of China's increased purchases of bulk commodities (see charts) and are up about 50% from the winter, he said.

In the U.S., lower fuel costs have brought down truck rates, which have increased marketing opportunities for grain merchants in some areas. In central Illinois, for instance, shipping corn and soybeans to Mississippi River markets is now a viable option to local processors. In western Iowa near Interstate 80, corn can now go to ethanol plants up to 30 miles away versus less than 20 miles before.

The expanded marketing is not universal. One Illinois merchant said the cost savings was not enough to justify the longer haul. “You are talking fraction of cents per bushel,” the merchant said of this year’s lower fuel surcharges on trucks.

Lower barge rates this year allowed river merchants to pass the savings onto farmers with stronger basis bids for corn and soybeans, a Quad Cities shipper said.

USDA’s transportation report said the per-ton cost of shipping crops by barge to Gulf export markets as of May 17 is down 25% from a year ago on the upper Mississippi River, down 29% on the mid-Mississippi and down 32% on the lower Illinois River.

The report said nearly 841,000 tons of grain were shipped by barge during the week ended May 14, down 16% from the prior week but up 9% from a year ago.

For truckers, the U.S. average diesel fuel price increased 3 cents to $2.30/gal. in the week ended May 16, but that is down nearly 61 cents from the same week last year.

USDA’s weekly export inspections on Monday had corn shipments at 42.4 million bu., down slightly from 44.6 million bu. a week ago. Mexico, Japan and Colombia were the leading destinations.

Soybean shipments of 2.8 million bu. were down sharply from the prior week and under the pace needed to meet USDA’s annual forecast. Japan, Costa Rica and Indonesia were the leading destinations.

Wheat shipments of 11.1 million bu. were down from a week ago and were led by Indonesia, El Salvador and Mexico.

Livestock groups testify on harm of GIPSA rule

On Tuesday, livestock groups testified on key issues before the House agriculture subcommittee on livestock and foreign agriculture. One common thread among beef and pork producers was the assertion by Agriculture Secretary Tom Vilsack that he would reinstate the proposed Grain Inspection, Packers & Stockyards Administration (GIPSA) marketing rule that resulted from language included in the 2008 farm bill.

David Herring, vice president of Hog Slat Inc. who testified on behalf of the National Pork Producers Council (NPPC), said NPPC has “grave” concerns that if the U.S. Department of Agriculture finalizes the GIPSA rule, it will repeat what was proposed in 2010.

Herring testified that U.S. pork producers were stunned in June 2010 when USDA proposed a rule that not only went well beyond the five issues Congress asked the agency to address but included provisions considered and rejected by congressional lawmakers during the 2008 farm bill debate.

One provision included in the GIPSA rule, for example, would have required meat packers to justify and document — including with revenue and cost analyses — price differences paid for livestock, making it difficult for producers to negotiate premiums based on certain production practices or accept lower prices for livestock of lesser quality. Such a “justification” provision was considered and rejected by the Senate.

“The rule would have had a devastating impact on livestock producers,” Herring said. According to an analysis of the regulation conducted by Informa Economics, it would have cost the U.S. pork industry more than $350 million annually.

“Industry analysis of the rule concluded that it likely would have had a chilling effect on innovation and flexibility, leading to a race toward mediocrity. It would have created legal uncertainty, driving costs higher and causing an increase in vertical integration in the livestock sector, forcing producers out of business and possibly affecting meat supplies,” he said.

In response to questioning, Herring noted that the GIPSA rules are very concerning because they are so vague and become a “trial lawyer's playground.”

All of those effects would have harmed the U.S. pork industry’s international competitiveness, costing on-farm and pork processing jobs as well as negatively affecting the U.S. balance of trade.

While there was overwhelming opposition to the GIPSA rule, including more than 16,000 public comments from pork producers, it took yearly action by Congress to prevent its implementation. Unfortunately, no such action – in the form of language in USDA’s annual appropriation – was forthcoming for fiscal 2016.

At a March meeting of the National Farmers Union, a group that supported the 2010 GIPSA rule, Vilsack indicated that his agency was moving forward with implementing the regulation, and NPPC confirmed last week that several of the regulations are with the White House Office of Information & Regulatory Affairs — the last step before rules are proposed final or become final.

“Pork producers again are very concerned that USDA’s GIPSA rule will be too expansive, limiting farmers’ ability to sell animals, dictating the terms of private contracts, making it harder to get farm financing, raising consumer prices and reducing choices, stifling innovation and leading to more vertical integration in the livestock industry,” he said.

The U.S. pork industry opposes any legislation or regulation that restricts marketing opportunities and interventions into hog markets unless such actions address a clear, unequivocal instance of market failure or abuse of market power. To date, USDA has not presented any evidence that either is taking place.

Tracy Brunner, president of the National Cattlemen’s Beef Assn., said through value-based marketing arrangements, many have been able to improve overall quality and demand. He said he relies on these types of arragements with the packer-processor and, by doing so, consistently achieves premiums of $30-50 over the cash market.

“We have worked for years to find new and innovative ways to market cattle,” Brunner noted. “Alternative marketing arrangements have been studied by USDA and independent groups, and the results show that these alternatives benefit producers and consumers alike. The proposed GIPSA marketing rule would have made USDA the ultimate arbiter of how cattle are marketed and taken away our ability, as cattle producers, to market cattle the way we want. That is why bipartisan appropriations language defunded any additional work on, or implementation of, the proposed GIPSA marketing rule. We do not need USDA dictating how we can or cannot market our cattle.”

The House agriculture appropriations bill again included a rider to prevent USDA from moving forward with its rule. The Senate’s version, which passed out of committee last week, did not include any amendment to prevent USDA from using resources to advance the rule.