Commodity Corner

Blanche Lincoln and her committee of chairmen

On the congressional scale of measurement, Blanche Lincoln got a plum of a birthday present — the gavel as Senate committee chairman. She is the first woman to head the Agriculture Committee. Amid the congratulatory banter on Sept 30, Lincoln’s 49th birthday, were reminders of the enduring power of its members, past and present.

As Lincoln noted, her committee includes the chairmen of four other committees — Budget, Judiciary, Finance and Health. It is a higher number of sitting chairmen than most Senate committees and allows a useful melding of interests.

Finance chairman Max Baucus and Budget chairman Kent Conrad used their jurisdictions to help write the 2008 farm law, for example, sometimes in seeming competition with Tom Harkin, who passed the gavel to Lincoln and is now Health chairman. Harkin holds a historical footnote for chairing Agriculture twice.

Senate Republican Leader Mitch McConnell is an Agriculture member as well. In years past, Republican Bob Dole and Democrat Tom Daschle served on Agriculture while also party leaders in the Senate.

Chairmen are thick on the ground in the Agriculture Committee by another gauge too. Five of its former chairmen sit at the head of the table with Lincoln — Democrats Harkin and Pat Leahy on her right and Republicans Saxby Chambliss, Richard Lugar and Thad Cochran on her left.

“Maybe we should have a special chairman’s pin (for) former chairmen,” remarked Leahy, now Judiciary chairman.

Further down the table are Republicans Pat Roberts of Kansas, a former House Agriculture Committee chairman, and Mike Johanns of Nebraska, who resigned as U.S. agriculture secretary two years ago to run for the Senate.

Sugar shortage spawns sweet jokes from late-night comedian

By Christopher Doering       The surge in sugar prices and potential risk of a shortage has provided some sweet fodder for one late-night comedian who can’t help but poke fun at the attention the tasty ingredient is receiving.   Stephen Colbert, who hosts the Colbert Report on Comedy Central, spent part of his show this week lamenting the sugar crisis.    After showing a montage of television clips about the sugar situation, Colbert proceeded to break a glass cover — similar to one containing a fire extinguisher — and pulled out a bag of sugar, which he dosed all over himself.   “Oh my God, there’s a sugar shortage,” said Colbert. “How could this happen. Well, like interstate highways and potable water it’s the government’s fault.”   Large U.S. food companies, including Kraft Foods, General Mills Inc and Hershey Co, have been pushing the Obama administration to ease sugar import curbs, citing forecasts for unprecedented sugar shortages that could result in higher retail prices and possible job losses.   In a letter to U.S. Agriculture Secretary Tom Vilsack dated Aug. 5, the companies and other groups warned that “our nation will virtually run out of sugar,” if a USDA forecast is accurate.   “Can you imagine an America with no sugar?” said Colbert. “Juice would contain nothing but 10 percent juice and we’d all be eating uncaramelized apples. What are we going to do?” 

For more information on the sugar shortage, click here.

Grain markets flashing warning signs

Another food price spike could be on the horizon, analysts told Reuters.    Consider these factors: * Grain prices, led by soybeans, have been up since March.  * South America’s crop is expected to be a disappointment. Crops in both Brazil and Argentina have a poor outlook. In fact, the U.S. Agriculture Department steadily lowered its forecast for Argentina’s soybean crop throughout the year.

* Many will be looking to the United States to come through with a big crop. But U.S. soybean stocks began the 2009/10 marketing year at a five year low. That means there’s not a lot of surplus to keep prices level if there’s any type of disruption in supply or weather calamity.

Signs of an economic recovery, which are just now beginning to be realized, would be threatened if the world were to face soaring food prices reminiscent of last year.    “It would not be what the financial media is describing today as a green shoot,” said Rich Feltes, senior vice president at MF Global Research. “It’s going to be a green shoot that’s being killed with Roundup Ready herbicide. It’s not going to be good.”

A food czar could bring sexy back to agriculture

It seems if you got a problem in Washington today, you need a Czar to take care of it. And now some powerful U.S. senators believe the agriculture sector should get one to sharpen efforts to feed the world’s poor.      Former Agriculture Secretary Dan Glickman told lawmakers on Tuesday that too often agriculture takes a back seat to other “sexier” issues in policymaking, but it must be a priority if the country hopes to address global hunger and malnutrition.   “It is not a secondary factor,” Glickman said before the Senate Foreign Relations Committee.   Senator Dick Lugar, the Republican leader of the committee, supported appointing a White House food coordinator to take on raising agriculture and food aid’s prominence.      This “food czar” would be tasked with coordinating efforts between the U.S. Agency for International Development, the U.S. Department of Agriculture and other agencies involved in food aid and agriculture production.      The need for a food czar doesn’t seem as far stretched when considering recent events that have nudged agriculture over into the realm of a national security issue.      Soaring food prices last year sparked food riots and led to political instability in some parts of the world. The threat of violence and coups continues as the recession makes it increasingly difficult for even more people to buy food.      A food czar could possibly mitigate future riots by improving the United States’ role in making other nations self-sufficient in agricultural production, an area some say the country has failed in.      In fact, U.S. efforts to address the long-term challenge of persistant malnutrition earn an ‘F,’ according to political science professor and author Robert Paarlberg.   He said U.S. agriculture assistance to Africa has plummeted 85 percent since the 1980s. “So as things have been getting steadily worse in Africa, the United States goverment has curiously been doing steadily less,” Paarlberg said.   A food czar, Lugar said, would have the difficult job of addressing this conundrum.

Photo Credit: Reuters/Luc Gnago (Farmers in Cote d’Ivoire work on a rice field); Reuters/Alberto Lowe (Riot police clash with Panamanians over food prices in Panama City); Reuters/Margaret Aguirre (A child in Ethiopia is severely malnourished due to widespread starvation brought on by drought and soaring food prices)

from Jasmin Melvin:

Modern marvels boost food output, or would if countries used them

It may have been preaching to the converted but the world's largest agrochemicals company came to the 2009 Outlook Forum to hold forth on the benefits of technology for farmers, and not just on genetially modified technologies.      Michael Mack, CEO of Zurich-based Syngenta International AG told attendees that advanced technologies and a little education will be necessary to feed the world, but maintained such innovations aren't years or even decades away -- they're already here.     More than 850 million people face starvation each day under current conditions, according to the United Nations' Food and Agriculture Organization, yet many nations do not fully utilize existing technologies to maximize their harvests.      "We can realize significant yield potential in the next 10 years by simply deploying existing technology across land that is currently under cultivation," Mack said.       Mack noted that places such as Russia and Ukraine, once considered the breadbasket of Europe, farm only 10 percent of their land efficiently, while Asia could boost its productivity by 20 percent within seven to 10 years by adopting modern farming methods.   Simply put, technology would allow us to do more with less, a phenomenon that will become even more significant as the world's population grows by an expected 2 billion people by 2030.      "This means that there are not only more mouths to feed but they will all be demanding a bigger and better diet," Mack said, which will require a doubling of feed and food production.      Technologies as simple as fertilizers and pesticides boost crop yields but costs and lack of  education on their use often result in them being left out of farming in developing countries.      The International Plant Nutrition Institute, a not-for-profit agronomic education and research group, says on its Web site that "somewhere between 30 to 50 percent of crop yield in the U.S. is attributable to nutrient inputs."      And Mack noted, "It's a fact without current crop protection products there would be 40 percent less food available in the world."      Syngenta has seen sales of its crop protection products increase in recent years.      Selective herbicides, which target specific weeds and are Syngenta's most profitabe crop protection product, saw sales increase by 8 percent to $2 billion for the company in 2007.        Mack also spoke about more controversial technologies, like genetically modified seeds, which are strongly opposed by some environmental groups. He praised American policy and regulations on GMO crops and expressed hope that other countries would follow.    

"If we embrace science, we can have a future of bounty," Mack said.

For more Reuters coverage of the U.S. Agriculture Department's 2009 Outlook Forum, click here.

Photo credit: Reuters/Christian Hartmann (Syngenta CEO Michael Mack during an interview with Reuters at Syngenta's headquarters); Reuters/Beawiharta (A farmer sprays pesticide on a rice field in Indonesia)

U.S. soy planting record possible, corn out of reach

U.S. farmers could set a record for soybean plantings this year, topping 2008′s 75.7 million acres. The Agriculture Department will release its initial projection of seedings later this week. Some economists see plantings of 79 million acres (32.9 million ha) given that market prices and production costs currently favor soybeans.

Most expect corn plantings to lose ground as global recession takes the shine off demand from livestock and ethanol. But it would be daunting to break the U.S. corn plantings record even if the biofuels boom were re-ignited.

Corn seedings hit 93.5 million acres (37.8 million ha) in 2007 in a land rush to profit on ethanol. Although it was the largest total since 1943, it ranks 16th at USDA. The largest corn planting on record is a giant 113 million acres in 1932 — 21 percent larger than 2007. It may not give a full picture of corn-growing in America.

USDA began recording corn plantings in 1926. It has records of corn harvest area from 1866. From 1909-18, harvest area usually exceeded 100 million acres, so plantings had to be much larger, to allow for abandonment and other uses. In 1926, for instance, plantings were 99.7 million acres and harvest area was 83.3 million acres, a decline of 16 million acres. In recent years, the shrinkage from plantings to harvest area has been around 7.5 million acres, mostly for silage.

There are plenty of reasons for large corn plantings in the early 20th century. Corn was needed to feed the vast herds of horses and mules used as draft animals on the farm and in the city before gasoline power was adopted. Corn is easy to store. Livestock could glean cornfields after harvest. And, yields were a lot lower — 25.7 bushels an acre in 1926 for a crop of 2.14 billion bushels. In 2008, the corn crop was 12.1 billion bushels with a yield of 153.9 bushels an acre from 86 million acres.

–Charles Abbott

    Five largest soybean plantings     (Records begin in 1924)      75.718 million acres, 2008      75.522 million acres, 2006      75.208 million acres, 2004      74.226 million acres, 2000      74.075 million acres, 2001      

The answer is 99,439. Pass it on.

During his first week on the job, Agriculture Secretary Tom Vilsack said no one knows for sure how many people work at the Agriculture Department. Speaking to USDA employees and later to reporters, he used that startling anomaly as an argument to update USDA’s computer equipment.

Like the admonition against saying “never” or “always” during an argument, there could be a corollary: Never say “no one knows” in a bureaucracy.

A USDA employee quickly provided an answer for Reuters: 99,439 fulltime, part-time and temporary federal employees as of Monday based on figures from the payroll agency.

There were some qualifiers in Vilsack’s statement. He said he asked the Obama transition team and “I was told no one knows for sure how many people work at (USDA). They could tell me how many checks are issued, but not how many people actually work here.”

A former USDA official snorted at the idea of an uncountable workforce. ”That may be almost an urban myth,” he said. “It’s not a simple answer” but is within reach.

There are some complexities. For example, USDA employment rises to include Forest Service “smoke jumpers” and wildfire crews during the summer and shrinks during the winter.

Then there’s the roughly 9,400 people in the county offices who are part of the Farm Service Agency. They perform federal tasks but are hired by locally elected committees. 

First in, first out in the USDA hunt

One of the great rules of inventory management — first in, first out — could apply to the process of deducing who will be agriculture secretary in the Obama administration with a wry renaming. In this iteration, it is “first named, first discarded.”

The list of potential nominees deemed as front-runners or consensus choices to run USDA has churned continuously since Barack Obama won the presidential election. And it is unclear when a nominee will be named. Most of the front-runners have faded from attention like flowers at the approach of winter.

In early November, the list of potential nominees was filled with Washington heavyweights, like National Farmers Union president Tom Buis or former Texas Rep. Charles Stenholm, along with former Iowa Gov. Tom Vilsack.

They were superseded by a series of state officials, such as Kansas Gov. Kathleen Sebelius and Pennsylvania Agriculture Secretary Dennis Wolff. Still more potential names surfaced, including first-tem Montana Sen. John Tester and John Boyd, head of the National Black Farmers Association.

One agricultural commentator listed more than a dozen possible candidates at a conference last week, ranging from Patty Judge, the Iowa lieutenant govenor, to Jill Long Thompson, a former USDA official who ran for Indiana governor this year.

Speculation now centers on Colorado Rep. John Salazar, a farmer-rancher and Army veteran. “It’s a real long shot,” Salazar told Reuters. All the same, members of the House Agriculture Committee greeted Salazar like a returning hero when he arrived at a hearing on Monday.

In the Washington parlor game of “Who Gets the Job?” some of the people mentioned for secretary are deemed better candidates for other slots — Dallas Tonsager of the Farm Credit Administration as undersecretary for rural development and lawyer Marshall Matz as undersecretary for nutrition. Matz and Tonsager were prominent in seeking rural votes for Obama. And Californians have been consistent in backing Karen Ross for deputy secretary, the No. 2 post.

Commodities: Oil price forecasts still coming off

Hurricane Ike kept oil prices ahead Monday as the storm barrels toward southern Florida but the wider trend on crude prices is less clear. Credit Suisse cut its third quarter 2008 U.S. crude oil forecast to $120 per barrel and fourth quarter forecast to $110 per barrel.

Here are some of the stories Reuters is watching today in other commodities markets.

• USDA issues crop progress report of year
• Day 1 of Consumer Federation of America, Grocery Manufacturers conference on food prices. Agenda is here
• National Farmers Union annual Fall Fly-In begins. Appearances by USDA officials including Agriculture Deputy Secretary Chuck Conner expected. More
• Mexico suspended meat exports to allow checks to comply with U.S. sanitary regulations (Sep 5)