USDA Agrees To Help U.S. Pork Producers

The National Pork Producers Council today commended U.S. Agriculture Secretary Tom Vilsack for his decision to lend assistance to the U.S. pork industry to help it weather a nearly 2-year-old economic crisis that has put some producers out of business.

The U.S. Department of Agriculture agreed to purchase up to $30 million of pork products, which will be used for various federal food programs. Secretary Vilsack, who heard from hundreds of hurting pork producers, today announced the pork purchase. USDA also is working to reopen pork export markets that closed in the wake of the H1N1 flu outbreak.

“The action by USDA to buy additional pork will benefit America’s pork producers, the U.S. economy and the people who benefit from government food programs,” said NPPC President Don Butler. “NPPC is extremely grateful to Secretary Vilsack for recognizing the plight of our producers and for taking action to help them. The pork purchase and the ongoing efforts to reopen export markets are important steps that will help our industry bring pork supply and demand back into balance and allow producers to continue providing consumers worldwide with economical, nutritious pork products.”

In an Aug. 17 letter to the secretary, NPPC urged USDA to take immediate action to address a crisis that since September 2007 has seen producers losing an average of more than $21 on each hog marketed. The pork industry has lost more than $4.6 billion in equity over the past two years. NPPC asked the agency to:
    * Purchase immediately an additional $50 million of pork for various federal food programs, using fiscal 2009 funds. Fiscal 2009 ends Sept. 30. (USDA annually buys pork for food programs; it bought $62.6 million worth in 2008, for example.)
    * Urge Congress to lift a spending cap on Section 32 funds, and use $50 million of $350 million available to purchase pork for the program, which uses customs receipts to buy non-price-supported commodities for food programs.
    * Buy on Oct. 1 a minimum of $50 million of pork, using fiscal 2010 funds. Fiscal 2010 begins Oct. 1. The purchase would be in addition to USDA’s annual buy.
    * Use $100 million of the $1 billion appropriated for addressing the H1N1 virus for the swine industry, including $70 million for swine disease surveillance, $10 million for diagnostics and H1N1 vaccine development and$20 million for industry support.
    * Work with the U.S. Trade Representative to open export markets to U.S. pork. Several countries, including China, continue to impose unwarranted bans on U.S. pork, citing the H1N1 flu.
    * Study the economic impact on the livestock industry of an expansion of corn-ethanol production and usage. EPA has proposed raising the cap on blending ethanol into gasoline to 15 percent from its current 10 percent.



Gov. Heineman Applauds USDA Assistance to Pork Industry

Gov. Dave Heineman today offered his thanks to United States Agriculture Secretary Tom Vilsack for his department’s response to a request for assistance to the pork industry.  The United States Department of Agriculture (USDA) announced today the purchase of $30 million in pork as a measure to improve the economic climate for the industry.

“I appreciate the efforts of the President, and Secretary Vilsack and USDA, to respond to our request for action,” said Heineman. “Our pork producers have been in economic distress for well over a year. This type of assistance is critical for improving the market atmosphere for pork.”

Gov. Heineman, along with eight other governors from key pork producing states, sent a letter to President Barack Obama in August outlining several steps to aid pork producers, including asking for the federal government to purchase pork for government feeding programs.

Gov. Heineman and Nebraska Department of Agriculture officials will continue to dialogue with Nebraska pork industry leaders.

“Pork is an important segment of our agriculture industry in the state,” said Agriculture Director Greg Ibach. “We are hopeful that USDA’s actions today will improve the outlook for our swine producers so they can weather this period of unprofitability.”



Informa Updates Crop Pegs

Sources familiar with Informa Economics say the group has updated their U.S. crop estimates. Following are the estimates:
Corn: Yield of 162.6 bu. per acre for crop of 13.01 billion bu.; compares to USDA's Aug. estimate of 159.5 bu. per acre and crop of 12.761 billion bushels.
Soybeans: Yield of 43.1 bu. per acre for crop of 3.305 billion bu.; compares to USDA's Aug. estimate of 41.7 bu. per acre and crop of 3.199 billion bushels.
All cotton: Yield of 820 lbs. per acre and crop of 13.266 million bales; compares to USDA's Aug. estimate of 816 lbs. per acre and crop of 13.207 million bales.



Black Point Incidence up in 2009 Wheat
Stephen Wegulo, UNL Extension Plant Pathologist

Black point, also known as kernel smudge (Figure 1), is a disease which causes discoloration of the embryo (germ) end and surrounding areas of the wheat kernel. The disease occurs from the grain filling period to harvest and is favored by prolonged wet weather during this period. Rainfall during grain maturation favors growth of several weak pathogenic fungi on wheat heads. The fungi mainly associated with black point are in the genera Alternaria, Bipolaris, and Cladosporium. Alternaria and Cladosporium are also the main cause of sooty mold (Figure 2), a superficial growth of black, dark green, or even pink or white molds on wheat heads.

Excessive rainfall in June coincided with grain maturation in most of Nebraska’s wheat growing areas, favoring the growth of black point-causing fungi on wheat heads. This resulted in higher than normal black point incidence (percentage of affected heads or grain) and prevalence (percentage of affected fields).

Implications of Black Point
Elevators often discount discolored grain because blackened kernels are considered damaged and products made from them can have an undesirable color or odor. Only 2% or 4% of blackened kernels are permitted in wheat graded as U.S. No. 1 or No. 2. Flour milled from black-pointed grain may contain dark specks and fungal compounds on grain can cause illness if affected grain is used as feed or food. In addition, germination of affected grain is lower than that of healthy grain.

Black point usually does not reduce yield during the year the causal fungi invade wheat heads. Lower than expected yields this year, especially in irrigated fields, were more likely caused by other diseases favored by excessive rainfall such as loose smut, leaf rust, tan spot, black chaff, and Fusarium head blight (scab). Other diseases observed that could have contributed to low yields were wheat streak mosaic virus and/or the newly discovered Triticum mosaic virus.
Managing Black Point

It is impossible to exclude saprophytic fungi from maturing wheat heads, but growers can take steps to limit damage:
   1. Avoiding excessive irrigation can help reduce colonization of wheat heads since moisture is critical to the growth of these fungi. If excessive rainfall occurs in June, as it did this year, little can be done.
   2. Keep harvested grain at a moisture level of 12% in well ventilated storage to avoid the fungi growing and causing storage molds.
   3. Avoid using grain from affected fields as seed for next season's crop, especially if disease incidence is high. Otherwise seedling rots and/or blights may occur, resulting in reduced yield. If the grain must be used as seed, treat it with a systemic fungicide before planting. A partial list of seed treatment fungicides are in NebGuide G1671, Management of Residue-Borne Diseases of Wheat.




USMEF Survey Shows Reaction of Chinese Consumers to H1N1

Nearly two-thirds of China’s consumers stopped eating pork in the early stages of the H1N1 influenza outbreak this year, and more than one in five consumers in the world’s largest pork market still believe that eating pork can result in catching the flu virus, according to a survey of 1,200 Chinese consumers commissioned last month by the U.S. Meat Export Federation (USMEF).

Speaking to the Fifth International Meat Secretariat (IMS) World Conference in Qingdao, China, on Thursday, Sept. 3, Joel Haggard, senior vice president Asia-Pacific for USMEF, told the more than 600 global pork industry executives in attendance that China – both the world’s largest pork producer and consumer – may have been more affected by the H1N1 virus outbreak than previously suspected.

“In the early stages of the outbreak, 64 percent of Chinese consumers refrained from pork consumption,” said Haggard, citing research conducted Aug. 6-10 by Sinotrace Marketing Research Company of 200 consumers in each of six Chinese cities: Beijing, Shanghai, Chongqing, Guangzhou, Nanjing and Shenyang.

Even now, months after the initial outbreak, 21.2 percent of those surveyed still believe that eating pork can lead to catching the H1N1 virus. Despite efforts by the Chinese government to educate consumers regarding the safety of pork, 54.7 percent of those who fear the connection between pork and the flu virus say that it is because the virus has been labeled “swine flu.”

"The research suggests that the initial Chinese consumer reaction to H1N1 was sharp, and that a significant number of consumers may still associate the virus with pork and hogs,” said Haggard.

Haggard also delivered to the conference an overview of the U.S. pork industry's development over the last 20 years, with the message that U.S. pork producers – contrary to many assumptions by those in overseas markets – do not receive substantial subsidies from the U.S. government.

He reported that increased efficiencies in the U.S. pork industry have resulted in steadily declining prices for consumers. When adjusted for inflation, prices per pound for pork in the United States have declined from $2.40 per pound in 1980 to $1.60 per pound in 2008.

Among the productivity measures Haggard cited for the U.S. pork industry were reductions in the cost of feed and labor – 44 percent and 80 percent, respectively – that are required to produce a unit of pork. Those productivity gains were realized between 1992 and 2004.



Consider Consequences Of Actions Against Chinese Tire Imports, Groups Urge USTR

An ad hoc coalition, which includes the National Pork Producers Council and 33 other food and agricultural organizations, today sent a letter (below) to U.S. Trade Representative Ron Kirk urging him to consider the consequences of actions he might recommend be taken against China over tires imported into the United States.

President Obama is expected to make by Sept. 17 a decision on the findings of a U.S. International Trade Commission investigation of imports of certain car tires from China. The United Steelworkers filed a complaint with the ITC, claiming that a surge of Chinese tire imports had cost the union thousands of jobs. The ITC recommended a “safeguard action” of a 55 percent tariff on Chinese tires.

If the president accepts the ITC recommendation, the food and agricultural coalition is concerned that China will retaliate against U.S. products. Pork and soybeans, for example, have been mentioned as candidates for retaliation.

“We ask that you consider the effect of likely retaliatory action against U.S. food and agriculture products as you formulate your recommendations,” the coalition said in its letter. “Retaliatory actions by China against U.S. food and agricultural products … would significantly affect U.S. farmers, ranchers and food companies at a time when many are facing serious financial problems.”


September 3, 2009
Dear Ambassador Kirk:

The undersigned U.S. food and agriculture organizations are writing with respect to the recommendation you will soon make to the President in response to the findings of the International Trade Commission in the Section 421 investigation regarding certain tires from China.
 
Unlike other recent import relief cases in which China was found to be unfairly dumping or subsidizing products into the U.S. market, there is no claim of unfair trade in this case. However, because Section 421 is a safeguard action unique to China and not applied to other WTO members, and despite the fact that China previously agreed to that treatment to gain WTO membership, there is the real possibility that China will choose to retaliate. Recent press reports indicate that the China Rubber Industry Association intends to petition China’s Ministry of Commerce to increase tariffs on or otherwise restrict U.S. exports of pork and soybeans. Although such retaliatory action arguably would be inconsistent with China’s Protocol of Accession to the WTO, we have seen in other situations that China has demonstrated both the capability and the inclination to implement measures to restrict imports outside the normal WTO process.

We ask that you consider the effect of likely retaliatory action against U.S. food and agriculture products as you formulate your recommendation. Although pork and soybeans have been mentioned as candidates for such action, any U.S. product exported to China is vulnerable. Retaliatory actions by China against U.S. food and agricultural products, whether legally justified or not, would significantly affect U.S. farmers, ranchers and food companies at a time when many are facing serious financial problems. The already dire situation in several of these sectors would be compounded if their export opportunities to China were to be further eroded. For some, the Chinese market is the difference between profitability and possible bankruptcy.

We appreciate the opportunity to raise these concerns and urge you to take them into account as you weigh the costs to other parts of the U.S. economy in this import relief case.

Sincerely,
American Feed Industry Association
American Meat Institute
American Seed Trade Association
American Soybean Association
Animal Health Institute
Commodity Markets Council
Corn Refiners Association
Distilled Spirits Council of the U.S.
Hormel Foods Corporation
International Dairy Foods Association
Louis Dreyfus Commodities
National Association of Wheat Growers
National Barley Growers Association
National Cattlemen's Beef Association
National Chicken Council
National Corn Growers Association
National Council of Farmer Cooperatives
National Grain and Feed Association
National Meat Association
National Oilseed Processors Association
National Pork Producers Council
National Turkey Federation
North American Export Grain Association
Northwest Horticultural Council
Pet Food Institute
Tyson Foods, Inc.
U.S. Grains Council
U.S. Dairy Export Council
U.S. Livestock Genetics Export, Inc.
U.S. Meat Export Federation
U.S. Wheat Associates
U.S. Hides, Skins & Leather Association
USA Poultry & Egg Export Council
USA Rice Federation



Ag Economist Sees More Rough Times For Beef Industry

The pain of recent record losses in the U.S. cattle feeding industry will not diminish soon, but tightening supplies could lead to a modest rebound in late 2010, according to agricultural economist James Mintert.

Speaking at Kansas State University´s Risk and Profit Conference last week, Mintert said that consumers have responded to the U.S. economic downturn by saving more and spending less. Not a bad thing on the face of it, but what consumers are saving means that they´re spending less on some foods, such as beef.

Mintert, who recently became the assistant director of extension at Purdue University, said, "historically, beef demand has benefitted from growth in the U.S. economy and a low (consumer) savings rate." In 2009 and into 2010, however, he expects weak consumer expenditures to hold back beef demand.

That demand slowdown is partly responsible for the record losses realized by cattle feeders during 2008 and 2009. For example, Iowa State University´s estimated livestock returns indicate that cattle feeders lost an average of $120 and $100 per head during 2008 and the first 7 months of 2009, respectively.

Mintert, who was a livestock marketing economist for K-State Research and Extension for 23 years, noted that the U.S. cattle industry was "a picture of a healthy industry" from 1925 to 1975 as the industry grew over time in response to growing aggregate demand for beef. Since the mid-1970s, however, the industry has responded to a lack of profitability among cow-calf operators by shrinking its numbers - from more than 130 million head in 1975 to about 94 million today - a reduction of about 28 percent.

"Domestic beef demand is still suffering from a long-term decline," he said. "In 1998, domestic beef demand was about half what it was in 1980. Unfortunately, the uptick in demand from the late `90s through 2004 is starting to look like it was just a blip in the long-term decline in demand."

In addition to demand issues, the cost to produce beef calves, including feed costs and returns to owned assets, has jumped 30 percent since 2005, which has made even a break-even situation beyond the reach of most producers in the last couple of years.

Breakeven prices for calves in Kansas have jumped from just over $100 per hundredweight (cwt) in 2006, to more than $140 per cwt this year when producers factor in all of their costs, he said.

While the costs of production were rising, prices paid for calves were dropping.

Cattle producers have responded to the situation by sending cows to slaughter - in increasing numbers every year for three years straight from 2005 to 2008. That trend, Mintert said, will likely abate somewhat this year and next, but the cattle herd will continue to shrink in part because dairy cow slaughter during 2009 (through July) was up 15% compared to a year earlier.

As a result, the Livestock Marketing Information Center expects commercial beef production in 2009 will total about 25.4 billion pounds and in 2010 will be just 25 billion pounds - both down from 26.5 billion pounds in 2008.

"Tight supplies could set the stage for a cattle price rebound in late 2010 or into 2011," Mintert said.

By 2010, overall total meat supplies are expected to be "very tight," the economist said. Annual U.S. red meat and poultry consumption in 2010 is expected to drop to about 207 pounds per capita. That would be down from about 211 pounds per capita projected in 2009 and well below 222 pounds in 2007.

Live cattle futures based on the CME market indicate some price recovery this fall - but that will only happen if demand recovers enough to reinforce the effect of tight supplies, Mintert said.

Other factors affecting the cattle market are supplies of competing meats and any impact the H1N1 virus has on pork demand, he said.

The media continue to refer to H1N1 as the swine flu. This has confused some consumers and led to a reduction in pork demand, even though the illness is not related to eating pork, he said. And oftentimes, when pork prices slump, they weigh down beef prices, as well.

Mintert said that as the beef industry works to regain some of the demand it has lost in the past couple of years, he hoped that it would focus on some of the findings from a recent beef demand study. That study, conducted by Mintert and agricultural economists Ted Schroeder of K-State and Glynn Tonsor of Michigan State University, showed that convenience, nutrition, and safety are very important factors influencing U.S. consumers demand for beef. In particular, it appears that the beef industry has lagged the chicken industry in providing consumers convenient new products that consumers find attractive.

"A lot of what´s happened with the recent slowdown (in beef demand) is due to macroeconomics," Mintert said. "The macroeconomic problems in the U.S. are out of the beef industry´s control, but there are things the industry can work on to reinforce demand and prepare for a rebound as the economy recovers."



Ethanol Group Wants Origin Labeling for Fuel

An ethanol industry group is pushing lawmakers to craft legislation requiring fuel companies to inform customers what country their fuel came from in hopes of increasing awareness about money spent on oil imported from overseas. According to Reuters, retired U.S. Army General Wesley Clark, who co-chairs Growth Energy, says his group had spoken with lawmakers such as Collin Peterson, the chairman of the House Agriculture Committee and Tom Harkin, chairman of the Senate Agriculture Committee, and others from fuel-producing states, urging them to craft legislation that would require such labeling.

"Most Americans don't want their paychecks going to Venezuela and other regimes that don't agree with and support the U.S," said Clark. "The United States spends tens of billions of dollars a year on protecting shipping lanes for oil."

Some of the money could be saved by increasing production of U.S. oil and developing alternative fuels like ethanol and fuel-sipping cars, he added. U.S. oil production peaked in the 1970s which means the world's largest fuel consumer has to import most of its crude.

In 2008, Canada was the largest exporter of oil to the United States, sending nearly 2.5 million barrels per day, according to the U.S. Energy Information Administration. Saudi Arabia sent more than 1.5 million bpd, Mexico sent 1.3 million bpd, and Venezuela sent nearly 1.2 million bpd, according to the EIA.

Clark stopped short of saying the labeling would cut U.S. consumption of oil from countries whose governments are not friendly to Washington. But he said it would give consumers more choice on deciding what kind of fuel, or alternative fuel automobiles, they want to buy.

U.S. ethanol producers, pushing to boost the allowable level of ethanol in regular gasoline from 10 percent to 15 percent, could benefit if U.S. dependence on foreign oil fell.