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USFR Weekly Recap - April 7-8, 2012

April 11, 2012

THIS WEEK ON U.S. FARM REPORT
EPISODE #2017
APRIL 7-8, 2012

JOHN’S OPEN: Hello and welcome to U.S. Farm Report, I'm John Phipps. After historically unusual March weather, the expectation for an equally remarkable beginning to the major planting season has sputtered to a fitful lurch as dry soils and forecast cold temperatures frustrate farmer plans. In my part of the world, we're already competing over tenths of an inch of rain, something that typically takes place in July or August. At the same time, normal April weather seems like a return to winter. All this anxiety stems from the deep conviction that 2012 crop really matters. The realization that burdensome surpluses of the past are gone is finally sinking in. Time now for the headlines.....here's Tyne Morgan.

CROP PROGRESS: Thanks John. A remarkably mild spring has planters rolling earlier than normal across the Corn Belt. As of last weekend, the Ag Department reports about 3% of the nation's corn crop is already in the ground. Federal crop watchers report planters are rolling in a number of northern states...including Illinois, Indiana, Michigan, Nebraska and Ohio. The five-year average shows planting is typically not underway at this time in any of those states. 5% of the crop is planted in Illinois and 2% in Michigan.
Down south Texas is trailing slightly behind while Tennessee, North Carolina and Missouri are ahead of pace.

WHEAT CONDITION: Also from the field, the condition of the winter wheat crop continues to improve. In its weekly update, the Ag Department pegs 58% of the crop as good or excellent...more than 20 points ahead of where the crop was a year ago. Texas growers are facing the biggest challenge as about a third of that state's winter wheat is rated poor or very poor.

CHINA BUYS CORN: China is back in the market for U.S. corn. Reports indicate the Chinese placed an order for 120,000 tonnes to be shipped by the end of August. That brings their total for the season to nearly 4 million tonnes, right in line with USDA's forecast and the highest total in nearly two decades.

MILC PAYMENTS: For the first time since April of 2010, the Ag Department announces it will be making a milk income loss contract payment. USDA says it will pay 39-cents per hundredweight for February milk production. Based on current futures prices, industry insiders estimate payments will be made now through September. To be eligible, producers must sign up on or before the 14th of the preceding month. The March payment is estimated at 59-cents...the estimate bumps up to 89-cents in April and back down to 59-cents in May.

ANALYSIS: Mike Hogan chip Hemminger

JOHN’S WORLD: To most everyone's surprise, there is good news on the economic front. One of the most optimistic signs is a resurgence in exports. While we here in agriculture have been following this trend for decades, suddenly more industries are benefiting from American global competitiveness. Economist Tyler Cowen thinks this will powerfully affect our whole economy. U.S. exports are booming because more of the world have incomes closer to ours and want to buy products Americans buy. We excel in that market. It is also occurring because technology around the world is replacing people with ever smarter machines. Suddenly the cost of labor doesn't matter as much, so insourcing jobs is now fashionable. But there is another side to this story. In his analysis there will be stark differences for workers in exporting industries and those producing for a stagnant domestic market. Protected service sector jobs, like education, health care and government will be able to maintain numbers and wage growth, but otherwise abundant, well-paying jobs will not be a feature of this export-driven economy. Consequently, the flow of wealth will be to those who invest the capital or produce and operate technology - not everyone. Farms are not immune. Investments in farm machinery, land and improvements will continue to earn strong returns. Operator labor will get a much smaller slice of the pie. Hard work alone will not be sustainable business model.

2ND HALF:
JOHN’S OPEN:
Hello and welcome to U.S. Farm Report, I'm John Phipps. There was mediocre news on the job market Friday, but clearly the economy is plodding in the right direction. Nowhere is that news more welcome than our protein industry. Hard-pressed consumers slow down meat and dairy purchases faster in response to pinched finances. But even if the recovery accelerates, clearly it will not operate on the same fundamentals as before. Not only have consumers developed slightly new shopping habits, but the generational shift away from baby boomers raises new questions. We don't know much about succeeding generations, but if we want to market successfully in the future, we'd better start hanging out with them. Tyne Morgan is here with the headlines...

FDA SCRUTINY: Thanks John. New numbers show the FDA is stepping up efforts to safeguard the nation's food supply. In 2011, the agency reports it issued 52% more food-related warnings and nearly 300 food-related recalls. According to the Centers for Disease Control and prevention, an estimated 48-million Americans get sick and three-thousand are killed each year from food-borne illnesses. In addition, economists estimate outbreaks cost the U.S. economy more than 150-billion-dollars annually.

VEGGIE ACRES: An increase in vegetable production could equal lower prices for consumers. According to USDA estimates, veggie farmers will plant one-million additional acres in 2012. A big part of the boost will come from dry beans, sweet potatoes and mushrooms. In California alone, tomato production is expected to jump 3% with potato output up 6%. The big winner may be mushrooms. The market is now worth one and a quarter billion dollars...and that total is expected to climb in the year ahead.

CALI CITRUS GREENING: An unwanted visitor is taking aim at California's 2 billion-dollar citrus industry. The Ag Department has confirmed a case of citrus greening in Los Angeles County. The disease has already killed millions of trees in Florida and Brazil. Now agents say greening has been found on a tree in a residential neighborhood. Sales and shipments of citrus trees are being shut down in a five mile radius...and the quarantine could expand if more cases are confirmed.

HONEY PRICES: Don't expect honey prices to dip anytime soon. New figures show honey production totaled just under 150-million pounds in 2011...a 16% dip from the year before. As a result, stocks remain tight and prices remain at record levels.

SODA CONSUMPTION: American's have long loved carbonated beverages...but demand for soda is on the down-swing. For the 7th consecutive year soft drink consumption declined in 2011...hitting its lowest level in 15 years. In all, the average consumer drank 714 eight ounce servings, down 14 from the year before. Energy drinks are filling the gap, with sales up 16%.

E15 APPROVAL: In other news this week, the ethanol industry is applauding the latest decision from EPA regarding E15 ethanol. On Monday the agency approved E15 as a registered fuel. In February the ethanol blend passed the EPA's health effects testing. The renewable fuels association says E15 could start showing up at stations across the Midwest as early as this summer.

EGG DONATION: And on this Easter weekend, egg farmers are helping those in need. For the 5th consecutive spring, nearly 10-million eggs will be donated to food banks in 40 different states. The United Egg producers says eggs are a nutritional goldmine. The association says a single egg delivers six grams of protein and 13 essential nutrients.

HEARTLAND; TEXAS TRACTOR TEENS: Education can happen in a variety of ways - but for most of us, nothing works better than hands-on learning. In Texas, there's a group of high school students who are restoring history and at the same time opening doors for the future. Nathan Smith with the Texas Farm Bureau has their story. Our thanks to the Texas Farm Bureau for that report. To learn more about ag in the lone star state, head to their web site... www.txfb.org ...we'll post a link on our home page.

BAXTER BLACK: Welcome back. We hope you are enjoying a relaxing and peaceful Easter weekend...a time many of us spend with friends and family. From Baxter Black's perspective, a good friend is priceless. Up next, a trip to the pacific northwest for tractor tales, plus our country church salute...we'll be right back.

TRACTOR TALES: Al joins us now with tractor tales...what do you have for us this week? John, we're headed to Washington state to check out a unique D-19. This Allis Chalmers traveled a long way to reach its final destination...and the owner was more than happy to make it a part of his collection. As always, you can find Tractor Tales on our home page... www.usfarmreport.com ...or on Facebook. You can also download these segments as podcasts from iTunes.

CHURCH SALUTE: Today's Country Church Salute goes to the Georgianna United Methodist Church in Merritt Island, Florida. Construction began in 1885 with lumber delivered from St. Augustine by sailboat. The first service for this historic sanctuary was held on Thanksgiving Day in 1886...meaning the church celebrated its 125th anniversary in 2011. The original 95-seat sanctuary still stands today and includes much of the original lumber and pews. Due to unprecedented growth, the "transformational life center" was dedicated in 2007 and includes a worship center and classrooms. The current pastor is the Reverend Corky Calhoun. Our thanks to Jeannette Inman for telling us all about her home church. As always we want to learn about your church as well... Salutes can be sent to the address on the screen. Stay with us - the mailbag is next.

MAILBAG: Time now for our weekly look inside the farm report mailbag....My reference to the pink slime controversy prompted this question from Pam Stone. "I suddenly had a disquieting thought: is there "white slime" in ground chicken and ground turkey?" Consider the power of language here. The beef industry is irate about the blatantly derogatory term pink slime. But the problem is few people knew the correct name when the photos started hitting the internet. It is obviously pink and it looks slimy, although paste might be a more accurate description. Lean finely textured beef was not on labels or widely spoken about. To answer the question, there is no white slime, but there is a similar mechanically-separated product for poultry. It too is just as safe as whole meat. But the problem is not the name, despite the meat industry media-bashing. It's about the disgust reaction hardwired deep in our brains. It's why I don't eat raw oysters, for example. The ammonia doesn't help either. Adding security to processing plants and expecting rational arguments to override this instinct is probably not going to work. Two things need to change here. First consumers need recognize the real tradeoffs. If you want food fast, easy, tasty and cheap, don't be surprised when how it gets made is a lower priority. The meat industry needs to grow up too. The twenty-first century is not the time for your business plan to contain the phrase "Nobody will ever find out". As always, we want to hear from you, send comments to mailbag@usfarmreport.com or leave us a voice mail at 800-792-4329.
 

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