October 9, 2015
Historical Perspective on the 2014 Farm Bill's Farm Program Choice
The 2014 Farm Bill provided farmers with the opportunity to elect the commodity program for their crops and farms. As discussed in detail in previous farmdoc daily articles, producers could elect a fixed-price program (Price Loss Coverage, PLC), a county-level revenue program (Agriculture Risk Coverage, County, ARC-CO) and an individual all commodity level revenue program (Agriculture Risk Coverage, Individual, ARC-IC). This is not the first time throughout the 80-plus year history of farm policy that producers have confronted decisions about the specifics of the programs that will be applied to their farms; however, most came in the form of large-scale referendums of and votes by farmers growing the affected commodities. In light of the fact that 76% of all farm program base acres elected ARC-CO and 23% PLC, this article looks closer at previous instances of farmer decision making for farm programs.
October 8, 2015
Why are Gasoline and Diesel Prices So High? (Relative to Crude Oil Prices)
Gasoline prices at the pump in the U.S. closely tracked the stunning collapse of crude oil prices in the second half of 2014. However, this was not the case during 2015. As documented in a recent farmdoc daily article, the historical relationship between Brent crude oil prices and U.S. average gasoline prices at the pump suggested that gasoline prices in August should have been about $2.00 per gallon, but were stuck above $2.60 per gallon. A similar result was found for diesel prices in this companion farmdoc daily article. It was argued in both articles that the gap between predicted and actual gasoline or diesel prices could be traced to the improving U.S. economy and sharply lower crude oil prices, which, in combination, spurred gasoline and diesel quantity demanded and pushed the production capacity of the U.S. refining industry to the limit. The purpose of today's article is to provide a more detailed explanation why gasoline and diesel prices in 2015 have been elevated relative to crude oil prices.
October 7, 2015
FDA Revises Definition of "Farm"
The FDA Food Safety Modernization Act (FSMA), signed into law in January 2011, is perhaps the most far reaching reform of the food safety system since the enactment of the 1938 Federal Food, Drug, and Cosmetic Act. Recent data from the Centers for Disease Control and Prevention estimate that 48 million (1 in 6) Americans suffer from a foodborne illness each year. Moreover, 128,000 are hospitalized and 3,000 people die from this largely preventable public health issue. In an effort to minimize foodborne illnesses, the FSMA directs the FDA to implement comprehensive, prevention-based controls throughout the food supply chain--a new legislative mandate that expands FDA jurisdiction beyond its traditional post-farm gate areas of responsibility.
October 6, 2015
Significant Reductions in Working Capital Likely in 2015 on Grain Farms
Working capital will be reduced on many Midwest farms in 2015. In this article, per acre reductions of working capital are quantified for owned, cash rented, and share rented farmland. A repeat of a year like 2015 in 2016 could see many farms back approaching a working capital situation similar to the period from 1996 to 2006, the period immediately prior to the period of higher incomes from 2006 to 2012.
October 5, 2015
Weekly Outlook: Soybean Balance Sheet Projections Remain Unsettled
The USDA will release the monthly WASDE report on October 9. For soybeans, there are a number of potential changes in the supply and consumption projections that were made in the September report.