Senator Cochran Promises Ag Disaster Relief

Agriculture-related losses as a result of Hurricane Katrina, drought in the Corn Belt or other weather-related impacts will get help in the next disaster bill written by Congress, Senate Appropriations Chairman Thad Cochran (R-Miss.) said September 21.

Senator Cochran said he would work to “craft language and funding that will be approved by the Senate” in the next recovery bill for all U.S. farmers hit by severe weather. Cochran said the Office of Management and Budget is anticipating another emergency supplemental. “[When] it comes we’ll work to include the appropriate provision,” he said.

Meanwhile, Agriculture Secretary Mike Johanns last week released a preliminary assessment of U.S. agricultural production losses due to Hurricane Katrina in the mid-south and drought in the eastern Corn Belt. The report estimates hurricane related losses to be nearly $900 million. “Given the severity of the hurricane, the agricultural losses could have been much greater,” Johanns said. “With that said, there is a long road ahead for many of our producers who face infrastructure and long-term losses not accounted for in this assessment. USDA is committed to supporting producers throughout long and short term recovery.”

Hurricane-force winds missed major crop production areas in the mid-south. Substantial portions of soybeans, rice and corn production in hurricane-affected states were harvested prior to landfall of Hurricane Katrina, which also limited production losses. Much of the crop losses are lost horticultural production in Florida and along the Gulf Coast.

This preliminary assessment provides estimates of 2005 production losses and does not include infrastructure or long-term losses. Crop and livestock producers face added losses in the form of damaged or destroyed barns, equipment buildings, fences, machinery, as well as losses associated with degraded farm fields, carcass disposal, electrical power losses and fuel shortages.

The losses from Hurricane Katrina compare to a combined total of $20 billion in farm cash receipts in 2004 for producers in Alabama, Florida, Louisiana, Mississippi and Tennessee. The USDA assessment also reviews production losses due to the drought in the eastern Corn Belt, estimating $1.3 billion in corn and soybeans losses in Arkansas, Illinois, Indiana, Missouri, Ohio and Wisconsin. In addition to hurricane and drought production losses, the report notes that grain and oilseed producers throughout the Midwest have faced reduced prices due to the shipping interruption in New Orleans ports.

Crop insurance will cover a portion of farm production losses attributable to Hurricane Katrina, the drought and other adverse weather conditions this year. While coverage varies by crop and state, in general, 70 to 95 percent of planted acreage is covered by insurance in the hurricane-affected area and 60 to 75 percent of corn and soybean acreage is covered in the drought-affected area.

Ag Coalition Seeks Jones Act Waiver

A coalition of twenty-one farm and commodity groups, including the American Soybean Association, has requested the Bush Administration temporarily waive provisions of the Jones Act for agricultural commodities because of the transportation problems caused by Hurricane Katrina. Under the Jones Act, passengers and cargo moving from one U.S. port to another must be carried on U.S. owned, flagged and manned vessels. A temporary waiver of the Jones Act through 2005 would ease the burden on the overtaxed U.S. transportation system and aid in post-Katrina recovery efforts, the groups said in a letter to President Bush.

The groups point out that there is an insufficient number of U.S. ships to move the anticipated 2006 harvest of soybeans and corn, and that those that are available are vastly more expensive to charter than foreign flag vessels.

Chamber of Commerce Report Critical of China’s Ag Trade Shortcomings

The U.S. Chamber of Commerce recently released its fourth annual report assessing the progress China has made in living up to the terms to which it agreed as part of its WTO admissions process. The Chamber made a number of recommendations to the Chinese government for corrective action on agricultural issues. These include:

• China’s General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) should rescind or suspend Decree 73 (the regulation that requires that quarantine import permits [QIPs] be approved prior to signing contracts) or modify it to clarify its implementation procedures to mitigate its negative impact on trade. Further, China should properly notify Decree 73 to the WTO and provide due consideration of the views of its trading partners.
• China should revise the import permit process and cease requiring shipment-by-shipment quarantine import permits so that trade is not unnecessarily interrupted.
• China should ensure that sanitary and phytosanitary measures are science based and practical, and should eliminate nontariff barriers.
• Chinese leadership should enforce the concept of contract sanctity and take appropriate measures against those importers that do not comply with their commitments.
• China should remove the export subsidies it is still providing on certain agricultural products.
• China should discontinue its discriminatory use of the value added tax as both an export subsidy and as an import barrier.

Some Brazilian Soybean Farmers Short Of Cash To Finance Planting

In need of cash to finance planting of the coming soybean crop, Brazilian farmers in the frontier regions of Mato Grosso, Goias and Bahia have been selling what they have left of their 2004-05 crop over the last week, traders told Dow Jones Newswires. But the story is different in the more traditional southern growing regions, where farmers are looking to retain stocks amid dropping prices in the hope that markets will improve in the fourth quarter, when supply is at its lowest.

Soy Complex Mostly Higher On Energy Prices, Inflation And Potentially Higher Soyoil Use

The soy complex closed mostly higher on September 22, reflecting the impact of higher energy markets, potentially higher soyoil usage for bio-diesel production and inflationary concerns. Solid export sales and news that China is buying U.S. soybeans from the Pacific Northwest helped support the market. November bean futures closed up $1.10 finishing at $213.30; January was $0.73 higher, closing at $216.33; and March gained $1.01 ending at $219.27. October meal was down $0.55, closing at $189.71; December was $0.66 lower, finishing at $192.90; and January decreased $0.77 to finish at $194.45. October oil closed $8.82 higher to finish at $514.11; December increased $7.72, closing at $519.40; and January gained $7.94, ending at $522.71.