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Ag Insight
Agriculture, food industry involved in response to virus
The COVID-19 pandemic has changed numerous aspects of everyday life, both in this nation and worldwide, and the U.S. Department of Agriculture has altered its programming in response to the virus’s challenges.
Among other things, the department has launched the Farmers to Families Food Box program and has extended the contracts of select vendors from the first round of the effort, designed to “help fill the hunger gap in all of our communities.”
From its start in mid-May, the program delivered through mid-June more than 17 million food boxes to some 3,200 nonprofit organizations across the United States, including Guam and Puerto Rico. USDA has extended the effort through the end of August, based on the performance of participating vendors, and has authorized up to $1.16 billion to fund it.
Agreements with some vendors were extended with no adjustment to their delivery amounts while others’ amounts or locations were changed based on their demonstrated abilities to perform or a vendor’s request.
USDA says the extensions continue to require audits to ensure adherence to food safety plans and that 100% of food procured and delivered is U.S. grown and raised. Food products also must meet all USDA quality standards.
The agency chose not to extend some vendors’ contracts either because of concerns brought up during audits or for performance challenges. Additionally, some contracts were not extended at the vendors’ request.
In addition, USDA has begun new contracts with a few vendors whose offers were not previously accepted due to technical errors in their proposals.
USDA says it continues to evaluate how to expand access to the program in underserved areas and is in the final stages of determining cities and states that have been affected by the economic impacts of COVID-19 and where additional food boxes are in demand.
In early June, U.S. Secretary of Agriculture Sonny Perdue joined Governor Kay Ivey, U.S. Representatives Robert Aderholt and Terri Sewell, and Commissioner of Alabama Department of Agriculture and Industries Rick Pate in a virtual Farmers to Families Food Box event.
Orange juice sales spike in virus aftermath
Reversing a downward trend that began 10 years ago, retail orange juice sales have risen since the U.S. onset of the current COVID-19 pandemic.
One reason is that U.S. consumers may have sought methods to increase their intake of vitamin C, a nutrient commonly believed to build up a healthy immune system. During the four-week period after the pandemic announcement earlier this year, orange juice sales reached the highest level in five years at 44.5 million gallons.
The average price of frozen concentrate orange juice in April rose 5% from the previous month to $2.40 per 12 oz. can, the first March-to-April sales price increase observed since 2012.
In 2019, orange juice consumption in the United States had fallen to 2.25 gallons per capita, a 40% decline from 2010. The decrease in orange juice purchases is attributable to both demand and supply-side factors. Research has indicated that declining consumer interest in sugary beverages may be contributing to reduced purchases.
On the supply side, citrus greening disease, an insect-borne illness, has decimated the Florida orange juice industry, decreasing bearing acreage of juice oranges by 30% since 2005.
After their surge in April, sales of orange juice are already showing signs of retreating, but were still well above average at midyear.
USDA set to reach goal in trade dispute mitigation efforts
USDA recently announced it has purchased more than $2.2 billion of meat, fruits, vegetables, specialty crops and dairy products in fiscal years 2019 and 2020.
The purchases are part of ongoing efforts to assist American farmers and ranchers suffering from damage due to trade retaliation by foreign nations and to feed people in need. The agency said it’s on target to reach the fiscal year goal of about $1.4 billion of trade mitigation purchases in the next phase of fiscal year purchasing, which ends Sept. 30.
Products were bought through the Food Purchase and Distribution Program, one of three USDA programs in the agency’s support packages for farmers.
Most of the food purchased is provided to states for distribution to nutrition assistance programs such as The Emergency Food Assistance Program and child nutrition programs.
The FPDP was established in fiscal year 2019 to assist U.S. producers by purchasing commodities the Trump Administration believes have been targeted in the nation’s ongoing trade disputes with China and other countries. Under the program, USDA buys food products produced on American farms through approved vendors who have proven they can supply U.S.-produced products.
Virus affects wheat-corn price spread
Wheat and corn prices tend to move in parallel, with cash and futures wheat prices historically being slightly above those for corn. However, when efforts to contain the outbreak of COVID-19 brought about widespread stay-at-home orders, this wheat and corn price relationship began to diverge significantly.
The widening spread came at a potentially significant time for farmers, whose planting decisions could have been influenced by the perceived relative profitability of corn and spring wheat (winter wheat is planted in fall of the prior year and sowing would not be affected by recent developments).
From the end of March through mid-May, the price difference for the leading wheat futures contract surged to $1.54 per bushel and well above the comparable average wheat-corn price margin. In contrast, between August 2019 through March 2020, the average difference between futures contract prices of hard
red winter wheat and yellow corn was about $0.58 per bushel and similar in size to their typical price spread.
A spike in domestic retail flour, bread and wheatbased product sales related to greatly increased expenditures on food eaten at home contributed to the observed wheat price increase.
In contrast, stay-at-home orders significantly reduced demand for fuel, 10% of which is corn-based ethanol, thereby putting substantial downward pressure on the 2019/20 corn price.
In the new marketing year, the margin between wheat and corn cash prices is expected to remain above the five-year average, due in part to the continuation of COVID-19’s impact on demand for wheat and corn products, and also to contrasting supply expectations for each grain.
Dicamba ruling sparks further legal dispute
In the wake of a ruling by a panel of judges vacating the registrations of three dicamba herbicides, the legal battle over use of the chemicals continued. After the ruling by judges in the Ninth Circuit, the Environmental Protection Agency said it would end sales of the three herbicides, but allow farmers and commercial applicators to continue using supplies they already had on hand as of June 3. That use was permitted through July 31, subject to state regulations that still apply.
The group of farm and environmental organiza tions that had successfully brought the lawsuit against EPA over the use of dicamba products then brought legal action asking the Ninth Circuit to order an imme diate halt to the use extension and to hold the EPA in contempt, based on their argument that continued use violated the court’s order to vacate the registrations.
The EPA defended its decision to allow continued use of XtendiMax, FeXapan and Engenia, and asked the Ninth Circuit Court of Appeals to throw out the contempt motion. The agency also said vacating the registrations (by either judicial or administrative ac tion) “only makes it illegal to distribute or sell that pesticide,” but “does not outlaw use of products already legally purchased.”
The plaintiffs noted that EPA’s order would allow up to 16 million pounds of the herbicides to be applied over the top of cotton and soybeans through July 31. That usage again could cause extensive injury to nearby but not targeted crops – a result instrumental in the judges’ decision to vacate the registrations.
USDA issued a statement saying it “supports the actions taken by the EPA to respond responsibly to the decision of the Ninth Circuit regarding dicamba.
“The Ninth Circuit should not allow plaintiffs’ hostility against the American farmer to cloud the fact that the EPA’s actions follow both legal precedent and common sense,” the statement by Secretary of Agriculture Sonny Purdue said.
According to the USDA statement, the order allowing for limited use of existing chemical stocks already purchased follows EPA precedents from the Obama and Clinton Administrations when registrations for other crop protection tools were canceled.
that the EPA’s actions follow both legal precedent and common sense. Sonny Purdue, Secretary of Agriculture ”
