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April 27, 2017

Senate Confirmation Hearing Starts Today For Sonny Perdue

Sonny_Perdue_at_rallyThe last member nominated to fill the Cabinet of President Donald trump will go before the Senate Ag Committee today.  Former Georgia Governor and nominee to becoming US Agriculture Secretary Sonny Perdue is scheduled to begin is long awaited questioning at 9 am central time Thursday.  Perdue will be introduced by his cousin and fellow republican, US Senator David Perdue, also of Georgia.

The lack of urgency behind Perdue’s nomination raised concerns in rural america, a major contributor to President Trumps Victory.  After being the last member nominated just a day before Trumps inauguration, it took another seven weeks for the nomination to become official and all the paperwork to be submitted.  Despite that, Perdue is expected to be confirmed fairly quickly.  Several major farm groups as well as previous Ag Secretary Tom Vilsack have all endorsed him leaving few major hurdles.  His business and professional experience is likely to aid the process.  Aside from serving as former governor, Perdue was trained as a veterinarian and also owned several commodity export and trading companies.  His ethics paperwork states he will unwind himself from involvement in Perdue Management Holdings LLC and Perdue Business Holdings Inc.

If confirmed, analysts caution Perdue’s job won’t be easy.  He’s taking the reins of a industry that has struggled the past few years and is facing the crafting of a new farm bill.  Trade disputes and rising rhetoric with major trade partners Canada, Mexico, and China will also be big challenges.  Perdue will have to manage all this with a base that feels neglected and a proposed budget that would leave his agency with the lowest discretionary funds since 1988.

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US Farmers Receiving Less Of Each Dollar Spent On Food

2015 food dollar marketing bill_fed-01_450pxA study released late last week by USDA’s Economic Research Service shows that for the fourth year in a row, US Farmers received less of each dollar spent on domestically produced foods.  Those include foods purchased at grocery stores and grown in the US as well as those purchased at restaurants, coffee shops, and other eating establishments.  The data ran only through 2015, but showed a steeply declining curve in the amount of money coming back to the nations farmers.

The data released shows the amount of each dollar going back to the nations producers peaked in 2008 at just under 18 cents.  While the percentage increased slightly from 2009 to 2011, it never made it back to pre-recession levels and fell by 1.6 cents from 2014 to 2015.  The reduction coincided with four consecutive years of increases in the share of food dollars going to services within the food industry.  USDA concluded that the increasing costs of preparing and serving meals is also driving down the share going to farmers.

The decline also came during a sharp fall in the farm good PPI, or producer price index.  That index measures the average change in prices received by producers, meaning that while prices were declining, US farmers were also receiving a small share of the lower amount.

The study comes as part of an ongoing food dollar series, with USDA illustrating the relationship between the nations consumers, US farmers, and the processing industries.  More information and several other studies can be found at ers.usda.gov/data-products/food-dollar-series

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China Bans Brazilian Beef In Wake of JBS, Meatpacking Scandal

beef-carcassesIn the wake of news last week that Brazilian authorities had raided JBS and other large meat packers on charges of government bribery and sale of adulterated meat product, China’s Administration of Quality Supervision, Inspection and Quarantine has announced that all clearance of Brazilian meat products will be put on hold.  The declaration includes product already in warehouses and in transit, with approximately 3400 tons estimated to be on ships alone.  No word just yet on how many tons are in estimated to be in Chinese warehouses.

The raids came after reports surfaced that JBS SA as well as competitor BRF SA and several smaller regional companies had bribed government officials to overlook sanitation violations.  In particular, the raids surfaced on the question of whether or not the companies had processed rotten meat, shipped salmonella tainted cargoes, and forged certificates on Chinese, EU and Middle Eastern bound containers.

So far, the EU has not slapped any restrictions on Brazil’s products, although analysts say there is a high possibility of that happening in the near future.  The raids have also resulted in the arrests of 5 employees; 3 from BRF and 2 from JBS, as well as 20 government officials.  One BRF plant has been ordered temporarily closed as well as two operated by a smaller company Grupo Peccin.

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