May 23, 2013

North Dakota Farmers Union Applauds Quick Movement on Farm Bill

The recent passage of farm bills in both the U.S. Senate and House Ag Committees, literally within hours of each other on Tuesday and Wednesday, is welcomed by North Dakota Farmers Union.

“Farmers need the certainty of a farm bill and the rapid action by both halls of Congress moves us closer to having a farm bill signed into law by Sept. 30,” said NDFU President Woody Barth.

“We are pleased with the family farmer and rancher provisions contained in the Senate Ag Committee bill which includes $800 million in mandatory funding for the energy title. Both are a reflection of Sen. Heitkamp and Sen. Hoeven’s efforts to protect and provide a strong safety net for North Dakota farm and ranch families. We are fortunate to have them both on the Senate Ag Committee,” Barth said.

The House version of the farm bill includes language that also provides protections to family farmers when disasters strike or prices collapse, but does not include mandatory funding for renewable energy programs to support domestically-produced fuels.

“As both bills now move to the floor, it will be more important than ever to craft legislation that provides a strong safety net for producers – protecting them in times of disaster or long-term price collapse – and funds a renewable energy program that lessens America’s dependence on foreign oil,” he said.

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Crop Progress Advances as Weather Dries

Corn Planting Progress advanced across the U.S. albeit and a continued slow pace.  USDA Crop Progress reports yesterday reported national corn planting at 28% complete and 5% emerged versus the five year average of 65% and 28%, respectively.  Soybean progress advanced marginally to 6% complete compared to the five year average of 24% complete.  Weather over the next few days should allow for further progress before more rains move across the cornbelt this weekend.

Dry conditions in the Northern Plains did allow for significant Hard Red Spring planting.  USDA reported national progress at 43% complete compared to the five year average of 63% for this week.  Winter wheat conditions were largely stable with no change in the percentage of crop rated good to very good.

In North Dakota,  much warmer weather conditions across the state allowed most producers to make good progress with their fieldwork, according to the USDA’s National Agricultural Statistics Service, North Dakota Field Office.  According to reports, the warmer, drier weather allowed almost all producers across the state to either start preparing their fields for planting or make good progress in getting their crops in the ground. Statewide, on average, there were 5.5 days suitable for fieldwork.  High winds have caused newly planted fields to dry quickly. Topsoil moisture supplies are rated 65 percent adequate and 8 percent surplus. Subsoil moisture supplies were 57 percent adequate, and 6 percent surplus. Livestock conditions improved last week as a result of the better weather.  However, as a result of a blizzard received on April 15, some calf losses were reported due to scours and pneumonia.  Other livestock activities occurring last week were branding of calves and breeding of cows.

Spring wheat seeding for ND rated 26 percent complete, still behind last year at 92 percent and 53 percent average, but advanced 19 percentage points from last week. Emergence rated 1 percent, behind last year at 65 percent and 25 percent average.   Canola seeding rated 12 percent complete, behind last year at 78 percent and 36 percent for the average.  Sugarbeet planting rated 42 percent complete, behind last year at 99 percent and 68 percent average.  Corn planting rated 18 percent complete, behind 79 percent last year and 43 percent average.  Soybean planting rated 3 percent complete, behind last year at 45 percent and 14 percent average.

In South Dakota, most areas of the state made good progress planting small grains and row crops with 5.5 days suitable for fieldwork, according to the USDA’s National Agricultural Statistics Service, South Dakota Field Office. Seeding of small grains was above 70 percent and corn planting was over one-third complete. Topsoil moisture supplies rated 12 percent very short, 25 percent short, 59 percent adequate, and 4 percent surplus. Subsoil moisture supplies rated 29 percent very short, 43 percent short, 27 percent adequate, and 1 percent surplus. Even though pastures are slow to green up, livestock producers are beginning to take cattle to pastures due to decreasing forage supplies.

Winter wheat conditions rated 28 percent very poor, 33 percent poor, 34 percent fair, 5 percent good, and 0 percent excellent. Winter wheat headed rated 1 percent, behind 13 percent last year and 3 percent average.  Spring wheat seeding advanced 30 percentage points with 76 percent rated complete, behind last year’s 100 percent and 88 percent average. Spring wheat emerged rated 20 percent complete, also behind last year at 95 percent and 56 percent average.

Corn planting also advanced 30 percentage points with 37 percent rated complete, behind last year at 76 percent and 46 percent average. One percent of corn has emerged, behind last year at 35 percent and 10 percent average.  Soybean planting rated 6 percent complete, behind last year at 25 percent and 10 percent average.

 

 

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Study Finds Candy Industry Thrives Under Current Sugar Policy

Confectioners and other producers of sugar-containing products (SCP) are adding more jobs, growing revenues faster and achieving higher profitability than other food processing segments, according to a new report released today that examines the economic effects of U.S. sugar policy.

“The SCP industry has been faring very well under current U.S. policy,” found the report’s author, University of Maryland Professor Alexander J. Triantis, Ph.D. The findings stand in contrast to claims by candy industry lobbyists that sugar policy has caused economic hardship.

“SCP companies have experienced strong revenue growth over time. These companies have high profitability and high returns on equity, even when sugar prices increase,” continued Triantis, the former chair of the university’s finance department. “Coupled together with low risk and therefore a low cost of capital, SCP companies have generated impressive total shareholder return since 2000, and their stocks are priced to reflect strong expectations for the future.”

As part of his work, Triantis examined the financial performance of 10 large U.S. publicly held companies that produce highly sweetened products and found:

  • Share prices have shot up more than 300 percent since 2000, compared to an almost flat S&P index during that period.
  • Revenues grew by 45 percent between 2004 and 2012, 50 percent higher than the growth rate for the rest of the U.S. economy.
  • Net profit margins from 2004 to 2012 were 17 percent higher than the average for all U.S. public companies and 60 percent higher than all the food processing industry.
  • Return on equity was 47 percent higher than the overall food-processing industry and 115 percent higher than the U.S. economy from 2004 to 2012.

Triantis also noted the number of jobs in the SCP sector has grown since 2006, while employment by food manufacturers that do not use sugar has fallen by 3 percent.

Sugar policy and sugar price fluctuation have minimal impact on the SCP industry’s financial health, Triantis said, noting that labor and other overhead costs reflect much larger line items on corporate income statements.

“The cost of sugar constitutes, on average, only 4 percent of the cost of producing a confectionery product,” he explained. In addition, “retail SCP prices have risen much faster than the U.S. wholesale sugar price … and don’t typically fall when the sugar price decreases.”

The financial future of the sugar producing industry, however, is directly linked to decisions being made by lawmakers during the Farm Bill debate.

“If U.S. sugar policy were to be altered in any significant way, a large number of jobs supported by the sugar industry would be lost, and there is no evidence that consumers would benefit in the form of lower SCP prices,” Triantis wrote.

Sugar related jobs have declined 40 percent over the past two decades, he explained, and the remaining jobs would be put in jeopardy if subsidized foreign sugar supplies flood the U.S. market, as large candy companies advocate.

Triantis pointed to Europe for proof. After the European Union rewrote its sugar laws in favor of greater import dependence, 120,000 sugar jobs disappeared.

“Given the historical link between profitability of operations and employment in the sugar industry in the U.S, and the recent experience in Europe, it is thus reasonable to expect that any disruption to U.S. sugar policy that will result in a decrease in the price of sugar will result in the loss of a large fraction of the roughly 142,000 jobs supported by the sugar industry,” he concluded.

The American Sugar Alliance, which represents U.S. sugar producers, commissioned Triantis’ work and will share the report with lawmakers and administration officials

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