K. William Watson
A scandal has recently erupted in Europe after it was discovered that horsemeat was being sold to consumers in processed foods claiming to be 100% beef. This is, of course, already blatantly illegal, but that hasn’t stopped regulators from trying to figure out how to increase their oversight of Europe’s already highly regulated food market.
Unfortunately, some policymakers have used this scandal to push for increased trade barriers within the European Union. Their preferred barrier is the increased use of mandatory country of origin labels. This policy ignores the fact that horsemeat can be passed off as beef in any country and that doing so is illegal in all of them.
Nevertheless, this call for labels reveals a justified concern that complex supply chains obscure relevant information from consumers. But, consumers don’t need protectionist mandates to solve their problems; a little common sense will do just fine. The Scottish Farmer, an advocacy group for Scottish agriculture, reports that 92% of local butcher shops in Scotland have reported increased patronage since the horsemeat scandal broke.
If complex supply chains are perceived as unreliable, consumers will forego the price benefits of frozen packaged food and choose to buy meat from a simpler and more transparent source. Such rational consumer behavior will likely do more to improve the quality of international supply chains than any tweak in complex regulatory oversight.
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It seems that talks about a possible transatlantic trade deal between the United States and the EU are ongoing. Speaking at Davos, soon-to-be-ex U.S. Trade Representative Ron Kirk told reporters that the United States was keen to lower trade barriers on goods and services flowing between the two economies, but wants to make sure that the political ducks are in a row first. One hurdle? Famers. Apparently he wants to make sure that U.S. farmers are comfortable with the deal before proceeding, as they have the power to block any deal once it comes before Congress. From the New York Times on Sunday:
But Mr. Kirk noted that members of Congress with farmers as constituents far outnumbered those whose districts included big companies like Boeing or Apple that would benefit from a trade deal. “Agriculture tends to be a challenging issue,” he said.
Ugh. Again with the implication that the benefits of trade come from exports, and flow to big corporations. As far as the congressional maths is concerned, Mr Kirk fails to recognize that members of Congress with consumers as constituents– that is, all of them– far outnumber those whose districts include either “big companies like Boeing or Apple” or farmers (who may also see higher export sales, in any case). Consumers have long been the silent, long-suffering minority when it comes to political support for free trade, but it would be nice if we had a trade representiative willing to make their case. Perhaps Mr. Kirk’s successor will be more bold.
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With Farm Bill Stalled, Consumers May Face Soaring Milk Prices
If Congress cannot pass a new farm bill, a 1949 one will go into effect and prices could reach $6 to 8 a gallon.
By RON NIXON
Published: December 20, 2012
WASHINGTON — Forget the fiscal crisis and the automatic budget cuts. Come Jan. 1, there is a threat that milk prices could rise to $6 to $8 a gallon if Congress does not pass a new farm bill that amends farm policy dating back to the Truman presidency.
The government sets a minimum price for milk to cover dairy farmers’ production costs.
Lost in the political standoff between the Obama administration and Congressional Republicans over the budget is a virtually forgotten impasse over a farm bill that covers billions of dollars in agriculture programs. Without last-minute Congressional action, the government would have to follow an antiquated 1949 farm law that would force Washington to buy milk at wildly inflated prices, creating higher prices in the dairy case. Milk now costs an average of $3.65 a gallon.
Higher prices would be based on what dairy farm production costs were in 1949, when milk production was almost all done by hand. Because of adjustments for inflation and other technical formulas, the government would be forced by law to buy milk at roughly twice the current market prices to maintain a stable milk market.
But the market would be anything but stable. Farmers, at first, would experience a financial windfall as they rushed to sell dairy products to the government at higher prices than those they would get on the commercial market. Then the prices customers pay at the supermarket would surge as shortages developed and fewer gallons of milk were available for consumers and for manufacturers of products like cheese and butter.
For dairy farmers like Dean Norton in upstate New York, who are struggling with high feed costs caused by this summer’s drought, a jump in prices would be welcomed.
“But it would be short-term euphoria followed by a long hangover that would be difficult for us to recover from,” said Mr. Norton, who is president of the New York Farm Bureau. “I don’t think customers and food processors are going to pay double what they are paying now for dairy products.”
The Senate passed a farm bill in July. A House version of the bill made it out of committee, but House leaders have yet to bring its version to the floor.
Under the current program, the government sets a minimum price to cover dairy farmers’ production costs. If the market price drops below that, the government buys dairy products from farmers to buoy prices and increase demand. Since milk prices have remained above that minimum price in recent years, dairy farmers usually do better by selling their products commercially rather than to the government.
But if 1949 rules go into effect, the government would be required to buy dairy products at around $40 per hundredweight — roughly twice the current market price — to drive up the price of milk to cover dairy producers’ cost.
“It would be bad for consumer demand in the long run,” said Chris Galen, a spokesman for the National Milk Producers Federation, which represents more than 32,000 dairy farmers.
Mr. Galen and others in the dairy industry said reverting to 1949 policies could probably force the makers of butter, cheese, yogurt and other dairy products to look for cheaper alternatives, like imported milk from countries like New Zealand.
Most dairy companies declined to discuss plans to buy dairy supplies from abroad if they are forced to pay higher prices for milk.
But Land O’ Lakes, a dairy company based in Arden Hills, Minn., said the 1949 law could be potentially disruptive for dairy industry operations.
“Congress needs to pass a comprehensive farm bill that helps farmers continue to feed the world, keeps food prices affordable and provides farmers some financial stability in the very unpredictable profession of farming,” said Rebecca Lentz, a company spokeswoman.
In a conference call with reporters on Thursday, Tom Vilsack, the agriculture secretary, said the department was exploring all its options to deal with the possibility of the 1949 law going into effect.
“We will do whatever we are legally obligated to do,” said Mr. Vilsack, who declined to say what specific steps the department would take to prepare for what dairy lobbyists and industry officials are calling the “milk cliff.”
Among the options: the agriculture secretary could drag his heels on the milk purchases until Congress passes a new farm bill or an extension of the 2008 one that expired in September, said Vincent Smith, a professor of agriculture at Montana State University in Bozeman.
“This is a totally antiquated law that has nothing to do with farming conditions today,” Professor Smith said. “It was put as a poison pill to get Congress to pass a farm bill by scaring lawmakers with the prospect of higher support prices for milk and other agriculture products. Letting it go into effect for even a few months would be particularly disastrous for consumers and food processors. “
Statistics: Posted by yoda — Fri Dec 21, 2012 10:48 am
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29th October 2012 by Administrator in Economy |Politics |Social Issues
Bernanke, consumer spending, Inflation, Personal Income, Recession, Savings rate
Another day and another Orwellian economic report from the BEA which is then spun by the corporate mainstream media as a positive development. So it goes.
It seems the American consumer is spending like a drunken sailor again. It must be that new 20 hour a week job at Popeye’s that has them opening their wallets again. Consumer spending SURGED by 0.8% in September. That is an annualized rate of about 10%. Surely this means the recovery is taking off. Well let’s look at the actual numbers. Here is the link:
These are my observations:
Consumers increased their personal outlays by $93 billion in September. The MSM considers this a good thing. It certainly doesn’t matter that this surge was caused by people paying 20% more to fill up their SUVs and 10% more to fill up their grocery basket. Essentially, the increase in spending is being forced upon the public by Ben Bernanke and his inflationary QE to infinity and Obama’s saber rattling on behalf of Israel.
In a truly revealing statistic, that will absolutely not be reported on CNBC, personal outlays for interest skyrocketed at an annual rate of 12% in September. It has risen at an annual rate of 26% since June. Don’t we have the lowest interest rates in history? For the slow witted (aka any anchor on CNBC) I’ll explain what is happening. The country went into recession in June. Consumers have no savings whatsoever. They are now surviving on their credit cards and paying 15% interest on their ever increasing balances. This is why interest outlays are soaring.
This is completely confirmed by the plunge in Savings rate to a ridiculously low 3.3%. When you spend more than you make, your savings dwindles.
Now we get to the income side. Personal income grew by only $48 billion, about half as much as spending. Yeah, that’s sustainable. You’ll be happy to know that $13 billion of this increase was from government transfers. That’s right – 27% of the increase in “personal income” came from the government handing out your tax dollars to other people. Is that really income?
Now to the figure that makes my blood boil. Interest income reached a new post crisis low of $975 billion in September. It is at the same level it was in 2005. This is the money paid to senior citizens and savers. This figure was $1.422 trillion in August 2008. Please think about this for a second. Ben Bernanke through his ZIRP has stolen $447 billion out of the pockets of senior citizens and handed it to Wall Street bankers. He should be strung up from a lampost.
In the meantime dividend income reached a new post-crisis high of $743 billion. Mitt Romney and his ilk in the .01% are doing just fine thank you, while senior citizens are deciding which brand of cat food tastes best.
Lastly, the fact that CNBC will also not be reporting – REAL DISPOSABLE INCOME IS DECLINING!!!! It has fallen two months in a row and is at the exact same level as it was in May. Bennie says inflation is well contained, but reality says something different. Keep in mind, this is even using the fake government CPI calculation. Real disposable income is plunging.
When you review this report using critical thinking skills you understand how badly you are getting screwed. We have been in a recession since June, and this data confirms it.
U.S. consumer spending climbs 0.8% in September
WASHINGTON (MarketWatch) – Consumer spending in the U.S. rose a seasonally adjusted 0.8% in September, the Commerce Department said Monday. Spending for August was unchanged at a 0.5% increase. Personal income, meanwhile, rose a slower 0.4% in September. Economists surveyed by MarketWatch had forecast a 0.7% increase in spending and a 0.4% rise in personal income. Since incomes rose slower than spending, the personal savings rate fell to 3.3% from 3.7%. Also, inflation as gauged by the PCE price index increased 0.4% in September. The core PCE index was up 0.1%.
Statistics: Posted by yoda — Mon Oct 29, 2012 9:36 am
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Food price worry as U.S. corn, soybeans in worst state since 1988
Andrew Stern, Reuters | Updated: July 10, 2012
U.S. corn and soybean crops, the world’s largest, are in the worst condition since the last major drought in America’s breadbasket in 1988, the government said on Monday, pushing up grain prices and raising the prospect of global food-price inflation.
Corn and soybean prices soared at the Chicago Board of Trade (CBOT), based on forecasts that thirsty crops will get no relief for at least another week, although a record-shattering heatwave abated over the weekend in the eastern half of the country.
On Monday, the U.S. Agriculture Department said its surveys showed only 40 percent of the corn and soybean crops were rated in good to excellent condition, the lowest rating at this stage of the season since the last severe U.S. drought in 1988.
Corn – used for everything from fuel ethanol to livestock feed – has been hit hard by dryness and heat in its critical pollination growth stage, when yields are established to a great extent and drought damage can be irreversible, analysts said.
Soybeans, a basic for fuels and feed and food use, mature a bit later than corn but have also baked under severe stress.
The CBOT July soybean contract set a record high of $16.65 a bushel on Monday, up nearly 3 percent on the day, and July corn jumped more than 5 percent to $7.77 a bushel. Corn prices have risen 30 percent in the past month to within striking distance of last summer’s record price of $7.99-3/4 a bushel.
The implications for the world food system of U.S. crop losses are massive. The United States exports more than half of all corn shipped worldwide and is a major supplier of soybeans to China, the world’s most populous country.
Food price inflation takes time to feed into the grocery counter, but dairy, meat and poultry – all dependent on corn for feeding animals – generally feel the brunt first. Drought-shortened U.S. crops would also reduce America’s ability to supply food aid to needy nations at a time when South America’s farmers have also been hurt by drought.
The drought is also likely to hit already strained U.S. government budgets through disaster-aid payments and hurt insurance companies selling crop insurance.
The Agriculture Department will issues its updated monthly crop production and yield estimates on Wednesday.
RAIN NEEDED QUICKLY
Missouri farmer Will Spargo said that only a couple of inches of rain had fallen over the past four months in southeast of the state. He said irrigating fields was expensive and inadequate but dried-up streams left him little choice on Monday but to pull water from wells to give parched corn and soybean crops a bit of moisture.
"A good two inches of rain from Mother Nature would sure cure a lot of problems," he said.
On Greg Sharpe’s 400-acre farm in northeast Missouri, the drought has left the corn plants three feet (one metre) shorter than they should be. Sharpe said the combined heat and drought this spring and summer was the worst he had seen in 35 years.
"We could still have a good bean crop, but it better rain quickly," Sharpe said.
Sharpe’s sole compensation may come from crop insurance. "It will be the biggest claim I ever had," he said.
The dry spell has seen U.S. crop ratings fall for five weeks in a row and wrecked what many crop analysts had projected to be a bumper crop this autumn after spring planting went smoothly.
Before the drought, the Agriculture Department estimated farmers would produce a near-record corn crop and harvest an average of 166 bushels of corn from 96 million acres. But traders said the recent price rise reflected a yield closer to 140 bushels to 145 bushels an acre.
"Moisture demands from the plant have increased during this time period and there is just no moisture in the soil to draw from," said Shawn McCambridge, an analyst at brokers Jefferies Bache. "You still need the moisture, especially at this time of year when the crop is pollinating.
The government said the rating on soybeans had dropped to 40 percent good to excellent from 45 percent the prior week.
Weather forecasts on Monday for the U.S. Corn Belt, which stretches from Nebraska to Ohio, were grim. While temperatures have moderated from a peak of triple-digit heat in recent days, in many stressed areas, rainfall is nowhere on the horizon.
Even where some rainfall has been predicted, it is not expected to help and some farmers on the southern tier of the Corn Belt have already plowed up withered corn into silage, a cheap feed.
"Where they could get some improvement, across the central and western Midwest, it doesn’t look like they are going to get much rain," Kyle Tapley, an agricultural meteorologist with MDA EarthSat Weather/CropCAST, said.
"We got a break in the temperatures over the weekend but no rain of significance is in sight for the next seven days," said Jim Keeney, a meteorologist for the National Weather Service in Kansas City, Missouri.
"A drought doesn’t have to be hot," said Sterling Smith, a grain analyst for Citigroup in Chicago. "A drought means no rain, and that’s where we are." (Additional reporting by Kevin Murphy in Kansas City and Christine Stebbins, Mark Weinraub and Julie Ingwersen in Chicago; Editing by Peter Bohan and David Brunnstrom)
Statistics: Posted by yoda — Tue Jul 10, 2012 3:14 pm
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