Bloomberg writers Alan Bjerga, Cindy Hoffman and Laurie Meisler reported this week that, “The fall U.S. crop harvest has finished, and it’s a record. That’s the problem.

“Oversupply has pushed wheat prices to decade lows, while corn is at less than half the price it fetched in 2012. Cattle and hog prices have also plunged, pushing up farm debt and making some farmers wonder if they’ll be able to stay afloat.

“Much of their fate rests with President-elect Trump and a new Congress, which will be tasked with crafting the next farm bill, the trillion-dollar, twice-a-decade behemoth that sets farm subsidies and broadly shapes the day-to-day lives of farmers. For them, even the margins can make a big difference to their financial reality.”

Graphs From Bloomberg News

The Bloomberg item noted that, “While farmers are putting faith in new markets—from increased exports to China to higher domestic consumption of organic foods—boom times may be tougher to achieve than they were a decade ago. Consumption of ethanol, which pushed up grain prices in the past, has plateaued. So has the price of land, which is used as collateral for loans. Meanwhile, debt levels are rising.”

The Bloomberg article added that, “Exports and farm aid have helped farmer balance sheets—but both have their limits. Free trade is a double-edged sword, giving farmers new markets while exposing them to foreign competition. Meanwhile, farm payments are rising—but too much of an increase will make them vulnerable to federal-budget demands.”

The Associated Press reported on Friday that, “A federal judge has ruled that three Hawaii counties can’t enact their own bans or regulations on genetically modified crops and pesticides, handing a victory to the major agriculture companies that fought the regulations.

“Circuit Judge Consuelo M. Callahan on Friday upheld a lower court’s decision that said Hawaii law prohibits counties from regulating agricultural matters.

“The cases stemmed from a decision by Maui voters to ban the cultivation and testing of genetically modified crops in 2014 and related movements on other Hawaiian islands.”

The AP article noted that, “Kauai County had imposed pesticide notification requirements and mandated pesticide buffer zones, and Hawaii Island had enacted an ordinance banning open air testing of genetically engineered organisms, among other things.

“But the court held that the county laws are pre-empted by state laws that regulate potentially harmful plants.”

Friday’s article added that, “Monsanto, which farms genetically engineered seeds to be used by farmers around the world, was part of a group that fought the Maui GMO ban.”

Chicago Tribune writer Greg Trotter reported yesterday that, “Some food industry titans worry President-elect Donald Trump’s tough talk on trade could eventually hurt business in numerous ways, including limiting food and agriculture exports.

“Others in agriculture see Trump’s election as an opportunity to improve the viability of family farming.

“In other words, anticipation of Trump’s policy actions is prompting the same type of anxiety and hope found elsewhere throughout the American economy. In an interview at a Chicago event organized by the nonprofit Food Tank, Cargill CEO Dave MacLennan said he hoped Trump’s pick for secretary of agriculture would carry forward the same pro-trade policies of outgoing Secretary of Agriculture Tom Vilsack.”

Mr. Trotter noted that, “Kenneth Quinn, president of the Iowa-based World Food Prize Foundation, said agriculture has long served to bridge disagreements between political parties and nations. Quinn said he hoped the next agriculture secretary can carry that torch.

“But he also acknowledged unknowns regarding Trump’s campaign promises to ease environmental regulations on farmers.

“‘I think people are still going to be concerned about water, and nitrate runoff is a big issue in Iowa. And the question is, how do you work it out?’ Quinn said. ‘The (Environmental Protection Agency) had a very forward-leaning role, maybe now that won’t be quite the same way. But I think there will still be that focus. The environmental issues, they can’t go away.'”

The Associated Press reported yesterday that, “Six states lacked the legal right to challenge a California law that prohibits the sale off eggs from chickens that are not raised in accordance with strict space requirements, a federal appeals court said Thursday.

“The states — Missouri, Nebraska, Oklahoma, Alabama, Kentucky and Iowa — failed to show how the law would affect them and not just individual egg farmers, a unanimous three-judge panel of the 9th U.S. Circuit Court of Appeals ruled. The court upheld a lower court decision that dismissed the lawsuit.

“California voters approved a ballot initiative in 2008 that set the space requirements for egg-laying hens in the state. The standards say chickens must spend most of their day with enough space to lie down, stand up, turn around and fully extend their limbs.”

The AP article noted that, “California egg farmers raised concerns that the measure would put them at a competitive disadvantage with their counterparts in other states. In 2010, California legislators expanded the law to ban the sale of eggs from any hens that were not raised in compliance with California’s animal care standards. The California law cites concerns about protecting people from salmonella and other illnesses.

“The six states argued that the law would force their egg farmers to stop selling in California or spend hundreds of millions of dollars complying with the California standard. Ninth Circuit Judge Susan Graber said that argument did not give the states standing to file suit.”

And, Kristine A. Tidgren explained today at the Ag Docket Blog (Iowa State University Extension)  that, “Not among the plaintiffs were any egg producers or egg producer groups. No doubt egg producers themselves may have been concerned about potential negative publicity accompanying their participation in such a lawsuit. The state leaders sought to stand in the place of impacted egg producers and citizens in parens patriae capacity. This is a doctrine under which a state can act as the legal protector (or parent) of its citizens. But this is where the lawsuit failed. In October of 2015, a federal judge dismissed the case out of hand before reaching the merits. She found that the plaintiffs lacked standing to file the lawsuit because they did not show that the law would harm their citizens as a whole. The court also found that the states did not show that there was a genuine threat of enforcement by California.

“The State’s promptly appealed, and yesterday, the United States Court of Appeals for the Ninth Circuit agreed with the district court. The court ruled that the States failed to establish parens patriae standing. Specifically, the Court ruled that the States failed to articulate an interest apart from the interests of an identifiable group of private egg producers who could have filed an action on their own behalf.”

The “Washington Insider” update from DTN yesterday indicated that, “More than two decades ago, Congress told USDA to set up a national organics program that would regulate and certify certain production processes to qualify products for an ‘organic’ label.

“As you might expect, USDA set up advisory boards and committees and developed such a process. However, the agency is still in the business of deciding what should be allowed to be labeled and what should not. For example, certain biotech products were originally eligible, but that was changed after a storm of protest.

“USDA depends on recommendations of a 15 member Organic Standards Board that hammers out recommendations over which production methods are acceptably organic. The current Board is meeting this week, and at least one question on the agenda is ‘roiling the world of organic farming,’ the New York Times says. It thinks that the answer could redefine ‘what it means to farm organically.'”

The DTN update noted that, “On one side are the growing number of big and small growers raising fruits and vegetables in hydroponic systems who argue that their production methods are not basically different from those of farmers who grow plants in dirt. They also think their approach makes organic farming more sustainable by, for instance, reducing water use…[N]ot so, say many farmers who have spent years developing practices to draw nutrients from the soil. They argue that organic production is first and foremost about caring for the soil, which produces environmental benefits that go beyond growing plants.”

The DTN article explained that, “In 2010, the Board recommended that hydroponic systems be ruled ineligible for organic certification because they excluded ‘the soil-plant ecology intrinsic to organic farming systems.’ At that time, there were only 39 hydroponic growers with organic certification.

“USDA has not yet acted on the board’s recommendation, so organic certification of crops grown in hydroponic systems is continuing. The number of hydroponic growers with organic certification dropped to 30, but there were 22 certified aquaponic growers and 69 certified operations growing plants in containers lined with things like peat moss and coconut husks.

“So, once again USDA is caught in the middle.”

Yesterday’s update added that, “So, the issue continues to simmer and, once again and it will be interesting to see what the Board and USDA decide to do. Still, consumers may have a word in the outcome of the debate—especially, if hydroponic products are significantly cheaper to produce and their quality is high.”

DTN Executive Editor Marcia Taylor reported earlier this week that, “If you want a sneak peek at the conversations that will be taking place in lenders’ offices this winter, study actual farm business records from year-end 2015, ag economists are warning. All signs indicate a number of Grain Belt operators have depleted their liquid reserves and will be facing major sacrifices if they want to keep farming in 2017.”

Ms. Taylor explained that, “The 2015-crop was the lowest income year in the 20 years of records monitored by the Center for Farm Financial Management with median incomes of about $22,000, said University of Minnesota economist and the center’s assistant director Dale Nordquist. That was despite yield records set for corn and soybeans, so he doubts incomes will improve much after 2016’s returns are tallied.”

The DTN article also noted that, “Agriculture is in a situation much like the seventh-inning of a baseball game, Virginia Tech economist emeritus Dave Kohl added. ‘They called in the relief pitcher in innings three through six, and that was working capital. Now the next relief pitcher is core equity, its land. Growth-oriented farmers without a land base [to remortgage or sell] will be headed to the exit ramp.'”

And Mike Wilson reported yesterday at Farm Futures Online that, “After a brief bump in crop prices last summer, farm financial conditions continue to deteriorate with little positive news for 2017. As a result, ag bankers meeting in Indianapolis this week are bracing for even tougher talks with farmer customers who see working capital depleted after three years of thin or non-existent margins.

“‘During the super cycle businesses grew faster than their managers’ business acumen, but margins were so high it didn’t matter,’ says Virginia Tech economist Dave Kohl, a keynote speaker at the 2016 Ag Bankers Conference. ‘Prices went up, but so did fixed and variable costs. Bankers will be looking now at a farmer’s accrual adjusted financials to see if those costs are coming down. If they’re not, there may be a problem.'”

In his article, Mr. Wilson added that, “While some bankers report higher loan defaults, banks themselves are in good financial shape, according to FarmerMac economist Jackson Takach. While crop prices are bogged down from record inventories, demand is moving at a brisk clip for nearly all commodities.

“‘Agriculture is set up for a period of prosperity in a couple years, after we work through this current time,’ says Jason Henderson, director of Extension at Purdue University. ‘The rest of the world is waiting for the U.S. economy to be that spark. Right now we have the best looking house on a really bad block when you look at the global economy. We are the world’s consumers and they are relying on us to lift them out of recession.'”

On-the-job training program launched for military #Veterans interested in careers in the agricultural industry https://t.co/2PZkTTtE5q

— Andrew Cuomo (@NYGovCuomo) November 11, 2016

The Associated Press reported recently that, “New York state has started a new program that aims to give veterans the skills and training they need to begin a new career in agriculture.

“The initiative allows veterans to use their military benefits while at the same time earning a wage during the on-the-job training, which can last from six months to two years.”

The AP article added that, “Democratic Gov. Andrew Cuomo announced the program’s launch on Friday, Veterans Day.

“State Agriculture Commissioner Richard Ball says it addresses a shortage of skilled farm workers while helping veterans get the training they need to begin a career after leaving the service.”