Kelly McGowan reported in yesterday’s Des Moines Register that, “State and federal governments can do a better job of supporting rural America, U.S. Secretary of Agriculture Tom Vilsack said Saturday.

“Leaders from across the nation discussed the current state and potential improvements to the agricultural sector during the National Governors Association’s summer meeting at the Iowa Events Center in Des Moines.

“America produces the world’s safest, highest quality, and most affordable food, Vilsack said, but he and others had suggestions to foster future success in a changing agricultural economy. Those included supporting connections between farmers and consumers, teaching students about the field and encouraging trade worldwide.”

The Register article noted that, “[Iowa GOP Gov. Terry Branstad] introduced a panel, including Lt. Gov. Kim Reynolds, Louisville, Ky.-based chef Edward Lee and Secretary of Agriculture Tom Vilsack, a former Iowa governor and state senator. The panel talked about the importance of connecting farmers to buyers and encouraged governors to help facilitate that.”

Yesterday’s article added that, “Governors should invest in rural areas, Vilsack said, and work to change the ‘extraction economy’ practice of taking from rural America to supporting the areas as places for people to live, grow and raise families.

“Vilsack said local and regional food systems are important, and challenged governors to work to have schools and other large institutions get food from local producers.

“‘The most pressing thing for us is to give small family farms access to retail outlets,’ Vilsack said.”

Stephanie Strom reported on the front page of the business section in today’s New York Times that, “The last time Wendell Naraghi tried to make money from organic nuts, in the 1980s, he failed miserably.

“‘Basically, we stopped because no one paid me,’ said Mr. Naraghi, whose father started the family’s large nut orchards here in the Central Valley in the 1940s. ‘There just was no market premium for organic.’

“Today, the problem is turned upside down: Companies can’t get enough organic ingredients to satisfy consumer desire for organic and nongenetically modified foods. The demand for those crops outstrips the supply, leaving farmers like Mr. Naraghi racing to convert their land to organic production, an arduous and expensive process.”

Ms. Strom explained that, “The clamor for organic crops is so intense that major food brands, like General Mills, Kellogg and Ardent Mills, are helping to underwrite the switch. General Mills, for instance, recently signed a deal to help convert about 3,000 acres to organic production of alfalfa and other animal feeds. Ardent offers farmers a premium for crops grown on land while a farm transitions to organic.”

Today’s article pointed out that, “The amount of farmland devoted to organic food is tiny. In the most recent government tally, in 2011, organic farmland, including that used for grazing, was less than 1 percent of crop land in the United States.

“But the consumer demand is accelerating the conversion process. Sales of organic products grew 11 percent last year to $43.3 billion, or roughly four times the growth in sales of food products over all, according to the Organic Trade Association. Sales would have been even higher had supply, particularly in organic dairy and grains, kept up with demand.”

Ms. Strom noted that, “Ardent’s plan to help farmers, for instance, pays them more for crops grown on land undergoing the three-year transition and helps them choose rotational crops they can sell to supplement their income;” and, “Kashi, the cereal business, has developed a program called Certified Transitional to label products made from ingredients grown on land that is in transition.”

The Times article added that, “[David Denholm, chief executive of Kashi, a unit of the Kellogg Company] said that, given current trends, as much as 20 percent of cropland in America could be organic in the next decade or so, but land suitable for transition is getting harder to come by.”

Heather Haddon reported yesterday at The Wall Street Journal Online that, “In a victory for food companies, Congress has passed a federal requirement for labeling products made with genetically modified organisms that will supersede tougher measures passed by one U.S. state and considered in others.

“The bill will require labels to be reworked or updated to show whether any of the ingredients had their natural DNA altered, but will take years to phase in and will give companies the option of using straightforward language, digital codes or a symbol to be designed later.”

Ms. Haddon noted that, “The compromise federal bill, which passed in the Senate last week and passed 306-117 in the House of Representatives on Thursday, is a likely relief for manufacturers, farm groups and biotechnology companies.

“A White House spokeswoman said the administration anticipated signing the bill in its current form.”

The Wall Street Journal article also explained that, “Some big companies including Campbell Soup Co., General Mills Inc., Kellogg Co. and Mars Inc. went ahead and began placing GMO-labeled items on store shelves several months ago nationwide either in response to consumer demand or Vermont’s law.

“Danone SA said on Thursday that it would also begin to label GMO ingredients in yogurts made for the U.S. market. A Campbell spokeswoman said the U.S.’s largest soup manufacturer will continue to print labels with words related to GMO ingredients, and the company is in discussions with federal regulators about the language.

“A Mars Inc. spokesman said the company is sticking with the text it has applied to products containing engineered ingredients for now.”

And Christopher Doering reported on the front page of the business section in today’s Des Moines Register that, “‘It’s important that this state-by-state patchwork not disrupt the nationwide marketing of food,’ said Rep. Mike Conaway, R-Texas, chairman of the House Agriculture Committee. ‘With the Vermont mandate kicking in earlier this month, time is of the essence.’

“The labeling bill was introduced in the Senate, which passed last week.

“Last year, the House approved another bill that would have made it voluntary for companies to label their GMO products. The Senate never acted on the legislation.”

In a statement yesterday, Rep. Adrian Smith (R., Neb.) noted that, “The potential impacts of Vermont’s mandatory GMO labeling law on Nebraska agriculture and our country’s food supply have concerned me deeply. A mandatory label hurts the poorest among us the most by unnecessarily raising the cost of food. The voluntary labeling bill passed by the House last year, of which I was a cosponsor, would have preempted the Vermont law while avoiding higher food prices by allowing the market to dictate what should be labeled.

“The bill before us now is a compromise labeling agreement. It is a less favorable option than the House’s original legislation, but I believe it is better than doing nothing and allowing a costly patchwork of unscientific local and state labeling laws to take effect.”

Similarly, on the House floor yesterday, Agriculture Committee ranking member Collin Peterson (D., Minn.) stated that, “My colleagues may remember that almost a year ago this chamber passed legislation to establish a voluntary labeling program. I still believe a voluntary label is best but, frankly, if we are going to address this issue we need to work with the Senate and this is the compromise that was reached.”

Meanwhile, The Wall Street Journal editorial board opined on Thursday that, “The legislation may be necessary to prevent food manufacturers from dealing with 50 different laws in a national supply, but it won’t add to the sum of consumer knowledge. That’s because genetic modification is not an ingredient, but an innovation—one that has made farming more sustainable and food more affordable. Mark this down as a loss for that human progress.”

Bloomberg writers Alan Bjerga and Angela Greiling Keane reported yesterday that, “The White House plans to support legislation creating a national labeling standard for foods containing genetically modified organisms even though consumer groups criticize the bill for allowing information to live behind special codes, and for exempting meat and eggs.

“‘While there is broad consensus that foods from genetically engineered crops are safe, we appreciate the bipartisan effort to address consumers’ interest in knowing more about their food, including whether it includes ingredients from genetically engineered crops,’ White House spokeswoman Katie Hill said in an e-mail. ‘We look forward to tracking its progress in the House and anticipate the president would sign it in its current form.’

“The Senate-passed labeling bill, S. 764, is to be taken up in the House this week. The chairman of the House Agriculture Committee, Republican Mike Conaway of Texas, has signaled his approval, making it more likely the proposal will pass the chamber and end up on Obama’s desk.”

The Bloomberg writers added that, “The law doesn’t mandate printing ‘GMO’ on the exterior, instead offering three options for disclosure: text on the packaging, a symbol, or an electronic link that would direct consumers to a website for more information.

“Beef, pork, poultry and eggs wouldn’t be subject to labeling, though the deal would cover many other grocery staples including corn flakes and cooking oil. The bill also would tightly define genetic engineering in ways the biotech industry wanted, not including new techniques such as gene editing.

“State-imposed labeling requirements would be banned and producers that have secured a ‘certified organic’ designation from the U.S. Department of Agriculture would be allowed to clearly display a ‘non-GMO’ label on their products.”

DTN writer Todd Neeley reported earlier this week that, “The Federal Reserve Bank should consider raising interest rates now as there are signs the overall national economy is ready for increases and low rates may be exacerbating pressure felt by rural banks from a slow agriculture economy, the head of the Federal Reserve Bank of Kansas City said Monday.

“Esther George, chief executive officer and president of the Federal Reserve Bank of Kansas City, told an audience of bankers, farmers and others during an agriculture symposium that the current agriculture downturn has small bankers on notice.

“‘If you’re in the ag community, you are seeing more pressure,’ she said. ‘Ag bankers are looking at their portfolios in the third year of depressed farm incomes. Not all farmers are prepared. I wouldn’t say we’re in a crisis, but we are seeing signs of underperforming loans.'”

The DTN article explained that, “‘At this point the banking industry has stronger capital and is in a better position than it was seven or eight years ago,’ [George] said, although a sagging agriculture industry is one of the pressures being closely monitored by the Federal Reserve. ‘The banking industry does not benefit in a low-interest rate environment.’

“George said while the Fed decided recently not to raise interest rates after a poor May jobs performance that saw just 12,000 jobs added to the economy, June’s bounce-back to 200,000 jobs added is a sign the economy can handle higher rates.”

In a related item, a news release earlier this week from Sen. John Hoeven (R., N.D.) stated that, “Senator John Hoeven, who serves on the U.S. Senate Agriculture and Agriculture Appropriations Committees, requested that the U.S. Department of Agriculture (USDA) replenish Farm Service Agency (FSA) loan programs to ensure that the nation’s producers have access to necessary credit during the current period of low commodity prices.

“Farmers across the nation experiencing cash flow issues are increasingly turning to the FSA Loan Program for assistance. The increased need for these programs has resulted in insufficient loan authority to meet accelerating demand. According to the most recent publicly available data from the FSA for Fiscal Year 2016, the vast majority of the loan authority for the Direct Operating Loan Program has been depleted, and the entire amount of loan authority for the Guaranteed Operating Loan Program has been exhausted.

“Hoeven wrote to USDA Secretary Tom Vilsack to request that the agency use its existing authority to reprogram funding to the loan programs.”

Yesterday, the Federal Reserve Board released its Summary of Commentary on Current Economic Conditions. Commonly referred to as the “Beige Book,” the report included the following observations with respect to the U.S. agricultural economy:

* Fifth District- Richmond– “Agricultural activity increased modestly since our previous Beige Book report. Fifth District farmers stated that spring planting of cotton, peanuts, and corn was complete. Farm input prices remained unchanged in recent weeks while prices of grains, cotton, and corn declined. While the damage has yet to be assessed, sources in West Virginia expect that recent severe flooding will force farmers in some areas of the state to plow under their crops in the weeks ahead.”

* Sixth District- Atlanta– “Agriculture conditions across the District were mixed. Drought conditions spread through much of the region, ranging from abnormally dry to severe drought. Nonetheless, by mid-June, District cotton, soybean, and peanut planting were close to their five-year averages and nearing completion. On a year-over-year basis, prices paid to farmers for corn, cotton, rice, soybeans, beef, broilers, and eggs declined, although on a month-over-month basis, prices increased for corn, cotton, soybeans, and broilers.”

* Seventh District- Chicago– “Prices for corn and soybeans rallied through the reporting period, though corn prices gave back all of their gains in the second half of June. The price gains led more farmers to lock in prices for the fall harvest, though the increases were not enough to change contacts’ expectations that farm incomes will be weak this year. Corn and soybean plants were generally in good shape in most of the District, though contacts said that if the hotter- and drier-than-normal weather persisted much longer, yields could drop. Margins for dairy and beef producers continued to be tight because of low prices. Hog producers, on the other hand, were doing better because of higher-than-expected prices.”

* Eighth District – St. Louis– “Most fields were unscathed by the heavy rain in May and early June. About 94 percent of both District corn and soybeans were rated fair or better as of mid-June, which is around 5 percentage points higher than their 5-year averages for both crops. Among major District row crops, rice is the only crop with a lower rating than its 5-year average. With healthy fields and the recent crop price rally, row crop farmers are set to experience significant income improvements relative to 2015.”

* Ninth District- Minneapolis– “District agricultural conditions improved slightly, thanks to strong growing conditions and small increases in some commodity prices from their recent lows. Coming off an early start to planting, most of the District’s corn, soybean, and wheat crops were rated in good or excellent condition as of late-June. A chicken processing plant in Minnesota was undergoing a major expansion. Prices received by farmers increased in May from a year earlier for corn, soybeans, and turkeys; prices for wheat, hay, cattle, hogs, chickens, eggs, and milk fell from a year earlier.”

* Tenth District- Kansas City– “District farm revenue improved modestly from the previous reporting period. Despite market volatility, corn and soybean prices rose modestly due to international production concerns, providing some relief to persistently weak profit margins in the District’s farm sector. Wheat prices remained flat compared to the previous survey period, and profit margins remained tight even though early reports of harvested yields have been strong. In the livestock sector, hog prices rebounded to year-ago levels and were generally above the breakeven cost of production. Conversely, cattle prices declined slightly from the previous reporting period due to slightly softer demand which continued to suppress profits in the District’s cattle sector.”

* Eleventh District- Dallas– “Production prospects for crops remained strong across most of Texas thanks to good soil moisture and favorable weather. Crop prices generally improved over the reporting period and, while still fairly low, some pushed above break-even levels. Developments on the livestock side were mixed. While measurable rainfall across the state continued to benefit pasture conditions, cattle prices fell and feed costs rose.”

* Twelfth District- San Francisco– “Activity in the agriculture sector picked up over the reporting period. Increased water supply following a wet winter has improved growing conditions in California and other states, boosting yields and quality for various crops. Demand for beef cattle strengthened, and contacts noted that ranchers were beginning to realize profits after a prolonged period of losses. Overall, the strong dollar continued to hold down exports for most goods. However, strong demand from Asia boosted exports of pork products, while lingering overseas supply shortages from last year’s avian influenza outbreak boosted exports of poultry products.”