DTN Markets Editor Katie Micik reported today that, “Farmers’ feelings about the ag economy continue to fade while agribusinesses’ sentiment took a steep dive, according to the latest results of the DTN/The Progressive Farmer Agriculture and Agribusiness Confidence Indexes.
“The latest reading of the DTN/The Progressive Farmer Agriculture Confidence Index came in at 91.5, the lowest since DTN began surveying farmers in 2010.  

“That compares to an index value of 92.7 in December and 98.8 in March 2015. An index value of 100 is considered neutral, while higher values indicate optimism and lower values reflect pessimism.”

The DTN article stated that, “Experts estimate the average Kansas farmer’s net income for 2015 will see a loss of $30,000. The forecast is for more of the same in 2016.”

Ms. Micik added that, “The Agribusiness Confidence Index came in at 83.4, down more than 15 points from December’s 98.3 reading and more than 21 points from the previous March’s 104.7 reading.”

Jacob Bunge reported in today’s Wall Street Journal that, “U.S. opposition to the largest acquisition by a Chinese company is growing, with a top farm-state senator saying the $43 billion takeover of seed giant Syngenta AG could pose risks to the security of America’s food supply.

“Sen. Charles Grassley (R., Iowa) launched a public broadside against China National Chemical Corp.’s planned deal, saying that the government must ensure that ‘we’re not permitting the sale of too much of our food industry, especially when government-controlled entities like ChemChina are the buyers.’

“He said in an interview Wednesday that a bipartisan group of senators would seek a formal role for the U.S. Department of Agriculture as the Treasury-led Committee on Foreign Investment in the U.S., or CFIUS, carries out a national security review of the proposed ChemChina-Syngenta deal. Lawmakers want food security and safety implications analyzed, said Sen. Grassley said.”

Mr. Bunge explained that, “The lawmaker’s comments raise a new threat to a deal that investors don’t yet regard as a sure thing. The USDA has already expressed concerns over the deal’s potential impact on the sector.

“ChemChina struck a deal to buy Syngenta in February, extending a string of deal making among global giants in the $100 billion market for crop seeds and sprays. Agricultural companies are pursuing deals as they grapple with a three-year slide in major crop prices that has hit farmers’ pocketbooks and forced seed makers to cut thousands of jobs.”

The Journal article added that, “U.S. farm groups and agricultural companies also have complained that China’s process for reviewing and approving agricultural products like genetically modified seeds is out of step with other major countries, leading to sometimes lengthy delays for high-tech seeds and trade disruptions.

“U.S. Agriculture Secretary Thomas Vilsack said in February that the U.S. agricultural industry has grappled with ‘inconsistency’ and ‘lack of synchronization’ when it comes to securing China’s approval to import new biotech crops in China, one of the world’s top buyers of agricultural commodities.”

Bloomberg writers Craig Giammona and Alan Bjerga reported this week that, “The second-smallest U.S. state is forcing a big change in the food industry.

“Kellogg Co., Conagra Foods Inc. and Mars Inc. all announced this week that they will start putting labels on all products made with genetically modified organisms. They followed Campbell Soup Co. and General Mills Inc. in preparing for the July 1 implementation of a Vermont law that requires the change. Creating labels for only one state isn’t feasible, so all packaging has to be overhauled nationwide, executives say.

“Food companies and agribusinesses have spent tens of millions of dollars fighting state ballot initiatives to require GMO labels, hoping to avoid a state-by-state patchwork of laws they argue would be expensive and burdensome. Big Food lobbied Congress for a federal solution but acquiesced to Vermont after a bill died in the U.S. Senate last week amid a partisan stalemate. That means a state with fewer than 630,000 residents is setting the course for a nation of 322 million.”

The Bloomberg writers explained that, “Even as the industry prepares to meet the requirements of the Vermont law, companies like General Mills, Conagra and Kellogg are holding out hope that Congress will find a compromise and establish a federal standard when legislators return from Easter break next month. [Note a related update about the potential difficulty of reaching a compromise in the Senate may be.] Absent that, the concern is that other states will enact laws that are similar but not identical. In that scenario, labels in Vermont might not be compliant with what’s required in other states, said Ken Powell, the chief executive officer of General Mills.

“Kellogg joined General Mills is arguing that creating labels for a single state won’t work. It’s impossible to isolate Vermont in a distribution system designed for interstate commerce, according to Powell.”

Christopher Doering reported in today’s Des Moines Register that, “Sen. Chuck Grassley said Tuesday it will be difficult for Congress to reach a bipartisan deal on labeling products containing genetically modified ingredients before Vermont’s own law takes effect this summer.

“Congress last week was unable to advance a bill banning states from establishing their own GMO labeling laws. Instead, it would create a voluntary program where producers could put “smart labels” on their products.

“In a failed attempt the help attract enough Democratic support, the food industry would have three years to bring 70 percent of its products into compliance or the Agriculture Department would be allowed to make the labeling requirement mandatory.”

The Register article quoted Sen. Grassley as saying, “It’s going to be very difficult to get such a bipartisan agreement, and I wouldn’t be surprised that what you are going to find (is) some food companies that think the business for 600,000 people in Vermont is probably not worth it, and they’ll quit doing business there.”

Mr. Doering added that, “With growing uncertainty over whether Congress will act and what a final agreement will look like, General Mills, Mars and other companies have announced they will place GMO labels on their products to comply with the Vermont law.”