Black Farmers Still Looking for Justice
While the Civil Rights Act of 1964 made racial discrimination illegal, thousands of black farmers contend they've been systematically denied federal loans and subsidies for decades. In 1999, they won a landmark civil rights settlement with USDA.
To this day though, thousands of the litigants say they've never received a penny of the record $2.3 billion legal remedy. While some were optimistic the current Farm Bill would address their plight, they now say new restrictions endorsed by the Obama Administration are discriminating against them all over again.
In yet another chapter of the decades-long struggle between black farmers and the U.S. Department of Agriculture, members of the National Black Farmers Association, or NBFA, protested in Washington this week. Led by outspoken NBFA President John Boyd, the demonstrators claim the federal government still has not satisfied the requirements of a landmark civil rights settlement.
African-American farmers filed suit against USDA in the 1990’s, alleging racial discrimination by federal farm loan officers.
USDA settled with the plaintiffs in 1999, agreeing to pay a record $2.3 billion in damages. But subsequent independent investigations discovered an overwhelming number of applicants were denied any legal remedy as nearly 50,000 claimants were turned away.
Black farmers and USDA wrangled during much of Bush Administration until bipartisan legislation sponsored by Iowa Republican Charles Grassley and then-Senator Barack Obama made its way into the 2008 farm bill.
Dr. John Boyd, President – NBFA: "This is not an anti-Obama rally. This is to say Mr. Busy President there are black farmers promised money in the farm bill. If we can pass a stimulus bill then we can pay the black farmers."
The legislation paved the way for thousands of black farmers to reapply for financial damages. But 100 days into the Obama Presidency, new legal maneuvers by the current Administration prompted Boyd to renew his call for swift government action.
Dr. John Boyd, President – NBFA: “"Is it too much for the large white farmers to get millions in a bad economy? People suddenly ask that about black farmers getting money and somehow that is about the economy.”
The Obama Administration’s move to cap all payments at $100 million comes after some estimates claim the figure could balloon to more than $1 billion without a limit. Across Washington at a House Appropriations Hearing, lawmakers probed whether new leadership at USDA was tackling civil rights issues properly.
Rep. Joe Baca, D-California: “Has GAO found during the course of its investigation that USDA is open to change?
Lisa Shames, Chief Investigator – GAO: "I do want to say that for underperforming organizations, it takes time to turn them around. Maybe 5 years or 7 years."
Agriculture Secretary Tom Vilsack has publicly addressed the issue of discrimination during his short tenure in Washington – even directly admonishing USDA employees.
Sec. Tom Vilsack, USDA: “We have been sued - repeatedly over the decades. It takes time, it takes energy, it takes resources, it doesn't have to be and it shouldn't be."
Dr. Joe Leonard, USDA Assistant Sec. of Civil Rights: “Since 1983, USDA has not had any investigators on the ground in these states and that is something we are looking at changing.”
Despite USDA assurances of increased oversight, John Boyd and the National Black Farmers Association remain concerned that “change” has not come to Ag Department policy.
Dr. John Boyd: “If you want the news reports to end, then pay the farmers. I hope this is the last time I drag this mule up the road."
California Adopts Low Carbon Fuel Standard
Testifying to the House Energy and Commerce Committee, Gore endorsed a democratic plan calling for mandatory 20 percent reductions in carbon dioxide and five other greenhouse gas emissions from 2005 levels by 2020 -- and an 83 percent cut by 2050.
House Minority Leader John Boehner of Ohio denounced the bill, calling it a "massive national energy tax on every American who drives a car, buys a U.S. manufactured product, or has the audacity to flip on a light switch."
But some states aren’t waiting for Washington. Late last week, California adopted the nation’s first low-carbon fuel standard. And though the “Golden State” consumes 10 percent of the nation’s gasoline, the decision was sharply criticized by ethanol proponents.
With ethanol producers already lobbying hard to increase the use of their predominately corn-based biofuel this would appear to be a good sign. Surprisingly, though, there is considerable disagreement as to whether CARB's biofuel rules give ethanol a passing grade.
Bob Dinneen, CEO, Renewable Fuels Association: "I think it is a disgrace what the state of California has done. What started out as a really good idea to create a low carbon fuel standard and incentivize technologies that will reduce carbon into the atmosphere has turned into something far different, because of the selective use of the science that they've utilized. And, in fact, what they've created is a 'do not enter sign' for any Midwest ethanol production and what the result is going to be is likely more petroleum use, not less, and most certainly higher costs to California consumers."
Mary Nichols, Chairman, California Air Resources Board: "This is a rule that is aimed at getting the major oil companies to match some of the kinds of investments that other business in this country, including electric utilities and the auto manufacturers are now making to produce products that are much more fuel efficient and that have much less of an impact on air pollution and on the climate."
Nichols says eleven ethanol production pathways were scientifically reviewed and seven passed muster. And, she says, ethanol producers are misinterpreting the standard.
Mary Nichols, Chairman, California Air Resources Board: "I think they are actually misreading the rule on the way it works. The rule only applies to the oil companies or companies that sell fuel directly to the public. And for them it mandates this 10 percent reduction in overall carbon from their products."
The dispute centers on the parameters for measuring how much carbon is used in creating biofuels like ethanol. And, according to Dinneen, petroleum companies are not being evaluated by the same rules.
Bob Dinneen, CEO, Renewable Fuels Association: "...their assumption is that when a bushel of grain is used in the production of ethanol in the Midwest that somehow an acre of rain forest is going to be destroyed. The problem is they only applied this phenomenon of indirect effects to corn-based ethanol."
CARB has committed to reevaluating land-use and other indirect effects by December of 2011 when recommendations for change will be presented to the Board.
Mary Nichols, Chairman, California Air Resources Board:"most of those fuels actually do get a significant benefit over today's gasoline and we think they're going to do very well in the market place...but if they produced the ethanol in a plant that is mostly burning coal and then ship it to California that's not gonna be a benefit for California..."
If all goes according to CARB's plan, the use of corn-based ethanol will triple by the 2020 deadline. The RFA can only wait and see if the corn-based biofuel gets the nod.
Pork Industry Copes with Public Perception of H1N1
Researchers at the Centers for Disease Control, or CDC, discovered the never-before-seen strain of influenza -- a unique blend of bird, human and pig viruses. Scientifically, it's part of the Type A/H1N1 family of influenza, and CDC officials shortened the name to “swine flu.”
But authorities in other U.S. agencies, particularly the Agriculture Department, were concerned that name might confuse people into thinking they can catch the virus from eating pork -- which everyone agrees is impossible.
Mexico has the largest outbreak of H1N1, but no one really knows where the virus began. And while U.S. officials are concerned about the spread of H1N1, they claim calling it “swine flue” is hogwash.
Anthony Fauci, National Institute of Health: “A pandemic is a pandemic and forget the letters and the numbers…”On Tuesday, the Senate convened a Labor, Health and Human Services subcommittee to address challenges regarding the recent influenza outbreak.
Anthony Fauci, National Institute of Health: “What we have is an H1N1. We have never seen anything like this…”
While the threat to human health is of paramount importantance, committee chair Senator Tom Harkin expressed concern over the outbreak’s negative impact on agriculture.
Sen. Tom Harkin, (D) Iowa: “We don’t have one hog in the United States that has this flu that we know of.”
Dr. John Clifford, UDSA: “That we know of, we don’t have one single pig in the US that has this particular virus.”
Sen. Tom Harkin, (D) Iowa: “And as far as we know we don’t know of any in Mexico either?”
Dr. John Clifford, UDSA: “That’s correct. In fact, I’ve received a communication from my counterpart in Mexico indicating that to their knowledge, thus far, they have no knowledge of pigs with this virus.”
Sen. Tom Harkin, (D) Iowa: “That’s why I’m really sorry that this has taken on the connotation of swine flu. I don’t know how that happened and somebody just started talking about it. I opened the paper today with pictures of pigs and hogs as though all of them were infected with this.”
Harkin was not the only one lamenting the virus’s name. On Thursday, the World Health Organization announced it would stop referring to the H1N1 influenza virus as swine flu to avoid misleading consumers that eating pork poses any health risk. The policy shift came a day after Egypt had already began slaughtering the nation’s 300,000 hogs and pigs.
Dr. Butch Baker, Iowa State University: “It is virtually impossible to catch this virus from pork, even if it were raw but certainly if you cook it.”
At Iowa State University in Ames, researchers are studying on the risk the H1N1 virus poses to the swine population. According to USDA, 70% of the nation’s swine herd is already inoculated for H1 influenza. While human health is the chief concern, some scientists actually are more concerned over the potential for the virus to spread from humans to swine.
Dr. Butch Baker, Iowa State University: “There is so much opportunity for this virus spreading quickly among humans, there's going to be opportunity for it to reach our pig heards. By next week we'll know if this virus will infect pigs and they will know if it transmits from pig to pig. So after next week we will have a lot more information on the pig side of this virus.”
Market Analysis: John Roach, Senior Market Analyst
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For the week, May wheat gained 28 cents, and the nearby corn contract moved 25 cents higher.
Soybeans also rallied nicely with the May contract gaining nearly 65 cents, and the nearby meal contract was up $28.80 per ton.
In the softs, cotton flirted with $60 as the December contract gained about $3.50.
In livestock, May cattle fell $1.37. Nearby feeders lost 88 cents. And the effects of bad publicity – accurate or not – were readily apparent in pork prices as the May lean hog contract lost more than $11.
In other markets of interest, the Euro gained 22 basis points against the dollar. Crude oil rose $1.65 per barrel. Comex Gold declined nearly $26.00 per ounce. And the Goldman Sachs Commodity Index gained more than 9 points to close at 378.60.
Roach: Thanks, Mark.
Pearson: The livestock sector has struggled for eighteen months or more with high input costs and then this week media hysteria over the H1N1 virus which sadly was pegged as swine flu. Debacles were finally seeing pork prices starting to recover and we get slammed this week. What is your take on this? What is our recovery going to look like?
Roach: Slammed is exactly right. Part of what came from the naming of the virus and the people thinking that having something to do with pork and, of course, as everybody has heard even the talk of Egypt reducing their hog herd ...
Pearson: Slaughtering 300,000 pigs.
Roach: You have that whole side of it. But there is another real side to it and that is the damage that is happening in Mexico because of the flu and the outbreak that they have had, it's slowing their economy down, it's scaring people from traveling to Mexico and Mexico is a very large buyer of our pork. So, our pork export business we look at down the road with their economy being hurt a little bit here or maybe hurt a lot, we'll see how much, that is a real world situation but it's a shame. We were hit from two sides, one from just a misnaming and the other one from real world.
Pearson: And as we looked at that last hogs and pigs report we saw reduced farrowings were really getting the supply side of the pork industry in pretty decent shape going into summer, you were fairly optimistic.
Roach: We were looking for better prices. In fact, the futures market was as well. We had the futures market at a pretty good premium to the nearby cash market and we all anticipated the cash market would catch up to the futures. Instead what happened is the futures were slammed, the cash market was slammed as well, according to the daily livestock report pork producers have been losing money for 15 out of the last 17 months and if you look at the losses from this year and the futures projecting on out forward pork producers will lose an average of $15 per head for all the hogs that they market this year. That's the way the market structure is currently set up. So, the news is desperate and it's occurring at a time when a lot of pork producers have really pulled down the equity that they have in their business operation trying to survive these months here of losses and we're hearing reports this week that this is kind of the final straw for some of the people, financing has become difficult and people are finally making those very difficult decisions about do I stay in this industry or not. And we're going to see people liquidate out because of this last nail in the coffin, if you will, and we don't know how quickly it's going to clean up. Remember if you go back and look at the Mad Cow disease it became a political issue and when it became a political issue the science didn't matter so much and that's what has happened here with this particular virus situation, it's become a political issue now.
Pearson: It's tragic on so many fronts, certainly the influenza itself, but the impact it has had on this industry. Words of hope, John, as we go forward, as the hysteria subsides, people become aware of the facts, are we going to see pork demand start to rekindle itself?
Roach: We hope so, we certainly do hope so. We normally see pork demand getting stronger here during this time of the year, we normally see supplies getting tighter, we know we've been reducing supplies as time goes along, we're reducing supplies up in Canada as well and so we hope that this would all balance as we saw the economy start to firm up a little bit, at least stabilize and we see better prices and it looked like we were headed in that direction until this week. Quite frankly it's still too early to tell what the full impact of this flu pandemic -- remember this is a pandemic, the World Health Organization is increasing the risk here as they move through this week. So, the jury is still out on that. I'd like to hold out hope, probably the right approach to it is to say this is going to take out the people because of money reasons are going to have to get out of the business and for those that are left in the business this will bring the supplies down quicker than what otherwise would have happened.
Pearson: The impact wasn't just to the hog business, certainly in the overnights on last Monday when this first broke we saw beans, bean meal, we saw the whole complex come under a lot of pressure briefly. The market recovered relatively quick and finished stronger for the week. But one area that is also struggling a little bit is spring wheat planting. As you look at this wheat market right now, John, what are your thoughts?
Roach: Well, the spring wheat actually prices have moved up because of the problems of getting the crop planted and we actually entered into the first day of one of our sell signals on spring wheat today. Normally those sell signals the peak of the market will come during one of our sell signals, normally our sell signals will last four to six days so we expect next week the market to dial in all the problems with spring wheat and come up to some sort of a market peak and we're using that peak as an opportunity to be making sales on what's left in the bin and portions of the new crop that you want to get sold prior to harvest this late summer and early fall.
Pearson: Some strength certainly in the soft red wheat in Chicago as we reported also.
Roach: We had strength across all the wheat markets. The wheat crop is really our first crop in the northern hemisphere and the crop is not off to the best start. Spring wheat is not getting planted, hard red winter wheat experienced a killing freeze, we've had difficulties with dry conditions in the former Soviet Union, the Argentine crop which should be being planted is going into dry conditions, same way with southern Brazil so the wheat crop really around the world is getting notched lower just over these last few weeks and remember, that is the crop that was looking like it was in a surplus, it's the one that really started down first and it is looking like it got cheap enough and so now we're going to see how much strength that market can put into it. We think we'll be at a sell signal for hard red winter and for soft red winter wheat this next week. We think strength this next week will be a good selling opportunity for wheat.
Pearson: Let’s talk about the corn market. Again, it's the tale of two corn crops, the western Corn Belt about half done now delayed by rain, the eastern Corn Belt struggling with wet weather and typically this is going to be our time, you've talked about this for years about the time to make sales and typically this is when we have some of our strongest prices between now and July. What are your thoughts right now? Do you have a sell signal on corn?
Roach: We do not. The corn market is moving up toward one, we expect to see one the early part of next week, the same way with soybeans, we'll expect to see a sell signal. We think it's a bit of a perfect storm, if you will, where we have the South American crop being reduced late in its growing season. Remember, South America raises more soybeans than the United States and they have taken off somewhere around 15% to maybe perhaps as much as 20% of the crop that they had last year and so that is the first thing it's stimulating. Secondly, we have the Chinese that are in buying and building their inventory, they're trying to accumulate a reserve, if you will, of soybeans, they're talking about 7.5 million tons, they're trying to get that accomplished now and then we have weather problems as well. So, we think those three things are substantial bullish fundamentals that are crossing at the intersection at the same time. That should put a peak in the market. In addition to that we have a weak dollar and anticipating further weakness forward. So, those things all working together -- remember, markets peak in the midst of the most bullish news and so all those bullish factors are coming into the marketplace at one time. As you look forward and say, okay, what will probably happen as a consequence? Well, we know that farmers will get the crop planted so that will occur and we know that the South American crop is in the latter stages of harvest and so pretty soon they're going to count the bushels and it won't get any smaller. We're about to that stage and we also anticipate that the Chinese are going to dice around here a little bit as they are accumulating this inventory. Remember, the Chinese grain industry is a little different from ours. We have grain inspectors that come out to our grain elevators, they have reserve police and so when they come out to count the bushels that they are telling you that they want you to accumulate you better have those bushels. On the flip side, those same processors and warehousemen in China are struggling to try to make this deal work because they can't process these soybeans and make a margin. So, it's a dicey situation with their demand. We think their demand is getting fully dialed into the market now and so, again, markets make their peak in the midst of the most bullish news. We think next week will be one of those bullish news weeks and we're wanting all of our producers to get prepared to be making sales into that strength.
Pearson: That's both corn and soybeans.
Roach: Exactly, both corn and soybeans. We're already there on spring wheat, we started today. Again, our sell signals last four to six days usually and we think we'll be into a sell signal on Monday or Tuesday on all the rest of the grains.
Pearson: So, your corn target right now a little over four dollars, you think we'll make those sales?
Roach: I think we can move the market maybe up over this process here maybe 15, 20 cents higher. The only thing really working in the corn favor is the slowness in planting and as we saw last year we can get through a really difficult spring and still produce trend line kind of yields so we think that will occur and we think it will be hard to get the corn market to get much more enthusiastic than that.
Pearson: So, as we look at this market do you think key selling periods are about upon us?
Roach: Right upon us and remember if you go back and look historically the first of April tends to be the peak for the year on corn, the first of May tends to be the peak for soybeans if you average all the years together over the last fifteen years or so. So, it's coming right at the time it should be coming.
Pearson: And new crop sales and old crop?
Roach: Yes, we think that you have to be getting your old crop bushels just down to your gambling bushels to gamble on whether we have a drought or something this summer. New crop we think most producers need to really focus in on how many bushels they want to get sold ahead of harvest. And at the end of this next sell signal on corn and soybeans and wheat we would have three-fourths of the bushels you want to sell ahead of harvest we'd have them priced.
Pearson: Pretty aggressive.
Roach: So, we're aggressive. We have to look and see our biggest problem we have is that the chief buyers, the livestock industry and the biofuels industries are all in trouble and so we think that higher price levels and real optimism in the grain market is going to be met with the difficulty of using your product, your grain product and turning it into a product and make a margin of profit at the same time.
Pearson: Let's talk about the cattle market, John, and what you see happening there. As you look at this market going forward are we fairly current on these fed cattle?
Roach: We're not bad, we're not bad. The market is really showing a discount out into the future. The live market versus the futures market there's no incentive to be holding cattle into a cheaper market. So, we're not in too bad a shape. We think that the cattle on feed report we've seen month after month of reduced numbers and we think that's starting to finally get our numbers whittled down and at the same time we think the economy has bottomed in here or nearly bottomed and we think we can get some better demand kind of news as well.
Pearson: So, maybe some better restaurant demand we might see that market start to improve on both the fed cattle and the feeders.
Roach: We're expecting that.
Pearson: So, as you look ahead second half maybe a little bit better for at least the cattlemen anyway?
Roach: Right now there's a good premium on into the last half of the year relative to where the front part of the marketplace is and so the market is really suggesting that to you, that we will have some better prices. The problem is that if you try to buy replacement cattle right now and make them work into the fall months there's no margin of profit there. So, you're going to have to bet on the cover, you're going to have to buy the cattle and hope.
Pearson: On that hopeful note that will wrap up this edition of Market to Market. But if you'd like more information from John on where these markets just might be headed visit the Market Plus page at our Web site where you'll find streaming video of our program. You can also download audio podcasts of our market analysis and our Market Plus segments absolutely free at our Web site. Be sure to join us again next week when we'll update the impact of H1N1 on commodity prices. Until then, thanks for watching. I'm Mark Pearson. Have a great week.
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