Working to Improve Food Safety
While the move earned praise from the White House, critics say the fact that eggs, meat, poultry and other foods remain under USDA – and not FDA - purview is but one of the bill's many weaknesses.
A similar measure is pending in the Senate. And with Congress still in recess, food safety advocates gathered in Des Moines, Iowa this week to share their stories and call for further reforms.
Dana Boner knows the heartbreak of losing a loved one to a food borne illness. In 2007, her daughter Kayla died from an E. coli infection.
Dana Boner, Kayla’s Mother: “Something does need to be done. People die from it, my child died from it, and what angers me is that we’ll never know what she died from. All we know is it was E. coli.”
According to the Centers for Disease Control, an estimated 76 million food-related illness occur annually in the U.S., resulting in 325,000 hospitalizations and 5,000 deaths.
Sen. Tom Harkin, D - Iowa: “As I have observed many times, to say that food safety in this country is a patchwork system is giving it too much credit. Food safety in America has too long been a hit-or-miss gamble with parents obliged to roll the dice when it comes to the safety of their kids’ food. We need to act and we need to act now.”
"Make Our Food Safe," a coalition of food advocacy organizations, is organizing events, including the one attended by Senator Harkin in Iowa this week, to gather support for stronger food safety legislation.
Donna Rosenbaum, Executive Director of Safe Tables Our Priority: “One of the issues that is most astounding to the American Public and to the families affected by food borne illness, is the fact that in this country we have no mandatory recall. The government does not have mandatory recall authority. Neither the USDA nor the FDA.”
Donna Rosenbaum, the Executive Director of Safe Tables Our Priority, believes the most important thing that could be done to improve food safety is to increase the number of inspections of domestic facilities and foreign imports.
Donna Rosenbaum, Executive Director of Safe Tables Our Priority: “The FDA inspects on average, and they’re inspecting 80% of the food supply, on average a food facility every ten years on the domestic side and approximately 1% of foreign imports. And, I think the American public deserves better protection than that.”
Despite a wide range of opinions on how to ensure the safety of the nation's food supply, it's clear that nothing will change without Congressional action.
Sen. Tom Harkin, D - Iowa: “I think the big hurdle we have to get over is how we combine the Food and Drug Administration with their jurisdiction with the USDA and their jurisdiction. Quite frankly, I think the USDA does a very good job in its food safety and inspection service. But I do think they need better coordination with the FDA. I think that's what's lacking in both bills and that's what I hope to strengthen in the bill in the Senate.
Creighton Researcher Takes Economic Pulse of Rural America
The Labor Department reported this week that employers shed 216,000 jobs in August – lower than previous estimates and the smallest monthly figure in the past year.
Workers losing their jobs and settling for part-time work also known as the “underemployed,” rose to 16.8 percent – the highest rate in 14 years.
The overall unemployment rate jumped to 9.7 percent – rising one-tenth of a point from last month. The nearly 10 percent jobless rate is the highest since the early days of the Reagan Administration 26 years ago.
On Inauguration Day, America's 44th President proclaimed he would breathe life into an economy mired in the worst recession since World War II. And in the ensuing months, President Obama authorized more than $1 trillion in federal spending and tax breaks to stimulate the economy and preserve a floundering financial sector.
While the vast majority of stimulus funds have yet to be distributed, most analysts are cautiously optimistic about prospects for recovery -- perhaps as early as this year.
However, Rural America is watching the recovery, thus far, from the sidelines.
And as Paul Yeager reports, no one knows that better than the chair of the Creighton University Economics Department, Ernie Goss.
For the past 15 years, Ernie Goss and the Creighton Economic Forecasting Group have published a monthly study of Midwest economic conditions known as the "Business Conditions Index for Mid-America." Hoping to assess economic vitality in the "Heartland," researchers survey bank CEOs and nearly 1,000 purchasing managers.
Ernie Goss/Creighton University Economist: “These are the men and women at the front line of the economy. If they're buying, that soon spills over into the economy. That’s the theory behind it. Its a leading economic indicators. We’ve been doing it for, since 1994. We get a good beat on the economy. And during that time we’ve had two recessions, we picked them both up in advance."
The "Business Conditions Index" is compiled from surveys conducted in nine Midwestern states. The finished product is emailed to 5,000 recipients -- each with different perspectives and interests.
Terry Moore is president of the Omaha Federation of Labor AFL CIO and a Bank Officer for the Federal Reserve Bank of Kansas City. He reads Goss' survey and sources the data in reports to the Reserve Bank board.
Terry Moore/Omaha, NE/AFL-CIO: "That research that is right to the point to very hot, news, that they don't have yet. When were talking to a car dealership, were getting his reports of this week, and were talking about the transportation of goods we're getting them as of today. When we talk about the railroad, or furloughs, which they would not have any of that information, or the idea of that, so were going to give them information that hasn't even been done yet, ‘cause we know this layoff is happening in the next to-two weeks, hiring is happening in the 2-3 days, or whatever may be.”
This month's survey asked supply managers 9 basic questions about production orders, exports and inventory
Creighton University graduate students compile survey results into charts and graphs. Goss then meets with researchers, faculty colleagues, and even Federal Reserve Board representatives to analyze and interpret the data.
Brooke: "A lot of them are hoping for a turnaround by October.
Tony Hendrickson: "Are they the forbearers to a double decline recession? Where it goes down and back up, then goes down again. Are we the harbor of something to come, or are we following a trend and lagging behind?"
Factors weighing heavily on the rural economy are readily apparent. As researchers analyze August data, the discussion quickly turns to the farm economy.
Hendrickson "Prices are going to rebound, negative effect on production of ag products.
Goss: “Then how much of this is ag related? Income down 25%. If you look at the rural survey, banks, not good. Seeing farm equipment sales not doing well at all, that's spilling out over to the Main Street survey.
Hendrickson “I think that explains an effect in downed retail sales. As the ag economy tends to be more cyclical, more recessions, more cutbacks and problems, in our history, different from than regular recession, I think people in rural areas have learned to say, times are hard, they stop spending. They respond with cutbacks in spending much quicker than the rest of the economy because they're more used to downturns." Whether its negative or positive, its right on the border, its not that positive.
In August, the "Business Conditions Index for Mid-America" fell to 48.4 from July's 51.7 and June's 49.3... a troubling development since it represents the first decline since January.
A reading above 50 indicates economic growth, and anything below 50 signals a shrinking economy.
The lowest number ever tallied on the index was last December's 33.
While government numbers on the broader economy have shown signs of improvement in recent months, Goss says conditions in Mid-America are not recovering as quickly.
Goss: "Its crawling out of the recession, and it is crawling, we've really reached some, put out there scary numbers back in January and February as the President had said, 2615 its been inching up each month. The negatives have been less negative, you look at this recovery according to our survey, versus recovery in 2002, after the recession of 2001, this is not a recovery you like to see, like to see more robust recovery."
Goss claims significant pullback in farm income is now reaching businesses with ties to the farm sector.
Goss: "Ag is really underpinning this economy, and I think it has a lot to do with ag income which is down 25%"
In addition to a 25 percent decline in farm income this year, Goss claims a strengthening dollar portends more bad news for the highly trade-sensitive industry of agriculture.
Goss: “Farm products from this part of the country got higher in price in Asia, higher price in Europe, all of a sudden our farm sector wasn't as competitive as it was previously. I'm bullish on the farm sector because the dollar is going to weaken and this will favor Ag, we will see biofuels and alternative energy have some positive impacts think its been overstated a bit.”
Goss: “Unfortunately, the last thing we see is jobs.”
Release day is somewhat tense for Goss. Since he publishes his regional report the same day as a similar, national study is released, the Creighton economist pours over the numbers for accuracy and -- hopefully -- developments also found in the broader economy. But this month, his survey doesn't match the national trend.
NewsHour with Jim Lehrer/9.1.09: “The selloff came despite reports that US manufacturing grew in August for the first time in 19 months.”
Goss: “Maybe I'm becoming too hung up on the numbers, but when you look at the rural bankers, the bank CEOs, and I'm putting it together, because that one was running upward and boom and started to go down. Now this going down, you're like, what's going on. And you got to think it has something to do with farm income. Because the rest of the nation is crawling out.”
So what does Goss see when he gazes into the cystal ball?
Goss: "Overall farm income, this window we're looking at right now, just not that good. Now showing up in our surveys. Manufacturing still is not doing well. Food processing which is tied to ag, that's holding up pretty well. That's really important to this part of the country."
Bearish sentiments aside, it may be wise to remember the old adage that "one month does not a trend make."
Market Analysis: Don Roose, Market Analyst
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For the week, September wheat was down 23 cents and the nearby corn contract traded 20 cents lower.
The soybean pits erased the previous week's gains and then some on reports of a potentially record breaking crop. For the week, September soybeans lost nearly $1.75, and the nearby meal contract was down nearly $55.00 per ton.
In the softs, cotton traded lower as the December contract posted a loss of 81 cents.
In the dairy market, Class III Milk futures moved higher with a gain of 5 cents.
In livestock, October cattle were down nearly 5 cents. Nearby feeders were up 50 cents. And the October lean hog contract gained $2.43.
In other markets of interest, the Euro gained 17 basis points against the dollar. Crude oil was down nearly $5 per barrel. Comex Gold gained nearly $35.00 per ounce. And the Goldman Sachs Commodity Index lost nearly 30 points to close at 437 even.
Roose: Hello, Mark.
Pearson: Let's talk about a couple of general things and then I want to get into these big crop numbers that we've been seeing from these private estimators. First of all, oil down, some pressure on gold, it seems like some of the what were very hot markets of the last twelve months are starting to cool just a little bit. What are your thoughts on some of the outside markets outside of the corn, soybeans and livestock pits?
Roose: Well, I think we're starting to deal a little bit more with reality. We realize that we've got a lot of work to do ahead of us from an economic standpoint and it's going to be a slow road to recovery rather than a fast road to recovery and I think that's what the market is trying to tell us too, let's walk slower and measure ourselves and that's what we did this week.
Pearson: As we look at what is happening as far as the world markets are concerned it seems like we are on a general ramp up in overall economic development. Do you agree with that? Do you think we're going to start to see more of that demand pull from overseas?
Roose: Well, I think that is the goal and I think actually with the dollar weaker I think that really changes a lot of the dynamics around the world. But I think overall, again, we continue to focus, at least from the market standpoint, and we watch China very closely as far as their moves and how they are doing economically and their stock market seems to be still on the road to recovery and they are still in expansion mode.
Pearson: So, it portends well for us down the road. Let's talk about the wheat market first and what you see happening on wheat. A good crop in the United States, a little concerned about Australia who had certainly a slow go in getting the spring wheat harvested. What do you see ahead? What is your take on wheat?
Roose: Well, I think when you look at it the wheat is really a world product and we have a big crop here in the United States and I think a big world ending stocks figure also so it's just one of these markets that has a hard time sustaining rallies until we can deal with some lower production numbers down the road. You alluded to the fact that Australia, in an El Nino year, we could have some difficulties over there but we're on hold and we'll wait and see.
Pearson: It seems like elsewhere around the world we turned in a pretty good crop.
Roose: Yes, I think we've had some problems in some other areas. Argentina with some of their dry areas are off to a little bit of a slow start from that standpoint. Europe was a little bit too wet at times. But overall we have big world supplies that we have to deal with and world ending stocks that are on the rise and we'll probably find that out in the September report.
Pearson: That's right and that's coming up the 11th of September. Tell us this, Don, you're talking to a wheat producer who has harvested his hard red wheat and now has it in storage but hasn't sold anything yet. What are you going to tell him?
Roose: Well, what you're really talking about is catch up sales and what you're looking for is a post-harvest marketing and I think you have to wait for the crop to be tucked away and probably what you're really looking at is anywhere from a 30 to a 60 cent rally, probably marketing opportunities unless some of the environment changes around the world. Weather is a great equalizer so I think that's what you have to watch from here forward.
Pearson: 30 to 50 cents though you start to make sales?
Roose: I think that's what you have to do particularly if you have what you would call catch up sales.
Pearson: Let's talk about the corn market. I've been in Wichita, I've been in Springfield, Illinois, Indianapolis, Minneapolis, Worlington, Minnesota, northwest Iowa, eastern Nebraska, I can't find a bad crop anywhere to be honest with you and it seems to be getting born out and all these private analysts, Informa's numbers were huge, 13 plus billion bushel corn crop, we've had other numbers from other analysts who have come out with big numbers. USDA's number is going to be the one everybody is going to be looking at on the 11th of September. Do you think they'll reflect close to those numbers or a little more conservative?
Roose: Well, I think they're going to be a little more conservative because the government really is one that we don't want to move from a higher yield and then have to start to ratchet it back down and make the market erratic. But I think what you're really saying is just what the crop condition ratings are saying is that we do have a large crop out here, it's really a race to the finish because we've got a crop that is probably ten to fifteen days behind and it looks like we're going to have another record. I think the real fear of the marketplace is we had huge leaps in yields on corn in '82 and in '85 and '94 an 2004, if you remember that was our last record yield year and could this be one again that could jump again to numbers that you just can't believe and I think that's the fear of the marketplace and that's why we've been taking some risk premium out of the market pretty aggressively as we're moving forward.
Pearson: It does look good. Save your e-mails, we know there are pockets where it's bad and it may be in your area and we understand but generally everyone pretty much agrees this looks like a bumper. So, in the face of that, obviously we've had great opportunity to sell corn, last time you were on you were talking about if you haven't made sales make sales. If we didn't do that what are you telling a producer right now who walks in and talks to you about selling their corn crop for '09?
Roose: Well, I think what you have to look at is what the opportunities are that you have in front of you. You have a huge carry in the corn market, 4.5 cents a month from December to July, you've got a basis level that allows you to store the crop. So, I think you look at it from that standpoint and at least try and get a return on your storage investment and not let things turn worse for you.
Pearson: So, use the carry in the market and if you've got on-farm storage good, if you don't sell the crop would you buy it back some way?
Roose: Well, I think if you're going to buy it back again I think you have to look at what the basis levels are, you have to look at the carries in the market but if you're going to buy it back and you want to control your risk management what you're really down to is buying options from an insurance standpoint or some kind of a window contract. So, yes, certainly because this looks like a classic year where you put in your harvest low probably late as we're trying to harvest and then you see what kind of a rally you get back on a post-harvest rally. And the great equalizer is weather, again, we could have some weather problems around the world.
Pearson: You mentioned the fact that everywhere we've been I need to have this caveat and that is that as good as this crop looks, as you point out, in most cases it is ten days, two weeks late. There is a concern about cool weather. It looks like most of the forecasts kind of changed, maybe not that much concern here in the next five to seven days. Longer term obviously we need to get out to October 1 before we're frost free for most of our viewing area?
Roose: Yes, I think that's it, up around the Minnesota border, Iowa border October 1 is about the normal frost date so I think we're talking somewhere around there later and we need that extra ten to fifteen days. But the current weather looks like we're going to get that but it could change very fast. Monday night the trade is probably going to be what the weather forecast is.
Pearson: That's right, so we're trading to a weather market here which may give us some opportunities to make sales. Corn sales, 15, 20 cents up would you make some sales?
Roose: Yes, where you're at is all the cards are coming out of the deck here pretty fast and we pretty well know all the variables and so these rallies, if we don't have a problem at the end of the crop, they're going to be limited and I would say when you get up into that $3.25 now, sounds like a low number, on up to the $3.40 area those are probably your opportunities. The market is oversold here. This is a market that is two steps down, one up and you look for that one up to take advantage of some opportunities to market.
Pearson: Let's talk about soybeans, again, potentially record crop on soybeans based on everything that we're reading and hearing from the private forecasters and, again, we'll find out on the 11th of September what the score really is but as you look at this soybean market right now it still seems to be a lot of demand for soybeans worldwide. Do you agree with that?
Roose: Well, there is a big demand on the soybeans and the number one buyer is China. They bought an astounding amount of new crop soybeans. They bought 12 million metric tons of soybeans so far for the new marketing year which just started. Last year they bought 19.8 million metric tons for the whole year. So, there's been some reports out at the end of the week that they may have lost, due to some dry drought conditions, up to 15% of their soybean crop, 12% of their corn crop but they have adequate reserves to buffer that and they have been working on that very aggressively here in the last six months.
Pearson: They certainly have and they have been big buyers of our beans. Obviously we also have to look at South America and what's going to happen down there. What are your thoughts on South America?
Roose: Well, I think it really looks like we're going to have big soybean production at the expense of corn and that's really what we're doing is we're racing to plant the most profitable crop, not only in the U.S. but around the world. And the other thing we have to remember and I think we have to keep an eye on this is it is still an El Nino year. El Nino was moderate, it's strengthening a little bit again but in an El Nino year you have a tendency to have a warm/dry condition in South America and Australia.
Pearson: So, again, could cause us some more crop problems, perhaps opportunities for U.S. producers to take advantage of it. Price wise on soybeans where do you want to start making sales again? I gather not in here.
Roose: Yes, we're on a pretty hard break, we're on a dollar break basically just short order, just a few days as the crop maturity comes at us and I think what you're really looking at is some kind of a dead cat bounce, if you will, anywhere from 30 to probably 50 cents is your opportunity now.
Pearson: Basis levels are holding pretty well on soybeans?
Roose: Basis levels were holding very well but the big thing that happened this week in soybeans is the basis level mid-week just torpedoed. In a 24-hour time period we lost 80 cents to $1.80 just in short order as the delta harvest started to pick up and that started to move north and that really put an end to the tightness here short-term.
Pearson: This new crop is going to come in after all. Real quick let's talk about livestock and what you see ahead there. The fed cattle market is one that we track and we've been concerned about because of the losses we've had in every portion of livestock, dairy and poultry sectors. Are we going to start to see a turnaround?
Roose: Well, I think we are little by little. The cattle numbers, I think you start with the cattle first and we're moving into the tight numbers that we all anticipated because the low placement figures. We'll stay tight on numbers going into probably the first of December and then they'll grow a bit so then we're going to have to worry about the demand side of the market but it's not the supply side on the cattle market like it is with the hogs, it really boils down to the demand and they've got a lot of competition from cheap meat out here that they have to compete against.
Pearson: General economic recovery in the U.S. would do a lot to save some of that?
Roose: Well, I think so. We're seeing a pick up in the domestic demand a little bit but the weak dollar also you can't say enough for the exports on beef continue to gain a little bit of momentum and even on the pork.
Pearson: Fed cattle, can we buy calves today and put them in the lot and make some money on them?
Roose: Well, you can. Now, you have to make sure that you do a good job of management of the input costs and also on the sales side. So, there's opportunities coming back into the marketplace and I think that's what we're looking for.
Pearson: A little bit of good news there. Let's talk about the hog market and what you see happening there. Are we finally starting to see some liquidation? Is it finally starting to happen?
Roose: Well, that's the interesting thing because you look at this -- I was looking at the data real close on the sow slaughter and you think we've had a lot of liquidation but up until the middle of July basically our sow liquidation was less than a year ago. Now, the last two weeks we've changed that. Two weeks ago our sow slaughter was over 4% versus a year ago, this last week it was over 3% over a year ago so we are, the wheels are in motion for some liquidation and that's really what we need to do is liquidate down to a level where we meet up with the demand.
Pearson: You mentioned exports, that's been really critical for pork and the cheaper dollar, do you think that's going to continue?
Roose: Oh, I think most definitely because we're working very hard to try and promote the pork exports. It's just that China was really a big buyer of pork for a short amount of time and that really changed some of the factors that we were looking at so we have to look at some other new markets and those are starting to grow and I think we're going to concentrate on that and they recognize a bargain when they see one too and pork is certainly cheap.
Pearson: Livestock, poultry, dairy right now time to buy feed, cover feed needs?
Roose: I think so. We think that the market can continue to work lower but the big down in the market particularly when you look at corn, yes, I think you have to be negative, we're probably going to move lower but how much lower and you have to look at the basis levels at the same time and do you run into some surprises beforehand. So, there's not that much down side to it so I'd say a scale down buyer is what you need to look at.
Pearson: Very good. Don Roose, we appreciate it. That will wrap up this edition of Market to Market. If you'd like more information from Don on where these markets may be headed please visit our Market Plus page at our Web site where you'll find streaming video of our program and you can download audio podcasts of our Market Analysis and Market Plus segments absolutely free at our Web site. And be sure to join us again next week when we'll commemorate the 50th anniversary of Nikita Khrushchev's historic visit to the heartland and one farmer's quest for peace through corn. Until then, thanks for watching. I'm Mark Pearson. Have a great week.
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