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Lack of USDA Reports Creates Uncertainty

posted on October 11, 2013

The partial government shutdown continued for an 11th day Friday.  But, with the potential for a more significant fiscal crisis looming on the horizon, congressional leaders and the president appeared to be getting closer on a resolution to a pair of economic quagmires. 

The shutdown has already had a profound impact on the markets. The Dow, for example, shed 400 points in the first seven days of the impasse. Experts, however, say that could be a blip compared to the declines that would likely take place October 17th -- if policymakers fail to come to terms raising the debt limit and Uncle Sam – for the first time in history – fails to pay at least some of his bills. 

But on Thursday, when hints of movement toward some kind of agreement began to emerge, the Dow rallied more than 320 points, to post its largest single-day gain since 2011. 

While the fine print of the proposal likely won’t be fully known before the weekend, the shutdown continues to have far-reaching ramifications for millions of Americans -- -- including America’s farmers and ranchers, who rely heavily on data from the Agriculture Department.  On Friday, however, a highly anticipated report on global supply and demand became a casualty of the shutdown.   

Lack of USDA Reports Creates Uncertainty

Farmers and livestock producers use the Agriculture Department reports to make decisions on everything from which crops to plant to how and when to market their goods.

And since local Farm Services Agency, or FSA, offices also have been shuttered, producers are unable to apply for new loans; or sign up for government programs. 

But growers say those inconveniences pale in comparison to the lack of USDA reports, because farmers today depend far more on the global marketplace than government largesse.

The data helps farmers react to changes in supply and demand in America and overseas.  And during the shutdown USDA isn’t providing sales reports from livestock auctions that are used to help set prices on the Chicago Mercantile Exchange.

And, as fate would have it, the shutdown occurred on the same day as a one-year extension to the current Farm Bill expired.  And American Farm Bureau officials expressed their frustration this week with the current state of affairs in Washington.

Dale Moore, Executive Director, Public Policy, American Farm Bureau: “We’re taking some shots at ourselves in terms of how we move the ball forward relative to getting a Farm Bill done.  We had hoped we would see Farm Bill action.  We would see the House-Senate Conference beginning to get the new Farm Bill done, get immigration reform done for ag labor types of activities...”

Despite the shutdown, farm subsidies remain intact for crops currently being harvested, and because crop insurance is funded under a permanent authorization, it too is largely unaffected.

The expiration of the Farm Bill isn’t expected to really make an impact until the end of the year, when some dairy supports end.  Retail milk prices are predicted to rise sharply.  But due to the perishable nature of their products, dairy producers can only “sell it or smell it.” 

Jeff Betley/Betley Farms, LLC: "Something needs to change.  The current system, I'm not a big fan of.  We don't milk cows to see what the government is going to give us.  There's no talk of a farm bill.  There's no talk of immigration.  There's no talk of trade agreements, or any of that stuff, which is probably more important, the trade agreements, the TPP.  Things like that, you know, for the future.  As an industry I think we're moving 14, 15 percent of our product offshore."

Congress has been debating next Farm Bill for more than two years.  There was word late this week that conferees could be named as early as next week to hammer out a compromise between previously passed House and Senate versions of the legislation.  But now with the fiscal fiasco intensifying to include a high-stakes game of poker surrounding the debt ceiling, the final Farm Bill is not likely to make its way to the President’s desk anytime soon. 


Tags: CME Group Congress dairy Farm Bill Farm Bureau farm subsidies FSA livestock milk prices reports shutdown USDA