The story of American agriculture in 2015, as it so often does, revolved around supply and demand. And, it was a bad year for farmers to see the former outweigh the latter.
1. Demise of Direct Payments
2015 saw the implementation of a new federal farm program. It brought the end of “direct payments,” which farmers received regardless of crop prices. Growers of Sun Belt crops like rice, cotton and peanuts had been particularly reliant upon direct payments. But the shift to different programs came just as crop prices fell to their lowest in nearly a decade, due to a combination of a successful growing season and slumping overseas demand.
2. Decline in Farm-Related Sales
Declining farmer profits also rang alarm bells in agribusiness, which experienced reduced sales. The board of the world’s biggest farm chemical company, Switzerland’s Syngenta AG, rejected repeated takeover bids by rival Monsanto Co. despite criticism from restless stockholders. In October, that pressure led CEO Mike Mack to resign. Similar shareholder complaints about performance also led to the October resignation of DuPont Pioneer CEO Ellen Kullman. Farm equipment sales have dropped precipitously, and major manufacturers like Deere & Company have laid off thousands of workers; sales of large farm tractors were down nearly 30 percent through October.
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3. Battle of the EPA Clean Water Rule
Agricultural interests have focused much of their energy the last two years on quashing the federal Environmental Protection Agency’s “Clean Water Rule,” originally the “Waters of the U.S. Rule.” Formally released in March 2014, the regulation would extend Clean Water Act jurisdiction to geographic features not currently covered, overturning a 2006 U.S. Supreme Court ruling that prevented EPA from blocking commercial development in isolated wetlands. In March 2015, the EPA reissued a modified rule, while dropping a separate interpretive document that agricultural groups said would prohibit common farming practices and turn the U.S. Department of Agriculture’s Natural Resources Conservation Service into a policing agency. The U.S. House passed a bill to block the rule, but it stalled in the Senate. However, state attorneys general, including Arkansas Attorney General Leslie Rutledge, filed suit against the rule, and on Oct. 9, the U.S. Court of Appeals for the Sixth Circuit issued a nationwide stay that prevents EPA from implementing it. The majority of a divided 2-1 panel said the stay “temporarily silences the whirlwind of confusion that springs from uncertainty about the requirements of the new Rule and whether they will survive legal testing.” Although the majority said the plaintiffs are likely to ultimately prevail, the case is still in adjudication. The Supreme Court may yet get another bite at this apple.
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4. Agreement on Trans-Pacific Partnership
On Oct. 5, after seven years of talks, negotiators from the U.S. and 11 other countries reached agreement on the Trans-Pacific Partnership, which lowers trade barriers and addresses other issues that create unequal international commerce conditions between the signatories. U.S. farm groups had been particularly keen on concessions made by TPP member Japan, which imposes tariffs or volume restrictions on many commodities. Of particular interest to Arkansas, under the agreement, Japan will establish a new, duty-free quota for U.S. rice. However, the U.S. industry believes any gains will be offset by market share losses in Mexico to major rice exporter Vietnam, both of which are also TPP members.
Read more here.
5. Impact of Avian Flu
The highly pathogenic H5N2 virus only struck one Arkansas commercial poultry facility, but its spread to more than 80 others across the country forced the destruction of 30 million birds and pushed egg prices to record highs. It also caused foreign customers to suspend poultry imports, which ironically backed up supplies and depressed chicken prices. The outbreaks traced the path of wild fowl trekking south for the winter, and it’s feared the flu will return.
Read more here.