John Block: Bird Flu

By John R. Block

There is no industry more volatile or more uncertain than agriculture. The drought came and Texas and Oklahoma ranchers had to sell their cattle – not enough feed. Beef prices shot up. We still don’t have enough beef. The pork industry was hit with a swine disease. Thousands of baby pigs died. That resulted in a pork shortage and those prices shot up.

Now, we have bird flu. Who would have predicted? The H5N2 virus has killed 47 million chickens. We should be producing enough eggs to meet domestic demand and be able to export more than 30 million eggs per month. Not now. Iowa has been hurt the most – losing 30 million birds. That’s half the laying hens in the state.

The price of eggs has doubled. Egg processors making cakes, cookies, Krispy Kreme donuts, etc. are crying for eggs. For the first time in 10 years, we have authorized imports. Seven European countries have been approved to import shell eggs. Government officials say it will take as long as 2 years to get our production of eggs back to where it was before the virus.

This is not the first time we have been hit with a bird flu virus. When I was Secretary of Agriculture in the early 80s, we had our last bad bout with bird flu. That was a disaster then. But this time is much worse.

The Department of Agriculture oversees these problems. Farmers are compensated for the birds that die or are destroyed. According to Secretary Vilsack, the cost could exceed a half billion dollars. We are losing a lot of birds, including egg-laying hens, broilers, and turkeys. It will take a lot of money and time to rebuild the business.

Stopping the spread of the virus will not be so easy. Canadian geese in the state of Michigan have tested positive. They fly everywhere. In the meantime, the industry is looking for a vaccine to protect against the virus. None approved as of yet.

There is no industry more essential to mankind than food production. There is no industry more uncertain. And yet, our farmers and ranchers persist and get the job done. Did you know that this spring world food prices fell to their lowest level since 2009?

John Block was Secretary of the U.S. Department of Agriculture from 1981-1985, where he played a key role in the development of the 1985 Farm Bill.

John Block: GMOs Under Assault

By John R. Block

We can’t seem to silence or satisfy the loud scream of opposition to GE crops. The reason probably is that up until now we have ignored them. It’s time to stand up and set the record straight.

GE food is safe and even beneficial according to 88% of scientists. We have conducted more than 1,000 studies. We have been eating GE food for more than 20 years – no one has gotten sick.

The fact is that for thousands of years, farmers have been improving crops through selective breeding. That process alters genes. We have found that in the laboratory we can do it faster.

Never mind the facts, the critics are beating the drums. Three states have passed labeling laws. Vermont is in the lead as they begin to implement their law. It sounds simple. Just label the food if it has GMO products in the food.

It’s not that simple. Vermont has a long list of exemptions. Animal products are exempt – beef, pork, chicken, dairy. But keep in mind the animals were fed GMO corn and soybean meal.

Trying to get out ahead of everyone, Chipotle recently announced that it has gone GMO free. But it’s not really free. The soft drinks are made with GMO corn sweetener. The burritos have GMO corn-fed beef, pork, chicken, and GMO sour cream.

The U.S. Congress is considering as many as 30 bills to deal with the GMO debate. You may wonder where all of this noise is coming from. Yes, there are individuals that sincerely are concerned about GMO safety. However, the organic companies (some of them are huge) are helping to push the false argument about risk. If they succeed, they can sell more product and make more money.

This debate is not over. You will soon read about the next step in plant technology – gene editing. Gene editing is a more precise way to alter plant traits.

The leading critics of GMOs are totally inconsistent. First, they support the science on global warming, but ignore the science on GMOs. Next, they pretend to care about the poor, but genetic engineering helps the poor by keeping the cost of food down. The world will not produce enough food without new technology. Finally, if they want to reduce the use of chemicals and energy, GE also does that.

Stay tuned.

John Block was Secretary of the U.S. Department of Agriculture from 1981-1985, where he played a key role in the development of the 1985 Farm Bill.

John Block: “COOL” Isn’t Cool

By John R. Block

As a farmer, we understand that if you have something that doesn’t work, you fix it. It will just cost you money if you ignore the problem. Somehow, the federal government doesn’t seem to understand that common sense fact.

The Country of Origin Labeling (COOL) law was first passed in 2002. Canada and Mexico have been challenging the law now for 13 years. The World Trade Organization (WTO) just this week ruled it to be a violation of U.S. international trade obligations. We are a member of the WTO and therefore should live within the rules. That is our obligation, and we expect other countries to do the same.

This week, for the third time, the WTO ruled against us. That ruling gives Canada and Mexico the legal right to retaliate. Canada already has a list of proposed restrictions, which will result in a dramatic cut in our exports to Canada and Mexico. That is serious. Canada and Mexico are our number 1 and 2 export markets. Besides, they are our closest neighbors.

Senator Pat Roberts (KS) had this to say: “If Congress doesn’t act swiftly, retaliation will wreak havoc on the U.S. economy.” I think we should be aware that if we don’t fix this law, it will cost us millions of dollars in ag exports as well as other exports.

The law today requires that meat from a calf born in Canada and shipped to the U.S. bare a label that reads “Born in Canada, raised and slaughtered in U.S.”  Just imagine the cost and confusion that can cause.  What about the Montana farmer who imports Canadian calves and mixes his own U.S. calves with the Canadian calves?  By law, he would have to keep track of them and market them separately. The U.S. processing plant would then have to process them separately. That would be the only way to ensure the Canadian label was on the Canadian steak.

Consumers say they have the right to know where that animal has been. Why? It isn’t worth the hassle. USDA just released new study results that point out the COOL labeling policy costs consumers nearly 8 billion dollars over 10 years.

We don’t need to try and change COOL. We’ve tried that before. COOL isn’t cool. Just get rid of it.

John Block was Secretary of the U.S. Department of Agriculture from 1981-1985, where he played a key role in the development of the 1985 Farm Bill.

John Block: Down on the Farm

By John R. Block

I was on the farm last week and early this week. My timing was right. I wanted to be there for the corn planting. We finished and started on soy beans. I have never seen the seeds go in the ground under better conditions. That rich, black dirt was not cloddy, not too wet. It would crumble in your bare hands. The day I got to the farm, the corn was not up. But when I left this week, I could mow it. To look at those green sprouts peeking up out of that rich earth is a beautiful sight.

Think about all the time and effort and money spent in getting the crop this far. Last fall, we put lime on some fields where the soil tests told us it was needed. We applied phosphate and potash at just the right amount to meet fertility needs. With GPS and accurate soil tests, we can apply the right amount in the right place. That’s precision farming.

We knifed into the soil “honey” from our hog barns. That is powerful fertilizer. Finally, anhydrous ammonia, our source of nitrogen, was put on the fields. We did all of that last fall. We won’t see any return on our investment until this fall.

When the corn gets up a foot high this spring, we will spray for weeds. With genetically engineered seed, we don’t use anywhere near the amount of weed spray that we did 30 years ago. The critics of GE crops are making a big mistake. GE allows us to dramatically reduce the amount of chemicals to grow a crop. We don’t use the energy. In days back, we would have to cultivate the growing crop twice. And, we would still have weeds and grass in the corn rows.

Farmers are better stewards of their land than they have ever been. We have technology that makes it possible. We value our land and livestock. That’s how we make our living.

Of course, there are exceptions, but I can’t imagine a farmer mistreating his animals. I love our pigs. They are beautiful – so healthy. They are gaining weight and growing faster than I have ever seen. Sometimes, I think it may be the feed. It is a balanced ration. Corn, soybean meal and distillers dried grain (DDG). DDG is the high protein feed left over after making ethanol out of corn. It has become a very popular and valuable livestock feed.

Watching the 2015 crop grow this summer will be exciting. I’m sure we will be praying for rain in July. It’s in God’s hands now.

John Block was Secretary of the U.S. Department of Agriculture from 1981-1985, where he played a key role in the development of the 1985 Farm Bill.

John Block: Raisins

By John R. Block

The U.S. Supreme Court decides a lot of very serious, high-profile cases – gay marriage for example. However, recently, they heard one about raisins. Yes – raisins.

The Raisin Program dates back to the Great Depression of the 1930s. President Roosevelt cut the production of many farm products to reduce surplus and raise farm prices. My grandfather told me that they even killed baby pigs.

In the recent case, almost 80 years later, the government came to get raisins from the Marvin Horne farm in California. He said “no.” They fined him $700,000 and now they are in court. Under the Raisin Program, the annual crop is reviewed by the Raisin Administrative Committee. Then, the Department of Agriculture decides what percent of the farmer’s crop must be handed over to the government. The government can then give raisins to the School Lunch Program or maybe sell them and give the farmer some of the money.

Justice Breyer argued, “The government was not taking the raisins and giving the farmer nothing. He benefited from higher prices.”

Conservative Justices consider the Raisin Program to be an unconstitutional taking of private property without just compensation. Justice Roberts complained, “You come up with the truck and you take their raisins – probably in the dark of night.”

Justice Kagan pointed out, “We think this is a ridiculous program, but the ridiculousness or sensibleness of a program is not for us to decide.”

The court verdict should be announced by July. Now, to set the record straight – we have had government production control programs for years and years. Most of those control programs have been eliminated, but not all. A few years ago, the “UglyRipe® tomato,” grown in Florida, was not allowed to be sold out of that state. OFW Law was asked by a company growing the UglyRipe® tomato to help them. The Tomato Marketing Order that they were under would not allow them to sell the UglyRipe® tomato in any other state – just Florida. I did work with the USDA and eventually they lifted the Order. I saw UglyRipe® tomatoes in the supermarket here in Virginia last week.

I am not a big supporter of these government control programs. Maybe they served a purpose in the Great Depression. That’s not today. We have moved beyond that. Let the free market work.

What would your reaction be if the government came and took some of your corn after you harvested it?

John Block was Secretary of the U.S. Department of Agriculture from 1981-1985, where he played a key role in the development of the 1985 Farm Bill.

Dietary Guidelines – Confused About Caffeine

By OFW Law founding principal Richard L. Frank, sitting in for former USDA Secretary John R. Block

The news wires have been buzzing lately about the recently released scientific report of the Dietary Guidelines Advisory Committee. One of the hottest topics for discussion is how out of step the report is on a number of issues, including the Committee’s dive into political matters like sustainability, soda taxes, and “added sugar” labeling. These topics are outside the jurisdiction of the Dietary Guidelines and should be addressed by Congress or the FDA.

Today, I want to discuss caffeine consumption. Caffeine is something that has never been addressed before by the Dietary Guidelines for Americans and probably for good reason. First, caffeine is safe…and safety is outside the mandate of the Dietary Guidelines. It is a topic that fits firmly within the jurisdiction of the FDA. Secondly, America seems to know what it’s doing when it comes to caffeine. 85% of Americans consume caffeine every day – and they have done so safely for generations.

In the Committee’s conclusions on caffeine, they suggest that 3 to 5 cups of “Morning Joe” are just fine – up to a moderate intake level of 400 milligrams per day for healthy adults. Inexplicably, however, they seem to suggest that energy drinks with the same amount of caffeine should be avoided.

The Committee’s approach is troubling for a number of reasons, the least of which is that many coffee house chains serve coffee beverages that contain twice as much caffeine per fluid ounce as a standard energy drink. A typical small can of a leading energy drink contains 80 mg caffeine, which is roughly the same as a regular cup of coffee or a 20 ounce bottle of cola.

Why is the Committee treating caffeine in coffee differently from the caffeine in energy drinks? This is puzzling when we consider that caffeine is caffeine is caffeine – whether found in coffee, tea, cola, or energy drinks.

The report acknowledges that the largest sources of caffeine among both adults and children come from coffee, tea, and soda. So why is caffeine in coffee okay, while tea and soda are ignored and energy drinks are vilified? Possibly it’s politics!
The Dietary Guidelines should provide a practical and achievable set of dietary and nutrient recommendations, based on balance, variety, and moderation. It should not delve into political topics that are outside its mandate.

If the Dietary Guidelines are to address topics like caffeine, it should be done holistically and in an unbiased way. Consumers need to understand caffeine in context and be provided information with respect to all sources to enable them to make informed dietary decisions; otherwise they will get confused.

Let’s hope that the USDA and HHS take the lead on the important task of finalizing the 2015 Dietary Guidelines for Americans in a scientific, rather than a political and an emotional, way.

Trade is Critical to Rural America; Agriculture is Key to TPA

By Marshall L. Matz and former USDA Secretary John R. Block

Trade policy may present an opportunity for the Obama Administration and the Congress to work together in a bipartisan manner but it is sure not unanimous.   While Agriculture Secretary Vilsack and U.S. Trade Representative’s Chief Agriculture Negotiator Darci Vetter are making the case for Trade Promotion Authority (TPA), Senator Ron Wyden, the Senior Democrat on the Senate Finance Committee, is arguing for more negotiating transparency to be required by TPA before signing on.  In addition, while there is very strong support for TPA in the agriculture community, it is not unanimous.

TPA is a critical tool in the effort to complete the 12-country Trans-Pacific Partnership (TPP), and down the road the European Union Transatlantic Trade and Investment Partnership (TTIP) negotiations.  These trade agreements support U.S. jobs while helping American agriculture compete more successfully in the global marketplace. TPA will help ensure that America’s farmers, ranchers, and food processors receive the greatest benefit from the TPP, TTIP, and future trade negotiations.

These agreements could have an important economic impact on specific commodities and American agriculture more generally.  Secretary Tom Vilsack recently spoke out on the importance of trade to agriculture:

“It is no surprise that agricultural producers are joining the chorus of voices calling on Congress to renew Trade Promotion Authority. The past six years were the strongest period for agricultural exports in the history of our nation, despite the fact that many other countries’ markets are not as open to American products as our markets are to theirs. New trade agreements that help level the playing field for agriculture will build on the success we’ve seen in the agricultural economy since 2009 and help producers create more new jobs across the country. What makes the agricultural economy stronger makes our entire nation’s economy stronger. It is imperative that Congress act on Trade Promotion Authority early this year.”

Fiscal years 2009 to 2014 represented the strongest six years in history for U.S. agricultural trade, with U.S. agricultural product exports totaling $771.7 billion. Agricultural exports last fiscal year reached $152.5 billion, the highest level on record and supported nearly one million jobs here at home, a substantial part of the nearly 11.3 million jobs supported by exports all across our country.

USTR’s Office of Agricultural Affairs has overall responsibility for U.S. government trade negotiations and policy development and coordination regarding agriculture.  Darci Vetter and other USTR officials, works closely with relevant U.S. government agencies, particularly USDA, as appropriate.

In a recent letter to Congress a broad range of groups outlined the benefits of trade as follows:

“As a result of trade agreements implemented since 1989, when the U.S. began using bilateral and regional trade agreements to open foreign markets to our goods, U.S. agricultural exports have nearly quadrupled in value and now stand at a record $152.5 billion (fiscal 2014).  During that period, earnings from U.S. agricultural exports as a share of cash receipts to farmers have grown from 22 percent to over 35 percent.

“These farm and food exports have a positive multiplier effect throughout the U.S. economy.  Every $1 in U.S. farm exports is estimated to stimulate an additional $1.27 in business activity.  Off-farm activities and services include purchases by farmers of fuel, fertilizer, seed and other inputs as well as post-production processing, packaging, storing, transporting and marketing the products we ship overseas.  Exports of $152.5 billion in fiscal 2014 therefore generated another $194 billion in economic activity in the U.S., bringing the total benefit to the economy to $347 billion.”

The chart below shows the percentage of production that was exported, by commodity, in the most recent year for which there are numbers:

Commodity Percent
Wheat 50%
Corn 11%
Soybeans 62%
Beef 14%
Pork 26.5%
Diary 15.4%

In short:

1. Exports are critical to the agriculture economy; and

2. Agriculture’s political power may be the key to passage of TPA and the trade agreements being negotiated.

While only one percent (1%) of all Americans farm and the conventional wisdom is that agriculture has lost power, production agriculture still has an important role to play in making the case for expanded trade and TPA, as the farm economy has a major impact on all those who live in rural America.  From farm implement dealers to car dealers to rural bankers and the local coffee shops, what is good for farmers is good for rural America.

TPA gives us an opportunity to put economics before politics.  The farm groups who have signed the TPA letter to Congress are well positioned to make the case for expanded trade with both Democrats and Republicans bridging the urban-rural divide in America.

Marshall Matz specializes in agriculture policy at OFW Law.  He was formerly (Democratic) Counsel to the Senate Committee on Agriculture, Nutrition and Forestry.  John R. Block was Secretary of Agriculture under President Reagan.

John Block: Chickens and Eggs

By John R. Block

The State of California has a reputation for leading in many ways – especially in the area of government regulations. Now, they have bit off almost more than they can chew. Certainly, the disadvantaged will not be chewing on many eggs since the State has more than doubled the price of eggs. A dozen eggs now costs more than $3.00. One year ago, you could get a dozen for a little over $1.00.

All of this happens just at the time nutritionists are raving about how healthy eggs are for the diet.

California voters did this to themselves. In 2008, they passed a law that required that cages housing their laying hens had to be much larger. Then, it dawned on the politicians that that kind of costly requirement imposed upon their egg farmers would put them out of business. Less expensive eggs would be streaming into the State. So in 2010, they passed legislation that would not allow eggs coming into California from other states unless their cages were as big as the California cage standards. The cages have to be twice the size as the industry norm.

The cost of new cages can cost 1 million dollars for 25,000 chickens. As you might imagine, some California farmers are giving up on the egg business. California egg production has taken a 25% dive since the law was passed. Other states are not willing to pay the extra cost to expand their cages. So, California is short on eggs. The poorest consumers pay the price.

Here we are talking about free trade agreements with other countries. Do we need to negotiate a free trade agreement between states? Perhaps the California crate law violates the Commerce clause. States are not supposed to interfere with interstate trade.

All of this costly burden has been pushed upon California consumers by the animal rights organizations. They are never satisfied.

John Block was Secretary of the U.S. Department of Agriculture from 1981-1985, where he played a key role in the development of the 1985 Farm Bill.

John Block: Wish List

By John R. Block

Last year in January, I presented my wish list for 2014. Let’s take a look at how that worked out.

Wish No. 1: “Get a farm bill passed.” To my surprise, we did.

Wish No. 2: “Deal with our immigration problem.” Well, the Congress didn’t, but President Obama did a little bit. The fact is – the Congress must fix our immigration problem. Unfortunately, I don’t look for that to be done this year.

Wish No. 3: “I want Congress to pass a budget.” They didn’t deal with our budgetary and spending in “regular orders” last year. It was a mess. Our only discipline was a sequestration law which served as a “hammer lock” on discretionary spending, which is only 20% of our budget. This year, the Republican Congress is promising “regular order” of budgeting and appropriation. My fingers are crossed that they can do it.

Wish No. 4: “Hope the ag industry would come together to support and protect modern agriculture.” They are doing better, but protecting genetic engineering and new technology is still under heavy attack. The war on GMOs is anti-science. That’s the same crowd that uses science to justify their climate changes argument.

Wish No. 5: “Write a free trade agreement.” Didn’t get it done, but I think we can this year.

Wish No. 6: “Upgrade our locks and dams on our rivers.” Not yet, but Congress passed bipartisan legislation to get it done. I am optimistic.

Wish No. 7: I said, “God help us to end this draught.” He did, except for California. We raised record crops in most of the country last year.

Tax reform is on my wish list this year. I think we have a 50% chance of doing something. I am also wishing for money to fix our roads and bridges. And, I hope we can find a way to stop EPA’s effort to regulate everything. Over-regulation freezes our economy.

I would like to see the battle with Canada and Mexico over country of origin labeling (COOL) ended. Congress and Secretary Vilsack should get it done. Are they going to wait until Canada and Mexico start implementing sanctions on our exports?

John Block was Secretary of the U.S. Department of Agriculture from 1981-1985, where he played a key role in the development of the 1985 Farm Bill.

Gas Tax

By John R. Block

How many of you out there think that we would be well-advised to spend some money repairing our roads and bridges? What about our locks and dams and seaports that carry our grain to countries around the world? Are you aware that our Federal Highways Trust Fund will be running out of money this spring? What should we do?

Our roads are in serious need of repair. Some of our bridges are not safe. One of this country’s greatest advantages in competing with other countries for market share happens to be our infrastructure. Whether we are talking about roads, rail, or water, we have been able to compete with anyone. We’re going to fall behind if we don’t take care of our transportation system.

The timing is right. We’re pumping oil and gas like never before. The world is awash in oil. Gasoline prices at the pump have dropped almost 50%. See where I’m going? We could raise the federal gas tax. It stands now at 18.4 cents per gallon and hasn’t been raised in more than 20 years. If you don’t want to call it a tax, call it a “user fee.” We use our roads, bridges, and waterways. Their upkeep is not free.  A “user fee” is fair. When gasoline prices were pushing $4 per gallon, politically this idea wouldn’t sell, but we have a new equation now. With a sharp drop in gasoline prices, now under $2 per gallon in half of our pumps, let’s get it done.

Senator Bob Corker (R-TN) said, “If we’re going to do it, now is the time.” Senator Dick Durbin (D-IL) supports an increase in the tax.

To some, this might sound like a “no brainer,” and I think it is. However, getting this accomplished will not be easy. I called it a “user fee” but when you call it a tax increase, a lot of members of Congress get nervous. Will their constituents make them pay a price in the next election? The Members need to do what is right for the country. I feel that with the collapse in gas prices, the voters will support the investment. It would also be a good idea to tie the increase to inflation. Then we wouldn’t have to come back for more money in the next few years.

John Block was Secretary of the U.S. Department of Agriculture from 1981-1985, where he played a key role in the development of the 1985 Farm Bill.