With Measure J, California County Goes After Large Poultry & Livestock Operations

FY 2025 ag approps | Boozman farm bill framework | Iowa wants more bird flu aid | World Bank ups 2024 forecasts

Jim Wiesemeyer

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June 11, 2024 09:08 AM

FY 2025 ag approps | Boozman farm bill framework | Iowa wants more bird flu aid | World Bank ups 2024 forecasts

Today’s Digital Newspaper

MARKET FOCUS

World Bank raises global growth forecast on strong U.S. expansion
Lagarde: ECB might keep interest rates unchanged for multiple policy meetings
CBO reports $348 bil. deficit in May, FY 2024 deficit at $1.2 trillion, exceeding FY 2023
IMF blog delves into evolving role of U.S. dollar in global reserves
‘AI is the thing that can get Apple out of the ditch’
UK unemployment at 4.4% in three months through April, highest in over 2.5 years
Oil experienced its biggest jump since March
Canadian border agents again postpone strike, averting trade disruption for now
Contract negotiations at East Coast & Gulf Coast ports turn contentious
Ag markets today
USDA daily export sale: 104,000 MT soybeans for to China, 2023-2024 MY
China asking about new-crop U.S. soybeans
Ag trade update
NWS weather outlook
Pro Farmer First Thing Today items

CONGRESS

FY 2025 Ag approps bill released by House Ag Appropriations Subcommittee

ISRAEL/HAMAS CONFLICT

UN Security Council supported U.S. plan for ceasefire between Israel and Hamas

RUSSIA & UKRAINE

Russian grain exporters see growth potential in India, China

POLICY

Sen. Boozman to release his farm bill framework today
NMPF highlights mounting losses from milk pricing formula

PERSONNEL

Three nominees for FERC set for initial tests on Senate floor with cloture votes
WSJ: White House to appoint derivatives regulator Romero FDIC head

TRADE POLICY

The Philippines seeking to enhance economic ties with Japan and U.S.

ENERGY & CLIMATE CHANGE

California sues oil giants for climate deception, seeks profits for victims’ fund

LIVESTOCK, NUTRITION & FOOD INDUSTRY

In Sonoma Co., Calif., ballot measure would ban large poultry and livestock operations
Are U.S. sugar tariffs driving candy makers over the border to Canada?
Iowa Ag secretary urges USDA compensate farmers for culling cattle due to H5N1 flu

POLITICS & ELECTIONS

What type of voter are you? Take this poll to find out…

OTHER ITEMS OF NOTE

Fresh produce group highlights ag labor crisis impact, calls for congressional action

MARKET FOCUS

— Equities today: Asian and European stock indexes were mixed overnight. U.S. Dow opened around 150 points lower and is currently down around 330 points. Chinese shares led losses in Asia equities. In Asia, Japan +0.3%. Hong Kong -1%. China -0.8%. India flat. In Europe, at midday, London -0.8%. Paris -0.9%. Frankfurt -0.6%.

U.S. equities yesterday: All three major indices managed to register modest gains to open the week. The Down rose 60.05 points, 0.18%, at 38,868.04. The Nasdaq gained 59.40 points, 0.92%, at 17,192.53. The S&P 500 was 13.80 points higher, 0.26%, at 5,360.79.

— Ag markets today: Corn, soybeans and wheat held in tight trading ranges during light, two-sided overnight price action. As of 7:30 a.m. ET, corn futures were trading 1 to 2 cents higher, soybeans were 1 to 3 cents lower, SRW wheat was 2 to 4 cents higher, HRW wheat was 1 to 2 cents lower and HRS wheat was 2 to 3 cents higher. The U.S. dollar index was up nearly 200 points, and front-month crude oil futures were modestly lower.

Another small cattle slaughter expected. Last week’s federally inspected slaughter totaled 614,000 head, the smallest since 2016 and came after a holiday-shortened tally of 540,000 head during the week of Memorial Day. Slaughter is expected to be light again this week as packers manage a tight supply of market-ready animals. The light slaughters are supporting wholesale beef prices, despite hefty carcass weights, which continue to run well above average.

Cash hog index, pork cutout slip. The CME lean hog index is down 23 cents to $91.52 as of June 7, the third straight daily decline. However, the index has dropped just 54 cents during that span. The pork cutout value declined 48 cents on Monday to $100.43, as all cuts except hams weakened.

— Agriculture markets yesterday:

Corn: July corn rose 3 cents to $4.51 3/4, nearer the session high and above the 100-day moving average.
Soy complex: July soybean futures rallied 9 cents before settling at $11.88 1/4 and near session highs. July meal futures surged $7.30 to $368.00 and closed on session highs. July bean oil futures firmed 3 points to 43.66 cents.
Wheat: July SRW wheat fell 20 cents to $6.07 1/2. July HRW wheat closed down 22 cents at $6.43 3/4. Both markets closed near their session lows and hit five-week lows. There have been nine consecutive lower closes in wheat futures, the longest streak since July of 2015. July spring wheat futures sunk 19 1/4 cents to $6.75 1/4 and settled on session lows.
Cotton: July cotton plunged 203 points to 71.81 cents, forging a 23-month low close.
Cattle: August live cattle rose $2.80 to $179.975. August feeder cattle gained $3.725 at $258.65. Prices closed nearer their session highs.
Hogs: June lean hog futures slipped 27.5 cents to $92.25, while most-active July futures sunk 60 cents to $92.90.

— Quotes of note:

Federal Reserve Chair Jerome Powell is expected to use Wednesday’s post-decision press conference to suggest a slower and more cautious easing cycle, according to Karl Schamotta, chief market strategist at Corpay. Schamotta notes that this approach will likely keep the U.S. dollar’s rate differentials elevated compared to other developed-market currencies. Recent strong job and wage growth, reported in Friday’s non-farm payrolls, have led traders to anticipate a delay in the Fed’s easing cycle. As a result, the Fed is likely to be the last of the Group of Seven central banks to begin easing this year.
European Central Bank President Christine Lagarde stated that the ECB might keep interest rates unchanged for multiple policy meetings, despite the recent reduction in the deposit rate to 3.75%. Lagarde emphasized that this reduction doesn’t indicate a continuous downward trend, noting the absence of a predetermined path for interest rates. “We are not following a pre-determined path,” the ECB president said in a joint interview with four EU newspapers. “There could also be phases in which we leave interest rates unchanged.” She highlighted the need to observe labor cost developments and earnings absorption before making further cuts. Lagarde’s comments suggest the ECB is unlikely to cut rates at its next meeting on July 18, as new data on Eurozone wages will not be available by then.
Drip coffee. “It used to feel like an unlimited supply in Vietnam. This is the first year where we just told Costco, you can have eight truckloads, and that’s it.” — Debbie Wei Mullin of supplier Copper Cow Coffee, on shortages of coffee beans caused by climate change. Extreme weather is disrupting the production of some of life’s great comforts—wine, olive oil, coffee and cocoa. Some of these crops are concentrated in one or two regions, which means wonky weather in one part of the world can have a dizzying impact on global prices. (Link for details)
“AI is the thing that can get Apple out of the ditch.” —Trip Miller, managing partner at Apple investor Gullane Capital Partners, made the remark as Apple announced a systemwide update to software on its devices that the company said could offer a personalized version of generative AI to users.

— World Bank raised its global growth forecast for this year to 2.6%, up from January’s 2.4%, driven by strong U.S. economic expansion. However, it warns that climate change, wars, and high debt will negatively impact developing nations, particularly in Sub-Saharan Africa and the Middle East, where growth estimates have been lowered.

The U.S. growth outlook was significantly upgraded to 2.5% from 1.6%. Despite the global economic stabilization, growth remains below pre-pandemic levels, with the poorest economies facing ongoing challenges in stability and growth.

Global inflation is expected to decrease to 3.5% this year and 2.9% in 2025, though slower than previously projected. Central banks are likely to maintain higher interest rates, averaging around 4% in 2025-2026.

The World Bank emphasizes the difficulties developing economies face in attracting private investment, reducing public debt, and improving essential services. The 75 nations eligible for interest-free lending will require international support. Additionally, weak global trade poses significant risks, with the next few years predicted to be the worst for trade growth since the 1990s.

— CBO reports $348 billion deficit in May, FY 2024 deficit at $1.2 trillion, exceeding FY 2023. The Congressional Budget Office (CBO) reported that the US recorded a budget deficit of $348 billion in May, bringing the deficit for Fiscal Year (FY) 2024 to $1.2 trillion, an increase of $38 billion compared to the same period in FY 2023. While revenues have risen by $294 billion, outlays have surged by $332 billion in FY 2024 relative to October-May of FY 2023. Timing shifts in some outlays impacted these totals. CBO anticipates that the FY 2024 deficit will surpass that of FY 2023, partly due to increased spending on student loan administrative actions and international assistance legislation. The CBO will provide an updated forecast of the FY 2024 deficit next week.

So far, net interest on the debt stands at $622 billion in FY 2024, up from $437 billion at this time in FY 2023.

Next: The Department of the Treasury is set to release the official figures on Wednesday, June 12.

— IMF blog delves into the evolving role of the U.S. dollar in global reserves. It highlights several key points (link):

Dollar’s robustness and decline. The U.S. dollar’s dominance remains significant due to the robust U.S. economy, tighter monetary policy, and heightened geopolitical risks. Despite the dollar’s strength, its share in global foreign exchange reserves has gradually declined over the last two decades.

Nontraditional reserve currencies: The decline in the dollar’s share has not been mirrored by increases in the shares of the euro, yen, or pound. Instead, there is a rise in nontraditional reserve currencies like the Australian dollar, Canadian dollar, Chinese renminbi, South Korean won, Singaporean dollar, and Nordic currencies. These currencies offer diversification, attractive yields, and have become easier to trade due to new digital financial technologies.

Impact of exchange rate fluctuations: Exchange rate fluctuations can independently impact the currency composition of central bank reserves. Despite changes in relative values of different government securities and interest rates, the overall trend shows a gradual move away from the dollar.

Chinese renminbi: The Chinese currency has gained market share, accounting for a quarter of the decline in the dollar’s share. However, renminbi internationalization appears to have stalled recently, with no further increase in its reserve share since 2022.

Geopolitical influences: Some countries, due to geopolitical reasons, may avoid holding dollars and prefer other currencies. The 149 reporting economies to the IMF make up 93% of global FX reserves, indicating that non-reporters hold a small share.

Broad movement away from the dollar: The shift away from the dollar is broad-based, involving 46 “active diversifiers” with significant reserves in nontraditional currencies. This trend includes major advanced and emerging market economies.

Gold holdings: Financial sanctions have led central banks to favor gold, which is free from sanctions risk. Despite an increase in gold holdings, its share of total reserves remains historically low.

Bottom line: The international monetary and reserve system is gradually moving away from dollar dominance (see next item). Nontraditional currencies of small, well-managed economies are gaining a rising role, supported by digital trading technologies.

— BRICS talks overview. Foreign ministers from BRICS nations (Brazil, Russia, India, China, and South Africa) gathered in Nizhny Novgorod, Russia, for a two-day meeting focused on enhancing security and economic cooperation. A key topic on their agenda was promoting the use of local currencies in trade among BRICS members instead of relying on the U.S. dollar.

Highlights:

Local currencies in trade: The bloc aims to reduce dependence on the U.S. dollar by encouraging the use of their own currencies in international trade.
Russian perspective: President Vladimir Putin noted that 40% of Russia’s trade is now conducted in rubles, a shift away from currencies of what he termed as “non-friendly states.” He emphasized the intention to further increase the use of national currencies in foreign trade within the BRICS framework, aiming to enhance the security and efficiency of these transactions.

— UK unemployment rose to 4.4% in the three months through April, the highest in over 2.5 years, suggesting the Bank of England may cut interest rates later this year. Average weekly earnings in the private sector increased by 5.8%, the slowest in two years, even with a nearly 10% minimum wage hike. The figures indicate easing inflationary pressures, leading traders to anticipate a quarter-point rate cut by November and possibly another by year-end. Living standards improved with real wage growth at 2.9%, the highest since summer 2021. The labor market showed signs of cooling, with job vacancies and employment rates dropping. Despite this, the Bank of England is unlikely to cut rates immediately, waiting to reassess data over the summer.

Market perspectives:

— Outside markets: The U.S. dollar index is firmer. Nymex crude oil prices are weaker and trading around $77.50 a barrel. The benchmark 10-year U.S. Treasury note yield is presently at 4.44%.

— Oil experienced its biggest jump since March ahead of an OPEC report detailing market outlook. Brent crude traded below $82 a barrel after a 2.5% surge on Monday, while West Texas Intermediate was near $78. The OPEC report, followed by a Short-Term Energy Outlook from the U.S. and a monthly release from the International Energy Agency, is keenly anticipated. UBS forecasts oil demand to rise by 2M-2.5M bbl/day between April and August amid lagging supply due to OPEC’s extension of voluntary output curbs and modest growth outside the cartel. Meanwhile, the U.S. average price of gasoline at the pump fell to $3.40/gal on Monday, the lowest June level since 2021. Industry analysts point to lackluster demand as fewer people may be hitting the road as summertime begins.

— Canadian border agents again postpone strike, averting trade disruption for now. The union representing Canadian border agents has postponed potential strike action until next Wednesday, maintaining the flow of billions of dollars in daily cross-border trade for now. The Public Service Alliance of Canada (PSAC) set this new deadline as mediation with the government over a new labor agreement continues. The union had initially threatened to start a work-to-rule campaign by Friday afternoon if a new deal wasn’t reached. The PSAC represents approximately 9,000 employees at the Canada Border Services Agency (CBSA).

The Treasury Board, responsible for negotiations, expressed satisfaction with the union’s decision to delay the strike, highlighting productive discussions and a commitment to a fair agreement. The primary issue is pay, with border agents seeking raises to match domestic law-enforcement agencies, a demand the government has deemed unaffordable amid economic challenges and rising public debt.

Under work-to-rule conditions, productivity declines, causing significant delays at land crossings, airports, and ports. In 2023, approximately 70,000 vehicles crossed into Canada daily, a quarter of which were commercial trucks. During a similar strike in 2021, some border crossings experienced up to four-hour delays.

Business groups warn of severe supply-chain disruptions if a work-to-rule campaign proceeds, with the trucking and logistics industries particularly affected. Sectors like automotive manufacturing and food retail could face curtailed factory operations and shortages of staples due to delays. Approximately $3.1 billion worth of goods cross the Canada/U.S. border each day, with about $400 million crossing at the Windsor-Detroit border alone. Any prolonged delays could severely impact the flow of trade, affecting industries like automotive that rely on just-in-time logistics and deliveries across the border. The delays could also lead to shortages of certain goods at stores and businesses that depend on cross-border shipments. The impact would be particularly severe for sectors like automotive, food, and retail that have deeply integrated cross-border supply chains.

The government has the option to legislate workers back to their jobs if deemed necessary, although such action is controversial. Both parties are committed to finding a resolution that avoids labor action and maintains the integrity of border services.

— Contract negotiations at East Coast and Gulf Coast ports turned contentious before they even began, the WSJ reports (link). The dockworkers’ union, the International Longshoremen’s Association (ILA), canceled the opening bargaining session and renewed a strike threat, affecting over 45,000 dockworkers from Maine to Texas. This comes ahead of the current agreement’s expiration on Sept. 30. The union opposes moves toward automation at container terminals, citing an automated tool at the Port of Mobile, Ala., as a reason for their withdrawal. The potential standoff has political implications, with the contract expiring shortly before the presidential election, potentially impacting the American economy.

— China has been asking about new-crop U.S. soybeans. The basis levels have improved, and the central Illinois processing bid increased a nickel yesterday.

— USDA daily export sale: 104,000 MT soybeans for to China, 2023-2024 marketing year.

— Ag trade update: South Korea purchased 50,000 MT of U.S. milling wheat and passed on offers for 40,000 MT of Canadian wheat because prices were too high. Taiwan tendered to buy up to 65,000 MT of corn that can be sourced from the U.S., Brazil, Argentina or South Africa. Japan is seeking 109,126 MT of milling wheat in its weekly tender. Egypt tendered to buy an unspecified amount of wheat from multiple sources.

— NWS weather outlook: There is a Slight Risk of severe thunderstorms over parts of the Southern Plains on Tuesday and over parts of the Upper Mississippi Valley on Wednesday... ...There is a Slight Risk of excessive rainfall over parts of the southern tip of Florida through Wednesday... ...There are Excessive Heat Warnings/Watches and Heat Advisories over Northern/Central California, Southwest, and western Texas on Tuesday.

Items in Pro Farmer’s First Thing Today include:

• Varied price tone overnight
• Corn, spring wheat CCI ratings slip; soybean crop starts strong
• Crop Progress Report highlights
• Cordonnier raises Brazilian corn crop forecast
• Coceral raises EU + UK wheat crop forecast

CONGRESS

— House Ag Appropriations Subcommittee Republicans released the fiscal year (FY) 2025 Agriculture appropriations bill, which will be considered late this afternoon. The bill provides a total discretionary allocation of $25.873 billion, $355 million below the 2024 level and $2.688 billion below the president’s budget request. It includes $6.75 billion for the Food and Drug Administration and $345 million for the Commodity Futures Trading Commission, rejecting the administration’s user fee proposal for the CFTC. Link for subcommittee release and summary.

The House bill proposes five pilot projects to prevent SNAP recipients from purchasing unhealthy foods. It also seeks to block the USDA from enacting three fair-play regulations on livestock marketing and denies funding for “President Biden’s bureaucratic pay increases.”

The bill directs USDA’s National Agricultural Statistics Service to reinstate several reports previously halted due to insufficient funding, including the July Cattle report, the Cotton Objective Yield Survey, and all county estimates for crops and livestock.

The bill does not include language banning the mail delivery of abortion pills, a provision that had stalled the previous year’s bill.

Rep. Andy Harris (R-Md.), the subcommittee chairman, emphasized that the legislation targets core programs supporting farmers and rural communities, and includes a pilot program to restrict unhealthy food purchases with SNAP benefits. Rep. Sanford Bishop (D-Ga.) criticized the funding level as inadequate and warned that it could drive up agricultural costs and reduce funding for nutrition programs.

Democrats oppose the legislation, saying in their own summary (link/pdf) that it amounts to a 3.6% cut.

The measure would increase funding for the Women, Infants and Children nutrition program by $205 million, to $7.2 billion. The Republican summary said that the boost is to account for inflation. The Supplemental Nutrition Assistance Program would also see an increase, of $777.6 million, due to inflation. The bill would provide $123.2 billion in mandatory funding for SNAP.

The GOP measure would reduce funding for the Food for Peace Program aimed at providing food assistance to reduce hunger and malnutrition. The program would receive $1 billion, $619 million less than in FY 2024. However, the Republican summary said that cut accounts for USDA Secretary Tom Vilsack transferring $1 billion from the Commodity Credit Corporation for international food aid and the program’s $300 million in carryover balances.

The Center on Budget and Policy Priorities (CBPP) expressed concern over provisions related to the Supplemental Nutrition Assistance Program (SNAP) and WIC, arguing that restricting SNAP purchases would limit options and increase stigma. They also highlighted that the WIC funding level is significantly below the president’s budget request, which could hinder efforts to reach more eligible families.

The Republican summary said the measure would rein in “harmful regulations” that dictate how poultry and livestock producers raise and market their animals, and it would give the Food Safety and Inspection Service $33.8 million more than in fiscal 2024 for “frontline” inspectors.

It would also block revised energy standards for new homes financed by USDA.

The package would also require the Committee on Foreign Investment in the United States (CFIUS) to review the purchase of agricultural lands by several countries including China and North Korea.

The measure also contains several Republican policy riders similar to those in other already released appropriations bills. One provision would prohibit flying the pride flag over USDA facilities. It also would prohibit the use of funds for the USDA’s new diversity, equity and inclusion office and several DEI executive orders. It also would block the use of funds to promote critical race theory.

The full Appropriations Committee is slated to mark up the bill on July 10.

ISRAEL/HAMAS CONFLICT

— UN Security Council supported an American plan for a ceasefire between Israel and Hamas, with 14 out of 15 members voting in favor and Russia abstaining. Despite this, Hamas has not yet endorsed the resolution, and Israel is unlikely to accept any agreement that allows Hamas to remain in control of Gaza. Earlier, U.S. Secretary of State Antony Blinken urged Israeli Prime Minister Benjamin Netanyahu to agree to a ceasefire.

Hamas said it welcomed the resolution and is ready to engage with mediators in negotiations to implement the measures.

Israel vowed to persist with its military operation in Gaza, saying it won’t engage in “meaningless” negotiations with Hamas.

Details: The resolution calls on Hamas to agree to the three-phase plan, which would see an initial six-week cease-fire and the exchange of some Israeli hostages being held by Hamas in Gaza for Palestinian prisoners in Israeli jails. The second phase would include a permanent cease-fire and the release of the remaining hostages. The third phase would involve a reconstruction effort for the devastated Gaza strip.

RUSSIA/UKRAINE

— Russian grain exporters see growth potential in India, China. Russian grain exporters see potential to increase shipments of grains and pulses to India and China while continuing to focus on their traditional markets in the Middle East and North Africa, the ag ministry said. The comments came after meeting with exporters following Turkey’s decision to halt wheat imports from late June to at least mid-October, one of its top export markets.

POLICY UPDATE

— NMPF highlights mounting losses from milk pricing formula. The National Milk Producers Federation (NMPF) raised concerns about the growing financial losses dairy producers are facing due to the current milk pricing formula. This issue is being discussed in an ongoing public hearing by USDA, which is considering potential reforms.

Current formula and losses: The “Class I mover” formula, introduced by the 2018 Farm Bill to set the price for fluid milk, has resulted in cumulative losses of approximately $1.2 billion for dairy producers since its implementation in 2019.

Call for reforms: NMPF hopes that the USDA will revert to the pre-2018 Farm Bill formula. They are pushing for this change to be fast-tracked, separate from other potential reforms.

Legislative developments: The House Ag Committee has approved a farm bill that includes language to revert the Class I mover to its previous form, indicating legislative support for this change.

PERSONNEL

— Three nominees for the Federal Energy Regulatory Commission (FERC) are set for their initial tests on the Senate floor with cloture votes scheduled for this evening. The nominees include Democrats David Rosner and Judy Chang, and Republican Lindsay See. Their confirmation would restore the nation’s grid regulator to full capacity before Commissioner Allison Clements departs at the end of the month.

— The White House is set to appoint derivatives regulator Christy Goldsmith Romero as the new head of the Federal Deposit Insurance Corp. (FDIC), replacing Martin Gruenberg, the Wall Street Journal reports (link). Gruenberg announced his resignation in May following an external investigation that uncovered widespread sexual harassment and misconduct at the FDIC, leading to bipartisan criticism of his leadership. He will step down once Romero is confirmed by the Senate.

TRADE POLICY

— The Philippines is seeking to enhance economic ties with Japan and the U.S., including potentially joining a trilateral pact on critical minerals. Trade Secretary Alfredo Pascual, in an interview with Bloomberg, emphasized the need for the Philippines to be an economically strong strategic partner. Manila is urging Japan to reduce tariffs on its banana exports, currently at 8% and 18% depending on the season, as part of a review of an existing free trade agreement.

This push comes amid heightened tensions with China over the South China Sea, prompting the Philippines to strengthen relations with the U.S. and Japan, highlighted by a trilateral summit at the White House in April. While trade with China remains steady, the Philippines aims to diversify its markets and sources of supply in preparation for any potential fallout.

The Philippines is also resuming free trade talks with the EU and progressing on a similar agreement with the UAE. Additionally, trade deals with Africa and Latin America are being considered, and an FTA was signed with South Korea last year.

In pursuit of increased domestic processing of its abundant nickel supply, mostly exported as raw ore to China, the Philippines has discussed joining the U.S./Japan critical minerals agreement. This could facilitate investments from U.S. and Japanese companies in the Philippines, enabling the production of batteries for electric vehicles and energy storage. Pascual mentioned ongoing talks with U.S. battery and EV firms but did not disclose specific companies. Meanwhile, China’s top EV maker BYD Co. has shown interest in manufacturing operations in the Philippines, although plans have not yet materialized.

ENERGY & CLIMATE CHANGE

— California sues oil giants for decades-long climate deception, seeks profits for victims’ fund. California is attempting to use consumer protection laws to seize profits from some of the world’s largest oil companies through a lawsuit accusing them of decades-long deception regarding their role in climate change. State attorney-general Rob Bonta invoked a new state law allowing claimants to target company profits identified from violations of consumer protection and advertising laws. The updated filing lists recent examples of alleged false advertising and misleading environmental marketing by some defendants, seeking profits to be deposited into a victims’ restitution fund.

The lawsuit, initiated last September against ExxonMobil, Chevron, Shell, BP, and ConocoPhillips, broadly accuses these companies of spreading misinformation, sowing doubt about climate science, and falsely marketing some of their products as “clean.” This legal action reflects a broader trend of US states and cities using consumer protection, racketeering, product liability, and other laws to seek damages from oil and gas companies for climate-related costs.

Climate-related court cases have doubled globally between 2017 and mid-2023, with the majority filed in the U.S., according to research by the UN and Columbia University.

This lawsuit comes at a time when the fossil fuel industry has generated record profits due to surging energy prices following Russia’s invasion of Ukraine in 2022. The top ten listed U.S. fossil fuel producers amassed a combined net income of $313 billion in the first three years of the Biden administration, nearly triple the amount during the same period under Trump, with U.S. oil and gas production hitting record levels in 2023.

California’s lawsuit alleges that oil and gas executives knew about the catastrophic consequences of relying on fossil fuels but suppressed this information, leading to a delayed societal response to global warming and resulting in billions of dollars in damage, including droughts, wildfires, and storms in California. The state’s recent filing adds new evidence of company lobbying and misleading statements in advertisements, in conjunction with the American Petroleum Institute (API).

Ryan Meyers, API senior vice-president and general counsel, argues that climate policy should be decided by Congress rather than through courts, calling the lawsuits a waste of taxpayer resources. Shell also stated that the courtroom is not the appropriate venue for addressing climate change, emphasizing the need for smart government policy and multi-sector action. BP and ConocoPhillips declined to comment on ongoing litigation, while other defendants did not immediately respond.

LIVESTOCK, NUTRITION & FOOD INDUSTRY

— In Sonoma County, California, a ballot measure is set to be voted on in November that would ban large poultry and livestock operations, which activists label as factory farms, according to Politico (link). This move comes as animal rights activists push for greater oversight in an area known for its vineyards, dairies, and organic farms.

The proposed measure, known as Measure J, seeks to prohibit large poultry and livestock operations, claiming they pollute the environment and mistreat animals through close confinement. If passed, Sonoma would be the first county in the U.S. to implement such a ban. Supporters argue that residents should have a say in local agricultural practices, and they have gathered enough signatures to place the measure on the ballot.

Farmers, however, view this measure as an attack on their livelihood. They argue that it would force many to either downsize or shut down, leading to significant economic repercussions. Mike Weber, whose family has been producing eggs since 1912, believes the initiative is an attempt to eliminate animal farming entirely. The Sonoma County Farm Bureau estimates that the measure would impact at least 60 poultry and livestock operations.

The debate highlights the changing demographics and attitudes in Sonoma County, where urbanization is increasingly encroaching on rural areas. While some see the measure as a necessary step towards animal welfare, others worry about its economic impact and the potential for misinformation to influence voters. Past statewide initiatives in California, such as Proposition 2 and Proposition 12, have shown voter support for animal welfare measures, suggesting that similar sentiments might influence the upcoming vote.

Bottom line: The outcome of Measure J could set a precedent for other regions and influence future legislative actions on animal farming practices both within and beyond Sonoma County.

— Are U.S. sugar tariffs driving candy makers over the border to Canada? Bloomberg recently released an article (link) noting Hershey Co. repurchased a factory near Ottawa, which it had closed over a decade ago, signaling a trend where confectionery companies are investing heavily in Canadian manufacturing. Blommer Chocolate Co. is expanding in Ontario while closing its 85-year-old Chicago plant, and Mondelez International Inc. has invested $250 million in Ontario facilities in recent years. Despite Canada’s inability to grow sufficient sugar, the country has attracted substantial investment due to what the article says are long-standing protectionist measures in the U.S. that keep American sugar prices high.

The Bloomberg item said U.S. sugar prices are significantly higher than global prices. This disparity, it said, has driven confectionery production north to Canada, where companies can avoid hefty U.S. tariffs on raw and refined sugar. This trend has resulted in record levels of finished goods containing sugar, like chocolate, being shipped from Canada to the U.S.

While sugar isn’t the only cost factor in manufacturing, the cheaper price in Canada, along with favorable labor, energy costs, and exchange rates, makes it an attractive location for expansion, the article said. Canadian sugar refiners are also ramping up capacity to meet growing demand.

Despite these trends, the item said companies are still investing domestically, with Blommer, Hershey, and Mondelez expanding or upgrading facilities in the U.S. However, for older facilities needing significant investment, relocating to Canada is often a more viable option.

We asked the American Sugar Alliance to respond to the Bloomberg article. Here is what their top economist Rob Johansson, former Chief Economist at USDA and current Director of Economics and Policy Analysis at the American Sugar Alliance (ASA), wrote:

“The article from Bloomberg misses several points. Here’s a response from ASA:

“The article from Bloomberg did not seek a comment from ASA. We have reached out to Bloomberg to point out that that the cost of producing candy is dominated by the cost of labor and benefits, not sugar purchases. Wages in Canada are roughly 44% less than the U.S. Wages in Mexico are roughly 98% less than the U.S. Benefits paid by private companies in Canada to their employees are about 79% lower than the U.S. And benefits paid by private companies in Mexico to their employees are about 96% lower than the U.S. The cost of sugar is only about 6% of the cost of producing confectionery.” Citation: https://sugaralliance.org/sales-and-costs-of-confectionery-industries-in-north-america/38810]

“Moreover, candy companies are also expanding in the U.S. as well. For example, the maker of Little Debbie treats has pledged more than $500 million in production investments in Tennessee [Citation: https://www.greaterchatt.com/success_stories/mckee-foods-expands-in-collegedale/]. Data we’ve been tracking show that over the past dozen years confectioners and food manufacturing companies have been spending at least $1 billion per year to expand production in the United States. The success of U.S. candy manufacturing can be attributed, in part, to the stability of U.S. sugar policy, which has provided these manufacturers with a reliable supply of food-grade sugar. That’s why making candy in the U.S. is actually more lucrative compared to other agribusiness.” [Citation: https://link.springer.com/article/10.1186/s40100-020-00161-5].

— Iowa Ag secretary urges USDA to compensate farmers for culling cattle due to H5N1 flu. Iowa’s Agriculture Secretary Mike Naig is urging USDA to compensate dairy farmers who cull cattle due to the H5N1 avian flu virus. This call follows the state’s second outbreak of the virus. Since its detection in Texas in March, at least 90 herds across 12 states have been affected. Naig emphasizes the significant threat posed by the virus to livestock and farmers’ livelihoods.

The current outbreak, ongoing since February 2022, is the largest animal disease event in U.S. history, having killed nearly 97 million birds, primarily egg-laying hens and turkeys. Iowa, the top egg-producing state, has suffered one-fourth of these losses. The virus is believed to have spread to dairy cattle in the Texas panhandle in late 2023 or early 2024.

Naig proposes that USDA should compensate farmers for the fair market value of culled cattle and 90% of lost milk production. A dairy cow typically costs between $1,500 and $3,000, with the national average price being $2,254 for a fresh Holstein cow.

Currently, dairy farmers can receive up to $28,000 over three months from USDA to implement biosecurity measures, provide protective equipment, cover veterinary testing costs, and safely dispose of milk from infected cows.

Bird flu typically affects older cows, causing fever, loss of appetite, and reduced milk production. Recovery usually takes a couple of weeks, though some symptoms may persist for four to six weeks.

To improve understanding and response, Iowa’s Agriculture Department will expand testing to include dairy farms near poultry farms with outbreaks.

Naig also advocates for increased USDA indemnity rates for birds and egg production losses.

POLITICS & ELECTIONS

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OTHER ITEMS OF NOTE

— Fresh produce group highlights ag labor crisis impact, calls for congressional action. The International Fresh Produce Association (IFPA) released two reports from Texas A&M University and the Center for North American Studies, highlighting the severe impacts of the agricultural labor crisis. The findings emphasize the need for immediate congressional intervention to address labor shortages and rising costs.

Labor shortages: The reports reveal that the average farmer is unable to meet 21% of their labor needs, leading to increased reliance on the H-2A visa program, which has surged by 300% since 2012 and now represents 10-15% of all agricultural labor jobs.

Economic impact: Since 2020, a significant portion of the fresh fruit supply in the U.S. has been imported rather than grown domestically. This shift is driven by out-of-control labor costs and increased farm wages, which have risen by 20% due to the Adverse Effect Wage Rate (AEWR).

Consumer impact: The financial strain on growers and reduced competitiveness in the international market are likely to result in higher prices for U.S.-grown produce.

Urgent call for action: IFPA CEO Cathy Burns warns that labor costs are threatening to disrupt the U.S. food supply chain and push the fresh produce industry into crisis. The reports underscore the need for congressional action to provide relief to growers and reform regulations that currently expose employers to liabilities and allow workers to receive wages for work not done.

Legislative support: IFPA has endorsed bills in Congress aimed at reforming the H-2A visa program to address these issues and support the agricultural sector.

KEY LINKS

Policy Updates