Some Farmers May Have to Repay ERP

News/Markets/Policy Updates: Aug. 9, 2024

— Charlie Cook on possible election results following Kamala Harris’ entry: “The possibility of a total wipeout for Democrats in the Senate, defined in my mind as losing five or more seats, is greatly reduced, as are the chances of Democrats losing a dozen or more seats in the House. Democrats are still very likely to lose their Senate majority, but with Harris, they can keep their losses down to a mere three or four seats. Now the House majority is very much in doubt. David Wasserman, senior editor and elections analyst of The Cook Political Report with Amy Walter, suggests that the biggest obstacle to Democrats winning back a House majority is less about Democrats losing either their own incumbents or open seats and more about whether or not they can flip a few Republican open seats… The presidential race is undeniably still very competitive and could plausibly go either way. It seems Trump still has an edge, but the opposite outcome would hardly be shocking... A case can be made that Trump is more likely to lose this race than Harris is to win it… When people say that Trump can be his own worst enemy, they could be talking specifically about Georgia.” — The presidential debate scheduled for Sept. 10 on ABC will proceed as planned, with both Kamala Harris and Donald Trump confirming their attendance. The debate was initially organized before Kamala Harris stepped in as the presumptive Democratic nominee, replacing Joe Biden. There was some uncertainty about Trump’s participation, as he had previously hinted at withdrawing from the debate. However, he recently announced at a news conference that he is now willing to participate in three debates, one each hosted by Fox News, ABC, and NBC. — Donald Trump, the Republican presidential candidate, suggested he wants more influence over the country’s monetary policy, challenging the traditional independence of the Federal Reserve. This comes after a report by the Wall Street Journal revealed that Trump’s advisers had drafted proposals that would subject the Federal Reserve’s regulations to review by the White House and require consultation with the president on interest rate decisions. Although Trump has been critical of the current Fed Chair, he stated in June that he would allow him to complete his term. The Federal Reserve has consistently emphasized the importance of its independence from political influence. Fed officials, including Chairman Jerome Powell, have argued that the central bank’s credibility and the economy’s performance hinge on its ability to operate without direct political interference. Of note: Congress would need to approve any changes that would give the president more say over monetary policy. The Federal Reserve operates as an independent entity, and its structure and functions are defined by the Federal Reserve Act, which was enacted by Congress. This independence is designed to insulate monetary policy from political pressures and ensure decisions are made based on economic data and analysis rather than political considerations. The President does have some influence over the Federal Reserve through the appointment of the Fed Chair and members of the Board of Governors, but these appointments require Senate confirmation. — 50 years ago this morning. “On Aug. 9, 1974, Richard M. Nixon became the only U.S. president to resign from office, bowing to pressures from the public and his party to step aside,” the Washington Post writes this morning, reproducing on Page A2 the front page (link). (Washington Post/NYT)

— Equities today: Asian and European stock indexes were mixed but mostly firmer overnight. U.S. Dow opened slightly lower. A recovery of global shares continued in Asia, tracking gains on Wall Street after signs of resilience in the U.S. labor market. In Asia, Japan +0.6%. Hong Kong +1.2%. China -0.3%. India +1%. In Europe, at midday, London +0.5%. Paris +0.6%. Frankfurt +0.4%.

U.S. equities yesterday: The Dow gained 683/04 points, 1.76%, at 39,446.49. The Nasdaq rose 464.22 points, 2.87%, at 16,660.02. The S&P 500 added 119.81 points, 2.30%, at 5,319.31, its best day since 2022. The S&P 500 is only down 0.5% for the week.

— Bayer’s Crop Science division reported a 1.4% decrease in sales for the first half of the year. The decline was primarily due to significantly lower sales of non-glyphosate herbicides and fungicides, which outweighed the higher sales of glyphosate-based weedkillers, insecticides, and seeds for corn, soybeans, and vegetables.

— The Commodity Futures Trading Commission (CFTC) announced that FTX has been ordered to pay $12.7 billion to its customers, allowing them to recoup the deposits that were frozen when the crypto exchange went bankrupt in 2022. The funds for these payments have been secured through FTX’s bankruptcy liquidation, which also facilitated settlements with regulators and former business partners of Sam Bankman-Fried, the founder who is currently serving a 25-year sentence for fraud. However, some FTX customers are reportedly dissatisfied with the resolution, as their payouts are calculated based on the value of cryptocurrencies in 2022, which could be significantly lower than current or peak values. This reflects ongoing frustration among those affected by the collapse, who feel that they are not being fully compensated for their losses.

— Paramount announced it will cut 15% of its U.S. workforce, amounting to around 2,000 layoffs, primarily in back-end roles like communications and finance. This move is part of a $500 million cost-reduction plan in preparation for its merger with Skydance Media. Despite the layoffs, Paramount revealed that its streaming division turned a profit in the second quarter, which surprised investors, though the company’s overall revenue fell short of expectations.

— Ag markets today: Corn, soybeans and wheat traded higher amid corrective buying during the overnight session. As of 7:30 a.m. ET, corn futures were trading fractionally higher, soybeans were 3 to 4 cents higher, and wheat was mostly 8 to 10 cents higher. The U.S. dollar index and front-month crude oil futures were both marginally higher this morning.

Money flow remains key for cattle futures. Money flow, primarily long liquidation, remains the key driver of price action in cattle futures. Fundamentals and big discounts to the cash market have been pushed to the back burner. Key to price action to close out the week could be whether Monday’s reaction lows hold. If not, a fresh wave of technical-based selling would be likely.

Cash hog fundamentals further weaken. The CME lean hog index is down another 30 cents to $92.80 as of Aug. 7, the fourth straight daily decline, prompting increased thoughts the index posted seasonal top at $93.64 on Aug. 1. The pork cutout value fell 73 cents on Thursday to $98.23. That’s down from what appears to be the seasonal peak of $106.78 on July 29 and the lowest level since July 11.

— Agriculture markets yesterday:

• Corn: December corn slid 3 3/4 cents to $3.97, marking a fresh near-term low close after carving fresh daily lows late in the session.
• Soy complex: November soybeans fell 10 1/2 cents to $10.08 1/4, a fresh near-term low, while December soymeal slipped $2.20 to $316.10, marking a low-range close. September soyoil rose a modest 10 cents to 42.17 cents.
• Wheat: December SRW wheat fell 1/2 cent to $5.61 1/4 and near mid-range. December HRW wheat fell 3 1/2 cents to $5.68 3/4 and near mid-range. September spring wheat fell 1/2 cent to $5.85 1/4.
• Cotton: December cotton fell 49 points to 67.24 cents and forged a high-range close after marking a new contract low early on.
• Cattle: October live cattle fell $1.25 to $178.025, nearer the session low and posted a nearly three-month-low close. October feeder cattle closed down $2.125 at $236.00, nearer the session low and hit a contract low.
• Hogs: The expiring August contract slid 57.5 cents to $90.025, while most-active October tumbled 95 cents to $73.625.

— Quotes of note:

• Federal Reserve Bank of Kansas City President Jeffrey Schmid expressed caution about reducing interest rates, citing that inflation remains above the Fed’s target and the labor market is still robust, though it has shown some signs of cooling. Speaking to the Kansas Bankers Association, Schmid acknowledged that the recent decline in inflation is a positive development, and continued reports of low-price pressures could strengthen his confidence in reaching the Fed’s 2% inflation target, which would make a rate cut more viable. However, Schmid emphasized that the Fed is “close, but still not quite there,” indicating that he is not yet ready to support lowering interest rates. He refrained from predicting when rate cuts might occur, stating that future policy decisions will depend on incoming economic data and the overall strength of the economy. Because regional Fed presidents vote on a rotating basis, Schmid won’t be able to cast his ballot on interest rates until next year. But he’s still influential, says Barron’s: “If nothing else, he’s the host for this month’s Jackson Hole, WY. symposium, where central bankers from across the world gather to discuss monetary policy.”

• Trump on the Federal Reserve: “The Federal Reserve is a very interesting thing,” Republican nominee and former President Donald Trump announced at a conference in Mar-a-Lago. “It’s sort of gotten it wrong a lot. [Chairman Jerome Powell] gets things a little bit too early and a little bit too late. That’s very largely a gut feeling. I’ve had it out with him a couple of times — very strongly. I fought him very hard, and you know, we get along fine. I feel that a president should have at least say in there — I feel that strongly. In my case, I made a lot of money. I was very successful, and I think I have a better instinct than, in many cases, people that would be on the Federal Reserve or the chairman.”

• Market volatility: “We along with a lot of other market participants had been puzzled to a degree by the amount of sensitivity the market was showing.” — Kevin Khang, senior international economist at Vanguard, discussing gains in the stock market Thursday following volatility earlier this week.

• Delta fights back: “There is no basis — none — to suggest that Delta was in any way responsible for the faulty software that crashed systems around the world.” — High-profile litigator David Boies, who is representing Delta Air Lines as it ratchets up efforts to seek compensation from CrowdStrike over the recent disruptive outage.

— Mortgage rates have recently fallen to their lowest levels in over a year, driven by expectations that the Federal Reserve may cut interest rates soon. This development is particularly significant in the context of the ongoing challenges in the U.S. housing market.

Current mortgage rates. As of this week, the average 30-year fixed-rate mortgage stands at 6.47%, down from 6.73% last week. This marks the lowest rate since May 2023. Some sources report an even lower rate of 6.04% for the same mortgage type, reflecting a significant drop from 6.62% just a month ago. Other mortgage types have also seen decreases:

• 20-year fixed-rate mortgage: Now at 5.72%, down from 6.25% a month ago.
• 15-year fixed-rate mortgage: Currently at 5.43%, down from 5.99% a month ago.
• 7/1 ARM: Now at 5.86%, down from 6.66% a month ago.
• 5/1 ARM: Currently at 6.13%, down from 6.57% a month ago.

The decline in mortgage rates is largely attributed to market expectations of Federal Reserve rate cuts. Traders anticipate a half-point cut at the Fed’s next meeting in September, with the possibility of additional cuts before the end of the year. Although mortgage rates do not directly track the federal funds rate, they are often influenced by it.

— The federal budget deficit for the first ten months of fiscal year 2024 was $1.5 trillion, according to estimates from the Congressional Budget Office (CBO). This figure represents a $103 billion decrease compared to the same period in the previous fiscal year.

CBO projects that the total deficit for FY 2024 will be nearly $2 trillion. This is part of a broader trend of increasing deficits, which are expected to rise from $1.9 trillion in 2024 to $2.9 trillion by 2034.

Drivers of the deficit: Several factors contribute to the rising deficit, including increased spending on Social Security, Medicare, and defense, as well as higher interest costs due to rising interest rates. Additional appropriations for military aid and other supplemental funding have also played a role.

Outlook: Lawmakers face a series of critical fiscal decisions, including addressing expiring tax provisions, raising or suspending the debt ceiling, and managing major trust funds nearing insolvency. These decisions will have lasting impacts on the nation’s fiscal health and economic stability.

Market perspectives:

— Outside markets: The U.S. dollar index was flat. Most foreign currencies had a slightly negative tone against the greenback. The yield on the 10-year U.S. Treasury note was weaker, trading around 3.95%, with a mostly lower tone in global government bond yields. Crude oil futures were firmer, with U.S. crude around $76.40 per barrel and Brent around $79.35 per barrel. Gold and silver futures were slightly higher ahead of U.S. market action, with gold around $2,470 per troy ounce and silver around $27.63 per troy ounce.

— Shipping costs are rising as container imports and freight rates surged in July, signaling an earlier-than-usual peak in global ocean shipping. July saw the third-highest level of U.S. container imports on record, with 2.6 million TEUs, a 16.8% increase from last year, driven by record shipments from China. Retailers, responding to consumers shifting holiday shopping earlier, have become more aggressive in their orders. Contributing to the surge are fears of an International Longshoremen’s Association strike on Oct. 1, which could disrupt ports along the U.S. East Coast and Gulf, with recovery from even a one-week shutdown potentially taking 4 to 6 weeks. Additionally, concerns about potential increased tariffs on Chinese goods if Donald Trump wins the presidency in November are influencing current shipping activities.

— USDA daily export sales:
• 132,000 metric tons soybeans to China during 2024-2025 marketing year;
• 100,000 metric tons soybean cake and meal to Colombia. Of the total, 12,000 metric tons are for delivery during the 2023-2024 marketing year and 88,000 metric tons are for delivery during the 2024-2025 marketing year;
• 212,000 metric tons soybeans received in the reporting period for delivery to unknown destinations. Of the total, 50,000 metric tons are for delivery during the 2023-2024 marketing year and 162,000 metric tons are for delivery during the 2024-2025 marketing year.

— India maintains sugar export curbs. India will retain curbs on sugar exports to ensure adequate domestic supplies and boost the country’s ethanol output, people familiar with the matter told Bloomberg. India introduced a quota system for sugar exports for 2023-24, limiting shipments to about 6 MMT. Local sugar mills and exporters have asked for the restrictions to be lifted.

— France slashes wheat crop estimate. France’s ag ministry slashed its estimate of the country’s wheat crop by 3.33 MMT to 26.32 MMT, which would be the smallest crop since 1986. However, that’s above estimates from private firms Strategie Grains and Argus Media, which were cut to 25.6 MMT and 25.17 MMT, respectively, earlier this week.

— Japan is on alert over the heightened possibility of a huge earthquake that could cause immense loss of life and property across a wide stretch of the country. That comes after the nation’s meteorological agency for the first time issued an advisory on Thursday saying the odds for such a catastrophe increased after a magnitude-7.1 quake struck off Miyazaki prefecture on the southern island of Kyushu earlier in the day.

— NWS outlook: Dangerous flooding and severe weather continue as Debby accelerates through the Mid-Atlantic and Northeast today... ...Below average temperatures persist across the Northern to Central Plains, Upper to Mid-Mississippi Valley... ...Above average temperatures continue across the West into the South, but with less record highs compared to previous days... ...Elevated fire weather conditions and poor air quality continue across Great Basin.

(NWS)

Items in Pro Farmer’s First Thing Today include:

• Corrective buying in grains overnight
• Argentine oilseed workers strike continues
• China continues to crack down on bond trading

— In a joint statement, the United States, Egypt, and Qatar have called for renewed ceasefire talks between Israel and Hamas, scheduled for Aug. 15. Israel has agreed to send a delegation to Doha for these discussions, but Hamas has not yet responded to the invitation. Complicating the situation, Hamas recently appointed Yahya Sinwar, the mastermind behind the Oct. 7 attacks, as its new leader. Sinwar’s leadership role significantly reduces the likelihood of reaching a ceasefire, given his history and hardline stance.

Of note: The Sevens Report writes: “Geo-politically, a retaliatory attack from Hezbollah and/or Iran on Israel remains imminent and we shouldn’t be shocked if geo-political risks rise over the weekend.”

United Airlines announced Thursday it was suspending flights to Tel Aviv for the foreseeable future and will resume them when it views conditions as safe for customers and crew. The airline had suspended its Newark, New Jersey-Tel Aviv daily flight July 31 but had allowed booking of the flight from September 1 forward. Delta said it has suspended its flights from New York to Tel Aviv through August 31.

— IKAR raises Russian wheat production, export forecasts. Consultancy IKAR raised its Russian wheat crop forecast by 600,000 MT to 83.8 MMT, with total grain production now expected to reach 129.5 MMT. IKAR raised its 2024-25 export forecast for the country to 44.5 MMT, up 500,000 MT from its prior outlook. Total grain exports are expected to total 56.2 MMT.

— ERP payback? The Emergency Relief Program (ERP) administered by USDA has specific requirements and conditions that farmers must meet to qualify for and retain relief payments. One of these conditions is the requirement that all eligible crops must be insured. This stipulation has led to some farmers being required to pay back ERP funds if it was found that even a single acre of marginal land was not insured, even if that land was not planted with a crop.

The ERP is designed to provide financial assistance to farmers and ranchers who have suffered losses due to natural disasters. To qualify for ERP payments, farmers must have federal crop insurance or Noninsured Crop Disaster Assistance Program (NAP) coverage for their crops. This requirement is intended to encourage participation in risk management programs and ensure that aid is directed to those who have taken steps to mitigate their risks.

However, this stringent requirement has led to complications. If a farmer indicated that every acre of eligible crops was insured but an audit or review found that any portion of their land was uninsured, they might be required to repay the ERP funds. This includes marginal land that may not have been planted with crops but was still considered part of the farm’s total acreage.

Recent legal challenges have further complicated the ERP landscape. A federal judge in Texas ruled that the USDA’s practice of providing additional aid to socially disadvantaged farmers was unconstitutional, arguing that it discriminated against white farmers. This ruling has raised questions about the fairness and implementation of USDA’s relief programs.

Farmers who are required to repay ERP funds due to the insurance requirement face significant financial strain. The repayment demands can be seen as punitive, especially if the uninsured land was not actively used for crop production.

— FarmDoc analyst describes a farm bill ‘death knell’. Writes Jonathan Coppess (link): “As the days of August fall from the legislative calendar, the chances that the 118th Congress reauthorizes the farm bill diminish exponentially. CBO costs estimates are typically critical pieces of the reauthorization puzzle, while also providing useful transparency about complex legislation. This transparency can cut through the jumble of amendments, insertions, and deletions of legislative text to provide real insight about the potential impacts of proposed changes to policy; in the wake of a CBO score, there are fewer places left to hide. Such is the case with CBO’s score of the Farm Bill reported by the House Agriculture Committee, exposing the likely increases in farm program payments juxtaposed against reductions in food assistance for low-income households. Either alone may present near-insurmountable barriers to Farm Bill reauthorization but combined sound the death knell for it.”

— China’s inflation rate hits five-month peak. China’s annual inflation rate climbed to 0.5% in July 2024 from 0.2% in June, exceeding market forecasts of 0.3% and pointing to the highest figure since February.

Several factors contributed to the higher-than-expected inflation rate:
• Seasonal factors: Weather conditions, including high temperatures and rainfall, significantly impacted food prices, which played a crucial role in the monthly increase in the Consumer Price Index (CPI). Pork prices, for example, rose by 20%.
• Core inflation: Excluding volatile food and fuel prices, core inflation rose by 0.4% year-over-year in July, although this was a decrease from the 0.6% recorded in June.

While consumer prices rose, the broader economic context in China remains challenging:• Producer Price Index (PPI): The PPI continued to show deflation, declining by 0.8% year-over-year in July, the same rate as in June but slightly better than the forecasted 0.9% drop.• Domestic demand: Despite the increase in consumer prices, domestic demand remains sluggish. This is reflected in weak retail sales and a struggling housing market, which have been compounded by job insecurity and significant local government debt.
• Trade and exports: China’s export growth has been underwhelming, further straining the economy. The country reported a 7% growth in imports in July, but exports did not meet expectations, highlighting ongoing challenges in the trade sector.

Policy implications: the rise in inflation, coupled with persistent deflation in producer prices and weak domestic demand, underscores the need for continued policy support. Chinese authorities have been implementing measures to stimulate consumer spending and support the economy, including trade-in initiatives for vehicles and home appliances.

— China challenges EU tariffs on EVs. China has lodged a complaint with the World Trade Organization (WTO) over the European Union’s decision to impose anti-subsidy duties on Chinese electric vehicles (EVs), the country’s commerce ministry said. The aim is to “safeguard the development rights and interests” of China’s EV industry. “Judgment in the EU’s provisional conclusion lacks factual and legal foundation,” the ministry said. “It severely violated WTO rules and undermined the global cooperation on dealing with climate change.” Link to more via Bloomberg.

— China’s manufacturers are going broke. Overcapacity is leading to soaring bankruptcies. Link to details via the Economist.

— A bipartisan proposal aims to tighten regulations on imports that currently bypass scrutiny through the “de minimis” system, which allows goods valued under $800 to enter the U.S. tariff-free with minimal oversight. The legislation, introduced by Democratic Senators Ron Wyden, Sherrod Brown, and Bob Casey, along with Republican Senators Cynthia Lummis and Susan Collins, seeks to prohibit the use of de minimis for “import sensitive” goods, such as most apparel and textiles. This proposal specifically targets Chinese fast-fashion brands like Shein and online marketplace Temu, and aims to curb the influx of packages containing illicit drugs.

If passed, the bill would require U.S. Customs and Border Protection (CBP) to collect more data on low-cost shipments and impose a $2 fee per shipment using de minimis. The U.S. textile industry’s trade group supports the legislation, arguing it would help “level the playing field” for domestic manufacturers. Meanwhile, Shein has expressed support for reforming the de minimis system but opposes eliminating it entirely.

Bottom line: This legislation represents a significant effort to increase oversight of low-cost imports and protect domestic industries from unfair competition.

— The Department of Homeland Security has expanded its list under the Uyghur Forced Labor Prevention Act (UFLPA) by adding five entities whose products are associated with forced labor and are therefore prohibited from entering the United States (link). The newly added entities include:

1. Kashgar Construction Engineering (Group) Co., Ltd.
2. Xinjiang Habahe Ashele Copper Co., Ltd. (also known as Ashele Copper)
3. Xinjiang Tengxiang Magnesium Products Co., Ltd.

These three companies are included for their involvement with the government of the Xinjiang Uyghur Autonomous Region in activities related to forced labor, such as recruiting, transporting, harboring, or receiving forced labor.

Additionally, two other entities were added for sourcing materials from the Xinjiang region or collaborating with the Xinjiang government or related groups that use “poverty alleviation” or “pairing assistance” programs to exploit forced labor:

1. Century Sunshine Group Holdings, Ltd.
2. Rare Earth Magnesium Technology Group Holdings, Ltd.

Notably, Xinjiang Tengxiang Magnesium Products Co., Ltd. is listed under both categories.

This move is part of ongoing efforts to prevent products made with forced labor, particularly those linked to the Uyghur region, from entering the U.S. market, aligning with broader human rights enforcement measures.

— ITA extends duties on Spanish ripe olives for five more years amid WTO dispute. The International Trade Administration (ITA) has published a notice in the Federal Register (link) announcing the continuation of duties on imports of ripe olives from Spain for another five years. This decision follows determinations by the Department of Commerce and the U.S. International Trade Commission that revoking the antidumping and countervailing duty orders on these products would likely lead to continued or renewed dumping, subsidization, and material injury to the U.S. olive industry.

The order, which took effect on July 31, will remain in place for five more years. This decision comes despite a ruling earlier this year by the World Trade Organization (WTO) that the U.S. had not complied with an initial decision against these duties. As a result, the European Union (EU) may have the right to take retaliatory action against the U.S. However, the U.S. has expressed its intention to work with the EU to find a resolution to the dispute. This ongoing issue reflects the tensions between trade protection measures and international trade agreements.

— The U.S. imported near-record levels of renewable diesel in the first five months of this year, averaging 30,000 barrels per day, a 29% increase compared to the same period in 2023, according to the Energy Information Administration (EIA/Link). These imports, primarily from Neste, were mostly directed to the West Coast, where states like California, Oregon, and Washington have clean fuel programs that incentivize the use of renewable diesel.

The surge in imports is likely due to Neste’s expanded production capacity in Singapore and increased storage in Los Angeles. Renewable diesel, which differs from biodiesel in its production method, has seen domestic production surpass biodiesel, reaching 3 billion gallons in 2023. Imports made up 20% of U.S. biomass-based diesel consumption from January to May, up from 15% in 2023 and 10% in 2022.

— Summit Carbon pipeline start pushed back. The Summit Carbon Solutions carbon capture and storage pipeline is now expected to start operation in late-2026 or early 2027, according to Summit Agricultural Group CEO Justin Kirchoff. Summit Carbon Solutions is developing a 2,500-mile carbon capture and storage pipeline designed to transport carbon dioxide (CO2) from ethanol plants across five Midwestern states to an underground sequestration site in North Dakota. The project aims to capture and store up to 12 million metric tons of CO2 annually, contributing to significant reductions in greenhouse gas emissions.

Originally slated to begin operations in 2024, the Summit Carbon Solutions pipeline has faced multiple delays due to regulatory hurdles and opposition from various stakeholders, including farmers and environmentalists. As of now, the pipeline’s operation start date has been pushed back to late 2026 or early 2027.

The project has encountered significant regulatory challenges in multiple states:
• Iowa: The Iowa Utilities Board approved the project in June 2024, allowing Summit to use eminent domain to acquire necessary land. However, construction in Iowa cannot commence until permits are obtained in the Dakotas.
• North Dakota: Approval is expected in September 2024, but the project previously faced a permit denial that Summit is working to overturn.
• South Dakota: The most significant regulatory challenge remains in South Dakota, where the Public Utilities Commission (PUC) denied Summit’s permit application in 2023. Summit plans to reapply, but the state’s new regulatory law, which is subject to a November 2024 referendum, could further complicate the process.

The project has faced opposition from various groups, including:
• Farmers and landowners: Concerns about property rights, potential damage to farmland, and safety issues related to CO2 leaks have been prominent. The use of eminent domain has been particularly contentious.
• Environmentalists and indigenous groups: Environmental and safety concerns, as well as the protection of ancestral lands, have led to opposition from these groups. The coalition of Native Americans and white farmers in South Dakota exemplifies the broad spectrum of resistance.

Proponents argue that the pipeline will:
• Help reduce the carbon footprint of ethanol production, which is significant in states like Iowa, the nation’s top ethanol producer.
• Provide economic benefits, including job creation and tax revenues for communities along the pipeline route.

— Farm Bureau looks at solar energy expansion and its impacts on rural communities. The group’s Market Intel report (link) notes that the growth of solar energy as an alternative power source has expanded rapidly, driven by decreasing installation costs and federal incentives. Solar now generates enough energy to power 36 million U.S. homes and accounts for a significant share of new electricity capacity. However, this expansion is increasingly taking place on farmland, leading to tensions between private property rights and the preservation of productive agricultural land.

The following is a brief digest of the Farm Bureau article:

Solar installations on farmland are attractive due to lower construction costs and favorable conditions, but they also pose challenges. As more land is converted for solar use, farmers face rising land values and rental costs, which could impact their livelihoods. While solar leases offer landowners substantial financial benefits, they can drive up land prices, making it harder for farm operators to afford.

Concerns also arise over the environmental impact of solar facilities, including soil degradation and the potential contamination from improperly disposed solar panels. Additionally, integrating solar energy into the grid presents logistical challenges, such as long delays in connecting new projects.

The concept of “agrivoltaics,” where agriculture and solar energy coexist, shows promise but faces technical challenges. Balancing the need for renewable energy with the preservation of agricultural land is crucial as the U.S. transitions to a low-carbon future. The debate centers not on whether to expand solar energy, but on how and where to do so without compromising the nation’s food and agricultural resources.

— Colorado identified ten new outbreaks of bird flu in dairy herds through mandatory testing of milk samples, as part of efforts to control the spread of the H5N1 avian flu virus in the dairy and poultry industries. Since bird flu was first detected in cattle in late March, Colorado has confirmed the virus in 63 dairy herds, accounting for one-third of the 190 outbreaks across 13 states. Most recent cases have been in Colorado, with the state leading in detection due to its unique bulk tank testing system.

Public health officials maintain that the risk to the public remains low, as there is no evidence the virus is becoming more transmissible. However, 13 farmworkers, mostly in Colorado, have contracted mild cases of bird flu. USDA’s strategy for controlling the virus involves isolating affected farms and offering financial support to improve biosecurity and cover veterinary costs. Colorado remains the only state with mandatory bulk tank testing, while USDA has introduced a voluntary dairy herd status program in other states.

Since the bird flu’s emergence in February 2022, nearly 101 million birds in U.S. domestic flocks have died, with Colorado accounting for 9.7 million of those deaths.

— Cotton AWP moves higher. The Adjusted World Price (AWP) for cotton moved up to 55.24 cents per pound, effective today (Aug. 9), up from 53.94 cents per pound the prior week. This still marked the tenth week the AWP has been under 60 cents, and it continues to be above the 52-cent level that would trigger farm program benefits. The Fine Count Adjustment (FCA) for 2024 crop is 0.00 cents per pound compared with 0.36 cents per pound for the 2023 crop. Meanwhile, USDA announced that Special Import Quota #17 will be established Aug. 15 for the import of 43,369 bales of upland cotton, applying to supplies purchased not later than Nov. 12 and entered into the U.S. not later than Feb. 10.

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