News Update
June 23, 2011

Risk Management Agency Reassures Farmers Along the Flooded Missouri River

Heavy rainfall, snow melt and flood conditions along the Missouri River have added to an already wet spring and affected farmers in the Midwest and Northern Plains. The U.S. Department of Agriculture (USDA) Risk Management Agency (RMA), which administers the Federal crop insurance program, reminds farmers and ranchers in flooded areas that they should contact their crop insurance companies at the first sign of damage to insured acreage.

“USDA wants to assure affected producers that this flood event is covered by crop insurance for those insured farmers and ranchers in the flooded area,” said RMA Administrator William Murphy.“ The flooding happening now is the result of extraordinary amounts of rainfall this spring and winter snow runoff, which is a natural cause of loss and is covered by crop insurance. We’ve spoken to the crop insurance companies, and they assure us that they have adequate staff with additional adjusters sent as needed to help settle claims as soon as they can get into the fields.”

Some farmers have voiced concerns that the flooded lands may not be covered by crop insurance if there was breach of a water-supporting structure near their land, such as the collapse of a levee, but Murphy noted that actions taken by the Army Corps of Engineers to lessen property damage have not affected the coverage farmers have paid for with their crop insurance premiums.

Any additional questions may be directed to any RMA Regional Office. Information is also available at www.rma.usda.gov/aboutrma/fields/rsos.html.

— Release by USDA.

Economist: Don’t Blame Rising Food Prices on Fuel Costs

Consumers continue to pay high prices at the fuel pump, and costs are rising at the grocery store. But an Ohio State University (OSU) agricultural economist says the two aren’t related as much as people might think.

Besides transporting food from the farm to processors and then to retailers, fuel prices can affect the cost of food production in many ways, said Ian Sheldon, a researcher with the university’s Ohio Agricultural Research and Development Center (OARDC). Higher fuel costs mean higher prices on the farm for fertilizer, pesticides and other chemicals; increased expenses to run farm machinery; and increased prices for lubricants and even electricity.

And fuel costs have risen precipitously in 2011. Ohio’s average price for regular-grade gasoline this week was $3.49 per gallon, according to the auto club AAA. That’s down from an all-time high of $4.16 per gallon in May, but still much higher than the $2.72-per-gallon price tag at this time last year. 

Many other factors influence food prices at the grocery store, said Sheldon. “In the United States, we can expect a 3% to 4% increase in food prices this year, but a ballpark estimate is that only 10% to 15% of that increase is due to fuel prices at the farm gate. So, of the 3%-4% overall increase in food prices you see at retail, you could attribute maybe a half-percent to higher fuel prices on the farm.”

Sheldon based those figures on a World Bank analysis of causes behind the last food price spike in 2008, when U.S. food prices rose 5.5%. In contrast, U.S. food prices in 2010 rose just 0.8%.

“Higher fuel prices’ effect on transportation costs from the farm to the processor could have more of an impact on food prices, but manufacturers often absorb some of those increases,” Sheldon said.

What’s really driving food prices up is a global increase in demand, Sheldon said. “Food prices are being driven by what’s going on in Asia — particularly China and India. They’re experiencing rapid rates of income growth and people in those areas are adopting more of a meat-based diet. As very poor people switch from a subsistence diet — rice, vegetables and a bit of meat — to more of a meat-based diet, then more crops need to be grown for animal feed. That increases prices not only of corn but soybeans, too. This upward trend in food prices is being driven by a strategic shift in global demand, and that’s not going to go away.”

In fact, although inflation-adjusted food costs in general declined from the post-World War II era through 2000, they have been on the rise since, primarily because of supply and demand, including a leveling off of yield improvements and an increase in global population and economic conditions in major developing countries. The result? Expect food price increases to stick around for the long-term, he said.

Another factor influencing food prices include a shift toward growing crops for biofuels instead of for food or feed.

“In 2010, 15% of the global corn crop was used for ethanol production,” Sheldon said. “There’s a growing clash between food and fuel.”

In addition, weather conditions have impacted global food supplies: drought in northern China, Russia and Ukraine last year devastated the global wheat crop; wet weather in Ohio and other parts of the Midwest are likely to affect yields this year. On a broader scale, there are indications that global climate change is playing a role in increasing food prices anywhere from 6% to 20%, he said.

“We also have low inventories right now,” Sheldon said. “When you have low stocks and a supply shock, the price spike tends to get exacerbated.”
Although Americans may grumble as their grocery bills inch up, Sheldon says to keep the matter in perspective.

“Food costs still tend to be a small proportion of our overall budget in the U.S.,” Sheldon said. “In the developing world, food is a very large portion of the average budget. When you’re living on $1 a day, food price increases can really hurt.

“In fact, the World Bank is talking about 44 million people being dragged into poverty in the past year because of higher food prices. While we do have food insecurity in the United States, too, we have social safety nets in place that help. That’s not the case everywhere.”

— Release by Martha Filipic, OSU College of Food, Agricultural and Environmental Sciences.

CNN Reports Release of Oil from Reserves

“The U.S. and International Energy Agency will release 60 million barrels of oil from reserves to stablize world energy markets,” CNN reported earlier this morning. To offset disruption of the oil supply due to unrest in the Middle East, the United States will release 30 million barrels from its Strategic Petroleum Reserve within the next 30 days. The balance will come from the International Energy Agency.

USDA Official Meets With Producers in Flood-Damaged Areas of Missouri

Karis Gutter traveled to Missouri today, June 23, to tour areas damaged by flooding and meet with local producers to discuss USDA efforts to provide assistance. As acting deputy undersecretary of USDA’s Farm and Foreign Service (FFAS), Gutter helps oversee two key agencies that can assist with the recovery: the Farm Service Agency (FSA) and the Risk Management Agency.

“This historic flood is already causing substantial hardship for people who live and make their livelihoods along the Missouri River,” Gutter said. “USDA has a variety of programs that can help, and Secretary Vilsack has promised that USDA will do everything possible to provide assistance to those affected by flooding.”

In the wake of several disasters that have affected the Midwest, USDA and the entire federal family have been working with state and local officials to provide relief to residents, farmers, ranchers, businesses and those who need it most.

The FSA administers several important programs that help producers recover from disaster damage and livestock deaths. Among the key programs available to address impacts from disasters are the Emergency Conservation Program (ECP), the Livestock Indemnity Program (LIP), the Emergency Assistance for Livestock, Honeybees and Farm-Raised Fish Program (ELAP), the Noninsured Crop Disaster Assistance Program (NAP), and the Supplemental Revenue Assistance Payments (SURE) Program.

Secretary Vilsack announced recently that $3 million has been allocated to the Emergency Watershed Protect Program administered by NRCS to carry out emergency restoration projects in five western states experiencing flooding or at risk for flooding.

— Release by USDA.

Basic Prescribed Burn Workshop Scheduled Aug. 11-13 in Sonora

The Academy for Ranch Management will host a basic prescribed burn workshop Aug. 11-13 at the Texas AgriLife Research Station located 28 miles south of Sonora on U.S. Highway 55.

 “Burning is an efficient range management tool that eliminates use of chemicals or costly mechanical control methods,” said Ray Hinnant, AgriLife Research senior research associate and one of the workshop instructors.

Hinnant said incorporating an effective prescribed burn management plan on a ranch can be a preventative strategy during times of drought, such as the current conditions across Texas.

“Burning reduces the risk of catastrophic wildfires by removing hazardous fuel loads,” Hinnant said. “This workshop will give a comprehensive overview of this method, plus other topics.”

The Academy for Ranch Management offers hands-on experience with both classroom and field activities for participants. The workshop provides education for existing ranch owners, new ranch or landowners and for absentee owners who are several generations away from the ranch, Hinnant said.

He and Charles “Butch” Taylor, station superintendent, are prescribed burning board lead instructors and will be teaching the workshop.

The basic workshop will provide information on managing fuels, weather monitoring and equipment for fire suppression. Participants will develop a prescribed burn plan and will conduct a prescribed burn, Hinnant said.

“The basic workshop is a prerequisite to the advanced workshop,” he said. “The advanced workshop provides additional information on weather and fuels with more emphasis on planning and directing a prescribed burn as the burn boss.”

Cost is $395 and includes meals and on-site lodging. For more information and to register, call 979-820-1778 or 325-387-3168 or visit

— Release by Blair Fanin, TAMU AgriLife Communications.

— Compiled by Shauna Rose Hermel, editor, Angus Productions Inc.