Negative reaction by U.S. beef trade partners to USDA's announcement last week it confirmed this country's fourth case of BSE - the first in nearly a decade - has been minimal. USDA reported last week it uncovered an "atypical" case of BSE in an almost 11-year-old dairy cow in central California. The cow, picked up by a rendering company from a dairy in Tulare County, California, was tested as part of USDA's routine surveillance program conducted at rendering facilities, and tested "atypical," meaning the cause of BSE is not consumption of contaminated bovine tissues, USDA said. The cow was not presented for slaughter and no product or byproduct entered the food or feed chains. USDA reported this week the infected animal had two calves, one stillborn, the other located in another state. That animal "has been appraised, humanely euthanized and sampled for BSE," and was negative for the disease, USDA said. At the same time, a hold has been placed on a second dairy in central California associated with the primary dairy location, with both dairies still under quarantine.  

The California Department of Food & Agriculture has completed its inventory of both facilities. In addition, the calf ranch where the BSE cow was born 10 years and seven months ago is also under investigation. USDA, in cooperation with FDA, continues to investigate the feed records at the primary dairy, rendering facility and at the calf ranch, and to date 10 firms have been identified as suppliers for the primary dairy during "the time period of interest." The department also confirmed the rendering facility met all federal labeling requirements for distribution of meat and bone meal. On the trade front, Canada, Mexico, Japan and South Korea, representing almost 90% of U.S. beef exports, said they plan no action on U.S. beef imports; only Indonesia said it will make importing U.S. beef/byproducts more difficult by raising its import standards on in-bone beef, tallow, glycerin and bone meal. An earlier report that Thailand took similar action initially proved to be false; however, Thai newspapers continue to report the government will shut down U.S. beef imports, and the U.S. Meat Export Federation (USMEF) has advised members a market shutdown is likely.  

Taiwan and South Korea sent teams to the U.S. this week to inspect slaughterhouses, as well as meetings with feed and rendering companies and laboratories. Only access to the primary farm in California has not been permitted. South Korea, nearly meat deficit given its ongoing battles with food-and-mouth disease (FMD), saw two supermarket chains pull U.S. beef - one subsequently restocked - and the Korean legislature's agriculture committee approved a resolution barring inspection of U.S. beef in order to enter the country. However, the Korean government said it has increased import inspection, not because of safety reasons, but to provide "public assurances." The Korean trade team in the U.S. reports back to the government on May 9.

The Board of Forestry has been tasked with implementing the SRA Fire Fee. The board announced that it will hold three public forum workshops throughout the state in May to discuss permanent rules that would implement a State Responsibility Area (SRA) Fire Prevention Fee. These workshops are tentatively planned for May 16 in San Diego, May 23 in Madera, and May 30 in Redding.

The SRA Fire Prevention Fee is a fee assessed on parcels with structures, and would fund state fire-prevention activities. Currently, there are Emergency Regulations that implemented these fees, but those Emergency Regulations will expire later this year. Updates on these scheduled workshops can be found on the Board's website at http://www.bof.fire.ca.gov/.

Industry continues to wait for regulations implementing the Food Safety Modernization Act (FSMA) nearly one year after President Obama signed the measure into law. While FDA has drafted the initial sets of rules, those draft regulations are still pending at the Office of Management & Budget (OMB) for review, and while OMB has publicly said the reason for the delay is the complexity of the draft rules, most in industry believe the regulations' price tag - estimated at north of $1.2 billion - is the real reason. The rules implementing the voluntary export inspection program were to be finalized last January, and the produce safety rules were supposed to be in place about the same time. The rest of the rules are to be published for public comment by July 4, but FDA has already said it will not make that deadline.

USDA's weekly Crop Progress report pegs corn plantings in excess of 53% of the estimated 96 million acres expected, well above the five-year average of 27%, and prompting USDA Chief Economist Joe Glauber to report: "We should see a very, very big crop and, particularly with demand starting to flatten a bit - at least on the ethanol side - we should see some rebuilding of corn stocks" to 2009 levels of about 1.7 billion bushels. He added the department right now is giving a preliminary estimate of season-average cash corn prices at around $5 a bushel. Fastest progressing corn planting states are Tennessee, North Carolina and Kentucky, with only Texas falling behind last year's pace. Iowa made the most progress in the most recent week, jumping from 9% to 50%; in Ohio, 57% of the acreage is planted, compared to just 1% this time last year.    Nationally more than 15% of the crop has emerged, with overall numbers indicating more than three times the corn has emerged compared with last year and more than double the five-year average. Soybean planting is reported by USDA at 12%, more than double the week before. Southern states lead in bean planting, with only Virginia reporting no progress. USDA releases its first seasonal forecast of new crop supply, demand and prices on May 10.

In what can be described as the war between the crops, midwestern and northern tier farm Senators carried the day as the Senate Agriculture Committee approved its version of the 2012 Farm Bill 16-5 late last week, losing all votes from southern Senators. The bill started the markup boasting almost $27 billion in savings over 10 years, but wound up when the final vote was taken saving only a bit more than $23 billion. A subsequent cost score by the Congressional Budget Office (CBO) says savings amount to only $17.4 billion, with another analysis expected soon. The attacks from cotton, rice, sugar and peanut interests were swift, alleging the approved commodity title favors corn and soybeans and larger midwestern farmers - with greater experience with crop insurance benefits - over their Deep South cousins. At one point, the unrest was enough to postpone the scheduled markup for 24 hours as committee staff tried to mollify southern crop producers.  

The core of the crop program dispute is the end of $5 billion in conventional direct payments, counter-cyclical payments and the Average Crop Revenue Election (ACRE) program, replaced by the Agricultural Risk Coverage program (ARC). ARC, built off an assumption prices will not dip significantly over the life of the bill and including an end to per-farm payment eligibility loopholes, is a "shallow loss" federally subsidized insurance program. ARC pays out when producers suffer crop and/or price losses of 11-21%, predicated on a per-farm acreage option (65%) or a county acreage option (80%) loss. Any loss over 21% would be paid for by conventional crop insurance. However, should prices drop dramatically, any budget savings from eliminating direct payments would be quickly erased, say independent analysts. Overall commodity payments by the government would drop by about 33% under the new scheme, with corn and soybean farmers seeing less reduction, while cotton, rice, peanuts and wheat would see a greater reduction in benefits.  

Sen. Saxby Chambliss (R, GA), former chair and ranking member of the ag committee, said, "It is neither equitable nor fair and attempts to redistribute resources from one region to another. By squeezing all crops into a program especially designed for one or two crops, this bill will force many growers, particularly in our region, to switch to those crops in order to have an effective safety net, and isn't this the very planting distortion caused by farm policy we ought to avoid?" The bill will continue to evolve on the way to the Senate floor as changes designed to stem southern opposition are explored as part of a substitute "managers' amendment." Sen. Charles Grassley (R, IA), however, said this week the bill may not need the southerners to pass given its bipartisan approval in committee. However, Senate Majority Leader Harry Reid (D, NV), on record pledging floor action if the committee passed a strongly bipartisan Farm Bill, has given no indication when or if he plans to bring the bill to the floor. House Agriculture Committee Chair Frank Lucas (R, OK) said the Senate panel's approved program "is not the commodity title that is ready to be part of a final Farm Bill."  

He commended committee Chair Debbie Stabenow (D, MI) and ranking member Sen. Pat Roberts (R, KS) for making good on their pledge to get an omnibus farm package out of their committee before Memorial Day - and with a strong bipartisan vote - but added, "I look forward to working with them to end up with a final bill that continues the committee's history of providing equitable coverage for all commodities in all regions." Lucas' committee this week announced two more Washington, DC, Farm Bill hearings; the first will be May 8 to look at specialty crops and nutrition programs, and the second will be May 10 to review credit provisions. Back in the Senate, Chambliss was joined in his "nay" vote by Sen. Thad Cochran (R, MS), another former committee chair Sen. Mitch McConnell (R, KY), Sen. John Boozman (R, AR) and Sen. Kirsten Gillibrand (D, NY), who voted against the bill based on its cuts to food stamp funding.

The "Agricultural Reform, Food & Jobs Act" - better known as the Senate Farm Bill - carries many more changes in conventional farm legislation authorization than just the ARC program that has enraged southern crop producers. Sen. Pat Roberts, ag panel ranking member, said, "This is a reform bill. No other committee in the House or Senate has voluntarily undertaken programmatic and funding reforms at this level in this budget climate." Also destined to be controversial, however, is inclusion in the committee-approved bill of the National Milk Producers Federation (NMPF) "market stabilization" proposal, which critics contend is a milk supply control program to hold up prices.  

This proposal, designed to mitigate milk supply and price swings, has become a target not only for dairy processors, but for some major dairy state producers. The NMPF plan replaces three existing dairy programs and uses about $71 million in savings to pay for a "Dairy Producer Margin Protection Program." The program provides a basic $4 of margin protection - higher if a producer wishes - based on spikes in "feed" costs calculated off grain and oilseed prices, not the cost of finished feed. The more milk a producer wishes to insure, the higher the producer premium, NMPF said. The program also carries a penalty for "overproduction," a section challenged by Sen. Michael Bennet (D, CO), who offered but withdrew an amendment in committee to modify the program. While not touching the margin insurance part of the NMPF plan, Bennet would have scrapped the production penalty section as he has producers eager to produce for a new processing plant being built in Colorado. NMPF attacked the amendment, alleging it would cost $429 million over the five years, mainly in increased premium costs to farmers.  

In the broader bill, included in the estimated $23-billion savings over 10 years, the committee-passed bill consolidates 23 existing conservation programs into 13 and reduces the cap on the Conservation Reserve Program (CRP) to 25 million acres from the current 32 million acres, rewriting other conditions of participation; funds export promotion programs at $234.5 million for the life of the bill; eliminates 15 rural development and 60 research programs; cuts $4 billion in food stamps (Supplemental Nutrition Assistance Program (SNAP)); preserves $800 million in mandatory funding for energy programs, including on-farm renewable energy, efficiency projects and research/development for "advanced biofuels;" a $50,000 per person or legal entity payment limit for covered commodities and peanuts, and a new $750,000 Adjusted Gross Income (AGP) test, and a change in the "actively engaged in farming" definition; $750 million for the fresh fruit and vegetable program; $70 million per year for a specialty crop block grant program, and $406 million per year in specialty crop purchases by USDA.

Abandoning all hope of negotiating a compromise set of changes to proposed federal child labor protections that would limit a good share of on-farm and related enterprise youth employment, the Department of Labor (DOL) late last week formally withdrew its controversial proposed rulemaking. The proposed rule would have restricted significantly any work done by youth under 16 years old on their parents' farm, operations owned by relatives or in related employment within the ag community. A coalition of producer, processor, feed, grain and other ag interests, led by the Michigan Farm Bureau, opposed the DOL proposal, saying it would not only restrict the traditional role of youth labor on farms and ranches - including barring kids under 16 from herding animals on horseback or operating any machinery - but would have prohibited teenagers from working in grain elevators and other related ag businesses. Reps. Denny Rehberg (R, MT), Tom Latham (R, IA) and Dan Boren (D, OK) introduced legislation to block the DOL rulemaking, and House Agriculture Committee Chair Frank Lucas (R, OK) said, "I hope this will serve as a lesson to the administration that they should seek input from the agriculture sector before continuing to move forward with unworkable regulations." Secretary of Labor Hilda Solis, long a champion of migrant labor protections, said she was only trying to modernize federal child labor protections, but it's apparent she and her department seriously misunderstood the impact of the proposed restrictions.

Continued "effective" use of chemical fertilizers and pesticides as part of conventional crop production will be necessary to produce "the bulk of the world's food requirements," according to a study released this week by the Crop Production Agency (CPA) in the United Kingdom. Increasing to 100% organic crop production would result in a 34% decrease in production compared to levels produced using conventional agriculture, the study reported. Led by McGill University in Canada, the study compared organic production efficiency to conventional agriculture and found that for the crops studied, organic agriculture performed particularly poorly for vegetables and cereal crops. Dominic Dwyer, CPA chief executive, said, "We urgently need measures to reduce waste and improve distribution, but output growth - yielding more crop per hectare - will be the single most important factor in helping food supplies keep pace with rapidly rising demand."

The House last week approved two bills aimed at mitigating the impact of the Dodd-Frank Financial Reform & Consumer Protection Act on agriculture. The first approved was a bill that would give smaller banks relief from Dodd-Frank provisions and allow them to provide low-interest fixed rate loans to small businesses. The relief also applies to credit unions, Farm Credit banks, the Rural Electric Cooperative system and finance companies. Rep. Vicki Hartzler (R, MO), author of the approved bill, said many smaller borrowers, including farmers and ranchers, are ignored by larger banks, but still need access to competitive loans. In a related development, the full House approved a bill that would exempt farm credit banks from restrictions on offering financial swaps. Exempt from the new swap rules are "farm credit institutions, insured depository institutions and U.S. branches of foreign banks, if they engage in a swap with someone hedging credit risk or a swap to offset risks of such a transaction," according to the bill. Similar exemptions exist to the "swap dealer" definition and swaps clearing mandate. The new rules on swaps mandate new collateral, stiff margin and recordkeeping requirements, and the bill approved last week would exempt certain financial entities from being classified as swaps dealers. House Agriculture Committee Chair Frank Lucas (R, OK), praised the House action saying Dodd-Frank never intended to regulate community banks in the same manner as global financial institutions. Committee ranking member Rep. Collin Peterson (D, MN) said the bill was consistent with the original intent of the law and he has no objections to it.