Washington Insider-- Monday

By DTN's Washington Insider

Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.

California's Animal Welfare Law Likely to Temporarily Affect National Egg Prices

Eggs are about to become more expensive in California as the state's producers are required under a new animal welfare law to expand the amount of space that laying hens must have. And, since California imports 30% of its eggs from other states, producers who want to sell to California also will be required to move to the new production standards.

The question now becomes whether non-California egg producers will upgrade their facilities or choose instead to supply markets other than California's. If they decide to switch away from California, it could mean lower egg prices for consumers in other states.

There are a number of other variables that also are in play and that could affect egg production, including feed costs that are lower now than during the past several years, an increase in egg consumption as consumers switch from other protein sources with higher prices for beef, pork and poultry, and lower energy prices that likely will lower production costs for egg producers.

Analysts have every expectation that producers will work out the new kinks in the system and that the situation eventually will simmer down. But first, both egg consumers and producers may experience an economic roller coaster ride over the short-term.

***

Froman, Pritzker to Host This Week's JCTT in Chicago

The 25th session of the U.S.-China Joint Commission on Commerce and Trade (JCCT) is scheduled this week in in Chicago, with Commerce Secretary Penny Pritzker and U.S. Trade Representative Michael Froman serving as hosts to a high-level government of China delegation. Secretary of Agriculture Tom Vilsack also is scheduled to address key agricultural trade issues between the two countries.

There is unlikely to be any major announcement made following the meetings. Instead, the annual get-together is expected to report incremental progress on perennial issues such as Chinese intellectual property rights enforcement, agriculture, pharmaceuticals, information technology and travel and tourism issues.

One possible area where some news might be made is in the area of climate change and steps planned by both countries to curb greenhouse gas emissions.

***

Washington Insider: Big Shoes to Fill at USDA

Well, time marches on, as they say, and that march recently has included the loss of a couple of major players in USDA’s economic services. Last May, Dr. Gerry Bange retired after more than three decades as chair of USDA’s World Board, which manages the monthly forecasts of the Agricultural Supply and Demand Estimates report, among other things.

Dr. Bange has had an amazing career, from agricultural marketing specialist for ARS in 1971 by way of the Foreign Ag Service to chair of USDA’s outlook services.

Actually, the Board is one of those organizations most people know little about, but which integrates information from all across the agency on crop and livestock production, prices, stocks markets and trade in the United States and overseas to insure a steady flow of information and outlook for the ag system.

And, the Board’s numbers are highly regarded as both current and unbiased. As Chair, Dr. Bange is credited with keeping the service up with the times as marketing channels and the economy have changed — and, keeping it sharply focused.

Since June, Bange’s job has been filled by Dr. Seth Meyer from the Office of the Chief Economist, who is also highly regarded and brings experience as an economist with the United Nations Food and Agriculture Organization and the Department of Agricultural Economics at the University of Missouri.

In addition to the challenge of replacing a pillar of USDA’s information services like Dr. Bange, the department now faces a possibly more daunting task of replacing its chief economist, Dr. Joseph Glauber. As chief, Glauber was ultimately responsible for the forecasts and projections and for advising the secretary of Agriculture on a broad range of economic matters, including programs, regulations, legislative proposals and many others. These include, amazingly, the Office of Risk Assessment and Cost-Benefit analysis, the Global Change Program Office, and the Office of Energy Policy and New Uses.

Dr. Glauber was Deputy Chief Economist from 1992 to 2007 when he became Special Doha Agricultural Envoy at the office of the U.S. Trade Representative. He has continued to serve as chief agricultural negotiator in the Doha talks, as he did earlier during the Blair House agreements that wrapped up the Uruguay Round. He has also served as senior staff economist at the President's Council of Economic Advisers and as an economist at USDA’s Economic Research Service.

Dr. Glauber is sometimes referred to as USDA’s highest ranking anthropologist since he holds a bachelor’s degree in that field from the University of Chicago, as well as a Ph.D. in agricultural economics from the University of Wisconsin. Robert Johansson, USDA's deputy chief economist, will become acting chief on Jan. 1.

People retire all the time, you say, and the bureaucracy keeps grinding on. You would be right, but there’s more. USDA’s statistics have a reputation as the gold standard for the field — honest, unvarnished views of the production and marketing trends for the future. USDA once had a scandal with the early release of some data — in 1927 –– and it installed security measures like those at Defense Department to prevent another one. Both Bange and Glauber have left their mark on that system.

There is another thing. USDA has its public relations people but it also has visible, credible realists who are expected to tell unpleasant truths to politicians at USDA, the White House Office of Management and Budget and Congress, as well as to the public. Both Bange and Glauber had long, successful experience with this role, especially concerning trade and trade negotiations. Thus, when they warned that the new farm bill may well expect some spirited challenges from trading partners in the future, most observers took notice even if these warnings did not always penetrate the heavy cloud of politics.

Certainly, Bange and Glauber can and will be replaced with extremely well qualified people. But it is worth remembering that the coming months likely will be especially challenging for U.S. agriculture, especially regarding trade issues. But it also will be challenging with regard to the shake-down cruise of the new, stronger insurance-based safety nets.

Agriculture Secretary Tom Vilsack has a reputation as a politician who sometimes turns more to politicians for guidance than to his staff experts, and he has been burned a number of times for that choice. For example, Vilsack at one time voiced enthusiasm for cap and trade related program proposals and at another kept a low profile on the several, especially thorny trade issues.

USDA has a proud history of service to the food industry in the area of economics and policy, issues that will become more rather than less important in the future. The new folks in USDA’s economics and outlook services certainly will have their work cut out for them, Washington Insider believes.

---

Want to keep up with events in Washington and elsewhere throughout the day? See DTN Top Stories, our frequently updated summary of news developments of interest to producers. You can find DTN Top Stories in DTN Ag News, which is on the Main Menu on classic DTN products and on the News and Analysis Menu of DTN's Professional and Producer products. DTN Top Stories is also on the home page and news home page of online.dtn.com. Subscribers of MyDTN.com should check out the U.S. Ag Policy, U.S. Farm Bill and DTN Ag News sections on their News Homepage.

If you have questions for DTN Washington Insider, please email edit@telventdtn.com

(GH/CZ)

Copyright 2014 DTN/The Progressive Farmer. All rights reserved.