President Barack Obama, campaigning in Iowa today, will announce $170 million in government meat purchases and urge Congress to pass an agriculture bill that provides aid for farmers struck by drought, the White House said.
The buys of as much as $100 million of pork, $50 million of chicken, and $10 million each of lamb and catfish come on top of $30 million in assistance to farmers and ranchers struggling with the worst combination of heat and dryness since the 1950s, the administration said.
Obama is also directing the Defense Department to speed up purchases and freeze the meat for later use, the White House said in a statement.
The administration said the buying will help farmers with sales as they are dealing with the effects of the drought and the government will get a better price on products than if they were bought later.
The president will tour a farm in Missouri Valley, Iowa, the first of several appearances on his three-day trip through the swing state, which is the leading U.S. producer of corn, soybeans, pork and ethanol.
More than half the counties in the U.S. have been declared natural disaster areas by the Department of Agriculture, and 69 percent of the Midwest last week had moderate to exceptional drought, government data show. Corn prices have surged 60 percent since mid-June, reaching an all-time high of $8.49 a bushel on Aug. 10 on the Chicago Board of Trade.
Livestock Producers
Livestock producers may be at greater economic risk than growers of grains and oilseeds because they receive less federal support, said Bill Lapp, a former chief economist for ConAgra Foods Inc. (CAG) For cattle, the drought may further thin a national herd that at the start of the year was the smallest since 1952, as meatpackers including Tyson Foods Inc. (TSN) and Cargill Inc. boost short-term slaughter, he said.
A livestock-assistance program in the current five-year farm bill expired last year.
The U.S. Senate and the House Agriculture Committee have approved bills to replace the current law which contain livestock relief provisions.
House Republican leaders have not set a vote on their legislation.
The House on Aug. 2 approved a $383 million stopgap measure to reinstate the livestock aid, while the Senate took no action. The current farm bill was passed in 2008 and expires in September.
Limits on Aid
“We are very limited in what we can do” because of the congressional impasse, Agriculture Secretary Tom Vilsack said in an interview last week.
“The key issue for livestock is access to hay and grazing opportunities,” he said, adding that the USDA is focusing its response on opening conservation lands to grazing and helping move water to parched herds.
The Corn Belt just went through the third-driest June-July period on record, according to the government.
In the short term, what’s bad for ranchers may be good for consumers.
The increased sales of animals to slaughterhouses will boost beef supplies and slow price increases at the supermarket, Lapp said.
The USDA last month lowered its forecast for beef-price inflation for 2012 half a percentage point to 3.5 percent to 4.5 percent.
For 2013, the expectation is a gain of as much as 5 percent.
“Near term, there is an adequate supply of meat from all species,” Michael Martin, a spokesman for Minneapolis-based Cargill, said last week in an e-mail.
“As we move into 2013, the supply of beef, in particular, could be constrained by the U.S. herd being the smallest in 60 years.”
Source: bloomberg
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