LSP Land Line: Re-Carbonizing Soil, Hot September, Ag Payments, School Meals, Price Fixing

Oct. 15: An LSP Round-up of News Covering Land, People & Communities

World Food Prize Laureate Advocates for Re-Carbonizing Soil to Protect Food Production

(10/13/20) Soil scientist Rattan Lal, the 2020 Word Food Prize laureate, makes the case that agriculture globally must take better care of its most valuable resource to not only produce more, healthier food in the future, but also help remove greenhouse gases from the atmosphere. At the top of Lal's list for innovation is "re-carbonization of the soil and biosphere," reports DTN's Chris Clayton. Highlights:

  • "…consider soil as a bank account — carbon as a currency," Lal said. "If you want to increase organic carbon in soil similar to a bank account, the inputs going into the bank account must be more than the losses out of it."
  • Financially, Lal said, agriculture can sequester carbon as cheaply as $10 per metric ton, making agriculture the most cost-effective way to sequester carbon.
  • Yet, farmers must be paid more than $10 per ton, he said, for an effective carbon-trading program. "The real price, based on the ecosystem services, is about three-and-a-half times more," Lal said. "And a farmer must be paid justly and fairly."
  • A farmer sequestering a half-ton of carbon per hectare should have a financial benefit of $65 per hectare, he said. That's $26 per acre, per year. "That's the proper payment for farmers if we respect this greatest tool of natural resources; to consider that we welcome what they do, that we appreciate what they do, society must be willing to pay them the right price."

For more on how farming can re-carbonize the land, check out LSP's Soil Health, Water & Climate Change: A Pocket Guide to What You Need to Know.

Earth just had its hottest September on record

(10/14/20) Unprecedented heat around the world made September 2020 the hottest September since 1880, according to scientists at the National Oceanic and Atmospheric Administration. Highlights:

  • The average global temperature in September was 1.75 degrees Fahrenheit above the 20th century average of 59 degrees.
  • The 10-warmest Septembers have all occurred since 2005, with the seven-warmest Septembers occurring in the past seven years.

Check out LSP's white paper, "Farming to Capture Carbon & Address Climate Change Through Building Soil," on our Carbon Farming web page.

A Geographical Look at Net Farm Income and Direct Payment Trends

(10/12/20) Recent state-level trends in net farm income vary considerably, according to Agricultural Economic Insights. Highlights:

  • In recent years, the farm economy has struggled with the downturn in net farm income. At the national-level, net farm income peaked at an average of $126 billion from 2011 to 2013. More recently, net farm income from 2018-2019 averaged just $84 billion. The adjustment from boom-era levels is a 33% decline in real net farm income.
  • While the sector average change was a 33% decline, the state-level changes have varied from -68% (Minnesota) to +18% (Nevada). Broadly speaking, the Northern Plains and Midwest states have been hardest hit as producers faced the largest contractions in net farm income. In these states, the decline has been larger than the national average.
  • For 2020, the current national data show direct government payments will be equal to 36% of net farm income (likely to turn higher in light of the latest COVID-19 support program). Direct payments in 2020 are up from an average of 22% from 2018-2019. For additional context, it was common for direct payments to account for around 10% of net farm income during the farm economy boom.
  • Compared to the national data (22% average for 2018-2019), there are again significant differences when it comes to direct government payments. For the "I" states, direct payments account for 37% (Iowa), 42% (Illinois), and 34% (Indiana) of net farm income. Direct payments were more than half of net farm income in Arkansas (59%), Minnesota (53%), and North Dakota (50%).

This spring, the Minnesota Legislature passed a bill brought forward by LSP that extends the time frame for the right to farmer-lender mediation from 90 days to 150 days, or Dec. 1, whichever comes first. On Oct. 14, an adjustment to the Farm Loan Guarantee Fee Grant Program passed unanimously in both the Minnesota House and Senate. The adjustment opens the availability of this program to farmers who are refinancing their loans and experiencing financial crisis in mediation or outside mediation. It also gives the Agriculture Commissioner the authority to award grants to farmers experiencing financial stress, prioritizing farmers who are in mediation. See this link for details on the Farm Loan Guarantee Farm Grant Program. For additional details, see this recent Land Stewardship Letter article.

School meal programs have lost more than $483 million so far during the pandemic

(10/15/20) School meal programs have taken a massive financial hit during the coronavirus crisis, according to the Food and Environment Reporting Network. Highlights:

  • A survey by the School Nutrition Association, which includes responses from school nutrition directors in 1,614 school districts across the country, points to the crippling costs of adapting to pandemic-related constraints, and significant losses due to a drop in participation in the school-lunch program.
  • More than half of surveyed districts reported a financial loss during the 2019-2020 school year — exceeding $483.5 million in total losses — and nearly two-thirds anticipate losses during the 2020-2021 school year.
  • School closures in the spring led to a drop of almost 400 million meals served in March and April, compared to the previous year, according to the Government Accountability Office.
  • The cost per meal tends to go up as participation declines. Schools are reimbursed only for meals served, but whether they serve 100 meals or 50, their production costs — cooks’ salaries, equipment, etc. — remain fixed.

October is National Farm-to-School Month. For resources and details on how local farms can connect with schools and early care education centers, check out this Minnesota Department of Agriculture web page. The USDA is implementing the Coronavirus Food Assistance Program 2 for farmers and ranchers who continue to face market disruptions and associated costs because of COVID-19. Details are here.

Pilgrim's Pride will pay $110M to settle price-fixing allegations

(10/14/20) Pilgrim's Pride, one of the largest poultry producers in the U.S., said it would pay $110.5 million to settle federal charges that it helped fix prices and then passed on higher costs for chicken to consumers, restaurants, and supermarkets, according to the New York Times. Highlights:

  • Pilgrim’s Pride is among a number of major poultry producers that have been contending with price-fixing allegations for years.
  • Last year, the Justice Department intervened in a lawsuit brought by major chicken customers against Pilgrim’s Pride, Tyson Foods, and other producers. The lawsuit said the companies had made coordinated production cuts that led to significant increases in the price of broiler chicken, which makes up the vast majority of all the chicken meat sold in the United States. The customers noted that chicken prices were rising even while feed costs were falling.
  • In 2019, Pilgrim’s Pride reported $11.4 billion in sales. It said the $110.5 million fine would be recorded as a “miscellaneous expense” in its next quarterly report.

If you suspect a agricultural commodity buyer or input supplier is engaged in price fixing or other anticompetitive activities, contact one of LSP's Policy Program organizers.To contact the Minnesota Attorney General’s office about a concern related to anticompetitive behavior in agriculture, see www.ag.state.mn.us or call 1-800-657-3787.

Brian DeVore is the editor of the Land Stewardship Letter.