Farm News & Views for the week of October 9, 2023
Last week, Arizona governor Katie Hobbs announced that her administration would terminate state land leases that had given a Saudi Arabian -owned farm the right to pump groundwater from underlying aquifers without limits. The Saudi company, Fondomonte Arizona is a subsidiary of Saudi dairy giant Almarai Co. Alfalfa grown on several thousand acres of land about 80 miles west of the Phoenix Metropolitan area is either owned or leased from the state. Hay on those farms is harvested and shipped to Saudi Arabia to feed livestock in the water-stressed Gulf kingdom. Critics contend that growing and shipping this hay is tantamount to sending Arizona water to that desert nation. In Arizona, under a 1980 state law aimed at protecting the state’s aquifers, cities such as Phoenix and Tucson have restrictions on how much groundwater they can pump from underlying aquifers. But in rural areas, there are few restriction on how much water a user can to pump from underground aquifers beneath farms. All a farmer has to do before using the underlying water is to register a well with the state and use it for activities, like irrigating crops, which is deemed a “beneficial use.”
Cow-calf producers in Colorado, Nebraska, South Dakota and Texas will have the opportunity to sign up for a new insurance option, the Weaned Calf Risk Protection program. USDA announced this risk-management product last week, stating it will be available to livestock producers in four states beginning in 2024. The policy is part of the USDA's Risk Management Agency program that offers Actual Production History coverage for beef producers to insure revenue from spring calving operations. The policy is a type of insurance that protects against yield losses due to natural causes. Those causes include drought, excessive moisture, hail, wind, frost, insects and disease. These new policies, will provide coverage due to a decline in price and loss of yield due to a decrease in overall weaning weights. Coverage levels between 50% and 85% will be available, as well as catastrophic coverage. Producers can receive more information for this program at their local Farm Service Agency offices.
Currently, cattle producers are seeing a tremendous uptrend in prices so far in 2023, according to Derrell Peel, Oklahoma Cooperative Extension Livestock Marketing Specialist. He believes that these record prices may continue for two to four years because of the herd liquidation caused by the severe widespread drought in the states with the largest numbers of cattle. Thus far, he hasn't seen evidence that producers have started rebuilding herds because many of them are financially stressed, and continue to sell calves rather than hold back heifers to begin the rebuilding process. He expects that it may be 2024 before the U.S. cattle herd will begin to increase numbers. While producers are benefiting from stronger cattle prices, consumer demand continues to be strong, and Peel expects that consumers will see even higher prices for beef at meat counters into 2024, as producers go through this rebuilding process.
I wonder if the recent failure to pass a farm bill, that must be renewed every five years, is a matter of procrastination or is an indication of ineptitude by those who are tasked to complete the job.