Evening Report | Aug. 25, 2021
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ERS hikes 2021 food price outlooks… The all-items consumer price index (CPI) climbed 0.5 points from June to July before seasonal adjustment, with the measure of economy-wide inflation up 5.4% from year-ago levels, according to USDA’s Economic Research Service (ERS). The CPI for all food climbed 0.7 points from June to July, with food prices up 3.4% from July 2020 levels.
The food-away-from-home CPI rose 0.8 points last month, with restaurant purchase prices up 4.6% from year-ago. The CPI for food-at-home (grocery store) purchases rose 0.6 points from June, with prices up 2.6% from year-ago in July. Seven months into 2021, food-at-home prices have climbed 1.9% and food-away-from-home prices have risen 3.1%, with the CPI for all food up an average of 2.4%. Of note, ERS comments, “No food categories have decreased in price in 2021 compared to 2020.”
ERS made upward revisions to its 2021 food inflation forecasts for all food, restaurant and grocery store prices. It now calls for food-at-home prices to climb 2.5% to 3.5%, topping the 20-year historical average of 2.0% inflation. Food-away-from home prices are expected to climb 3.5% to 4.5%, well above the 20-year average of 2.8%. Those increases lifted ERS’s 2021 inflation outlook for all foods to 3.0% to 4.0%, topping the average increase of 2.4% over the past 20 years. ERS is still calling for a 2.0% to 3.0% rise in all food prices in 2022.
“Forecast ranges for 12 of the 22 CPI food categories were revised upward this month, including those for beef and veal, pork, poultry, fish and seafood, dairy products, fats and oils, and sugar and sweets,” ERS comments.
USDA establishes Dairy Donation Program… Today, USDA announced the establishment of a $400-million Dairy Donation Program (DDP). The DDP aims to facilitate timely dairy product donations while reducing food waste and it is part of the $6 billion of pandemic assistance USDA announced in March. Today’s announcement follows the Aug. 19 announcement of $350 million Pandemic Market Volatility Assistance Program for dairy farmers. It is the second part of an over $2 billion comprehensive package to help the dairy industry recover from the pandemic and improve or establish programs to make it more resilient to future challenges.
“Under the DDP, eligible dairy organizations will partner with non-profit feeding organizations that distribute food to individuals and families in need. Those partnerships may apply for and receive reimbursements to cover some expenses related to eligible dairy product donations,” USDA says in a press release.
Perspective: Dairy farmers have received more than $3 billion, or about $1 of every $8, of the $24.4 billion disbursed to farmers and ranchers since Covid-19 payments began in May 2020.
Vietnam to lower import duties on corn, wheat and pork… Vice President Kamala Harris announced in Vietnam today the country has agreed to cut its import duties on corn, wheat and pork products. Harris noted Vietnam is the seventh largest U.S. agricultural export market, and said the tariff cuts “allow U.S. farmers to provide Vietnam with quality and competitively priced products while also helping reduce the U.S. trade deficit with Vietnam.”
Covid-19 outbreaks in sparsely vaccinated Asian countries is disrupting factories… This adds to a long list of challenges to delivering goods ahead of the holiday season. Authorities in Vietnam have ordered some plants to shut and others to drastically reduce workers, affecting Western brands — such as Adidas, Crocs and Steve Madden — that rely heavily on manufacturing there. The added costs from lockdowns in the region will further increase the sales price of consumer goods such as shoes, which in July was up 4.6% from a year earlier in the United States.
Labor shortages are materializing across China… This comes as young people shun factory jobs and more migrant workers stay home, offering a possible preview of larger challenges ahead as the workforce ages and shrinks, the Wall Street Journal reports. With global demand for Chinese goods surging this year, factory owners say they are struggling to fill jobs that make everything from handbags to cosmetics. Some migrant workers are worried about catching Covid-19 in cities or factories, despite China’s low caseload. Other young people are gravitating toward service industry jobs that pay more or are less demanding. The trends echo similar labor market mismatches in the U.S., where some employers are finding it hard to hire enough workers. But China’s problems also reflect longer-term demographic shifts — including a shrinking labor pool — that are legacies of the country’s decades-long one-child policy, which was formally abandoned in 2016.
Brazilian company relies on pipelines for ethanol export deal with California… The Brazilian transportation company Logum Logistica today reported it completed its first ethanol export deal to California. The company moved 40 million liters of ethanol from a terminal in Ribeirao Petro in the country’s main sugar and ethanol belt to Ilha D’Agua port in Rio de Janeiro, using a combination of its pipeline system and short truck trips to traverse the roughly 463 miles. The firm said that its use of ethanol pipelines prevented the use of more than 700 trucks, avoiding 2,000 MT of carbon emissions. Logum also said the deal was possible because California’s government gives a price premium to cane-based ethanol as well as biofuel transported through lower-emissions infrastructure. That results in a premium of $8 per 1,000 liters of ethanol, Logum said in a note.
USDA issues FAQs outlining enforcement of Trump-era Packers and Stockyards Act final rule… USDA issued new guidance on how it will enforce the Packers and Stockyards Act relative to a final rule issued in December 2020 covering undue or unreasonable preferences or advantages under the law. The new guidance is presented in the form of a series of “frequently asked questions” (FAQs) that outline “how problematic provisions of the 2020 Undue Preferences rule will not apply to cases that seek to protect producers from a range of circumstances such as retaliation and racial discrimination by giant agribusinesses.” The FAQs outline “additional criteria that may be utilized” in undue preference cases under the law and were developed in response to the executive order signed in July on competition and come as USDA is writing three new rules on enforcement of the Packers and Stockyards Act.
USDA said in announcing the FAQs that it shows “intent to use every weapon in its arsenal to ensure that growers and producers are protected from harm, even while the agency engages in the rulemaking process to update its rules.”
Supreme Court rejects Biden’s appeal to reverse migrant asylum policy... The Supreme Court by a 6-3 vote upheld a Texas judge’s order that would require the Biden administration to follow former President Donald Trump’s so-called Remain in Mexico policy. That program sought to deter Central American migrants from seeking asylum in the U.S. by requiring them to stay in Mexico until their cases were heard in America. Biden’s lawyers said the Texas ruling conflicted with the principle that the executive branch has leeway on how best to enforce the immigration laws. In a brief order, the justices said the Biden administration “failed to show a likelihood of success on the claim that the memorandum rescinding the Migrant Protection Protocols [Remain in Mexico] was not arbitrary and capricious.”
