Restaurants hit with higher food prices caused by drought; small, local eateries struggle most

This summer's oppressive drought scorched Midwestern crops, raising the cost of feed, dairy and meat. Those high prices are impacting the size of restaurant menus across the U.S., with small, local eateries feeling the pinch the most. The cost of food now rivals labor as the top expense for most restaurants, Tiffany Hsu of the Los Angeles Times reports. Owners are reducing menu offerings, shrinking portion sizes and considering staff cuts. (L.A. Times photo by Francine Orr: patrons eat at Smokin' Jonny's BBQ in Gardena, Calif.)

Restaurant prices have been rising for more than a year, with wholesale food costs increasing by 8.1 percent in 2011, Hsu reports. The increases will continue, but at a quicker pace, because the price of corn, which is a key component in livestock feed, powdered sugar, salad dressing, and more, jumped by 60 percent this summer. Chicken and turkey prices rose by 5.3 and 6.9 percent, respectively, and eggs now cost 18 percent more. Analysts expect overall food prices to rise from between 5 to 20 percent by year's end.

Big chains are able to weather drought price hikes well, but small restaurants will suffer, Hsu reports. "The smaller mom-and-pop restaurants are going to get hit with the drought very shortly," Motley Fool analyst Don Krueger told Hsu. It's forcing small restaurant owners to make tough decisions. Restaurant consultant Kian Abedini told Hsu more restaurants are using small plates and tapas dishes to save money. He's also noticed cheaper cuts of meat on menus, along with more curry and rice dishes. Pickled items are showing up as well because they're less expensive than fresh foods, Abedini said.(Read more)

California poultry company files for bankruptcy; will be eighth poultry firm to fold in the last year

Zacky Farms LLC, a California poultry company that dates to the 1920s, filed for bankruptcy this week. High feed costs following this summer's oppressive drought led to the decision, P.J. Huffstutter of Reuters reports. The company employs about 1,500 people in southern California, and listed between $50 and $100 million in assets, with debts in the same range.

The bankruptcy filing showed that the company's largest unsecured creditors are feed company Western Milling, to whom Zacky Farms owes about $6.6 million, and poultry company Foster Farms LLC, which is owed about $1.2 million. "Zacky Farms will be the eighth poultry firm to be sold, entered into Chapter 11 bankruptcy or shut down altogether since 2011, according to data from trade group National Chicken Council," Huffstutter reports. (Read more)

Huffstutter advises in an email that Zacky's is ranks about among poultry companies in revenue, and about 10th among turkey packers.

Pork producers struggle through drought, sending more young female hogs than ever to slaughter

More female hogs than ever are being sent to slaughter because producers can't afford high feed prices caused by this summer's oppressive drought. Sows are building blocks of herds, so slaughtering them not only shrinks herds but expands the pork supply, sending prices plummeting, P.J. Huffstutter and Theopolis Waters of Reuters report. Producers are left to either use savings to survive, or sell herds and leave the business. (Photo by John Gress)

Just under 10 million head of hogs were sent to slaughter in August, the most ever for that month, according to data analyzed by Reuters. But, the U.S. Department of Agriculture in its quarterly inventory of hogs and pigs on Friday said the number increased slightly through Sept. 1. There were 67.5 million head, up 3 percent from June 1.

Still, large producers are "scouring the Midwest to snap up whatever feed they can find, or are sinking tens of millions of dollars into importing [feed] from Brazil," Huffstutter and Theopolis report.

Drought is likely to cost consumers next year

The massive drought that hit many U.S. farmers hard this summer will be felt by consumers next year in the form of higher food prices, according to The Food Institute. A family of four will likely spend $351.12 more on food in 2013, about $6.75 a week. The data was gathered by calculating the actual financial effect of the drought, which reduced corn yields, causing feed prices to rise, making livestock producers unable to afford it.

The increase will be felt most at meat counters, Lisa Keefe of Meatingplace reports. Annual costs of meat will rise about $44 next year for a family of four and about $30 for a two-person home. Beef costs would account for almost one-third of those estimates. Fresh produce will be the next most expensive, adding about $23.44 to a family's annual grocery spending. "These spending predictions could vary as substitutions are made in one category or another," Keefe reports, adding that consumers could choose to spend more on canned and frozen products to offset higher prices for fresh meat and produce. (Read more)

Drought expands slightly; weather patterns indicate little or no relief should be expected in early 2013

The worst drought in more than 50 years has expanded slightly for the third consecutive week, according to the U.S. Drought Monitor. Exceptional drought, the most severe category, now covers 6.2 percent of the U.S., up from 6.1 percent last week. All levels of drought increased to 64.2 percent from 63.4, the highest percentage this year.

There were "minor improvements" in the Midwest, Northeast, mid-Atlantic, Arizona and the Great Basin, Brian Sullivan of Bloomberg reports. Drought has caused corn and soybean prices to rise as the size of harvests shrunk, creating hardship for livestock and dairy producers who could no longer afford feed. It has also caused Mississippi River levels to drop in some places, making river travel difficult to impossible. (Read more)

Relief from drought conditions may be years away. Iowa State University extension climatologist Elwynn Taylor said the La Nina weather pattern causing the drought will likely stick around through early 2013. An El Nino pattern that would bring enough rain to quench U.S. soil isn't anywhere on the horizon, Jeff Caldwell of Agriculture.com reports. "If weather patterns respond to a neutral or to an early 2013 development of La Nina," Taylor said, "it will be likely that the U.S. corn yield will fall below the 30-year trend line for a fourth consecutive year." (Read more)

Wolves in Rockies going off endangered list; activists say hunting laws will threaten them

Wolves in the northern Rocky Mountain region of Wyoming are finally poised to be removed from the endangered species list by the U.S. Fish and Wildlife Service, but activists fear new state laws that expand hunting and trapping of wolves will threaten their newly established numbers. (Yellowstone National Park photo)

The agency announced the wolf population in Wyoming is officially "recovered," just like those in Idaho and Montana. When the decision takes effect in September, it will mark the end of a 17-year wolf recovery process in the region, Kim Murphy of the Los Angeles Times reports. Wolves had recovered so much in some places, ranchers were reporting frequent deaths of livestock, and state laws had been expanded to allow ranchers to protect herds with killing and trapping. In some instances, state agencies had employed helicopters to aerially kill wolves.

Legal action is expected from activists in Montana, where they contend newly authorized wolf traps could threaten Canada lynx, and in Wyoming, where critics argue that the state's wolf-control laws could "leave them vulnerable to wholesale killing through most of the state," Murphy reports. In Idaho, a proposed law would allow live-baiting of problem wolves with dogs, something attorneys for Earthjustice said has been discussed in Wyoming, too. (Read more)

Humane Society looks to Wall Street to prompt change in pig-production practices

The Humane Society of the United States has bought shares in four major financial services companies in a bid to use shareholder pressure to force two of the nation's largest pork producers to stop housing pregnant sows in gestation stalls. The animal rights group said that its small investment is large enough to introduce proposals during shareholder meetings. The group, reports P.J. Huffstutter of Reuters, has successfully used such shareholder advocacy in the past to pressure food and agriculture companies to change corporate buying habits and production practices. (Wikipedia photo)

"By not changing over to alternative animal housing, claims the group, Tyson Foods Inc. and Seaboard Foods are putting their lucrative contracts with these customers at risk," reports Huffstutter. "McDonald's, the nation's top hamburger chain by sales, vowed in May that its U.S. business would only buy pork from farmers and other sources that do not use gestation stalls for housing their pregnant sows by 2022. Such stalls are used to confine sows during the breeding and post-birth process."

Seeing little success from the producers, "the Humane Society decided to a less-direct route and press its case with Tyson investors: JP Morgan Chase, , the biggest U.S. commercial and investment bank by assets; BlackRock, the world's biggest asset manager; Jennison Associates, a subsidiary of Prudential Financial, the second-largest U.S. life insurer; and Ameriprise Financial, a financial services company," Huffstutter reports. Tyson told her in an email that it is committed to humane animal treatment at all stages of food production, and expects the same from those farmers who supply products to it. Seaboard, the nation's third-largest pork producer, could not be reached for comment. (Read more)

Shortage of livestock veterinarians is growing

Rural America is short on large-animal veterinarians, and the deficit is growing. Just 17 percent of veterinarians nationwide work in food-animal medicine, according to the American Veterinary Medical Association, and that percentage is expected to fall to 12 or 13 percent by 2016, reports Walker Moskop of the Minneapolis Star Tribune. (Strib photo by Richard Sennott: Food-animal vet student Joe Armstrong)

AVMA President Rene Carlson told  the shortage is partly the result of too many students entering the pet-care field. She also said "simple economics" is a factor. Some rural areas don't have enough large animals to make a clinic pay, especially when considering student loan debt for vet school. Food-animal vet work can be demanding, Moskop reports. Many are on call nights and weekends, and have to cover a lot of territory. The shortage has gotten so bad in some areas that rural vets that have reached retirement age have to keep working so their community will have a veterinarian.

University of Minnesota College of Veterinary Medicine professor John Fetrow told Moskop the demanding hours, low pay and less-than-ideal working conditions often forces those who start their careers as food animal vets to switch to pet care. The university is offering an accelerated program that allows students to earn their bachelor's and doctoral degrees in seven years, a year early, to entice more students to take the food animal path. Graduates are also offered up to $25,000 a year if they work in a rural area. But, budget cuts this year could threaten incentives for students. North Dakota is offering a similar loan repayment program to veterinary graduates, and Alaska will allow out-of-state vets to practice free of charge in rural areas of the state without veterinarians. (Read more)

Meat industry video shows cattle slaughter process

The American Meat Institute and noted Colorado State University animal science professor Temple Grandin have released a video depicting and explaining cattle processing at a large, unnamed slaughterhouse, Rita Gabbett of Meatingplace reports.

The video's release coincides with the temporary closure of a California meat plant over human handling concerns, but the Meat Institute's Janet Riley said the video was in production long before. She says in a blog post that Grandin "talks about many aspects of handling and slaughter and she specifically explains that after animals are stunned to make them unconscious prior to slaughter, a step that is required by law, it is normal to see some uncoordinated movement, especially of the unrestrained rear leg. She notes that this does not mean that an animal is conscious, and much research will support this."

The video, narrated by Grandin, "takes the viewer from live cattle being unloaded from the truck through the stunning and slaughter process, and is perhaps a response to recent slaughterhouse videos recorded secretly by animal-rights groups. The video comes with a warning: "We do want to caution viewers that the scenes are graphic at some points. In an effort to provide true transparency, we are shining a light on the complete process." (Read more)

Outbreak of West Nile virus is 'one of the largest'

U.S. health officials reported Wednesday three times the usual number of West Nile virus cases for this time of year, and one expert told The Associated Press it is “one of the largest” outbreaks since the virus appeared in this country in 1999. So far, 1,118 illnesses have been reported, about half of them in Texas, according to the federal Centers for Disease Control and Prevention. In an average year, fewer than 300 cases are reported by mid-August. There have also been 41 deaths this year. Most infections are usually reported in August and September, so it’s too early to say how bad this year will end up, CDC officials said.

AP reports that West Nile virus peaked in 2002 and 2003, when severe illnesses reached nearly 3,000 and deaths surpassed 260. The best way to prevent West Nile disease, say experts, is to avoid mosquito bites. Insect repellents, screens on doors and windows and wearing long sleeves and pants are some of the recommended strategies. Also, empty standing water from buckets, kiddie pools and other places to discourage breeding. (Read more)

Drought increases hay prices, making it even more difficult for livestock producers to feed herds

The price of bales of hay has more than doubled this year, with average prices reaching record levels. The price increase has made hay a major commodity in drought-stressed areas of the U.S., "far out-pacing the rally in corn and soybeans prices," Gregory Meyer of the Financial Times reports. The increase is also putting more stress on ranchers who are struggling to feed their herds.

Hay supplies per animal are at the lowest level in more than 25 years, Department of Agriculture economists told Meyer. This will increase meat and dairy prices as ranchers shrink herds because they can't afford to feed them. Ranchers would typically be grazing cattle now and mowing hay supplies for winter, but corn-price increases and poor pasture conditions are forcing many to use existing hay stores. The U.S. faces its smallest hay harvest since 1976, Meyer reports.

The rise of hay prices has been "largely unnoticed outside the cattle industry," but its price increase is significant, Meyer reports. At an auction in Iowa last week, hay sold for $300 per short ton, a 150 percent increase from last August. In Missouri, prices rose by 70 percent, according to the Agricultural Marketing Service. Hay has been delivered to Iowa from as far as Manitoba, Canada. (Read more)

Would Obama's order to Pentagon to buy more meat raise prices for producers? Analysts disagree

The Obama administration has ordered the Pentagon to buy more beef, pork and lamb to try and help ranchers through the severe drought, prompting the Defense Department to determine whether it can afford to buy more. The military buys millions of pounds of meat every year to feed troops around the world.

Some analysts say the move would only help Obama politically, but others say it could be an opportunity for the Pentagon to pay less for meat it will eventually need and can freeze. Drought has forced up the price of corn, which livestock producers use as supplemental feed, and since they aren't able to make livestock heavier faster, they are forced to sell sooner than usual, Jennifer Rizzo of CNN reports. This causes more meat to be available, making prices drop, which also reduces the profit that ranchers have available to buy feed. Rizzo reports the mandate to buy more meat is an attempt to raise prices by taking more meat off the market.

Iowa State University economist Bruce Babcock told Rizzo the impact of these purchases is suspect. "The purchase is delaying the day of reckoning because ... it will raise their prices somewhat now and it will allow them to purchase more feed, but that feed cost isn't going to go down for a year," Babcock said. The livestock industry has to shrink by reducing herd sizes in order to afford corn in the future, he said. American Farm Bureau Federation economist Bob Young told Rizzo that even though the purchase would only make a small dent in the market, the move will ultimately help ranchers. (Read more)

Delaware, Maryland entice and train young farmers with grants and no-interest loans

Cara and Philip Sylvester, on their farm
in Delaware (State photo)

Two states have recently introduced programs that make it easier for young people to start farming.

In Maryland's Montgomery County, this month County Executive Isiah Leggett announced an initiative that will train young farmers and place them on privately owned land to grow sustainable crops and livestock for five years or more. The Washington Post reports that county officials hope to approve five to 10 participants this winter and prepare them to farm in the spring. Funded by a federal Small Business Administration grant, the New Farmer Pilot Project aims to help build small farms at a time when the county is struggling to preserve farming. (Read more)

In Delware, 10 young farm families and individuals are on their way to owning their dreams with help from an economic development program designed to boost agribusiness in The First State. The farmers from Kent and Sussex counties all received help purchasing land – nearly 900 acres total – from the Delaware Young Farmers Program, marking its first year. The no-interest loan program was launched in July 2011 by Gov. Jack Markell as a way to reduce the capital investment for young people looking to set up agribusiness operations. It was funded through $3 million in the fiscal 2012 budget. (Read more)

Lawyer has become rural America's 'new antitrust cop,' filing suit against agribusiness concentration

Kansas City lawyer Dan Owen, left, could have a major impact on the agriculture business if the antitrust suits he's filed are successful. Bill Bishop of the Daily Yonder reports two suits are "aimed at both the economics and politics of the food industry." A potential third suit would "challenge the way meat packers are buying live cattle at auction."

The Obama administration appeared ready to challenge the increasing centralization and concentrated of agricultural production by large companies with industrial-style farms,  announcing it would conduct a "wide-ranging investigation" to see if it violated antitrust laws. Hearings were conducted and speeches made, but nothing of substance ever happened, Bishop reports. Activists turned to the private sector for help, and no one, Bishop writes, "has taken up the cause more fervently than Owen." He has become "the new antitrust cop on the beat in the food business."

His first suit seeks to keep money collected through the beef checkoff program from going to the National Cattlemen's Beef Association. For 26 years, the Department of Agriculture has collected $1 per head of cattle sold for a fund to promote beef industry, and almost all of the $1.6 billion collected has gone to the NCBA, which Owen claims has violated the terms of the  program.

The second suit concerns price fixing in the fertilizer business, particularly among potash producers. Five companies control 70 percent of the world's potash supply, and prices have increased to $1,000 a ton from $140. Owen's suit claims potash companies "conspired to close mining operations in order to manipulate supplies and prices," Bishop reports.

Bishop reported last week that the USDA issued a report concluding that "there are so few cattle sold at auction that there was no way to determine a fair price for beef." Most cattle raisers were selling according to a formula created by meat packers, which left prices up to large companies. "The report says, to us, that cattle raisers no longer have power in the markets. ... Instead of a competitive market, there is a 'dictatorship,'" Bishop wrote.

Owen said he's started investigating the way livestock is purchased. He received complaints from cattle raisers who said they were receiving only one bid at auction, Bishop reports, and Owen said he's investigating "whether packers are avoiding bidding against each other by divvying up feed lots." He's discovered a study in Utah that concluded half of all feedlots sold to one buyer, and is continuing to investigate. (Read more)

To help livestock producers and limit meat prices, U.N. wants feds to halt mandated ethanol production

The United Nations is calling on the United States to halt its mandate for ethanol production in order to lower corn prices, which would help struggling livestock producers and mitigate increases in meat prices. Recent oppressive drought caused the U.S. Department of Agriculture to estimate a large decrease in the size of the U.S. corn crop last week, which forced prices to almost $9 a bushel.

About 40 percent of U.S. corn will be used for ethanol production as part of the government mandate, Javier Blas and Gregory Meyer of the Financial Times report. But UN Food and Agriculture Organization Director-General Jose Graziano wrote in a Financial Times opinion piece that a temporary suspension of ethanol production "would give some respite to the market and allow more of the crop to be channelled towards food and feed uses." (Read more)

Week's start on drought news: Wells dry up, crop insurance helps, pot shrivels, some areas gain

A cornfield in Bloomsdale, Mo., where wells
wells are going dry. (St. Louis Post-Dispatch)

"Everyone, most everything, needs water," Rick Montgomery of The Kansas City Star wrote Sunday in the first installement of his three-part series, "Chasing the Drought." "We just can’t always expect it to be there, not as the world’s population grows and its moisture content stays the same."

So begins the week's reporting on what is fast becoming the topic none of us can escape.

“This year’s drought is a great opportunity to look at the plans in place and better prepare for the next drought,” Michael Hayes, executive director of the National Drought Mitigation Center at the University of Nebraska told Montgomery. The reporter has traveled through seven Midwest states and "met with farmers, beef producers, worried weather experts, park managers and policy wonks" to find out how each would try to avert some of this pain down the road, if it can be averted. (More here)

Abandoned Main Street in post-irrigation
Happy, Texas (Scott Tong photo)

How much impact? Today, 36 states are projecting water shortages next year. For regulators, it's hard to limit the use of the essential resources, especially in states like Texas, where groundwater is part of your private property. American Public Radio's Marketplace visited Happy, Tex., a small town in the Panhandle that knows what it's like to run out of water. (Read more)

You can add residential water wells to the list of casualties claimed by the Drought of 2012, reports the St. Louis Post-Dispatch. "For months, farmers have been forced to drill deeper wells to water parched crops and feed livestock. But in recent weeks, homeowners across the state have reported that they can't perform basic tasks such as doing laundry or washing dishes, let alone even think about watering their flower beds. It's a difficult problem to quantify, because most private wells go unmonitored."

While the government has slashed its estimate of the soybean yield, made only a month ago, to the lowest level since 2003 and its estimate of the corn yield to the lowest level since 1995, Agriculture Secretary Tom Vilsack says 85 percent of farmers are covered by crop insurance, The New York Times reports.

It's safe to bet that these farmers aren't covered: Lauren Pack of the Dayton Daily News and John Caniglia of The Cleveland Plain Dealer report that the state's marijuana crop has suffered horribly in the drought. "The potent plant that thrives in fields and wooded acres across Ohio has suffered through an unusually brutal summer," he writes. In many places, plants are a fraction of the 4- or 5-foot height that is normal for this point of the growing season. Give it time; it's a weed, remember? (Photo from KEVO-TV, Brownsville, Tex., with story by Tina McGarry)

Of course, the drought is good news for farmers in places where it is absent, because it has driven up prices, but those effects can be broader and indirect, in areas where grains are not major crops. In western North Carolina, award-winning editor Jonathan Austin of the Yancey County News found a way to make the national story local in a region that is getting plenty of rain: "Some area farmers may want to consider taking a chance by buying some of the cattle flooding the market in the Midwest. The impact of the drought on food prices could also lead more residents to begin shopping locally," according to North Carolina State University's Arnold Oltman, a professor of agriculture and resource economy. Austin also reports the region's "availability of water may prove to be an economic boon to microfarmers, beef growers and others who look to the land for at least some of their income." (Read more)

Being deep-fried at a fair takes on new meaning in drought and heat wave

In much of rural America, it's that most wonderful time of year -- fair season. A time when country life is on proud display, where generations of farm families gather and deep-fried foods seem guiltless. But at many county and state fairs this year, the most widespread drought since the 1950s is also evident, reports Monica Davey of The New York Times. (Keeping cool at the Ozaukee County Fair in Wisconsin was a full-time job; NYT photo by Darren Hauck)

“You see the stress of this all on individuals everywhere you go, even the fair,” said Vivian Hallett, who most years has entries (and winners) in nearly every imaginable plant category at the Coles County Fair in Illinois. Not this year. “We just didn’t have the stuff,” said Hallett, 65. “All our pumpkins have died. Zucchinis? Dead. Our green beans are just sitting there turning rubbery. And my gladiolas never came up at all.”

Bad, yes, but human attendance has shriveled, to -- the combination, organizers say, of miserably hot weather and larger, overwhelming concerns back home on the farms. “It was the roughest I’ve seen,” said Gary Shemanski, facilities manager at the Johnson County Fair in Iowa. There, he told Davey, attendance fell, four rabbits perished in heat that exceeded 100 degrees, and a beloved, final fireworks display was canceled for fear of setting off a blaze in the bone-dry county.

Why go at all? Because, organizers say, rural families may need a distraction more than ever. “The fair is just in your blood — you don’t think about it, you just go,” said Jean Klug, 63, of Cedarburg, Iowa. “It’s just country living,” said Bob Hartwig, who added that his children had intended to bring five cows to Wisconsin's Ozaukee County Fair but downsized to three just as his family was weighing downsizing a larger herd at home. Fair organizers say they are bracing for the possibility of still more fallout next year, writes Davey, when raising an extra pig for a fair may become an impossible luxury. “They may decide feed prices are just too high the next time,” said Brian Bolan, agriculture director for the Wisconsin State Fair.  (Read more)

Drought one of worst in history, but not necessarily economic disaster, Kansas City Fed bankers write

"Severe drought has ruined one of the most promising harvests in U.S. history," but a weather disaster doesn't mean economic disaster, Federal Reserve Bank of Kansas City Vice President Jason Henderson and economist Nathan Kauffman write in the latest edition of the bank's quarterly publication, The Main Street Economist.

Though the U.S. Department of Agriculture recently cut estimates of the corn crop by 12 percent and the soybean crop by 8 percent, but "USDA’s price and yield projections suggest that U.S. corn revenues could rise 12 percent above June estimates and approach last year’s record highs." (Chart based on data from Commodity Research Bureau.) "Similarly, total soybean revenues are now projected to increase 3 percent above June 2012 estimates. A similar revenue pattern emerged during the 1988 drought. Still, final revenue estimates for 2012 will hinge on future weather patterns, final production losses and price responses to harvest expectations."

Individual farmers' situations depend on their crop choices, marketing strategies, the weather and crop insurance, the report says, but livestock producers are worse off: "Estimates suggest that over 70 percent of all beef cows are in states with pasture conditions rated as poor to very poor. With two-thirds of U.S. hay production areas experiencing drought, alfalfa prices have jumped 15 percent since May. In an attempt to limit losses, ranchers weaned calves earlier than usual and increased the placement of feeder cattle into feedlots. Combined with the increased shipments of feeder cattle from Mexico, the influx of cattle into feedlots contributed to a 12 percent decline in feeder cattle prices since mid-June. . . . USDA expects feedlot operations to lose more than $200 per head this fall. . . . Hog and poultry enterprises are also bracing against rising feed costs and falling profits." But if short-term losses reduce livestock head count, prices are expected to rebound.

Henderson is the bank's vice president and Omaha branch executive. Kauffman is an economist. Their report also addresses the drought's effect on transportation, meatpacking, ethanol, food prices and all consumer prices. To read it, click here.

House passes drought-aid bill, as outlook for overall Farm Bill remains unclear

The House passed a disaster aid package today to help cattle and sheep ranchers who are running out of pasture and up against high feed prices. The vote was 223-197. While the $383 million measure "promises some political cover for Republican candidates in farm states," reports David Rogers of Politico, the standoff over the five-year Farm Bill "remains a serious liability for the GOP going into November’s elections."

The current Farm Bill expires at the end of September, when Congress is likely to recess for campaigning. Congress has relatively little time to legislate before that, because it is starting a recess that will run through Labor Day. The chairmen of the House and Senate agriculture committees were scheduled to meet tonight "to begin negotiations toward a potential compromise that could be called up in September if the political winds shift enough in favor of action," Rogers writes.

Lacking votes to pass it, Republicans pull 1-year Farm Bill extension, replace with drought package

Facing certain defeat, not to mention near-universal displeasure from farm groups, Republicans pulled their one-year Farm Bill extension from the House docket late Tuesday in favor of a narrower $383 million disaster aid package to address the immediate needs of drought-stricken livestock producers. (Agri-Pulse graphic)

The abrupt turnaround, writes David Rogers of Politico, "came just minutes before the House Rules Committee had been slated to take up the extension in anticipation of floor votes Wednesday. Within hours, the slimmer 22-page disaster bill had been filed with the promise of floor votes Thursday. The action shows how much the GOP leadership — having boxed itself in by refusing to take up a five-year Farm Bill — is scrambling now to find something the party’s candidates can take home to farm states in August given the severe drought plaguing much of the country."

The substitute disaster bill will restore livestock indemnity and forage programs that have expired in the current farm program, with some assistance also for specialty crops. To keep down costs, the aid will apply only to 2012, while offsets will come from imposing caps on two conservation programs much as the House Appropriations Committee has already proposed. Early estimates indicate the net savings would be about $256 million. (Read more)