Washington Insider -- Friday

By DTN's Washington Insider

Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.

Underfunding May Threaten FDA's Food Safety Plans

The responsibilities added by the Food Safety Modernization Act (FSMA) to those already assigned to the U.S. Food and Drug Administration will be extremely difficult for the agency to meet due to chronic underfunding by Congress, FDA Commissioner Hamburg said this week.

President Obama's fiscal 2015 budget requested an increase of $263 million from fiscal 2014 enacted levels for food safety. The House Appropriations Committee draft proposal would allocate an additional $25 million from fiscal year 2014 enacted levels. The president's budget proposes that additional funding be generated from new industry user fees that would have to be authorized by Congress. However, some members of Congress have said that legislators will not authorize them.

This puts the agency in a tough budgetary position because Congress appears unwilling either to increase FDA's annual appropriation or allow the agency to institute user fees that would pay, in part, for the new regulatory duties that have been assigned to the agency.

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Mexico's Economy May be on Verge of Major Growth Spurt

Steps being taken by legislators and policymakers in Mexico could boost annual long-term growth to as high as 5%, according to a recent American Chamber-Mexico economic report. The main driver of the projected increase in economic activity will come largely from an overhaul of the energy sector, which currently provides funding for about 40% of the government's budget, says ACM.

As Mexico seeks to bolster its oil industry, analysts note that the country needs to look beyond the United States as a customer for petroleum exports, since U.S. production is supplanting imports from a number of sources. U.S. crude oil imports from Mexico already have fallen nearly 50% in the last ten years, according to the U.S. Energy Information Administration.

So at the same time that U.S. policymakers are considering whether to approve the Keystone XL pipeline that would bring in more oil from Canada, Mexico will need to find other outlets for its substantial petroleum production.

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Washington Insider: Data Privacy Concerns and Technology

The Economist magazine has a reputation for somewhat stiff-necked economic conservatism cleverly packaged and delivered. So, it was not unusual to see a warning recently for U.S. agriculture that began with the premise: "Farmers can be among the most hidebound of managers, so it is no surprise that they are nervous about a new idea called prescriptive planting, which is set to disrupt their business." Or, maybe spiff it up a little. But it is an interesting opening nevertheless.

The focus of the warning is a new management system that prescribes "with great precision" which seeds to plant and how to cultivate them, an advance that "could be the biggest change to agriculture in rich countries since genetically modified crops" and "nearly as controversial, since it raises profound questions about who owns the information used." This could plunge "stick-in-the-mud farmers into an unfamiliar world of big data and privacy battles," the Economist opines.

The article focuses on emerging prescriptive-planting system, including Monsanto's FieldScripts that is now on sale in four states. It uses remote sensing and other mapping techniques based on data for every field in America together with "all the climate information that it could find." By 2010 its database contained 150 billion soil observations and 10 trillion weather-simulation points.

The Climate Corporation originally created the mapping system to sell crop insurance. Then, Monsanto bought the company and added its library of hundreds of thousands of seeds and their yields. By adding these to the soil- and-weather database, the company can produce highly detailed maps that define which seed grows best in which field, under what conditions.

FieldScripts uses all these data to run machines including those made by Precision Planting, a company Monsanto bought in 2012, which makes drills and other field equipment. Now, Monsanto can plant a field with different varieties at different depths and spacings, varied according to weather data.

Now, prescriptive planting is catching on fast, the Economist says, and another seed producer, Du Pont Pioneer, has linked up with John Deere to beam advice on seeds and fertilizers to farmers in the field. Farm-supply co-op Land O'Lakes bought Geosys, a satellite-imaging company, last December to boost its farm-data business.

Producers who have tried Monsanto's new system claim roughly 5% increases in yields over two years, a very significant advance. The seed companies think providing more data to farmers could increase U.S. corn yields sharply and increase growers' margins at the same time.

The Economist sees a threat in all of this, though, from conflicts that arise "naturally" when data entrepreneurs "meet old-fashioned businessfolk" who now will need to operate with less discretion and who already tend to "distrust the companies peddling this new method" And, it says that many fear that the details they are providing might be sold or even used to speculate on underperforming farms that would then compete with them — or, at least trade on the commodity markets to the detriment of farmers.

In response, the American Farm Bureau is working on a "code of conduct" asserting that farmers own and control their data and that companies may not use the information except for the purpose for which it was developed. The companies agree with those principles, the Economist says, but once data have been sent and de-identified, it is not clear who owns them or has rights to their use. For this reason and others, some Texan farmers have banded together to form the Grower Information Services Co-operative, to negotiate with the data providers.

Another worry is that farmers could be locked into doing business with a single provider. The Climate Corporation has set up a free data-storage service which others cannot access without permission. In addition, new specialty data-management firms are emerging and will make the market more competitive, the Economist suggests.

Still, the publication worries that the new system's success depends on farmer trust that, in turn, depends on benefits equitably shared.

Well, of course, you might say. But this particular worry may well be amplified by the long distance between the United Kingdom and U.S. commercial farms whose operators are known to be voracious consumers of high-tech machinery and methods –– rather than hide-bound — and have few illusions about dealing with agribusiness. They also have sharp pencils — more likely advanced algorithms — that tell them pretty clearly when benefits exceed costs, and when they don't.

Sure, they do worry quite a bit about who has their information and what they are doing with it, how that affects them, and how that link might evolve in the future. Some still mistrust surveys by USDA's National Agricultural Statistics Service. But most commercial operations use these data and massive amounts of commercial information as well and work closely with others who know a lot about their operations.

Since this is far, far from new territory in the evolution of U.S. farm technology many observers suggest this new approach will be managed just fine and adapted fairly quickly if it continues to work as well as it seems it might, Washington Insider believes.

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