Washington Insider--Wednesday

Local Foods and Prices

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

Rule Announced for Commercial Drone Uses by DOT

Commercial, scientific, public safety and other non-recreational uses of unmanned aircraft systems (UAS) -- drones -- were cleared via a final rule released by the Department of Transportation (DOT).

The final small UAS rule provides the first national, uniform guidelines for non-recreational operation of drones lighter than 55 pounds, the White House said in a statement. Under the rule, drone flights will be permitted for commercial, scientific, public safety and educational purposes, pursuant to a set of operational and safety requirements.

The new rule, which takes effect in 60 days, will allow unmanned aircraft weighing less than 55 pounds to fly as high as 400 feet and as fast as 100 mph during the day. In the evening, only drones with anti-collision lights will be allowed to operate.

Unmanned aircraft will not be allowed to fly over people under most conditions, and non-recreational remote pilots will be required to pass a written test and go through the same security vetting process as traditional pilots. Operators will continue to be required to keep their aircraft within sight, unless they get a waiver.

The rule also allows unmanned aircraft to operate in sparsely occupied areas without a requirement to coordinate with air traffic control. In more congested areas, the operator will still need Federal Aviation Administration permission to fly.

The restrictions still preclude longer flights to inspect farms, pipelines and utility lines as well as such commercial uses as deliveries by companies like Amazon.com Inc. and Alphabet Inc.'s Google.

FAA Administrator Michael Huerta said the rule establishes a waiver process for certain operations. The FAA's goal for the waiver process is to make it as streamlined as possible, for example, through an online portal. "We do not envision this being a very burdensome process," he said. Individuals or businesses that want to conduct nighttime operations can apply to the FAA for waivers, Huerta said. In doing that, they would need to demonstrate how they are going to ensure safety and visibility for nighttime operations.

What is not subject to waiver, Huerta said, is the maximum weight of 55 pounds, maximum speed of 87 knots or maximum altitude of 400 feet.

Egypt To Issue Decree Wednesday on Ergot in Imported Wheat

Egypt is poised to issue a decree that will allow imports of wheat with up to 0.05% ergot, according to a statement by the country's prime minister in a meeting with ministers involved in the country's ag import policy.

His office is expected to issue a decree Wednesday instructing the country's ag quarantine authority to accept wheat shipments with up to 0.05% ergot. The quarantine office previously indicated they had to enforce the zero-tolerance policy that has roiled Egyptian wheat imports.

"The decree has been promised to be sent tomorrow, it will trump the previous ministerial decree which had dictated a zero tolerance policy," said Eid Hawash, spokesman for the agriculture ministry.

But it may not impact demand for U.S. wheat even once it is resolved as U.S.-origin wheat has not been competitively priced when exporters submitted it under tenders issued by Egypt previously.

Washington Insider: Local Foods and Prices

The Washington Post is carrying a fairly long report this week on why local foods cost more. The article struggles with the realities of ag markets and pricing, but inevitably raises questions about the economic basis for the local foods movement, especially for lower income consumers.

The story hangs heavily on snapshots of consumers' experiences in making market choices. It quotes one customer with a community-supported agriculture subscription who told the Post, "I know it costs more than the grocery store. But I sort of don't care. I'm not counting my pennies like that."

Then, the Post makes an interesting conclusion. "Visiting a farmers market involves discovering new vegetables, swapping recipes and feeling good about consuming healthful foods while supporting small, local farms," it says. "But that feel-good experience comes at a price."

The article focuses on strawberries and notes that organic local strawberries cost about 74 cents per pound more at the farmers' market than at Kroger which were packed by "the largest berry supplier in the United States, Driscoll's." The article thinks that is surprising, considering "Driscoll's pays salaries of more than 40,000 employees, and all those berries travel thousands of miles under constant refrigeration."

The Post says it may look like small farms are simply price gouging, "but the realities are far more complicated."

Both big and small farms have certain fixed expenses, the Post says. Those expenses are the same whether you're farming one acre or 100. Spreading those fixed costs over a bigger farm means the cost per acre to run that farm is lower. Well, while the details are shaky, the generalization is supportable.

Still, the Post thinks, scale differences are "not the main reason local produce costs more." That reflects the fact that California farmers can produce more pounds of berries per acre than other producers. "For example, Virginia strawberry growers plant anywhere from 12,000 to 17,000 plants per acre. They are spaced 12 inches apart in two tidy rows per bed, snuggled under plastic mulch. California growers plant triple rows, squeezing in nearly 22,000 plants per acre."

In addition, California has a longer growing season the article notes. "Ever-bearing plants there produce a steady supply of berries for seven months, while Virginia's seasonal varieties shut down after about six weeks. Farmers in both states harvest berries daily, rotating their time across the fields so that each plant gets plucked every two to three days. But California has much more growing time."

This means that given the same acreage, "California produces about double what the rest of the country does", the Post concludes. "And, while California's minimum wage is slightly higher than Virginia's, so labor costs are a bit of a differentiator but not the deciding factor."

The Post also notes that for many small growers, farming is more a lifestyle than a business. For it cites the Byrd Farm in Columbia, Va., where the farm owners "don't take any money" out of the operation. "The farmer and her husband work long farmer's hours for free and pay their bills using retirement income," the Post reports.

The article also notes that prices reflect many factors, and that "Fiddling with that equation is so complex that business school professors make careers out of teaching it. And it's even harder if, like many small farmers, you don't track your numbers." If you think that's quite strange in a major article on cost competition, you would be right.

Then, the article concludes, as many observers do, that "support local farms" arguments fail if the produce didn't taste great. And flavor is where local strawberry farms have California's shipped fruit beat," the Post says. "This summer, that's going to be what's at the farmers markets or, even better, growing in our own back yards."

So, local foods in season are tasty and hard to beat, but the hard facts of cost competition have created a highly efficient supply structure that serves consumers extremely well when local foods are not in season, the Post seems to be saying.

Still, the local foods movement would have you believe that their structure is much more important than that -- and, that there really are legions of farmers who don't care about economics, an argument that seems fanciful, at best and certainly should be regarded so by policy makers who want to spend taxpayers' dollars to support such schemes, Washington Insider believes.

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