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  • Fresh Produce Imports from Mexico Continue to Rise

    Fresh Produce Imports from Mexico Continue to Rise

    Mexico is the largest agricultural trading partner for the United States totaling $71.9 billion (imports plus exports) in 2022.  U.S. agricultural exports to Mexico totaled $28.5 billion while imports from Mexico totaled $43.4 billion.  The main agricultural products imported from Mexico are fruits and vegetables, in fact 44 percent of the fruits and 48 percent of the vegetables imported by the U.S. are from Mexico. The United States imported $18.7 billion of produce from Mexico during 2022, including fresh, frozen, and processed fruits, vegetables, and nuts. Just over 98 percent of these imports entered the United States by land ports between Mexico and Texas, New Mexico, Arizona, and California. When considering only fresh fruits and vegetables, which is nearly 89 percent of total produce, imports totaled $16.6 billion. These imports were shipped in 590,906 forty-thousand-pound truckloads. About 55 percent of U.S. fresh fruit and vegetable imports from Mexico entered through Texas land ports, arriving in 325,467 truckloads and worth $11.6 billion. The most active single port for fresh produce import from Mexico in 2021 was Pharr, Texas with 197,253 truckloads followed by Nogales, Arizona with 144,027 truckloads. Laredo, Texas (75,409 truckloads) and Otay Mesa, California (73,580 truckloads) rounded out the top four. Although there was a small drop of the number of fresh produce trucks crossing from Mexico in 2022, the expectation is that the positive trend seen over the last decade will continue as U.S. consumers continue to demand year-round supply of fresh produce.

    Figure 1. U.S. Imports of Fresh Produce from Mexico by Truck, 2012-2022

    Source: Agricultural Marketing Service (AMS), USDA

    Photo by PhotoMIX Company: https://www.pexels.com/photo/vegetables-stall-868110/

    Ribera, Luis. “Fresh Produce Imports from Mexico Continue on the Rise.” Southern Ag Today 3(8.4). February 23, 2023. Permalink

  • Outcomes of Chapter 12 Bankruptcy Fillings

    Outcomes of Chapter 12 Bankruptcy Fillings

    There are two primary outcomes of Chapter 12 bankruptcy filings, discharge and dismissal.  The most common objective is the discharge of eligible debts.  After completing all the payments required under the Chapter 12 plan, the debtor will certify that all obligations have been paid.  At that time, the debtor can receive a discharge of eligible debt.  The discharge can release the debtor from all debts, with some exceptions.  Several debts will not be discharged, including child support and alimony payments.  Other debts that would not be allowed to be discharged are those that have been secured or restructured.  With restructured debts, the plan may allow for payments past discharge based on the type of asset and quality of the asset.  For example, claims secured by livestock may be allowed to be restructured over 5 to 10 years.

    At the same time, a debtor may qualify for a hardship discharge.  A hardship discharge is allowed when the debtor fails to meet the plan payments through circumstances beyond the debtor’s control.  For example, if the debtor became seriously ill and unable to work during the plan, this potentially could lead to a hardship discharge.

    An alternative to discharge of debt may occur when the court grants a dismissal order.  

    Dismissals occur for a variety of reasons, including the failure to pay the filing fee, failure to file all required documents, or failure to make plan payments.  Additionally, debtors sometimes will request a dismissal when financial situations change, or negotiations result in the ability to pay back debt without further protection from the courts.

    Figure 1 shows the breakdown of the most common outcomes in the southern U.S. bankruptcy cases that we have looked at in this four-part Southern Ag Today series. From October 1st, 2012 to September 30th, 2022, there was an equal percentage of discharged filings and dismissals.  Only 1% of the discharged cases were in the hardship category, with the other 99% resulting in some form of debt relief.  

    Approximately 19% of the dismissed cases were for failure to make a plan payment.  This may occur when the bankruptcy repayment plan does not provide sufficient relief, or additional financial issues develop.  The remaining 81% of dismissed cases fall into the multiple dismissed categories previously discussed, although the data provided do not allow for identification between those groups.  However, it should be noted that some of those dismissed cases are voluntary, which can be viewed as an optimal decision by the debtor to exit the court process.  

    What is apparent from these data is that filing bankruptcy does not provide automatic relief from dischargeable debt.  There is still a need to negotiate with the court and the creditors throughout the process.  The court protection can hold off other legal action and foreclosures, but this can also be achieved by early communication with creditors when financial problems become apparent.  If necessary, U.S. bankruptcy law does provide farmers with a unique court protection option.

    This work is supported by the Agriculture and Food Research Initiative (AFRI) program, grant no. 2022-67023-36112/project accession no. 1028056, from the U.S. Department of Agriculture, National Institute of Food and Agriculture.

    Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and should not be construed to represent any official USDA or U.S. Government determination or policy.

    Rabinowitz, Adam, Paul Goeringer, and William Secor. “Outcomes of Chapter 12 Bankruptcy Filings.” Southern Ag Today 3(8.3). February 22, 2023. Permalink

  • An Interesting Curiosity, for Now

    An Interesting Curiosity, for Now

    USDA reports cold storage supplies of meat (and other agricultural commodities) each month.  In December 2022 there were 544 million pounds of beef in cold storage facilities.  That was the largest amount of beef in storage since December 2016.  It also was the second largest amount of beef in storage on record, at least going back to 1973.  What does this mean, if anything?

    Cold storage stocks of meat are much different than grains or cotton.  Meat is not storable for very long, compared to grains.  It should be thought of as a flow stock, or product in the system, or cold chain, that is in movement eventually to its final destination.  The meat is often frozen which causes a price discount compared to fresh.  We often think about a buildup of stocks as an indicator of a demand problem.  But, it can often reflect more production moving through the system, or that we have more imports and exports reflecting growing trade or even meat company strategies to stock up on items due to favorable prices for example in pork bellies.  

    Cold storage stocks of beef tend to peak in December-January and reach a low in June-July.  The seasonal decline in stocks has been, on average, about 82 million pounds over the last 5 years.  In 2022, there was very little seasonal decline and supplies grew to 544 million pounds by the end of the year.  

    Why are stocks so large?  One factor is that beef production was a record large 28.3 billion pounds in 2022.  U.S. total beef trade, exports plus imports, was also a record large 6.78 billion pounds in 2022.  Beef exports were a record large 3.43 billion pounds and imports, 3.35 billion pounds, the most since 2015.  That’s a lot of beef moving in, out, and around the country.  The beef in storage is reported as boneless (mostly for ground beef) and cuts (think of steaks and other cuts).  Of the 544 million pounds in storage, 498 million pounds are boneless beef, and that was 6.5 percent more than in December 2021.  This beef is likely related to the large number of cows that were culled in 2022.  The remaining 45.7 million pounds are beef cuts. Another way to put this in context is that 544 million pounds is about 1.6 pounds per person, which is not a lot different than per capita stocks over the last several decades.  Per capita cold storage stocks were over 2 pounds back in the early to mid-1970s when the U.S hit peak cattle numbers and beef demand began to decline. 

    While the amount of beef in cold storage is curious, it’s not likely a sign of weakening demand yet.  The next USDA cold storage report will be released on Friday afternoon and should add more context to this curious statistic.  

    Anderson, David. “An Interesting Curiosity, for Now.” Southern Ag Today 3(8.2). February 21, 2023. Permalink

    Photo by Dana Sredojevic: https://www.pexels.com/photo/a-butcher-holding-a-slab-of-steak-13279400/

  • 2023 Peanut Market Outlook

    2023 Peanut Market Outlook

    U.S. peanut production decreased in 2022, driven by both lower acres harvested and lower yields. Peanut acres planted were down by 8% nationwide, to 1.46 million acres. Yields dropped by 2.7% from 2021 to 4,019 lb. per acre nationwide. Georgia – the largest producing peanut state – saw yields fall to 4,250 lb. per acre, a 200 lb. per acre drop, as its crop was affected by the tomato spotted wilt virus. The main driver of the lower nationwide yields came from drought-stricken Texas, which had a 21.6% decline in yield to 2,800 lb. per acre, its lowest value since 2011. Furthermore, Texas saw 25% of its planted acreage go unharvested due to the drought. Total peanut production in the U.S. is estimated at 2.8 million tons, a 12% decrease from 2021 (orange line in Figure 1). 

    On the demand side, peanut use is expected to decline by 4% this marketing year (bars in Figure 1). This is primarily due to a 7% forecasted decrease in exports. Food – which makes up the largest portion of peanut disappearance – is projected to increase by 1% from 2021. A 13% increase in peanut candy consumption kept peanut food use from falling much during the 2021-2022 marketing year, despite decreases in disappearance for peanut snacks, peanut butter, in-shell peanuts, and other edible peanut products. Over the first five months of the 2022-2023 marketing year (August through December), the quantity of peanuts used for peanut butter is at record levels, up 2.9% over the same period last year. This is crucial because over half the peanuts used for food end up as peanut butter. 

    Peanut carryover at the end of the marketing year is expected to decrease by 8% to 1.1 million tons. While peanut supply and demand factors are not the main drivers of peanut prices, peanut prices are expected to remain high amid the projected lowered peanut stocks. The expected price for the 2022-2023 marketing year is at $540 per ton, which would be the highest level in ten years. This comes as high prices for several alternative crops boost competition for peanut acreage this Spring.

    Figure 1. U.S. Peanut Production, Stocks, and Disappearance by Year

    Data Source: USDA Economic Research Service. Oil Crops Outlook: February 2023.

    Photo by Marina Leonova: https://www.pexels.com/photo/close-up-shot-of-peanuts-7717463/

    Sawadgo, Wendiam. “2023 Peanut Market Outlook.” Southern Ag Today 3(8.1). February 20, 2023. Permalink

  • Oklahoma Prevails in Lawsuit Against Poultry Growers for Pollution of Illinois River

    Oklahoma Prevails in Lawsuit Against Poultry Growers for Pollution of Illinois River

    On January 18, 2023, the United States District Court for the Northern District of Oklahoma ruled on a lawsuit filed by the State of Oklahoma against 11 poultry producers. The lawsuit alleged that the poultry producers polluted and continue to pollute the Illinois River with phosphorus and bacteria from poultry litter applied to lands in the Illinois River watershed.

    The original lawsuit included 11 causes of action. The court dismissed six causes of action before trial: cost recovery under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA); natural resource damages under CERCLA; a Solid Waste Disposal Act (SWDA) citizen suit; unjust enrichment/restitution/disgorgement; and two claims under Oklahoma state statutes and regulations. A trial was held on the following five causes of action:  violation of Resource Conservation and Recovery Act (RCRA) 42 U.S.C. § 6972; state law public nuisance and state law nuisance per se;  federal common law nuisance; trespass; and two claims under Oklahoma state law.

    The court granted two posttrial motions, dismissing the RCRA claim, the per se nuisance claim, and one of the state law claims because poultry litter can have a beneficial use and was not being disposed of on the fields. On the merits, the court found that the poultry growers were liable for state law nuisance, federal common law nuisance, trespass, and one state law claim.

    Oklahoma proved that each poultry grower contributed significantly to the phosphorus loading of the river and that the state need not trace the exact contribution of each. State-approved permits to apply poultry litter needed to be more specific to immunize the poultry growers from liability. In addition, Oklahoma statute prohibits the creation of an environmental or public health hazard or contamination of waterways from poultry waste handling.

    Since activities in Arkansas caused damages in Oklahoma, the interstate nature of the activities implicates federal nuisance law. The court found that the Clean Water Act did not displace federal nuisance law in this instance. Further, the court found that the poultry growers have unreasonably interfered with the public’s use of the Illinois River in Oklahoma and are liable under state nuisance law and federal nuisance law.

    As to trespass, the activities of the poultry growers resulted in runoff containing phosphorus entering the waters of the Illinois River, constituting a physical invasion. But, again, the state-issued permits did not immunize the poultry growers against the trespass claim. Likening the alleged violation of state law prohibiting waterway pollution to trespass, the court also found the poultry growers liable on those grounds.

    The court ordered the parties to attempt to reach an agreement on the remedies and present the agreement to the court for approval on March 17, 2023. If no agreement is reached, the court will rule on the remedies.

    Richardson, Jesse. “Oklahoma Prevails in Lawsuit Against Poultry Growers for Pollution of Illinois River.” Southern Ag Today 3(7.5). February 17, 2023. Permalink