Views on the News: Chinese Facility Explosion and the Farm Bill Becomes Law
Scientists predict California drought could be a long one
The top stories for the week of Feb. 3 are …
- Nine Injured In Chinese Corn Processing Plant Explosion
- Senate Sends Farm Bill to President Obama
- ADM Reports Strong Adjusted Fourth Quarter 2013 Earnings of $0.95 Share
- Cargill Will Idle Raleigh, NC Soybean Processing Facility
- Scientists Fear Long California Drought
Three workers were critically injured while six more needed medical attention after an explosion at a corn processing plant in the Heilongjiang Province of China. Heilongjiang Longfeng Corn Development Co., Ltd. is a leading agricultural products processing plant, with a capacity of over 900,000 tons. There is an investigation into the cause of the explosion, but no new news as of this writing.
The Farm Bill finally reached completion on Feb. 7, when President Obama signed the bill into law at Michigan State University. The bill has managed to squeeze through a divided congress after almost two years of negotiations that saw one extension of the 2009 farm bill and the threat of returning to the outdated permanent law. The new bill will expand crop insurance offerings while eliminating direct payments to farmers. Food stamps, one of the main stumbling blocks, will be reduced by 1%.
Adjusted earnings may have been up by 58% this past quarter, but Archer Daniels Midland Co.’s net earnings were down from $0.77/share to $0.56/share. This decrease was due to the company’s Brazilian sugar mill and the acquisition of the Australian company GrainCorp falling through. ADM’s Chairman and CEO Patrica Woertz was pleased with ADM’s biofuel performance and cost savings efforts.
This year’s spring and summer processing of soybean meal at Cargill’s Raleigh, NC, facility will be suspended. Cargill cited the lack of consistent demand of soybean meal along with a high demand of U.S. soybeans from other sources for the reasoning behind their decision. The Raleigh facility will still buy soybeans from producers, and demands for soybean meal will be met by their Fayetteville, NC, facility. Cargill will continue to evaluate whether to open the plant for processing.
California has been in a drought for the last three years, with this past year having the lowest recorded rain fall in 150 years. This drought is pushing California’s water reserves to their breaking point, with many producers limiting or completely scraping their crops this year. This extreme drought in California may not be as short lived as many hope. Megadroughts are a fairly common occurrence in last 1,000 years of California’s history. Most of the Megadroughts last 10 to 20 years with the most extreme stretching out from 180 to 240 years, a stretch of dryness that modern California is not prepared for. California is the United States’ largest state by population and a prolonged drought will have a ripple effect through agriculture and the rest of the economy.
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