USDA NASS Cancels the 2015 Preliminary Crop Report
January 14, 2016
Normally I would not send out two newsletters within a week of each other. However, on Tuesday I contacted the USDA National Ag Statistics Service to find out why their crop production report did not include any data on the pecan crop. I was advised that the data would have normally been published next week in the agency’s 2015 Preliminary Crop Report. However, due to ‘budgetary constraints,’ it was decided late last week not to publish the report, and if I wanted to comment on that decision, I should send my comments to Ms. Sue King (phone 202-690-8122) at email@example.com.
For those not familiar with the NASS January Preliminary Report, it is usually the last crop estimate given until the final figures are published in July. Because the pecan industry does not operate under the auspices of a Federal Marketing Order, the only crop data available to the industry is collected and published by the USDA in the form of an October crop estimate, the January Preliminary Crop Report and the July Final Crop Production Report. The first two reports are critical to the development of pricing. Without it, the industry is forced to operate in the blind.
I am asking that each of you copy the below paragraphs, put them in an email, and send them to Ms. King. It will take less than a minute to do so. That is the only way we can hope to get the USDA to publish the data. Here are the points that need to be made:
1. Unlike the almond, walnut, pistachio and hazelnut industries, the pecan industry does not operate under a Federal Marketing Order nor does it have a marketing board. As such, the only crop data available to the industry is what is generated by the US Government (USDA NASS).
2. Unlike almonds, walnuts and pistachios which are only grown in California (some pistachios are grown in Arizona but only on a limited basis), pecans are grown in sixteen states. The pecan industry employs thousands of people in those states which derive significant tax revenue not only from the businesses and their employees within those states, but from the family farmers who own and manage the tens of thousands of acres of land used to grow the nuts. Anything that adversely impacts the pecan industry adversely impacts the economies of sixteen states. This year, the pecan industry will generate over $1.5 billion for its growers and processors. That figure grows substantially when one looks at the dollars generated at the consumer level.
3. Unlike the almond, walnut and pistachio crops where final payments to the farmer are often made months after the product is received by the processor and are usually based on the price the processor receives at the time the finished product is sold, pecans are a cash crop based on the market price of the raw material on the day it is received by the processor. If cash is not paid at the time of purchase, or the price guaranteed with interest, the product is sold elsewhere. As such, once the processor takes possession of the product, his costs are fixed, and if the market falls, he takes the losses.
4. The October 2015 initial crop estimate was widely considered to be inaccurate when first published. However, with no other data available, all purchases and sales of both inshell and meats have been based on that number. Now, due to adverse weather conditions that have plagued the entire pecan growing region since September, there is a general consensus that the crop is much smaller. This uncertainty has led to a significant escalation of prices based almost entirely on speculation. Without the preliminary report (it was supposed to have been published January 21, 2016), the industry will have no idea as to the actual size of the crop until six months after all of the contracts have been written. If the crop really is significantly smaller than the October figure, than the current price increases may turn out to be justified. However, if that is not the case and the supply is actually larger, the additional supplies could result in a precipitous drop in prices resulting in tens of millions of dollars in losses.
5. Because of the importance of the USDA NASS data to the industry and the states that support it, funds were specifically earmarked in the latest Farm bill to insure the continued gathering and publishing of pecan crop data in October (first estimate), in January (Preliminary Crop Report) and in July (Final Annual Crop Report). Now we are being told that budgetary constraints caused NASS to cancel the report less than two weeks before its anticipated publication. What happened to the funds?
6. The pecan industry is in the process of implementing a Federal Marketing Order. Like the almond, walnut and pistachio industries, as part of the new order, the industry will have the ability to generate its own data greatly minimizing the importance of the NASS publication. In fact, like the almond, walnut and pistachio industries, the pecan industry will probably end up supplying NASS with the data to be published. If everything goes as planned, the pecan industry hopes to have the new order in place for the start of the 2016 harvest. However, in the meantime, the data is critical to the industry, and as such, it is imperative that the USDA NASS reconsider their action and publish the document as close to the January 21st date as possible.
Should you have any questions, or want additional clarification of the problem, please do not hesitate to contact me at 630-879-5200 (877-905-5110 Toll free in the US).