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WASHINGTON AGRIBUSINESS

An annual report by Washington State University’s School of Economic Sciences

2020

S T A T U S A N D O U T L O O K

Contents

3 Preface

4 Acknowledgments

SECTION I . STATUS AND OU TLO OK

5 Situation and Outlook for Small Grains

10 2018 Washington Tree Fruit Outlook

16 Specialty Crops

20 Washington Beef Cattle Sector Review and Outlook

24 Dairy

28 Forestry Sector Review and Outlook

33 Macroeconomic Conditions and Washington Agriculture

SECTION II . SPECIAL FO CUS

37 Coevolution of technology & law for water management in Washington State and beyond

42 Washington State Livestock Identification: Changes to Cur-rent Laws and the Future of Traceability

SECTION II I . WASHINGTON DATA

Preface / 3

PREFACE

WASHINGTON Agribusiness: Status and Outlook is an annual publication prepared by Washington State University faculty in the School of Economic Sciences. It is intended to be

a concise overview of Washington’s current and near-term agricultural activity. The publication is broken into two primary sections. Section I reviews the status of various sub-sectors in agriculture and provides short-term projections or areas of focus moving forward. Section II provides specialty research focused on agricultural economic issues such as animal health, water constraints, etc. A version of this report will be available online through the School of Economic Sciences. Feedback on this issue and suggestions for future featured articles is most welcome. Specific questions regarding focus areas in the report should be directed to the managing editor who will work with the primary authors to provide responses.

Randy Fortenbery, Executive Editor School of Economic Sciences Washington State University

Pullman, WA 99163 (509) 335-7637

[email protected]

Timothy P. Nadreau, Managing Editor School of Economic Sciences Washington State University

Pullman, WA 99163 (509) 335-0495

[email protected]

January 2020

4 / Acknowledgments

ACKNOWLEDGMENTS

THIS publication was made possible through the financial support of the Washington Grain Commission, Washington State University’s College of Agriculture, Human, and

Natural Resource Sciences Office of Research, Washington State University’s School of Eco-nomic Sciences, University of Washington’s CINTRAFOR department, and Washington State University’s IMPACT Center. We are grateful to Peacock and Pen Graphic Design for their help with the report layout and design and to Laura Pizzo for external editorial support. We are also indebted to the following contributors.

Michael Brady, Ph.D. Assistant Professor (509) 335-0970 [email protected]

Randy Fortenbery, Ph.D. Professor, Small Grains Endowed Chair (509) 335-7637 [email protected]

Karina Gallardo, Ph.D. Associate Professor, Extension Specialist (253) 445-4584 [email protected]

Mark Gibson, Ph.D. Assistant Professor (509) 335-7641 [email protected]

Alexander Kappes, Ph.D. Student Research Assistant (509) 335-2865 [email protected]

Kent Wheiler, Ph.D. Director and Associate Professor (206) 543-1918 [email protected]

Timothy Nadreau, Ph.D. Research Associate (509) 335-0495 [email protected]

Shannon Neibergs, Ph.D. Associate Professor (509) 335-6360 [email protected]

Jonathan Yoder, Ph.D. Professor, Director State of Washington Water Research Center (509) 335-8596 [email protected]

Situation and Outlook for Small Grains / 5

SECTION I. STATUS AND OUTLOOK

Situation and Outlook for Small GrainsT. Randall Fortenbery (509) 335-7637

1 https://www.ers.usda.gov/topics/farm-economy/farm-sector-income-finances/farm-sector-income-forecast/

MARKET prices for small grains producers (wheat and barley) improved in the 2018/19 marketing

year compared to the previous year (the marketing year is from June 1 through May 31 the following year). However, prices were still pressured by trade frictions and uncer-tainty as to whether the trade fights would be resolved in a positive way moving forward.

The United States Department of Agriculture’s (USDA) Farm Sector Income Forecast projects that net farm income in 2019 will exceed 2018 levels by about 10 per-cent.1 On the crop side, total receipts by U.S. crop farm-ers are projected to increase about 1 percent in 2019 on a nominal basis, but when adjusted for inflation are expected to drop just over 1 percent. Much of the decline is driven by a year-over-year reduction in soybean prices of about nine percent. However, the value of total wheat sales also declined about 10 percent compared to 2018. The largest year-over-year increases in crop receipts came from corn and vegetables. Total receipts from barley also increased in 2019 compared to 2018.

Washington barley producers increased production by almost 20 percent in 2019, but Washington wheat produc-tion declined by about seven percent. The wheat produc-tion decline occurred in spite of small increases in both planted and harvested wheat acres. The harvest value of 2019 Washington barley production was about $23.5 million, compared to a 2018 harvest value of about $14.4 million. For Washington wheat, the 2019 harvest value totaled $805.2 million compared to $835.7 million in 2018. Harvest prices for wheat were nearly identical in 2019 compared to 2018, so the decline in value came from reduced production.

WheatAfter falling in 2018/19 for the first time in several years, world ending stocks of wheat (the wheat left over going into the next harvest) will increase again in 2019/20. Global wheat consumption is forecast to be slightly higher in 2019/20, but the consumption increase is more than offset by an increase in total wheat production. As a result, global ending stocks are expected to increase about four percent. Figure 1 shows world consumption, production, and result-ing ending stocks over the last several marketing years.

Figure 1: World Wheat Production

Source: World Outlook Board, United States Department of Agriculture

World wheat ending stocks

World wheat consumption

World wheat production

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2302016/17 2017/18 2018/19 2019/20

6 / Section I. Status and Outlook

In contrast to the global picture, wheat ending stocks in the U.S. are expected to be lower at the end of the 2019/20 marketing year compared to last year. Domestic produc-tion of wheat actually increased in 2019 compared to 2018, but increases in both domestic consumption and U.S. exports are expected to more than offset the increase in production. The result is an expected 10 percent reduction in U.S. wheat ending stocks. This will be the first time ending stocks have been under 1 billion bushels since the 2015/16 marketing year. Figure 2 presents the U.S. wheat balance sheet for the last seven years, and the forecast for the 2019/20 balance sheet.

Despite the reduction in year-over-year U.S. ending stocks, U.S. average wheat prices are expected to be well below levels from the 2018/19 marketing year, and the lowest prices in four years. This price reduction is because U.S. prices are influenced by international demand/supply conditions. Thus, the expected increase in world ending stocks leads to an expectation of lower domestic wheat prices this year compared to last, even though U.S. ending stocks are expected to decline.

2 Fortenbery, T. Randall. “Benefit to Washington Wheat Producers Associated with Increased Farmer Program Flexibility,” IMPACT Center Fact Sheet, http://ses.wsu.edu/impact-center/wp-content/uploads/sites/2/2018/05/IMPACT-Fact-Sheet_Wheat-Benefits.pdf

The low expected prices for the 2019/20 marketing year suggests that most grain producers will receive income support from the farm support programs authorized in the 2018 farm bill. Producers have until March 15, 2020 to sign up for benefits for the 2019 harvested crop, and June 30, 2020 to sign up for the 2020 wheat crop. The basic program opportunities are the same as in the previous farm bill: Producers can elect for Agricultural Risk Cover-age (ARC), a revenue protection program, or Price Loss Coverage (PLC), a price loss program.

Under the 2014 farm bill, producers had to choose between ARC and PLC at the beginning of the farm bill life, and their choice was irrevocable for the entire life of the farm bill. Because price levels at the time were well above the prices that would trigger a PLC payment, most Washington wheat producers chose ARC. However, within a couple of years prices had deteriorated significantly, and it turned out most producers would have been much better off under the PLC program. In fact, research conducted through the WSU IMPACT Center2 estimated that the lack of flexibility cost Washington wheat farms over $60 per base acre in 2016 alone.

Table 1: U.S. Wheat Balance Sheet (June/May) – Based on Dec 2019 WASDE – USDA

Marketing YearUSDA 12/13

USDA 13/14

USDA 14/15

USDA 15/16

USDA 16/17

USDA 17/18

USDA DEC Fore

18/19

USDA DEC Fore

19/20(in million bushels, million acres)

Beg Stocks 743 718 590 752 976 1,181 1,099 1,080Imports 123 169 151 113 118 157 135 105 Acres Planted 55.7 56.2 56.8 55 50.1 46.1 47.8 45.2 Acres Harvested 48.9 45.3 46.4 47.3 43.8 37.6 39.6 37.2 % Harvested 87.8% 80.6% 81.7% 86.0% 87.4% 81.6% 82.8% 82.3%Yield 46.3 47.1 43.7 43.6 52.7 46.4 47.6 51.7 Production 2266 2,135 2,026 2,062 2,309 1,741 1,855 1,920Total Supply 3,131 3,021 2,768 2,927 3,402 3,079 3,119 3,105 Food 945 951 958 957 949 964 955 955 Seed 73 77 79 67 61 63 59 61 Feed and Residual 384 228 114 149 160 51 90 140 Exports 1,012 1,176 864 778 1,051 901 936 975Total Demand 2,414 2,432 2,015 1,951 2,222 1,980 2,039 2,131Ending Stocks 718 590 752 976 1,181 1,099 1,080 974Stocks to Use 29.74% 24.26% 37.32% 50.03% 53.15% 55.51% 52.97% 45.71%Avg. Farm Price $7.77 $6.87 $5.99 $4.89 $3.89 $4.72 $5.16 $4.55



The new farm bill requires producers to make a single program choice for both the 2019 and 2020 crops, but then they can change their program choice on an annual basis in subsequent years. Given the late sign up producers will know with near certainty what the optimal choice is for the 2019 and 2020 crops, and since they can change their program selection in later years losses associated with lack of flexibility under the current farm bill are likely to be minimal. Given the poor price outlook, it is anticipated that most producers will initially elect the PLC program.

Government program payments under the PLC program are triggered based on the national average marketing year price reported by USDA. This price is for all classes of wheat and all production regions. The trigger is $5.50 per bushel, so if the current price forecast in Figure 2 comes to fruition ($4.55 per bushel), wheat producers in the PLC program will receive significant payments.

Washington producers’ actual cash price received for wheat is generally above the USDA reported prices, as well as the USDA market price used to determine PLC payments. This is true for a couple of reasons. First, most wheat grown in Washington is soft white wheat headed to Asian markets. It is considered to be higher quality than most other wheat varieties produced in the U.S. and thus captures a price premium. Second, Washington producers are closer to export terminals than producers located further inland, and thus their local price does not have to be discounted as much relative to the export price to cover transport costs to export terminals. Figure 3 shows the USDA calculated average all-wheat price on a monthly basis compared to the all-wheat Washington price.

Washington’s contribution to total U.S. wheat production has averaged between 7 and 8 percent over the last few years (Figure 4). Note that Washington production has been substantially more stable than U.S. production—the year to year percentage change in production is smaller for Washington than for the U.S. This means the change in total wheat value in Washington on a year-over-year basis tends to come more from price variability than changes in production levels, while the U.S. as a whole experiences year-over-year changes in total wheat production value driven by both price and production variability.

Figure 3: U.S. vs. Washington Wheat Prices

Figure 4: Wheat Production

Source: National Agricultural Statistics Service, United States Department of Agriculture


2,500,000

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2015 2016 2017 2018 2019

U.S. Washington Washington wheat share

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The most important wheat class grown in Washington is soft white wheat. Nearly 90 percent of all soft white wheat grown in Washington is exported, primarily to Asia. Further, Washington dominates national production of white wheats (Figure 5). The other primary producers are Oregon and Idaho.

Japan is a major buyer of white wheat sourced outside of the U.S. and the recently negotiated trade agreement with Japan ensures that wheat imported form the U.S. will compete favorably with other potential importers and is critical in maintaining Washington’s advantage in serving Japanese consumers of wheat. Without this agreement, the outlook for Washington wheat prices in the coming year would have been even more pessimistic.

BarleyU.S. barley production increased in 2019 compared to 2018, totaling 170 million bushels. This compares to 154 million bushels in 2018, and 143 million in 2017. The year-over-year production increases follow several years of declining production.

Unlike wheat, expected increases in both domestic barley consumption and exports will not be sufficient to offset the production increase. Thus, ending stocks for U.S. bar-ley will likely increase in 2019/20 compared to 2018/19. However, the increase is not sufficient to drive an expected change in average prices, so national barley prices this

year are expected to be about equal to last year’s prices (Figure 7).

Washington barley acres increased by about 10,000 in 2019, totaling 95,000 acres, an increase of almost 12 percent. Yields in 2019 declined to 70 bushels per acre from 73 in 2018, but the increased acreage still led to a total barley production volume of 5.9 million bushels, an increase of about 20 percent over 2018.

In contrast to wheat, Washington barley prices do not generally trade at a premium over the U.S. national price. Barley is not a major export crop, so proximity to ports is not an advantage. Washington markets are in fact further away from the final domestic markets for barley compared to other barley producing regions, so transport costs have a negative impact on Washington barley prices (Figure 8). Note, however, that Washington malt barley prices did exceed the national average price in the last marketing year.

SummaryAfter some price improvement in the 2018/19 marketing year, prices for wheat are expected to decline this year, with barley prices being essentially unchanged. With increased production costs in the 2019/20 marketing year, farm profit margins for grain producers this year will be negative when all costs of production are included. They will be close to break-even if one only considers the variable costs associ-ated with directly planting and harvesting the crop (i.e. if

Figure 5: Panel A – White Wheat Figure 6: Barley Production



100%

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0%2015 2016 2017 2018 2019 2015 2016 2017 2018 2019

Washington’s share of U.S. soft white wheat – WinterWashington’s share of U.S. soft white wheat – Spring

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one ignores costs associated with depreciation, mortgages, or other fixed costs that do not vary by production). This economic environment results in significant financial stress to the grain-producing sector.

The poor price outlook in coming months suggests that farm program payments will be a significant contributor to grain farm income this year, both at the national level and within Washington. Prospects for substantial price improvement revolve around some sort of production shortfall in another wheat and barley producing country, affecting global supplies and reducing the burdensome world ending stocks levels. Improved trade relations could also support prices, but burdensome stocks remain the main driver of current low prices. Passage of trade agree-ments with both Mexico and Japan are already providing support to wheat prices and any additional support will need to come from an unexpected supply disruption.

Both world and domestic wheat demand are expected to increase relative to last year, but the increase will not be sufficient to offset the increase in world supplies. While an expected reduction in U.S. wheat ending stocks is posi-tive from a price perspective, it will not be large enough to offset the price impact associated with an increase in world ending stocks.

Figure 7: U.S. Barley Balance Sheet (June/May)

Marketing YearUSDA 12/13

USDA 13/14

USDA 14/15

USDA 15/16

USDA 16/17

USDA 17/18

USDA DEC Fore

18/19

USDA DEC Fore

19/20

(in million bushels, million acres)

Beg Stocks 60 80 82 79 102 106 94 87

Imports 23 19 24 19 10 9 6 8

Acres Planted 3.7 3.5 3 3.6 3.1 2.5 2.5 2.7

Acres Harvested 3.3 3 2.5 3.2 2.6 2 2 2.2

% Harvested 89.2% 85.7% 83.3% 88.9% 83.9% 80.0% 80.0% 81.5%

Yield 66.9 71.3 72.7 69.1 77.9 73.0 77.5 77.7

Production 219 217 182 218 200 143 154 170

Total Supply 302 316 287 315 312 259 254 264

Food 155 153 151 158 162 157 155 153

Feed and Residual 58 66 43 44 39 2 8 15

Exports 9 14 14 11 4 5 5 4

Total Demand 222 234 209 213 205 164 168 172

Ending Stocks 80 82 79 102 106 94 87 92

Stocks to Use 36.04% 35.04% 37.80% 47.89% 51.71% 57.32% 51.79% 53.49%

Avg. Farm Price $6.43 $6.06 $5.30 $5.52 $4.96 $4.47 $4.62 $4.65


Figure 8: Barley Prices by Marketing Year


$/bu

2015/16 2016/17 2017/18 2018/19

U.S. feed barley price

U.S. malting barley priceWashington feed barley price

Washington malting barley price

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2018 Washington Tree Fruit OutlookKarina Gallardo (253) 445-4584

WASHINGTON remains the single largest producer of apples, pears, and cherries in the nation. The

2019 Washington tree fruit outlook analyzes the produc-tion trends and market conditions. We also include the 2019 estimated production costs and returns for apple vari-eties: Gala, Honeycrisp, Granny Smith, Fuji, and Cripps Pink.

Note that we use two different words to denote year. To denote production related numbers, we use year, indicat-ing the year when most of the horticultural management took place and the year when the fruit was harvested. For example, we write “In 2018, Washington State total production was 3,350 thousand tons…” meaning the total production during months August throughout November of 2018 was 3,350 thousand tons. When stating sales figures, we use marketing season. For example, we write “During the marketing year 2018–2019, Red Delicious represented xx percent…” This refers to apples that were harvested on September 2018 and were sold since harvest time until the end of the season in July 2019.

ApplesIn 2018, Washington State total apple production was at 3,350 thousand tons, representing 65 percent of all total apple production in the United States at 5,129 thousand tons. In 2018, total Washington apple production was above the 10-year average (2008–2018) at 3,155 thousand tons but below the 2014 record production at 3,825 thousand tons. During 2008–2018, yield per acre in Washington increased four percent, from 19 tons per acre in 2008 to 20 tons per acre in 2018. Similar to previous years, the 2018 yield per acre in Washington State was above the United States aver-age at 18 tons per acre. During 2008–2018, apple-cultivated surface increased 11 percent from 153 thousand acres in 2007 to 170 thousand acres in 2018. In the same year, 79 percent of all Washington apple production was sold in the fresh market.

The Honeycrisp variety has the highest price received by growers in Washington State. For marketing year 2018-2019, Honeycrisp sold at $2,650/ton ($53.01/40-lb box). Honeycrisp is also the variety with the highest investment cost to produce and the lowest packout percentage com-pared to the other varieties grown in Washington State.

Figure 1: Total Apple Production, United States and Washington State, 2008–2018

Figure 2: FOB Price Comparison across the 7 Top Apple Varieties, Washington State, 2009–2019

Source: United States Department of Agriculture, 2019

Source: Washington State Tree Fruit Association, 2019

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2018 Washington Tree Fruit Outlook / 11

In 2018–2019, Honeycrisp accounted for 10 percent of the total volume of apples produced in Washington. Yet the Red Delicious variety is the largest in volume produced in the state, with 25 percent of the total volume of apples produced in Washington.

Besides Red Delicious and Honeycrisp, other important in volume varieties produced in Washington State, as of 2018–2019, are Gala with 23 percent of total production, Fuji with 13 percent of total production, Granny Smith with 11 percent of total production, and Golden Delicious with four percent of total production. The variety mix in the state has evolved towards varieties exhibiting textural and flavor attributes more appealing to consumers (e.g., crisp in texture, optimal balance of sweetness and acid in flavor). From 2009–2010 to 2018–2019, Red Delicious volume has decreased by 16 percent, Gala increased 42 percent, Fuji increased 16 percent, Granny Smith increased seven percent, Honeycrisp increased 533 percent, Golden Delicious decreased 57 percent, and Cripps Pink increased 88 percent.

Important for the State of Washington is the release of an improved variety called Cosmic Crisp®, a cross of the

Enterprise and Honeycrisp varieties that was bred by the Washington State University apple breeding program. This apple is juicy, with a remarkably firm and crisp texture, and an appealing balance of sweetness and tartness. In addition to its superior eating quality, this apple is slow to brown when cut and maintains its texture and flavor in storage for more than a year. More importantly, this apple was bred in Washington State for Washington State growing conditions. As of 2017, 35 growers in Washing-ton State have planted an unprecedented 629 thousand trees. Additionally, 5.5 million trees are expected to be planted in 2018 and another 5.5 more million trees in 2019. From 2017–2019, 11.5 million trees of Cosmic Crisp® will be grown, representing 12 percent of all trees planted in Washington State as of 2011. Cosmic Crisp® were available in the market in December 2019.

Maintaining a steady share in established export markets and an increasing share in emerging markets is crucial for the economic sustainability of the Washington apple indus-try. During the marketing season 2018–2019, Washington State exported 27 percent of the apples produced. Main export destinations were Mexico (34 percent) and Canada

Figure 3: Apple Variety Mix Evolution from 2009–2010 to 2018–2019, Washington State


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(15 percent). The second largest export destination were Asian countries, with India (eight percent), Taiwan (seven percent), China (three percent), Indonesia (four percent), Vietnam (five percent). The third block of important desti-nation was the Middle East with Dubai (two percent) and Saudi Arabia (two percent). Other destinations represent 17 percent of the total Washington apple exports.

World production for the marketing season 2019–2020 is forecast to increase nearly 5 million tons to 75.7 million as amplified production in China offsets the lower production in the European Union. China remains the largest pro-ducer of apples in the world. Domestic supplies in China have increased but quality is fair, leading to more import demand for higher quality apples. European Union pro-duction is forecast to decrease by 25 percent to 11.5 million, due to weather conditions in Poland. The production in the United States is projected to increase by 179 thousand tons to 4.7 million tons, as a result of favorable weather conditions in Washington State.

PearsWashington State remains the largest producer of pears by volume in the United States. In 2018, the total pear production in Washington State was at 398 thousand tons, representing 49 percent of total pear production in the United States at 805.5 thousand tons. In 2018, pear produc-tion in Washington was below the 10-year average, at 404.7 thousand tons. The production in 2017 was the lowest in the last 10 years but grew 26 percent in 2018. In 2018, the cultivated surface in Washington decreased by one percent from 20,800 in 2017 to 20,600 in 2018. This area represents 44 percent of the total bearing acres for pears in the United States. Yield per acre in Washington, at 19.3 tons/acre, is above the national average at 17.4 tons/acre. The overall (both fresh and processed market) price received by the grower was at $535/ton. Seventy-five percent of Washington State pear production went to the fresh market.

The most popular pear varieties grown in Washington State are D’Anjou with 57 percent of total production, followed

Figure 4: Washington Apple Exports Destination by Volume, from 2011–2012 to 2018–2019Ap

ple e

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Figure 6: Pear Variety Mix Evolution from 2009–2010 to 2018–2019, Washington State


Figure 5: Total Pear Production, United States and Washington State, 2008–2018

Figure 7: FOB Price Comparison across the Three Top Pear Varieties, Washington State, 2009–2019

Source: United States Department of Agriculture, 2019 Source: Washington State Tree Fruit Association, 2019

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by Bartlett with 27 percent, Bosc with 14 percent, and all other varieties at three percent of the total volume of pears grown in Washington.

Prices received by growers vary across varieties. For the top-most popular varieties, Free on Board (FOB) prices have remained stagnant for the last 10 years.

World production of fresh pears is forecast to increase by 13 percent for 2019–2020 to 23 million tons, due mainly to record production in China. In this country, production is expected to increase by 20 percent to 17 million tons. In the European Union, production is expected to decrease by 400 thousand tons to 2.2 million tons due to weather induced damages. Meanwhile, production in the United States is to remain unchanged at 726 thousand tons.

CherriesIn 2018, Washington State was the largest producer, in volume, of sweet cherries in the United States with 71 percent of total production. The Washington total sweet cherry production, in 2018, was at 245 thousand tons, seven

Figure 9: Sweet Cherry Variety Mix Evolution from 2009–2019, Northwest States

Source: Northwest Cherry Growers, 2019

Figure 8: Total Sweet Cherry Production, United States and Washington State, 2008–2018

Source: United States Department of Agriculture, 2019

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Bing Sweethearts Skeenas Rainier Chelan Lapin Vans OtherLambert


percent lower than 2017 production at 262.6 thousand tons. The Washington production volume in 2018 was higher than the 10-year average at 209.8 thousand tons and lower than the 2012 production peak at 264 thousand tons. Wash-ington sweet cherry cultivated surface has seen a 21 percent increase during the last 10 years, from 33 thousand acres in 2008 to 40 thousand acres in 2018. During 2008–2018, the yield per acre increased 102 percent from 3.03 tons per acre in 2008 to 6.12 tons per acre in 2018. The Washington State yield per acre was above the United States average yield per acre at 4.05 tons per acre for 2018. That year, 88 percent of all Washington State sweet cherry production was destined for the fresh market. The sweet cherry FOB price received by Washington growers was $1,900/ton, below the average for the United States at $2,080/ton.

As of 2019, the two most popular sweet cherry varieties grown in the Northwest (comprising the states of Wash-ington, Oregon, Idaho, Utah, and Montana) were Bing with 18 percent of total production and Sweethearts, with 14 percent of total production. These were followed by

Skeenas with 10 percent, Rainier with nine percent, and Lapin and Chelan with seven percent each.

As of 2019, 38 percent of the total Northwest production of cherries was exported. The main destination was Canada with 35 percent of total volume exported, followed by China with 21 percent, Korea with 13 percent, Taiwan with 11 percent, Vietnam with four percent, and Japan and Hong Kong with three percent.

World production of sweet cherries is expected to increase to 3.6 million tons, due to decreased production in Europe as a result of weather conditions. Turkey production is expected to rise over 40,000 tons to 865,000 on good growing conditions. Higher supplies are expected to raise exports to 78,000 tons. China’s production is expected to increase by 24 percent to 420,000 tons as orchards recover from weather conditions in 2018. In the United States, production is estimated to remain steady at 450,000 tons.

Figure 10: Northwest Sweet Cherry Exports Destination by Volume, from 2011–2019

Swee

t che

rry

expo

rt v

olum

e (to

n)

Can

ada

Chi

na

Kor

ea

Taiw

an

Vie

tnam

Japa

n

Hon

g K

ong

Oth

er

Source: Northwest Cherry Growers, 2019

35,000

15,000

10,000

5,000

0

30,000

25,000

20,000


Specialty CropsMichael P. Brady (509) 335-0979

IT is probably easier to define specialty crops in terms of what they are not (major grains, for one) rather

than what they are. However, the USDA does have a spe-cific definition. Under Section 101 of the Specialty Crops Competitiveness Act of 2004 (7 U.S.C. 1621 and section 10010 of the Agricultural Act of 2014, Public Law 113-79), specialty crops are “fruits and vegetables, tree nuts, dried fruits, horticulture, and nursery crops (including floricul-ture).” As is provided in more detail below, specialty crops play an outsized role in the agricultural economy relative to their share of acreage. This is particularly true in what the USDA refers to as the “Fruitful Rim,” which includes Florida, Texas, and the West Coast from Arizona to Wash-ington State. Specialty crops also play a key role in making agriculture a more dynamic industry. Fresh market and direct sales provide opportunities for high margins that can make it possible for new entrants into farming, such as by making operating at small scales financially feasible. This section provides an overview of trends in specialty crop production and markets. For more background on specialty crop production in general, see the 2014 version of this report.

This section provides a detailed summary of prices and production of the major specialty crops in Washington State. The most recent year information available is 2018, and all information is derived from USDA National Agri-culture Statistics Service sources except for wine grapes. Wine production and price trends are provided by the Washington State Wine Commission (www.washington-wine.org). Previous year data for specialty crops is gener-ally available in late-winter to early spring.

The Big Story for Specialty Crops Trends this YearThe big story for specialty crops in 2018 was stability. Prices and production were steady for most vegetable crops. Red and white wine grapes saw solid growth in harvested pro-duction and only minor decreases in prices. In the berry sector, blueberry production saw a return to growth after a momentary pause in 2017, which offset reductions in raspberry and strawberry production. Hop production leveled off after years of strong growth.

Wine GrapesWhite and red wine grape production rebounded in 2018 after declines in 2017 (Washington State Wine Commis-sion). Production for both is still below peaks achieved in 2014 for white varieties and 2016 for red varieties (Figure 1). Production increases can put downward pressure on prices, but both white and red varieties saw prices hold steady signaling strong demand. Growth in white wine production was the result of growth in all four of the major varietals (Figure 3), with White Riesling seeing the biggest increase. Similarly, production of all the three major red varietals were up. Cabernet Sauvignon, the most widely grown wine grape in Washington, achieved an all-time high in 2018. Merlot is still well below its 2016 peak.

There was a lot of diversity in price trends across variet-ies. All five major white varietals saw modest declines in prices. Red varietal prices were more variable. Merlot prices have seen impressive growth in the last two years. Cabernet Franc is now the most expensive grape per unit, overtaking Malbec, which saw a significant price decrease in 2018. Syrah prices also dropped this past year.

Figure 1: Wine Grape Production and Price Trends

Source:

Prod

uctio

n (to

ns)

Pric

e ($/

ton)

Red productionRed

price

White price

White production

180,000

140,000

120,000

100,000

0

80,000

60,000

40,000

20,000

160,000

$1,800

$1,600

$1,500

$1,400

$400

$1,200

$1,000

$800

$600

$1,700

2015 2016 20182013 2014 2017

Specialty Crops / 17

Figure 5: Red Wine Grape Price TrendsFigure 4: White Wine Grape Price Trends

Figure 3: Red Wine Grape Production TrendsFigure 2: White Wine Grape Production Trends

Source: Source:

Source: Source:

Tons

Tons

$/To

n

$/To

n

White Riesling

Cabernet Sauvignon

Sauvignon Blanc

Cabernet Franc

Gewurztraminer

Malbec

Chardonnay Malbec

Pinot Gris

Syrah

White Riesling

Syrah

Pinot Gris Cabernet Franc

Cabernet Sauvignon

Chardonnay

Merlot

Sauvignon Blanc

Merlot

$1,000

$700

$600

$900

$800

60,000

40,000

30,000

20,000

0

10,000

50,000

2012 2013 20182010 2011 2017201620152014 2012 2013 20182010 2011 2017201620152014

80,000

40,000

30,000

20,000

0

10,000

50,000

70,000

60,000

2010 2015 2016 20182011 2012 2013 2014 2017 2010 2015 2016 20182011 2012 2013 2014 2017

Gewurztraminer

$1,700

$1,400

$1,000

$1,600

$1,500

$1,100

$1,200

$1,300


VegetablesTable 1 reports production and Table 2 reports prices for major vegetables in Washington. As mentioned above, 2018 represented a period of relative stability in both production and prices. Potato prices were up a healthy $1/cwt on a slight increase in production. Sweet corn produc-tion in the fresh market dropped by nearly half, but the amount going to processing increased. Fresh sweet corn prices were up—possibly due to the drop in production. Green pea prices were down $3/cwt, but production was up more than 200,000 cwt, so total revenues held steady. Asparagus production was up slightly, but prices dropped a small amount.

Berries After a brief pause in production growth in 2017, blueber-ries saw a return to a big jump in production to 137 million pounds in 2018, up from 117 million in 2017. Prices edged up slightly to $1.02/pound leading to a large correspond-ing increase in the value of production from $115 million in 2017 to $139 million in 2018. This uptick is still below the $146 million crop produced in 2015. Prices were $0.78/pound and $0.98/pound in 2016 and 2017, respectively. Blueberry acreage increased from 13,700 acres in 2017 to 14,400 acres in 2018.

Red raspberry production (8 million pounds) and acreage (9,500 acres) remained about the same in 2018 compared to

Table 1: Vegetable production

YearAsparagus

(cwt)Onions

(cwt)Green peas

(cwt)Potatoes

(cwt)Sweet corn, fresh (cwt)

Sweet corn, processing (cwt)

2010 228,000 88,440,000

2011 220,000 97,600,000

2012 202,000 95,940,000

2013 188,000 96,000,000

2014 182,000 101,475,000 1,817,000 693,000

2015 167,000 100,300,000 3,441,000 722,000

2016 211,000 18,053,000 1,855,000 105,625,000 524,000 909,000

2017 232,200 15,894,000 1,528,100 99,220,000 808,000 734,000

2018 267,000 17,301,000 1,782,000 100,800,000 447,000 806,000

Source:

Table 2: Vegetable prices

YearAsparagus

(cwt)Onions

(cwt)Green peas

(cwt)Potatoes

(cwt)Sweet corn, fresh (cwt)

Sweet corn, processing (cwt)

2010 77.14 7.40 38.80 79.80

2011 78.90 7.90 41.00 109.04

2012 90.00 7.30 33.00 113.27

2013 95.06 8.25 37.00 121.49

2014 75.39 7.60 27.00 107.84

2015 93.32 7.70 6.30 105.65

2016 88.30 10.29 17.09 7.70 24.40 100.00

2017 101.40 8.15 15.63 6.92 35.50 90.00

2018 98.11 10.27 12.78 7.82 64.18 79.97

Source:

Specialty Crops / 19

previous years. However, the value of production dropped substantially from $58 million in 2017 to $35 million in 2018. Prices continue their slide that started a few years back. They were down to $0.47/pound in 2018, which is only half what they were in in 2016 ($0.85/lb), which was close to a $0.4/lb drop from the prior year. After years of steady production, strawberries also saw a drop in acres, production, and the value of production of about 15 percent compared to 2017. Strawberries are grown on fewer than a thousand acres in Washington.

HopsAfter years of remarkable growth, the hop market softened a bit in 2018. Hop acreage increased slightly to 39,200 acres, but the value of production dropped from $459 million to $428 million. Production was down about 2 million pounds to 78 million pounds. Prices dropped about $0.30/pound to $5.50/pound. Average prices in 2016 and 2017 were $5.84/pound and $6.21/pound, respectively.

MintAfter a downward trend in recent years, mint production held steady in 2018 compared to the year prior. Pepper-

mint accounts for 11,000 acres compared to 12,300 for spearmint. The total value of the mint crop in 2018 was just under $55 million. This is $16 million below the recent peak year of 2016.

OrganicOrganic farming continued its rebound that started in 2013, reaching an all-time high in acreage at nearly 130,000 (127,960) acres in 2018. For reference, total certified organic acres dropped below 90,000 in 2014. Washington is also approaching 1,000 unique organic farms. Tree fruit, and apples more specifically, continue to be the most important organic crop in Washington in terms of value.

Tree fruit accounted for just over a quarter of all organic acres. Forage crops constituted the largest share at 31%, while vegetables accounted for roughly another quarter. Organic acres are split about 70/30 between Eastern and Western, WA, respectively. The most up to date summa-ries of trends in organic agriculture are provided by the Center for Sustaining Agriculture and Natural Resources (CSANR) at Washington State University http://csanr.wsu.edu/trends-in-washington-agriculture/organic-statistics/.


Washington Beef Cattle Sector Review and OutlookShannon Neibergs (509) 335-6360

AFRICAN Swine Fever and the effects of tariffs and free trade market agreements on international trade

have dominated the global protein supply chain, export markets, and price effects. China has the second largest economy following the U.S. and is the world’s leading pork producer and overall meat consumer. African Swine Fever (ASF) is a fatal highly contagious viral disease that ravaged hog populations in China and Vietnam where market analysts predict a production decline of about 25 percent in 2019. ASF kills pigs by causing extreme hemorrhagic fever and destruction of lymphocytes that depresses immune response. To date, there is not an effec-tive vaccine. The effects of ASF will extend multiple years as Chinese pork producers continue to deal with ASF disease incidence and withhold females to restock their herds resulting in a shortage of pigs for slaughter. The outbreak of African Swine Fever (ASF) in China and Asia is a double-edged sword—increasing demand for protein imports and decreasing feedstuff demand for soybeans, dairy whey and lactose byproducts used widely in Chinese swine rations. Additionally, this outbreak has important cross market substitution effects on beef cattle.

ASF production losses have resulted in record high 2019 Chinese pork prices that peaked in November. The record high prices in China have shifted consumption patterns by decreasing pork consumption and increasing poultry and beef consumption. The effects from ASF were projected to positively affect U.S. beef, pork and poultry prices due to increased export demand.

China has dramatically increased meat imports to fill their supply gap with Brazil benefiting the most by increas-ing both pork and beef exports to China. However, the free trade dispute imposing retaliatory tariffs between China and the U.S. (beginning in 2018 and lasting through 2019) limited gains from U.S. meat exports. China instead imported record high levels of beef from South America. Argentina, which traditionally exports cheaper cuts to China, saw its beef exports to China more than double in the first seven months of 2019. Argentina beef export volume increased 129 percent, giving it the top market share of Chinese imports at 21.7 percent, slightly ahead of Brazil. Beef exports to China from Brazil grew from zero

in 2015 to reach record high levels in 2019. Conversely, U.S. beef exports to Hong Kong/China decreased –23 percent by volume and decreased –20 percent by value (U.S. Meat Export Federation, Trade Statistics, https://www.usmef.org/news-statistics/statistics/). Compounding future beef export market competition, China is relaxing a non-tariff trade barrier by aggressively expanding the number of China Inspection and Quarantine Service approved slaughterhouses that can export meat to China. The increase in approved slaughterhouses will intensify competition for Chinese export market share in the future.

Pork presents a different scenario with increased exports but limited price effects. U.S. pork exports to Hong Kong/China increased by 55 percent in year to date (October) volume but only increased 34 percent by trade value. The effect of record high Chinese pork prices did not transfer back to U.S. market prices. Prices for both beef and pork producers in 2019 were comparable to 2018 prices and did not see a significant upward price shock from ASF despite it being the largest worldwide protein production shock on record in the world’s second largest economy.

The lack of significant U.S. protein price improvement is likely due to the complex interactions of the tariff trade war with China and year over year record high production in U.S. beef, pork and poultry. As of September 1, 2019, tariffs on some pork products were as high as 80 percent, and the tariff on beef products was 47 percent. Future economic research is needed to evaluate the price elastic-ity of Chinese pork demand versus the U.S. pork supply price elasticity while taking account of the record level of U.S. pork production to evaluate who bore the brunt of paying the Chinese pork tariff.

U.S. and PNW Beef Production ReviewThe U.S. beef cowherd is transitioning from expansion phase from 2014 to 2018 to a stabilization phase. Cattle prices have stabilized, and tighter margins are decreasing the incentive to expand cow herds. Total U.S. meat pro-duction continues to set year over year record high levels of production (see Figure 1). Total meat and poultry pro-duction grew to 104 billion pounds in 2019, representing

Washington Beef Cattle Sector Review and Outlook / 21

a growth rate of 2.4 percent. However, most of the growth occurred in pork production, 1.24 billion pounds or 4.7 percent and poultry 1.16 billion pounds or 2.7 percent. Beef production grew in 2019 to a new record high but represents only a 0.2 percent rate of growth in 2019. A near record inventory of cattle on feed will continue to work through the supply chain and is expected to set a higher beef production record in 2020.

Washington’s beef cattle inventory is presented in Figure 2 and shows a beef cow herd that is relatively stable at 230,000 head. The annual fluctuation in Washington’s cow herd is about 5,000 head. The projected feedlot inventory has shown some growth over the past three years, reach-ing an estimated 460,000 head fed in 2019. The cattle on feed number estimates the annual number of feedlot cattle marketed, taking the January 1 USDA cattle on feed inven-tory by state and multiplying by 2, reflecting a typical 180 day feeding period with an inventory turnover of two. This indicates that Washington feedlots must source cattle from outside of the state, including live Canadian cattle imports,

Figure 1: U.S. Commercial Meat and Poultry Production and Future Forecasts

$17.43AVG 2015 to current

Source: USDA NASS, Complied and Forecasts by LMIC http://lmic.info/

Billi

on p

ound

s

1,000

Hea

d

120

80

0

60

20

40

100

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Beef Pork Lamb & Veal Chicken Turkey

Figure 2: Washington Beef Cattle Inventory

Source Author created with USDA Quick Stats.

500

400

300

200

100

02015 2016 2017 2018 2019

Beef cows Cattle on feed


to fill their feedlot pens. Canadian live cattle imports are reported by region of destination, combining Washington, Oregon and Idaho. Data on Canadian feeder and slaughter cattle imports are reported in Figure 3. Canadian imports in 2019 are similar to historic years indicating similar market effects to earlier years.

Price TrendsReflecting the stabilization of the cattle herd inventory and the lack of significant export market price shocks, prices in 2019 are but less than they were in 2018 for each month except April. Figure 4 shows the monthly price trend for steers weighing 500 to 600 pounds (the typical sale weight for cow-calf producers). Steer price for each month in 2019 was lower than 2018 by an average of –$5.43 per cwt and below the average for 2013 through 2016, including the record high cattle prices in 2014 and 2015. For weaned calves, October is the primary marketing month for the majority of Washington cow-calf producers. The October steer price is isolated and shown in Figure 5. The October 2019 price at $147 per cwt shows a $13 per cwt drop in price representing an estimated –$71.50 decrease in revenue per

Figure 3: Canadian Live Cattle Imports into Washington, Oregon and Idaho

Figure 4: Washington Monthly Steer Price

Source: USDA Weekly Canadian Live Animal Imports into U.S. by Destina-tion (WA_LS637) and Canadian Live Animal Imports by State of Entry (WA_LS635).

Num

ber o

f hea

d

250,000

200,000

150,000

100,000

50,000

02015 2016 2017 2018 2019 up to

11/30/19

Feeder cattle Slaughter steers & heifers and cows

Source: USDA/AMS – Weekly Combined Cattle Report – ML_LS795

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Avg ’13–’16 2017 2018 2019

Auct

ion

$/cw

t

$200

$180

$160

$140

$0

$20

$40

$60

$80

$100

$120

Washington Beef Cattle Sector Review and Outlook / 23

head sold. Prices for Washington finished feedlot cattle and slaughter plant meat prices are not publicly available because USDA has competitive non-disclosure policies when there are few producers.

Cattle producers also sell cull cows whose price is also presented in Figure 5. Cull cows are a significant source of revenue for cattlemen, and culls typically represent 15 to 20 percent of total revenue. Cull cow price has been relatively stable compared to recent years but in a declining trend. Cull cow prices declined to $61 in 2019 compared to a peak of $103/cwt in 2014. Washington cull cow prices have not seen a price benefit from increasing cull cow slaughter capacity from the CS Beef Packers that started operations in June 2017. The USDA reports cull slaughter data by regions. Our region combines Washington, Idaho, Oregon, and Alaska. Prior to the plant opening the number of cows slaughtered was relatively stable at below 250,000 head in the region. Cull cow processing of both dairy and beef cattle was 509,000 head in December of 2018 and increased to 587,300 in 2019.

Summary Review and 2020 OutlookAn interesting 2019 cattle market highlight was the record high choice—select price premium from July to October. Beef producers have consistently worked on improving carcass quality. The percent of choice grading carcasses in 2018 was about 70 percent. In 2019, the percent carcasses grading choice from July to October fell and was led by below choice carcass quality in Texas and Oklahoma. This

pushed the choice price premium to about $25 per cwt on a carcass weight basis up from an average about $13 per cwt. The USDA Estimated Grading Percent Report (NW LS196) groups regions but the data indicates that Washington did not see a choice quality decline and benefited from the market anomaly. Current months indicate a return to normal carcass quality trends.

Overall, total U.S. beef exports declined negative two percent by volume and negative three percent by value in 2019 to October. The export decline was led by Japan, our major beef trade partner, where exports declined negative six percent by volume and negative seven percent by value. Hopefully, that decline will be reversed by the U.S.—Japan trade agreement ratified in October 2019. The agreement matches trade access granted to the 11 Trans-Pacific Part-nership agreement the U.S. pulled out of in 2017. Presently, Congress has yet to ratify the USMAC trade agreement that also has seen exports lag in 2019. Beef exports to Canada decreased –13 percent by volume and –14 percent by value, and Mexico decreased negative one percent by volume but increased four percent by value.

Exports are the key driver to future price strength for most agricultural commodities as the U.S. produces more than domestic demand consumes. Production in competing pork and poultry is continuing to expand and is expected to set year over year supply records. The 2020 cattle price outlook will be driven by exports. Record large production is forecasted in the near term as the overall cow herd inven-tory has stabilized, but improved production efficiency and increasing carcass weights will increase production.

Figure 5: Washington October Steer and Cull Cow Prices

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

October steer price Cull cow

Auct

ion

$/cw

t

Source: USDA/AMS – Weekly Combined Cattle Report – ML_LS795

$300

$250

$200

$150

$0

$100

$50


DairyShannon Neibergs (509) 335-6360

DURING 2019, the dairy sector transitioned to a higher price profile, and milk price is expected to reach over

$20 per cwt in the fourth quarter of 2019. Washington’s October milk price was $19.90. This is the highest price dairy producers have received since 2014. Higher cheese prices were the main driver behind the price improve-ment, as shown by Figure 1. Since the start of 2019, prices of 500 pound cheese barrels and 40 pound cheese blocks have steadily increased reaching over $2.00 per pound in October 2019. Cheese prices have not been at this price level since the record high prices seen in 2014.

The rise in cheese price has been due to lower stocks, strong cheese exports and growing demand for the cheese production byproduct whey. Cheese produced for mass consumption is sold as either a 40-pound block or a 500-pound barrel based on the cheese’s eventual end use. Typi-cally, 40-pound blocks are converted into shreds, chunks or slices for the retail or food service industries. The 500-

pound barrels are destined for further processing into a wide variety of goods, like processed cheese slices, cheese sauces or cheese powders. Demand for whey, a natural byproduct of cheese production, has increased around the world. It’s shelf-stable, is easily shipped and can be con-centrated into a protein-packed base for milk alternatives, protein shakes, energy bars, and infant formula. The mar-ket prefers white whey as a by-product of cheddar barrel production. Cheese processors have realized the increased value of white whey and are producing cheddar barrels to increase white whey production. This has resulted in a wid-ening price spread between block and barrel prices, which can be seen in Figure 1 by comparing the price spread prior to 2017 to the current 2019 price spread.

The widening block-barrel spread is due to the complex-ity of market demand but driven by two primary factors. First, growing milk supplies and tight processing capacity in some regions led to distressed milk being dumped or

Figure 1: Chicago Mercantile Exchange Butter and Cheese Price

Source: Author using data from http://www.ams.usda.gov/market-news/dairy-market-news-weekly-printed-reports.

2014 2015 2016 2017 2018 2019 Oct 2019

Butter Cheese barrels Cheese blocks

$3.00

$2.00

$0.00

$1.50

$1.00

$2.50

$0.50

$/Po

und

Dairy / 25

sold at a discount. Distressed milk that flowed into barrel cheese production increased supplies and contributed to lower barrel prices. Second, cheese exports—mostly blocks—have improved in recent years. Cheddar cheese exports increased 43 percent in 2017 and then increased by 14 percent in 2018. Year-to-date cheese exports are up 13 percent from prior-year levels. The increased demand for block cheddar cheese has increased the price relative to barrel cheese, which has created a milk pricing anomaly.

Around 80 percent of the milk produced in the U.S. is priced under the Federal Milk Marketing Orders using a formula that takes into account the end uses of milk. The cheese part of the formula only uses cheddar blocks and barrels, even though cheddar cheese is no longer the most produced cheese in the U. S. and is now second to mozza-rella production. By overproducing cheddar barrels to sup-ply high whey demand, producers also end up depressing milk prices because of how the federal order milk formula is calculated. The estimated impact of the increasing spread is equivalent to nearly a $600 million-dollar reduction in dairy farm revenue since 2017 (Newton, J., September 2019, Cheese Prices, Do We Have a Problem, Reviewing the Block-Barrel Spread, https://www.fb.org/market-intel/cheese-prices-do-we-have-a-problem). Several suggestions

have been made to address this problem, such as changing the federal market order pricing formula and using other types of cheeses in the formula and forcing changes in the dairy production supply chain.

Washington Milk Price, Profitability and Cow InventoryThe good news is that prices received by dairy farmers improved in 2019. The monthly Washington milk price dairy farmers received from 2012 to October 2019, is pre-sented in Figure 2. Following record high prices in 2014, the resulting supply response and Russian trade restric-tions on dairy and food from the West reduced milk prices and challenged dairy farm profitability. Recent average annual prices range from a low of $16.50 in 2016 to $18.52 for January to October in 2019. From 2015 to current, the average milk price received was $17.43. The most currently available published estimated break-even for well managed Pacific Northwest dairies was $17.66 (Frazer, Dairy Farm Operating Trends, December 2018, https://frazerllp.com/resources/dairy-farm-operating-trends/). The extended period of low margins have challenged the way many farms have had to do business in order to survive and has created substantial financial stress for dairy farmers.

Figure 2: Washington Monthly Milk Price

2019 Oct 2019

$30.00

$20.00

$0.00

$15.00

$10.00

$25.00

$5.00

$/Cw

t

Source: Author using USDA Quick Stats.

$17.43 2015 to

current avg.$18.59

2012 avg.

$20.56 2013 avg.

$24.68 2014 avg.

$17.21 2015 avg.

$16.50 2016 avg.

$18.25 2017 avg.

$16.84 2018 avg.

$18.52 2019 avg.

2012 2015 2016 2017 20182013 2014


Profitability challenges have reduced the number of dairy producers in the state. Over the past five years the number of dairy producers declined by 43 producers from 367 in 2015 to 324 in 2019, representing a decrease of about 12 percent (see Figure 3). Washington’s decrease in dairy producers mirrors reports of national trends of declining dairy farm numbers, primarily attributed to the declining financial conditions as a result of low milk prices.

Although the number of dairy producers have decreased, the number of dairy cows in Washington has increased slightly from 275,000 in 2017 and 2018 to 280,000 dairy cows in 2019 using January 1 USDA inventory estimates. Washington’s monthly milk production continues its year over year production trend increase as shown in Figure 4. Variation in 2019 monthly production shows some effects from climate risks. The January 2019 milk production starts the year with the highest production reflecting the 5,000 head increase in January 1 cow inventory. However, Febru-ary and March production fell to below trend reflecting the winter storms that hit the Yakima Valley in mid-February that resulted in over 1,700 cow deaths. Milk production shows sharp increases over trend in July, August and Sep-tember reflecting producer efficiency and relatively mild summer temperatures. Overall year to date milk produc-tion from January to October indicates that Washington milk production increased 12.3 percent in 2019 over 2018.

Figure 3: The Number of Washington Dairy Producers

Figure 4: Washington Monthly Milk Production. Author using USDA Quick Stats data.

Source: Authors graph using Pacific Northwest Federal Milk Marketing Order, 2019. https://fmmaseattle.com/statistics/stats/stats19%20124.pdf

Source:

20192015 201820172016

400

200

150

100

0

50

250

350

300

367 360 353342

324


2015 20172016 2018 2019

Mill

ion

poun

ds

625

600

575

475

500

525

550

Dairy / 27

World Supply and ExportsDairy producers continue to face market challenges from world dairy oversupply and competitive trade conditions compounded by indeterminate tariff effects. Dairy prod-ucts have become a globally traded commodity. Dairy production for the five major world dairy exporters is presented in Table 1. Each year from 2015 shows a less than one percent average rate of production growth, but the continued growth in supply relative to stagnant world dairy demand continues to affect milk prices. The EU-28 milk production dominates world supply and the production estimate for 2019 is 156 million tons. The ongoing loss of dairy exports to Russia continues to drag on world milk prices. In August 2014, Russia banned most food imports from the European Union, the United States, and other countries after the West imposed economic sanctions on Russia over its annexation of Crimea and support of east Ukraine’s separatists. The current decree extends Russia’s embargo on food products from the West to the end of 2019. Russia is using the embargo to support and invest in Russian dairy production through subsidies and importing dairy animals as part of their plan to transform Russia from a major dairy importer to becoming dairy self-sufficient (https://www.dairyglobal.net/Farm-trends/Articles/2019/4/Russian-dairy-sector-to-grow-steadily-416025E/). Australia’s milk production is expected to con-tinue to shrink in 2020, reaching the lowest level in 25 years. This decline is a result of continued drought condi-tions in parts of the country and consequently high input costs for feed and water allocations, as well as a shrinking cattle herd and high cow cull rates. The decline in milk production in 2020, however, is expected to be much less than the drop in 2019 as more rainfall and good pasture growth in parts of Victoria is expected to help support production there (https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Dairy%20and%20Products%20Annual_Canberra_Austra-lia_10-15-2019).

The U.S. has faced higher tariffs on dairy products as part of trade disputes, which provides headwind, but generally, exports have been mixed this year. Year to date (October) dairy export data shows that U.S. dairy export volume decreased 11 percent but export value improved by five percent in 2019 compared to 2018 reflecting higher prices. Cheese exports have improved year to date, but butter has had the largest year to date delcine, down 42 percent, with milk powder and whey products are also shipping less overseas. Export values by country are also mixed with increases to Mexico, Southeast Asia and Canada offset by decreases to China, Japan and South Korea reflecting

the ongoing mix of tarriff effects and state of negoti-ated trade agreements. Detailed export statistics are only reported on a national level. Washington exports to Asian markets may be more negatively impacted than national statistics indicate.

Dairy Outlook for 2020Three concerns loom ahead for the dairy industry. The U.S. is dealing with slower economies globally, but the domestic market has been the demand component that has helped support dairy prices over the last year. There are mixed signs on the strength of the U.S. economy. Economists cite the late summer inversion of the U.S. Treasury yield curve raised concerns that the U.S. economy might be heading towards a slowdown in 2020. However, the yield curve flipped back to a positive slope in mid-October. The second concern is on the supply side. With advancement in genetics and production effeciency, and the best milk prices seen in several years, there is a concern that the supply side could expand at a time when demand may be pressured by the macroeconomy. Class III prices will hinge off cheese demand continuing its market strength. Forecasts expect a stronger first half in prices over 2019 but could see consumer sentiment wane by the second half of 2020.

Trade is probably the largest concern, particularly in regaining market share in China, but also represents the largest opportunity for growth. On a milk solids basis, the U.S. exports about 16 percent of total production. Wash-ington is highly vested in export markets, with reports that Darigold seeks to expand exports to more than 40 percent of its milk products outside of the U.S. Finalizing the USMCA trade agreement and normalizing trade rela-tionships with China are critical to establishing market competition and market stability.

Table 1: World Milk Production for Major Exporters

Million Tons

2015 2016 2017 2018 2019

Argentina 11.6 10.2 10.1 10.8 10.8

Australia 10.1 9.5 9.5 9.3 8.6

EU-28 150.2 151.0 153.4 154.6 156.0

New Zealand 21.6 21.2 21.5 22.0 22.3

United States 94.6 96.4 97.8 98.7 99.0

Major Exporter Total 288.1 288.3 292.3 295.4 296.7

Source: https://apps.fas.usda.gov/psdonline/circulars/dairy.pdf (July 2019)


Forestry Sector Review and OutlookKent Wheiler (253)218-8872

IN 2019, the trade war with China deepened, concurrent with a slowing in the Chinese economy, significantly

impacting softwood log and lumber exports and particu-larly Washington’s exports of alder lumber. A bark beetle infestation in Europe pushed more spruce logs and lumber into Asian markets. And U.S. housing starts stayed flat at 1.25 million annually. These global events weighed heav-ily against Washington’s forestry sector, and the domestic housing market did not provide enough growth to offset the negative influence of international trade.

Timber harvests in Washington from private and public lands combined fell 2.4 percent in 2018, and preliminary numbers for the first half of 2019 indicate a further drop of 10-20 percent in harvest volumes for the year. We usually rely on the Washington Department of Natural Resources (DNR) annual Timber Harvest Report to track harvests by ownership, species, and location. DNR gets the raw data from the Washington Department of Revenue (DOR). In 2018, DOR changed the way it collects information in order to improve accuracy, but the changes complicated DNR’s ability to prepare their normal report and delayed issuance of the 2018 Timber Harvest Report. Consequently, we are relying on DOR’s data this year and don’t yet have

details on harvests by species. Figure 1 shows Washing-ton State timber harvests along with Washington lumber production using data from the Western Wood Products Association (WWPA).

Private timberlands in Washington continue to supply about three-fourths of the timber harvested, with the state providing most of the balance. The state’s harvest, managed by DNR, stays relatively stable through good times and bad. The only class of ownership that increased harvest volumes in 2019 was the federal government, where greater attention to forest health issues in federal forests led to more maintenance and thinning operations. Still, federal timber is only five to six percent of the total volume. Employment in Washington’s forest products industry has remained fairly stable for the past three years at around 13,000 people per WWPA’s estimate.

Lumber production in the state rose 6.2 percent in 2018 (prices were very good in the first half of the year), while log volumes started to slow. A growing gap between timber harvests and lumber production is unsustainable, and it appears that lumber production through October 2019 has dropped at least one to two percent. Lumber prices were unusually volatile in 2018, climbing by mid-year to

Figure 1: Washington State Timber Harvests and Lumber Production

Source: Washington State Department of Natural Resources, Western Wood Products Association

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Softwood lumber production (MBF) Timber production (MBF Scribner)

Thou

sand

boa

rd fe

et (M

BF)

4,500,000

4,000,000

0

2,500,000

3,000,000

3,500,000

1,000,000

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2,000,000

500,000

Forestry Sector Review and Outlook / 29

record highs for this century, only to fall nearly 50 percent by year end. Figure 2 shows annual average prices, but by the end of 2018 prices were much lower than the average. We’ve included the composite prices as of mid-November 2019, which are lower than the average for 2018, but lumber prices have actually improved 10 to 20 percent from the lows in November 2018.

As we’ve noted before, domestic housing starts and repair & remodel of existing housing have by far the greatest impact on timber harvests and lumber production, accounting for about two-thirds of softwood consumption. At the begin-ning of the year, expectations for housing were optimistic, but new construction stayed flat at an annual rate of 1.25 million homes. For comparison, prior to the 2008-2009 recession, housing starts were running at an annual rate of around 1.6 million. Not surprisingly because housing construction is reflected in the numbers, economic growth in the U.S. was a promising 3.1 percent in the first quarter but slowed to a lackluster two percent and 2.1 percent in the following quarters. The supply of new homes is constrained by a shortage of labor for construction and inspection, and an insufficient pool of permitted building lots. On the other hand, high student loan debt, poor wage growth, and tighter lending standards dampen demand. The growth in student debt is amazing, reaching nearly $1.5 trillion, five times the level just fifteen years ago when there were about twenty million borrowers. Now there are 43 million debtors, who on average owe twice as much as students in the early years of this century. That debt serves

as a huge impediment to the purchasing power of young people who historically would be in the housing market.

One of the biggest stories of 2019 has been the trade war with China. Overcutting of China’s forests throughout much of 20th century led to gradually declining domestic harvests and finally a total ban in 2017 on commercial harvests from natural forests. Combined with a growing economy, rising incomes, a booming housing market, and a thriving furniture industry led to China becoming the world’s largest importer of wood products, drawing on suppliers from around the globe: New Zealand, Aus-tralia, S.E. Asia, Russia, Europe, Africa, North, and South America. Exports to China were particularly important for U.S. producers recovering from the 2008-2009 recession, especially hardwood lumber mills. In the years following the recession, U.S. hardwood lumber exports to China grew five-fold, with China eventually taking one-fourth of all graded hardwood produced in America.

An escalating trade war between the U.S. and China even-tually led to tariffs of five to 25 percent on logs and lumber from the U.S. Through October 2019, U.S. exports of logs and lumber to China are down 45 percent, a loss of over $1 billion in sales. To put this in perspective, the sales lost are more than a total loss of all U.S. log and lumber exports to Mexico, Japan, Vietnam, and Western Europe combined over the same period. There is simply no other market or combination of markets that can absorb the lost volume. The impact has been a painful blow for the U.S. industry and will have long-term implications.

Figure 2: Western Lumber and Plywood Prices

Source:

Western SPF lumber Green fir lumber Dimension lumber Western fir plywood

$/M

BF

800

700

0

400

500

600

100

200

300

Nov 15, 2019

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018


In addition to the trade war, there have been several other developments impacting wood products trade. China’s economy has slowed. Second quarter growth was 6.2 percent and third quarter was six percent. While still enviable rates of expansion, it is China’s slowest growth in several decades and is reflected in lower demand for wood products.

Japan is increasing harvests of their domestic timber and, in various ways, subsidizing the harvest, use, and sale of the wood. The timber is over mature and needs to be cut to avoid potentially catastrophic fires and environmental

problems, but logging is very expensive in Japan and the wood is relatively weak. Without subsidies, the timber wouldn’t get harvested or used, yet the subsidies serve as a barrier to other suppliers of wood to Japan, and as an advantage to Japan exporters competing in markets like China.

A bark beetle infestation in Europe is having a devastating impact on their forests, similar to what occurred in Brit-ish Colombia. Accelerated harvesting of the dead trees is pushing more spruce logs and lumber onto global markets and increasing competition for U.S. suppliers.

Figure 4: U.S. and Washington State Softwood Lumber Exports

Figure 3: U.S. and Washington State Conifer Log Exports

Source:

Source:

U.S. total (incl. WA)

U.S. total (incl. WA)

Washington

Washington

Mill

ion

U.S.

dol

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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019e

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019e

1,400

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800

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200

Forestry Sector Review and Outlook / 31

Washington State is the largest conifer (softwood) log exporting state, historically supplying around half of U.S. exports. Two-thirds of Washington log exports go to China and Japan. Washington’s softwood lumber exports are more diverse than logs (Japan is the largest market), but what exports there were to China have been decimated. For hardwood lumber, mills in Washington devoted con-siderable investment and years of effort developing export demand for alder. The impact of the trade war has been particularly hard on the alder suppliers. When markets are bad, timber owners can reduce harvesting. Immedi-ate revenues are reduced, but trees remain and continue

to grow, waiting for better days. But sawmills represent a huge investment in plant and equipment and people, all of which must be paid. As noted above, the alder mills had no alternatives for the lost sales to China, leading to the closure of one hardwood lumber mill in Washington and reduced operations at the others. In Figures 4–6 the impacts of the trade war and new sources of supply for China and Japan can be seen in the declining trends for exports.

In 2018, Washington exported $1.3 billion in wood prod-ucts and nearly the same value in pulp and paper products.

Figure 6: Washington State Hardwood Lumber Exports to China

Figure 5: Washington State Log, Lumber and Engineered Wood Exports

Source: U.S. Census Bureau

Source:

4403 Logs 4407 Lumber

2018Annual total 2019

4418 Engineered wood products

U.S.

dol

lars

Cubi

c met

ers

$80,000,000

$60,000,000

$0

$20,000,000

$40,000,000

$80,000,000

$60,000,000

$0

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$40,000,000

2017

20172007 2008 2009 2010 2011 2012 2013 2014 2015 2016

2018


2019 Oct 2019


Markets for pulp & paper are more diversified, but still China is a large customer, and the impact of the trade war has been felt.

OutlookToward year end 2019, the Trump Administration announced a “Phase One” deal with China. Details are yet to come, but hopefully we are on track for some improve-ment in 2020 and a resolution of at least some of the trade disputes.

Concerns about housing and the overall U.S. economy remain, with optimists difficult to find. Current expecta-tions are for housing construction to continue on the pace of the past couple years.

The popularity of mass timber construction continues to grow and represents an exciting opportunity for the industry and for architects to reduce the carbon footprint of their buildings. Two new CLT (cross laminated timber) plants were opened in the state in 2019, both in Eastern Washington.

Figure 8: Washington State Paper & Paperboard Exports

Figure 7: Washington State Pulp & Waste Paper Exports

Source:

Source:

4702 Chemical woodpup, dissolving

4804 Kraft paper & paperboard, uncoated

4703 Chemical woodpulp, sulfate 4707 Waste paper

4811 Paper & paperboard, coated

U.S.

dol

lars

U.S.

dol

lars

2017

2017

2018

2018

2019

2019

Oct 2019

Oct 2019

$25,000,000

$20,000,000

$0

$10,000,000

$15,000,000

$5,000,000

$50,000,000

$40,000,000

$0

$15,000,000

$30,000,000

$10,000,000

Macroeconomic Conditions and Washington Agriculture / 33

Macroeconomic Conditions and Washington AgricultureTimothy P. Nadreau (509) 335-0495 Mark J. Gibson (509) 335-7641

Introduction

WITH continuing uncertainty in U.S. and global eco-nomic conditions, Washington agriculture remains

in a somewhat uncertain position. The IMF is reporting lower forecasted growth rates for the United States and for many of Washington agriculture’s major export markets, including China, Japan, and the EU. The United States is, however, expected to make substantial progress regarding its trade relations during 2020.

World Status and OutlookTable 1 shows output, trade, and inflation statistics for 2018 and 2019, as well as IMF projections for 2020. World output growth slowed from 3.6 percent in 2018 to three percent in 2019. This was true of both advanced economies and emerging markets and developing economies (EMDEs). The IMF projects that world output will grow more quickly in 2020 than it did in 2019 but only due to EMDEs. If the world economy instead falls into recession, there will be limited capacity to respond using monetary and fiscal stimuli. Several countries have engaged in expansionary monetary policy, which has partially hidden the detri-mental effects of increased tariffs and other protectionist trade policies. The United States and China have also used expansionary fiscal policy, adding substantially to their national debts.

Growth in world trade volumes slowed even more dra-matically than growth in world output, from 3.6 percent in 2018 to just 1.1 percent in 2019. A major cause of this drop was the reduction in EMDE imports and advanced economy exports in the face of protectionist trade policies. The IMF is projecting growth in world trade volumes of 3.2 percent in 2020, anticipating mostly forward progress in international trade relations.

U.S. Status and OutlookTable 2 reports the year end economic data and projec-tions from the Congressional Budget Office (CBO) for the United States through 2020. Growth of U.S. real GDP

slowed from 2.9 percent in 2018 to 2.6 percent in 2019. The CBO projects that it will slow further in 2020, to 2.1 percent. Despite that, the unemployment rate fell from 3.9 percent in 2018 to 3.7 percent in 2019 and is forecast to remain at 3.7 percent in 2020. The U.S. economic expan-sion is now the longest in history, while fears of a reces-sion loom.

The CBO expects trade volumes to grow more rapidly in 2020 than in 2019, anticipating forward movement on U.S. trade relations, though much uncertainty remains. U.S. exports grew by 1.8 percent in 2019. The OMB is forecasting that that number will increase to 2.6 percent in 2020. U.S.

Table 1: IMF World Economic Outlook Annual Percentage Changes

2018 2019* 2020**

World Output 3.6 3.0 3.4

Advanced Economies 2.3 1.7 1.7

Emerging Markets and Developing Economies 4.5 3.9 4.6

World Trade Volumes 3.6 1.1 3.2

Imports



Exports



Consumer Prices



Source: IMF World Economic Outlook 2019.4* Based on Q4 Projections** Projections


imports are also expected to grow more quickly, increasing from 1.6 percent in 2019 to 3.1 percent in 2020.

One of the CBO’s major areas of concern for the United States is its fiscal policies. Historically, the government budget deficit declines during economic expansions. That has not been the case during the current expansion, as the government budget deficit continues to grow. In the CBO’s government budget deficit forecast for 2020 is $903 billion, if current policies are maintained. That level of deficit would cause the publicly held U.S. debt to reach roughly 80 percent of GDP by the end of 2020. Longer-term concerns about unfunded liabilities such as Social Security remain unaddressed.

Washington Agriculture’s Relationship to the MacroeconomyFigures 1 and 2 show world and U.S. output, respectively, on the left axis, and Washington agricultural output on the right axis. If output in the broader world economy and the United States continues to grow, Washington agriculture is likely to follow suit. After taking an extended time to recover from the recession, Washington’s agricultural sec-tor remains on track relative to broader measures of output.

The primary concern for the near term is an international recession. Because monetary and fiscal stimulus have already been employed in many cases, there will be less room to respond to a recession. This may lead to a larger-

Table 2: Congressional Budget Office Budget and Economic Outlook

2018 2019* 2020**

Output

Real GDP (Billions of 2012 dollars) $18,815.9 $19,287.7 $19,693.9

Percentage change, annual rate 2.9% 2.6% 2.1%

Components of Real GDP (Billions of 2012 dollars)

Personal Consumption Expenditures $12,887.6 $13,206.5 $13,501.5

Gross Private Domestic Investment $3,385.3 $3,483.8 $3,572.6

Government Consumption Expenditures and Gross Investment $3,176.2 $3,250.2 $3,305.2

Federal . $1,227.5 $1,262.3 $1,299.7

State and local $1,947.6 $1,987.0 $2,005.4

Net Exports of Goods and Services -$912.2 -$922.4 -$962.7

Exports . $2,546.9 $2,591.5 $2,658.7

Imports . $3,459.1 $3,513.9 $3,621.5

Prices

Consumer Price Index, All Urban Consumers (CPI-U)*** 251.1 255.9 262.0

Annual % Change in CPI 2.4% 1.9% 2.4%

Labor

Unemployment Rate, Civilian, 16 Years or Older 3.9% 3.7% 3.7%

Labor Force, Civilian, 16 Years or Older (Millions) 162.1 163.1 164.2

Labor Force Participation Rate, 16 Years or Older 62.87% 62.94% 62.86%

Interest Rates

10-Year Treasury Note 2.9% 2.3% 2.2%

3-Month Treasury Bill 1.9% 2.2% 2.1%

Federal Funds Rate 1.8% 2.3% 2.2%

Income, Personal (Billions of 2009 dollars) $17,569.6 $18,257.7 $19,074.7

Source: Congressional Budget Office.* Based on forecasts of Q2–Q4** Forecasted*** The base year for the CPI is 1982 – 84 = 100

Macroeconomic Conditions and Washington Agriculture / 35

than negative five percent deviation from growth trajecto-ries and have negative consequences for agricultural and food markets internationally and locally.

Washington Agriculture and U.S. Trade Relations Export markets, especially in Asia, remain vital to Wash-ington agriculture. Table 3 shows a calculation of Wash-ington agricultural exports by country of destination using data from the USDA ERS and U.S. Census Bureau Foreign Trade Statistics. From 2017 to 2018, Washington agricul-tural exports grew by about three percent. From 2018 to 2019, that growth rate slowed to about one percent. Washington’s agricultural exports to China nearly doubled from 2018 to 2019, but this increase was offset by sharp reductions in exports to Japan, South Korea, Taiwan, Vietnam, and India.

Stability and growth in agricultural exports from Washing-ton will be highly dependent on how U.S. trade relations develop in 2020. There are three major areas to watch. First, it is expected that passage of the USMCA, which is expected in 2020, will benefit U.S. agriculture. Accord-ing to the U.S. International Trade Commission, it will increase U.S. agriculture and food exports by 1.1 percent. Second, the U.S.-Japan trade deal represents a significant gain to Washington farmers by reducing tariffs and other trade barriers on a variety of agricultural goods, includ-ing wheat, beef, wine, and many specialty crops. Third, the United States and China are making progress in their

Figure 1: World and Washington Agricultural Output

Table 3: Total Washington State Agricultural Exports by Country of Destination ($1,000s)

Country 2017 2018 2019

China $1,756,549 $720,014 $1,387,696

Japan $670,650 $892,634 $790,352

Korea, South $409,750 $677,640 $345,767

Taiwan $290,803 $399,579 $286,866

Philippines $205,870 $204,328 $272,713

Canada $239,509 $221,719 $237,193

Mexico $64,152 $67,362 $76,264

Thailand $57,739 $64,337 $74,559

Vietnam $28,967 $242,714 $66,785

Guatemala $32,045 $43,121 $56,837

India $53,010 $67,242 $39,851

Hong Kong $37,782 $27,132 $32,435

United Arab Emirates $26,079 $23,903 $30,166

Netherlands $26,202 $26,672 $27,617

United Kingdom $18,661 $15,210 $15,057

Singapore $7,457 $10,341 $12,799

Dominican Republic $11,400 $9,419 $9,401

Colombia $10,513 $7,706 $7,661

Saudi Arabia $7,306 $14,388 $7,635

Pakistan $9,862 $14,342 $7,095

Brazil $3,993 $5,327 $6,275

All other Countries $36,333 $360,665 $375,940

Source: USDA ERS https://www.ers.usda.gov and U.S. Census Bureau Foreign Trade Statistics http://usatrade.census.gov

Figure 2: U.S. and Washington Agricultural Output

Source: IMF World Economic Outlook and BEA Source: Congressional Budget Office and the Bureau of Economic Analysis.

Wor

ld o

utpu

t (bi

llion

s)

U.S.

out

put (

billi

ons)

Was

hing

ton

ag. o

utpu

t (m

illio

ns)

Was

hing

ton

ag. o

utpu

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illio

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World output U.S. outputWashington agricultural output Washington agricultural output

$12,000

$8,000

$6,000

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$0

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2000 2005 2010 2015 2020 2000 2005 2010 2015 2020


trade negotiations, and China is expected to agree to a large increase in its purchases of U.S. agricultural goods.

Regarding exchange rates, the U.S. dollar has remained fairly stable relative to other major currencies over the past year, with the trade-weighted dollar index increasing by about one percent.3 By making U.S. goods seem relatively more expensive to major trading partners, this slightly diminished demand for Washington agricultural goods.

3 https://fred.stlouisfed.org/series/TWEXB

SummaryForecasters expect a weakening of growth prospects among most major economies in 2020, including the United States. Major uncertainty remains as to when the unprec-edented U.S. economic expansion will be brought to an end by a recession. Should a recession occur, governments may have less fiscal and monetary capacity to respond after already employing stimulus to counteract weakening trade relations during an expansionary phase of the busi-ness cycle. More positively, trade negotiations appear to be moving forward, so U.S. trade relations with important partners are likely to improve in 2020.

Coevolution of technology & law for water management in Washington State and beyond / 37

SECTION II. SPECIAL FOCUS

Coevolution of technology & law for water management in Washington State and beyondJonathan Yoder [email protected] Julie Padowski (509) 335-8539 Kirti Rajagopalan (509) 335-0714

Preface

THIS article is an early product of a USDA NIFA research grant led by Jonathan Yoder and the State of Wash-

ington Water Research Center, with collaborators at WSU (CAHNRS, CAS, VCEA), the University of Idaho, the Uni-versity of Utah, University of Washington, Kansas State University, and two private firms, Mammoth Water and Aspect Consulting. For more background on this grant project entitled “Technology for Trade: New Tools and New Rules for Water Use Efficiency in Agriculture and Beyond,” visit https://wrc.wsu.edu/project/technology-for-trade/. This work is supported by the USDA National Institute of Food and Agriculture, project #1016467.

Technology and InstitutionsThe arc of human economic development has been drawn by how people have developed technology to live with and utilize natural resources around them. From the first stone agricultural land tilling tools and cultivation and domes-tication practices, to the latest in computer-aided clima-tological forecasts, humans have adapted technologically to their environment (Derry and Williams 1960). Social institutions evolve as well (Gifford 1999, Ostrom 1990, North and Weingast 1989). Social norms, laws, government organizations, and other forms of formal governance and informal social contracts evolve through innovation in response to physical and social challenges in the context of our environment (North 1991, Loasby 2002).

Technological and institutional innovation does not hap-pen in isolation from each other, and in fact are often interdependent (Nelson 1994, Yates and Van Maanen 2000). In the American West, the U.S. Government passed the Homestead Act of 1862, which granted up to 160 acres of land for private ownership (subject to stipulations; Por-terfield 2004). De facto control over these homesteads by their “owners” was subject to a host of challenges. Barbed wire was a technological innovation widely adopted in the west between about 1880 and 1900 to reduce crop losses and encroachment by livestock and people, but it would not have not been adopted without an existing framework for securing land rights. Due to its cost-effectiveness,

Figure 1: Barbed wire played a role in changing property rights in the West

Source: https://commons.wikimedia.org/wiki/File:FARMERS_barbed_wire_1874_advertising.jpg

38 / Section II. Special Focus

barbed wire was widely used and fostered changes in law requiring ranchers to fence livestock in or face liability for crop damage. The combination of easily accessible barbed wire and the subsequent shift in land use law based on its widespread adoption ultimately facilitated a drift toward increasingly strong private property rights (Anderson and Hill 1975, 1977). Hornbeck (2010) shows statistical evidence that the land-protection value of barbed wire led to sub-stantial increases in land value and economic productivity.

More recent examples that highlight the interdependence of technology and institutions include platforms such as Uber and Airbnb. These technological innovations pro-vide efficiencies in terms of reduced transaction costs and improved information transfer and consumer welfare (Cra-mer and Krueger 2016). The institutional co-evolvement is a balancing act in simultaneously facilitating techno-logical innovations and resulting improved efficiencies while protecting the rights of consumers and third parties (Edelman and Geradin, 2015), and the debate about which side of the balancing act is most critical and in the public interest is still ongoing.

Technology and Water Law in the WestWater law has and continues to evolve in different ways depending on the environment and the state of available technology. East of the 100th Meridian in the United States, water law evolved from roots in English common law into what is now known as Riparian Rights. Under Riparian Rights, landowners have the right to use water adjacent to their property to the extent that their use does not harm other adjacent users; however, this right is strictly tied to the proximity of landowners to waterways (Della-penna 2011). While the Riparian Rights doctrine worked well for the relatively water-rich East, this legal doctrine worked poorly as a foundation for agriculture and dis-persed water use in the arid western states during western european settlement expansion. A different doctrine, the Prior Appropriations doctrine, was established and allows water to be diverted from a water body or waterway for use elsewhere. The right to divert water was acknowledged and later granted by state governments based on proof of reasonable beneficial use of the water (Kanazawa 1998, Johnson and DuMars 1989). During droughts, holders of earlier rights have priority in use over more recent claim-ants. In order to make a “water call,” senior water rights holders need only know that their water source (like a river) is dry, and which upstream users are “junior”. Junior

water rights can be cut off in order for more senior rights to be satisfied.

Importantly, this seniority system evolved to address two critical features of water in the western environment that makes it a “fugitive resource” and hard to manage. First, it is difficult to measure and generally does not respect property or boundaries except by coincidence, investment, or enforcement. Second, water is a fugitive resource (Smith 2008) because its availability is often uncertain and season-ally weather-dependent, information about its current and future availability and distribution is often a driving force in how it is used and regulated under the law.

While the availability of water played a major role in shap-ing the Prior Appropriations doctrine, its evolution has also been driven in large part by technological constraints and innovation. Agricultural irrigation was and still is a primary basis for most water diversions from rivers, lakes, and groundwater by volume, and their rate of beneficial use depends a great deal on conveyance and irrigation technologies. Innovations in irrigation and conveyance systems since World War II have led to major changes in water use efficiency, leading to lower return flows per gallon of water diverted, and these changes have signifi-cantly altered the irrigation water use landscape. Today, a fully-utilized right to divert one acre-foot of water crops with a modern sprinkler system leads to less return flow, and therefore less water available downstream for users.

The fact that water rights are based on diversions is no accident and has important consequences for water use. Diversions are easy to monitor and measure as compared to the amount of water actually consumed or returned to a source for use by others downstream. Diversion is a measurement at one (or few) point with relative simple instrumentation, while consumptive use needs to be mea-sured over large areas of use with more complex instru-mentation. Return flows are very hard to measure unless there is a channel that is specifically only for return flows and not is not mixed with natural flows as is typical. Argu-ably, this difficulty of monitoring and measuring return flows is the reason that rights are based in diversions rather than actual water consumption. But diversion-based rights have consequences. Reductions in return flows stress the Prior Appropriations doctrine itself, and in response, states have adopted rules to restrict the spreading of diver-sions “savings” from irrigation efficiency improvements to newly irrigated fields in order to limit overall increases in consumptive use. Historically, state case and statutory law governing surface and groundwater developed in


somewhat separate but parallel ways, with different water rights rules that reflect differences in the way water flows across boundaries and the quality of information about these flows (Smith 2008). An interesting stylized char-acteristic of these developments is that surface water law regulation tended to evolve and be actively enforced earlier than groundwater, and that law and regulation around the interaction between surface and groundwater has been even slower to develop, and this progression may be due at least in part to the relatively poor understanding and difficulty in establishing information about groundwater, and its interaction with surface water. Indeed, DuMars and Minier (2004) argue that “administration and regulation of groundwater pumping has evolved with the develop-ment of mathematical techniques and computer model-ing [p.46],” and go on to provide a detailed exposition of how information and technology development co-devel-oped with groundwater administration in New Mexico. Administration and the outcomes of legal cases have also been influenced in many or most other states. Legal cases around conjunctive effects of surface and groundwater users on the Snake River Plain Aquifer have pivoted on the results of groundwater models (O’Connell 2013).

The most consequential cases in water law in Washington State over the last 20 or so years focus on surface-ground-water connectivity, specifically in relation to the effects of “permit exempt-wells”—small, low-volume pumping for domestic rural use. The initiation and outcome of these cases and the regulatory and administrative responses that have resulted from them have been defined to a signifi-cant degree by our improving understanding of surface-groundwater interaction (Yoder 2018, Melious 2018).

Technology and Institutions for Water Use EfficiencyScience, technology, and the nature of time- and place-specific information about water distribution, water use, and its effect on others has played in important role in the historical design of water law and administration to sup-port effective water management and dispute resolution. But technology and science play an even broader role in shaping how, and how efficiently, we use water. Agricul-tural irrigators make decisions about planting, irrigation timing, and harvesting based on expectations of seasonal water availability. Currently, our best seasonal climate forecasts are only available at coarse spatial and temporal resolutions (e.g. one degree and one month resolution; Kirtman et al. 2014) with lead times of about seven months.

Figure 2: Irrigation technology and precision has improved yields and irrigation efficiency

Figure 3: New drip irrigation technology

Source: https://ilovehistory.utah.gov/topics/water/irrigation.html

Source: https://www.farmtek.com/farm/ supplies/cat1;ft_greenhouse_field_irrigation;ft_drip_irrigation_systems.html


While some downscaling options to improve the spatial and temporal resolution of forecasts have been developed, translation of these forecasts to local municipal and irri-gation water availability is largely unavailable. Improved seasonal forecasting could provide critical information for producers, irrigation districts, and regulators to help improve productivity and reduce losses due to unplanned contingencies. It will also help cities target investment in water rights and water infrastructure given limited fiscal resources.

Concurrently, changes in the way consumptive water use is measured could offer substantial benefits to both water users and water regulators. Traditionally, irrigators have made estimates of crop consumptive water use by relying on standards set in the Water Irrigation Guide (USDA, 1997). New methods for improving estimates of consumptive use of irrigation water via satellite data, drone, and other data sources can help improve yields through more precise crop-water application and can help regulate against increases in consumptive use that harm downstream water rights holders. These and other technological advancements can improve the way in which water rights are leased or sold in water markets by reduc-ing transaction costs and minimizing the administrative burden of transactions on water regulators. In particular, the use of smart markets, or computer-assisted electronic clearinghouses that facilitate water rights transactions could help match sellers and buyers and allow them to more easily navigate the highly complex regulatory con-straints for a successful trade (McCabe et al. 1991; Murphy et al. 2000; Young and Brozovic 2016). Once established, they can help buyers and sellers understand which types of transactions are likely to be quickly approved and which may require more legal scrutiny. They can also reduce other transaction costs and sources of market frictions.

Tradeoffs inherently exist with so many competing uses for water, especially during drought years when available water is limited. Maximizing opportunities for water to be tasked to its highest valued potential use, both within agricultural systems and across its many competing uses, is important for making the most out of scarce water resources. New management approaches would be more effective with improved information, and emerging information tech-nologies provide opportunities for enhancing the region’s resilience to drought by making water use more flexible.

The recognition that technological and institutional innovation go hand-in-hand is at the heart of a WSU-led research project entitled Technology for Trade: New tools

Figure 4: Tech for Trade project: Relationships between technology and institutions

Figure 5: Drones can be used to improve irrigation efficiency and consumptive water use measurement

Source: https://www.latimes.com/ business/la-fi-drones-agriculture-20140913-story.html

Consumptive Use Monitoring System

Seasonal Forecasting System

Inform producer

expectations and decision

making

Inform consumptive use formulas and leasing

markets

Provide consumptive use information for verification

and calibration

Crop choice, etc.

Irrigation scheduling

When to buy/sell

When to buy/

sell

Enforce-ment

Market constraints

Management

RegulationMarket

Participation

Storage delivery

Smart Water Market System


and new rules for water use and allocation in agriculture and beyond (State of Washington Water Research Center 2019). The project runs from 2018 to 2023, and focuses on contributing to enhanced water use efficiency by furthering the development of information technologies and comple-mentary innovations in the rules that govern water use. In particular, the Technology for Trade team aims to further

the development and application of three promising and complementary emerging technologies mentioned above: improved seasonal forecasting, remote measurement of crop water consumption, and computer-aided ‘smart’ water markets, and changes in contracts, law, regulation, and administrative rules and practices to complement them.

ReferencesAnderson, T.L. and Hill, P.J., 1975. The evolution of property rights: a

study of the American West. The Journal of Law and Economics, 18(1), pp.163–179.

Anderson, T.L. and Hill, P.J., 1977. From free grass to fences: Transform-ing the commons of the American West. Managing the commons, pp.200–216.

Brown, Justin Anthony. 2015 “Uncertainty Below: A Deeper Look into California’s Groundwater Law.” Environs: Environmental Law & Policy Journal 39:45–95.

Cramer, Judd, and Alan B. Krueger. 2016. “Disruptive change in the taxi business: The case of Uber.” American Economic Review 106(5):177–82.

Dellapenna, J.W., 2011. The evolution of riparianism in the United States. Marquette Law. Review 95:.53–90.

Derry, Thomas Kingston, and Trevor Illtyd Williams. A short history of technology from the earliest times to ad 1900. Vol. 231. Courier Corporation, 1960.

DuMars, C.T. and Minier, J.D., 2004. The evolution of groundwater rights and groundwater management in New Mexico and the western United States. Hydrogeology Journal, 12(1):40–51.

Edelman, B.G. and Geradin, D., 2015. Efficiencies and regulatory short-cuts: How should we regulate companies like Airbnb and Uber. Stan. Tech. L. Rev., 19, p.293.

Gifford, Adam. “Being and time: on the nature and the evolution of institutions.” Journal of Bioeconomics 1, no. 2 (1999): 127–149.

Hornbeck, Richard. 2010. Barbed wire: Property rights and agricultural development. Quarterly Journal of Economics 125(2): 767–810 doi:10.1162/qjec.2010.125.2.767

Johnson, N.K. and DuMars, C.T., 1989. A survey of the evolution of western water law in response to changing economic and public interest demands. Nat. Resources Journal., 29:347387.

Kanazawa, M.T., 1998. Efficiency in western water law: The develop-ment of the California doctrine, 1850–1911. The Journal of Legal Studies, 27(1):159–184.

Kirtman, B. P. et al. (2014), The North American Mulitmodel Ensemble Phase-1 Seasonal-to-Interannual Prediction; Phase-2 toward Devel-oping Intraseasonal Prediction, Bull. Am. Meteorol. Soc., 95(4), 585–601, doi:10.1175/BAMS-D-12-00050.1.

Loasby, Brian. Knowledge, institutions and evolution in economics. Routledge, 2002.

McCabe, K. A., Rassenti, S. J., and Smith, V. L., 1991. Smart Com-puter-Assisted Markets. Science, 254(5031), 534–538. http://doi.org/10.1126/science.254.5031.534

Melious, J.O., 2018. The Controversy Over Permit-Exempt Wells in Washington. Seattle Journal of Environmental Law, 8(6):144–166.

Murphy, J. J., Dinar, A., Howitt, R. E., Rassenti, S. J., & Smith, V. L. (2000). The design of “smart” water market institutions using laboratory experiments. Environmental and Resource Econom-ics, 17, 375–394.

Nelson, Richard R. “The co-evolution of technology, industrial struc-ture, and supporting institutions.” Industrial and corporate change 3, no. 1 (1994): 47–63.

North, Douglass C. “Institutions.” Journal of economic perspectives 5, no. 1 (1991): 97–112.

North, Douglass C., and Barry R. Weingast. 1989 “The Evolution of Institutions Governing Public Choice in Seventeenth-Century.” The Journal of Economic History 49(4):803–832.

O’Connell, John. 2013. Eastern Snake River Plain Rangen case scheduled for May. Capital Press, April 26. http://spfwater.com/news/eastern-snake-river-plain-rangen-case-scheduled- for-may/.

Ostrom, Elinor. Governing the commons: The evolution of institutions for collective action. Cambridge university press, 1990.

Porterfield, J., 2004. The Homestead Act of 1862: A Primary Source History of the Settlement of the American Heartland in the Late 19th Century. The Rosen Publishing Group, Inc.

Smith, H.E., 2008. Governing water: The semicommons of fluid prop-erty rights. Arizona Law Review 50: p.445–478.

State of Washington Water Research Center. 2019. Technology for trade: new tools and new rules for water use efficiency in agriculture and beyond. https://wrc.wsu.edu/project/technology-for-trade/

USDA, 1997. Washington Irrigation Guide. https://www.nrcs.usda.gov/wps/portal/nrcs/detail/wa/technical/engineering/?cid=nrcs144p2_036314

Yates, JoAnne, and John Van Maanen, eds. Information technology and organizational transformation: History, rhetoric and preface. Sage Publications, 2000.

Yoder, Jonathan. 2018. Fiscal Gridlock over the water budget in Wash-ington State: The politics and economics of pouring exempt wells into the Prior Appropriations bucket. Western Economics Forum 16(1):30-37. http://www.waeaonline.org/UserFiles/file/ WEFJour-nalVolume16Issuenumber1June212018revised.pdf.

Young, R. and N. Brozovic. 2016. “Innovations in groundwater man-agement: Smart markets for transferable groundwater extraction rights.” Technology & Innovation, Volume 17, Number 4, 2016, pp. 219–226(8)


Washington State Livestock Identification: Changes to Current Laws and the Future of TraceabilityAlex Kappes (509) 335-8305 Shannon Neibergs (509) 335-6360

Introduction

LIVESTOCK identification programs have the dual pur- pose of establishing a disease traceability network

and to promote commerce. Animal identification docu-ments individual animals or groups of animals to establish proof of ownership that is necessary to document owner-ship transfer, secure collateral for financial transactions, protect against theft and to track animal transportation. The regulatory structure controlling animal identification on the federal level focuses on the interstate movement of livestock. On January 9, 2013, the United States Depart-ment of Agriculture (USDA) published a final rule (9 CFR, part 86) titled “Traceability for Livestock Moving Interstate.” USDA requires that all animals moving in interstate commerce have a form of ID that allows trace-ability back to their originating state or tribal nation. The rule establishes official livestock identification methods (official eartags, brands, tattoos or group/lot identifica-tion number) and documentation (Interstate Certificate of Veterinary Inspection) necessary for interstate livestock shipment. This leaves the regulation of intra-state move-ment and means of official animal identification to be governed by state governments that have a large amount of discretion in deciding what form animal identification will take within their state.

Preferred means of animal identification differ by spe-cies. For beef cattle, many western states center animal identification on brands citing brands provide premise identification through brand registration and provides permanent non-alterable identification. Brand proponents cite eartags can be torn out of ears or otherwise lost and cite specific examples where brands were necessary in recovering stolen livestock. Brand critics cite difficulty in reading brands, time delays associated with manual (non-computerized) traceability methods, and the increasing number of slick (non-branded) cattle in the production chain. Dairy producers can use brands but commonly use eartags. Eartag technology has developed beyond tag numbers to radio frequency identification (RFID)

tags that display a unique identification number on the tag that can also be read electronically by wands and or panels. If it is an official United States RFID tag, the first three digits are 840. Figure 1 provides examples of official animal identification tags.

In 2018, the USDA Animal Disease Traceability Program held public meetings and initiated rule making towards the goal of 100% livestock traceability from birth to death by implementing a new, electronic system of traceability that starts with eliminating old plastic and metal ear tags. Metal ear tags have been an industry standard for many years to show that females have been tested and are free from brucellosis and were provided for free from the USDA. In April 2019, the USDA issued a RFID mandate to discontinue providing free metal tags by 12/31/2019. By 1/1/2021 the USDA will no longer consider metal tags usable for official animal identification and by 1/1/2023 RFID tags will be required for beef and dairy cattle moving interstate. On October 4, 2019 a lawsuit was filed to halt the USDA mandate and on October 25, 2019 the USDA withdrew its RFID mandate.

Alongside evolving USDA animal disease traceability regulations, Washington State passed legislation in the 2019 regular session updating rules governing livestock inspection and fees, and transaction reporting in order to increase transaction and traceability efficiency. The following outlines those changes and discusses future traceability implications.

Fees, Inspection, and Electronic ReportingWashington State recently revised livestock identification laws through Senate Bill 5959. These revisions will return the Washington State Department of Agriculture’s inspec-tion program to solvency while also providing producers an electronic reporting option for sale transaction. Pro-ducer asset protection and animal traceability through all market transactions is provided by the inspection program.

Washington State Livestock Identification: Changes to Current Laws and the Future of Traceability / 43

Effective 28 July 2019, point-of-sale inspection fees increased for both identified and unidentified cattle, and voluntary reporting through the electronic cattle transac-tion system requires that producers use authorized cattle identification methods. A summary of livestock inspection fees is provided in Table 1.

Mandatory cattle inspections take place at point-of-sale, before interstate shipment, and at processing facilities and certified feedlots. Inspection fees increase from $1.10 to $1.21 for cattle identifiable by owner brand, official elec-tronic individual identification, or other director-approved forms of identification. A $20 call out fee is also assessed. The inspection fee for a horse is $3.85 plus the call out fee. However, no inspection fee applies to identified cattle that are transported across state lines under an official temporary grazing permit. The ten percent increase in inspection fees and the call out fee replaces the previous rule for assessing fees at the greater value of $1.10 per head or the combined $17 per hour time and rate-set mileage fee.

Unidentified cattle are unbranded and are without official ownership documentation. Inspection fees for unidentified cattle increase from $1.60 to $4. The $20 call out fee also applies to unidentified cattle inspection.

Annual license fee changes apply to certified feedlots and public livestock markets. Certified feedlot annual license fees increase from $850 to $935. For public markets with projected gross sales on an official sales day between $0 and $10,000, the annual license fee increases from $150

to $165; for projected sales between $10,001 and $50,000, the annual license fee increases from $300 to $330; and for public markets with projected sales greater than $50,000, the annual license fee increases from $450 to $495. If inspection fees do not exceed $150 on any given sale day, the licensee will pay a $150 fee for inspection. The aggre-gate inspection fee will be paid by the licensee on any given sales day when total inspection fees exceed $150. All inspection fee changes expire 1 July 2023.

The electronic cattle transaction reporting system can be used as an alternative to the brand inspection rules. The electronic cattle transaction reporting (ECTR) system was previously used to report only unbranded dairy cattle transactions but can now be used to report any transaction signifying change in cattle ownership. In order to use ECTR a license must be acquired and department-authorized individual identification methods must be used. Electronic official individual identification is an authorized method. License holders for the electronic cattle reporting system must report change-of-ownership through the system within twenty-four hours of the transaction. Unique iden-tification information for all cattle involved in a transaction will be recorded in the system report. Accurate records of transaction must be maintained by license holders and be made available for inspection following a reasonable request. The electronic system can also be used to transmit interstate shipping inspection information. The legislative revisions made to electronic cattle transaction reporting rules have no expiration date, unlike the revisions made to inspection fees.

Disease Traceability Revisions to Washington State Department of Agriculture’s livestock inspection laws signal the importance of identi-fication and traceability. Providing incentive compatible options allows producers the opportunity to select an identification strategy based on a menu of inspection fees.

Using ECTR further decreases both realized and oppor-tunity costs of inspection, making for a more efficient allocation of both time and resources for producers and certified inspectors. Voluntary adoption of the electronic reporting system targets progressive producers with the intent that as these producers realize increased reporting efficiency, the benefits of electronic reporting will diffuse throughout industry and result in higher electronic report-ing adoption rates. Effective response to disease outbreak is contingent on accurate and timely livestock identifica-tion and traceability. Aligning producer incentives with

Table 1: Summary of WSDA Livestock Inspection Fees

Fee Cost UnitInspection fee for identified cattle $1.21 per head

Inspection fee for unidentified cattle $4.00 per head

Inspection fee at processing plant $3.85 per head

Inspection audit fee for certified feedlots $0.28 per head

ECTR Fee $1.30 per head

Call out fee $20.00 per inspection

Certified Feedlot License $935.00 annual

Auction markets < $10,000 in sales $165.00 annual

Auction markets between $10,000 and $50,000 in sales $330.00 annual

Auction markets > $50,000 in sales $495.00 annual

Source:


increased identification and electronic reporting promotes an effective response.

While the electronic reporting system does not prevent disease, it does mitigate disease spread risk when an out-break occurs. Accurate traceability results in timely con-tainment at the source or within a network close to the source. Accurate traceability also decreases the burden of individual level testing throughout herds placed on non implicated producers during disease outbreak investiga-tions. Mitigating disease burden positively affects livestock health and production, and human health in cases of zoo-notic disease. Markets recover at a faster rate as disease investigations become more efficient, allowing interstate shipping and processing markets to open.

Federal Livestock IdentificationThe USDA is encouraging producers to use radio fre-quency identification devices as the official identifica-tion method through financial incentives (USDA APHIS, 2019). Adoption of radio frequency identification devices promotes a comprehensive animal disease traceability system. Established in September 2018, the USDA com-municated four goals to increase traceability. The goals consisted of advancing electronic sharing of data among state and federal animal health officials, veterinarians, and industry; having producers adopt electronic individual identification tags, consistent with the radio frequency identification device, in order to allow for more efficient data transmissions; enhancing the ability to track animals

Figure 1: Official 840 Animal Identification Tags

Source: https://www.aphis.usda.gov/traceability/downloads/ADT_eartags_criteria.pdf


during the production process through a system allow-ing the connection of tracked data points; and increasing discussion with states and industry about working toward a system that electronically transmits animal health cer-tificates from private veterinarians to state animal health officials. While recorded brands and tattoos are currently acceptable identification methods if both the receiving and shipping states agree (USDA APHIS, 2019), the use of radio frequency identification devices directly enhances the animal disease traceability goals previously stated.

USDA animal disease traceability goals outline a system that minimizes the economic, social, and health costs of animal disease outbreaks through accurate traceability and timely response. Having homogenous traceability systems across federal and state governments ensure accurate traceability and timely response when disease outbreak response requires government partnerships. Washington State’s electronic cattle transaction reporting system sup-

ports USDA animal disease traceability goals, creating this homogenous system.

ConclusionRevisions to Washington State’s livestock identification law incentivizes producers to identify cattle and adopt the electronic cattle transaction reporting system. Incen-tive takes place through changes made to inspection fees, making it more costly to inspect unidentified cattle during declared points-of-sale. Voluntary use of the electronic cattle reporting system provides an alternative to manda-tory inspections while also providing a system that ensures accurate traceability and timely disease outbreak response. As livestock markets continue to evolve, becoming more interconnected, specialized, and/or intensified, disease traceability ensures livestock and human health, as well as efficient market recovery during times of disease outbreak.

ReferencesOlmstead, A. L. & Rhode, P. W. (2015). Arresting Contagion: science,

policy, and conflicts over animal disease control. Cambridge, MA: Harvard University Press.

Washington State Legislature. (2019). SB 5959 Revising Livestock Identifi-cation Law [PDF File]. Retrieved from http://lawfilesext.leg.wa.gov/biennium/2019-20/Pdf/Bills/Session%20Laws/Senate/5959-S.SL.pdf

United States Department of Agriculture Animal and Plant Health Inspection Service. (2019). APHIS Statement on Animal Disease Traceability [PDF File]. Retrieved from https://www.aphis.usda.gov/publications/animal_health/traceability.pdf



SECTION III. WASHINGTON DATA

Washington ($1,000) 2013 2014 2015 2016 2017Gross cash income 11,432,746 11,588,456 11,829,555 11,038,691 11,325,096All commodity receipts 10,728,282 10,790,573 10,587,714 10,321,223 10,512,021 Crop receipts 7,720,620 7,382,887 7,500,517 7,738,662 7,916,295 Animals and products receipts 3,007,662 3,407,685 3,087,197 2,582,561 2,595,726Cash farm-related income 496,863 667,386 1,022,810 474,229 595,249 Forest products sold 24,071 18,747 16,554 16,143 17,640 Machine hire and custom work 104,004 233,148 83,253 93,568 100,460 Other farm income 368,788 415,490 923,003 364,519 477,149Total direct government payments 207,601 130,498 219,032 243,239 217,826 Cash expenses 8,327,298 8,934,531 8,123,713 7,836,214 7,714,970Interest 302,671 313,137 321,976 337,603 358,492 Nonreal estate 114,460 118,915 126,270 127,014 132,104 Real estate 188,211 194,222 195,706 210,588 226,388Labor expenses 1,949,618 1,970,169 1,923,805 2,138,487 2,052,151Property taxes and fees 247,054 299,011 233,712 247,804 212,071Farm origin 1,462,823 1,591,543 1,383,550 1,323,978 1,667,396 Feed purchased 911,626 980,016 790,764 865,674 1,176,844 Livestock and poultry 171,352 217,389 213,220 134,979 183,550 Seed 379,844 394,137 379,567 323,324 307,003Manufactured inputs 1,637,534 1,943,363 1,458,813 1,374,774 1,271,462 Electricity 155,725 195,044 146,687 126,796 165,729 Fertilizer and lime 640,309 766,969 590,437 521,491 419,570 Fuel and oil 363,981 459,385 247,230 267,575 205,192 Pesticides 477,519 521,965 474,458 458,912 480,971Other intermediate expenses 2,187,316 2,313,478 2,221,993 1,963,869 1,739,759Net rent to landlords 540,282 503,830 579,864 449,701 413,638 Net cash income 3,105,447 2,653,925 3,705,842 3,202,477 3,610,126

Data Reported in 2018 dollarsSource: USDA ERS Farm Income and Wealth Statistics

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