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Articles from 2001 In October


Crop protection has key role in 'making world a better place'

"Our industry is needed and depended upon by our fellow Americans," he told members of the Southern Crop Production Association at their annual convention at New Orleans, "but that is not a guarantee for success."

Among conflicts to be resolved, he said, are the desire to increase production while maintaining the core value of safeguarding the environment, and the high costs of developing technologies while facing the reality of low crop prices.

And, Borel said, "Our industry has more infrastructure than our customers can afford, as evidenced by the industry consolidation we've seen over the last several years. Markets aren't growing, and competition is intensifying. Productivity gains have become harder and harder to achieve.

"We must remove cost and waste from the crop production system. There is no room for any excess."

That will require "a new kind of cooperation," Borel said, listing four "overriding priorities" among 10 that have been identified by the American Crop Protection Association (ACPA) for the next two years.

Pesticide benefits study

Noting that the ACPA has under way a study documenting the "substantial benefits" of pesticides in U.S. crop production, he said "if we are to have any hope of discussing the relevance of risks, both real and perceived, it is essential we communicate these benefits we bring to society in order to manage those risks at acceptable levels and maintain our right to operate."

Modern crop protection materials have helped American farmers to achieve "incredible improvement in yields," Borel said. "To produce the amount of food currently grown in the U.S., based on per acre yields of the 1940s, we would have to plow up about 300 million more acres.

"Clearly, part of the gain has been from genetics and cultural practices, but crop protection has been instrumental in that success."

Pesticides "contribute in a significant way" to improving quality of life, Borel said, and provide widespread public health benefits, such as fire ant, rat, and mosquito control.

"But many people — even some in our own companies — don't fully understand this."

A survey of ACPA members to get a better understanding of their opinions on the role of pesticides in society will be used in the organization's pesticide benefits communication plan for 2002. "Pesticides are benefiting society immensely," Borel said. "We need to share that message."

Also of major importance to the industry, he said, is the use of sound science in developing legislation and regulations governing the crop protection industry.

"We need to have decisions that are based on facts, made in a consistent way."

Encouraged

Borel said he is "encouraged by the signals we have received" from the Bush administration, and "we look forward to working with" Environmental Protection Agency Director Christie Whitman, and Secretary of Agriculture Ann Veneman. "With clear and appropriate rules, we can focus on making a real contribution to agriculture, rather than guessing which of our decisions will be accepted and which will be criticized or rejected."

Modern pesticides are "among the most thoroughly tested products in the world today," Borel said, with each product passing at least 120 health, safety, and environmental tests before being registered by the EPA. To bring a new product to market takes an average 8-10 years and $35 million to $50 million.

"Understandable rules and a sound science basis for our products is critical."

But, Borel emphasized, stewardship must continue to have the highest priority. "Society as a whole expects zero incidents — leaks, spills, misuses. Only with a solid, collective performance do we build trust and credibility. Our response must be a comprehensive commitment to management practices that will lead to the expected results."

For the past year, ACPA has worked with the Agricultural Retailers Association and other stakeholders in developing a common ground stewardship initiative that will be patterned after the American Chemistry Council's "Responsible Care" program.

"We will use Responsible Care as an umbrella and harmonize its standards to fit different agricultural situations, including transportation, storage, application, and training, as well as manufacturing.

"Everyone in agriculture is in this together," Borel declared, and "we all need to collectively commit to take this next big step. As we improve performance in the stewardship area, step by step, we build credibility."

Challenge

The challenge, he said, "is for all of us to invest in training and education to insure proper handling and application of pesticides; to place a high priority on insuring the safety of all those who use or come in contact with our products; and to focus research and development efforts on even better and safer products."

Misuse of pesticide products, Borel cautioned, can result in lost crops, environmental harm, and injuries to people — "but we lose credibility" and each instance makes "the climb back upwards to public acceptance more difficult."

The fourth industry priority, biotechnology, "offers the capability to have a very positive impact on society," he said.

"But the products of biotechnology must be shown to be safe for humans and the environment. Potential benefits and risks must be made transparent and understandable to the public, and we need to be responsive to the public's questions about the potential power of biotechnology."

DuPont's position, Borel said, is that "we will apply the same safety standards to biotechnology that we apply to industrial safety — and DuPont's safety performance is orders of magnitude better than industry averages."

The company, he noted, has formed an independent global panel to "help guide company actions, help create positions on important issues, and challenge us in the development, testing, and commercialization of new products based on biotechnology. This is an immense help as we seek to understand the ethical, religious, environmental, and social concerns, as well as the science itself."

Benefits over risks

History has shown, Borel said, that new technologies are not without risk — "but history has also shown that the benefits of a new technology can be much, much greater than the risks. Assessment of risks in the light of benefits should be the very essence of the current debate over biotechnology."

The crop protection industry has "an important role in helping the world to be a better place for everyone," Borel said, "and we are making a difference

Profitable farmers hard-line cash managers

Hardly heartening news from respected Bank of America agricultural economist Vernon Crowder.

Nevertheless there will be producers making a profit in the future just like — surprisingly -- some are today.

Crowder told the 20th annual Agribusiness Management Conference in Fresno, Calif., recently that some of his customers are turning a profit, but they are not the topic of coffee shop conversations where it’s mostly doom and gloom. The conference was co-sponsored by California State University, Fresno and Bank of America.

Depressed commodity prices and rising costs are here to stay for a while, and farmers should not pin their hopes for better times on a disaster elsewhere in the world. Crowder, Bank of America senior vice president and California agribusiness executive, said agriculture has become too globally productive to expect one farmer’s woes to be another’s blessing. The world has proven it can cover any shortfall in a hurry.

Even with his admitted second straight year of a dismal outlook at the conference that drew more than 400 to a downtown Fresno hotel, Crowder said California agriculture is a mature industry that will weather a prolonged economic downside.

The survivors will be those who strive for the highest yields possible while accounting for every dime spent. They will invest in technology to achieve those goals.

They will be diversified.

Drop unsuccessful

"Let go of things (crops) that are not working. That is a key factor with successful growers today," he said.

Improve marketing power by becoming vertically integrated, like the poultry industry and more recently like the Western high value vegetable industry.

Vegetable processors and growers have realized they need each other and that has created more partnerships to share risks, he said, adding this vertical integration is beginning to occur also in the dairy industry.

These partnerships are extending beyond the processor to the retailer, he added. Margins are getting tighter and forcing this vertical integration and partnershipping.

Cash management will also bode well for the future. "Tax management is OK for the good times. Knowing where losses are occurring" today is more important.

No questions times are tough in agriculture, but Crowder said there is no crisis — no disastrous free fall.

Some crops did well in 2001. Dairy, hay, orange and other fruit prices improved in 2001.Most, however, were flat or down. California is less dependent on government payments than other major agricultural states. The state’s farmers received only $670 million in 2001 for an industry grossing about $24 billion. Seven states received more than $1 billion in direct payments. Subsidies will continue to be needed. The only question is will the feds have the stomach to push them to record levels.

About the only cost that is going down is the cost of money. Some are fearful that that will attract unwanted over expansion. Crowder was optimistic that bankers and lenders are "more disciplined" now than they were in the 1970s and ‘80s when expansion turned disastrous for many crops. Many producers are still suffering from those days with debt loads today that are jeopardizing their future.

Crowder based his outlook on the fact banks’ agricultural lending levels are declining, and he predicted that trend will continue.

America is in a recession, according to several speakers. It just has not been declared. Crowder said food expenditure is typically not affected by a recession.

A recession may improve ag labor availability with job losses in food service and construction. Nevertheless, labor will continue to be a cost-increasing factor not only with increasing wages, but also with chronic shortages raising the costs.

DOV raisins driving major industry changes

Those changes are not coming easy in an industry where the average age of its 5,000 producers is 62 with an average vineyard size of 40 acres.

The changes are being forced on producers because it is an industry in an economic free fall, tumbling 34 percent in crop value in just two years due to overproduction and low sales. Prices have fallen to levels not seen in 20 years.

"There will be a totally new industry 10 years from now," Koligian told the annual Agribusiness Management Conference in Fresno recently.

California’s raisin industry has long been competing in a world market with a federal post-harvest volume control marketing order. Marketing order delegates determine crop size and market potential and release almost always less than 100 percent of the crop ("free tonnage") to compete against lower-price world competitors. The rest is considered surplus and sold at below what the industry sees as free tonnage prices.

In the past surplus raisins have been used for subsidized school lunch programs, distilled into alcohol and even used for cattle feed.

Import raisin gains

California-produced raisins have generally enjoyed a strong reputation for quality and earned higher prices, but that is changing. Turkish, Iranian and Afghanistan raisin production is not only increasing, but also quality has also improved, said Koligian.

This is putting a price squeeze on California raisin growers. The only way out, according to Koligian, is sales growth.

Koligian said pressure is mounting to compete toe-to-toe for world markets against foreign producers. However, most growers cannot do that using the long established, labor-intensive methods of drying raisins on paper trays between vine rows.

DOV advances

Increasingly more producers are investing $5,000 per acre to re-trellis or establish new vineyards where raisin-type grapes, mostly Thompson seedless, are Dried-On-The-Vine (DOV).

These DOV vineyards not only eliminate much of the hand labor associated with on-ground drying, but they produce as many as three times as many raisins as field dried raisin vineyards. This reduces the per ton cost of producing the fruit, meaning DOV producers can produce more tons for less money than on-ground producers.

This disparity is causing considerable division in the industry, and resulting in on-line raisin price bidding wars, Koligian said. This is also shattering the long-standing relationships between packers and growers.

"I look forward to getting back together again," he said.

California tree nut crop outlook encouraging

Nelson has one of the more enviable tasks at the Agribusiness Management Conference in Fresno. His was to report on the status of the California tree nut industry and the outlook for pistachios, almonds and walnuts is perhaps one of the brighter ones for California crops.

Yes, that includes almonds, the crop many believe is an oversupply disaster waiting to happen.

California may or may not produce a record almond crop in this season. Early on it was projected to be a record 850 million pounds, surpassing the 1999 830-pound record. With 75 percent of the crop hulled and shelled, it looks like it may not make that level. Nelson said it could come in only at 800 million pounds, but that combined with 703-million-pound 2000 crop is considerable tonnage to move.

Nevertheless, California continues to move record tonnage. For the 2000-2001 crop year it was 740 million pounds and for the 2001-2002 season it is projected to reach 760 million pounds.

Over the past 20 yeas, Nelson said the annual almond sales growth rate has been 4.3 percent.

Consumption trend

And consumption, he said, over that same period was limited by available supply. Buyers today have a perception of adequate supplies and the positive consumption trend is expected to continue.

"Almonds are being considered more often as a food ingredient in cereals, candies, ice cream and other items," Nelson said. "Low prices and strong supply provide incentive for companies to promote almond enhanced products."

Even with back-to-back large crops, Nelson said current prices back to farmers are in the 85- to 95-cent range.

No, that is not anywhere near the $2 price of years past, but today’s higher producing, more dense orchards produce more almonds per acre. The average number of trees per acre has increased from 88 in 1990 to 101 in 2001.

Older orchards cannot keep pace with the new ones. Nelson said there are 180,000 acres of almond orchards — 30 percent of the state’s total almond acreage — more than 20 year old. Those trees will soon come out, he predicted. California’s producing acreage is 525,000 acres. Non-bearing is estimated at 75,000 to 80,000.

Future expansion will be limited to those who have "financial staying power."

There is a 1 billion-pound almond crop on the horizon, but it will not likely be next year coming off a big 2001 crop.

"A crop of 750 million pounds could see farm prices return to $1.25 to $1.35 per pound," he predicted.

Walnuts

California’s other traditional nut crop, walnuts, also is enjoying steady consumption growth at an average of 3.4 percent annually over the past few years.

California’s acreage is holding steady at 191,000 bearing acres with crops of 239,000 tons last year and a projected crop of 280,000 tons this season. Shipments of California walnuts last season totaled 250,000 tons, 105 percent of production.

Two-thirds of the California crop is exported and one third is consumed domestically. It is a primarily a food ingredient item, but the snack food portion of the market is growing faster behind a message of health and nutrition.

The quality of this year’s crop is excellent, reports Nelson. Growers received 60 to 62 cents per pound in-shell for last year’s crop. This year’s return is expected to be slightly less.

Nelson said both the short and long-term outlook for walnuts is positive.

Pistachios

California’s pistachio acreage is 74,578 bearing and 21,730 non-bearing.

Iran and the U.S. produce 70 percent of the world’s pistachio supplies. Fifty percent of Iran’s pistachio plantings are non-bearing and production in that country is expected to increase 40 to 50 percent over the next five to seven years.

California’s 2001 crop is now projected at 160-170 million pounds, well off the state’s earlier estimate of 200 million pounds.

Current year shipments should reach 171 million pounds — a new industry record.

Prices have firmed recently at $1.55 for raw 21/25 U.S. extra No. 1 product. That price is expected to go up as much as 10 cents during this fall.

"Buying interest has been strong in domestic and export markets," said Nelson.

Industry experts expect a sharp worldwide increase in production over the next five years, but they expect consumption to keep pace.

'POP' cotton now or later? Clemson table may provide clue

These days, growers still watch the futures market but not with the intensity that they look at another number - the marketing loan gain value or loan deficiency payment rate announced each Thursday by USDA’s Farm Service Agency.

"Two questions I’m often asked are: "How can we predict the level of loan deficiency payment (LDP) rates?" and "When will the LDP rates be the highest?" says Charles Curtis, professor and Extension economist in the Department of Agricultural & Applied Economics at Clemson University.

"In other words, they want to know if they should take the LDP or producer option or POP payment now or wait until later," he said. "Many growers remember that the LDP shrank to almost zero at harvest last year and then began to increase early in 2001."

With New York December cotton futures trading at 36 cents a pound when he spoke at the Southern Regional Outlook Conference in Atlanta recently, Curtis said there is little doubt that farmers again will be trying to maximize their LDPs. (Since then, December has fallen to 29 cents per pound and the LDP has risen to nearly 30 cents.)

Guidance tools

And while recent history indicates farmers should wait until the dust settles from harvest before taking an LDP, Clemson economists have developed tools that could provide guidance for making such decisions.

To help South Carolina producers address this issue, Clemson economists began keeping records of loan deficiency payment rates in 1999. Those figures are available at http://cherokee.agecon.clemson.edu/ldp_page.htm. (Note: There is an underscore between ldp and page.)

Using those numbers, Clemson researchers developed a table that shows the monthly average basis of USDA’s adjusted world price (AWP) in relation to the nearby New York cotton futures contract. "This table allows a prediction of the AWP, which can then be compared to the CCC base loan rate of 51.92 cents per pound to calculate a predicted LDP," Curtis notes.

Based on data from the years 1998 through 2001, the table shows a January basis relative to March 2002 futures of –16.7. With March futures at 30.57 cents per pound (on Oct. 30), the predicted AWP would be 13.87. Subtracting the predicted AWP from the 51.92-cent loan rate yields a January 2002 LDP prediction of 38.05.

That’s about 8 cents per pound higher than the Oct. 26 LDP rate of 29.87 cents per pound. (Curtis notes that the basis information in the table should be used with a degree of caution because of the relatively short period of experience with LDPs.)

What if, on the other hand, March futures do an about face and move back to the range of 40 cents per pound?

If the basis relationships of the last three years hold true, the predicted AWP would rise to around 24 cents per pound and the LDP, as a result, would fall back to 27.9 cents per pound.

"According to our long-term price charts, futures do tend to rise in winter and early spring," says Curtis. "If that is the case, it would indicate that loan deficiency payments would be lower in the spring."

Looking at the current market-based probabilities of prices out to next June, the prospects of prices recovering such that there is no LDP by the end of next spring "are effectively nil," he said. "However, a price recovering to a level so that a 42-cent July 2002 call option would move in the money is near 45 percent."

Take LDP now?

Thus, growers who are concerned that the market could follow historical trends, rebound and reduce the LDP – or who need cash to pay debts this fall – might consider taking the LDP now, selling their crop and buying a call option.

"One strategy would be to accept the harvest market value (26.44 cents in the cash market – 28.94 December futures on Oct. 30 less the 250-point southeast basis – and the 29.87 Oct. 26 LDP rate) and reinvest 200 to 250 points into the July 02 call," says Curtis. "With a 45 percent plus probability of gain on the option, there’s a good chance of adding to the 56.31 cents that would be received for the 2001 crop."

For now, the market is giving cotton producers little to cheer about from the futures standpoint. As the U.S. crop size has continued to climb past 20 million bales and economic conditions have continued to deteriorate, New York cotton futures have dropped to their lowest levels in more than 25 years.

When Curtis spoke in Atlanta in late September, USDA was estimating U.S. production at just under 20 million bales. The Oct. 20 crop production report raised the projection to 20.07 million bales, the largest crop in modern history. Adding the estimated carry-in of 6.03 million bales would make the 2001-02 crop supplies the largest on record.

Lower mill use

Contributing to the market’s woes is USDA’s projection of 8.3 million bales of mill use in the 2001-2002 marketing year (Aug. 1-July 31).

"This is well below the average for the 1990s and is much smaller than we’d grown accustomed to in the mid-nineties," says Curtis. "This is assumed to reflect three factors including flat product demand, a strong U.S. dollar and little incentive to buy in a falling market."

With numerous plant closings and layoffs, the U.S. textile industry appears to be in disarray, Curtis notes. "One could expect to see the more labor-intensive activities in the textile manufacturing process to continue its move to cheaper labor markets such as Mexico. Hopefully, these overseas mills will continue to value U.S. cotton and be a source of export demand."

Exports are projected to be substantially higher at 9 million bales than what has been the average for the 1990s or about 6.8 million bales, he said. "The current forecast reflects tighter global stocks and increased consumption. Projected export market strength has been attributed to reduced price supports and a dramatic drawdown of Chinese cotton stocks and reduced southern hemisphere production."

With the dramatic increase in production, USDA forecasts U.S. ending stocks to reach 8.7 million bales, a huge jump from the 1990s average of 3.85 million bales. The higher carryover number will send the 2001-2002 stocks-to-use ratio to 50 percent, compared to the 30 percent target in the cotton industry’s farm policy objectives.

Curtis says LDPs help explain what some are calling the enigma of the cotton market; that is, why growers continue to expand cotton acres when prices have almost been in a free-fall since early this year.

"If you take the cash price of 32.50 cents (based on the 35-cent December futures price on Sept. 21) and add a 30-cent LDP to it, the grower receives 62.50 cents for his cotton in 2001," he noted. "That’s why cotton is king again in so many of our states."

Wine grape prices adjusting to consecutive huge crushes

However, one of the California wine grape industry’s most widely respected experts, Barry Bedwell, was not as much doom and gloom as those numbers would suggest when offering his analysis of this year’s crush and what the future might hold at the recent Agribusiness Management Conference in Fresno.

Bedwell, general manager of Ciatti Grape Brokerage and former president of Allied Grape Growers, certainly did not paint a rosy picture for California wine grape growers. In fact, it was down right grim for the central and southern San Joaquin Valley, which accounts for 60 percent of the statewide tonnage crushed.

With production costs running $1,300 per acre and income only $600 to $700 per acre in those regions, Bedwell is concerned that growers will simply abandon vineyards next season because there are no alternate permanent crops that offer profit potential.

That may bode well for the supply side of the ledger, but it is not good news in the ongoing battle against the glassy-winged sharpshooter and the western grapeleaf skeletonizer. Abandoned vineyards would become a reservoir for those pests.

Bottom this year?

"Times are very tough in the central valley, but this year may have been the year when it hit bottom," he said.

Overall, however, he called the short-term outlook for the state’s industry "realistic, but long term optimistic," especially for high value, premium coastal wine grapes.

His optimism is based on the fact that California wine grape exports are growing at a 16 percent increase clip. That compares to only 1 to 2 percent annual growth rates in the 1980s. Domestic wine consumption is also growing, however, imports are capturing a good portion that by virtue of their annual 23 percent increase rate.

Not surprising in light of recent heavy plantings, spot prices softened this season for most wine grapes. The industry’s "spectacular success" of the ‘90s spawned unprecedented vineyards plantings. And still 19 percent of the state’s 568,000 acres of wine grapes are non-bearing.

Most say a significant percentage of those grapes were established without long-term winery contracts, leaving them subject to the vagrancies of the spot market. That is a tough place to be with a fresh product in an oversupplied commodity. Certain varietals had tough sledding in the spot market this season and that is not expected to change next season with an average or above average crop. This will be the case even in the highest end of the wine grape spectrum, the North Coast and the Central Coast, predicts Bedwell.

Bright spots

There remain some economic bright spots, however. Zinfandel for both the red and white market is one and Merlot is another.

The rush to plant more Chardonnay and Cabernet Sauvignon spared Zin and Merlot.

At one time many expected Merlot to surpass Cabernet Sauvignon in tonnage and acreage, but that has not happened because many perceived Cabernet as growing faster that Merlot and therefore planted more Cab than Merlot. And with the Merlot crop smaller than expected this season there is a better supply/demand balance than with some other varietals.

Cabernet Sauvignon tonnage was down this year (340,000 tons versus 357,000 for last season), but the big crop in 2001 spiked the inventory. Referenced contracts netted Napa growers $3,500 to $4,000 tons this year, but the spot market was below $1,000 per ton in the same area as supplies increased sharply. In the Lodi-Woodbridge area the spot market was $200 to $300 and in the south valley only $100 per ton as a generic variety.

The same was true for Chardonnay where the 2000 crush filed the tanks with 107 million gallons of Chardonnay, up from just 35 million the year before. That increase represented 13 million more cases of Chardonnay from the 2000 crush vs. 1999, said Bedwell. That drove spot prices down in 2001.

"Zinfandel is in better shape than other varietals because it has not been overplanted. This is true for red Zin as well as well as the white market," said Bedwell. This bodes well for the Northern Interior area of Lodi-Woodbridge.

The concentrate crush (primarily Thompson seedless) in the central valley was less than expected this season and that may translate into higher spot market pricing and may reduce pulled acreage this winter. Bedwell said concentrate crush estimates were as high as 350,000 tons earlier, but that has fallen to at least 320,000 tons.

Only aggressive will prosper in changing fresh fruit, grape market

Conversely, highly leveraged producers and packers who are slow to adapt to change face an uncertain future, Burrell told the recent Agribusiness Management Conference in Fresno.

Per capita consumption of fresh fruit and vegetables has gone up more than 20 percent in the past three decades, and California producers have responded to that growing market by increasing peach acreage by 38 percent in the past decade. Nectarines bearing acreage has jump 34 percent in that same period and table grapes acreage has increased 11.5 percent.

The only decline since 1991 has been in plums, off 10 percent because plums do not offer a good return on investment.

Other nations have responded to the demand increase as well. Table grapes and fresh fruit are now available year-round largely from southern Hemisphere imports. For example, Burrell said Chile now supplies 31 percent of the total U.S. table grape market. Mexico supplies 12 percent of the market and that evolved into a major issue recently with Coachella Valley producers who contend Mexico is dumping products on the U.S. market at their expense.

Record export gains

On the other hand, California producers are enjoying record increases in exports. Table grape volume increased 29 percent in 2000 from 1999 and stone fruit exports totaled 8.2 million cartons last season, a new record.

Mexico has replaced Hong Kong has the largest export market for California table grapes. However, Asia remains an essential export market for both table grapes and stone fruit with seven of the 10 largest export markets for table grapes.

There also are changes in consumer preferences. Since 1991 volume for the mainstay variety of the industry, Thompson seedless, has been largely flat. Emperor and Ruby Seedless have declined sharply, replaced by dramatic increases in Red Globe (132 percent) and Crimson (376 percent) over the past decade.

California fresh fruit and table grape production has undergone rapid changes over the past decade, and Burrell said that is not likely to slow down in the future.

Favors for new 'friends' could impact U.S. textile mills

“We are concerned about trade favors (the U.S. government) might grant Pakistan,” William B. Dunavant III, told participants in a recent west Texas cotton marketing and flow meeting, sponsored by the Texas Cotton Shippers Association (TCSA) in Lubbock.

Dunavant, president of Dunavant Enterprises, Inc., in Memphis, Tenn., and first vice president of the American Cotton Shippers Association (ACSA), said Pakistan already is the number one producer of cheap textiles. Increasing the amount of textiles they can export into the country will limit how much U.S. cotton domestic mills will buy in an already shrinking market.

Dunavant said Uzbekistan, “one of the fastest growing textile markets in the world,” also may get favors for cooperation but will likely prefer military help.

Dunavant said the cotton industry faces other challenges. “We have a 9 million bale carryover in the United States,” he said. “That’s 53 percent stock to usage ratio, the highest since 1985. The ratio has averaged 27 percent for the past 16 years and could rise to near 60 percent by August 2002 if domestic consumption continues to fall.”

He said a meeting of 600 textile representatives in Liverpool recently “was extremely bearish,” and voiced concern about subsidies in the United States.

One of the biggest concerns among cotton shippers, he said, is default from mills.

“A drop from 60 cents a pound to 30 cents means customers are beginning to waver,” he said.

Default concerns, he said, is something “shippers let happen to themselves,” by not enforcing their own rules. “Shippers have to show unity and refuse to sell to buyers on the default list. Our worst enemy is that the default penalty has no teeth. We have no real means of punishing a shipper for selling to mills on the default list.”

Dunavant said domestic market woes continue. “Banks are now beginning to question domestic mills’ receivables in regard to credibility as collateral,” he said. “Banks are nervous about the stability of the domestic textile market.”

Dunavant said a potential bright spot for U.S. cotton is the overseas market. “The USDA estimates exports at 9 million bales,” he said. “That would account for 33 percent of the world’s exports; 26 percent is a traditional share. Those are lofty numbers but we can achieve them. Cotton with quality will export,” he said.

He said India is an increasingly important customer, upping imports from 300,000 bales last year to 650,000 from the 2001 crop.

“India likes U.S. cotton,” Dunavant said. “They like the quality and the information they get from high volume instrumentation (HVI).”

He said India’s crop yield and quality will be down. “They need American cotton,” he said.

e-mail: rsmith@primediabusiness.com.

Corn+Soybean Digest

A Tired Road Warrior

The Road Warrior of Agriculture

This past week I have crisscrossed the United States twice. The extra security, while good, does slow a person down. It is estimated that there are 17 million US business travelers yearly. One hour extra per trip adds up to 17 million lost hours of productivity!

In the Air
Yes, I know it is taking more time to actually get on the plane. But I support anything that the Feds want to do about security. I wanted to bring back some gifts that I was recently given. But I had to ask my customer to mail them instead. Thanks for the gifts, guys. It is now a fact of life that postage has to be included in the giving.

Rumor Mill
Land in western Minnesota sold last Friday at bids above $1,400 per acre, exceeding the $900 to $1,000 per acre norm for land prices. Can corn and beans and government payments justify these values, or are these higher prices a result of investment flight from Wall Street and the hope of capital appreciation?

Soymilk Mustache
I attended a dairy conference out west and industry experts indicated that soymilk demand is one of the fastest growing milk products. This is despite being a small percentage of the total market consumption. Talk about your niche marketing.

Interesting Perspective
A producer panel that I attended last week indicated that the agribusiness infrastructure is growing and consolidating in areas where they perceive that there will be sustainable agricultural producers in a growth mode. What kind of area do you live in?

Detour in the Credit Highway
Lenders become concerned when they observe more than five different sources of credit on the balance sheet. This is referred to as split lines of credit. It can be troublesome in circumstances of a workout. And very unsettling if you don’t know about it ahead of time!

A Full Service Office
I never know what awaits me for chores when I get back home from flying. This week, one of the pulsators and a cap from a milking machine were broken. I don’t know how my two boys did that (notice I blamed them both). I would like to be a fly on the wall and know the real story. You can relate, I am sure. So here we are, in the office, Barbzilla and me trying to take these things apart, looking for the broken parts. Barbzilla has everything in this office, even a screwdriver set. She says they are for the computer, not my manure covered accessories from the barn. But I talked her into helping me. Now we are ordering the parts.

Sports Perspective
The D-backs’ two great flame-throwers effectively shut down the Yanks in the first tow games. Looks like it may be over already. The Yankees have a tough row to hoe.

It was great to see Jordan back on the court! His defense is what impresses me.

What will the BCS football selection process do if ALL the top teams lose at least one game?

Next week I will be reporting from Wisconsin. Bundle up. The cold is coming!

My e-mail address is:sullylab@vt.edu

Editors' note: Dave Kohl, Soybean Digest Trends Editor, is an ag economist at Virginia Tech. He recently completed a sabbatical working with the Royal Bank of Canada. He is now back at Virginia Tech with his academic appointment, which is teaching, extension, and applied research.

To see Dave Kohl's previous road warrior adventures type Dave Kohl in the Search blank at the top of the page.

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