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Articles from 2004 In December


Tobacco export industry optimistic about future

There was undiluted joy among individuals and organizations involved in the exportation of American leaf when the tobacco buyout was signed into law.

“The beneficial aspects of going to a free market will more than overcome any negative aspects of the buyout legislation,” says J.T. “Tommy” Bunn, executive vice president of the Leaf Tobacco Exporters Association. “Our organization has supported buyout legislation strongly. Our members are very optimistic that this legislation is going to improve access to the world market.

“The legislation gives us the first opportunity in decades to reverse the decline in the U.S. market and make it strong and viable once more. Dealers will almost immediately be able to service a larger strata of the world market.”

But he advises all involved to plan for gradual growth in demand. “I don’t see a dramatic increase in production in the short term. We will regain our market the same way we lost it, slowly and deliberately,” says Bunn.

The big question in the near future will be how to market a more world-oriented crop. The domestic manufacturers seem to have learned to live with contracting, but that marketing method has some limitations for export sales.

“It fits best with the customer who can use all stalk positions, and not all can,” Bunn says. “Some dealers have increased their contracting programs, others have cut back.”

On the other hand, growers may find it hard to arrange financing for a crop unless they have a contract to show their lending institution since the price support program no longer is around to guarantee a market.

“This is all going to be a developmental process — we will just have to see what transpires,” he says. “It will probably take at least one year to see where we are going.”

Kirk Wayne, president of Tobacco Associates, notes that the basic effect of the buyout — elimination of a federally set price — has to be viewed as positive for U.S. leaf exports.

“One thing is a given about the buyout — it will bring about a reduction in the price of U.S. tobacco,” says Wayne, whose organization promotes exports of U.S. flue-cured leaf. “Clearly that will be a positive aspect. U.S. leaf has been the most expensive on the market, and the high quality hasn’t been enough to make up for it.

“Of equal weight is that it will relieve so much of the uncertainty of recent years. This will be significant. In my life, I have never witnessed anything so negative as this uncertainty has been as far as customers buying on our market were concerned. They just didn’t know what next year’s crop might be worth.”

So if nothing else, the buyout will have two positive effects on U.S. prospects on the world market. “This bodes well for us to predict an increase in demand for U.S. tobacco, along with the fact that I am sure there has been some pent-up demand for our leaf for some time,” says Wayne.

The only negative aspect relative to the competitiveness of the United States on the world market is that there will be a period of transition in marketing.

“If the foreign buyers are going to buy our leaf, there must be some way for them to access the grades that they require,” says Wayne. “These buyers won’t be anxious to contract with farmers for the whole stalk. Some means of providing grade selectivity will need to be found.”

It may be possible to do this through some modification of the current system of contracting and auction marketing centers. Or, a new system may have to be developed, he says. “I can’t tell you exactly how the animal might look, but I am confident that it will evolve,” he says.

Counting the American component of cigarettes made here for export, 60 percent of the U.S. crop is now finding a home in the foreign market. “That is power enough to assure that some system to accommodate that interest will be found,” he says.

Wayne notes that his organization plans to continue an aggressive program of promoting U.S. flue-cured leaf overseas. “We may have to change some directions because of the new circumstances. We are going to look at some of our funding sources and levels. And there are a lot of other things we have to reassess. But the role of Tobacco Associates is more important than it ever has been. Farmers are going to be moving, marketing and selling their product in a different way than before, and we need to help them sell it by expanding export markets.”

Trade negotations seek reductions in tariffs, improved market access

Trade negotiators from across the globe have nailed together a framework on which they plan to build the next international trade agreement. But the hammering continues, says Gary Adams, vice president for economics and policy for the National Cotton Council.

Adams participated in a Texas Commodity Symposium via teleconference recently, part of the annual Amarillo Farm and Ranch Show. “The Doha Round will determine the next trade agreements,” Adams says. “The framework simply defines the ground rules to take into the formal discussions.”

Adams says a goal of the next round of talks, which have as yet to be scheduled, will be to eliminate export subsidies. “That’s part of the framework,” he says. “The timeframe for elimination, however, remains to be negotiated. The European Union is one of the heaviest users of export subsidies.”

He says market access also makes the list of priorities. “Improvements in market access to all products will be important,” he says. “Reducing tariffs also will be key.”

He says tariff reductions likely will be accomplished through a tiered plan, a little at a time. Less developed and developing countries will have more time to cut tariffs.

Adams says changes mandated by findings of the WTO panel created to hear the Brazil claim against the United States for distorting cotton prices may take a year or more to enact.

“”If the findings are not overturned on appeal, the United States will have an appropriate time to comply. And if Brazil is not satisfied, their representatives can go back before the same panel again.”

Adams says both parties found reasons to appeal the panel’s initial rulings. “An aggressive appeal is underway. The situation will play out over the next three months.”

He says farmers should not expect changes in the cotton program any time soon, even if appeals fail. “Changes would have to be through legislation and then we have a time lag for implementation. At the earliest, it will be well into 2005 before any significant change can be made.”

Adams says payment structures, direct and counter cyclical, may be scrutinized for cotton and other commodities. He says WTO has no enforcement power. “Each member is expected to make appropriate changes.”

Part of the problem in international trade disagreements, he says is that trade agreements include “ambiguous language that’s subject to interpretation.”

Agribusiness: Headline fungicide now for corn and soybeans

For more than two years, Headline fungicide has delivered disease control in dozens of crops. Now, soybean and corn growers can make use of Headline as the result of a label expansion authorized by the Environmental Protection Agency.

Headline is registered on more than 100 crops to control some of the most damaging diseases that growers face. F500, the active ingredient, controls diseases by interfering with cell respiration and energy production. Headline was first registered for use in the United States in late 2002.

In soybeans, Headline is effective against some of the most destructive diseases, such as Cercospora blight, anthracnose, frogeye leaf spot and Asian soybean rust.

The number one Asian soybean rust product in South America over the last two years is a combination of F500, the same active ingredient contained in Headline fungicide, and a triazole fungicide.

BASF recommends that growers in areas where Asian soybean rust is identified apply Headline as a tank-mix with a registered triazole fungicide as a preventive treatment.

Headline also controls major diseases in corn, including gray leafspot, common corn rust and northern and southern corn leaf blight.

As in all other labeled crops, BASF recommends that Headline be used in soybeans and corn as a preventive treatment — that is applied prior to any visual evidence of a disease being present.

“For improved Plant Health, including disease-control, early application is critical,” said Gary Fellows, BASF technical manager. “Preventive treatments are the best way to insure that the fungicide will protect the plant by inhibiting the development of fungi before an infection has taken place.”

“Soybean growers and seed producers will see great benefits from treating with Headline,” said Tracy Linbo, soybean and plant health market manager for BASF. “It is a good fit for seed corn producers, as well as for growers of intensely managed crops, such as irrigated corn, sweet corn and popcorn.”

Linbo noted that Headline has provided positive return-on-investment benefits in the other crops on which it has been labeled. She anticipates strong demand from U.S. soybean and corn growers.

For more information on Headline and other BASF crop protection products, visit the BASF Web site at http://www.agproducts.basf.com.

Growers, researchers to discuss management plans

It’s not a matter of if U.S. cotton producers will be required to implement nutrient management plans on their farms — it’s a matter of when, and for some states it could come as early as 2007. The good news is that the change could make them more profitable cotton producers, according to Michael Kenty, Helena Chemical Co., in Memphis.

Kenty will moderate a symposium on nutrient management plans and cotton fertility during the 2005 Cotton Beltwide Conferences, on Wednesday afternoon, Jan. 5, from 1:30 p.m. to 5 p.m. at the Sheraton Ballroom A, in New Orleans.

The purpose of the symposium, according to Kenty, “is to bring awareness to the cotton producer of what is going on behind the scenes.”

Participants will discuss the role the Clean Water Act has on nutrient management and cotton production, as well as the impact of the global fertilizer market on cotton fertility.

State organizations in many states have already begun the process of establishing nitrogen and phosphorus levels that will be acceptable by Clean Water Act standards in various bodies of water, notes Kenty.

The next step is for each state department of environmental quality to present a package to its state legislature for enacting the new standards into law. Many states in the Mid-South are either at that step or close to it, according to Kenty.

Although there is data indicating that municipality discharge is partly responsible for levels being above the standards, agriculture is regarded as the primary non-point-source of pollutants.

The bottom line is that cotton producers “will be called upon to write and develop nutrient management plans,” said Kenty. Plans will require soil tests, geo-referenced maps, detailed records and for producers to follow USDA and NRCS guidelines.

“Either you look at it as another mandate by the government that makes it more difficult for you to earn your living, or you look at it as a tool that can help you fine-tune fertility inputs, ultimately creating best management practices leading to higher production, and hopefully, more profit,” he said.

Nutrient management plans are essentially a documentation of how the producer uses nutrients on his farm — “what goes in, what is used by the crop and what’s left,” Kenty said.

“Producers who have started down that path are making more money. They’re not necessarily spending less on their fertility, they’re placing it better.”

Two of those producers, Alabama cotton producer Shep Morris and California cotton producer Cannon Michael, will discuss their current production programs relative to the Clean Water Act during a panel discussion during the symposium.

Other presentations will discuss options for managing nutrients while maintaining high yields. The symposium will conclude with an audience question and answer session.

The Clean Water Act was put in place by Congress in 1972 and modified several times since. The act establishes the basic structure for regulating discharge of pollutants into U.S. waters. EPA is empowered to implement pollution control and set water quality standards.

There are two key points for agriculture: establishing total maximum daily loads (TMDLs) and developing management programs that describe methods to reduce non-point-source pollution nutrients from agriculture.

Nutrient management plans “are going to become mandatory, the question is when,” Kenty said. “Three years ago, EPA was saying 2005. That’s not going to happen. EPA’s latest timelines is for written nutrient management plans to begin in 2007, with the bulk coming 2008-2010.”

The Beltwide Cotton Conferences will take place Jan. 4-7 at the New Orleans Marriott and Sheraton New Orleans hotels. The National Cotton Council is the conferences’ primary coordinator.

For further information, contact the NCC’s Debbie Richter, P.O. 820285, Memphis, Tenn. 38182, or 901-274-9030 or beltwide@cotton.org.

The theme of the 2005 Beltwide Production Conference is “Innovation and Application, the Competitive Edge.”

e-mail: erobinson@primediabusiness.com

Agreement Reached on Korean Rice Imports

United States and Republic of Korea have negotiated greater market access opportunities for U.S. rice exporters. Korea will double the amount of rice it imports over the next 10 years, provide guaranteed access for 50,000 metric tons of U.S. rice each year, and make imported rice available directly to Korean consumers.

"In negotiating the agreement, we focused on improving the quantity and quality of the openings for U.S. rice exporters in the Korean market," says U.S. Trade Representative Robert Zoellick. "This will allow our competitive rice industry to make significant gains in the Korean market. Not only will U.S. rice imports increase, but the quality of access will be substantially improved -- Korean consumers will now be able to buy rice from the United States at the retail level."

Under WTO rules established during the Uruguay Round, Korea designated rice as a sensitive product. Instead of liberalizing its rice import regime by establishing a tariff-rate quota, Korea committed to import a specific level of rice imports for a period of 10 years. That period ends on December 31, 2004.

The WTO rules also provided that Korea's market access quota for rice, known as "special treatment," could continue for an additional length of time, but only after individual WTO Members had the opportunity to negotiate concessions in terms of how Korea would continue the 'special treatment' arrangement.

Earlier this year, Korea notified its trading partners that it sought an extension of the 'special treatment' for rice, and the Korean government began negotiating with the United States and eight other countries that formally expressed interest.

To qualify for continued 'special treatment' under the rules of the World Trade Organization (WTO), Korea is required to notify the WTO of the results of these negotiations by the end of this year. The terms agreed upon during the negotiation will be reviewed by WTO Members. If the Members approve these terms by consensus, Korea will implement them in 2005.

Canada Has Suspect BSE Case

Canada's national surveillance program has detected a suspect case of bovine spongiform encephalopathy (BSE) in a 10-year-old dairy cow from Alberta.

On Dec. 17th a local veterinarian identified the suspect animal as a downer animal on a farm. That vet then forwarded the sample to a screening lab to Edmonton on Dec. 23rd.

On Dec. 28 and 29th two Bio-Rad tests results yielded non-negative results. Canada officials duplicate Prionics rapid tests also yielded non-negative results on Dec. 29th. Confirmatory results are expected in two to four days with an immunohistochemistry test.

A statement from Canada says no part of the animal entered the human food or animal feed systems. The suspect animal was detected through the national surveillance program.

Similar to the two North American BSE-infected animals detected in 2003, this animal was born before the Canadian and American feed bans were introduced in 1997. If BSE is confirmed in this case, consumption of contaminated feed before 1997 remains the most likely route of transmission.

Trade not expected to be disrupted if confirmed positive

Canadian senior staff veterinarian Dr. Gary Little says, should the suspect case prove to be positive, there is an "expectation it will not impact the rulemaking process."

Canada officials did inform USDA before the U.S. agency announced the rule on Wednesday, Dec. 29. Dr. John Clifford, U.S. deputy administrator for veterinary services, said at that time if there was an additional case in Canada that USDA could take any appropriate action. "The action could be anywhere from continuation of the rule and no revoke. If we did revoke, we would come out with additional rulemaking to revoke that," he says.

The announcement may give more ammunition to opponents of reopening the border, including R-CALF and other consumer groups.

Column: Best fish story of all bubbles to surface

Tell one fish story and a dozen more will follow. The yarn last month about hugging your pet carp elicited the fish story of all fish stories. It came from a reader who will remain anonymous to protect his professional stature.

University of British Columbia, Vancouver scientists apparently with time on their hands have discovered that herring communicate using a noise they call Fast Repetitive Tick (FRT). Ben Wilson of UBC calls it a "high-pitched raspberry." Newspaper columnist Dave Barry called it breaking wind, but I won’t use that term.

Get the picture?

This fish tale made the rounds about a year ago and seems to bubbling to the surface once again.

No leg or finger pulling here. Canadian scientists have actually learned Pacific herring communicate by expelling gas from the same anatomical location people—mostly male people -- expel gas.

Everyone heard the squeaky sound Flipper made on television when the smarter-than-man fish warned of danger. Thirty-five years ago scientists identified more than 200 species of fish which made some form of sound: grunts, drums, door-knocks, heartbeats, burps, croaks, crackles, chattering, purring, clucking and even a foghorn.

These noises come from fish bladders. At first scientists thought the herring’s noise also came from the same place. However, bubbles broke the surface of the fish tank when the herring made it noise and the keen eyes of scientists discovered the anatomical emission point of those bubbles; thus was born the scientific terms "digestive system venting," "burst pulse sounds," and FRT (Fast Repetitive Tick.).

Wanting to plunge deeper into the new, clouded mystery, scientists discovered that herring emissions are not related to diet. Guess there are no Mexican restaurants in Neptune’s Locker.

However, the researchers discovered that when the herring population was increased in the fish tank, more FRTs surfaced. This begs to find the scientific truth to the question: are herring as competitive as the male species of Homo sapiens?

Increased herring emissions were found not to be danger signals. The herring practiced digestive system venting only after dark and scientists concluded that this was a way they could locate one another when they could not be seen. Not going there.

This is all good to know, according to the scientists who sniffed it out. For one thing it will be easier to find herring. They will be easier to count and maybe be kept off some endangered species list. Fishermen may be able to catch more herring. Just follow the bubbles.

This information also could be useful for ocean swimmers fearful of attracting shoaling herring. No one would want to create paranoia among herring frantically searching in vain for lost brethren. Might lead to oceanic bureaucratic regulations.

For those who still think this is a spoof from a demented editor, it is the truth. The Discovery Channel, NewScientist.com news service and Dave Barry all say it is fact. It did not come from Dan Rather.

If you still are shrouded in disbelief, log on to http://www.zoology.ubc.ca/~bwilson/herring.html and listen to the unmistakable sounds of a fast repetitive tick, a high pitched raspberry, digestive system venting and a burst pulse sound.

Then proclaim to everyone that is was not Colorado Barking Beetles they heard, but shoaling herring.

e-mail:hcline@primediabusiness.com

R-CALF Gears Up For Border Fight

For months R-CALF has been working hard to keep the border closed to Canadian beef. Many attribute the rule delay to R-CALF's preliminary injunction imposed in April after the organization discovered the USDA was allowing Canadian beef not approved for export to enter the U.S. food supply.

R-CALF has two main avenues to prevent the border from opening as scheduled on March 7, 2005. R-CALF CEO Bill Bullard says the first step the organization will take is to carefully review the final rules and determine the impact on the cattle industry.

Bullard says the description by USDA of the final rule looks very similar to the proposed rule, which R-CALF had several concerns. R-CALF submitted 450 pages of comments in an attempt to address those concerns. "If our assumption is correct, we'll begin to work with Congress to halt the opening," he says.

The rule calls for a mandatory 60-day congressional review period. It will still come into effect on the March 7th date unless Congress takes action before then to prevent the flow of cattle. Bullard says Congress has the power to do that, and he hopes to continue working with representatives from cattle producing states who've supported them in the past to make it happen. In addition, he says if the review finds that consumers are at a greater risk, R-CALF will also begin seeking support from urban congressional members.

However, at this time it doesn't appear that R-CALF has enough support in the House or Senate to pass the veto. R-CALF is concerned that meat from Canada can now be co-mingled with U.S. beef. Without country-of-origin labeling, consumers will not have the ability to exercise their right to choose, Bullard says. R-CALF says COOL is a food safety issue, not marketing, which COOL opponents say. There is more support for COOL in the Senate compared to the House.

Other potential avenues for R-CALF to prevent the border reopening are to request an extension of the injunction or start a new battle in court.

As of Jan. 9, 2005, the R-CALF requested preliminary injunction put on the importation of Canadian beef products and live cattle will end. The injunction was set to expire five days after the publication of a final rule, scheduled for Jan. 4.

Canada Eligible to Export Live Cattle to U.S.

The USDA announced Wednesday that the U.S. has established Canada as a minimal risk region for bovine spongiform encephalopathy (BSE). The rule will allow imports of live cattle under 30 months of age and certain other commodities from regions with effective bovine spongiform encephalopathy (BSE) prevention and detection measures.

The rule states cattle can be exported to the United States beginning March 7, 2005. The rule calls for a Congressional review period but will still come into effect on the March 7th date unless Congress takes action before that date to prevent the flow of cattle. The rules establishing the minimal risk standard will be published in the Jan. 4, 2005, Federal Register.

Live cattle imported from Canada under this rule, which is over 500 pages, will be subject to restrictions designed to ensure that they are slaughtered by the time they reach 30 months of age. Dr. John Clifford, deputy administrator for APHIS, says these include permanent marking of the animals as to their origin with a tattoo that is a C, upside down D and N as well as an ear tag; requiring them to move in sealed containers to a feedlot or to slaughter; and not allowing them to move to more than one feedlot while in the United States. Clifford explains that breeding herd animals will not be allowed.

A statement from the National Cattlemen's Beef says Canada has expanded its restricted feeder program to allow for year-round movement of feeder cattle to Canada from 39 U.S. states with no testing requirements for Bluetongue or Anaplasmosis, a dispute settled last year.

Slight price reduction expected

USDA Chief Economist Keith Collins forecasts a total of 2 million cattle entering the United States in the 12 months following the opening of the border. According to USDA's Economic Analysis, the largest effects for cattle are expected to occur in 2005, when the backlog would be imported and the Canadian displacement of fed cattle slaughter by cow slaughter would be largest. The impact for fed cattle would be greater than for feeder cattle because of the larger number of fed cattle expected to be imported.

For fed cattle, the annual price declines may range from 3.2% in 2005, to 1.3% in 2009. For feeder cattle, the price declines may range from 1.3% in 2005, to 0.6% in 2009. Estimated net benefits in 2005 for fed cattle are estimated to range from $25.0 million to $26.9 million, and for feeder cattle, from $10.4 million to $11.0 million. In each successive year the net benefits are expected to become smaller, such that by 2009 they may range for fed cattle from $3.8 million to $4.3 million, and for feeder cattle, from $4.3 million to $4.8 million.

Collins explains that with the U.S. cattle cycle down in 2005 with producers holding back heifers there will be excessive slaughter capacity for Canada's cattle. While U.S. prices will drop slightly, Canada prices will rise--bringing the two market prices to closer levels.