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Serving: United States

Another record corn crop expected

Corn yields in the United States this year are expected to hit another record yield in 2004, say USDA analysts, who are forecasting 10.41 billion bushels of production from 73.2 million acres, with a national average yield of 142.2 bushels per acre.

And corn used for ethanol production is expected to increase by 13 percent.

The projected farm price of $2.60 per bushel is 15 cents higher than the midpoint of the 2003-04 range.

The predictions were announced at the annual Agricultural Outlook Forum at Arlington, Va., by USDA's Interagency Commodity Estimates Committees.

The forecast yield is up almost 300 million bushels over 2003. However, says commodity analyst William Tierney, reduced carryin stocks will be partially offsetting, and total supplies are projected at 11.32 billion bushels, up just 110 million over 2003-04.

Tierney, who is with the World Agricultural Outlook Board, Office of the Chief Economist, USDA, says an expanding ethanol market will push use of corn by another 1.3 billion bushels in 2004-05.

“Ethanol production has expanded rapidly and as of January 2004 is approximately 3.1 billion gallons per year, with additional capacity planned or in the process of being built.” Ethanol producers have made a commitment to those states that have banned MTBE in gasoline fuels that they will have sufficient supplies of ethanol to replace the MTBE.

Feed and residual use of corn is expected to decline from 2003-04 levels because other feed grains are expected to provide additional feed, and beef production is expected to decline.

“With normal weather, grain sorghum production will increase from the drought-reduced levels of prior years,” Tierney says. “With larger supplies, feed and residual use of sorghum is expected to increase. Total beef production is projected to decline as more heifers are held back to rebuild the cow herd. In addition, byproducts from ethanol production will displace feed grains in some rations.”

Other corn food, seed, and industrial uses are now “mature markets,” he says, and while they are continuing to grow, that growth will depend on an increasing population and expanding economic growth. Corn used to make high fructose corn syrup is expected to grow 1 percent. The syrup is used mostly in soft drinks, a market that is being hit by weight-reduction campaigns. Corn used to make starch is expected to increase as the economy grows and consumes more paper and building materials. Corn cereals and other corn products are growing along with population growth.

U.S. corn exports are projected at 2.1 billion bushels, Tierney says, an increase of 100 million from the 2003-04 forecast.

“The global setting for U.S. feed grain trade is more favorable than for wheat, and corn exports will face less competition from China and South Africa. But normal growing conditions for Argentina in 2004-05 should lead to an increase of exports from that country. Feed-quality wheat exportable supplies should return to a more normal level, displacing some corn feed use. The European Union, Russia, and Ukraine will all return as major feed-quality wheat exporters.”

With more feed-quality wheat available on the world market, corn imports will decline in some countries, such as South Korea, the European Union, the Philippines, and Israel. Eastern Europe will have more-normal feed crops and higher feed exports. With the accession of 10 Eastern European countries to the European Union, much of Eastern Europe's grain exports will go to the rest of the European Union, reducing the external import needs of corn and freeing up more feed-quality wheat for export from the EU.

China's corn imports “will have a major impact on the U.S. share of the world feed grain trade,” Tierney says. “Although Chinese domestic corn prices rose sharply in the fall and winter of 2003-04, and the government announced a number of measures to increase crop plantings, China's farmers are expected to continue to switch crop land to soybeans, cotton, and other high-value crops. In addition to competition from more-profitable crops, corn and wheat plantings are imperiled by the conversion of arable land to non-agriculture uses and by the reduced availability of water for irrigation.”


e-mail: hbrandon@primediabusiness.com

Biotech crops continue rapid growth worldwide

Boy, were they wrong. All the naysayers and gloom-and-doomers who said biotech crops would never succeed are now dining on heaping helpings of crow.

Not since the herbicide revolution of the '70s have farmers so rapidly embraced a new technology. And despite all the fuss in Europe and a few other countries over “Frankenfoods,” biotech crops are pretty much a non-issue with most of the general public. If the crops weren't finding markets and being used, you can bet farmers wouldn't be growing them.

The 2003 crop season marked the seventh consecutive year that biotech crop acreage worldwide grew by double digits — 15 percent last year, for a global total of 167.2 million acres. The United States had by far the majority of the biotech acres, 105.7 million; it and five other countries (Brazil, South Africa, Argentina, Canada, and China) planted 99 percent of the acreage worldwide.

During the eight-year period 1996 to 2003, global acreage of transgenic crops increased 40-fold.

Almost one-third of the global biotech crop area was in developing countries, thus debunking opponents' contention that resource-poor farmers couldn't afford the cost of participating in the new technology. An estimated 7 million farmers in 18 countries of the developing world planted the crops in 2003.

“Farmers have made up their minds: They continue to rapidly adopt biotech crops because of significant agronomic, economic, environmental, and social advantages, says Clive James, chairman of International Service for the Acquisition of Agri-biotech Applications (ISAAA).

Biotech soybeans continue to lead in acreage planted globally, increasing 13 percent last year to 102.2 million acres — 55 percent of the crop worldwide. The biggest increase, though, was for biotech corn/maize, up 25 percent to 38.3 million acres. Canola had the second largest increase, 20 percent, and cotton was third with 6 percent.

“Despite the ongoing debate in the European Union, there is cautious optimism that the global area of biotech crops and the number of farmers planting them will continue to grow in 2004 and beyond,” James says.

U.S. soybean farmer Ray Bardole puts it succinctly: “Current biotech crops are to agriculture what the Model T Ford is to modern transportation — we're only beginning to see the benefits.”

During the eight-year period 1996-2003, herbicide tolerance has consistently been the dominant trait in transgenic crops, followed by insect resistance. In 2003, herbicide-tolerant crops comprised 73 percent of the worldwide total, with 18 percent planted to Bt crops. Stacked genes for herbicide tolerance and insect resistance in both cotton and corn continued to increase, account for 8 percent of the combined acreage. The global market value of genetically modified crops in 2003 is estimated at $4.5 billion to $4.75 billion, up from $4 billion in 2002. For 2005, the global market value is projected at $5 billion or more.

“The experience of those eight years shows biotech crops have “met the expectations of millions of large and small farmers in both industrial and developing countries,” says an ISAAA report.

“The adoption of this technology is nothing short of phenomenal,” says Linda Thrane, executive director of the Council for Biotechnology Information. “The more people know, the more they support biotechnology.”

USDA expects wheat acreage decline

Major questions hover over the potential for production from the current U.S. wheat crop, but USDA analysts are forecasting a 2 million-acre decline from last year, for a harvested acreage of 50.8 million.

Prices received by producers are projected to be $3.35 per bushel, unchanged from the midpoint range for 2003-04, due primarily to lower exports.

Dry conditions in parts of the Plains, along with cold weather and soggy soils in the Corn Belt, are cited as question marks about the crop to be harvested this spring, according to a report from USDA's Interagency Commodity Estimates Committees presented at the annual Agricultural Outlook Forum at Arlington, Va.

“The ratio of harvested-to-planted acres in 2004 is expected to be 84 percent, slightly less than the 10-year national average ratio,” says William Tierney, commodity analyst for the World Agricultural Outlook Board, Office of the Chief Economist, USDA, who presented the report. “The assumed yield for 2004 results in a projected production of 2.12 billion bushels, down over 215 million from 2003. Smaller production, though partially offset by larger carryin stocks, will leave 2004-05 supplies down 174 million bushels from a year earlier.”

Food use is expected to decline slightly, he says, as a result of reductions in per-capita wheat food consumption due to changes in diets and baking technology, and this will more than offset the effect of population growth.

Feed and residual use, at 250 million bushels, will be up “modestly” from the 225 million bushels in 2003-04.

“Lower wheat prices during harvest will promote its use for feeding,” Tierney says.

“Hog and poultry producers in the Southeast and Atlantic Coast areas, and cattle and hog feeders in the Plains likely will see relatively high prices for corn during the early summer. In the Plains, which saw poor corn and sorghum crops in 2003, livestock operations will have to obtain corn for feeding from greater distances than usual.”

Although world wheat trade is expected to increase in 2004-05, he says U.S. exports are forecast to fall 200 million bushels below the 1.05 billion forecast for 2003-04 — the highest level of exports since 1995-96.

“Because drought and winterkill sharply reduced production in the European Union, Central Europe, and the former Soviet Union, U.S. wheat exports and world export market share increased in 2003-04,” Tierney notes.

“But in 2004-05, a Foreign Agriculture Service evaluation of the prospects for the region's winter wheat crop suggests that a substantial recovery is expected in crops in Europe and the former Soviet Union. As a result, many importers are expected to obtain more of their purchased from lower-priced wheat from Russia, Ukraine, and other minor exporters. Also, net wheat exports by the European Union are expected to rise.”

As usual, Tierney says, “Imports by China are a source of great uncertainty.” A February estimate indicated its 2003 crop would be reduced to 86 million metric tons, a drop of 5 percent from last year. “Recently, one government think tank in China pegged the 2004 crop at 83.4 million metric tons, which would be the smallest since 1983.”

As of Feb. 5, export commitments of old crop U.S. wheat to China were 40 million bushels, the largest since 1997. “Even more unusual,” Tierney says, “was the 33 million bushels of wheat sales that had already been booked for new crop 2004-05.”

Total U.S. wheat disappearance in 2004-05 is expected to decline around 8 percent, but supplies are down slightly less, about 6 percent; thus, ending stocks, at 541 million bushels, will be slightly higher than a year earlier. The ending stocks-to-use ratio, 24.7 percent, is slightly larger than the 22.5 percent forecast for 2003-04, but below most levels since 1996-97.


e-mail: hbrandon@primediabusiness.com

USDA forecasts strong prices to continue

An “exceptional year for U.S. agriculture” — that's how USDA's economists characterize 2003's record crop yields and record cash net income.

What's more, say Mitchell Morehart and James Johnson of the agency's Economic Research Service, “the financial outlook remains strong for 2004” despite the setback to the cattle sector as a result of the recent “mad cow” scare.

They told attendees of the annual USDA Agricultural Outlook Forum at Arlington, Va., that this year should see crop receipts increase by more than $7 billion to a record $114 billion, based mainly on improved market conditions for corn and soybeans. Although livestock receipts are expected to decline from 2003's record level, the forecast is for the sector to exceed $100 billion for the third time in four years.

Even though crops are expected to generate more revenue in 2004, the economists say less of the farm household's earnings will come from farming, but that an expected 3 percent increase in income from off-farm sources “should help buffer the decline in total household income.”

Farmers and their households should benefit from higher asset values in 2004, Morehart and Johnson say, with the value of farm assets projected to increase by almost $43 billion. Real estate values are expected to rise by 3.5 percent, accounting for nearly 90 percent of the increase in the total value of farm assets.

“The importance of the non-farm economy to the economic well-being of farm households is reinforced by the significance of non-farm assets and debt,” they say. “About 20 percent of the average farm household's net worth could be attributed to non-farm sources.”

For the year just past, they note that the new records for net cash income were due to a combination of strong exports, excellent yields, and strong prices — and “a relatively high amount of government payments.” Continued growth in farm real estate values also helped push the aggregate of farm assets to new highs, while “modest increases in debt helped maintain a consistent level of solvency for the sector.”

In both 2003 and 2004, Morehart and Johnson note, market receipts are expected to make up a greater share of net income than has occurred since 1997.

Prices for several agricultural commodities increased toward the end of 2003 and are projected to “sustain these relatively high levels through 2004.”

Corn, soybean, and wheat prices were sharply higher in 2003 than their average for the past five years, while broiler prices were more than 10 percent over the previous year and egg prices were up over 25 percent.

For the second consecutive year, receipts from crops and livestock should total more than $100 billion each, with 2004 expected to see a total $215 billion for the two sectors.

Corn, the number 1 crop in terms of cash receipts, could see an upward movement of as much as 16 percent in 2004, while soybeans, the nation's second largest crop, are expected to be up 16 percent also.

Strong demand for U.S. cotton in 2004, primarily from China, could boost receipts by nearly $700 million, the economists say. Another factor strengthening cotton receipts is a stocks-to-use ration that “could be the lowest since the 1997 crop.”

Projected low lending stocks are also expected to improve rice receipts.

There are “some notable exceptions” to the rosy 2004 outlook, Morehart and Johnson note.

  • Beef producers could see a $5 billion reduction in receipts as a result of the “mad cow” scare, with most countries that import beef from the U.S. imposing bans or restricting importation of beef from the U.S. “Even with this market uncertainty, beef receipts are expected to remain higher than they were in 2002.”
  • The combination of consumers substituting poultry for beef and the declining dollar's impact on markets could cause expected poultry and egg receipts to rise by 7 percent.
  • Dairy cow numbers declined in 2003 for the first time in several years, but an expected increase in milk productivity may offset the lower herd size and result in “a relatively small decline in overall milk production.” Further productivity gains are anticipated in 2004; that, combined with a lower inventory of milking cows, “could result in unchanged receipts.”

e-mail: hbrandon@primediabusiness.com

Dick Bell's $9 forecast comes true

MEMPHIS, Tenn. – How sweet is: At the 1994 Mid-South Farm & Gin Show, Riceland Foods Chief Executive Officer Richard Bell said potential existed in the future for producers to see $9 soybeans.

“When the price hit $9 recently, I started getting a lot of telephone calls and e-mails,” he laughed at this year’s show at Memphis. “My prediction finally made it – it just took a while.”

But $9-plus soybeans are just part of what has been a remarkable year, says Bell, who’s headed the 8,000-member Stuttgart, Ark. farmer-owned cooperative for the past 27 years.

“What a difference a year has made. At last year’s show, I had to work hard to be halfway optimistic about the outlook for soybeans and grains. But during that time, we’ve seen a fundamental change in the marketplace that has had a significant impact on demand and price.”

At the end of the year, he says, there was a 58-day supply of world grains, compared to a 111-day supply a year ago. Wheat was 78 days, rice 73 days, and corn 38 days. “The pipeline supply is generally about six weeks, so we very well could see corn below the pipeline level.” Carryover levels of wheat and corn are the lowest in many years, he noted.

What happened?

“We saw stagnant production in many parts of the world, rising world consumption, and increasing world trade, which is an important aspect of price-making.”

Amazingly, Bell says, “We harvested a 10 billion bushel corn crop last fall, and we’re going to sell it all, thanks to strong domestic growth, including 1 billion bushels for ethanol, which could expand to 2 billion, and strong world demand. The U.S. produces 40 percent of the world’s corn supply, which gives us an absolute advantage in that crop.”

He expects another 10-billion-bushel crop this year, with continued strong demand, and prices in the $2.35-$2.45 range. “Before summer, I believe we could see $3 per bushel for Chicago December corn. And although Mid-South producers tend to not sell what they’ve not planted, they need to take advantage of these pricing opportunities as they come along.”

The current winter wheat crop will be smaller than expected, Bell says. “People just didn’t plant as much as we’d thought.”

Wheat nonetheless tends to be a good crop for the Mid-South growers, he says, due largely to newer, better varieties. “I used to grit my teeth over the low tests weights, but we don’t see much of that any more.”

The North American Free Trade Agreement (NAFTA) has been a boon to grain sales, he contends. “We’re shipping trains to Mexico every other week. We’ve also been able to cultivate business in Egypt and China.”

Bell says, however, he’s not as enthusiastic about the Central American Free Trade Arrangement, and tends to be “a bit irritated” with the Bush Administration’s approach. “It’s not really a free trade agreement; it’s more a series of bilateral agreements, and it comes up quite a bit short in terms of trade benefits.”

As for those $9 soybean prices, Bell’s advice: “I tell growers, ‘enjoy!’ It’s a 50-year phenomenon – we had a great crop in the South when the Midwest had a poor crop. It was a great crop from a quality standpoint, too; I’ve never seen such high quality soybeans. And also unusual, at harvest time, soybean prices were rising.”

The U.S. crop came in at only 2.4 billion bushels, down 12 percent from the year before, with an average yield of 33 bushels, down 16 percent from 2001. Carryover was below 200 million bushels. All of which, Bell says, served to ration supply and drive up price.

China and its huge population will continue to be a major influence on the world soybean market, he says. “But I think a lot of people misread the reason for China’s influence on demand, and that’s the 300 million to 400 million people with higher incomes, who are shifting to more expensive foods.

“Last year, China bought 2l.4 million metric tons/800 million bushels of soybeans. That’s equivalent to 75 percent of all U.S. soybean exports, which is tremendous. The real question is whether it will continue. I think it is irreversible if China’s economic growth continues. I’m optimistic for our prospects there.”

Recent-day soybean prices, Bell says, are reflective of problems in South America, where analysts were forecasting record crops. Instead, he notes, the region has been hit with torrential rains, which has diminished crop quality/quantity and turned roads into muddy bogs, slowing field-to-port movement. An outbreak of Asian rust is expected to further diminish yield potential.

Soybean production for Brazil/Argentina/Paraguay could be reduced to last year’s level, he says. “The market didn’t anticipate that, and price will have to ration supply.”

Bell says he looks for 2004/05 soybean prices to range from $6.25 to $6.50 per bushel. “That’s not $9-plus, but it’s a lot better than the $4.50 we were seeing two years ago.”

Riceland’s average booking price for old crop soybeans is running about $6.81, he says, with $7.25 “the magic selling target.”

But the fundamental change in the world situation points to “favorable prospects” for all grain crops, Bell says.

Several thousand farmers, agribusiness representatives, and others attend the two-day Mid-South Farm & Gin Show, sponsored by the Southern Cotton Ginners Association and Delta Farm Press.

e-mail: hbrandon@primediabusiness.com

NCC seeks to fulfill 'Contract with Agriculture'

MEMPHIS, Tenn. – Woody Anderson says the National Cotton Council intends to try to make sure Congress honors its “Contract with Agriculture” when it considers the Fiscal Year 2005 budget later this year.

“Most farmers think that Congress made a commitment to them in the 2002 farm bill,” said Anderson, a farmer from Colorado City, Texas, and the new chairman of the Cotton Council. “We will work with our friends in Congress to make sure Congress honors that commitment.

Making a play on words with the Republican Party’s Contract with America in 1994, Anderson said the Council is hopeful congressional leaders will have a similar follow-through in its “Contract with Agriculture.”

“In 2003, the Council worked very hard to address the ongoing priorities of defending the U.S. cotton program and attaining sound trade policy,” said Anderson in comments to farmers attending the Mid-South Farm and Gin Show,

“The U.S. cotton program faced continuous attack from our foreign competitors, from some members of Congress, and from many in the media. Many of us shared the same sense of frustration as one media outlet after another unjustly blamed our cotton program for driving down world prices and for the plight of poor African farmers.

“Incredibly, many of these same voices alleged that farm programs foster terrorism and even contribute toward obesity.

In Congress, the Council defended the farm bill throughout the budget debate and the appropriations process. “We joined others who shared our views in testimony before the Payment Limit Commission about the tremendous damage that will accompany any additional program benefit restrictions.”

As the cotton industry develops strategy for 2004 and beyond, defense of the U.S. farm program and influencing the outcome of trade negotiations will continue to be at the top of the Council’s priority list, said Anderson.

“This year’s budget and appropriations measures will be crafted in a partisan environment and election year politics will dominate debate on every issue considered by Congress,” he said.

“The cotton industry is very fortunate to have members of Congress who understand our industry and are willing to address key issues. But we must also be prepared to change with several pending retirements in the Senate and re-districting issues in the House.

Anderson said growing budget deficits will generate pressure for change in 2004. “When Congress begins debating the new budget, there will be proposals to save money by modifying programs or reducing benefits. Others in Congress will work to cut funds from production agriculture in favor of more politically attractive programs.”

The Council will continue to work with all agriculture and allied organizations to effectively defend commodity programs and other key provisions of the farm law, he noted, and will help build and maintain coalitions that remind Congress that the current farm law is balanced in its approach to funding for production, conservation and nutrition programs.

“Our trade agenda this year stands virtually shoulder-to-shoulder with farm policy in determining the ultimate success of the cotton industry,” Anderson said. “In response to our government’s recent efforts to jumpstart WTO talks, the Council will continue discussions with USTR to ensure that negotiations concerning the U.S. cotton program will be conducted in the context of the overall agricultural negotiations and not singled out from the discussions on other commodities.”

The Council has continually stated that a good Central America Free Trade Agreement is essential to preserving a viable U.S. cotton and textile industry, according to Anderson.

“A good CAFTA assures that the benefits accrue to the signatory countries and denies unnecessary benefits to non-signatory countries,” he noted. “The Council’s board adopted a resolution stating that the Council opposes the CAFTA in its current form and urges Congress to defer consideration of CAFTA until such time as the textile provisions are thoroughly reviewed and significantly improved.

“We will continue to make every effort to obtain improvement in the textile provisions of CAFTA – and will work to ensure that the market disruptions generated by China are addressed by the Administration and Congress.”

e-mail: flaws@primediabusiness.com

Optimism reigns for Iraqi rice trade

ARLINGTON, Va. – Fresh off the plane from their trip to the Middle East, rice industry officials deemed their trade summit with Iraq’s Grain Board a success.

“We’re going to get this market back,” says Stuart Proctor, president and CEO of USA Rice Federation. “We have two new best friends in the rice industry, the director general of the ministry of trade from Iraq and the director general of the Iraqi Grain Board.”

Fourteen years after the United States’ government issued a trade embargo, trade is resuming between the United States and Iraq. That’s why USDA officials thought the time was right to send a U.S. delegation to meet with the Iraqis and re-establish a trade relationship between the two countries.

Resuming rice exports to Iraq is the USA Rice Federation’s No. 1 priority in 2004, Proctor says. “Iraq is our former No. 1 export market. The Iraqis used to buy 500,000 metric tons of rice from us each year back in the 1980s before the U.S. government imposed an embargo in 1990. The point of this trip was to get that market back and give us an opportunity to provide some technical information on trading our products.”

Proctor says USDA officials quickly pulled the meeting together, putting Iraqi officials on military airplanes and flying them from Iraq to Amman, Jordan to meet with the delegation of 10 rice millers, exporters and traders.

The USA Rice Federation delegation had the specific, technical information about grades and trading specifications, delivery time periods and delivery destinations that Iraq wanted, he says. During the meeting’s two and one-half days, rice officials went to work informing and educating the Iraqis through both informal meetings and discussions, as well as a formal presentation.

“One million metric tons of rice are imported annually into Iraq,” Proctor says. “We haven’t done business there for 14 years, and, during that time, they have been buying rice almost exclusively from Vietnam and Taiwan. Iraqi officials remember the high quality U.S. rice shipped to them back in the 1980s, and they have a bias. They want to do business with us, so it was a very positive environment for us to operate.”

During his opening comments at the start of the recent summit, Iraq’s Minister of Trade Director General Ahmad Al-Mukhtar said the Iraqi people have good memories of past purchases of high-quality U.S. rice.

During the recent meeting, USA Rice officials learned that the Iraqis are very interested in building their buffer stocks, or on-hand inventory, of rice, and they want to do it very quickly. The Iraqis decided that they will issue a larger tender of rice through the Ministry of Trade within the next week, according to Proctor.

That’s a change from the way Iraq has been buying food for the last few months. Up to this point, Iraq has purchased commodities through the World Food Programme.

Proctor calls the change “very positive,” saying U.S. exporters found it difficult to work with the World Food Programme tender, because it was difficult to get registered with that program, and exporters didn’t fully understand the specifications written in to that program. At least for an initial trial run, Iraq will purchase commodities such as rice directly from U.S. exporters.

“We are hopeful that we are going to get a least a part of that tender, but we have a huge obstacle to overcome and that obstacle is our price. Right now, there is a 75 percent premium for U.S. rice over the price of our competitors,” Proctor says. “We’re about $150 a ton more expensive.”

To counter that obstacle, USA Rice Federation members argued the need for Iraq to build their stocks immediately should put the United States at the top of their list of potential suppliers. “We emphasized the reliability and quality of U.S. grown rice,” says Proctor. “We are a reliable supplier. We ship on whatever date when we say we will, and deliver a high quality product that will meet Iraq’s specifications to their port of choice on the specified date.”

However, he says, because of the price premium, the amount of U.S. rice Iraq will buy is limited. “If we get any part of that tender, it will mean that this delegation was a total success. If we had not gone on this mission, we never would have had a chance of Iraq buying any rice from the United States with that premium.”

Over the long term, Proctor says, the trade summit built a base for future trade between the two countries. “We have begun to re-establish our trading relationship by providing Iraq with the technical information it needs, and in the long term we are going to get back into this market,” he says. “Our short term objective is to increase sales immediately, which we should be able to accomplish, especially since the premium will decrease presumably as we go into the production season and our price gets back in line with world market price. Our long-term objective is to build a relationship and provide the foundation for future sales.”

"The USA Rice team absolutely maximized the opportunity to increase rice sales in the short term and re-establish a long-term working relationship that will enable Iraq to become a major importer of U.S. rice," says delegation member Lee Adams.

According to Proctor, The USA Rice Federation has invited the Iraqi Grain Board to send a delegation to the United States to tour the rice producing areas and processing facilities here. “We hope to get them over here this spring,” he says.

e-mail: dmuzzi@primediabusiness.com

Federal jury assesses Tyson $1.28 billion in pricing suit

In an eye-popping verdict, a federal jury has ruled against Tyson Foods, Inc., in a class-action suit brought by cattle producers. The jury, seated in Montgomery, Ala., agreed with class attorneys who argued that Tyson Foods had “fixed” market cattle prices from 1994 through 2002. They recommended the class be awarded $1.28 billion, covering some 35,000 members.

The suit was first filed in 1996 against IBP (now Tyson Fresh Meats) by a group of cattlemen accusing the company of manipulating prices.

Tyson attorneys immediately said the company would request the judge set the verdict aside. The option of appeal is also on the table.

Tyson released a statement following the verdict. In part, it reads: “This is only a temporary legal setback. We will ask the judge to set aside the verdict. If he does not act, we intend to appeal and fully expect the jury's decision to be reversed by the 11th Court of Appeals…We do not expect today's jury decision to materially impair our liquidity or affect operations…. We expect no appeal bond will be required.”

According to published reports, class attorney Randy Beard (of Beard and Beard in Guntersville, Ala.) said the jury found that Tyson's “conduct in manipulating and controlling the price it paid for cattle was in violation of an 80-year-old law…. This should be considered an extraordinary day for cattle producers in this country.”

Beard — calling the verdict “significant” — said the company, using contracts, “gained control” over a large percentage of the cattle supply. Beard alleges Tyson then used that control to affect the cash market.

Tennesse to vote on boll weevil plan

This spring, regions 1, 2 and 3 of west Tennessee will decide whether or not to approve a new referendum which would restructure and extend boll weevil eradication efforts. Ballots will be mailed to eligible voters in early March and are scheduled to be counted March 25.

The 10-year program would cost growers an annual maximum of $12.25 per acre of cotton. It is anticipated that assessments would drop to $5 per acre or less after the proposed 10-year program expires. The prediction is based on costs in areas that have already completed eradication, such as middle Tennessee.

If the proposed referendum passes, it will replace the current referendum, and growers will not pay the previously-approved assessments for 2004 and beyond.

The current program includes a maximum annual assessment of $20 to $32.25 per acre, depending upon which region a farm is located in.

To date, grower costs have been reduced by about 20 percent because of state funding contributions. State support is expected to continue for 2004 and beyond, although how much is uncertain. Any state funding would offset some of the proposed fee of $12.25 per acre.

The Region 1 program is scheduled to expire following the 2004 growing season. Three years of full assessments remain for growers in regions 2 and 3 under the current referendum.

If the proposed referendum is not approved, the eradication program will continue in 2004 under the currently-approved referendum. However, Region 1 producers in the southern counties of west Tennessee must pass a new referendum before the growing season of 2005 if eradication efforts are to continue.

Following “active” eradication programs, a maintenance program is necessary to prevent boll weevils from re-establishing within eradicated areas (and promptly dealing with any re-infestations). This is accomplished by maintaining a trapping and equipment infrastructure. In the long run, this job gets easier and cheaper as boll weevil eradication progresses across the Cotton Belt.

However, calling the pending referendum a maintenance program is a misnomer because west Tennessee has not completed the active stages of boll weevil eradication.

The proposed referendum will cover operating expenses necessary to finish eradicating the boll weevil in west Tennessee. It will also refinance existing debt and include maintenance program costs over the next 10 years.

Cost overruns have accumulated since the program began in west Tennessee during 1998. In particular, migrating weevil populations along the Mississippi River have elevated program costs during the last two years.

Eradication efforts are behind schedule in southwest Tennessee, but the program has made great strides. Boll weevil populations have been reduced by over 92 percent across the state, and we expect rapid progress now that our leaky borders have been repaired with the inclusion of adjacent areas of Arkansas into an eradication program.

Before Tennessee cotton farmers vote, they should seriously consider the benefits of boll weevil eradication and the likely impacts of not approving a new referendum. Unfortunately, it is easier to quantify how much boll weevil eradication costs than how much it saves. However, average yields during the last three years are the highest ever in Tennessee, with no yield losses attributed to the boll weevil during this same time.

Contrast that with estimates of yield losses during the previous eight years, ranging from 2 to 18 percent and averaging about 5.5 percent. These losses occurred despite routinely making two to five insecticide applications for this pest each season. If these numbers are in the ballpark, economic losses related to the boll weevil have cost the average grower as much as the assessments dedicated to eradicate this pest.

Without doubt, some of the recent yield increases can be attributed to good weather, varieties with high-yield potential, and the use of Bt cotton. But conservatively, the average Tennessee producer has increased yields by 50 pounds of lint per acre as a result of boll weevil eradication efforts. In a year of late cotton, such as 2003, many producers feel they made an additional 100 to 250 pounds of lint that would have otherwise been sacrificed to boll weevils.

What if west Tennessee never passes a new referendum? Expect boll weevil populations to return to pre-eradication levels in two to four years. Today's cotton is a friendlier place for the boll weevil because of Bt cotton, restrictions on the use of traditional, broad-spectrum insecticides, and pyrethroid resistance in tobacco budworm populations (forcing the use of newer, selective insecticides in non-Bt cotton).

It is impossible to calculate how much the adoption of Bt cotton and the associated reduction in applications of broad-spectrum insecticides has hindered weevil eradication efforts. But it is almost certain that spraying for boll weevils will increase if they are allowed to repopulate Tennessee.

Are there tools available to control boll weevils if they re-infest Tennessee? The answer is yes and no. Methyl parathion has all but disappeared from the marketplace. There are significant restrictions on the use of other traditional boll weevil products. Who knows how future regulations may impact the availability of other products? Newer products like Trimax and Centric will lose much of their utility because they lack activity on boll weevil. There is also the potential threat and costs of quarantines on equipment and cotton itself.

These realities are not intended as scare tactics, but rather, emphasize the importance of continuing boll weevil eradication efforts in Tennessee. The progress toward boll weevil eradication represents a significant investment and accomplishment of Tennessee cotton producers, but the greatest potential benefits of this investment lie ahead.


Scott D. Stewart is a cotton IPM specialist and Chism Craig is a cotton specialist, both with the University of Tennessee.

USDA forecast: Competition keeps U.S. acreage stable

Relatively stable acreages of major U.S. field crops are being projected for the next decade, says a report by USDA economists at the annual Agricultural Outlook Forum at Arlington, Va.

The eight crops should run between 249 million and 250 million acres for the period through 2013, according to the Interagency Agricultural Projections Committee. That is significantly below the 260 million acres planted in 1996.

Corn, wheat, and soybeans will account for about 86 percent of the acreage, with a shift “somewhat more to corn and away from wheat and soybeans, reflecting underlying growth in demand shown in price signals and net returns.” Yield gains will also contribute to production increases, limiting the need for additional land in crops.

Domestic mill use of upland cotton is projected to continue falling sharply through 2006-07, with further gradual declines over the remainder of the period to 2013. However, upland cotton exports are expected to rise to about 13 million bales, as fiber is exported for processing in developing countries with lower labor costs.

After 2004, import quotas that have protected the U.S. textile industry will be completely eliminated. “Without the quotas originally instituted under the Multi-Fiber Arrangement, apparel imports will rise,” the analysts say, “and this will lower the apparel industry's demand for fabric and yarn produced in the United States.”

Some increase in U.S. yarn/fabric exports is likely as a result of tariff reductions in other countries, but this is not expected to offset the impact of reduced U.S. apparel production on domestic mill use.

After increasing somewhat through 2007-08, upland cotton exports are projected to remain relatively stable at about 13 million bales annually to 2003. Foreign competition will continue to strengthen “and keep U.S. cotton exports from expanding further.” With world cotton trade expanding throughout the period, the U.S. share of global cotton exports will decline to about 39 percent in 2013-14.

Steady growth in domestic food use of rice is projected for the baseline period, with U.S. exports increasing in 2004-05 and 2005-06, but “declining moderately” for the rest of the period.

The initial increase in exports is due to increasing production and total supplies more than offsetting rising domestic use, and a declining price difference between U.S. and foreign rice. Later in the period, continued expansion in domestic use of rice will push U.S. prices higher relative to Asian competitors, resulting in a longer-term small downward trend in U.S. exports after 2005-06.

Wheat acreage will decline to 60 million acres for most of the period, as relatively weaker gains in demand are generally met through yield increases. Marketing loan benefits will augment market revenues for wheat through most of the period, keeping net returns relatively flat and holding land in wheat.

Domestic wheat demand is “relatively mature,” the report notes, and food use growth will be very slow, “reflecting consumer adjustment to diets that include fewer carbohydrates.” Feed use of wheat will rebound “to relatively high levels” through most of the period.

U.S. wheat exports are projected to decline through 2006-07 as production rebounds in the European Union, but as global income and population in developing countries grow, global wheat trade and U.S. exports are expected to increase. Competition, however, will hold the U.S. market share at about 23 percent.

Soybean plantings will rise initially in response to relatively high prices and net returns, the analysts say, but will then “decline somewhat before stabilizing in the second half of the projection period as yield gains are sufficient to meet growing domestic demand.” Too, higher prices and net returns for competing crops, particularly corn, will dampen gains in soybean acres.

U.S. soybean exports are expected to rebound in 2004-05, then gradually decline through 2013, largely due to strong competition from Brazil. “Consequently, the U.S. market share of global soybean trade will decline through the period.” Soybean meal and oil also face competition from South American producers, which will result in “moderate growth, but a declining U.S. share in those markets.”

Domestic corn use will be strong in the initial years and continue growing through 2013, and the global economic recovery will support long-run growth in U.S. corn exports.

Significant growth is expected for ethanol over the next several years.


e-mail: hbrandon@primediabusiness.com