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Articles from 2008 In April

How do countries manipulate their farm economies? Let's count the ways

(Click on title to read article)

As World Trade Organization talks progress, expect to see a lot of finger pointing at rich countries (like us) that use subsidies to protect agriculture.  But ironically this could be the best time ever for trade reform.

The subsidy issue pulls back the curtain on just how much government policies impact the global marketplace. When surpluses are high and prices low, government policies mean something. But right now, the marketplace is doing the talking.

There are a lot of ways you can subsidize an industry or manipulate a market. We're seeing that now with the panic over food supplies.

Some of those controls restrict exports while others increase export taxes.

Fears of high domestic food prices provoked the Argentine government to put export taxes on soybeans ranging from 40 to 90% of market prices says Mercedes Colombres, a reporter with La Nación, the nation's leading farm paper. Exports of beef, corn and wheat were also taxed. "Prices for these products were very low all through 2007 for producers, so they were very angry even before the new export taxes were announced,•bCrLf she says.

That sparked one of the biggest farmer strikes (photo left) Argentina has seen in decades. Argentine producers forced highways traffic to a halt across the country and held crops, beef and milk off the market for 21 days, causing supply problems in supermarkets.

India is subsidizing its farmers' fertilizer bills to make sure expensive ammonia does not deter plantings. China has imposed export taxes ranging from 5 to 25% on wheat, corn, rice and soybeans.

In Ireland (below) more than 10,000 farmers, lead by the Irish Farmers' Association, took part in a protest march against current European proposals in WTO negotiations. The farmers are convinced that EU import tariff cuts, proposed by European

Union Trade Commissioner Peter Mandelson, would destroy the country's thriving beef business. Over 80% of Irish beef is exported.

Could those things happen here? Probably not. A recent Farm Futures poll shows 89% of farmers don't believe the United States would curtail exports. But we do tinker with market forces. Biofuel mandates, tariffs on ethanol imports and tax credits to ethanol blenders all manipulate the marketplace.

Alltech took up the subject last week during their 24th annual International Feed Symposium in Lexington, KY. One of the highlights was a debate between representatives of three ag powerhouses:  Former Secretary of Agriculture Mike Johanns for the United States, former European Union Commissioner for Health and Consumer Protection David Byrnes for Europe and Osler Desouzart, president of OD Consulting, Brazil.

"The image of the rich countries is not exactly very nice,•bCrLf says Desouzart. "They do have subsidies that distort reality and generate profit , they do distort free market. It is a fact.•bCrLf

Johanns wasn't going to take that lying down.

"There are many ways to subsidize agriculture,•bCrLf he noted. "Very high tariffs subsidize agriculture. Closed markets subsidize agriculture. We ask farmers in the United States to pay very high property tax to pay for local schools. In other parts of the world they literally pay no property tax.•bCrLf

In a perfect economic world, we would let market signals lead farmer decision-making.

"Projections this year in Brazil and the United States show that farmers are responding to what the market is saying to them,•bCrLf added Johanns. "Prices are high so they are planting commodities and we are doing that through historically difficult weather patterns. I caution that if you start to interfere with that marketplace you may pay a heavy price.•bCrLf

Trade reform now Today's commodity prices mean some countries are lowering their tariffs because they need imports. They are reaching out to world communities. That means there is an opportunity for trade reform now.

"I'm making a plea to the WTO community of nations,•bCrLf says Johanns. "This may be an opportunity that only comes along once or twice in a generation and if we miss it now we may miss it for a long time.•bCrLf

There's a whole list of tariffs that are being removed, because those countries need imports and are reaching out to world communities, and saying our markets are basically open to these products. That indicates there is an opportunity out there.

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Farm Bill Conference on Hold

Congressional farm leaders are back in a short limbo period on the farm bill waiting for the financial "scoring" on the policy changes made during Tuesday's closed door meeting. Senate Chairman Tom Harkin, D-Iowa, said that several of the agreements were "innovative" and could complicate scoring by the Congressional Budget Office. The new agreements must fit within the $10 billion in over-budget spending, which has been agreed to by the Senate, House and Administration.

Harkin said the scoring could be completed as early as Thursday. House Chairman Collin Peterson, D-Minn., told farm broadcasters Wednesday if the scores come in too high, "we'll fix it." Tight budget issues have plagued the bill for almost a year, he noted.

Harkin says the next public session of the Senate-House conference will happen once the scores are known.

The current extension for the farm bill debate expires Friday at midnight. Both Harkin and Peterson say a new extension will be sought. Peterson said he believes a two-week extension will be required.

Source: Feedstuffs

Major Changes Made in Farm Bill Commodity Title

Several major changes were made to the commodity title during Tuesday's closed door session according to Senate Agriculture Committee Chairman Tom Harkin, D-Iowa, and Senate Budget Committee Chairman Kent Conrad, D-N.D. Among the major changes, Harkin reported that an estimated 275,000 program acres nationwide could become eligible for planting non-program crops through two new, separate farm bill provisions.

The first provision would end farm program eligibility for landowners with 10 acres or less with crop base acres. Nationwide such small acreages account for a total of about 200,000 acres, Harkin said. Taking those base acres out of program eligibility resulted in a savings to help pay for the farm bill, but it will also mean the landowner can plant the acres to non-program crops such as organic crops, specialty and horticultural crops, or orchards.

Additionally, an agreement made Tuesday would authorize flexibility planting on a total of 75,000 acres divided in specified state programs. Farmers could plant non-program crops and forego their farm program payments in that crop year, under the provision. The provision would apply to 9,000 acres each in Illinois, Indiana, and Wisconsin; 1,000 acres in Iowa, 34,000 acres in Minnesota, and 4,000 acres in Ohio.

Program eligibility would be limited to those with non-farm, adjusted gross income of $500,000 or less. Farmers would begin to lose a percentage of their direct payments if their adjusted gross income rose above $950,000 a year. For each increment of $100,000 in additional AGI of farm income, the payment would be reduced by 10%.

In a first, Conrad says the AGI rules would also apply to conservation payments in the new farm bill.

Additionally, Conrad reported that the President's demand to reform the "beneficial interest" of grain used to secure marketing loans had been addressed. He reported that instead of the price "being determined on a one-day sale, it would have to be on a 30-day rolling average" to prevent farmers from being able to make windfall profits as happened during the market disruptions caused by Hurricane Katrina.

Source: Feedstuffs

Deadline Approaching for Dairy Disaster Sign-up

Dairy producers who suffered production losses in 2005, 2006 or 2007 have until Monday, May 5, 2008 to apply for benefits under the Dairy Disaster Assistance Program III.

This dairy program will provide $16 million in benefits to dairy producers for dairy production losses that occurred between Jan. 1, 2005, and Dec. 31, 2007, because of natural disasters. To be eligible, a producer's operation must be in a county designated a major disaster or emergency area by the president or declared a natural disaster area by the secretary of agriculture between Jan. 1, 2005, and Dec. 31, 2007.

Eligible producers can sign-up at their local USDA Farm Service Agency service center.

Give Wheat a Check Up

Wheat growers should take time now first assess the crop's growth stage, says Pierce Paul, an Ohio State University plant pathologist with the Ohio Agricultural Research and Development Cente. Growers concerned about the state of their crop should also conduct a stand count in fields or sections of fields that may exhibit problems.

"Growers want to go out and count the tillers in poor-looking areas of their field. Fifteen tillers per-foot-of-row is considered minimum for an economic crop," says Paul. "If growers faced issues with standing water in fields, then a stand count becomes that much more important." The number of tillers on the wheat determines yield potential, and yields are reduced if tiller numbers fall below 25 per square foot after green-up.

"Growers should then assess the crop's growth stage by pulling multiple tillers in multiple areas in the field, stripping off the lower leaves and looking for the first node. The wheat is at growth stage six. Growers need to identify the growth stage because most of the critical management decisions with fungicide, herbicide and insecticide applications all depend on specific growth stages," says Paul. "In general, herbicide applications should be made before the first node develops.. Remember, short-looking wheat does not mean that the crop is not developing and advancing through the different growth stages. Growers who rely on the height of the crop as an indicator of crop development may be missing a critical growth stage for herbicide application."

The wheat crop is greening-up rapidly throughout the state.

"The crop is developing very fast and it looks great, especially when compared to last year's crop," says Paul.

According to the Ohio Agricultural Statistics Service, Ohio's wheat crop is 90% in fair to excellent condition.

"I want us to have a great wheat crop this year. In recent years we've seen a decline in our wheat acreage. However, increased acreage this year (over 1 million acres) is due largely because of the high wheat prices," says Paul. "But if we get good yields on top of the good prices, that will be a boon for wheat because it's such an important part of our rotational system. If we don't have major disease concerns and if the grain fill period isn't too warm to where it shortens the grain-fill period, then we should have a bumper crop."

For more information on wheat management in Ohio, log on to the OSU Extension Agronomy Crop Team Web site at

UNL Water Tour Planned for Republican Basin

The 2008 UNL Water Tour will visit the lower Republican River basin in Kansas and Nebraska on June 3-5.

Increasing urbanization and water use in and near Ft. Riley, Kan. due to military buildup to support ongoing military operations in Iraq and Afghanistan will be apparent.

Beginning near the river's mouth at Junction City, other Kansas tour stops will include Milford reservoir, Kansas Bostwick Irrigation District and a site near Keith Sebelius Reservoir where Kansas State University and University of Nebraska researchers are investigating changes in overland runoff caused by terracing and other conservation measures.

In Nebraska, tour participants will visit the recently completed ethanol plant at Cambridge. Efforts to control salt cedar and other invasive species, using a special funding provided by the state legislature, will be examined below Harlan County Dam.

On the final day, Nebraska tour participants will join those taking part in a similar tour organized by the Kansas Geological Survey. Following lunch at Superior Estates Winery, legislative and executive branch official from both states will discuss water issues in the Republican River basin.

To register for the 2008 tour, contact Michelle Meyer, Kearney Area Chamber of Commerce, at (308) 237-3168. Registration fees will cover all lodging, transportation and meal expenses.

Start Marketing Fall Calves Now

Spring is the ideal time to start marketing your fall calves, says Tim Petry, NDSU extension livestock marketing specialist.

Last fall, the range in prices for similar weights and grades of calves at the same sale was wider than at any other time in history.

Northern Plains auction markets recorded $15 per hundredweight (cwt) or even greater ranges in prices. Fall 2008 price ranges could be even wider.

A group of 550-pound calves that brings $15 per cwt more than another group at a sale returns an additional $82.50 per head. Keep in mind that an additional $50 to $100 per calf may be the difference between profit or loss this fall. Trying to reduce costs by that amount may be difficult due to rising feed, fuel and land costs. So, selling calves near the top of the range rather than close to the bottom will be important.

Since supplies of calves will be near last year's levels, the two most important fundamental factors that will affect fall calf prices will be corn and fed cattle prices.

Corn prices are higher than last year and will continue to be volatile as news reports about planted acreage and weather in the Corn Belt and even worldwide are released. Usually, a 10-cent-per-bushel change in corn prices causes a $l-per-cwt change in the opposite direction in fall calf prices. Higher corn prices will continue to put downward pressure on calf prices, which is just another reason to try to add value to calves.

Fed-cattle prices in 2008 have been lower than last year because of deteriorating economic conditions in the U.S., increasing supplies of competing meats and struggles to regain export markets for U.S. beef.

Cow-calf producers have no control over corn and fed-cattle prices, but can influence some of the many factors that affect feeder-calf prices. What can be done to assure that calves bring the best possible price now is the question.

Of course, good management practices, such as dehorning, castrating and marketing larger, uniform lots, help enhance prices.

However, other factors also can have a significant impact on prices. A first step is to visit the market where calves usually are sold for tips on management and marketing practices that can favorably impact prices. Decisions on whether to implement a number of value-added strategies need to be made now.

Calves that have had appropriate vaccinations that can be documented may bring premium prices. Check with both your veterinarian and market to determine what health program is best for your area.

Calves that have been weaned and bunk-trained usually are preferred by feedlot buyers.

Natural beef is increasing in popularity and calves that qualify for natural programs may bring premium prices. The key is being able to document that calves have not received growth implants or antibiotics.

Age- and source-verified calves may bring a premium because beef exported to Japan must be verified as coming from cattle that are 20 months of age or less. Several large beef retailers in the U.S. now prefer source-verified beef.

Documenting the feedlot performance of past calf crops, enrolling in beef quality assurance programs or marketing at special feeder calf sales sponsored by state or local purebred cattle associations may be other ways to increase calf value.

High-quality replacement heifers also are bringing premium prices. Bangs vaccination, uniformity of the lot, reputation of the seller and providing genetic information are important factors that impact prices.

The key to enhancing fall calf prices is to start the marketing process early. Now is the appropriate time to implement the strategies that can add value to calves. Don't wait until sale day to simply haul the calves to market and expect premium prices.

Source: NDSU Extension Communications

Politicos Want Teeth in Animal ID Program

By Harold Harpster

Rosa DeLauro, chairwoman of the U.S. House of Representatives ag appropriations subcommittee, isn't happy with USDA's progress on national animal ID. The Connecticut Democrat recently noted her displeasure at hearings on USDA's marketing and regulatory programs.

DeLauro said she was growing more "frustrated" by the department's efforts on the livestock-tracking system, which is years behind schedule. At that point, she hadn't yet determined whether to fund USDA's 2009 budget request for animal ID.

Nearly $130 million in federal money already has been spent. The Bush Administration proposed another $24 million in its fiscal 2009 budget.

"If we proceed with funding..., we'll require a high degree of accountability from USDA," said DeLauro, adding that "to have a credible and effective national ID system we have to change the department's approach."

Proposed 'teeth' would bite producers

DeLaura may push for a requirement that meat purchased for USDA food programs could only come from animals in the national ID program. If successfully implemented this would immediately put "economic teeth" in the need to rapidly adopt national ID.

USDA is one of the largest buyers of U.S. beef, for its school lunch programs. This is the program involved in this winter's massive Hallmark beef recall. Undoubtedly, the beef industry would be pressured to comply.

In response, Bruce Knight, USDA undersecretary for marketing and regulatory programs, replied that USDA is "making significant progress." Much of the money spent so far has been hard to "quantify" because it was used to build databases and overhaul computer programs so disease eradication systems could talk to each other. He expects a study to determine the cost of the animal ID program to be completed as early as this summer.

Knight noted that USDA already has 48-hour traceability for poultry. It's almost there with swine. Plans are in place to have it with sheep in the next year or so, according to Knight. After that, the focus will be predominately on beef and dairy cattle.

Three Illinois Gas Stations Receive Top Honors for Selling VeraSun's E85

VeraSun Energy, an ethanol producer, announced the recipients of its 2007 VE85 Awards. VE85 is VereSun's branded E85 for use in flexible fuel vehicles.

The awards recognized five independent fuel marketers for retail sales, promotion and education of E85. Three of the fuel marketers are located in Illinois.

VE85 Awards

  • Retailer of the Year Award: in recognition for highest volume of VE85 sales.
  • Ambassador of the Year Award: for dedication in education and leadership of VE85.
  • Driving Change Award: for locations that sold the highest volume of VE85.
  • Fueling Growth Award: for locations with the highest percentage of increased sales.

Gas City, Ltd. earned the Retailer of the Year Award, VeraSun's most prestigious award for 2007. The independent petroleum marketer is located in Frankfort, Ill., and owns and operates stations in northeast Illinois, northwest Indiana, Florida and Arizona. Currently, Gas City has 34 fueling locations in Illinois and Indiana offering VE85.

In addition to the Retailer of the Year Award, the company also received the Driving Change Award and the Fueling Growth Award for three of its Illinois VE85 fueling locations in Schaumberg, Shorewood and Romeoville. Gas City's Executive Vice President William Shireman was awarded the 2007 Ambassador of the Year Award.

The Fueling Growth Award was also given to Brookings BP in Brookings, S.D.; GROWMARK's Fast Stop in Waterloo, Ill., and JD Streett's Lowells Service Station in Collinsville, Ill. Three stores owned and operated by Sheetz, Inc., were recognized with the Driving Change Award. Two of those fueling locations are located in Pittsburgh, while the third location is in Monroeville, Pa.

"These retailers have shown market leadership," says Barry Schaps, VeraSun's senior vice president, sales and logistics. "Offering their customers a fueling choice is an important step to reducing our dependency on fossil fuels as a nation. Their sales growth demonstrates how customers are rewarding them for leadership in offering renewable fuels as an alternative fueling option."

VE85 was launched in May 2005 with seven stations in Sioux Falls, S.D., and is now available in the metro areas of Dallas, Houston, Chicago, Minneapolis-St. Paul and Pittsburgh, in addition to the Ohio metro areas of Cincinnati, Columbus and Toledo. In June 2007, VeraSun, General Motors and Enterprise Rent-A-Car partnered to open the first E85 retail location in Washington, D.C.