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Serving: United States

Veneman reminds producers of June 1 DCP deadline

WASHINGTON – Agriculture Secretary Ann M. Veneman is reminding producers that they have until Tuesday to complete sign-up for the 2004-crop Direct and Counter-cyclical Payments and avoid a late application fee.

The Farm Security and Rural Investment Act of 2002 requires that producers sign annual contracts through 2007 to participate in the DCP program. Sign up for the 2004 DCP began on Oct. 1, 2003 and continues through June 1.

"I encourage producers who want to participate in the 2004 Direct and Counter-cyclical Payment program to sign up at their local Farm Service Agency office before June 1," said Veneman. Since the program began in October 2002, USDA has issued more than $11 billion in DCP payments to producers, including $2 billion in 2004 direct payments.

Regulations prescribe a $100 late fee for sign up after June 1, 2004. To avoid the late fee, producers must contact their local FSA office prior to the June 1 deadline. Producers will not be able to sign up for 2004 DCP payments after Sept. 30, 2004.

Producers may opt out of participating in the program any year if they choose. Any farm enrolled in the 2004 DCP, however, will retain eligibility for the 2005 and subsequent DCP programs.

Producers may access the relevant DCP enrollment forms on the FSA website and then submit them to their local service center. USDA also encourages producers to access their individual Customer Statement on the USDA website, where they can gain program information and payment history through one online source at http://customerstatement.usda.gov/.

In order to insure personal identity, producers must first register online for a USDA eAuthentication Account by creating a user ID and password and confirming their e-mail. The final step requires visiting a local USDA Service Center to complete the eAuthentication process.

2004 rates and schedules

Both direct and counter-cyclical payments are computed using the base acres and payment yields established for each farm last spring, which are effective through 2007. Producers receive direct payments at rates established by statute regardless of market prices, while counter-cyclical payment rates vary depending on market prices.

The following are the 2004 crop year direct payment rates and maximum potential counter-cyclical rates:

Commodity Unit Direct($/unit) MaximumCounter-cyclical($/unit)
Barley Bushel 0.24 0.15
Corn Bushel 0.28 0.40
Grain Sorghum Bushel 0.35 0.27
Oats Bushel 0.024 0.086
Other Oilseeds Pound 0.0080 0.00
Peanuts Ton 36.00 104.00
Rice Hundredweight 2.35 1.65
Soybeans Bushel 0.44 0.36
Upland Cotton Pound 0.0667 0.1373
Wheat Bushel 0.52 0.65

Schedule of payments for the 2004 DCP:

  • Began December 2003: 50 percent advance direct payment.
  • October 2004: 50 percent final direct payment.
  • October 2004: first advance counter-cyclical payment (up to 35 percent of projected payment).
  • February 2005: second advance counter-cyclical payment (up to 70 percent of projected payment less first advance).
  • Dates vary by crop (in general, 30 days following the end of the marketing year): final counter-cyclical payment (100 percent of actual payment, less any advances received).

    More information on DCP is available at local Farm Service Agency (FSA) offices and on FSA's Web site at: www.fsa.usda.gov.

    e-mail: flaws@primediabusiness.com

USDA forecasts record agricultural exports

WASHINGTON, D.C. — The U.S. Department of Agriculture has revised its forecast of agricultural exports for fiscal 2004 to $61.5 billion, an increase of $5.3 billion over ag exports in 2003. If realized, 2004 exports would be the highest ever, eclipsing the old record of $59.8 billion set in 1996.

“This latest export sales forecast clearly indicates that our efforts to expand overseas market opportunities for our farmers and ranchers are working,” said Agriculture Secretary Ann M. Veneman. “With some of our recent market re-openings and continued strong commodity prices, we are well on the way to setting a new export sales record.

“Exports to China continue to be a real bright spot for U.S. agriculture,” said Veneman. “U.S. agricultural exports to China will have more than tripled since their accession to the World Trade Organization, rising from $1.8 billion in 2001, to $3.5 billion in 2003, and they are forecast to reach a record $5.9 billion in fiscal 2004. China was our fifth largest agricultural customer last year, and our number one market for soybeans, cotton and hides/skins.”

Wheat and corn exports are likely to account for 50 percent of the annual increase in agricultural exports. U.S. wheat is in high demand and is benefiting from reduced competition due to poor harvests in the European Union, Russia and Ukraine. Corn is experiencing strong sales growth to Egypt, Colombia, Israel and Korea.

Other commodities benefiting from large sales increases this year include cotton and horticultural products.

Cotton sales are forecast to rise $1.5 billion over last year to $4.2 billion. Cotton farmers are benefiting from strong prices and high global demand.

Horticultural sales are forecast to set a record of $13.5 billion, with tree nuts and a broad array of processed foods accounting for two-thirds of the overall gain. Horticultural exports to Canada and Mexico remain strong, sales to Europe of selected products are brisk, and exports to several Asian countries are rising sharply.

The 2004 forecast of livestock and livestock products of $7 billion is $1 billion higher than USDA’s February forecast. The increase is due to high beef, pork and poultry prices and the Department’s efforts to reopen some key beef and poultry markets that were closed following findings of Bovine Spongiform Encephalopathy and Avian Influenza. Livestock exports in fiscal 2003 totaled $9 billion.

Imports, forecast at $51.5 billion for 2004, are $5.8 billion higher than in 2003, resulting in an agricultural trade surplus of $10 billion.

As they have for the past three decades, horticultural imports continue to rise, accounting for about half of the overall import gain. Off-season demand for fresh products and competitive prices are driving the long-term growth in imported fruits and vegetables.

The U.S. Department of Agriculture’s Economic Research Service, the Foreign Agricultural Service and the World Agricultural Outlook Board release agricultural trade forecasts quarterly. The summary and full report of USDA’s Outlook for U.S. Agricultural Exports may be accessed from the ERS Web site at http://www.ers.usda.gov or the FAS Web site at http://www.fas.usda.gov. The next quarterly report will be issued on Aug. 31.

Calcot makes more progress payments

Calcot growers have more money in the bank, and the cotton marketing cooperative has a new logo.

Calcot’s board approved the fourth progress payment for 2003-04 crop Upland cottons, and the fifth for Pima. It amounted to a three-cent payment across the board for seasonal pool upland styles and a five-cent payment for Pima cottons.

The latest payment brings base grade San Joaquin Valley Acala to 73 cents per pound for the 2003 crop, and pushes both desert California/Arizona (C/A) and California Upland styles to over 66 cents.

California Upland will now be advanced 67.65 on gin UD free terms, following the three-cent payment. C/A cottons will be advanced at 66.05 cents. Roller-ginned Ultima will reach 80.85 cents.

SJV Pima is now at $1.1940 on gin UD free terms for Grade 2. C/A Pima, same grade, on a net basis will be priced at $1.1780 after the payment.

Total payments across the membership will be $11.4 million. Payments were to be mailed before the Memorial Day weekend.

"With two months remaining in the 2003-04 marketing year, I am pleased to report that sales and shipments have been good and timely," said Calcot president Robert W. Norris. "While demand from China has slowed somewhat, other markets have been active and we are on our way to a very good final result for the season."

Norris noted an additional factor coming into play in the weeks remaining in the 2003-04 marketing season is the return of the Step 2 marketing certificates. Though available for much of the season, their value has been relatively low and the certificates disappeared for a time. However, Step 2 made a strong return on May 14, with current values nearing seven cents per pound for Upland styles.

Norris also shared favorable news on the new crop.

"By almost all reports, the 2004-05 crop is developing to be a good one and is mostly ahead of schedule," he said. "But higher cotton prices have encouraged greater plantings around the world, and this has pressured new crop prices."

Calcot’s board also approved a new logo and identity for the 77-year-old cooperative.

Created by Calcot’s communications staff, the new logo displays the name of the cooperative prominently atop a stylized letter "C," which symbolizes Calcot’s global reach and dynamic business plan to deliver Far Western cottons all over the world.

The old logo has been used for more than 30 years and featured the name in a rounded rectangle with a cotton boll overlaid on top of the box.

"It’s time for a change," Calcot communications director Mark Bagby said. "Calcot is a dynamic, active company, offering the ultimate in cotton marketing services. Our old logo, while it has served us well, was a bit tired-looking and didn’t convey our strengths or give any indication of the breadth of the company’s goals or plans."

GAO investigates trade in Mexico

WASHINGTON, D.C. -- Barriers American rice encounters in market access in Mexico were the subject of a meeting this week between staff members of Congress’ General Accounting Office and USA Rice.

The meeting is part of a GAO investigation of Mexico’s compliance with NAFTA’s agricultural trade commitments. GAO is Congress’ investigative arm.

In the meeting, USA Rice highlighted the importance of NAFTA to opening the overall Mexican market to U.S. rice; the industry’s defense against Mexico’s anti-dumping ruling on long grain milled rice from the United States; and the critical importance of enforcement of trade agreements.

GAO also is interviewing other U.S. agricultural commodity groups that have faced similar market access barriers in Mexico, such as apples, beef, pork and corn (in the form of high fructose corn syrup).

The study on Mexico is being carried out at the request of Sen. Charles Grassley, R-Iowa, chairman of the Senate Finance Committee.

Agribusiness: Diamond insecticide approved for use on cotton

MIDDLEBURY, Conn. – Federal registration of Crompton Corp./Uniroyal Chemical’s new Diamond insecticide will help cotton growers achieve more effective control of plant bugs, stink bugs and other damaging, mid to late season pests.

Diamond, a broad-spectrum cotton insecticide with a unique mode of action, recently received a Section 3 registration from the Environmental Protection Agency. The registrant says it should help combat escalating populations of such pests.

Unlike conventional insecticides that attack the nervous system, Diamond controls insects by interfering with chitin development, which causes the target pest to produce a weak or malformed insect exoskeleton. Applied early when insect pests are in the larvae/nymph stage, Diamond prevents juvenile tarnished plant bugs, clouded plant bugs, stink bugs, armyworms, loopers, budworms and bollworms, cotton leaf perforators and saltmarsh caterpillars from reaching the next growth stage.

The introduction of Diamond allows growers to effectively control a group of pests once considered to be “secondary.” Cotton specialists agree that widespread adoption of transgenic Bt cotton, successful eradication of the boll weevil, and an overall reduction in the use of broad-spectrum insecticides have caused insect pests such as the stink bug and plant bug to emerge as primary cotton pests in states ranging from Georgia and Alabama to Mississippi, Louisiana and Arkansas.

Gary Lentz, research entomologist with the University of Tennessee, reports that stink bugs ranked as the No. 2 cotton insect pest in Tennessee in 2003, behind bollworm/tobacco budworm. However, the bug complex, including plant bugs and stink bugs caused the greatest losses in 2002.

University entomologists generally recommend use of a conventional insecticide when stink bugs reach a threshold of one bug per 6 row feet, or when plant bug populations cause at least 20 percent pinhead square damage or 10 percent damaged bolls in blooming cotton.

Because Diamond will control juvenile insects, it should be applied at the first sign of nymphs.

“Replicated field trials have shown that Diamond is persistent and rainfast on plant tissue, and will provide at least 14 days of residual control of plant bugs and stink bugs when used according to label directions,” says Tim Weiland, technical manager at Crompton Corporation/Uniroyal Chemical.

Because Diamond is safe to most beneficial insect species, it is highly compatible with IPM programs, said Weiland. Diamond offers a good option in rotation with other classes of insecticides for resistance management. Reapplication under heavy infestation may be required to protect new foliage.

Diamond may be applied alone for control of juvenile insects. Diamond may also be applied in a tank-mix combination with conventional pyrethroid or organophosphate insecticides, or in rotation with neonicotinoid insecticides for control of mixed populations of juvenile and adult insect pests.

Growers may make up to four applications of Diamond per season and apply up to 42 total ounces per acre per season. Consult the label for specific application rates.

Diamond has been granted “OP Replacement” status by the EPA, with a worker re-entry interval of just 12 hours.

While Crompton Corporation/Uniroyal Chemical is currently seeking state approvals for Diamond, registration of Diamond is not expected for 2004 in Arizona, California or Florida as a result of individual state approval processes. For specific information about using new Diamond insecticide in your state, check with your state Extension entomologist.

e=mail: flaws@primediabusiness.com

Challenges to cotton industry have been overcome

Had we space enough and time, cataloguing the challenges cotton producers have faced since colonists first started growing the crop in America hundreds of years ago would offer an entertaining look at the ingenuity of farmers.

We have an abundance of neither.

So, a quick primer on cotton:

  • It’s hard to pick.
  • It’s hard to separate the lint from the seeds. And then it’s hard to separate the seed from the lint for planting.
  • It’s hard to control insects, weeds and diseases.
  • It’s awfully hard to grow without adequate water.
  • It’s hard to assemble the harvested product into a form easy to transport to market.
  • Markets are as capricious as the weather required to grow it.
“And we have more challenges ahead of us,” says Carl Anderson, Extension cotton marketing specialist at Texas A&M University.

Anderson, speaking at the recent Texas Cotton Association annual meeting in San Antonio, said a global economy has exacerbated some of the historical challenges.

“Revamping our production system poses a significant challenge for the industry,” Anderson said. “Streamlining market channels offers another, as does increasing textile manufacturing efficiency. All three segments of the industry need to do things more efficiently. And all are improving.”

He cites yield potential as a critical concern. “China has beaten our socks off (on yield) since the 1980s,” he said.

Genetic engineering plays a role in that beating. Anderson has no burrs to pick with genetic engineering and sees transgenic varieties as critical to an efficient production system.

“But under the old system, the one China has been following, breeders select the most vigorous and highest yielding plants,” he said. That system once held sway in the United States, under the old public breeding programs.

“Unfortunately, the United States backed off public breeding. China increased theirs. We went more to private company breeding and laboratory-based stacked gene varieties.”

The solution, Anderson says, is a combination of the two, continued efforts on gene and genome work and public and private breeding programs.

He said the industry also must improve harvest and ginning efficiency. “That’s where one-third of our costs occur,” he said. “Can we reduce those expenses?”

Anderson said research efforts underway would identify the best size for a gin and the necessary output to maximize efficiency. “Bigger gins must have more bales coming through. And we need to ask if we can run our gins longer, extend the ginning season.”

He said research priorities also include “block ginning” of specific varieties to improve uniformity of spinning qualities. “Researchers also are looking at wireless tags.”

Anderson said storage and transportation also warrant scrutiny so growers, ginners and merchants can “move it to foreign countries” efficiently.

He advised growers to look farther than the picker as the final step in the production process.

Marketing must play a bigger role. He recommends farmers invest a little money and a bit more time to develop marketing skills.

“In Texas, we have a Master Marketer Program, developed in 1996, that tries to get farmers to sit for eight days and think. It’s adult education and the grade is survival.”

He said the program started with A&M and got an economic boost from Texas commodity groups, including Texas Farm Bureau, as well as Cotton Incorporated and the Texas State Legislature.

During the course, a farmer completes a financial analysis of his operation, identifying strengths and weaknesses and developing a business plan.

“They meet for eight days, two days every other week for in-depth market training,” Anderson said. “We follow up with a one or two-day advanced program.”

He said 680 graduates have completed the program since 1996. “The average annual income of those graduates has improved by $32,000 per year. In total, the graduates add $20 million annually to the state’s economy.”

The course costs participants $250.

Anderson recommended growers redefine success to mean more than just big yields. “Success means the lowest possible expense to return ratio and the highest net cash for the investment per acre. It’s also the lowest possible debt to asset ratio.”

Anderson said the cotton industry has always faced, and met, challenges. Globalization, rising production costs, demand for better quality fiber and trade barriers present obstacles and opportunities, which the industry will meet.

Another primer:

  • Mechanized cotton harvest.
  • The cotton gin.
  • Modules.
  • Boll Weevil Eradication.
  • Herbicide tolerant varieties.
  • Electronic marketing.
Perhaps Eli Whitneys are waiting in the wings.

e-mail: rsmith@primediabusiness.com

Fire controls weeds in niche soybeans

STONEVILLE, Miss. — Using flame cultivation to control weeds could make producing organic soybeans a profitable venture for those Southern growers willing to invest the extra time and money in this value-added market. That’s the conclusion of an ongoing study at the Delta Research and Extension Center.

It’s more complicated, more labor-intensive, and more expensive per acre, but with organic soybeans bringing from $7 per bushel for split and damaged beans to $22 per bushel for high-quality soybeans, the reward may justify a few risks.

“Organically grown soybeans can be produced economically in the Mississippi Delta, especially if early planting is used in conjunction with flame cultivation, says Dan Poston, a weed scientist at the Delta Research and Extension Center. “I certainly wouldn’t use this system unless it was economically motivated. In addition, I don’t expect this system to take over any large acreage, but it could represent a profitable niche market for some producers.”

The obvious advantage to organic soybean production, aided by flame cultivation, is the potential for higher net returns per acre. On the other hand, this production system is complex, expensive, dangerous, and extremely labor intensive if hand weeding is used to supplement flaming.

To see just how economical this production system would be for Delta soybean growers, Poston is field-testing the economics of a transition from traditional soybean production to organic production over time in a worst-case weed control scenario using flame cultivation for weed control.

His research plots are infested with annual morningglory, hemp sesbania, prickly sida, sicklepod, and annual grasses such as barnyardgrass.

What he’s found is a system that shows potential; it could find a fit on some Southern acres. In his tests, however, the silty-clay loam soil commonly used for soybean production didn’t fare as well as silt loam soils did under this production system. The silt loam soils were far less cloddy than soils that have traditionally been used for soybean production, and tillage, bed preparation and drainage were much easier in the silt loam fields, Poston reports.

In his study, Poston compared systems using no weed control, flame cultivation, conventional cultivation, and a Roundup Ready weed control system. Precision parallel and cross flamers were used in flame-cultivated plots. The parallel flame cultivator is used prior to soybeans reaching 12 inches tall, and shoots a flame parallel to the soybean rows, while a shield protects the soybean plant. In comparison, the precision cross flamer is used after soybeans reach 12 inches tall, and is similar to a layby rig with burners oriented perpendicular to the soybean row to shoot flames up under the soybean plants.

Weed control with flame cultivation alone in all of the tests ranged from 75 to 93 percent, and was equal to the best treatments except in the case of pigweed. Soybean yields in April-planted tests on silt-loam soils ranged from 63 to 65 bushels per acre, and were similar in all treated plots.

“Weed control with flame cultivation was generally higher than the level of control achieved with cultivation only, and all weed management treatments improved soybean yield compared to the untreated test plot. Annual morningglories and annual grasses were the weeds most difficult to control with flame cultivation. Annual grass control also tends to be more of a problem in later-planted soybeans,” Poston says. “Although morningglory was difficult to control in one study with flame cultivation, the level of control achieved was similar to the level provided by the Roundup Ready weed control system. In addition, the level of sicklepod control with flame cultivation was 93 percent, compared to 83 percent with a conventional herbicide system supplemented with cultivation.”

Flame cultivation is more costly than conventional cultivation. Operating at three miles per hour, it costs $21.44 per acre for the precision parallel flame cultivator treatments and $39.81 per acre for the precision cross flame treatments. The cost of conventional cultivation is estimated at less than $7 per acre.

“Higher labor and tractor costs were estimated for flame cultivation than for conventional cultivation because of the added time needed to fill up propane tanks and adjust equipment in the field,” Poston says. “Operating flamers at 4 miles per hour can reduce the cost of operation. At this speed, the cost of operation is estimated at $15.65 and $29.58 per acre for parallel and cross flamers, respectively. However with some weed species, increasing speed may reduce weed control or require multiple trips across the field.”

Planting organic soybeans in April will increase yield potential, but it will also increase weed control costs, according to Poston’s research.

He says, “Early production system soybeans have the opportunity to establish a competitive advantage over several summer annual weeds, especially annual grasses and to begin to shade the row middles before many summer annual weeds become established. In contrast, summer annual weeds emerged simultaneously with the crop in May-planted studies, and labor to remove these weeds was extremely costly.”

Because planting in early April allows the soybeans to emerge before many summer annual weeds, the crop can gain a competitive edge over the weeds. In comparison, planting organic soybeans in May allowed the weeds to more readily establish a competitive advantage over the crop, making it more difficult to achieve broad-spectrum weed control with flame cultivation, Poston says.

“Soybean vegetative growth and canopy closure occur much faster with May planting dates than with April planting dates. Because the May-planted soybeans grew faster, fewer flame cultivator trips were required in May-planted soybeans, than in April-planted soybeans,” he says.

According to Poston’s research, season-long weed management costs using flame cultivation alone were $126 per acre for April-planted soybeans and $83 per acre for May-planted soybeans. However, soybean yields were 11 bushels per acre higher on average for the April plantings than for May plantings.

“With May plantings, the extra level of weed control provided by flame cultivation compared to conventional cultivation is more valuable, making flame cultivation the more efficacious and profitable system for these later-planted soybeans grown for the organic market,” he says. “Assuming an estimated selling price of at least $12 per bushel for the organically grown soybeans and an average selling price of $6.56 for the non-organic soybeans, net returns with flame cultivation could greatly exceed net returns from other soybean production systems.”

Poston’s flame cultivation studies, as well as flame weed control research in cotton, are being underwritten by the Propane Education and Research Council, which believes that by 2010 the agricultural industry will recognize propane as a preferred energy source.

e-mail: flaws@primediabusiness.com

Iraqi group postpones U.S. tour

WASHINGTON, D.C. — A team of Iraqi grain and trade specialists, led by the minister of trade, has postponed its plan to tour parts of the U.S. rice and wheat industries this week. The last-minute postponement was due to difficulty in obtaining a visa for one of the team members.

The visit was designed to familiarize the Iraqis with U.S. grain policies and trade, the rice and wheat industries’ production, processing and inspection capabilities and to introduce the Iraqis to key members of Congress and the Bush administration. Plans are under way to reschedule the delegation visit for later this summer, with dates and delegation members dependent on the outcome of plans for a new governing structure in Iraq.

Cattlemen support new U.S. animal tracking system

When it comes to protecting animal-based foods, knowing an animal's past is essential. And farmers, industry and government officials are developing a way to track it.

The U.S. Animal Identification Plan will allow officials to trace all animals and locations potentially exposed to an animal with a foreign disease within 48 hours of discovery. Once in place, it will track animals from the farm to the table.

The plan requires animals be given an identification number at birth. How they'll be tagged and who will do it was the topic of a round-table discussion during the University of Georgia Mountain Beef Cattle Field Day in Blairsville, Ga.

“When we had our first case of BSE (bovine spongiform encephalopathy), also known as ‘mad cow disease,’ last December, it took six weeks and 500 people to trace the animals. And there are still more than 20 cows unaccounted for,” says Carter Black, Georgia’s associate state veterinarian.

“If this had been foot-and-mouth disease,” he says, “we would be in a world of hurt.”

Black says tracking animals isn't a “one-size-fits-all” activity. “What works in one part of the country won't work in other parts,” he says. “In Georgia, we have too many landowners who don't own the cattle on their land.”

Black says state livestock officials seem to prefer electronic identification, which uses radio frequency chips. A number of companies make them, but the chips aren't compatible. “We need one scanner and one type of chip for this system to work,” he says.

Cattleman Bud Hill of Hill Vue Farms in Blairsville, Ga., sees the benefits of tracking. But he isn't excited about adding more farm chores and record-keeping.

“We're gonna have tags up the grommet if we're not careful,” he says. Most cows have ear tattoos, an ear tag and a visual tag. The new radio-frequency tracking tag would be yet another tag.

“You can buy gas at six different stations in one day and there's a record of where you've been,” he says. “This system should work the same way.” The added tag shouldn't be a problem, he says, as most breeders are already set up for tagging.

But “sale barns aren't set up to tag cattle,” says Eddie Bradley, a Towns County, Ga., cattleman. “But they are the logical place to tag cattle from small producers.”

According to the Georgia Cattlemen's Association, 85 percent of Georgia cattle are sold through sale barns.

Bradley sees the new tracking system as a way of reassuring the public that U.S. beef is safe to eat.

“This is a positive change,” he says. “After all, we're selling food, not cattle. Our beef is probably the safest in the world. Proving it may be like taking medicine. It'll be bad at first but will benefit us in the long run.”

Government dollars must fund the system, said Jim Collins, executive vice-president of the Georgia Cattlemen's Association. “The plan is just a skeleton to build on,” he says. “Now we have to move forward with something that's workable.”

By this fall, each state must decide how to assign and manage the tags, Collins says. By July 2006, the tagging system should be in place.

Besides cattle, the system will track bison, swine, sheep, goats, equine, poultry, game birds, farmed fish and domestic deer, elk, camelids (like llamas and alpacas) and ratites (like ostriches and emus).

The USAIP Web site (www.usaip.info) reports that the system's first phase, premises identification by state, should be complete this year.

“This program is in the development stage, and it's a moving vehicle,” said Charles McPeake, a UGA animal scientist helping develop the system for Georgia. “It will be a number of months before information is concrete.”

Farmers feeling the pinch at the pump

COLLEGE STATION, Texas – National gasoline prices set a record high this week and farmers are feeling the pinch at the pump, Texas Cooperative Extension reports. According to Stanley Bevers of Vernon, Extension economist, the producer who is planting is the one most affected by rising fuel costs.

"Cotton, corn and peanut producers are getting hit pretty hard (with high fuel prices) because right now, it's a necessity for their operation," Bevers said. "They have to ‘fill-up' and plow the fields."

According to Bevers, a tractor can burn from 8 to 20 gallons of fuel an hour. "The average varies greatly depending on what the producer is doing," he said. "That large amount of fuel results in a large bill."

Fertilizer is another big cost that rises with fuel prices.

"Fertilizer price is a function of natural gas prices," Bevers said. "Farmers have experienced a 20 percent to 30 percent increase in the price of fertilizer.

"Natural gas (a main component when producing fertilizer) is part of the energy complex, therefore when other energy prices increase, their prices follow suit." Bevers said.

Harvesters are feeling the demand for more of their dollars and cents as well, he said. "I expect to see custom harvesting prices go up in order to cover fuel costs."

According to the U.S. Department of Energy's Web site, gasoline prices rose to a nationwide average of $2.06 for a gallon of regular on Monday. The jump equals an increase of nearly 5 cents since last week and 58 cents from the same time 2003. Diesel prices are $1.76 a gallon, up nearly 33 cents from last year.

C. Parr Rosson of College Station, Extension economist specializing in international trade, said the price increase is a result of several factors that occurred all at the same time. He explained it as a function of supply and demand.

"Demand in the United States is up, and our supplying power has not increased," he said. "We're looking at a situation where demand has been growing, yet supply is limited because of a lack of refineries."

The actual oil is not lacking, causing the price increase, Rosson said. What is lacking is the ability to refine it into useable products.

"We import crude oil and then refine it," he said. "There hasn't been a refinery added since the 1970s."

According to Rosson, the freeze of new refineries is a result of increased regulation and higher costs.

"Over time, we will see an increased amount of imported refined products, improved capacity to refine oil, and even alternative energy sources like hybrid vehicles," he said.

Bever said producers have been able to ride the price storm successfully.

"Agriculture has been fortunate to see high commodity prices. Beef prices are at a record high, and corn is getting more than in the past," he said. "Producers are hoping that the prices hold until payday comes at harvest."

According to Bever, growers can save on gasoline prices in many ways, but not in all operations.

“Farmers can change to a no-till or conservation-till method and save on gas money, but it's very tough to change a system," he said.

"This isn't the first time fuel prices have gone up and it probably won't be the last time."

The earliest possible price relief for producers will come in the fall.

"We're approaching the summer months when people are driving and air travel has picked up," he said. "It's not a long-term fix, but producers should see a price decrease once summer demand goes down."

Stephanie Jeter is a writer for Texas A&M University.

e-mail: workn1@neo.tamu.edu