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Articles from 2006 In June

The biofuel revolution

In Nevada, Iowa, and other places around the state, the biofuel revolution is industrializing row crop agriculture.

Instead of fretting over high Nitrogen costs, farmers here are plowing ahead with plans to grow more corn and sink more iron into the ground in the form of ethanol and biodiesel plants. This new 'biofuel' generation of farms is aligning with private companies like Cargill and other grain companies to build storage. To protect profits and avoid a basis wreck this fall they're making sure they have a place to stash crop. Meanwhile they're looking ahead and forward pricing for this fall and next.

"If they're going to participate in biofuels they are going to need access to storage and not be at the mercy of full commercial storage cost and that basis," says Steve Johnson, Iowa State University farm management specialist.

"The industrialization of row crop agriculture is taking place," he adds. "Private industry is aligning with larger producers. It is not business as usual."

At the heart of this movement is biofuel. Iowa already has 20 plants and has another 29 either being expanded, under construction, or in the planning stage. Nationwide, corn flowing into ethanol production will increase by 34% over the next year. Ethanol demand for the next marketing year will be 2.15 billion bushels nationwide, matching all the corn the state of Iowa grew in 2005.

"We're moving to vertical integration clustered around these ethanol plants," says Johnson. "It's a way of boosting competition. If you don't have an ethanol plant there may be an opportunity to sell corn that goes on to a 110-car shuttle train to Hereford, Texas."

This business model requires a new mindset. Perhaps most exciting is how corn is being utilized locally. In the new biofuel community, corn is grown locally, sent to a local ethanol plant, and the dried distillers grains that are leftover from that process stay in the community and are fed to livestock. Every kernel stays inside the community.

"I've never seen anything like it in my career," Johnson adds. "It's an interesting phenomena. I can only compare it to the hog industry 20 years ago. Those guys were investing capital, confinement buildings, getting a handle on nutrition and selling pork on contract. That's where this is moving."

It's not for everyone. There will be some who resent production contracts and larger feedlots. There will be groups who would like farming to go back to the 50s.  But for those who are participating, it's a new world.

Next: Meet Bill Couser, a Nevada, Iowa farmer who is part of grain's new biofuel revolution.

Canada Finds Suspect BSE Cow

Preliminary screening conducted by the Province of Manitoba and the Canadian Food Inspection Agency has detected a potential case of bovine spongiform encephalopathy in a mature crossbred beef cow born well before 1997 implementation of Canada's feed ban.

No part of the animal's carcass entered the food or animal feed systems. Samples have been sent to the National Centre for Foreign Animal Disease in Winnipeg for confirmatory testing. Final results are expected next week.

As with all previous cases, the animal was identified through Canada's surveillance program. In Manitoba, the CFIA and Manitoba Agriculture, Food and Rural Initiatives collaborate closely to collect and analyze samples for BSE testing.

The CFIA has begun a preliminary examination of the animal's history. If confirmatory testing yields positive results, a full investigation, conducted in accordance with international standards, will be launched.

Asian soybean rust found in south Louisiana kudzu

LSU AgCenter specialists announced Asian soybean rust has been found in a Louisiana kudzu patch south of Lafayette near New Iberia. The disease has not been found in soybeans.

“Late yesterday afternoon, Blaine Viator reported he’d found something that looked a lot like ASR,” said David Lanclos, LSU AgCenter soybean specialist, shortly after the disease confirmation. “Along with several sentinel plots, Blaine has been monitoring that kudzu for a while. When he found this suspicious patch he gave us a call. He drove a sample to Baton Rouge this morning.”

After having a look, plant pathologists said Viator’s initial ASR diagnosis was correct.

Viator, a prominent sugarcane consultant in south-central Louisiana, found the infected kudzu in a low-lying area beneath a tree. That region has been receiving intermittent showers so there was moisture available to the disease.

“Our immediate plans include intensifying scouting efforts around the area,” said Lanclos. “I’ve been in regular contact with Blaine all afternoon. In fact, I spoke with him 30 minutes ago and he was in another sentinel plot. He’s been unable to find any more ASR. That’s very good news.”

Lanclos and colleagues are careful not to downplay the significance of the find. But as long as it’s hot and dry (conditions Louisiana is well familiar with this year), “it would be difficult for ASR to really get going. Even in that kudzu patch it hasn’t really spread. That goes to show where the sun is shining and there’s little moisture retention, the disease isn’t prevalent.

“The flip-side, of course, is if it does begin to rain and temperatures drop it would theoretically allow the disease cycle to pick up steam. Those conditions would certainly be optimum for it to get cranked up.”

Between 50 and 60 percent of the state’s soybeans are already at R-5.

“The cutoff for ASR, according to everything we know – and we are still on a learning curve – is once we get to R-6 there’s no real harm ASR can do to the crop. So we’re about two weeks away from being able to say 60 percent of our crop is safe.”

As for recommendations, “we’re not changing course just because of this kudzu patch. If it’s found in soybeans and appears to be spreading, then we’ll definitely change our tune.

“We’re not promoting not spraying. We’re just suggesting producers stay on the spraying program they’re normally on. If they’re not ones for any risk, they can add a triazole to the system. That might help some folks sleep better.”

The area the ASR was found in isn’t known for soybean production.

“It’s in the sugarcane belt. Traditionally, in a good year, between the parishes down there – St. Mary, Iberia and a couple of others – there’s around 30,000 acres of soybeans.”

And the area’s beans are some of the state’s earliest planted. Most producers there plant in early April and harvest in mid- to late August.

“This is unfortunate and I’m sorry ASR is back on farmers’ plates. But at this point, it’s not in beans and there’s no reason for panic. Everyone should keep looking for ASR and if it does spread, we’ll let everyone know immediately.”

House passes DOER Act to permit offshore exploration

The House passed a bill that could allow coastal states to open up the outer continental shelf to exploration for oil and natural gas supplies that the legislation’s sponsors say are needed to increase energy resources in the United States.

The bill, the Deep Ocean Energy Resources or DOER Act of 2006, was approved by a vote of 232 to 187. It faces an uncertain future in the Senate where filibuster rules could make it easier for environmentalist-leaning senators to keep it bottled up.

“Today (Thursday) marks a historic day for the House of Representatives and the United States,” said House Resources Committee Chairman Richard Pombo, R-Calif. “Never before have we accomplished so much for American jobs and energy security in single, stand-alone bill.”

Pombo said the bill will “finally correct the one-size-fits-all bans that were enacted during times when energy production and environmental protection were thought to be mutually exclusive. They are not, and today a bipartisan majority in the House voted for both.”

A bipartisan group of representatives including two Louisiana Congressmen – Bobby Jindal, a Republican, and Charlie Melancon, a Democrat; Rep. John Peterson, R-Pa.; and Neil Abercrombie, D-Hawaii, helped craft the bill.

“My bill provides incentives for more domestic production, allows states to have more control over energy activity off their coasts and encourages production from new energy sources,” said Jindal.

The bill will reduce energy costs and help the country to begin to reduce its dependence on foreign sources. It will also allow states like Louisiana to have a greater share in the benefits from energy production, Jindal noted.

“Louisiana’s coastlines have borne the brunt of the consequences of energy exploration for decades, and this legislation will help restore our coastlines for generations to come,” he said. “The overwhelming support for my bill today sends a strong message to the Senate that now is the time for reform of how we distribute our nation's energy royalties.”

“I applaud the U.S. House of Representatives for passing the DOER Act, and I encourage the Senate to also recognize the importance of this legislation and vote for passage,” said Melancon. “In Louisiana, this bill will ensure that for the first time since drilling began off our coasts 50 years ago, we will receive a fair share of the royalties this industry generates for the federal treasury.”

Louisiana’s General Assembly has passed a constitutional amendment that would require the state to dedicate the new revenue to building a comprehensive hurricane protection and coastal restoration system that will protect a vulnerable population of more than 1 million people.

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Johanns Update on WTO Shows Worry over 'Loopholes'

The work of trade negotiations is long and arduous. This afternoon, Ag Secretary Mike Johanns paused in his day - 10 p.m. his time - to brief U.S. media about the Geneva meeting. This discussion, which had a different tone than the briefing he gave earlier today in Geneva, talked about key "loopholes" he is concerned about in these negotiations.

"In the past two days of discussions we're getting a clearer understanding of what negotiators mean when market access is mentioned and frankly I'm worried," the secretary says. "There are three major loophole areas - sensitive products, special products, and special safeguard mechanisms - and these are loopholes - that can set aside products to prevent access into the marketplace."

He notes in the sensitive product area alone from 1 to 15% of tariff line items could be set aside as sensitive products. "Anything beyond 2% would lose any advantage of tariff reduction," he says. In the case of the G33, which includes a vase number of developing countries - 94 to 98% of the market for developing countries would "be blocked to us." he adds.

Johanns notes that "developing country" in that G33 proposal would include China, Brazil and India. "You can see why I'm worried," he says.

This negotiation, which has been going on for more than four years, continues, but Johanns admits that market access issues remain very important and that the loopholes defined would "smother market access." He says, that's where the concern is and admits it is a "worrisome" development.

Johanns and U.S. Trade Representative Susan Schwab have been invited back to talks with the G6 yet tonight, but he was unsure if there was any movement on the market access issue.

Johanns says the U.S. offer to cut amber box payments 60% is a bold move from the United States but is contingent on market access and for now, he's not sure if negotiators are making progress. "We are committed to the negotiation process, and continue to be," he says.

Johanns Restates Commitment to Market Access at WTO Press Conference

The offer has been on the table since last October - the United States would cut export subsidies by 53% if the rest of the world would open their doors for market access. In a press conference from the World Trade Organization talks in Geneva today, Ag Secretary Mike Johanns restated that position noting that the offer on the table isn't carved in stone, but U.S. negotiators are still waiting for some kind of movement from other countries.

"We made it very very clear at the time that that strong ambition, that bold offer, was dependent upon a strong response in market access. That is the key," he told reporters today. "We have made no bones about it since then. We have talked over and over again about the importance of market access•Every study you read will tell you that the real opportunities for the globe lie in improved market access."

Much of the U.S. talk about WTO negotiations focuses on how the Doha Round could impact the 2007 Farm Bill. Johanns noted today that the farm bill needs to be reformed for a number of reasons, not simply because of the WTO. "I believe reform is appropriate. I don't say that again just because I came to the office and one day thought it up. We did Farm Bill forums across the United States. I did 21 of them myself in 21 states•and we heard a lot from farmers about reform, about the needs that they have."

He notes that only about 40% of U.S. farmers receive a subsidy and 60% do not receive any government support, but did come to the forums to discuss reforms in a lot of areas ranging from the need for investment in research to phytosanitary/sanitary practices, and other issues.

"So those farmers who are very legitimately at the table for the farm bill discussion are bringing these issues and saying we think it's important that you consider the important contribution we make to the world economy. I think that's a fair comment," he said.

Johanns notes the farm bill will be written in Congress, and adds "it must be predictable, it has to be equitable•it has to be beyond challenge."

As the conference opened this week, WTO Director Pascal Lamy proposed an approach that would limit U.S. ag support spending to $20 billion, which is actually higher than what was spent last year. Johanns notes that the overture by Lamy was made to the media and it "was not an overture made in a negotiating session or a discussion session. I read it with interest, but that would be about the extent of my thoughts on it."

When challenged further on ag spending, Johanns detailed what a 60% cut in amber box payments - part of the October offer - would mean to ag spending in the United States. "I means we would go from $19 billion to $7.6 billion. I can tell you that in 2005 we estimate that these [amber box] programs will cost $12.5 billion. So even if you go beyond bound to what we are actually going to use, this is a real cut," he notes.

In trade discussions so far, the European Union has not brought forward a new proposal, but has restated the G20 position of market access, yet Johanns questions some of the finer points noting that the EU will not define "sensitive products" which would remain protected in their proposal. That prevents negotiators from knowing the true extent of the EU offer, Johanns notes.

Johanns adds that U.S. negotiators came to work at the meeting, a point he reiterated throughout the press conference. "We came here to do everything we could to contribute to a successful Doha round and that's what we're going to endeavor to do."


U.S. Ag and Trade Officials Keep Pushing for Market Access

Could the latest round of World Trade Organization talks in Geneva end in the same lack of results seen in Hong Kong last December? It's beginning to look that way. In a joint statement issued today by Agriculture Secretary Mike Johanns and U.S. Trade Representative Susan Schwab, the officials maintain what they say are "high hopes for a meaningful and robust outcome to these talks and we are urging other countries to seek the same. The U.S. proposal delivers on the promise of Doha, unfortunately other proposals thus far lack the necessary ambition."

The statement notes the continued aim of gaining market access which they say is "the key that will unlock the negotiations and ambitious reform is essential if this round is to live up to its name as a development round." They note deep tariff cuts are needed to increase trade flows and without the cuts their will be neither income growth nor new opportunities for farmers, especially those in developing countries.

Schwab and Johanns commented on the G20 proposal for deeper subsidy cuts and a limit on U.S. support spending: "There has been a lot of talk about the G20 proposal. It proposes deep cuts in trade-distorting domestic support, but lacks sufficient market access to achieve the goals of this development round. It is also vulnerable to loopholes that will result in less rather than more market access. The U.S. stands ready to roll-up our sleeves and negotiate, but we need a balanced proposal on the table. As yet, none has been offered, but we are not prepared to give up trying to work with our trading partners to develop one."

Biotech Crops Keep Gaining Ground

Friday's crop report includes USDA's annual look at the advancement of biotechnology on corn, soybean and upland crop acres. This year's report shows biotech corn - including Bt, herbicide resistant and stacked varieties - went on more acres in 2006 than 2005.

For 2006, the number of acres planted to all biotech crops rose by 9 percentage points to 62%. The report shows that Bt corn stayed steady, but the number of acres planted to stacked gene varieties is up from 9% of acres to 15% - a significant boost.

For soybeans, long the darling biotech crop thanks to glyphosate tolerance success, the increase is minor and given the statistical variability of the study remains about the same as 2005 with about 89% of acres planted to the technology.

Upland cotton, where Bt and glyphosate-tolerance technology have been popular the percent of acres planted to all types of biotech rose from 79 to 83%. However, the biggest gains came in stacked-trait varieties while Bt-only and herbicide-resistant-only acres stayed flat.

The group Truth About Trade and Technology notes that total acres of biotech corn, soybeans, cotton and canola planted for 2006 rose by 11.1 million acres to 128.3 million acres. "This report confirms our earlier estimate that somewhere in the world in early June of this year the 1.3 billionth acre of biotech crops was planted since commercial production began in 1996," says Dean Kleckner, chairman.

The group estimates that total biotech plantings in 2006 in the northern hemisphere are at 145 million acres in 14 countries. In the southern hemisphere in 2005 plantings topped 72 million acres and could exceed 80 million acres in 2006.

U.S. not giving ground in Doha negotiations, analysts say

U.S. negotiators appeared to be standing their ground as WTO members applied renewed pressure today try to get the United States to make more concessions on farm subsidies so they could begin wrapping up a Doha Round agreement.

Reports from a meeting of about one-third of the WTO’s 149 members said U.S. officials had rejected criticism that a proposal tabled by Trade Representative Rob Portman last fall would not bring a significant reduction in U.S. subsidies.

“How could anybody argue that it is not a meaningful reduction, when literally we are saying the very heart of the U.S. farm program is directly impacted by the cuts we have put on the table,” said Agriculture Secretary Mike Johanns at a press conference in Geneva. “It is very, very real.”

U.S. analysts say the proposal offered by Portman, who has since become director of the White House Office of Management and Budget, would reduce U.S. farm subsidies by 60 percent. European Union officials claim the proposal would not result in reductions in actual spending.

Farm organization leaders attending the talks in Geneva have been urging U.S. negotiators to stand firm, arguing their members are not willing to see farm subsidies cut from an estimated $16.1 billion to $7 billion to $8 billion with no increase in market access in return.”

“We understand the negotiations are becoming more difficult in regard to agriculture issues such as market access,” said Leon Corzine, National Corn Growers Association chairman and a farmer from Assumption, Ill.

“Corn growers maintain the position that we will not support deeper cuts than what was previously proposed by the United States. The European Union and other trade ministers must understand that expanded market access is key to our industry and whether we will support or oppose approval of a Doha round agreement by the U.S. Congress.”

In a joint statement issued from Geneva and transmitted to Washington, the new U.S. Trade Representative Susan Schwab and Secretary Johanns said they continue to believe market access proposals by the European Union are less than what would be accepted by the U.S. Congress and farmers.

“We continue to have high hopes for a meaningful and robust outcome to these talks, and we are urging other countries to seek the same,” the statement said. “The U.S. proposal delivers on the promise of Doha; unfortunately other proposals thus far lack the necessary opinion.”

WTO negotiators have been trying to complete a draft agreement on the Doha Round, which began in Qatar, Doha, in 2001, by July 31, so they could reach a final agreement by the end of 2006. President Bush has said he wants to be able to submit a Doha agreement to Congress for an up-or-down vote before the Trade Promotion Authority that allows him to do so expires in July 2007.

Alejandro Jara, WTO deputy director-general, said the first section of agriculture issues to be discussed at this weekend’s meeting in Geneva will be market access, tariff-reduction formulas, sensitive products, special products and special safeguard mechanism. The second part of the discussions will focus on domestic support, overall cuts, blue box definitions and base period.

Ambassador Schwab has said the WTO would need to improve the market access proposals and that Congress would not agree to support concession beyond the U.S. proposal last fall. But she has also said the agriculture negotiations of the Doha Round are conditional and could be improved or scaled back depending on trading partners’ willingness to make new concessions on market access.

Last week, representatives of the National Cotton Council, USA Rice Federation, the NCGA, the American Soybean Association and other commodity groups met with Schwab to discuss the agriculture negotiations. The commodity groups repeated their position that U.S. farmers do not support additional amber box cuts and believe current market access proposals on the table are not acceptable.