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Articles from 2005 In August


Hurricane Katrina Impacts Transportation Costs and Trade for Producers

As Hurricane Katrina paralyzed off-shore oil platforms in the Gulf of Mexico and refineries in Louisiana, the timing could hardly have been worse. Record-high oil prices will skyrocket, and Katrina will have an overall negative impact on grain producers and grain transportation.

"Our thoughts are with those in Alabama, Louisiana and Mississippi who were affected by this devastating hurricane,•bCrLf says Rick Tolman, National Corn Growers Association's CEO. "Right now, the focus needs to be on the human element and making sure the search and rescue effort continues.•bCrLf

Tolman notes that once the rescue effort is finished, that will be the time to assess the damage and the impact on grain transportation, exports and the oil and gas sector.

Lisa Kelley, NCGA director of public policy says it is really too soon to measure what the outcome will be. "Right now, it is too soon to tell what the long-term transportation damage may be along the Mississippi River and any damage to the New Orleans ports. Barge traffic, carrying commodities, goods and essential crude oil, has been halted on the Mississippi.•bCrLf

Each year, 1 billion bushels of grain (or 60% of grain going to export) are exported via the Mississippi River, says Kelley. "Between the low water issues facing the Upper Mississippi and the potential and significant damage to the lower Mississippi infrastructure and port at New Orleans, it doesn't look like ocean freight will ship out of that area for sometime.•bCrLf Kelley also mentioned, with the river transportation already stopped and potential damage done to the infrastructures, farmers and businesses will now need to rely on rail or truck transportation, which is more expensive and are already heavily used.

According to news reports, Hurricane Katrina has already interrupted farm shipments through New Orleans.

Also impacting transportation are the rising and almost crippling prices of oil and gasoline. Energy production, according to news sources, is all but paralyzed in one of the nation's main hubs for oil and gas, shuttering refineries, raking offshore oil platforms, closing pipelines and raising fears that oil prices could reach debilitating heights in the coming weeks. Six hundred fifteen of the 819 oil platforms in the Gulf of Mexico—three-quarters of the total—had been evacuated, according to the Department of the Interior. Oil production has dropped nearly 92%, or 1.4 million barrels a day. Natural gas production, a component critical to corn growers nationwide, was down 83% which has resulted in a 15% price increase. However, U.S. Department of Energy Secretary Samuel W. Bodman today notified the public that the Strategic Petroleum Reserve will be opened for this emergency.

"Corn growers are certainly going to be affected drastically with the rising costs of natural gas and diesel. As they head into harvest, the impact of the devastating effects of this hurricane will be felt throughout the Corn Belt, says Samantha Slater, NCGA director of public policy. "The costs of natural gas and gasoline our farmers have and will face in the coming days will be even higher than expected and will have lasting impacts on the prices they will receive at market as well as the impact of limited transportation.•bCrLf

Trade is another issue that will certainly be affected by this hurricane, says June Silverberg, NCGA director of public policy. "Ninety percent of corn exports go through the Mississippi—Gulf Area. The Port of New Orleans is closed, the electricity in the area is out and the Corps of Engineers are looking to secure the infrastructures and facilities as best as possible. No one will really be able to assess the full damage to commodities industry for sometime.•bCrLf

Column: Katrina destroys more than buildings

I had flashbacks this morning of the 2005 Beltwide Cotton Conferences.

As you will recall, we met in New Orleans.

I remembered wonderful meals with good friends from the cotton industry. We sat one evening in a French Quarter restaurant that embodied all the charm that makes New Orleans a city one never forgets.

We had a table by a window with a good view of a constant stream of pedestrians strolling down one of those quaint little streets that crisscross the city. One walker recognized us, waved, made his way into the restaurant and joined us for the last few drops of a magnificent white wine and a dessert the likes of which can be found only in New Orleans.

I remember an evening with some friends, just walking through The Quarter, stopping in strange and wonderful shops, grabbing a Hurricane at Pat O’Brien’s and trudging, way too late, back to the hotel.

It will be years before we can do that again.

That restaurant, those cobbled streets, that unique little shop where an odd but somehow wonderful woman explained the necessity of keeping the right kind of gemstones about you, are all underwater. Destroyed.

I have not yet heard reports on damage to the area’s agriculture. It’s bound to be significant. Cotton, grain, rice and livestock could not have escaped the wrath of Katrina unscathed. I expect to hear of thousands of acres lost, buildings destroyed, a year’s investment blown away in what likely will be one of the worst hurricanes ever to hit the United States.

But it’s much worse. I watched in horror, as did many of you, as news programs showed Mother Nature at her ugliest. I watched rescue workers pluck victims from rooftops. I watched boats, loaded to the gunwales with wet, cold, miserable people, maneuver through the debris left in Katrina’s wake.

I was moved by the plight of thousands of people huddled in the Super Dome because they had nowhere else to go – without enough power to run the air conditioning and to provide adequate light. Many of these were too old, too ill or too poor to leave the city. And then they had to be moved again because even the Super Dome could not stand up to the power of wind and rising waters.

But even worse, I watched firemen and other workers carry sheet-shrouded bodies away from the wreckage.

I am dumfounded by what lies ahead for survivors. The most fortunate, the ones who had the means and the good sense to evacuate will return, at some point, to find their lives in shambles. The less fortunate, those who had no way to escape, those of modest or less means, those who already teetered on the razor’s edge of survival, continue to battle just to stay alive. Some, two days after the storm, remained trapped in homes with water relentlessly creeping farther and farther up the walls.

One man, anguished beyond comprehension, recalled his wife being torn from him and washed away in the torrent. “She’s gone,” he shrieked to the camera.

Weeks will pass before anyone can tally up the number of lost lives from this devastating hurricane. The coastline of Louisiana, Mississippi and Alabama will never be the same. The destruction is horrendous. The cost in lost businesses, lost homes and lost income pushes into the billions of dollars.

But that’s just things. That’s just money.

The cost in lost lives and lost hope, mostly from the already nearly hopeless, is immeasurable.

Help in anyway you can.

e-mail: flaws@primediabusiness.com

USDA selects 110 watersheds for 2006 CSP

Agriculture Deputy Secretary Chuck Conner announced that 110 watersheds, with at least one in all 50 states, Guam and Puerto Rico, will be eligible for the 2006 Conservation Security Program.

"This voluntary program recognizes farmers and ranchers for their ongoing stewardship activities on working agricultural lands," said Conner. "Natural resource conservation efforts by America's producers benefit everyone through healthier soil, cleaner air and water and improved fish and wildlife habitat.

“CSP successfully demonstrates a cooperative public-private conservation partnership."

Conner made the announcement in Alaska prior to holding the tenth in a series of USDA Farm Bill Forums that are currently being held across the country by Agriculture Secretary Mike Johanns, Conner and other USDA officials.

The sign-up period will take place early in fiscal year 2006. These watersheds represent more than 120,000 of the nation's potentially eligible farms and ranches, covering more than 46 million acres that are evenly split between cropland and grazing land.

USDA's Natural Resources Conservation Service held the first CSP sign-up in 2004. Today's announcement brings the number of watersheds enrolled to 330 across the nation, covering 250 million acres that have been eligible for the program.

The 2006 CSP will include a renewable energy component. Eligible producers will receive compensation for converting to renewable energy fuels such as bio-diesel and ethanol, for recycling 100 percent of on-farm lubricants, and for implementing energy production, including wind, solar, geothermal and methane production.

A sign-up announcement will be published that will detail specific program requirements in the watersheds. The program will be offered each year on a rotational basis in as many watersheds as funding allows.

Additional information on CSP, including a map of the fiscal year 2006 watersheds and eligibility requirements, is on the Web at http://www.nrcs.usda.gov/programs/csp.

e-mail:flaws@primediabusiness.com

U.S. rice producers may not share in increased Cuban imports

The Cuban government’s food buying agency, ALIMPORT, could import up to 1 million metric tons of rice annually by the end of the decade. But U.S. rice producers may not participate in the increase from current levels of 712,000 metric tons.

Cuban President Fidel Castro announced during a meeting with USA Rice Federation leaders in his offices in Havana Aug. 25 that Cuba would buy 100,000 metric tons of U.S. paddy rice and 30,000 metric tons of U.S. milled rice for delivery between September and January of 2006.

Castro and Pedro Alvarez, chairman and CEO of ALIMPORT (the Empresa Cubana Importadora de Alimentos), said the Cuban people prefer American rice to that of other countries. But new restrictions on shipments of rice and other products are souring the Cuban government on U.S. rice.

“Cuba is being deprived of rice that is very much liked by the Cuban people,” said Alvarez, speaking at the First Cuba-USA Rice Federation Rice Conference at the Hotel Nacional in Havana prior to the meeting with Castro. “We have to wonder why if there are excess supplies of rice in the United States there are restrictions on the sale of rice to Cuba.”

Alvarez thanked leaders of the Rice Federation for their efforts to remove the recent trade restrictions but said more needs to be done to allow trade and travelers to flow freely between the two countries.

Cuban officials were obviously annoyed at new Treasury Department regulations aimed at restricting food shipments to the island. Last December, the Treasury Department’s Office of Foreign Assets Control (OFAC) issued new rules requiring the Cuban government to pay for such shipments before they leave U.S. ports instead of on delivery.

U.S. rice sales to Cuba were down nearly 50 percent by volume and 62 percent by value for the January-May 2005 period, primarily due to the new restrictions, according to USA Rice Federation officials.

The House has passed legislation introduced by Rep. Jo Ann Emerson, R-Mo., which would require the Treasury Department to stop enforcing the OFAC rules for one year. Similar legislation has passed the Senate Treasury Appropriations Subcommittee and Senate Appropriations Committee and is awaiting a floor vote.

Lee Adams, chairman of the USA Rice Federation, told Alvarez that USA Rice will continue to do all it can to try to ease the restrictions and “normalize” trade relations between the two countries.

“We are active in Cuba in promoting U.S. rice, and we are equally active in the United States in seeking ways to end the economic sanctions against Cuba,” said Adams, president of American Rice Inc., in Houston. “We are highly committed to normalizing relations and are working publicly and behind the scenes to make this happen.”

The new purchases announced by Castro on the night of Aug. 25 will bring 2005 U.S. rice shipments to Cuba above last year’s 177,000 metric tons. U.S. rice mills and merchants had previously shipped 90,000 metric tons to Cuba.

Alvarez said Cuba could easily increase its imports of U.S. rice even if it retains its other foreign suppliers such as China and Vietnam. “U.S. rice producers and the rice industry are very efficient and have high quality rice,” he said. “And those producers are linked to Cuba geographically allowing shipments to be made in a matter of days rather than months.”

While Cuba wants to buy U.S. rice, “we have had to divert $200 million to other sources of rice or other crops because OFAC’s new restrictions on shipments from Cuba,” he said. “These new restrictions have made imports from the United States highly unreliable and those shipments have dropped 50 percent in recent months.”

The ALIMPORT chairman was referring to shipments that were en route from the United States last December when the Treasury Department’s Office of Foreign Assets Control issued its new regulations.

“Cuba turned to other markets to make up for those losses,” he said. “But we favor American rice in Cuba, and we want to buy more.”

In an interview, Alvarez said Cuba could eventually import up to 1 million metric tons of rice annually as part of a plan to improve the diets of the Cuban people.

During a five-and-one-half hour meeting in the Cuban president’s offices, Castro told the USA Rice Federation leaders that he plans to provide Cubans with one more kilogram (2.2 pounds) of rice per month by December at subsidized prices.

According to USA Rice Federation estimates, Cuba’s 11.2 million people consume 128 pounds of rice per capita compared to 26 pounds per capita in the United States. Most of the rice is distributed through the “bodega” or ration system and through government-controlled supermarkets.

During their meeting, Castro told USA Rice members that the Cuban government is taking a number of energy conservation measures, including distributing electric rice cookers and other appliances to 2 million Cubans. “This is so we can buy more rice from you.”

But Cuban officials also took numerous opportunities to express their displeasure with ongoing U.S. government efforts to strengthen the 43-year-old embargo against Castro’s government.

“We don’t burn any flags,” said Castro, asking why the United States isn’t willing to relax the embargo and allow free trade and free travel between the countries. (The USA Rice Federation delegation had to apply for a commercial license from the U.S. government for members to legally travel to Cuba.

“What is the fear of 2 to 3 million Americans traveling to Cuba and getting to know us?” asked Alvarez during the interview. “This appears to be an anti-constitutional restriction on travel for Americans.”

Prior to Castro taking power in Cuba in 1959, Cuba was the No. 1 market for U.S. rice. Since Congress passed the Trade Sanctions Reform and Export Enhancement Act of 2000, which allowed U.S. producers to resume food exports to Cuba, the latter has become the fourth biggest market for U.S. rice.

“We know the restrictions are aimed at us, but it’s the U.S. rice producer who is harmed the most by these restrictions,” said Alvarez.

e-mail: flaws@primediabusiness.com

USDA changes sugar program changes in Katrina aftermath

Anticipating widespread destruction in Louisiana’s sugarcane fields in the wake of Hurricane Katrina, USDA announced further changes to the FY 2005 sugar program that it modified only two weeks ago.

Agriculture Department spokesmen said USDA is increasing the FY 2005 Overall Allotment Quantity (OAQ), which is the quantity of domestic sugar that may enter the market. It also announced early entry of the FY 2006 refined sugar tariff-rate quota, beginning Sept. 8, 2005.

The early entry of the FY 2006 refined sugar tariff-rate quota does not include specialty sugar, for which the previously announced dates of opening remain unchanged. This announcement follows the Aug. 19 sugar program actions intended to increase domestic supply.

Katrina struck land east of the primary sugarcane area of Louisiana, but the Category 3 hurricane was still expected to cause widespread damage to sugarcane fields, which were about two months from harvest.

The hurricane was the latest in a series of events that has severely tightened the sugar market and threatened the domestic production of sugar containing foods. The sugar market has progressively tightened across FY 2005 due to unexpected strong demand, reduced cane sugar production caused by previous hurricanes and expected weather-reduced September 2005 beet sugar production in the upper Midwest.

The actions taken Aug. 30 are intended to boost refined sugar quantities immediately available to ameliorate already-tight domestic market conditions, exacerbated by the forced closure of two major sugar refineries by the hurricane. The refineries in the New Orleans area produce about 5,500 tons of sugar daily.

USDA is committed to provide an adequate supply of sugar to meet domestic needs, within the bounds of the current sugar program, Department officials said.

An increase in the OAQ of 225,000 short tons, raw value (STRV) is expected to result in immediate availability of some beet sugar "blocked stocks." Fifty four percent of the OAQ increase is assigned to the beet sector as required by statute.

It is also recognized that not all entities receiving allocations will be able to supply sugar this month because of the location of current inventories and the transportation logistics of moving refined sugar. As a result, USDA surveyed all entities that have been assigned a marketing allotment to determine the amount of refined sugar that actually can be made available to the market in the remainder of FY 2005. Accounting for this "slippage," the 122,288 STRV allocation is estimated to result in some 71,000 STRV actually entering the market.

The beet sugar allotment is assigned to sugar beet processors. As in the Aug. 19 announcement, the Commodity Credit Corporation (CCC) reassigned allotment from companies that were not expected to fulfill their allocation to companies that have a greater capacity to do so.

No cane sugar blocked stocks exist, and that sector's portion (46 percent) of the allocation must be reassigned to the CCC. Since CCC also has no sugar, the allotment is reassigned to imports, notably to the refined sugar TRQ allocation and to over-quota (tier II) sugar entering from Mexico.

The Aug. 12, 2005, World Agricultural Estimates of Supply and Demand report, estimated FY 2005 Mexican tier II imports at 110,000 STRV. Assigning this shortfall to raw sugar exporters would not help alleviate the acute shortage in refined sugar. Refineries already are operating at near capacity and few supplying countries are able to land raw sugar before Sept. 30, the end of the marketing year, even if refinery capacity were available.

Allowing early entry for the refined sugar FY 2006 minimum TRQ is expected to result in an additional 22,000 STRV available at once to the market. Most is already in the United States in bonded warehouse facilities or nearby in Canada.

The release of the blocked beet stocks plus early entry of refined sugar thus could result in more than 93,000 tons more sugar in the market in September. This amount is adjudged to be well in excess of the reduced supply resulting from the production disruption caused by Hurricane Katrina.

The Department announced on Aug. 12 details of the sugar program for FY 2006 beginning Oct. 1. Sugar and sweetener market conditions are closely monitored continuously and adjustments made when warranted.

e-mail: flaws@primediabusiness.com

Agribusiness: Beltwide Cotton Genetics offers plot tours

Mid-South cotton producers, consultants and seed dealers can walk plots of Bollgard II/Roundup Ready Flex in September when Beltwide Cotton Genetics, LLC will conduct a series of pre-harvest plot tours. State cotton specialists and other university personnel will speak during the two-hour tours, and CCA’s and CEU’s (soil and water management) can be earned.

The tours’ times and locations follow:

Sept. 15, Northeast Research & Extension Center, Verona, MS from 7:30-9:30 AM.

Sept. 19, Balmoral Farm Partnership, Newellton, LA from 4:00-6:00 PM

Sept. 20, South East Research Station, Rowher, AR from 5:00-7:00 PM

Sept. 21, Judd Hill Plantation, Trumann, AR from 7:30-9:30 AM

Sept. 22, West TN Experiment Station, Jackson, TN from 7:30-9-30 AM

Sept. 22, Delta Center, Portageville, MO from 5:00-7:00 PM

Sept. 26, West TN Agricultural Museum, Milan, TN from 5:00-7:00 PM

Sept. 27, TN Valley Research & Extension Center, Belle Mina, AL from 7:30-9:30 AM

Sept. 27, Agricenter, Cordova, TN from 5:00-7:00 PM

For tour location maps and more information, contact Beltwide Cotton Genetics sales reps John Bradley at 901.834.1034 or Andy Morris at 901.674.0768, or go to www.beltwidecottongenetics.com e-mail:flaws@primediabusiness.com

Nothing Good Expected to Come From Katrina, Specialists Give Preliminary Assessment of Hurricane

"I don't see anything good coming from it.•bCrLf

That statement pretty much summed up the preliminary assessments of crop specialists in Mississippi, speaking Monday on cell phones as hurricane Katrina moved up the continent after slamming the coasts of Alabama, Louisiana and Mississippi, killing more than 50 people and leaving destruction in its wake.

Corn and rice, still in the field, were expected to take the hardest hits, specialists said.

Tom Barber, cotton specialist at the Mississippi State University Cooperative Extension, says the hurricane hammered growers in southern Mississippi, putting fields under water. If there's a silver lining to the destruction of the hurricane, it could be that farther north in the state, the cotton was not open. "We haven't defoliated yet,•bCrLf Barber says. "We'll lose some to rot and have lots of plants on the ground, but • it could have been a lot worse if we had had open cotton in the Delta.•bCrLf

Alan Blaine, Mississippi State University Extension soybean specialist, said, "It's not going to be good. If we're looking at downed crops, we can get them up, but if it stays wet, we have rotten crops. A lot of this crop is ready to gather, and then we're going to get into fields that are extremely wet and cause problems that we'll have to fix next year. I don't see anything good happening from it.•bCrLf

While Steve Martin, Mississippi State University Extension ag economist, says it's too early to tell the numbers from the damage, he says the main concern is rice. Martin says the cost to harvest rice could increase three-fold.

"Rice is going to go down,•bCrLf Martin says. "Very little has been harvested and the wind and rain will put it on the ground. We'll probably have some rice that rots. The second concern is corn. Wind will be a problem on corn. It's going to affect soybeans and corn and string out cotton.

"If we get hit bad we'll know on Tuesday ,•bCrLf Martin says. "If we didn't get hit hard in the Delta, we won't know until harvest.•bCrLf

At the point, Martin was speaking late Monday afternoon, it had just begun to rain in Stoneville, Miss., at the Delta Research and ExtensionCenter. "Researchers have been checking their plots today.•bCrLf

USDA Wants Private Companies to Store National Animal Identification System Data

Agriculture Secretary Mike Johanns announced Tuesday that the driving principal behind USDA's new National Animal Identification System (NAIS) will enable private companies to store data on animal movement and will provide vital and timely information to officials investigating any potential future irregularities in the food supply.

"After hearing the confidentiality concerns of producers, we envision a system that allows these databases to feed a single, privately held animal-tracking repository that we can access," he says.

There are a number of concepts being discussed in the private sector about how this should work and how it should be funded, Johanns told reporters Tuesday. "USDA is not favoring any one of them over the other. USDA will be scheduling a stakeholder meeting this fall to clarify expectations for the private tracking system and discuss user requirements in system specifications," he says. 

Johanns says in the meantime, USDA will be finalizing and releasing the program standards that were presented in the thinking paper. "Beyond that, we will be looking to industry to come together to drive this leg of the journey," Johanns says.

USDA's guiding principles for NAIS include mandates to ensure flexibility and adaptability while avoiding undue burden on producers and undue government intrusion. The four guiding principles for the NAIS are:

  • The system must be able to allow tracking of animals from point of origin to processing within 48 hours without unnecessary burden to producers and other stakeholders.
  • The system's architecture must be developed without unduly increasing the size and role of government.
  • The system must be flexible enough to utilize existing technologies and incorporate new identification technologies as they are developed.
  • Animal movement data should be maintained in a private system that can be readily accessed when necessary by state and federal animal health authorities.

Mixed feelings on privatization

National Farmers Union President Dave Frederickson says his membership has repeatedly called for the database to be maintained within the public agency domain. "Private control of producer information creates an inherent risk to producers that private and/or proprietary information could be divulged in a manner that could be detrimental to producers, firms and the marketplace," he says.

Both the National Cattlemen's Beef Producers and National Pork Producers Council voiced strong support for the secretary's announcement. President Elect Joy Philippi says the swine industry will use the existing mandatory Pseudorabies Eradication program standards as the model for a national swine identification system. "This will ensure that the swine industry is able to build on a proven and effective program that has been developed, implemented and accepted by pork producers, and federal and state partners and one in which costs have already been built into the pork production system," Philippi says. 

Mike John, NCBA president-elect and chairman of NCBA's Animal Identification Commission, says, "NCBA believes protection of producers' rights and confidentiality is a top priority, and the industry is best equipped to do this. Under this private-sector system, animal health authorities will be able to receive information for appropriate animal health concerns, but the data will remain the property of the individual and managed by a non-profit multi-species consortium to maintain confidentiality. 

Biotech Wheat Would Lower Wheat Income According to WORC Published Report

Introduction of genetically modified wheat would lower income for wheat growers and the wheat industry, according to a report released Tuesday.

Published by WORC (Western Organization of Resource Councils), Harvest at Risk — Impacts of Roundup Ready Wheat in the Northern Great Plains examines the likely consequences of Roundup Ready wheat adoption and projects economic impacts on wheat growers and the wheat industry.

"This is a technology for which there is really no compelling need," says Dr. Charles Benbrook, author of the study. "Existing weed management systems are stable, the price of weed management is not increasing, and farmers are managing resistance to currently used herbicides."

If Roundup Ready wheat is introduced, increased seed and herbicide costs and reduced wheat prices would outweigh the operating cost savings from Roundup Ready wheat's simplified weed management by as much as $37 per acre, the report concludes. Farmers who do not plant Roundup Ready wheat would also face increased costs and lower income, ranging from $5.60 to $18 per acre.

"Overall, the wheat industry could lose $94 million to $272 million," Benbrook says.

The report projects costs per bushel and per acre for farmers adopting Roundup Ready wheat and for non-adopters under a best-case scenario and a worst-case scenario. In either case, farmers would lose money from introduction and use of Roundup Ready wheat.

The report finds mostly negative affects from nine factors affecting the costs and benefits of growing Roundup Ready wheat: emergence of resistance, gene flow, disease pressure and related problems, impacts on seed plus herbicide expenditures, market rejection, dockage, yields, grain quality, and wheat prices.

Harvest at Risk is the latest WORC report analyzing the probable effects of commercial introduction of Roundup Ready, genetically modified wheat. An earlier report by WORC found that introduction of genetically modified wheat in the U.S. risks the loss of one-fourth to one-half of U.S. hard red spring and durum wheat export markets and up to a one-third drop in price.

WORC commissioned the study to answer questions about gene flow and contamination, weed resistance, disease problems and cost and returns, says Dena Hoff, WORC Chair, farmer, and member of the Northern Plains Resource Council.

"There are other unanswered questions about the impacts on soil and water and human and animal health that should be studied," Hoff says. "We're going to have to work together so that we don't put our harvest at risk."

Monsanto indefinitely postponed development of Roundup Ready wheat in May 2004.