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Organic food producers lose ground to imports; other news

(Friday, Oct. 14, 2005 -- CropChoice news) --

1. Multinationals gain at expense of farmers in developed world
2. Portmanís WTO commitment to slash safety net for farm families is typical of Bush administrationís record on farm policy
3. Fair trade groups ask Congress to oppose Bush trade proposal
4. Portman: EU plan not enough
5. Wolfowitz calls on Japan to reduce tariffs
6. Chambliss warns against cuts
7. Mike Johanns seeks fundamental changes in agricultural policy
8. Farm groups reaction mixed
9. Organic food producers lose ground to imports
10. Producers oppose wheat checkoff
11. Bunge buys Russian elevators
12. Windmills could bring good chunk of change

1. Multinationals gain at expense of farmers in developed world

ASHOK B SHARMA
Posted online: Monday, October 10, 2005 at 0105 hours IST
http://www.financialexpress.com/fe_full_story.php?content_id=105080

The crisis in the farm sector is global in nature. Whether it is in developed or developing countries, the issue is of farmers' net incomes which are generally below sustainable levels.

The reasons for such a state of affairs are both internal policy decisions as well the WTO regime, which is riddled with unfair trade practices. That the farmers of the developing world are suffering is commonly known. But it is sometimes difficult for the common man to believe that the farmers in the developed world are also suffering even though the farm sector in these countries is highly subsidised and protected.

There is no doubt that the heavy farm subsidies and protected markets of the developed world have depressed global prices, adversely affecting farmers in the Third World. It has also resulted in dumping of cheap subsided goods in the markets of developing countries. Apart from this, there is another cause which has denied the farmers their due share. It is the price manipulations by the corporate houses engaged in both supply of inputs to farmers and procuring their produce. The farmers in the developed world have fallen prey to this situation.

A study prepared by Agriculture and Agri-Food Canada (AAFC) and GPC Public Affair titled 'Farm Income Consultations: Final Report', apart from listing various causes of distress to farmers has admitted such price manipulation practices. The reports said: "Consolidation and vertical integration among processors and retailers is significant, leaving only a few outlets for certain commodities in some regions of the country. This has eroded producer bargaining power to such an extent that many can no longer set prices that afford them a profit. Large Canadian processors and retailers, as well as dominant multi-nationals, were cited as problematic."

There are also similar studies on European and US farmers that have recognised the same problem. The sorrowful fate of African cocoa growers is due to the multinationals in the trade. There is a need to learn lessons from such studies. India and other developing countries, which are eager to open up their farm sector for participation by corporate houses and big retail chains, should tread cautiously on this issue.

The consolidation of multinationals and retail chains has taken place over two decades in the developed world. Canada's National Farmers Union (NFU), a representative body of family farms, in its report submitted to the federal government pointed out that from 1985 through the 1990s the realised net income from markets (Market RNI) by farmers fell to near zero. Recently, Market RNI has fallen deep into negative territory, oscillating between negative $10,000 and negative $20,000 per farm per year. Market RNI in dollar terms is adjusted for inflation. By subtracting government payments, Market RNI reveals the full extent of declines in net returns to farmers.

The net returns to farmers in Canada have declined to negative value despite impressive economic growth, burgeoning trade, stable employment, tremendous stock market gains and record crop production in the past 20 years. Ontario farmers will receive about $2.50 per bushel for this year's corn crop. Adjusted for inflation, this is the lowest price in the past 100 years. Worst still, this year's price is half the price in the worst years of the Great Depression!

The NFU study clearly shows that corporate houses engaged in agri-business stand to gain at the expense of farmers. The processors and retailers procure produces from farmers at cheap prices and sell their products at higher prices to reap huge profits. Even retailers' packaging costs are paid by farmers. The input supplying companies charge high prices from farmers. The ultimate gainers are the input suppliers, processors and retailers.

Monsanto, Cargill, Weston, ADM and Tyson largely control the Canadian agri-business. Explaining the cause of farmers' distress the NFU report said: "To understand the farm crisis, it is important to remember that the family farm is embedded at the centre of an agri-food chain that reaches from energy, fertiliser, seed and chemical companies at one end, to packers, processors, retailers and restaurants at the other. In addition, it is important to realise that every link, with the exception of the farm link, is dominated by a tiny number of huge transnational corporations."

The consolidation of multinationals in agri-business, resulting in lower net incomes to farmers over the past 20 years in the developed world, was rightly predicted by the noted US economist, Richard Levins. He once said: "The shortest possible economic history of agriculture during the twentieth century would be this: non-farmers learning how to make money from farming."

The lessens from the role of multinationals and retail chains in the farm sector in the developed world is before us. Those who advocate the cause for greater corporate involvement in Indian agriculture citing possible benefits to farms should do a better rethinking on this issue.

2. Portmanís WTO commitment to slash safety net for farm families is typical of Bush administrationís record on farm policy

An editorial comment by Larry Mitchell,
Chief Executive, American Corn Growers Association
Contact: Larry Mitchell (202) 835-0330
http://www.acga.org

WASHINGTON, D.C., Oct. 12, 2005 ≠ The recently announced trade plan of U.S. Trade Representative Rob Portman to the World Trade Organization (WTO) is yet another in a series of policy decisions by the present administration to unravel the safety net for the nationís farm families. The administrationís decision to slash our essential domestic farm program benefits by 50 to 60 percent is ill advised, irresponsible and ill timed .

The Ambassadorís proposal comes at a time when crop prices are at record lows, energy prices are at record highs and rural Americaís economy and people are in a state of severe depression. Today it takes three times as many bushels of corn to buy a barrel of oil than it did just one year ago. That is an inflation rate of 200 percent! While it is doubtful the President has near enough of his "political capital" left to get this plan through Congress, let alone accepted by the European Union, it is indicative of how his administration treats rural Americans.

Portmanís decision can now be added to a growing list of the Presidentís policy decisions that would or have undermined U.S. domestic farm policy. A plan put forward in the President's FY 2006 budget request last winter was to pay Loan Deficiency Payments (LDPs) on only 85 percent of the "fixed payment" yield. The fixed payment yield for corn is about 100 bushels per acre. Last year's LDP yield was over 160. That is about a 50-percent cut. Very few agricultural journalists picked up on the proposal, but thankfully Congress turned a "thumbs down" on the plan.

After signing the 2002 farm bill, this administration has fought fiercely to avoid enforcing several of the provisions of that bill, including mandatory Country of Origin Labeling (COOL) for food products sold in the U.S.

The current administration has also undermined conservation programs like the Conservation Security Program (CSP), another essential component of the 2002 farm bill designed to reward good land stewardship in all areas of the country. They have also chosen not to advance the expansion of the Conservation Reserve Program (CRP) as legislated and enacted in the 2002 farm bill.

But, as stated above, the most troubling part of the Portman announcement is the timing as it relates to the confusion and despair in rural America. Many farm families, during this trying time, are blaming themselves for their failures. I can only reassure them that it is not their fault. It is the fault of failed farm programs, failed energy policy, and failed promises from our government.

Global markets, important as they are to the U.S. farm economy, have not been the driving force for our agriculture economy for over twenty years. In fact, exports have been the driving force in the U.S. agriculture economy only three times in the last century ≠ those periods being during and immediately after World War I and World War II and when the Soviets required huge grain imports in the early 1970ís. Our market growth has been in domestic sales and use. To the economic peril of the U.S. farm economy, our policy makers have mistakenly spent the last three decades insisting that the boom times of 1973 and 1974 were the normal and preferred course for the U.S. farm economy and that all we had to do to regain those glory days was to become "more competitive in the global market."

But there is a plan that can reduce agricultural subsidies to the extent promised by Ambassador Portman and save rural America at the same time. Such a plan will require a rethinking of U.S. agriculture policy and will require price supports in place of cash subsidies, a viable grain reserve and a rebalancing of our crop planting choices away from those commodities now in surplus and toward energy producing biomass production. Until we can enact such a new direction in farm policy, we must preserve the system we have. We therefore vehemently oppose the Portman proposal.

-30-

3. Fair Trade Groups Ask Congress to Oppose Bush Trade Proposal
Proposal Would Continue Market Deregulation, Unsustainable Overproduction and Dumping of Agricultural Commodities

Press Release
October 12, 2005
Contacts: Ben Lilliston, Institute for Agriculture and Trade Policy, (612) 870-3416
Kathy Ozer, National Family Farm Coalition, (202) 543-5675
Karen Hansen-Kuhn, ActionAid International USA, (202) 835-1240, ext. 6
David Waskow, Friends of the Earth - United States, (202) 222-0716

Washington, DC - Family farm, religious, conservation and other fair trade organizations sent a letter to key members of Congress calling on them to resist a specific Bush Administration proposal that would change rules at the World Trade Organization (WTO) to shift U.S. farm payments from one category to another. The letter charged that the proposal would do nothing to curtail costly overproduction and dumping of agricultural commodities onto world markets below the cost of production, and would perpetuate the current agricultural market deregulation policy that hurts family farmers in the U.S. and around the world.

The groups' letter comes on the heels of an announcement by U.S. Trade Representative Robert Portman that the Bush Administration would support a 60 percent cut in trade distorting farm payments in exchange for concessions by other countries.

Next week, the WTO will hold its final General Council meeting in Geneva before its December Ministerial in Hong Kong. Negotiations are currently taking place under a "Framework Agreement" reached last year. The Framework includes a USTR proposal to alter the WTO Agreement on Agriculture to allow U.S. counter-cyclical farm payments into what is known as the Blue Box. The Blue Box was originally established to allow less trade distorting farm programs that limit production, but counter-cyclical payments have nothing to do with limiting production. Last year, a WTO dispute panel ruled that counter-cyclical payments must be classified in the Aggregate Measure of Support under the Amber Box, which is capped.

"The USTR's proposal would perpetuate the current U.S. agricultural trade policy that has pushed farmers off the land here in the U.S. and around the world," said Dennis Olson of the Institute for Agriculture and Trade Policy. "This approach has become increasingly indefensible both here and abroad. It's time for real reform that would sensibly regulate agricultural markets and curtail costly and unsustainable overproduction and dumping."

George Naylor, Iowa farmer and President of the National Family Farm Coalition, said that, "without a supply management system and fair prices, farmers will inevitably expand their production and depress world market prices whether government payments are cut or re-labeled green or blue. The Portman agenda simply means more cheap commodities and fewer family farmers in the U.S. and around the world."

Karen Hansen-Kuhn of ActionAid International USA stated that, "Developing countries are right to be wary of opening their economies to cheap U.S. food imports that could flood local markets, drive farmers out of business and increase poverty. These proposals could have very real effects on people's lives and livelihoods, both in the United States and in developing countries. I doubt very much that developing country governments will be fooled by this so-called solution to the problem of U.S. subsidies. They will continue to insist on their rights to development and food sovereignty and to a real solution to the global commodity price crisis."

David Waskow of Friends of the Earth-United States said, "For too long, we've seen the negative environmental impacts of agricultural overproduction in the U.S. and the environmental harm caused in developing countries when dumping has pushed small farmers from their land. Unfortunately, the USTR Blue Box proposal will make things worse. It's a double whammy that shields the true nature of U.S. subsidies, while simultaneously sidelining environmentally friendly agricultural policies. USTR's Blue Box approach would also undercut the use of production limiting programs that would benefit the environment and help reduce overproduction and dumping."

Maria Riley of Center for Concern said, "The famous `boxes' in the Agreement on Agriculture, developed by the U.S. and EU as a protective framework for their domestic subsidies, mitigate against any meaningful reduction in subsidies. New mechanisms that do not jeopardize appropriate support for small farmers in the South and family farmers in the North are needed to address the subsidy problems."

As part of a July 2004 "Framework Agreement," the Bush Administration agreed to a 20 percent reduction in WTO limits to farm payments. However, the groups' letter cited several studies that have shown that expanding the Blue Box to include counter-cyclical payments could actually increase the United States' domestic subsidy payments above current levels.

"Through this revised definition of the Blue Box, the USTR seeks simply to shift counter-cyclical payments from Amber to Blue Box to continue current U.S. agricultural trade policy, which has failed either to reduce costly overproduction or to curtail dumping," the letter said. "As we head into the 2007 farm bill debate, we urge Congress to seek solutions to the real problems with the United States' agricultural trade policy, and not accept an approach that simply moves payments from one box to another in an effort to maintain business as usual," the letter concluded.

The letter with all signatories can be found at: http://www.tradeobservatory.org

4. Portman: EU Plan Not Enough
Argument Centers on Special Protection for Sensitive Products

Associated Press, 10/12

GENEVA (AP) -- A European Union proposal to allow foreign producers greater access to its farm markets, offering to cut the number of sensitive products that have higher import tariffs found opposition from the U.S. Wednesday.

The proposal "doesn't come close meeting the expectations we all have on market access," said U.S. Trade Representative Rob Portman.

Brussels is offering to reduce the number of products where it considers its own farmers most vulnerable to foreign competition -- such as beef and poultry -- from 10 percent of its total to 8 percent, trade officials said.

But the E.U. offer stopped far short of the percentage that Washington has demanded. Under the U.S. market access proposal, the E.U. would only be allowed to maintain special protection for some 20 sensitive products.

Cutting the number of sensitive products by two percentage points would equate to reducing total tariffs by 24.5 percent, Portman said.

"That's not adequate. I don't think anyone considers that adequate," he added.

Trade ministers from a powerful group of developing countries were also trying to work out a counterproposal asking for greater reductions in both U.S. and E.U. farm subsidies.

Ministers from the so-called G-20 group, which is led by Brazil and India, had previously given a cautious welcome to new offers from Washington and Brussels made this week, but said they did not go far enough in trimming actual payments, said Brazil's Foreign Minister Celso Amorim.

5. World Bank Chief on Market Access
-Wolfowitz Calls on Japan to Reduce Tariffs

Associated Press, 10/12 10:47

TOKYO (AP) - Japan and other rich countries must allow developing countries greater access to their agricultural markets, World Bank President Paul Wolfowitz said Wednesday, a day after Tokyo said it could not accept a new U.S. proposal that calls on the EU and Japan to reduce tariffs by 80 percent.

In a speech at a Tokyo university, Wolfowitz called the U.S. proposal - which says it will cut tariffs by 60 percent - an important step forward, and said developing countries needed better access to agricultural markets.

"The rich countries need to take the lead in opening their markets, especially in agriculture. That's where poor countries are losing important trade opportunities because of border protection and costly subsidies," Wolfowitz said.

"Japan is a major market for developing countries. It must take the lead in reducing subsidies and opening its markets," he added.

The World Trade Organization's 148 members are scheduled to meet in Hong Kong in mid-December to agree on an outline for a global trade deal as part of the Doha round of negotiations, named for the Qatari capital where it was launched in 2001. But progress has stalled, largely because of the thorny issue of farm subsidies.

Japan's Agriculture Minister Mineichi Iwanaga on Tuesday has said Tokyo could not accept the U.S. proposal, or any restrictions on its tariffs.

The EU has offered to reduce the number of products where it considers its own farmers most vulnerable to foreign competition - such as beef and poultry - from 10 percent of its total to 8 percent. But the offer stops far short of the 1 percent that Washington has demanded under its new proposal.

Wolfowitz is in Tokyo as part of his two-week trip to Japan, China, Russia, Sweden and Finland - his first visit to those countries since taking office as head of the 184-nation bank whose stated mission is to fight poverty and promote economic development.

During his trip, Wolfowitz will also take part in a meeting of finance ministers and central bank governors of the Group of 20 industrialized and emerging countries that begins Saturday in Beijing.

6. Chambliss Warns Against Cuts
-Senator OK with Reducing Trade Distortions of Overall Spending the Same

Dow Jones, 10/11 15:45

WASHINGTON (Dow Jones) -- The chairman of the U.S. Senate Agriculture Committee urged the Bush Administration not agree to cuts in overall farm subsidies during World Trade Organization talks in Geneva.

Sen. Saxby Chambliss, R-Ga., said in a letter: "I firmly believe the United States should commit to reduce trade-distorting domestic support in exchange for other forms, but it should not reduce overall farm program expenditures in the negotiations."

The U.S. unveiled a proposal in Geneva Monday to cut its "trade-distorting" farm subsidies by 53 percent in return for similar cuts and tariff reductions by WTO members.

Chambliss' letter, dated Oct. 9, was addressed to U.S. Department of Agriculture Secretary Mike Johanns, who is now in Geneva for trade negotiations.

"Let me be clear, the Congress will be writing the next farm bill in 2007, and I am deeply concerned the (Bush) Administration is using the current negotiations to reshape farm policy without the full input of Congress and grassroots support," Chambliss said. "I am looking forward to a successful conclusion to the negotiations, but not at the risk of a bad agreement that lacks the support of farmers and ranchers in the United States."

Johanns, who spoke to reporters Tuesday, refused to comment on the Chambliss request because he said he had not yet seen it, but he did promise that any deals struck would not hamper Congress in crafting the next Farm Bill, a blue print for U.S. farm programs.

Chambliss also criticized the U.S. trade proposal for pushing reforms too quickly. The plan calls for reductions in domestic subsidies and tariffs in five years, but the senator said at least 10 would be needed.

"Any significant changes in the structure of U.S. domestic support programs will cause some economic hardship in rural America," the senator said. "The United States can commit to substantial down payments in the first years of an agreement, but Congress must have adequate time extending over a period of time ... to implement larger and deeper reforms in domestic support."

7. Mike Johanns seeks fundamental changes in agricultural policy

(Bakingbusiness.com, October 11, 2005)
by Josh Sosland

WASHINGTON -- Current farm programs have not effectively created a safety net for growers, are imperiled by world trade rules and should be fundamentally changed, said Mike Johanns, U.S. Secretary of Agriculture.

After conducting farm bill forums around the nation ahead of the 2007 Farm Bill, Mr. Johanns shared his strong impressions of the future of farm policy in a presentation at the Commodity Club luncheon at the Hotel Washington in Washington.

Mr. Johanns said his thoughts about the future of farm programs were driven in part by a recent World Trade Organization decision against a U.S. cotton program, thoughts he said are compounded by potential or actual challenges to rice and corn programs.

"We have a choice," Mr. Johanns said. "We can sit back and watch as our farm policy is disassembled piece by piece, or we can begin a discussion about how to craft farm policy that provides a low-risk, meaningful safety net for our farmers and ranchers."

In conducting the forums, Mr. Johanns said three major concerns were voiced about current farm programs:
1. Farm payments being capitalized into increased land values;
2 Farm program being directed toward one third of all producers;
3 The greatest benefits going to the largest farms.

"Soon, we must decide as a nation whether to embrace a new age of agriculture or continue relying on a policy structure that was conceived 75 years ago, when the face of agriculture was very different from what it is today," Mr. Johanns said.

Elaborating on the concerns about farm programs, Mr. Johanns noted that less than 8% of farms receive 50% of all government payments. Additionally, discontent has been voiced over the direction of support payments to certain crops and not to others.

"Program crops represent a quarter of production value, yet they receive virtually all the funding," Mr. Johanns said. "Put another way, 92% of commodity program spending was paid on five crops -- corn, wheat, soybeans, cotton and rice. The farmers who raise other crops -- two thirds of all farmers -- received little support from current farm programs."

Despite this disparity, Mr. Johanns said growers who currently do not receive support payments are not requesting such payments.

"Instead, they are looking to the future and asking for more focus on research and promotion, increased sanitary and phytosanitary enforcement and access to new markets."

Demographic facts demand attention to building export demand for U.S. exports, Mr. Johanns said. He noted that 95% of the world's population lives outside of the United States and that U.S. agricultural productivity is far outpacing domestic consumption.

"We must use the W.T.O. (World Trade Organization) to force open markets for U.S. products," Mr. Johanns said. "Let me be clear that the W.T.O. will not write our next farm bill, but we must show leadership in the area of support program policy to gain market access in other countries.

"If we timidly take our seat at the world trade table with a farm program structure that is wed to the past, we can expect a future of playing defense to protect our share of trade and wondering which U.S. farm program will be challenged next.

"On the other hand, if we boldly take our seat at the world trade table, then we'll have the opportunity to control the future of our farm policy -- instead of having that future dictated to us.

"There is absolutely no doubt in my mind that we can show tremendous support of agriculture without trade-distorting subsidies. I am confident that America's farmers and ranchers can compete with any farmer or rancher in the world if given a fair opportunity."

Suggestions that fundamental change is needed often meet a response that growers' safety net must be preserved, Mr. Johanns said. But he challenged the effectiveness of the current safety net in view of the W.T.O. decision against the cotton program, the inability of young people to enter agriculture, government payments capitalizing into higher land values, large farmers getting most of the payments and two thirds of farmers receiving little protection from farm programs.

"A true safety net for all of agriculture is much more than subsidies," Mr. Johanns said. "It is good farm policy that opens real and substantial market access. A true safety net is also good tax policy, trade policy, sanitary and phytosanitary policies, and investment in new markets. I believe in providing a safety net for farmers and ranchers, but it must be inclusive, predictable, and beyond challenge.

"The easy choice would be to repackage current farm policy and convince ourselves that the old structure of payments based on production levels will somehow provide adequate support. We could choose to ignore the challenges to that old structure, but doing so would be the same as saying it's okay to jeopardize a quarter of our cash receipts and ignore the current program imbalances."

Mr. Johanns said he was not yet prepared to translate these principles into a specific farm program.

"I don't yet know how these ideas should come together to form future farm policy," he said. He invited Congress to work with him to "fashion a farm bill that demonstrates a true commitment to our farmers and ranchers."

8. Farm Groups Reaction Mixed
-U.S. Proposal Calls for 60 Percent Cut in Subsidies

By Todd Neeley DTN Staff Reporter, 10/10

OMAHA (DTN) -- Reaction was mixed Monday to a U.S. World Trade Organization proposal that calls for, among other things, a 60 percent reduction in U.S. farm subsidies in the first five years of the agreement.

American Farm Bureau Federation president Bob Stallman said the proposal was a good beginning toward increasing U.S. farmers' access to world markets.

"The American Farm Bureau Federation believes bold action is needed to provide commercially meaningful access to world markets for America's farmers and ranchers," Stallman said in a written statement.

He said the agricultural trade proposals put forward today will "significantly advance that position within the WTO agriculture negotiations."

While Stallman said AFBF supports the agreement, he cautioned in the statement that trade must be expanded for U.S. farmers for the proposal to work.

"It must be emphasized that real trade reform must include substantial, ambitious and quantifiable expansion in access to markets," he said. "We will do our share on domestic support but developed and developing countries must do their part in reforming and expanding market access opportunities."

In an interview with DTN while on a trade mission in Geneva, Switzerland, Stallman said although the proposed 60 percent cut in subsidies may seem high to some, what U.S. farmers could get in return should make up for the reductions.

"We think all of the ag subsidy cuts need to be made up through market access," Stallman said. "One of the things our negotiators proposed is a cut in higher tariffs. This is aggressive enough to create market access. When some countries are charging 500 to 700 percent tariffs, capping those at 75 percent makes a lot of sense."

He said although he has had little time to talk to foreign negotiators about the recent U.S. proposal, many will soon let U.S. representatives know where they stand.

"I would suspect the way negotiations work that many of these countries are trying to figure out how to respond," Stallman said. "The U.S. has been beat up on this for so long and now we've put together a proposal. As we say in Texas, it's time for them to fish or cut bait. If they're really ready to move forward on this, let's see it."

On the other end of the spectrum, American Corn Growers Association chief executive Larry Mitchell said the proposal would seriously hurt corn farmers who are already battling low commodity prices.

"It's devastating," he said. "I don't know where they're going with this. Our trade subsidies do not give incentives to produce more. If they really want to reduce government programs we need to establish forward pricing. The subsidies aren't the disease, the disease is the low prices."

During a press briefing today in Washington, D.C. a U.S. trade representative said those U.S. programs that would be under the microscope would include direct payments to farmers, the marketing loan program or loan deficiency program and the minimum price support for milk.

The proposal would put a $7.6 billion spending lid on such programs. The U.S. currently spends about $19.1 billion on subsidies to farmers, according to the trade representative.

Mitchell said the U.S. farm program could work at the $7.6 billion funding level, but only after the U.S. provides price supports through non-recourse loans, government purchase of surplus grains and if an expanded federal grain reserve is created.

The National Pork Producers Council also supports the proposal.

In a written statement NPPC president Don Buhl said the proposal would be good for farmers.

He said the U.S. pork industry would benefit from "a big market access package" that includes the removal of trade barriers across the world.

According to the statement, the U.S. pork industry in 2004 exported a record 1,023,413 metric tons of pork valued at $2.2 billion.

"The top seven export markets in 2004 were all markets in which pork exports soared because of recent trade agreements," the statement said. "The industry has enjoyed export increases of more than 337 percent in volume terms and more than 293 percent in value terms since the implementation of the North American Free Trade Act in 1994 and the 1995 Uruguay Round Agreement of the General Agreement on Tariffs and Trade, the precursor of WTO."

Sherman Reese, president of the National Association of Wheat Growers, said although his group had plenty of input on the drafting of the USTR proposal it wasn't exactly what he had expected.

"We saw a lot of the proposal (prior to release) and we were surprised," he said. "We were asking for 50 percent (reduction in subsidies). In the wheat industry we haven't had a chance to use counter cyclical payments and LDPs as extensively as other commodities, so it (subsidy cut) won't impact us as much. But it's disconcerting to have that kind of cut."

According to a joint written statement from the Wheat Export Trade Education Committee, NAWG and U.S. Wheat Associates, the groups said the proposal came at a tough time for farmers.

"This offer to remove such a large portion of support programs comes at a universally difficult time for American farmers and ranchers," the statement said. "It is difficult to envision giving up any programs when faced with yet unknown highs in fuel and other input costs and low market prices coupled with continued trade challenges from our trading partners."

Bill Bullard, chief executive officer for R-CALF USA, said his group supports many of the measures proposed, but with caution.

Because the cattle industry is the "most import-sensitive industry," he said, the U.S.-proposed tariff reduction of from 55 to 90 percent is important.

"We really need to be paying close attention," Bullard said. "This is a $48 billion industry and we should not act in haste. We need rules that do not disadvantage U.S. cattle producers."

He said the proposal is good because "it will provide greater market access to U.S. cattle."

On the flipside, Bullard said, it could also make it easier for foreign cattle to make inroads into the U.S. domestic market.

Todd Neeley can be reached at Todd.Neeley@dtn.com.

9. Organic food producers lose ground to imports
Market has been seen as a niche for small U.S. farms

PHILIP BRASHER
DesMoines Register
October 8, 2005

Advocates tout organic food as a salvation for small U.S. farms. But more and more, organic food isn't American at all. The apples included.

Companies are cutting costs by importing not only bananas and coffee but also all-American commodities like soybeans, fruits and vegetables, and now even beef. The imports also feed U.S. consumers' growing demand for organic products - sales are increasing 20 percent a year nationwide.

A major U.S. organic grain supplier, Clarkson Grain Co. of Cerro Gordo, Ill., has lost 25 percent of its soybean business during the past year because of surging imports from China and South America.

U.S. farmers "will lose their markets overwhelmingly if they don't meet this competition," said the grain company's president, Lynn Clarkson.

One of the most popular brands of organic soy milk, Silk, is now made in part with imported soybeans.

Organic Valley, a Wisconsin-based farmer cooperative, imports some of its beef from Australia.

Cascadian Farm, a major name in organic frozen produce that started out buying commodities in the Pacific Northwest, now buys many of its fruits and vegetables from overseas.

According to package labels, the broccoli is from Mexico, the asparagus from China, the green peas from New Zealand, and the cherries and raspberries from Chile. Even the California-style vegetable mix isn't entirely American; some of the veggies originate in China.

Trader Joe's, a fast-growing grocery chain that attracts upscale shoppers with moderately priced natural foods, also is going to China and South America for its produce.

Fresh organic produce, including Chilean apples and Mexican vegetables, also is being widely imported by U.S. stores when domestic product is out of season, according to the Organic Trade Association.

All of these imported foods carry the U.S. Agriculture Department's green-and-white seal that certifies that they were grown according to the USDA's organic standards, which bar the use of synthetic pesticides and fertilizer.

The foreign farms must be inspected by a USDA-approved certification agency.

This appetite for imports is not what many organic-food enthusiasts had in mind.

"This issue is going to become huge," said Ronnie Cummins of the Organic Consumers Association, which advocates buying from smaller-scale U.S. growers.

Consumers "don't realize that the USDA seal does not mean made in the USA," said Wende Elliott of Colo, Ia., who founded a cooperative of organic livestock producers.

Elliott's cooperative, Wholesome Harvest, sells meat to Sysco Food Services, Whole Foods Market, Hy-Vee and Dahl's, and competes with the foreign-grown products.

Buying imported food robs local communities of the environmental benefits of organic farming, she said. "It's great to clean up China and Argentina, but that doesn't help our local drinking water situation in Iowa," she said.

There are no reliable data on organic imports. The government does not keep separate numbers on organic and conventional food shipments.

However, a recent USDA study estimated that the United States imported as much as $1.5 billion in organic food in 2002, while exporting as little as $125 million worth of organic products.

U.S. growers face distinct disadvantages, according to the study. Growing crops without chemicals requires more workers to cultivate the crops, and cheap labor is plentiful in poorer countries. Canada has a shorter growing season, which means fewer weeds to pick. The European Union directly subsidizes farmers to grow organic crops.

The USDA has appointed 99 companies and government agencies to certify organic farms and processors. Forty-three of those certifiers are based overseas, and some U.S. agencies also handle foreign certifications.

Industry experts say it is difficult to get many U.S. growers to convert to organic farming, given the lack of subsidies or other financial incentives. Farms cannot sell their crops as organic until they have been free of prohibited chemicals for three years. For organic cattle producers, there also is the high cost of feed - organic grain can be up to three times the cost of conventional.

The fear of foreign competition also has been giving farmers pause, and "that concern is now proving true because people have been so reluctant" to go organic, said Katherine DiMatteo, executive director of the Organic Trade Association.

That reluctance has in turn forced food companies to look overseas.

Organic Valley, which sells meat under the label Organic Prairie, started buying beef from Australia last year because there wasn't enough domestic meat available.

The maker of Silk soy milk, White Wave Inc., started importing organic soybeans from China, Brazil and Argentina because of shortages in 2003, said Doug Radi, marketing director for Silk. The majority of the soybeans are still domestic, he said in a statement.

"We are committed to making practical decisions that are consistent with sustainable business principles," he said.

The problem for organic farmers in the Midwest is that processors can buy imported soybeans for less than they obtain them domestically, said Clarkson, the Illinois grain buyer.

West Coast processors are buying Chinese soybeans for $14.50 to $15 a bushel. Midwest soybeans will cost as much as $19 per bushel after shipping costs are figured in, he said.

Because of the foreign competition, Clarkson expects the prices for domestic soybeans to drop by $2 to $4 a bushel, depending on the quality.

"We're saying we would love to buy your beans . . . but we've got to be able to sell them," Clarkson said.

10. Producers oppose wheat checkoff

By Mikkel Pates
Agweek Staff Writer

FARGO - Four individuals and two groups have filed a suit against the state of North Dakota to stop the mandatory funneling of a wheat checkoff increase to two groups the North Dakota Grain Growers and the U.S. Durum Growers.

The suit was filed Oct. 7 in South Central District Court in Bismarck.

Represented by Sarah Vogel of Bismarck, the plaintiff group includes Greg Svenningsen of Barnes County; James Teigen of Pierce County; Deb Lundgren, LaMoure County; and Casey Wells of Grant County. Other plaintiffs are the North Dakota Farmers Union, based in Jamestown, and the Dakota Resource Council of Dickinson.

Funds directed

In the complaint, the plaintiffs say the Legislature improperly directed funds to two "private trade associations."

The plaintiffs say the arrangement is unconstitutional.

And if it isn't declared unconstitutional, the plaintiffs want the court to declare both groups and their national affiliates as "public entities," subject to the state's open meetings and open records laws.

In the complaint, the named individuals say they are wheat farmers and none have requested a refund for any wheat tax paid in 2005.

The plaintiffs in the case say that if the contracts were similar in the second year of the biennium, they'd funnel about $1 million to the two groups over the two years.

Among other things, the Legislature mandated that the Wheat Commission contracts with the two groups "require" that the two state groups use state funds to pay "all dues required" in their national affiliates. With the Grain Growers, that national affiliate is the National Association of Wheat Growers.

Both contracts are "essentially the same," according to the complaint.

Among the group's points:

Neither group was required to show they had "capabilities to perform the services covered by the contracts."

Other groups (the NDFU and DRC among them) could have performed the services, but weren't given a chance to bid.

Neither association had "staff in place" to perform services required under the contracts, when the contracts were executed. Among other things, both groups are contracted to "develop appropriate domestic policy which is beneficial to wheat and durum producers and pursue its implementation at the state and national levels."

Each group was to be paid in quarterly installments, to equal a full payment, plus a "fifth payment" following the fourth quarter "to comply with the statutory language assuring that the amount raised by the two mills be committed to domestic policy matters."

The state is constitutionally prohibited from enter contracts with an "individual, association or corporation except for the reasonable support of the poor" or if the state itself is "engaging in an industry enterprise or business."

The contracts aren't legitimate because "there is no requirement that the services contracted for correlate with the amount of money to be paid to the entities."

The lawsuit does not require a roll-back of the checkoff increase from the full 15 mills. Presumably, funds would remain with the Wheat Commission, which would be free to entertain bids for domestic policy work.

Pates covers agriculture for the Herald and Agweek. Reach him at mpates@gfherald.com or (701) 297-6869.

11. BUNGE BUYS RUSSIAN ELEVATORS

Agency WPS
The Russian Business Monitor (Russia)
October 10, 2005

Corporation Bunge, which had until recently been interested only in the Russian market of vegetable oil, decided to develop grain business in the country seriously. Bunge plans to establish a chain of 12 elevators. The first acquisition was already made. The company bought the Kholmsky flour mill with capacity of about 130,000 tons of grain in the Krasnodar Territory.

The international agricultural corporation Bunge headquartered in New York is the world's largest producer of vegetable oil. The company also trades in grain and supplies soy beans practically to all countries of Europe, South and North America. In 2003, turnover of the corporation amounted to $22 billion. In summer 2004, the company bought a grain terminal in Rostov-on-Don for $10 million and bought the rights for sale of vegetable oil under Ideal brand in Russia and CIS from the Argentinean company Molinos for $20 million. Bunge also owns Oleina brand under which the Dnepropetrovsky oil extraction plant produces oil in Ukraine. At the beginning of 2005, the company announced its intention to invest $130 million in construction of an oil extraction plant in the Voronezh Region.

Bunge is not going to stop after acquisition of the Kholmsky flour mill. In the next three to five years the company is going to buy and/or build 10-12 elevators more to provide warehousing facilities for the future oil extraction plant in the Voronezh Region, as well as for storage and transshipment of grain. It is planned that the elevators will be located in the Stavropol and Krasnodar territories, Rostov, Volgograd, Voronezh, Saratov and Samara regions.

Other transnational players are buying up elevators too. On October 6, investment group Russian Funds announced closing of the deal for sale of the Gulkevichsky flour mill (Krasnodar Territory) and Dvoinyansky elevator (Rostov Region) to International Grain Corporation, Russian subsidiary of Glencore. PR Director of Russian Funds Vladimir Sysoev reported that the overall sum of the deal was slightly less than $10 million. A market player close to International Grain Corporation says that in the near future the corporation is going to buy one elevator more in the south of Russia.

Elevators in the south of Russia where grain export flows are concentrated are attractive assets and transnational companies are interested in their acquisition. A "big division" of elevators among international companies is underway in the North Caucasus. Alexei Ivanov, General Director of the grain company Razgulyay, estimates one elevator at not less than $3 million.

Source: Vedomosti, October 07, 2005

12. Windmills could bring 'good chunk of change'

by Janine Giordano [September 22, 2005 Richfield Springs, NY MERCURY

VAN HORNESVILLE -- The winds of change were blowing strong Wednesday evening as board members and a handful of residents joined Superintendent James Christmann for a discussion on the possible location of 75 wind turbines within the Owen D. Young Central School's boundaries. The revenue such a project could provide over the next 20 years painted a rosy picture for the district, based on initial information provided by Christmann.

So far, Christmann said he does not see any resistance by the community to the project. The acceptance of this proposal could provide hundreds of thousands of dollars of revenue over the next 15 to 20 years, he said. There are very minimal businesses contributing to the tax base within the district at this time.

Although he said he is "holding out for as much money for the district as I can,"Christmann said current figures regarding how money would be split among municipalities leave the school district with 64 percent, Otsego County with 22 percent and the town of Stark with 14 percent.

Based on current figures, each wind turbine could produce an estimated $5,000 in revenue per year, operating at 1.5 to 2.0 megawatts. "With 75 windmills in our district, that would be $562,000 a year. Everyone wants a piece of that pie," he said. He approximated that, based on the current discussions, the town would receive $78,750, the county would receive $123,750 and his district would get $360,000.

"That?s a good chunk of change," he added.

Board members and resident Tom Hardy, who is considering the placement of a wind turbine on his acreage, questioned information provided by the proposing company, the Community Energy Group, of Saratoga Springs.

Hardy had concerns over the money paid in years to come, and if that amount would increase, as inflation and cost of living increases. He also had concerns over the rights by the company to use his property and build roads to drive from the wind turbine on his property to adjacent turbines.

He also questioned whether the company would have the right to expand or upgrade the turbine in the future.

Property values were also a concern, with the issue of whether a project like this would truly increase or decrease property values. "This is the first real industry approaching (ODY) in the past 75 years. We have never had anything that could generate this huge amount of tax dollars,"Christmann said.

He also pointed out that roads would not have to be renovated, land would not have to be dug up, and huge factories would not be built. "There may be environmental problems with the birds, air, shading, but there doesn't seem to be any major impact on the environment,?" Christmann said, comparing it to the placement of an automobile factory.

"This would solidify the district for years to come and it would end a lot of financial woes and concerns for the school district and the taxpayers," he said.