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COUNTRIES RETURNING TO U.S. WHEAT
U.S. wheat growers are glad to hear the good news coming from Africa and
the Middle East. Last week's sale of hard red winter wheat to Tunisia is the first sale of U.S. wheat to that country since the 97/98 marketing year. And it's been at least ten years since commercial sales were made
to Bahrain, so their recent purchase is especially welcome. Another piece of excellent news comes from Egypt, where the pace of U.S. wheat purchases is more than double last year's sales. With this week's sales, our
loyal customers in Egypt have already purchased 1.3 million metric tons in this marketing year, more than the vast majority of our customers purchased for the entire last marketing year. At this time last year,
Egypt had purchased half a million metric tons.
NEW U.S. AID PROGRAM ANNOUNCED
The U.S. will launch a school feeding pilot program, working through the UN
World Food Program in partnership with private voluntary organizations, it was announced last week. Under the program, the USDA's Commodity Credit Corporation (CCC) would purchase surplus agricultural commodities
and donate them for use in school feeding and pre-school nutrition programs in poor countries with strong action plans to expand access to and improve the quality of basic education. The commodities most suitable
for this initiative are soybeans, corn, wheat, rice, and nonfat dry milk, and products containing these commodities.
For the first year of the program, the U.S. has allocated $300 million for commodities, international transportation, and other costs, feeding as many
as 9 million schoolchildren and pre-schoolers. Some critics, however, have questioned whether $300 million is enough to meet the goals of the program.
Selection criteria would be based on need, but also on the country's contribution of resources, their commitment to expanding access to basic
education, commitment to assume responsibility for operating the program within a reasonable time frame, and current infrastructure and ability to deliver food to schools.
Announced plans make clear that USDA will manage the program "in a way that does not hinder sales opportunities for local farmers or distribute
U.S. or Allied commercial exports." Some of the commodities will be monetized (or sold) to fund other food, on-the-ground, and administrative costs.
FOOD FOR EDUCATION
USDA Secretary Dan Glickman discussed President Clinton's proposal for U.S. participation in a
global food for education initiative.
"...International development and food security are as pragmatic as they are humanitarian. In addition to being moral imperatives, they are in our
self-interest. No one knows that better than America's farmers and ranchers. During the past two years, the United States has provided record amounts of food aid - support that helped not only people and countries
in need, but also our farmers who were reeling from rock bottom prices, bumper worldwide crops, and reduced global demand."
BAUCUS REAFFIRMS NEED TO LIFT CUBA EMBARGO
Senator Tells Castro That Cuba Must Also Open Up
(WASHINGTON, D.C.)
U.S. Senator Max Baucus (D-Mont.) told Fidel Castro that he favors immediately lifting the embargo on Cuba. In a letter cosigned by Senators Pat Roberts (R-KS) and Daniel Akaka (D-HI), Sen. Baucus wrote, "Having been to Havana, we are more convinced than ever that the economic embargo has outlived its purpose."
The three Senators traveled to Havana in July of this year for meetings With Cuban dissidents and government officials, including a ten-hour marathon
Session with Fidel Castro.
To work towards lifting the embargo, Sen. Baucus indicated that he had encouraged the Clinton Administration to interpret current regulations "as
liberally as possible." He specifically mentioned the need to define "non-governmental entity" broadly in order to facilitate sales of US agricultural goods. Current US regulations allow
US farmers to sell to Cuban private organizations, but not to the Cuban government. However, the regulations classify virtually no Cuban importer as wholly "private."
In his letter, Sen. Baucus also indicated his support for the Cuban dissidents he met, calling them "thoughtful and courageous."
He encouraged Castro to allow for open discussion of Cuba's political and economic problems, and to release political prisoners.
Sen. Baucus sponsored bipartisan legislation this year to lift the Embargo and normalize trade relations with Cuba.
On May 24 he introduced S.2617, the Trade Normalization with Cuba Act. On July 20 he introduced S.2896, the United States-Cuba Trade Act of 2000.
HAMNES TESTIFIES BEFORE SUBCOMMITTEE ON EXPORT PROGRAMS.
Tuesday evening,
Bruce Hamnes, Chairman of WETEC and U.S. Wheat Associates (USW), offered testimony to the Senate Agriculture Committee's Subcommittee on Production and
Price Competitiveness, speaking on behalf of the National Association of Wheat Growers, USW, and WETEC.
Declaring that "the importance of the USDA export programs for U.S. wheat cannot be overstated," Hamnes called on Congress to level the
global playing field in the development of export markets.
Minnesota wheat farmer Bruce Hamnes told the subcommittee that "American agriculture cannot compete against foreign governments," and laid
out steps that Congress needs to take in a global marketplace that is "characterized by heavily subsidized and protected competition."
"Flexible, effective, and fully funded export programs are critical to our long-term success," Hamnes told the panel.
Pointing out that as historical support was eliminated under "Freedom to Farm," use of agricultural export programs remained stagnate and in
some cases decreased as "U.S. farmers were sent out into the world market to survive without their traditional 'tools' of support. Well-funded export programs, which are a necessary part of the equation, were
not reinforced," Hamnes said, despite increased promotion activity by competing countries.
"As we embark on debates surrounding a new farm bill, export programs that give American farmers and ranchers the tools to survive in the 'new
economy' must not be overlooked or taken for granted."
Asking Congress to "correct this oversight," Hamnes called for increased funding and an "unshakable commitment to provide American
agriculture with the proper tools to develop markets and promote agricultural goods."
"The Foreign Agricultural Service and the Animal Plant Health Inspection Service must be funded at levels that allow for adequate personnel and
programs to meet the demands of opening and expanding world markets," Hamnes said. "The export of American agricultural products is possible because of a large group of dedicated people in USDA who depend
on you for their funding, and to whom the industry is indebted. They make the export programs work."
To "counter unfair trade practices" the wheat industry also asked Congress to direct the Secretary of Agriculture to direct unexpended Export
Enhancement Program (EEP) funds to export market development activities. EEP is a program that helps U.S. farmers challenge unfair trading practices of subsidizing countries, but by 1996 the U.S. voluntarily
stopped administering the EEP for wheat sales, despite the fact that EU subsidies for wheat and wheat flour exports are still used.
Hamnes also reiterated the wheat industry's call for sanctions reform. Even though President Clinton eased the embargo against Cuba, there was a major
catch. The sanctions, which are stipulated by law, do not allow products to be sold to the Cuban government; the five flour mills in Cuba are owned by the government. Ergo, no U.S. wheat can be sold into Cuba.
Other actions Congress should take, Hamnes said, include passing "Fast Track" negotiating authority, providing responsible oversight of the
WTO negotiating process and, most importantly right now, granting Permanent Normal Trade Relations for China.
"If Congress fails to grant China Permanent Normal Trade Relations in a timely and honorable manner we can expect to see very few, if any, sales
in the future," Hamnes declared. "There is no issue more important to the future of the industry than finalizing this process."
PREMIUM FOR HARD WHITE WHEAT
In a move that will solidify the market for hard white wheat, Cargill announced plans to
pay a 10-cent-per-bushel premium and up to 15c in quality premiums for hard white wheat contracts in 2000-01, company officials said. Delivery is for certain Cargill locations and designated collection points in
Kansas and Colorado.
FAS CONTINUES WORK ON GRAIN CLEANING
FAS Administrator Tim Galvin, speaking this week at a meeting of U.S. Wheat
Associates, confirmed that the original USDA proposal to use federal funds to help install grain cleaning equipment in the U.S. Gulf is no longer under serious consideration. But he quickly followed up with an
update on the steps USDA is taking to encourage wheat cleaning by the trade.
Galvin explained that USDA will be issuing a proposed rule this fall that will put forth new grading standards for dockage. He also explained that his
office is proceeding with the development of a program using EEP (Export Enhancement Program) funds to give financial incentives to private traders to provide cleaner wheat. The EEP proposal is currently undergoing
internal review in an inter-agency process, Galvin explained, and at this point the mechanics -- allocations, prioritizations, possible exclusions -- are still being developed.
WHEAT TOUR SEES ABOVE-PAR DNS YIELDS
FARGO, Aug 3 (Reuters) - According to Reuters, spring wheat yields across the U.S.
Northern Plains are expected to be above average, while durum yields should be closer to recent averages this season, according to final estimates of a three-day crop tour.
More than 60 tour participants, including agronomists, grain industry representatives and others, surveyed 472 fields, mostly in top producer North
Dakota, along with some in South Dakota and Minnesota.
The 63 tour participants walked 355 spring wheat fields, and estimated the yield to be at 36.5 bushels per acre, versus last year's final tour estimate
of 30.5 bushels, and the 5-year tour prediction of 32.6 bushels per acre.
Some signs of scab disease were evident particularly in the east central North Dakota, as predicted after July rains, but the damage was not as severe
as some in the industry had feared. In fact, fields looked healthier further east on both sides of the Red River, group members said.
"It doesn't look as bad (as anticipated) but it's very widespread and it makes people nervous and we're going to have to monitor it
carefully," said Dave Green, ADM Milling Company.
"I was pleased with what I saw," said Bob Bennett, director of technical services and grain quality laboratory at Farmland Industries Inc. in
Kansas City. "I thought we would see worse (in Minnesota's Red River Valley.)"
Agronomists have been pushing farmers to rotate crops and apply fungicides as a means of fighting leaf diseases, said Jochum Wiersma, agronomist with
University of Minnesota.
"In certain areas, 60 to 70 percent of fields are being sprayed with fungicide," he said. "There is still some scab but overall we are
controlling the leaf diseases."
The group walked 113 durum wheat fields, with the overall estimated yield put at 26.6 bushels per acre, versus last year's final tour estimate of 23.2
bushels, and the 5-year tour prediction of 28.0 bushels per acre.
Tour participants walked 4 hard red wheat fields, with the overall estimated yield put at 46.3 bushels per acre, while there was no estimate last year.
MARKETING LOAN LIMITS INFORMATION
Reprinted with permission from Agrimark
Many producers will have a problem with the $75K marketing loan limit unless Uncle Sam changes the rules. However, there is a way to skirt the
limit.
First, address how much LDP you could be working with. The current sunflower LDP is $3.70, so a 1600 pound/acre crop would be $59.20 per acre. Canola is $3.30, so you are looking at similar numbers. Corn is currently at $.52, so 125 BPA nets $65 per acre, so it won'take long for max out a limit. The $75K limit applies to the combination of all marketing loan gains, including all LDP and for loans taken and paid off with cash. Now, the architects of F2F likely never expected average sized farms would hit such a limit, rather it was designed for the large corporate farms, esp. in the cotton and rice country.
Now, how to skirt the limit (nothing illegal, you simply need to request a different method of computation). You can request the FSA office to
pay off an existing loan with PIK certificates rather than using cash. You will still be able to pay off the loan at the PCP rate. The difference between the PCP and loan will not be counted against your
limit if you use certs. The county FSA can issue on the spot certs to use.
These certs are not traded, nor do they leave the FSA office. Two points to be aware of: the grain must be under loan to LQ with certs so if you have to move grain to commercial storage at harvest, be sure the location can issue a warehouse receipt for a few days/weeks. Next you can not use certs to LQ a loan while it is under the 60-day lock, but you can once the lock expires.
For more on this article call Agrimark at 1-800-373-8123
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