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AUSTRALIA NON-GM GRAINS CASH IN WINNING TRADE HAND
Australia's big grains export industry has begun cashing in on worldwide
consumer fears about genetically modified (GM) food by selling canola to Europe with a non-GM price premium.
The sales involve about 150,000 tonnes of canola, for shipment early next year at a non-GM premium of about US$5 a tonne, well-placed industry sources told Reuters.
This was a clear-cut example of how Australia, which has so far resisted following Canada and the U.S. into genetically modified food crops, was making hay
while the sun shines, analysts say.
A perceptual advantage which Australia was clearly beginning to enjoy over its North American GM-producing rivals was reinforced by United States farmers
virtually giving up on strict separation of genetically modified (GM) grains from conventionally produced grains, analysts and traders also said.
"Problems being experienced in the U.S. of separating GM grains could have short-term benefits for Australia," national wheat exporter AWB Ltd said in a statement issued to Reuters through its spokeswoman. "We have GM-free products and if they've experiencing problems in providing GM-free product, that gives us an obvious advantage in the short-term," she said.
Neither Australia nor the U.S. presently produce GM wheat, but U.S. problems with separating GM from non-GM corn and soybean crops was giving Australia a
perceptual advantage on export markets, the AWB spokeswoman said.
Non-GM canola scores first premiums
Australia's non-GM canola competes directly with Canadian GM canola on export markets, and here consumer
resistance, strengthened by the U.S. inability to separate all GM grains from non-GM grains, was boosting Australian sales, traders said. "We believe that we're starting to see the early stages of the
much-waited premium for non-GMO canola," one well-positioned grains trade source told Reuters, requesting anonymity.
New crop forward business had been done between Australia and Europe for the new crop canola, to large crushing companies.
This was for shipment January onwards at a time and price indicating a premium on current Canadian sales to China, he said. It was hard to gauge the exact premium because currencies, freight rates and futures all came into play.
But the premium appeared to be up to US$5 a tonne on the current stable market of around the mid-US$190s fob, the source, with one of Australia's leading grains
export boards, said. Shipments were expected to involve around three Panamax loads of 50,000 tonnes each, he said.
An admission this week by the National Grain and Feed Association in the U.S. that less than 10 percent of the U.S. grains industry was segregating GM from
non-GM grains in the present record harvest year has also confirmed sneaking suspicions held by consumers and in Australia's non-GM farmers. "Less than 10 percent of the industry is engaged in segregation
and we don't anticipate a strong need for it this fall," Thomas O'Connor, National Grain and Feed Association director of technical services, told Reuters in Chicago.
Australia braces for GM Dilemma
While the U.S. dilemma is advantageous to Australia at present, AWB's spokeswoman said on Thursday that Australia
could be facing similar issues in the longer-term. "We're GM-free now. We may not always be," she said.
The Australian industry was taking a very serious look at the matter and adopting a coordinated approach, she said. Australia so far produces no GM
grains, with first production of its first modified grain crop, canola, at least two years away. Wheat is Australia's leading grain, holding a share of almost 20 percent of the world market. "Who
knows?" the AWB spokeswoman said when asked if Australia would be producing GM wheat in the future. "It's still a few years away."
US EXPORTERS SAY NON–GMO GRAINS "YOURS FOR A PRICE"
Consumer and environmental groups in some of the biggest importers of US
grains -- Japan, South Korea and Europe – are suspicious of GMO grain, and are pushing for bans or labeling requirements. As a result, these countries are importing non-GMO corn and soybeans, and they're paying a
premium. Grain traders say the premiums paid for non-GMO crops in the US and abroad add up to 75 cents per bushel to be shared by the farmer, grain handler and exporter. These prices have slowed exports
somewhat. However, Jerry Slocum, a committee chairman for the United Soybean Board, says American farmers should have no problem serving worldwide clients with non-GMO crops, but they will need monetary
incentives. "If the marketplace wants to send a message to producers," he says, "it needs to send it in the form of price."
SOUTHERN HEMISPHERE WHEAT WAITING FOR RAIN AND WARMER WEATHER
Crop watchers suggest Argentina's winter wheat seeding is
essentially complete and some precipitation is now needed to induce a well-established crop prior to the start of the spring growing season. Although local sources suggest there is plenty of time available for
replenishing rainfall before spring growth, there is some minor concern of deficit soil moisture levels in the central and northern wheat crop areas.Meanwhile, Australian winter wheat and barley crops remain
semi-dormant, but upcoming weather patterns are expected to change the situation.
Weather sources indicate they expect rainfall through the winter crop areas over the next 10 days followed by seasonal warming in late August and into September, which should encourage new crop development. Moreover, newswire sources indicate Australia's production potential has been slightly reduced because of late planting due to dryness in the fall and early winter, but timely rains and mild temperature this spring could improve yield potentials.
THE UNRELENTING DROUGHT CONDITIONS IN AFRICA ARE THE WORST SEEN IN 42 YEARS
The UN Food and Agriculture Organization (FAO)
indicates that nearly 20 million people in sub-Saharan Africa are currently facing serious food shortages, three million more than they estimated back in April.
Hard hitting drought conditions have undermined food production in major areas of eastern Africa, while war and civil strife have severely limited farming activities in other areas. Their report suggests some of the most adversely affected countries, including Angola, Burundi, Eritrea, Ethiopia, Sierra Leone, Somalia and Sudan are suffering from the impact of war or civil conflicts. Other countries such as Kenya and Tanzania have been decimated by relentless drought conditions. Moreover, the report suggests this year's drought has aggravated an already severe scarcity of water and pasture, resulting in massive livestock losses as well. Meanwhile, the report warned Kenya's food shortages will be worse than originally expected, as the FAO estimates nearly 3.3 million Kenyans need emergency food assistance. The unrelenting drought conditions are the worst seen in 42 years and have caused widespread crop failures and livestock losses.
USDA DONATES WHEAT TO LEBANON, AMENIA AND MONOCO
On Thursday, USDA officials announced it is donating 73 TMT of US wheat and
vegetable oil under the 416b food aid program to Lebanon in fiscal 2000. Sources suggest the donation will include associated ocean freight costs as well. USDA officials indicated it will give the food
to Mercy Corps International which will then sell the commodities in the private market and use the proceeds to boost agricultural production and provide scholarships to students seeking to attend the America
University in Beirut or the Lebanese American University.
USDA also announced Thursday that it will donate 67.5 TMT of US wheat to Armenia in fiscal 2000 under the 416b food aid program.
The aid will also cover related ocean transportation costs. According to USDA, 60.0 TMT will be donated directly to the Armenian government. The wheat will then be sold and the proceeds used for agricultural and other rural development projects. The remaining 7.5 TMT will be donated to the Armenian Technology Group, a private aid organization, which will then use proceeds from the sale of the wheat for rural development and food security projects.
Furthermore, the USDA announced it would also donate 130 TMT of US wheat to Morocco in fiscal 2000 under the same 416b food aid program.
No donating agency was named in the press release, but officials suggested the wheat would be sold in Morocco and the proceeds would be used for "rural development activities". In addition, the announcement indicated the agency is providing $5 million each for US wheat and barley sales to Morocco under the PL 480 program, which provides long-term credit to governments to promote the sales of US farm commodities.
ANSWERS TO FAQ'S (FREQUENTLY ASKED QUESTIONS) ABOUT LDPs
By Betty Thom
Loan Deficiency Payments (LDPs) have become a major
marketing tool in the last few years of low commodity prices. The LDPs are based on the difference between the county loan rate and the CCC-determined value for a specific commodity, times the quantity.
Quite simply, LDPs are payments that make up the difference between the government loan rate and the market price. Any producer that is eligible for a government commodity loan is eligible for LDPs.
Although producers have become familiar with LDPs, many still have questions. Following are some of the more common questions about LDPs, answered
by Larry Lampl, ND Farm Service Agency f arm program specialist.
Is there any paperwork that needs to be filled out before harvest in order to be eligible for LDPs? And can I fax the paperwork?
Perhaps to the first question, and yes to the second.
If you plan on faxing any forms into your local FSA office, you will need to file a Facsimile Signature Authorization & Verification Form
(Form FSA-237). Someone at the FSA office needs to witness your signature. Although you can fax LDP requests, payments will not be issued until Form FSA-237 is filed. This same form needs to be filed before loan
applications are faxed.
Form CCC-709 needs to be filed before harvest. This agreement allows producers who deliver a commodity right off the combine for a cash sale or to
fulfill a forward contract (as well as basis fixed contracts, delayed payment contracts, minimum price contracts, and hedge-to-arrive contracts) and still be eligible for an LDP. The LDP payment rate is based on the
date of delivery to a buyer, warehouse or processor.
A separate CCC-709 must be filled out for each commodity. A new CCC-709 must be filed for each crop year. A CCC-709 also covers commodities
delivered and not sold, based on the LDP rate on the date of delivery. If specific quantities or special restrictions are required, the producer needs to contact the county office.
Form CCC-666 is used to file for LDP on your stored commodities. If the commodity is stored, you can watch the markets and file at a favorable
rate. Once the commodity is sold, you can't apply for LDP.
Producers should know that any forms faxed must be complete or the application will not be valid.
Who is eligible for LDPs?
Any producer who has enrolled the farm in the Production Flexibility contract, reported the planted acreage
and has a beneficial interest in the commodity. A beneficial interest means they have control of the commodity (makes the decision affecting the commodity), risk of loss (responsible for any loss or damage of the
commodity), and title to the commodity (has not already sold or delivered the commodity). The producer must also comply with conservation and wetland protection requirements.
For the 2000 crop only, contract commodities produced on noncontract farms are eligible for LDPs.
Can an application for an LDP be filed for grain already approved for a government loan?
No. The producer can take the LDP or a
government loan on the commodity, but not both.
What is the cut off time for faxing the CCC-666?
Faxes must be sent before 6:00 a.m.Central Time to the County FSA office in which the
farm is located.
What is the final cut off date for applying for LDP for the 2000 crop?
The final availability date for a LDP or loan on wheat, barley,
oats, canola, rapeseed, crambe or flax is March 31, 2001.
The final availability date for corn, grain sorghum, mustard, safflower, soybeans, and sunflower is May 31, 2001.
Can another county's LDP rate be used if the commodity is sold there?
The LDP is based on the loan rate in the county where it is stored.
If an LDP is requested on commodities using the CCC-709, the county loan rate in which the farm is located is used, no matter where it is sold. In either case, the CCC-709 or CCC-666 should be filed with the home
county.
Where can the daily LDP rates be found?
You can call your local FSA office after 8:00 a.m. for the updated LDP rate. Local elevators
should also have access to this information. LDP's are listed on the Data Transmission Network (DTN) screen under the Grain heading. You can also find LDP rates at www.grainline.com. The current forms can be found online at www.fsa.usda.gov/dafp/psd.
Is the quality of the crop considered when figuring out the LDP rate?
Other than excessive moisture, there are no discounts for the
quality of the commodity.
Is there a ceiling on the amount of LDP or market gain a producer can receive?
Yes. A producer can't receive more than $75,000 in LDPs and
market loan gains. Last year this limit was raised to $150,000 by an act of Congress. The higher limit applied to the 1999 crop only. (See page 29 for one way to legally circumvent the limit).
Is a crop still eligible for an LDP if it is used to pay others in the form of grain wages?
A producer can receive an LDP for bushels that
are given as grain wages to charities, a spouse or minor children if they do not have other farm interests. However, the right to LDPs is forfeited if grain wages are given to others like a hired man. If a producer
wishes to pay bills with grain, their name must be on the sales ticket. Then, a request can be made to the buyer to issue the check to another party(s) name.
Does there have to be proof of the amount of grain in storage?
Any sales and storage evidence must be in the owner's name. Spot checks will
be made on farm stored commodities.
Would I ever have to pay back any of the LDP if prices were to go up?
No. However, if you are spot-checked and the amount stored or sold
is less than what was declared on the LDP application, the difference must be refunded. Penalties may also apply if the quantity is less than 90% of the certified quantity.
LDP Forms on the Web
Need an LDP form but can't make it to your FSA office?
Go to this web site and print one out yourself. You will need Adobe Acrobat to run the form.
Go to http://www.adobe.com/products/acrobat/readstep.html to download the free Adobe Acrobat reader.
Then go to this web site to print out your form. www.fsa.usda.gov/dafp/psd/Forms/CCC666ldp.pdf
SOYBEAN TOUR AT CARRINGTON
The North Dakota Soybean Council and the NDSU Carrington Research Extension Center are conducting a
soybean tour at the Carrington Center starting at 5 p.m. on Thursday, September 7.
Tour topics include soybean disease management with emphasis on sclerotinia, variety performance including high-protein cultivars, weed management research, planting technology, cropping systems, and fertility management. Speakers include Glen Nagel, North Dakota Soybean Council secretary/treasurer; NDSU agronomists Duane Berglund, Greg Endres, Bob Henson, Denise McWilliams, and Blaine Schatz; Berlin Nelson, NDSU plant pathologist; Shannon Oltmans, NDSU plant sciences graduate student; and Dave Franzen, NDSU extension soils specialist.
The tour will conclude with a sponsored supper. Additional tour details may be obtained from the
Soybean Council (701-239-7195)or the Carrington Center (701-652-2951). Other soybean tours sponsored by the soybean council and United Soybean Board are scheduled Aug. 29 at Great Bend, Aug. 30 at the NDSU Agronomy Seed Farm near Casselton, and Aug. 31 near Wyndmere.
USDA RELEASES EXPORT SALES REPORT 08/17/00
http://www.fas.usda.gov/export-sales/esrd1.html
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