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News from the Minnesota Association of Wheat |
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CONFEREES SEND APPROPRIATIONS BACK FOR FINAL OKAY
HOUSE PASSES CROP INSURANCE BILL The House,
by voice vote, Wednesday approved a crop insurance reform bill that increases producers' insurable yields and reduces premiums with a larger federal subsidy. House Agriculture Committee Chairman Larry Combest (R-TX)
says it "reduces the need" for farmers to depend on Congress for ad hoc disaster assistance. Three titles are included in the bill designed to increase participation, improve program administration, provide
new procedures to approve policies and plans of insurance, and to bolster the compliance and enforcement program of USDA's Risk Management Agency. Title I expands levels of coverage offered to producers by providing
greater federal assistance in buying better coverage levels. It also provides an adjustment in actual production history for producers who have suffered multiple losses in the 1990s. The second title seeks
to improve the operations of the federal crop insurance program. Title III reorganizes the Federal Crop Insurance Corporation board of directors and makes other improvements in the administration of the program. For
complete information click on Crop Insurance
LUGAR INTRODUCES HIS CROP INSURANCE BILL As the House passed its version of crop insurance reform, Senate Agriculture Committee
Chairman Richard Lugar (R-IN) was introducing his own version. A major feature is a payment to farmers who use at least two risk management practices each year through 2004. Farmers would be eligible for a risk
management payment for crop years 2001-2004 with the first annual payment possible as early as Oct. 1, 2000. Payments would be based on a farmer's actual production history for crop year 2000 if the farmer used at least
two risk management practices. Lugar has included eight practices from which farmers could choose: buy crop insurance equal at least to catastrophic risk protection; hedge price, revenue or production risk with at
least one standard contract for a future or option; hedge price, revenue or production risk on at least 10% of the value of a principal commodity produced on the farm by purchasing an agricultural trade option; cover at
least 20% of the value of a commodity with a cash forward or other type of marketing contract; attend an agricultural marketing or risk management class; deposit at least 25% of the risk management payments into a tax
deductible account; reduce farm financial risk by reducing debt in an amount that reduces leverage or by increasing liquidity, or reduce farm business risk by diversifying the farm's production.
GOVERNOR JESSE VENTURA ANNOUNCES HEMP SEMINAR The informational seminar is in response to legislation passed by the 1999 Minnesota Legislature requiring the
state to apply by September 30 for a federal permit to grow industrial hemp. The Drug Enforcement Agency (DEA) recently informed Minnesota officials that a state cannot apply for a general blanket permit.
Rather, individual farmers must apply directly to the DEA and the Minnesota Board of Pharmacy for a permit to grow experimental plots of industrial hemp. Minnesota Agriculture Commissioner Gene Hugoson and Trade
and Economic Development Commissioner Jerry Carlson will co-host the November 19 seminar, giving farmers tips on how to apply for the federal and state permits they will need to grow experimental plots. They will
also discuss any special conditions DEA has set for lawful cultivation of the crop. The Governor also sent a letter to President Clinton today, in which he explained the state's interest in industrial hemp production
and the need for federal cooperation in the matter. With the continual low prices for traditional commodities such as corn and soybeans, Governor Ventura said the seminar and letter represent another step toward
the goal of providing profitable alternatives to Minnesota's struggling agriculture community. "Farmers are facing a lot of challenges right now, and it's our role in state government to do what we can to give them
the economic tools they need to succeed," Governor Ventura said. "We see industrial hemp as another item they might want to add to their toolbox. It may not be the answer for everyone, but it has potential
as an alternative to traditional crops."
HOUSE AND SENATE LEADERS ARE COLLECTING SIGNATURES FROM CONFERENCE COMMITTEE MEMBERS
ON A FINAL VERSION OF THE FISCAL 2000 AGRICULTURE APPROPRIATIONS BILL
With the decision made that dairy compacts and trade sanctions on Cuba were off the table, Senate and House Republican leaders turned their attention to getting conferees to sign on to a package of income and disaster
relief now worth $8.7 billion. "We're working on it (getting a final bill ready); I think we're about one signature away" from getting a majority of the 28 House and Senate negotiators to approve the
package, House Majority Leader Dick Armey (R-TX) told BLOOMBERG NEWS. Capitol Hill officials close to the negotiating process say the $1.2 billion in disaster aid provision leaves it up to the Secretary of Agriculture
to determine who actually has incurred a loss. But the bill allows for quantity losses, quality losses or severe economic losses due to damaging weather or related conditions. All crops are eligible, even tree crops,
livestock and fisheries. The $5.5 billion for income assistance goes to farmers with 1996 farm law transition contracts and is tied to the amount of the AMPTA payments received in fiscal 1999. In addition the bill
includes: $400 million to get more farmers to buy more crop insurance for 2000 crops (30% discount on premiums), $328 million for peanut producers, $475 million in payments to 1999 crop oilseeds producers, $325 million
for livestock and dairy producers, restoration of the cotton Step 2 program, extension for one year of the milk price support program, suspension of the marketing assessment on sugar and a doubling to $150,000 of the
limit on loan deficiency payments and marketing loan gains.
NATIONAL ASSOCIATION OF WHEAT GROWERS REAFFIRMS POSITION NAWG is pleased with the proposed
emergency assistance package contained within the FY 2000 Agriculture Appropriation bill. Additionally, NAWG remains committed to seeing all sanctions on food repealed. NAWG also maintains its support of increased
disaster payments of $1.2 billion and an economic assistance payment equal to producer's full 1999 AMTA payment. NAWG encourages Members of Congress to finalize negotiations as soon as possible.
U.S. "SHOCKED" BY FLOOD OF CANADIAN WHEAT IMPORTS WASHINGTON, Sept 29 (Reuters) - The United States is ``shocked'' by a flood of durum wheat being imported from Canada and is surveying importers to
find out why they are shunning American wheat, U.S. trade officials said on Wednesday. Durum wheat farmers in Northern Plains states have long argued that they face unfair competition from the Canadian Wheat Board,
which has monopoly control over the nation's exports. Frustrated U.S. farmers have staged protests, blockaded the borders with tractors and urged Washington to stop the Canadian wheat from pouring in. During the
1998/99 marketing year, U.S. imports of durum wheat from Canada totaled 557,000 metric tons, up 27 percent from the previous year and more than twice the amount imported 10 years ago, according to Agriculture Department
figures. ``We have worked closely with Canada and are disappointed with the current level of shipments on durum,'' U.S. Trade Representative Charlene Barshefsky told a Senate Finance committee hearing on upcoming
world trade negotiations. ``We're actually rather shocked with the current level of shipments,'' she added. The Agriculture Department is contacting U.S. durum wheat importers to try to determine why they are choosing
Canadian wheat over U.S. supplies. USDA officials said they expect to have results from the survey in a couple of weeks. Barshefsky also said that new measures are now in place for the U.S. Customs Service to monitor
the prices of wheat entering the United States so they can determine if Canada is dumping wheat on the U.S. market. The first reports should start arriving mid-October, she said. Sen. Kent Conrad, a Democrat from North Dakota, accused Ottawa of dumping wheat. ``If they tell you it is because we are short-cropped or there are
quality problems, you just laugh at them,'' Conrad said. ``I'll bet anything that you find that what is really happening is they are dumping below cost in this market.'' Barshefsky also expressed frustration that
Canada has not complied with an agreement worked out between the two countries in December. In that pact, Canada agreed to report projections of its durum shipments to the United States each quarter. Canada recently
supplied the United States with numbers that were off by 50 percent, she said. While Ottawa's data was apparently a mathematical error rather than a deliberate attempt to underestimate wheat exports, Barshefsky called
the situation ``entirely unacceptable.'' Barshefsky said she met with new Canadian Trade Minister Pierre Pettigrew last week who promised to provide more accurate information. At the hearing, Agriculture Secretary
Dan Glickman also noted that the situation for durum wheat farmers should improve after the USDA agreed to recalculate a key marketing support rate for growers. The change ``should make durum more competitive by
encouraging farmers to market their commodity rather than just holding it, waiting for a higher price and watching that Canadian wheat come in,'' he said. Glickman is expected to discuss U.S.-Canadian wheat trade with
his Canadian counterparts at the Quint meeting in Montreal this week. (Reuters)
USDA TRYING TO PLUG LOOPHOLE IN LOAN REPAYMENT SCHEME Some farmers have figured out a way
to lock in increasingly lower repayment rates on their USDA loans and realize a larger gain between the repayment rate and the loan rate. USDA is about to propose a way to stop the practice. Farmers are "sort of
taking advantage of our rules," says one official. A meeting is scheduled for September 30 between USDA officials and representatives of various commodity groups to work out a solution. The normal procedure is
for a farmer to take out a loan and when he decides to repay it, the posted county price (PCP) on the day of repayment is the repayment rate. So if a farmer takes out a $2 per bushel corn loan, and three months later
wants to repay it and the PCP for that day is $1.80, the loan is repaid at $1.80 per bushel, a 20-cents per bushel gain for the farmer. USDA's Farm Service Agency also maintains a form 681-1. One FSA official explains
that if a farmers takes out a loan and cannot repay it, the form 681-1 may be used. Normally a farmer repays the loan and then sells the grain. Using the 681-1 allows the reverse process: a farmer may sell the grain and
repay the loan. There are two basic requirements: the farmer must need the proceeds of the sale to repay the loan, and the grain supporting that loan must be stored on the farm. A form 681-1 is good for 15 or 30 days.
When it expires, the provisions of the form are not binding on the producer; if the producer didn't pay off the loan within the 15 or 30 days, the 681-1 simply expires and the loan remains in effect and unpaid.
However, the FSA official explains, many producers were locking in a repayment rate, say at $1.80, then using the form 681-1. As prices continued to decline, the farmer would let the 681-1 expire and fill out a new form
at an even lower rate. Theoretically this could continue as long as the PCP continued to decline; farmers would realize ever increasing gains between the repayment rate and the loan rate. USDA decided to work up a
proposal that would lock in the first repayment rate on a form 681-1; the farmer couldn't change it regardless of whether the PCP declined or not. At the end of the nine month loan, the farmer can forfeit the grain or
repay at the locked in rate. But the proposal never was released officially. It is expected USDA will propose some type of resolution to the problem once the commodity organizations have met with FSA officials.
USDA SETS NEXT CRP SIGNUP 20 FOR JANUARY - FEBRUARY 2000 "This is an opportunity for farmers and landowners to participate in a cost-effective, voluntary program to
improve their land, water, and wildlife resources and lock in a multiyear payment based on local rental rates," Glickman said. "It is also an opportunity for participants with contracts expiring next fall to
make new contract offers." USDA will continue to evaluate and rank eligible CRP offers using an Environmental Benefits Index (EBI), which is based on the potential environmental benefits gained from enrolling the
land in the CRP. Decisions on the EBI cutoff will be made after signup 20 ends. The EBI cutoff used in previous signups may not be used for this one. The cutoff is decided after analyzing the EBI numbers of all the
offers. Those who would have met previous signup EBI thresholds are not guaranteed a contract under signup 20. "CRP is a highly successful and competitive program," said Glickman. "I encourage
all landowners to find out about the EBI before the February 11, 2000, deadline, and to consult with local USDA experts on steps they can take to maximize EBI points and increase the likelihood that their bid will be
accepted." The EBI in place for the 20th signup is very similar to the EBI used for last year's signup. The Farm Service Agency is authorized to maintain CRP enrollment up to 36.4 million
acres. Approximately 31.5 million acres will be enrolled in CRP contracts as of October 1, 1999. About 400 thousand acres currently subject to CRP contracts will expire on September 30, 2000. The
contracts awarded under signup 20 will become effective on October 1, 2000. "Producers can avoid the highly competitive EBI under the general signup by enrolling the most environmentally desirable
land under CRP's continuous signup program," Glickman said. Under the continuous signup, relatively small amounts of land serving much larger areas, such as filter strips, riparian buffers, and grass
waterways, can be enrolled at any time. Normal eligibility requirements apply, but the competitive nature of the EBI is waived because of the highly environmentally-desirable nature of the practices
available. The CRP is designed to improve the Nation's natural resource base. Participants voluntarily enter into contracts with USDA to enroll erodible and other environmentally sensitive land in
long-term contracts for 10 to 15 years. In exchange, participants receive annual rental payments and a payment of up to 50 percent of the cost of establishing conservation practices. The program protects millions of
acres of American topsoil from erosion. By reducing water runoff and sedimentation, it also protects groundwater and helps improve the condition of lakes, rivers, ponds, and streams. Acreage enrolled in the CRP is
planted to resource-conserving (vegetative) covers, which make the program the major contributor to increases in wildlife populations in many parts of the country. Release No. 0380.99
NDSU AG ECONOMIST MULTI-TIER TARGET PRICE AN ALTERNATIVE TO CURRENT FARM POLICY
Too much supply and too little demand worldwide are depressing the prices of agricultural commodities and the incomes of U.S.
farmers. Despite federal payments to American farmers increasing from $7.5 billion in 1997 to $24 billion this year, subsidies have not solved the financial crisis many smaller-sized family farms face. One solution,
among several being offered by a policy specialist at North Dakota State University, calls for a multi- tier target price scheme based on crop land. "Small family farms need government subsidies the most.
However, our government programs have not been targeted for small-sized family farms," says Won Koo, a professor of agricultural economics and director of the Northern Plains Policy and Trade Research Center at
NDSU. "Under this proposal, a schedule of target prices is applied to a limited number of crop acres." Specifically, Koo proposes that policy makers create three levels of target prices and then limit those
payments to 1,000 acres of land. He recommends setting the highest target price on the first 250 acres, the second highest price on the next 250 acres and the lowest target price on the next 500 acres. To demonstrate
his plan, Koo has used a target price of $5 per bushel (payable on average yield) for the first 250 acres; a $4 target price for the next 250 acres; a $3.50 target price for the next 500 acres; zero government payments
for the remaining crop acres in the farm. Assuming a market price of $3 per bushel for wheat and an average yield of 35 bushels per acre, a 1,000-acre farm would receive an average subsidy of $35 an acre, a 2,500-acre
farm would receive an average subsidy of $19 an acre, a 5,000-acre farm would receive $7 an acre, and a 10,000-acre farm would receive $3.50 an acre. Besides a three-tier target price, Koo says aggressive action on
the part of U.S. trade negotiators is needed to open foreign markets and reduce subsidy levels in grain exporting and grain importing countries. A particular target of this action, he says, should be European Union,
whose farm policy includes a combination of internal price supports and export subsidies that allow European grain to be sold on the world market at artificially low prices. "Tariffs on farm products average
more than 50 percent globally, even though duties on other goods have been coming down rapidly," Koo says. "Manufactured goods typically face an average tariff of 4 to 10 percent. In addition, there are many
different types of technical non-tariff barriers, which should be reduced substantially for U.S. farm goods." Koo says U.S. negotiators should also push for changes in how the Canadian and Australian wheat
boards and other state trading enterprises conduct business. These organizations currently wield significant market power in international markets and practice price discrimination. The final point of Koo's proposal
involves harmonizing existing regulations on agricultural biotechnology among countries. Because the United States is the leader in the creation and production of genetically modified organisms (GMOs), it is affected
the most by differing regulations, which serve to prohibit to U.S. exports in the same manner as other non- tariff barriers. "Changes that result from international trade liberalization and regional trade
agreements such as the North American Free Trade Agreement (NAFTA) will affect the U.S. agriculture sector more than other sectors," Koo concludes. "These changes will require more efficient farm operations
and improved farming techniques. Government policies and subsidy programs should facilitate the tools that make our agriculture more competitive and provide a fair playing field for agricultural exports."
NDSU Agriculture Communication [EDITORS: The news and information packet also may be found on the World Wide Web at
NDSU AG ECONOMIST: YIELDS DON'T TELL ALL; SOCIETY FACES DECISION North Dakota farmers who grew sunflowers, flax, corn, sugarbeets and potatoes had a good production year in 1998. Record-high average yields for all those crops were set last year, but crop yields don't offer a complete picture of farmers' overall economic situations. The 1998 net income of North Dakota farmers, as based on the financial records of participants in the Farm Business Management Program, would have been close to zero without government farm program payments and emergency aid, says an agricultural economist at North Dakota State University. "Over the years, increased production from advances in machinery, seed, pesticides and other technologies have increased farmer profit only briefly," says Andrew Swenson, an extension farm and family resource management specialist at NDSU. "Consumers, not producers, have been the main beneficiaries. The technology treadmill has brought oversupply and led to lower real commodity prices and fewer farmers. If prices continue low into the future, reliance every year on above-average yields entails tremendous financial risk." The economics of wheat production in North Dakota has been deteriorating for several years. From 1989 to 1997, the cost of raising wheat increased by 58 percent, but the trend line yield increased by only 8 percent. Swenson says adverse weather conditions creating such production problems as Fusarium head blight (scab) have overwhelmed technology, and low prices in recent years have compounded the problem. In 1998, the cost of raising wheat in North Dakota outside of the Red River Valley averaged $110 per acre, excluding the producer's labor. In the valley, production costs averaged about $175 due to higher land costs and increased use of inputs, Swenson says. With an average yield of slightly more than 29 bushels per acre and a selling price of $3.19 per bushel, producers outside the valley growing spring wheat on cash rented land would have lost about $11 an acre in 1998. Wheat producers in the Red River Valley would have lost about $28 an acre. "The sale of wheat, after expenses, did not provide money to help pay family living expenses in 1998," Swenson says. "Instead, producers in this situation either relied on government payments to cover living expenses, depleted their savings or increased their debt." The increasing debt level of North Dakota farmers is a concern, Swenson says. Extrapolating from the farm records of producers enrolled in the North Dakota Farm Business Management Program, he estimates that one-third of North Dakota farms now carry a 70- percent debt load--meaning that for every $100,000 of assets, these farms have amassed $70,000 of debt. "The current problems in agriculture have been well publicized. It is obvious that with current prices and the current cost structure, crop farming in North Dakota is not sustainable without federal assistance," Swenson says. "Eventually prices will recover or costs will decline, but it is important to recognize that the underlying reasons behind the long-term downward trend in farm numbers will probably remain intact. "In a competitive free-market economy, prices gravitate to the lowest cost of production. Economies of size have provided cost advantages and fueled concentration in agriculture. The size of farms and the size of agribusinesses continue to grow. This trend will continue unless society believes the negatives consequences of concentration--mainly, the depopulation of rural areas and the concern over market power--outweigh the benefits." NDSU Agriculture Communication [EDITORS: The news and information packet also may be found on the World Wide Web at http://www.ext.nodak.edu/extnews/ . If you have questions regarding the content of any release you receive via e-mail, contact Dean Hulse at (701) 231-6136.]
AMERICAN & CANADIAN FARMERS & RANCHERS TO TACKLE TRADE ISSUES Conference Set for November: The Northern Plains Producer Conference - On Common Ground will assemble farmers and ranchers from
Manitoba, Minnesota, North Dakota, Saskatchewan, and South Dakota with the intent of enhancing trade relations in the region. The event will take place at the Ramada Plaza Suites in Fargo, North Dakota, on November
15-17, 1999. Commissioner Johnson will co-host the conference along with Minnesota Commissioner of Agriculture Gene Hugoson, South Dakota Secretary of Agriculture Darrell Cruea, and the yet-to-be named ministers of
agriculture in Manitoba and Saskatchewan. Both provinces held elections earlier this month. Both governments are expected to make cabinet appointments within a week or two. "This conference will be
the first of its kind in our region," Johnson said. "Conference participants will be farmers and ranchers from the three states and two provinces, and the conference format will be focused on maximizing cross
border, producer-to-producer dialogue." Each jurisdiction will send up to fifty producer representatives on its behalf to work on the four conference objectives: Every day, $1.5 billion worth
of goods and services cross the US/Canada border, making the two countries each other's largest trading partner. Statistics show that number has steadily increased over the last five years. Johnson said that despite
the increasing volume of goods crossing the US/Canada border, trade relations between the two countries have been difficult in recent years. "Trade irritants and problems are on the minds of farmers and ranchers
and are reflected in the recent border protests and trade actions," Johnson said. "Trade problems and issues have been further amplified by the depressed farm economy on both sides of the border."
Johnson added, "There is a need for better communication across the border to further develop trade relationships, especially at a time when farmers on both sides face terrible economic conditions. This
conference will provide producers a forum to interact with neighbors who share common backgrounds and interests." Agricultural organizations in each of the states and provinces have been invited to send producers
to the conference. The number of conference participants and observers is limited. For more information on the Northern Plains Producer Conference, contact the North Dakota Department of Agriculture at (800)
242-7535.
START FALL ANHYDROUS APPLICATIONS
WITH SAFETY INSPECTIONS Applying anhydrous ammonia fertilizer is a familiar fall routine that can turn deadly with faulty equipment.
"All of the equipment used in the application of anhydrous ammonia needs to be in good condition. Faulty anhydrous ammonia equipment is a disaster just waiting to happen," says George Maher, an agricultural
safety specialist with the North Dakota State University Extension Service. Protective and emergency equipment, as well as hoses, connections and other mechanical parts, need a thorough inspection at the start of the
season and periodical checks during use, Maher says. "The personal protective equipment for handling and applying ammonia is a good place to start the inspections," he says. Each nurse tank should have a
safety kit containing gloves and goggles. Gloves must be approved for anhydrous ammonia work and the goggles must be the unvented, ammonia-type. Shop-type goggles are not acceptable because ammonia will easily pass
through the vents. Next, inspect the five-gallon emergency water reservoir on the nurse tank. The reservoir should always be full of fresh, clean water. The hose must deliver the water with a good flow. Water should
be changed daily because it can absorb ammonia over time. "The nurse tank hose is a vital connection between the tank and your field applicator," Maher notes. "Is the hose in good condition? It
shouldn't have any kinks, bruises, makeshift repairs, worn spots, or abrasions. Is the valve body and valve wheel in good condition? Is the bleeder valve usable? Has the hose been bled of ammonia properly so it will be
safe for you to attach to the applicator? All of these hose parts will be very important when it comes to attaching the tank to your field applicator." Everyone involved with the sale, service, transport or
application of anhydrous ammonia should carry a 5-ounce squirt bottle of water. "This water is the first response in case of an accident," Maher says. "Change the water daily. If it's tainted with
ammonia, it'll only add insult to injury." Inspect the field applicator next. Pay particular attention to the breakaway coupler, which will prevent an uncontrolled release of ammonia if the tank is accidently
uncoupled from the applicator. Make sure hoses to the injector knives are supported with no droops or sags. Check the applicator shutoff mechanism to make sure it is in good condition. Be certain reflectors and a slow
moving vehicle sign are in place and clearly visible. Attach the applicator to the tractor with a hitch pin that has a safety clip. Finally, make sure the applicator tires are ready for fieldwork and road travel.
Maher notes that transporting anhydrous ammonia in nurse tanks is risky, especially when using tanks from a retail source. "You rarely know who had the tank last and what kind of abuse it received," he says.
"Before leaving the retail source, check the wagon assembly to be sure it is roadworthy. Do all wheels have all the lug nuts? Is the frame straight and are all the welds secure? Is the nurse tank properly marked
with the slow moving vehicle sign and other required decals? Are there safety chains on the drawbar? Is there a safety clip for the hitch pin? Are the tires properly inflated and in good condition? The person behind the
wheel when a nurse tank is being moved on public roads is completely responsible for everything that happens with it." NDSU Agriculture Communication| [EDITORS: The news and information packet also may be found on the World Wide Web at
NEWS FOR THE VALLEY-CORN QUIZ/SOYBEAN INFORMATION 1. How cold does it have to get before corn is damaged? The severity and duration of sub-freezing temperatures determines damage. Four hours or more below 32F can cause
substantial leaf, stalk and husk tissue damage as can only a few minutes below 28F. Frost damage on final grain yield depends on how much leaf tissue is killed and the plant stage of development. Simple Soybean Seasonal Summary |
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