Report From the North American Grain Congress

Briefs from the 2006 Grain Congress

2007 Farm Bill: “Many Views, Fewer Dollars”
One thing is clear about the next farm bill: there will be more special interests vying for influence and for a piece of the pie than ever before, from environmental groups to other segments of agriculture that have had little to no farm program support.

Groups such as the United Fresh Fruit and Vegetable Association, which represents the national fruit and vegetable industry.  Legislative affairs director Keira Franz says that the group hasn’t had much involvement in farm bills prior to the ‘80s, but has become more involved since.  That’s due in part to so many more issues affect U.S. fruit and vegetable growers today, such as cheaper import competition, immigration issues, invasive pests, and industry consolidation.

Ralph Grossi, president of American Farmland Trust, says it would be a mistake to simply rubber stamp the ’02 bill without changes.  “Political support is high now in Congress, let’s design it to our (agriculture’s) liking. If we don’t, five years from now, someone else could design what the farm program looks like. Let’s broaden public support now and include things they believe are important.” Grossi notes that “environmental amenities” may be a buzzword we’ll hear in the next farm bill; green payments for farm programs that the public supports and that also encourage farmland stewardship.

James Vorderstrasse, president of the National Sorghum Producers, says that a competitive loan rate as well as ethanol plants in the plains sorghum-growing region and water use/irrigation measures will be important for his group.

Sherman Reese, immediate past president of the National Association of Wheat Growers, says the FAPRI (Food and Agricultural Policy Research Institute) is analyzing a NAWG “flex program” proposal that would allow growers to choose a higher direct program payment in exchange for a lower LDP and marketing loan.  A flexible plan would allow growers to choose the farm program support tools that best fit their operations.  Reese says a flex plan may also help commodity groups find common ground in what they want in a new farm bill. FAPRI’s analysis of the NAWG flex plan is expected this spring.

NAWG/USW Joint Biotech Statement Amended
NAWG and U.S. Wheat Associates approved several amendments and additions to their Biotechnology Position Statement.  Among the provisions:

Amended language: “We support and will assist in the development by all segments of the industry of an orderly marketing system to assure delivery of non-transgenic wheat within reasonable tolerances to markets that require it.”

Joint resolution supporting fusarium trait in wheat: USW/NAWG support continued research and development of Syngenta’s fusarium tolerance transgenic trait in wheat and will work proactively with stakeholders in the food system for the benefit of customers and consumers worldwide, U.S. wheat producers and the whole U.S. wheat industry.

Montanan named NAWG president
Dale Schuler, Carter, Mont., has been elected president of the National Association of Wheat Growers. Schuler was president of the Montana Grain Growers Association in 2000/01.

Montanans have led the national organization in recent years; in the past decade, former MGGA presidents Gary Broyles of Rapelje and Chuck Merja of Sun River served as NAWG presidents.

Other NAWG leaders in 2006: John Thaemert, Kansas, first vice president; David Cleavinger, Texas, second vice president; Karl Scronce, Oregon, secretary-treasurer; Sherman Reese, Oregon, immediate past president.

FSA County Offices Under Review
Teresa Lasseter, administrator of the USDA Farm Service Agency, told attendees of the 2006 Grain Congress that the controversial ‘FSA Tomorrow’ agency plan to review, modernize, and close county offices that may not be needed, is no longer a mandate, shelved by politics.  But while a top-down plan will not be implemented, she has asked state directors to review their operations and evaluate where FSA offices are most needed. “We have a number of locations where we are paying rent on buildings we don’t have employees.” Efficient use of taxpayer dollars is an objective, but so too is customer service.  “Restructuring is not something I take lightly.”  Lasseter said that any county restructuring changes recommended by state directors would not occur first without a public meeting in any county where change is proposed and notification to a state’s congressional delegation.  She notes too that if any county FSA office is closed in the future, growers in affected counties would have the option of ‘open enrollment,’ selecting to do business with an FSA office in a contiguous county of their choosing.

USW Urges AWB Be “Dismantled”
U.S. Wheat Associates, in light of the Australian Wheat Board’s involvement in the Oil for Food scandal, with alleged financial kickbacks to the former Saddam Hussein regime, approved a resolution in which “USW insists that the final agreement of the World Trade Organization Doha Round dismantles the monopoly status of AWB Ltd.”  USW says the scandal offers solid proof of unethical, monopolistic practices of state trading enterprises. USW’s trade policy statement on the issue can be found online at www.uswheat.org. 

Triticum aestivum L (Wheat)
An incredibly complex genetic soup

The irony of wheat (Triticum aestivum L.) – which some anti-biotech opponents want to see ‘spared’ from genetic manipulation – is that the genetic manipulation of this crop over thousands of years makes decoding and thus ‘manipulating’ the genes of bread wheat all the more difficult today.

Wheat started out as a grass, and about 9,000 years ago, wild einkorn wheat was harvested in the fertile crescent. Then around 8,000 years ago, a mutation or hybridization occurred within emmer wheat, resulting in a plant with seeds that were larger, but could not sow themselves through the wind. While this plant could not have succeeded in the wild, it produced more food for humans, and within cultivated fields, it outcompeted plants with smaller, self-sowing seeds to become the primary ancestor of modern wheat breeds.

“All of this genetic engineering (hybridizing) was conducted thousands of years ago by ancient farmers completely unaware of modern genetics or the difficulty of hybridizing polyploid plants,” explains Answers.com (www.answers.com/topic/wheat).

Bread wheat today is referred to as a ‘hexaploid’ species (6x chromosomes) containing three different ancestral genomes, each of which has seven pairs of chromosomes, for a total of 42 chromosomes.

The amount of DNA within wheat over thousands of years of transformation makes for an incredibly complex genetic soup. The bread wheat genome is one of the largest and most complex of all crop species, and in fact is even more complex than the human genome. The size of the wheat genome is approximately 13.5 gigabases; the human genome is only about 3 gigabases.

Needless to say, constructing a genetic road map of wheat is a long, tedious process because of the sheer amount of material to be mapped. Bikram Gill, Kansas State University, explained efforts now underway to sequence the wheat genome at the recent Grain Congress (NAWG’s annual meeting).  Gill, recognized as an international expert in wheat genetics research, heads a team responsible for mapping the genome of the wheat plant so breeders can identify important genetic traits and create new varieties of wheat with specific desirable characteristics, like more resistance to disease and insects, and better end-use traits. More information about this effort can be found online at www.wheatgenome.org.

International Trade Policy:

Boring, complex, yet vital for export commodities

The difference between formulating international trade policy and watching paint dry? Well for one thing, the former involves a lot more lawyers and interpreters.

In all seriousness, however, the reason we should bother with trade negotiations is a matter of dollars and cents, particularly for U.S. agriculture, which is heavily dependent upon exports.

Paul Drazek is an international trade consultant with decades of experience in international ag trade policy.  Drazek briefed attendees of the recent Grain Congress in San Antonio (the NAWG’s annual meeting) about the importance of the Doha Round of international trade negotiations.

Drazek used these illustrations to point out that overall, exports are growing, as is both the world population – the marketplace for consumers – and the relative affluence of much of the world population – consumer spending.

The World Trade Organization (WTO) is the only global international organization that deals with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their respective governing bodies. The goal is to help producers of goods and services, exporters, and importers conduct their business.  The Doho Round of negotiations is attempting to standardize international trading rules, and eliminate (or at least diminish) unfair trading practices and business barriers, such as tariffs and various forms of subsidies.

The Doho Round is named for the Fourth Ministerial Conference in Doha, Qatar, where member governments agreed to launch a new round of negotiations in November 2001. There are 149 WTO member countries involved.

Energy: “The Cure For High Prices Is High Prices”

If there’s good news to be found in today’s energy costs, it’s the market adage ‘the cure for high prices is high prices.’

Tom Tucker, president of marketing firm John Stewart & Associates, told attendees of the recent Grain Congress in San Antonio that the crude oil price, as well as the price of gasoline and natural gas, is expected to drift down into 2010 from the sharp increases of last year, according to the 2006 Annual Energy Outlook forecast of the U.S. Energy Information Administration. See EIA energy price forecasts online at www.eia.doe.gov/oiaf/forecasting.html.

The EIA forecasts that the average world crude oil price will continue to rise through 2006, and then decline as new supplies enter the market.

Today’s energy prices are a “new paradigm,” says Tucker, meaning that while long-term energy prices are forecast to remain stable, the bar is still set at a sharply higher level than just a few years ago – barring the unforeseen, it’s unlikely that the pump price will spike back up to $3/gal, but it’s also unlikely to fall back into the lower $1/gal range.

Since 2000, world oil prices have risen sharply as supply has tightened, first as a result of strong demand growth in developing economies such as China, and later as a result of supply constraints resulting from disruptions and inadequate investment to meet demand growth.

Ethanol use to zoom

One positive offshoot of high energy costs is increasing demand for renewable fuels, primarily ethanol, which Tucker says is limited in growth only by transportation and supply.

Despite talk about other sources to make ethanol (like switch grass), Tucker believes corn will remain the primary energy source for ethanol production, forecast to boom in the coming years. U.S. government estimates are for U.S. corn ethanol production to zoom from just under 4 billion gallons in 2005 to nearly 10 billion in 2015, and some private estimates are even higher.

Even that phenomenal growth, however, would barely make a dent in U.S. motor gasoline use – if corn ethanol consumption trends according to forecast, it would still comprise less than 5% of total U.S. transportation energy into 2030.  In 2015, corn ethanol production of about 9.5 bil gal (from 3 .4 bil bu of corn) would represent about 4% of motor fuel useage, saving some 420,000 barrels per day of oil imports (from a total of 10.5 million barrels per day of oil imports).

Tucker notes that the boost in ethanol consumption would be expected to have a “trickle-down effect” on wheat, indirectly providing some support in cash price. And what happens if the corn price spikes to $3?  It would take longer to pay off the investment in an ethanol plant, but corn buyers and ethanol users are able to project and thus hedge their supply needs in the marketplace.