MONTHLY NEWS REPORT ON GRAINS ISSUE 60 –MARCH 2010 IN THE NEWS: • EU Grain Farmers Ready to Hedge on Reform • No Rise Expected for Wheat Prices (Australia) • Grain Market Report Summary (IGC) • Drought in Southwest China has Limited Impact on National Grain Supply • Syria Becomes Net Importer of Wheat • Algeria Plans to Export Barley for First Time in 40 Years • Global Food Security Depends on Modern Agriculture • India Rules Out Wheat Exports, Favours Stepping Up Allocation • Hunger Knows No Borders • The True Cost of Cheap Food • Asia's Top Five Wheat Importers (Russia) • Lots of Wheat Will Keep Prices Down • Red Menace: Stop the Ug99 Fungus Before Its Spores Bring Starvation NEW REPORT: • US Baseline Briefing Book: Projections for Agricultural and Biofuel Markets (FAPRI) • Effects of US Maize Ethanol on Global Land Use and Greenhouse Gas Emissions: Estimating Market Mediated Responses UPCOMING MEETING: • International Grain Trading Conference (Russian Grain Union and APK-Inform Agency) April 13-15, 2010 Sharm El Sheikh, Egypt • Grains Conference (International Grains Council) June 8, 2010 – London, England WEB RESOURCE: • Global Trade Analysis Project (GTAP) https://www.gtap.agecon.purdue.edu/ ============================================================================ IN THE NEWS: ============================================================================ 30/03/10 – Guardian.co.uk EU GRAIN FARMERS READY TO HEDGE ON REFORM Demand for futures contracts and other hedges from European grain farmers is set to grow as impending market reforms force them to use financial products as a cushion against price movements. U.S. and Australian farmers have long hedged against price movements by buying or selling futures contracts, which are not physical transactions but exchange-traded agreements to deliver grain at a set price on a set date. Financial hedges exist in Europe, but demand has so far been limited. Reuters data show turnover in Paris for front-month wheat futures contracts was 216,000 50-tonne lots (10.8 million tonnes) in the last quarter of 2009, compared to the equivalent of 316 million tonnes in Chicago . Instead, farmers in Europe have largely relied on European Union "intervention" policy, which guarantees farmers can sell feed grains at a minimum price. However, Brussels will suspend automatic intervention as of May 31, and farmers will have to cope with more volatile prices in future "Futures and options are indeed an important tool that will grow if the European intervention system disappears," said Lionel Porte, head of agricultural commodities products at NYSE Liffe, the European derivatives unit of NYSE Euronext . Although thin, futures volume on Euronext has been growing steadily for the past couple of years. AUSTRALIAN EXAMPLE Australian farmers often deal through banks in international futures adjusted by banks to the exchange rate between the Australian dollar and U.S. dollar, known as swaps. National Australia Group is one of the biggest hedgers of wheat in Australia and is ready to offer financial hedges to farmers in Britain through its Clydesdale and Yorkshire Banks unit. "The swaps should appeal to European producers. Some of the benefits are: They allow growers to price grain beyond the maturities offered by grain merchants and in some cases the underlying futures market," said Rod Fraser, Head of Agribusiness for NAB. COOPS READY Analysts said hedging was likely to be more attractive to cooperatives in Europe, who can pool resources, rather than small farmers, many of whom would likely prefer to hedge indirectly, through a grain merchant. Spain's Farm Cooperatives group has already been holding courses for its members on futures and options trading in Paris and Chicago, to prepare for intervention reform. "Moving from theory to practice will be the hard part," said Cooperatives grain technician Antonio Caton. "But it's coming because the market is demanding it more each day. It's a way for the supply and demand side to ensure prices, just like the demand for insuring production." Caton noted the Spanish market had taken a tentative step towards hedging with forwards contracts currently being offered nine months ahead for the first time in memory. A forward is a private agreement to sell at a later date. Like many EU countries, Spain does not have a centralised commodities exchange on which to trade futures. FARM POLICY REFORM AWAITED Before commiting to financial hedging, some farmers are waiting to see how Brussels overhauls the 50 billion euro ($67.54 billion) a year Common Agricultural Policy (CAP) in 2013. Many expect the EU retain some form of market management In the debate on CAP reform, there has been talk of creating tightly regulated futures markets for agricultural commodities as a way of helping producers hedge against future price fluctuations, but discussions are still at an early stage. As an example of market management, Christian Vanier, a senior official at French farm office FranceAgriMer, noted that Brussels recently responded to a collapse in milk prices by creating tenders for milk powder and butter. "The Commission showed it can quickly react to market difficulties. There is no reason why it wouldn't do the same with grains," Vanier said at a news conference. (Additional reporting by Sybille de La Hamaide, Gus Trompiz and Valerie Parent in Paris, Nigel Hunt in London, Charlie Dunmore in Brussels, Svetlana Kovalyova in Milan and Barbara Skladowska in Warsaw; Editing by Keiron Henderson) ($1=.7403 Euro) ============================================================================ 26/03/10 – World-Grain.com NO RISE EXPECTED FOR WHEAT PRICES (AUSTRALIA) Grain traders say growers could be in for a prolonged period of low wheat prices as high stocks cause a global glut. Queensland-based PentAg says the larger volume of wheat has meant the global price hasn't moved significantly in around eight weeks. PentAg's Steve Sloss says something drastic would have to happen for the price to shift. "Unless we see a serious deterioration of someone's crop around the world and we talking about an event in the order of 10,000 to 15,000 tonnes, it's going to be a tough grind to push prices higher in the near term," he says. "Consumers both domestically and international are choosing to buy everything hand to mouth, which again is not new, but that continued buying pattern has made it a bit tough for us to get any sort of a rally in our markets here in Australia." ============================================================================ 25/03/10 – International Grains Council GRAIN MARKET REPORT SUMMARY Ample supplies and a mostly favourable outlook for upcoming harvests pressured grain export prices, although US futures remained volatile. Quotations in some exporters such as the EU, having benefited from the stronger US currency, were underpinned by the resultant increase in sales. Wheat markets mostly weakened in the past month, with buying activity largely routine and northern hemisphere winter crops developing favourably. Significant were a number of sales from EU and Black Sea origins to South America, reflecting their increased competitiveness against North American supplies. Notable was the strength in premium protein wheats, attributed to tightening availabilities. Although US maize (corn) futures fluctuated on a daily basis in response to movements in the dollar, crude oil and technical trading, prices generally eased in March, with new official estimates confirming smaller than anticipated exports and lifting the carryover forecast. Moreover, weather in the Corn Belt improved recently, with an upcoming annual survey report expected to reveal a significant increase in planting intentions for the 2010 crop. During much of the past month, oilseed markets were bearishly inclined as substantial new crop soyabean supplies became available in South America. However, concerns about port logistics in Argentina and Brazil and renewed speculative short-covering in US futures provided support over the period. Export quotations for white rice in Thailand touched two-year lows in March, reflecting reduced buying activity and advancing Asian harvests. Despite recent volatility in the minerals-oriented Capesize sector, ocean freight rates for grains and oilseeds steadily firmed in response to active chartering. Full summary of report is available at: http://www.igc.org.uk/en/publications/grainmarketreport.aspx ============================================================================ 24/03/10 – World-Grain.com DROUGHT IN SOUTHWEST CHINA HAS LIMITED IMPACT ON NATIONAL GRAIN SUPPLY Drought in southwest China is expected to have limited impact on national grain harvest this year, but may affect grain consumption in certain regions and raise market expectations of inflation, insiders say. The severe drought has led 18.05 million people and 10.17 million livestock short of drinking water, and affected 96.54 million mu (about 6.44 million hectares) of arable land in southwestern China's Yunnan province, Guizhou province, Guangxi Zhuang Autonomous Region, Chongqing Municipality and Sichuan province, accounting for 85 percent of the country's total drought-stricken tillable land, according to the latest statistics from the State Flood Control and Drought Relief Headquarters. Yunnan suffered the severest drought, with 3.19 million hectares of arable land having been affected. Sichuan is a major grain production base in China. Its rice output takes up 8 percent of the country's total, while its corn, soybean, and wheat output each account for around 4 percent. However, the province's drought area is less than 4 percent of the nation's total planting area and thus is predicted to have only a minor impact on this year's grain production. Shao Wenzhong, an analyst with Changjiang Securities, noted that grain output in Yunnan, Guizhou and Guangxi only made up 7.7 percent of the national total in 2008, with cereal, beans and potatoes output accounting for 7.2 percent, 8.4 percent and 14.7 percent. These provinces and region produced 11.4 percent of rice, 1.1 percent of wheat, and 6.8 percent of corn for China that year. Ma Wenfeng, an analyst with Beijing Orient Agribusiness Consultant Ltd., a leading agriculture and food business consulting company in China, estimated that the drought would cause Yunnan's spring grain output to fall by above 50 percent from last year. The province's spring grain output usually holds at around 2.3 million metric tons (tonnes), or 15 percent of its annual grain production. Shao pointed out that the drought would mainly lead to a fall in output of summer grain. Pessimistically, suppose that drought-ravaged Guangxi, Yunnan and Guizhou fail to reap summer grain; the country's rice, corn, and wheat supply would fall just 1.46 percent, 1.74 percent and 0.93 percent, respectively. Such a reduction would not have much impact on the national grain supply in consideration of the three crops' ample stocks, Shao added. Although the total grain supply will not be affected significantly by the drought, grain prices may still rise in the following period. Ma pointed out that drought will exert pressure on regional grain production and consumption, which is expected to boost local grain prices. He added that market expectations for inflation will also help push up grain prices. Some insiders pointed out that the worsening drought would drive up planting costs. Furthermore, the rise of the grain floor-price and fertilizer price this year will give support to grain prices. Ma meanwhile said that grain prices have limited room to rise, as the government is able to use ample stockpiles to stabilize market prices. ============================================================================ 23/03/10 – World-Grain.com SYRIA BECOMES NET IMPORTER OF WHEAT Syria became a net importer of wheat in 2009-10 due to a severe drought and a limited local crop in 2008, according to a March 22 report by the U.S. Department of Agriculture Foreign Agricultural Service (FAS). The 2010-11 wheat crop is forecast at 4.5 million tonnes with improved rainfall and imports will decline, FAS said. The government purchase price of $440 per tonne is at least double international prices. Russia and Ukraine were the main suppliers of wheat. FAS said Syria's corn imports are expected to continue to grow and are forecast to exceed 1.5 million tonnes in 2010-11. The U.S. has been the main corn supplier, but competition from Black Sea countries is increasing, FAS said. Syria continues to diversify the sources of imported rice as high prices and export restrictions make Egyptian rice less attractive. ============================================================================ 22/03/10- World-Grain.com ALGERIA PLANS TO EXPORT BARLEY FOR FIRST TIME IN 40 YEARS Citing an official in Algeria's Agriculture Ministry, Reuters recently reported that the country would like to export 300,000 tonnes of barley in its first foreign sale of the grain in 40 years. The country's National Cereal Agency (OAIC) said it has secured 2.1 million tonnes of grain stocks due to a strong harvest in 2009, which, according to OAIC director Nouredine Kahal, represents six months of the country's needs. In addition, Algeria has 570,000 tonnes of durum wheat in stock, which can cover five months of consumption. Kahal also said that Algeria's goal is to build up grain stocks of 4 million tonnes in 2010. Significance:Algeria is one of the world's biggest importers of cereals, with cereal imports standing at 6.3 million tonnes in 2008 and averaging 5 million tonnes over the past five years, but the record harvest of 2009 is turning the country into a net exporter of barley. Officials are hoping to beat last year's grain harvest as adequate rainfall has improved yields. The government remains committed to boosting agriculture production by providing financial incentives, such as subsidies for fertilisers and high-yielding seeds, the provision of plowing and sowing equipment, and soft loans for farmers. ============================================================================ 19/03/10 – WolrdSentinel.com GLOBAL FOOD SECURITY DEPENDS ON MODERN AGRICULTURE Studies released at a symposium in Washington, D.C. underscored the wide range of benefits modern agriculture has provided to society and emphasized the importance of continued innovation and new technologies to meeting growing global food, feed, fiber and industrial needs. Research presented by a diverse group of experts in agriculture, economics, conservation and food security detailed how technological advancements employed on farms and across the food chain have provided an abundant, safe, affordable food supply while fostering economic development by enabling fewer and fewer people to produce the food required by society. "Modern agriculture offers a range of benefits, including greater production and higher incomes for farmers -- including small producers -- in both developed and developing countries. Technical advances also have sharply reduced environmental impacts, enabling reduced pesticide, herbicide and fertilizer use, less tillage, and less land and water use per unit of output—all decreasing pressure on fragile global ecosystems," said Bill Motes, agricultural economist. "Agricultural development has brought improved living standards as smaller shares of disposable income are needed to purchase food, as well as enhancing social stability as food insecurity is avoided." "Too often science and technology get short shrift, along with the contributions of the private sector. We cannot meet the food and other requirements of a larger, more affluent global society without the scientific advances that underpin modern agriculture," said Michel Petit of the Institut Agronomique Méditerranéen in Montpellier, France. "The world has seen impressive growth in global agriculture in the past decades. As we face growing global demands and increasing resource constraints, agriculture must now become more sustainable." The full scope of the enormous challenge facing global agriculture in the coming decades was fully evident from projections presented by John Kruse, Global Insights economist. His study provided detailed projections for more than a dozen major crops in the important producing and consuming regions of the world. His projections indicated that overall crop demand will expand from present levels by approximately 85% to 2050. Another study indicated that other considerations are now more prominent and must be factored into the future challenge. "For the past 50 years, we have expanded food production by converting natural habitat at the rate of 0.4 percent per year. If we assume the ´business as usual´ case for expanding into natural habitat, there will be very little left by 2050," said Jason Clay of the World Wildlife Fund. "To feed 9 billion people and maintain the planet, we must freeze the footprint of food. The Earth´s resources are finite. If we exceed the carrying capacity of the planet, we are taking away the very resource base that will be needed by our children and our grandchildren." To examine the implications of freezing agriculture´s footprint, IHS Global Insight calculated the crop yield increases that would be necessary to meet global demand if the total crop area is fixed at the current level. "Holding crop area fixed and assuming only historical yield growth, food production will fall far short of the needs by 2050," said John Kruse. "Meeting those needs with the same land area would require global crop yields to increase nearly 25 percent faster than historically." William G. Lesher, Executive Director of the Global Harvest Initiative, noted that other resources used in agriculture may become more constraining, as well. "In addition to land, the availability of fresh water will increasingly be a limiting factor, necessitating that productivity rates accelerate even faster," said Lesher. "We need a major boost in water-use efficiency, what some call a ´Blue Revolution,´ to stretch our scarce water supplies significantly." The studies examined a range of potential solutions for meeting these challenges, agreeing that progress will come through a variety of efforts, including improved public policies and increased infrastructure investment, as well as new technology. Senator Richard Lugar (R-Indiana) emphasized the need for a renewed focus on agriculture development and increased political will for change if we are to succeed in creating a more secure world. "World peace will not be built on empty stomachs or human misery; a world in which 40 percent of the total population is marginalized in the global economy is not one where peace or environmental stewardship will prosper," said Lugar. "Modern agriculture is not the nemesis of the environment or socio- economic development; rather it is one of their greatest allies." Christopher Dowswell, for 31 years aide de camp to the Green Revolution´s Norman Borlaug, concurred, adding that while developing new crop varieties to increase potential yield is absolutely necessary, it is far from sufficient. "In attempting to bring the Green Revolution to Africa, for instance, agricultural experts developed impressive packages of technology during the 1980s that, on farmers´ demonstration plots, produced yields two-to-three times higher than average," said Dowswell, who is now with the Sasakawa Africa Association. "Yet a Green Revolution failed to take off, because Africa, unlike Asia and parts of Latin America, lacked roads, railroads, power grids, irrigation systems, market institutions to deliver seed and fertilizer and to handle the increased harvests, and farmer incentives from governments to encourage modernization. " While the studies described the progress that´s already been made, they also underscored the tremendous amount of work that still needs to be done. In summarizing the discussion, William Lesher said: "It is clear that we have a productivity gap going forward, a gap that we must begin now to close. If we are to double agricultural output by 2050 and do so with basically the same amount of land and water as we have today—while also reducing the environmental footprint—then clearly we must become more productive than we have been in the past. That is the productivity gap, that is our challenge!" The Global Harvest Initiative is dedicated to spurring the development and sharing of agricultural innovations with those that need it most. Members include Archer Daniels Midland Company, Conservation International, DuPont, International Conservation Caucus Foundation, John Deere, Monsanto, TransFarm Africa Corridors Network, and World Wildlife Fund. Further support is welcome from public and private sectors entities sharing the goal of closing the global productivity gap. For more information, visit www.globalharvestinitiative.org. ============================================================================ 19/03/10 – World-Grain.com INDIA RULES OUT WHEAT EXPORTS, FAVOURS STEPPING UP ALLOCATION Indian Food and Agriculture Minister Sharad Pawar yesterday ruled out exporting surplus wheat lying in warehouses to reduce the stock and instead favoured stepping up allocation to Above Poverty Line (APL) families. "There is no question of allowing wheat export. My ministry has proposed to allocate more wheat to the APL families. The issue was to be taken at the EGoM meeting today, but it has been postponed," he told reporters on the sidelines of an agriculture conference here. As on March one, the wheat stock in the Central Pool was 183.88 lakh tonnes, much more than the buffer requirement of 40 lakh tonnes until April one, according to government data. The minister also indicated that the government will extend the duty free import of wheat beyond March 31 - a move that was introduced in 2008 to increase wheat availability in the domestic market to cool prices. "We will not take any decision, which will increase the prices, but the decision will be taken by the Cabinet," Pawar said. Pawar also expressed hope that India's sugar production will cross 17 million tonnes this season (October- September), since the recovery rate and productivity of sugarcane have improved. If India produces 17 million tonnes of sugar, import requirement will also be reduced since the earlier estimates suggested sugar output at 15-16 million tonnes against the country's requirement of 22-23 million tonnes. ============================================================================ 18/03/10 – IRINNews.org HUNGER KNOWS NO BORDERS West Africa can meet its food needs through regional trade, most agricultural experts say, if countries keep their borders open for the free flow of staple grains, especially in times of heightened stress, whether climatic, economic, or brought on by conflict. In the fourth and final part of the series "Are we heading for another food crisis?", we take a brief look at West Africa, where prices have begun to rise and failed rains have left 10 million people across the Sahel food insecure, after barely recovering from the 2007/08 food price crisis. After three years of good harvests, in 2009 Niger was again in the food security headlines after poor rains let it down. It was last in the news in 2004, when a combination of poor rains and one of the worst locust infestations in 15 years left more than two million people in need of food aid. What aggravated the crisis - which spilled into 2005 - was the closure of borders, a decision that hampered the free flow of food, said a paper commissioned by the Famine Early Warning System Network (FEWS- NET). "In 2005 the situation was made worse when neighbouring countries closed their borders with Niger. This limited the availability of food and increased inflation," said the UK-based aid agency, Oxfam, which called on countries in the region to keep their borders open. In 2005 the situation was made worse when neighbouring countries closed their borders with Niger Niger and neighbouring Nigeria - the "giant" in the region, "accounting for 57 percent of total grain production in West Africa" - both had bad harvests In 2004/05, the FEWS-NET paper said. Nigeria banned the export of cereals as well as "imports that Nigeriens depended on for cash incomes". Burkina Faso, another neighbour, banned exports in 2004, "blocking another potential source of grain for Niger". Although prices fell slightly after the 2009 harvest, in most West African countries they remained higher than two years before, and have again started climbing in several countries in 2010, said the UN Food and Agriculture Organization (FAO). "Sahelian cereal markets are highly integrated among themselves and with coastal countries in West Africa; hence, prices in any individual Sahelian country are influenced by production results, changes in demand, and changes in price throughout West Africa; this particularly true for coarse grains [cereals other than wheat and rice], as they are rarely imported into the region," the FEWS-NET paper said. Ousmane Badiane, director for Africa at the US-based International Food Policy Research Institute, said high prices were here to stay, as the costs of agricultural inputs had increased enormously. He pointed out that if the global prices of wheat and rice were to rise, this could aggravate the situation in many cereal-importing countries in West Africa. Failed rains in some of the world's largest rice producers in Asia are causing global concern about the price of rice. The FEWS-NET paper noted that rice and wheat were important to many people in the urban areas of West Africa, and rarely substituted them for cheaper locally available staples. Humanitarian agencies have appealed for US$370 million to fund various initiatives in West Africa, of which only 3.1 percent has been covered. To see a snapshot of eight West African countries in need of food aid, based on information sourced from FAO and other agencies: http://www.irinnews.org/Report.aspx?ReportId=88478 ============================================================================ 17/03/10 – Resurgence.org THE TRUE COST OF CHEAP FOOD The globalisation of the food market has made food cheap, but who is benefiting? Cheap food causes hunger. On its face, the statement makes no sense. If food is cheaper it’s more affordable and more people should be able to get an adequate diet. That is true for people who buy food, such as those living in cities. But it is quite obviously not true if you’re the one growing the food. You’re getting less for your crops, less for your work, less for your family to live on. That is as true for Vermont dairy farmers as it is for rice farmers in the Philippines. Dairy farmers today are getting prices for their milk that are well below their costs of production. They are putting less food on their own tables. And they are going out of business at an alarming rate. When the economic dust settles, this will leave us with fewer family farmers producing the dairy products most of us depend on. This is the central contradiction of cheap food. Low agricultural prices cause hunger in the short term among farmers. And they cause food insecurity in the long term because they reduce both the number of farmers and the money they have to invest in producing more food. An estimated 70% of the world’s poor live in rural areas and depend either directly or indirectly on agriculture. Cheap food has made them hungry and kept them in poverty. It has also starved the countryside in the developing world of much-needed agricultural investment. Farmers have nothing to invest if they are losing money on their crops. The food crisis has indeed served as a wake-up call for governments and international agencies responsible for such matters. Among those most shaken from their policy slumber were officials at the World Bank, which cut the share of its spending on agricultural development from 30% in 1980 to just 6% in 2006. But, lo and behold, the World Bank’s World Development Report for 2008 carried the subtitle Agriculture for Development. It was the first time in twenty-five years that the Bank had focused its signature publication on agriculture. The renewed attention was welcome, as it included a call to reinvest in smallholder agriculture, not just large-scale export crops. The Bank, of course, studiously avoided taking any responsibility for having promoted the very policies that caused agriculture to be neglected in the first place: not only the cuts in aid and investment, but the structural adjustment programmes, imposed as conditions on its loans, which gutted the capacity of most governments to support domestic agriculture. These same structural adjustment programmes were part of the campaign to get governments out of the economy altogether. The argument was that the market should be allowed to work its magic, to allocate resources more efficiently, to set prices without government distortions. Trade policy needed to reduce the government role as well, cutting protective tariffs and quotas and price supports, following the theory of comparative advantage. In agriculture, what that meant for developing countries was that if you couldn’t produce basic grains as efficiently – read ‘cheaply’ – as they could in the US, or Australia, or Brazil, you just shouldn’t produce basic grains. It would be cheaper – “more efficient” – to buy them on the international market. Instead, maybe you should produce, say, flowers for export, or winter strawberries for the US market. But maybe you shouldn’t produce anything because maybe your land is bad and you have no roads to get produce to a port anyway. So maybe there’s nothing the market wants from you. And it doesn’t need your home-grown grains any more because they are being imported. That’s really how the theory works. The idea is that a country can import all the food it needs, and it should do so if it can get that food more cheaply from abroad than it could by having its own farmers grow it. One obvious problem with this approach is that if farmers stop growing food, their families don’t have anything to eat, and if they can’t get jobs, they have no money to buy food. Secondly, a country can end up in a situation of food dependency, which becomes particularly problematic when prices spike and supplies get tight. That is what we saw recently with what became known as the food crisis. Countries like the Philippines couldn’t get the rice they needed. They had stopped producing enough rice to protect themselves from such a market shock, and they couldn’t get anyone to sell it to them because governments were concerned about feeding their own people first. This exposed the dangers of following policies that say you can get all the cheap food you need out in the international market. A lot of countries have taken note of that; the Philippines is now on a multi-year national campaign to restore self-sufficiency in rice production. One place where the government seems to have kept its ideological blinkers firmly in place is Mexico. There, in the birthplace of corn, where the crop was domesticated into one of the world’s most important food crops, there were tortilla riots in the streets as people couldn’t afford this most basic staple. In the fifteen years since the North American Free Trade Agreement took effect, US corn has flooded Mexico at prices half what it cost to produce in Mexico. Mexico now depends on imports from the US for more than a third of its corn. Some two million hungry farmers have left agriculture under the flood of cheap food. The food crisis also illustrates what some have called the globalisation of market failure. Globalisation involves opening markets and bringing things that are produced in different parts of the world into direct competition. The assumption – and the integrity of the economic theory hinges on such assumptions – is that those markets work; that prices actually reflect the real values of what’s being traded. In agriculture, the assumption is that efficiency equals high yield, which means low price, which reflects the actual value of what’s produced. When it doesn’t, economists call it a market failure. Agriculture is rife with market failures. You can see it in the Mexico-US trade in corn. Environmental costs are one of the key areas where the market fails to adequately value both costs and benefits. The US specialises in environmental costs. Corn is one of the most polluting US crops of all. Excessive water and chemical use, run-off of fertilisers into waterways, the dead zone at the mouth of the Mississippi River in the Gulf of Mexico: all are examples of high environmental costs from US corn production. Producers and traders pay virtually none of the costs of those damages, and the price of corn when it goes across the border into Mexico does not reflect these environmental costs. What happens on the Mexican side? Well, the smaller producers are maintaining great biodiversity – both wild and in corn varieties – with low-input systems. These positive contributions go unrewarded by the market. Corn biodiversity has virtually no value in the global marketplace, yet these corn seeds are the building block for future varieties of corn: ones we will need to withstand climate change, deal with pesticide resistance, and so on. The price of Mexican corn does not reflect these contributions to the common good. When you globalise trade, you also globalise market failure. You get under-priced US corn coming into direct competition with under-valued Mexican corn. Mexican corn loses that competition, but not because it’s less ‘efficient’. A Mexican farmer once said, “We’ve been producing corn in Mexico for 8,000 years. If we don’t have a comparative advantage in corn, where do we have a comparative advantage?” He’s right. The problem is that comparative advantage as defined by the global marketplace doesn’t value the advantage that Mexican corn offers. And in the deregulated marketplace, the only value is how cheap something is. The globalisation of market failure gives us a worsening environment, increasing poverty among food producers, increasing food dependence, and hunger. That is why one of the main culprits of the food crisis is our blind pursuit of cheap food. Globalisation cheapens everything. The problem is that some things just shouldn’t be cheapened. The market is very good at establishing the value of many things but it is not a good substitute for human values. Societies need to determine their own human values, not let the market do it for them. There are some essential things, such as our land and the life-sustaining foods it can produce, that should not be cheapened. ============================================================================ 16/03/10 – Sharenet.co.za ASIA'S TOP FIVE WHEAT IMPORTERS (RUSSIA) Russia's aim to gain a foothold in Asia's lucrative wheat business will take longer than the targeted 2-3 years as transport hurdles and consumers reluctance to accept a new origin slow Moscow's campaign in a market ruled by Australia and the United States. Russia has already grabbed a sizeable share of U.S. and European exporters in the world's biggest wheat markets of Egypt and the Middle East in recent months, worrying suppliers that the country's push into Asia may cost them profits. Asia's top 5 wheat importers: Country 2008/09 2009/10* Indonesia 5,423 5,500 Japan 5,156 5,300 South Korea 3,371 4,000 Philippines 3,201 3,000 Bangladesh 2,882 3,000 Afghanistan 3,800 2,000 * Estimates for 2009/10 ============================================================================ 10/03/10 – ABC.net.au LOTS OF WHEAT WILL KEEP PRICES DOWN The grain market is expected to remain flat as a surplus of wheat in the northern hemisphere, and good seasons in Europe put a dampener on prices. A report from the United States Department of Agriculture due out later this week is expected to confirm the grim news. It's expected huge crops in South America, India and Russia will stop the market going up. Grains analyst Lloyd George says Russia is also talking about export subsidies. "I think it is fair to say that we're going to see renewed pressure on prices, as the weight of these increasing stocks just weigh on markets over a period of time," he says. Ninety-five per cent of the world's wheat is produced in the northern hemisphere, and many of the big grain producers have had a bumper season. With the rain falling here in Australia, farmers will soon decide how much they'll plant, taking a gamble with grain. "Looking at another big wheat crop, we've had a build up in stocks. Buyers are comfortable and waiting for the wheat to come to them," he says. The Australian Bureau of Agriculture and Resource Economics recently tipped the world wheat price would decline about 6 per cent. Mr George agrees. "I think farmers will do their thing. If they've got a good opportunity [from recent rain] to plant, they will," he says. "However, grain prices do have a way of doing the unexpected at times, so it's always hard to be sure. "But as crops come out of dormancy in the US, we'll know the whole situation for sure, but the opportunity for weather problems is narrowing." ============================================================================ Feb-March 2010 – Wired.com RED MENACE: STOP THE UG99 FUNGUS BEFORE ITS SPORES BRING STARVATION As they queue to fill water jugs from a rusty communal tap, the women of Njoro can’t help but gawk at the odd scene across the road. In a wheat field ringed by barbed wire, a dozen men wearing white polyethylene jumpsuits stand in a tight huddle, eyes fixed on the green-and-amber stalks that graze their knees. They chat in foreign tongues — Urdu, Farsi, Chinese — that are rarely heard here amid the acacia trees and donkey carts of Kenya’s Rift Valley. The men’s hazmat-style safety gear suggests they might be hunting down one of the infamous viruses that flourish in this part of the world — Ebola, perhaps, or Marburg. Then the leader of the huddle, Harbans Bariana, a rotund Australian in an undersize safari hat, begins reading aloud from his clipboard: “Wylah?” he asks. His colleagues bend down to examine some flaccid plants flecked with red splotches. A lanky Pakistani with a salt-and-pepper beard rakes a finger along one of the mottled stalks; an iodine-like residue rubs off on his skin. “40 S,” he calls out. The men move three steps right to a slightly more robust clump of wheat. The Australian asks: “Yandanooka?” “25 MR?” comes the tentative reply from a mustachioed Nepali in a green baseball cap. They slide over to inspect another stalk, and then another. To the women at the tap, faces scrunched in puzzlement, the call-and-response sounds like gibberish — and to most of the world, it is. But to the jumpsuited strangers in East Africa — a group of elite plant pathologists — these codenames and numbers are a lingua franca, describing just how badly a crop has been ravaged by disease. These specialists have come to Njoro on this autumn afternoon to study a scourge that is destroying acres of Kenyan fields. The enemy is Ug99, a fungus that causes stem rust, a calamitous disease of wheat. Its spores alight on a wheat leaf, then work their way into the flesh of the plant and hijack its metabolism, siphoning off nutrients that would otherwise fatten the grains. The pathogen makes its presence known to humans through crimson pustules on the plant’s stems and leaves. When those pustules burst, millions of spores flare out in search of fresh hosts. The ravaged plant then withers and dies, its grains shriveled into useless pebbles. Stem rust is the polio of agriculture, a plague that was brought under control nearly half a century ago as part of the celebrated Green Revolution. After years of trial and error, scientists managed to breed wheat that contained genes capable of repelling the assaults of Puccinia graminis, the formal name of the fungus. But now it’s clear: The triumph didn’t last. While languishing in the Ugandan highlands, a small population of P. graminis evolved the means to overcome mankind’s most ingenious genetic defenses. This distinct new race of P. graminis, dubbed Ug99 after its country of origin (Uganda) and year of christening (1999), is storming east, working its way through Africa and the Middle East and threatening India and China. More than a billion lives are at stake. “It’s an absolute game-changer,” says Brian Steffenson, a cereal- disease expert at the University of Minnesota who travels to Njoro regularly to observe the enemy in the wild. “The pathogen takes out pretty much everything we have.” Indeed, 90 percent of the world’s wheat has little or no protection against the Ug99 race of P. graminis. If nothing is done to slow the pathogen, famines could soon become the norm — from the Red Sea to the Mongolian steppe — as Ug99 annihilates a crop that provides a third of our calories. China and India, the world’s biggest wheat consumers, will once again face the threat of mass starvation, especially among their rural poor. The situation will be particularly grim in Pakistan and Afghanistan, two nations that rely heavily on wheat for sustenance and are in no position to bear added woe. Their fragile governments may not be able to survive the onslaught of Ug99 and its attendant turmoil. The pathogen has already been detected in Iran and may now be headed for South Asia’s most important breadbasket, the Punjab, which nourishes hundreds of millions of Indians and Pakistanis. What’s more, Ug99 could easily make the transoceanic leap to the United States. All it would take is for a single spore, barely bigger than a red blood cell, to latch onto the shirt of an oblivious traveler. The toll from that would be ruinous; the US Department of Agriculture estimates that more than 40 million acres of wheat would be at serious risk if Ug99 came to these shores, where the grain is the third most valuable crop, trailing only corn and soybeans. The economic loss might easily exceed $10 billion; a simple loaf of bread could become a luxury. “If this stuff gets into the Western Hemisphere,” Steffenson says, “God help us.” He and his fellow scientists around the world are scrambling to halt the pathogen. To do so, they must figure out a way to reach deep within the wheat genome and create genetic barriers that Ug99 cannot overcome. And they must do so quickly, before the pestilence moves on to the next continent, and then the one after that — wreaking havoc on the world’s food supply. Full Text: http://www.wired.com/magazine/2010/02/ff_ug99_fungus/all/1 ============================================================================ NEW REPORTS: ============================================================================ March 2010 – Food and Agriculture Policy Research Institute (FAPRI) US BASELINE BRIEFING BOOK: PROJECTIONS FOR AGRICULTURAL AND BIOFUEL MARKETS The Food and Agricultural Policy Research Institute (FAPRI) provides analysis of agricultural and biofuel markets and policies for Congress and other decision makers. This report presents a summary of ten-year baselineprojections for US agricultural and biofuel markets. Things to look for this year Net farm income fell sharply in 2009 because of a large reduction in commodity prices from their 2008 peaks. This report suggests future recovery in farm income will be tied to developments in the broader macro economy. •Renewed income growth in the United States and other countries in 2010 increases consumer demand for meat, dairy products and clothing, contributing to higher prices for cattle, hogs, milk and cotton. •As the world economy grows, energy demand increases and average oil prices rise. The combination of rising oil prices and increasing biofuel use mandates results in continued growth in biofuel production. •While a world economic recovery supports commodity prices, large global grain and oilseed supplies put downward pressure on prices for many crops in 2010. •After peaking in 2008, farm production expenses dipped in 2009 and only increase slightly in 2010. Net faro income recovers from the 2009 low, mostly because of greater livestock sales receipts. •Policy decisions will continue to affect agricultural market results. For example, not extending biodiesel and ethanol tax credits would have important impacts under some market conditions. The extreme price volatility of 2007-2009 may continue, as many of the factors that caused recent price swings remain in flux. FAPRI recognizes this uncertainty and considers 500 alternative outcomes for the future based on different assumptions about the weather, the price of petroleum and other factors that will affect the supply and demand for agricultural commodities. The tables which follow generally report the averages of the 500 alternative outcomes, but it is important to recognize that actual market results may vary greatly from the reported averages. Full Text: http://www.fapri.missouri.edu/outreach/publications/2010/FAPRI_MU_Report_01_10.pdf ============================================================================ March 2010 - .biosciencemag.org EFFECTS OF US MAIZE ETHANOL ON GLOBAL LAND USE AND GREENHOUSE GAS EMISSIONS: ESTIMATING MARKET MEDIATED RESPONSES Releases of greenhouse gases (GHG) from indirect land-use change triggered by crop-based biofuels have taken center stage in the debate over the role of biofuels in climate policy and energy security. This article analyzes these releases for maize ethanol produced in the United States. Factoring market-mediated responses and by-product use into our analysis reduces cropland conversion by 72% from the land used for the ethanol feedstock. Consequently, the associated GHG release estimated in our framework is 800 grams of carbon dioxide per megajoule (MJ); 27 grams per MJ per year, over 30 years of ethanol production, or roughly a quarter of the only other published estimate of releases attributable to changes in indirect land use. Nonetheless, 800 grams are enough to cancel out the benefits that corn ethanol has on global warming, thereby limiting its potencial contribution in the context of California’s Low Carbon Fuel Standard. Full Text: http://www.aibs.org/bioscience-press-releases/resources/Hertel.pdf ============================================================================ UPCOMING MEETING: ============================================================================ April 13-15, 2010 Sharm El Sheikh, Egypt INTERNATIONAL GRAIN TRADING CONFERENCE Russian Grain Union and APK-Inform Agency declare about holding of the regular International Grain Trading Conference in Egypt, which will traditionally take place in Sharm El Sheikh, on April 13-15, 2010. Despite rather essential growth of competitiveness between American, the Black Sea and European grains on the markets of the countries of the North America and Middle East in the current season, it is obvious that there are no alternatives of the Black sea grains in the region. Besides, high harvest of grains owing to favourable weather conditions caused reduction of import needs of the countries - in the North Africa by 6 mln tonnes compared to 2008/09 (5 mln tonnes - lower imports of wheat). Morocco and Algeria will essentially decrease their dependance on imports. At that, Jordan, Saudi Arabia will not only decrease, but probably increase import volumes. At the same time, since beginning of the season, importers have concentrated on struggling for improvement of qualitative conditions, and tried to discredit wheat from the Black Sea region on the markets of Egypt, Syria and other countries. In such conditions, exporters from the Black Sea region had to lower own prices and actively looked for new markets. At the same time, the North Africa and Middle East are strategical export directions, and even the temporary worsening of competitive positions on the markets will not cause any negative consequences in long-term and medium-term prospects. That is why, it is important to provide active dialog of exporters from the Black Sea region and importers of the mentioned regions concerning all problematic issues of cooperation in the current season. Assisting to the active dialog between the Black Sea exporters of wheat, maize, barley and other crops and importers from the countries of the Arab world concerning the development of grain trading through solving of grain quality problems will become the main target of the International Grain Trading Conference. More information: http://www.agrimarket.info/conferences/gtc2010/ ============================================================================ June 8, 2010 – London, England INTERNATIONAL GRAINS COUNCIL GRAINS CONFERENCE LONDON, ENGLAND — The annual International Grains Council (IGC) Grains Conference will be held June 8 at the Queen Elizabeth II Conference Centre, Westminster, London. The event will bring together the world’s decision-makers and stakeholders to discuss the key issues affecting international markets and trade. The theme of this year’s conference is: "The new decade: towards greater market stability?" IGC noted that leading industry and government speakers will present their views on current grains and oilseeds developments and consider scenarios for the new decade. IGC said that after vigorous expansion in global grains and oilseeds trade in the past 10 years, medium-term forecasts suggest continued growth as economies recover from the economic downturn and as demand increases further. While markets remain unpredictable, especially after the dramatic upheavals in recent years, improvements in transparency and a better appreciation of likely future trends are vital ingredients for a more stable trading environment. With over 400 delegates attended last year’s conference, IGC noted the conference provides excellent opportunities for networking. The conference will provide simultaneous interpretation in eight languages: Arabic, English, Chinese, French, Italian, Portuguese, Russian and Spanish. For more information about the Conference and to register, please visit the IGC web site: https://www.igc.org.uk/en/conference/confhome.aspx. ============================================================================ WEB RESOURCE: ============================================================================ Global Trade Analysis Project (GTAP), The Global Trade Analysis Project (GTAP), is coordinated by the Center for Global Trade Analysis, which is housed in the Department of Agricultural Economics at Purdue University. GTAP's mission is to provide leadership in economic policy analysis through better data, fostering collaboration and research. https://www.gtap.agecon.purdue.edu/ Center for Global Trade Analysis - Working Papers http://ideas.repec.org/s/gta/workpp.html ============================================================================ WORLD FOOD SITUATION PORTAL: http://www.fao.org/worldfoodsituation/ Portail sur la situation alimentaire mondiale: http://www.fao.org/worldfoodsituation/wfs-home/fr/?no_cache=1 Portal sobre la situación alimentaria mundial: http://www.fao.org/worldfoodsituation/wfs-home/es/?no_cache=1 ============================================================================ To request previous issues of the MNR: http://www.fao.org/es/ESC/en/15/53/highlight_55.html Vous pouvez trouver les numéros précédents du MNR à la page suivante: http://www.fao.org/es/ESC/fr/15/53/highlight_55.html Se pueden encontrar los números anteriores del MNR a la página siguiente: http://www.fao.org/es/ESC/es/15/53/highlight_55.html =============================================================== If you prefer not to receive the MNR, please reply to this message by typing "remove" on the subject line. 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