ShareThisSugar Makes It's Case
Hello, I'm Mark Pearson.
The numbers confirming a slowing economy continue to flow into the marketplace. Consumer inflation is in check, factory activity has fallen for the 9th straight month, and the commerce department reports businesses are beginning to make a dent in unsold inventories. But economic recovery continues to be a distant gleam on the horizon.
In farm country prospects are less encouraging. After a brief weather rally, grain and oilseed prices have fallen as crops begin to look more certain. Moreover the stable U.S. economy has strengthened the dollar which effectively raises prices on U.S. farm exports.
Outside the marketplace the Washington farm lobby is working hard to mine what has become the mother load of the modern agricultural economy.
Hearings on the 2002 farm bill continued in the Senate this week with pitches from the sugar and peanut industries. Both rely on government programs that balance domestic consumption with import quotas to manage supply. But both have been plagued in recent years by burdensome supplies and a decreasing number of processors, even as retail prices continue to rise.The numbers confirming a slowing economy continue to flow into the marketplace. Consumer inflation is in check, factory activity has fallen for the 9th straight month, and the commerce department reports businesses are beginning to make a dent in unsold inventories. But economic recovery continues to be a distant gleam on the horizon.
In farm country prospects are less encouraging. After a brief weather rally, grain and oilseed prices have fallen as crops begin to look more certain. Moreover the stable U.S. economy has strengthened the dollar which effectively raises prices on U.S. farm exports.
Outside the marketplace the Washington farm lobby is working hard to mine what has become the mother load of the modern agricultural economy.
Sugar industry representatives place much of the blame in imports. Last year, 15 percent of domestic sugar consumption came from sugar import quotas mandated by the WTO and NAFTA. As a result, they say, wholesale refined sugar prices have sunk to 22 year lows, and sugar was forfeited to the government last year for the first time in two decades.
Jack Roney, American Sugar Alliance: "We must import this foreign sugar whether we need it or not. And Mexico wants more. Mexico is disputing NAFTA sugar provisions and demanding unlimited duty-free access to the U.S."
Consumer groups, citing the growing spread between retail and wholesale prices, blamed the government program for encouraging overproduction. They noted government costs for the sugar program have risen from zero in 1996 ... to $465 million last year.
Art Jaeger, Consumer Coalition of America: "Growers comments to the contrary, imports are not the problem here. The problem is our high sugar price support which has led to an unmanageable surplus of sugar."
Indiana Republican Richard Lugar, a long-time critic of the sugar program, said that 40 percent of the government payout last year went to just 1 percent of the nation's grower processors.
SLUG: Harkin
Iowa Democrat Tom Harkin, the new chairman of the Senate Agriculture Committee, has pushed conservation measures as a way to decouple government subsidies from most commodities.
While House lawmakers have promised their version of the farm bill before Congress takes its August recess, a Senate package is not likely before October.
Legislation that is being pitched by House Agriculture Committee Chair Larry Combest is already being actively opposed. The Nebraska Center for Rural Affairs is harshly critical of the measure's lack of limits on the amount of government subsidies that would be allowed to individual farmers.
The Center's opposition comes on the heels of a GAO study reporting 43 percent of government payments in 1999 went to farms with more than 250-thousand dollars in sales.
EPA Cracks Down on Seaboard
The presence of large-scale livestock, especially pork and poultry, production remains one of the most contentious issues in Rural America. For years critics have contended the size and the manure output of such facilities were a threat to the economy and environment of rural communities. The critics have also argued such operations are factories and should be regulated as such.
There have been various efforts by states and even local governments to do that. And, in recent weeks a federal agency has been taking steps toward such regulatory oversight.
In a case that may have widespread ramifications, the Environmental Protection Agency is ordering Seaboard Farms, of Hennessey, Oklahoma to comply with a law governing hazardous waste from industrial or municipal sources. There have been various efforts by states and even local governments to do that. And, in recent weeks a federal agency has been taking steps toward such regulatory oversight.
The EPA took the action after discovering a private well near the operation was contaminated with excessive levels of nitrates.
Studies have associated nitrates with a number of human health risks including cancer, miscarriages, and "blue baby syndrome."
Monitoring wells at hog waste lagoons near Hennessey, were found to have nitrate levels 10 times the amount which the government believes to be safe. The EPA believes waste from hog lagoons leaked into local groundwater supplies.
(Slug: Hogs or Effluent)
Under the Resource Conservation and Recovery Act, the EPA has authority to issue administrative orders when the handling or disposal of hazardous waste poses imminent and substantial endangerment to health or the environment.
While acknowledging it isn’t sure the nitrates came from lagoons, the EPA ordered Seaboard and a former owner of the operation to investigate and clean up any contamination. Seaboard supporters claim runoff from nearby wheat fields is the source of the nitrates.
The National Pork Producers Council, or NPPC, adamantly opposes applying laws meant to regulate hazardous waste to hog manure, and the NPPC claims the case against Seaboard could lead to similar actions against cattle and poultry producers as well.
Meanwhile in Iowa, the nation's largest hog producing state, where hogs outnumber people five to one, more than a thousand operations are getting a reprieve from regulation.
In an effort to curb nitrate and phosphorous runoff, a 1998 state law was enacted to regulate how manure could be applied to farmland. The law required larger operations to file management plans.
But, Iowa's Environmental Protection Division is behind in reviewing the plans. Officials blame the backlog on a shortage of staff.
Internet Proves Useful to Rural America
The cold reality that the potential profitability of World Wide Web enterprises was largely inflated hit Wall Street hard. Stock indices tumbled as the gaze of financial analysts fell to the drooping bottom lines of dot.com balance sheets.
Despite its raw commodity orientation American agriculture has not been immune from the fall of dot.coms. Farm country boasted more than a few ventures hoping to harness the technology to the global marketplace.
The Internet has not become the marketplace panacea of countless predictions. A quick study of agriculture could have, perhaps, predicted as much. Endless supplies of bulk commodities, whether grain or information, do not necessarily translate into profits.Despite its raw commodity orientation American agriculture has not been immune from the fall of dot.coms. Farm country boasted more than a few ventures hoping to harness the technology to the global marketplace.
Scott Cavey, E-markets: "The biggest obstacle, I think, in the last year, has been somebody in rural America actually, having something worthwhile to do on the internet besides playing games or e-mail. There really hasn't been anything substantial in agriculture that a farmer would go on and do a bulk of their business for. They used it as an alternative or another way, but not as their fundamental business process."
However, that tide is quickly turning as development moves away from the internet as a target audience and is instead developed as a tool for agriculture.
Closest to home are co-ops that have made member accounts available online along with account inquiry and management services. The internet has also expanded the number of grain marketing tools available to the farming community through co-ops like the West Central Cooperative in Iowa.
Roger Fray, West Central Cooperative: "What we're trying to help him do, is simplfy marketing by basically, helping him execute. We know what prices we like....many times, we know seasonally, when we should be doing something but between being busy and maybe, rethinking thoughts or whatever, we don't execute like we should. So, it's an execution tool as much as anything for us."
The Network for Rural America
Despite some falters, the potential of the internet remains. It can expedite the flow of information and that can accelerate a host of commercial activities.
Indeed, so-called "business to business" commerce continues to expand. Rather than tapping broad markets such ventures may identify and fill a variety of needs within a single company or industry.
A case in point is the experience of E-markets, an Ames, Iowa business. Tyler Teske reports.
Indeed, so-called "business to business" commerce continues to expand. Rather than tapping broad markets such ventures may identify and fill a variety of needs within a single company or industry.
A case in point is the experience of E-markets, an Ames, Iowa business. Tyler Teske reports.
On the surface, Iowa-based E-markets looks like any dot-com company. There are programmers, project coordinators and designers. But, E-markets differs from many of its internet dependant cousins. Besides turning a profit, chief operating officer Scott Cavey says the philosophy driving E-markets is a desire to meet a universal need of businesses. Scott Cavey, COO E-markets: "…The key, is using the internet to make existing processes more efficient, streamline those processes, and create profitability along the whole value chain in agriculture versus using the internet as a specific target audience. It's a way to communicate, connect with customers up and down the chain, not to replace people within that value chain."
Cavey and many members of the company have a history with agricultural sector mainstays such as Pioneer Hi-Bred, Purina Mills, Cargil and Farmland. That experience has translated into widespread usage of E-markets products by roughly three thousand businesses, mostly in the central U-S.
Since its inception in 1996, E-markets has been creating solutions for seed management through a product called NetOrder. The application essentially cuts paperwork, and time, out of the ordering process, and is capable of managing the huge volumes of data generated by the transactions.
The fully customizable system has been used by a variety of seed companies. In 1999, the Land-o-Lakes seed arm Croplan genetics began using a version of NetOrder to manage seed distribution. The management system was tailored to the needs of Croplan and then branded with the SOAR 21 name. Now, three years later, roughly 90 percent of the elevators in the Land-o-Lakes system are using
SOAR 21.
Croplan is pleased with the system because it reduces paperwork and updates seed sales in real time. The company’s seed hybrids are never oversold and they can easily track sales and product movement.
Croplan is not the only beneficiary of SOAR 21. Dale Vos is the seed manager at the S-C-E Sully in Sully, Iowa, part of the Land-o-Lakes, Cenex Harvest States, Farmland system. Like others who use SOAR 21, Vos would not want to give up the application.
Dale Vos, SCE Sully: "I deal with several different companies and what I like about the Croplan System, is that they take those different companies and bring them under one umbrella. I can still keep those things separate but I don't have to keep this set of books for this company and this set of books for this company and that umbrella effect is a very effective tool for us."
According to Vos, SOAR 21 is continually evolving. As one of the first elevators to use the system, he has seen the growth and betterment of the product. Vos claims E-markets and Croplan have been responsive to his concerns and needs, and the software reflects changes based on user feedback.
Responsiveness to customer needs is part of what has driven the expansion of E-markets.
Bill Towles, Bunge Corporation: "We were impressed with their willingness to work with us and to jump through hoops, if you would to make things work for both us and the customer."
Bill Towles is the E-business manager for Bunge Corporation, one of the world’s largest grain and oilseed merchandisers.
Bunge has tapped into an E-markets product called E-Xchange to sell soybean hull pellets used for animal feed. E-Xchange works much like a trading pit. Through an internet login, buyers can an offer a price for the quantity they want to buy. Bunge can counter or accept and the entire transaction can be done electronically any time of the day. Typically, this process involves multiple phone calls, a considerable amount of paperwork and verification of orders through the postal service.
Bill Towles: "We attempted to do that over the years, eliminate paper as much as possible. We felt like this was a continuation of evolution to the internet and that we needed to participate at some level, and we opted to start with attribute E-Xchange, because we felt that would solve a problem for us, down the road, if we were successful."
Bunge is currently using E-Xchange at two soybean processing sites, one of which has moved all of its soybean hull pellet buyers online. If E-xchange continues to work well, the application will be used throughout Bunge’s operations.
Geography and a desire to reduce efficiency killing tasks, such as paper-pushing, are steering agriculture to the internet. Towles claims the trend is because of a bottom line influence.
Bill Towles, Bunge Corporation: "…It validates the flow of information electronically, versus the physical processing of paper. And that's a benefit to the customer. He has basically a 24 by 7 opportunity to trade or to interact with the business and he can do it on his own term. And that adds value to his relationship with us and it allows us to be more efficient in the way we process data."
The internet also holds less obvious benefits. While those who regard the internet as lacking usefulness will likely be left behind, those interviewed by Market to Market feel the internet only expands the possibilities for agriculture.
Cavey: "It's really the savior, in my mind, for elevators being able to handle a larger, broader audience without having to add exponentially staff to do it. Don't distract that or confuse that with finding people they don't know, because the harsh reality in agriculture is, an elevator manager knows all the people that are growing grain in a 50 mile radius, that have the likelihood of delivering grain to their facility. But it's about how can you do a better job facilitating their needs, servicing them, getting them the information on a timely basis that they are looking for…"
For Market to Market, I’m Tyler Teske.
Market Analysis: Jul 20, 2001
The grain markets finished a roller-coaster week sharply lower as the high pressure ridge over the cornbelt never fully materialized. For the week, wheat prices were down more than three cents. Corn prices were down more than 15-cents. Soybean futures were down more than 30-cents. Soybean meal finished $6.60 lower per ton. Cotton futures were down 9-cents.
In livestock, fed cattle futures were down 17-cents. Feeder cattle were down 20-cents. The lean hog contract finished 42-cents lower.
In the financials, COMEX gold gained $2.60 per ounce. The Euro gained 176-basis points against the dollar. And, the CRB index finished the week three-and-half points lower to close at 203.70.
In livestock, fed cattle futures were down 17-cents. Feeder cattle were down 20-cents. The lean hog contract finished 42-cents lower.
In the financials, COMEX gold gained $2.60 per ounce. The Euro gained 176-basis points against the dollar. And, the CRB index finished the week three-and-half points lower to close at 203.70.
