IT’S ALL ABOUT BALANCE

The U.S. Grains Council convened its meeting yesterday, and a theme of the discussion could be summed up by, “What we need is balance.”

Balance…

So many of the challenges we face in agriculture tend to come because of an unbalanced discussion or unbalanced criticisms. These discussions and criticisms commonly come from outside the industry.

Internally, we face balance issues, as well. How do we balance the needs of our many customers? Should one take priority over the others? Do we sacrifice one customer because their needs seem more important than others?

How do we balance the needs of the developing world against the needs of the developed?

And in Illinois, how do we balance opportunities to export corn to other states and the world against the needs of our in-state livestock and ethanol issues?

Is this a micro issue, or a macro one? Balance…

The farmers and industry stakeholders and customers from around the world that are meeting in Panama this week are tackling issues of balance, all within the footprint of the Panama Canal.

I’ll have more about the Canal tomorrow.

Tricia Braid
ICGA/ICMB Communications Director

HAPPY HALLOWEEN!

Corn is arguably the most versatile crop in the world. Normally, we think of corn as food, and food only, when actually, less than one percent of corn in our country is sweet corn. Most people do not realize that corn has many different uses and we still continue to find more. Demand for corn has been at an all time high in 2011.

The United States is the largest producer and exporter of corn in the world.  This makes the largest net contribution to United States agricultural trade balance of all the agricultural commodities. On average around 20 percent of corn from the United States is exported. The rest we keep for our own uses.

Fuel ethanol has become a huge use of corn materials. By creating fuel ethanol with corn it has created thousands of jobs to our economy and added over 15 billion dollars to tax revenues through the federal state and the local government. This has displaced more than 445 million barrels of imported oil.

By using corn for ethanol we receive multiple products. After using the starch portion of the kernel that is converted to sugar and fermented, the rest of the kernel is used as corn oil and feed for the livestock.

One of the most important uses of corn is to feed livestock daily. Farmers like to use corn to feed their livestock because it has high-protein and high-energy.

Corn can actually help save the environment! One acre of corn can remove eight tons of harmful greenhouse gas.

Did you know corn is also used to made compostable plastics? Corn based plastics are used in utensils, gift cards, bags, plant containers, water bottles and more. Since they are compostable they will break down eventually.

Not only is corn used to make plastic materials but also there is now fabrics made from corn bio-materials. Corn replaces the oil that is usually used for polyester and nylon. These new fabrics have many advantages; such as they are much softer. Corn bio-materials can also be used to create a tough, stain resistant fiber that is used for carpets.

Researchers are now trying to find even more opportunities to use corn for more petroleum-based products. The opportunities are nearly endless. From antibiotics to frosting, to pet food to baby food, corn is a widely used crop that we could not get by without.

Hope everyone has a safe and fun Halloween with plenty of candy corn!

Emilie Gill
Illinois State University Student

INDIAN OFFICIALS VISIT A CENTRAL IL FARM

Mr. P. K. Basu, the Secretary of the Department of Agriculture for the Government of India, visited the Jeff Jarboe farm yesterday along with three other high level officials from the Government of India.

farm visit, indian officials, india, corn, farmer, tractor, wagon, grainThe Secretary and his colleagues were in search of a “typical” farming operation and were hoping to interact with local producers in the Paxton, Illinois area.

The Indian delegation was interested in understanding the role of new production technologies and seed technologies, as well as how the grain is stored after it is harvested. They were also very interested in learning more about the marketing techniques that producers use to market their crop throughout the year and the grain elevator’s role in the marketing of the grain.

The Secretary and his colleagues were shown tillage equipment, corn and soybean planters, tractors, and a combine.

Like most trade teams they found the combine of most interest and were given the opportunity to observe harvest, as well as how the grain is transported out of the field and to the bin for storage.

Most producers that I have met don’t think they do anything special in their daily lives. However, this delegation felt they observed something very special.

In addition, there was also another group from the Federation of Indian Chambers of Commerce and Industry. This group also desires a better understanding of agriculture and how to help develop linkages with the private sector.

This was a historical visit by many in the group as many have never been on a farm in the United States.

This particular visit is not unlike the other approximately 20 international visits per year that IL Corn hosts, visits with, or connects to local suppliers. IL Corn has a vested interest in improving market opportunities for IL corn farmers and visits from other countries like Mr. P. K. Basu and his colleagues are just one important way that we add value to your voice.

Phil Thornton
ICGA/ICMB Value Enhanced Project Director

See more photos from the tour here: photo album

HOUSE WAYS AND MEANS IS CELEBRATING FREE TRADE MONTH!

Earlier today, the Columbia, Panama, and Korea Free Trade Agreements were passed out of the House Ways and Means committee The Columbia vote was 24-12; Panama vote was 32-3; and Korea vote was 31-5, all in favor. 

Illinois corn farmers appreciate House members’ recognition that every minute these Free Trade Agreements sit without decision is another minute that corn farmers go without vital market opportunities and American’s miss the benefits of increased economic growth.  Specifically, the Illinois Corn Growers Association (ICGA) thanks Congressmen Schock and Roskam for their “yes” votes to pass these bills out of the House Ways and Means Committee.

“All three FTAs provide significant opportunities for U.S. agriculture by immediately eliminating import duties on the vast majority of U.S. agricultural commodities, such as corn and other coarse grains and co-products,” stated Paul Taylor, ICGA Export Committee Chair. 

Global trade is important to Illinois farmers. According to USDA’s Foreign Agricultural Service, Illinois feed grain exports to all countries totaled $1.7 billion in 2009, while all ag product exports reached $5.5 billion.

According to government and industry estimates, the three FTAs will result in an additional $2.5 billion in additional sales and lead to the creation of over 20,000 jobs, which are critical to creating economic growth and employment for U.S. citizens.

“Each of these countries are important markets for U.S. coarse grains and co-products and the FTAs offer significant opportunities for growth,” said Taylor.

ICGA looks forward to working with other House and Senate members to continue the quick movement of all three Free Trade Agreements through Congress.

RON GRAY ELECTED SECRETARY OF U.S. GRAINS COUNCIL

"Ron Gray" Illinois Corn Farmer

Ron Gray, Claremont, IL corn farmer and Illinois Corn Marketing Board District XIII Director, was elected Secretary of the U.S. Grains Council today during their 51st Annual Board of Delegates Meeting this week.

Gray’s position as Secretary allows him to eventually become Chairman of the Council.

The U.S. Grains Council is a private, non-profit corporation that seeks to develop export markets for corn, barley, and grain sorghum.   The Council believes exports are vital to global economic development and to U.S. agriculture’s profitability.  It uses 10 international offices and programs in more than 50 countries to accomplish these goals. 

As an officer of the Council, Gray will have input into the development of export markets around the world and will help guide the organization to quickly and efficiently increase export market opportunities for Illinois corn farmers.  Illinois exports more than half of its corn crop annually.

The Illinois Corn Marketing Board is a major funder of the U.S. Grains Council, donating approximately $850,000 annually.

WAITING ON WORLD TRADE

President Obama issued a national challenge to double US exports into the global economy during his 2010 State of the Union address. On Friday, in a Presidential Proclamation, he said, “World Trade Week is a time to highlight the vital connection between the global economy and the prosperity of our own country. Our 21st-century economy requires American businesses and workers to compete in an international marketplace. To ensure our success, we must advance a robust, forward-looking trade agenda that emphasizes exports and domestic job growth.

I encourage all Americans to observe this week with events, trade shows, and educational programs that celebrate and inform Americans about the benefits of trade to our Nation and the global economy.”

Illinois corn farmers wholeheartedly agree with his comments and his vision for US exports. Given the agricultural prosperity that we enjoy in this country and knowing that Illinois exports 50 percent of its corn crop to foreign countries, we’d like to issue the President a challenge of our own.

Illinois farmers want free trade with Colombia, Panama, and South Korea.

The benefits of these agreements have already been discussed on this blog and on www.ilcorn.org before. Congress understands that free trade agreements will add money to the US GDP, offer jobs to American workers, and establish a more stable United States economy.

Illinois corn farmers wonder, why are we waiting?

Learn more about how the Panama Free Trade Agreement will affect corn farmers.    Learn more about how the Colombia Free Trade Agreement will affect corn farmers.  Learn more about how the Korea Free Trade Agreement will affect corn farmers.

Phil Thornton
ICGA/ICMB Value Enhanced Project Director

SEVENTEEN YEARS LATER, NAFTA HAS HAD POSITIVE IMPACT ON AGRICULTURE

In honor of World Health Day, check out this post on world food trade and the positive benefits of free trade agreements from IL Corn!

The Economic Research Service of USDA has released its latest report on the effects of NAFTA on U.S. agriculture, NAFTA at 17: Full Implementation Leads to Increased Trade and Integratio. It concludes that most of North American agriculture has achieved a high degree of market integration for cross-border flows of trade and investments with the removal of almost all barriers.

For Illinois, this information is important.  Half of the Illinois corn crop is exported due to our unique position along the Mississippi River system (including the Illinois and Ohio Rivers); Illinois corn farmers continue to be interested in expanding opportunities to export their goods.

Through NAFTA, the U.S. and Mexico have eliminated all tariffs on agricultural products, unique among U.S. free trade agreements (FTA). The Canada-U.S. FTA began in 1989, but U.S. restrictions remain on imports of dairy products, peanuts, butter and cotton, and Canadian restrictions remain on dairy products, poultry, eggs, and margarine.

U.S. exports of wheat and rice to Mexico have quadrupled in the NAFTA era, while exports of feed grains, oilseeds, and related products to Mexico have increased by 134 percent from an annual average of 8.3 million metric tons to an average of 19.5 million metric tons. These have allowed livestock and poultry producers to lower their costs of production, expand output and compete more effectively with meat imports.

U.S. livestock and meat trade is highly integrated with Mexico, but Mexican integration with the U.S. market is rated medium to low due to animal health import restrictions on pork and poultry. U.S. and Canada are highly integrated with cattle, beef, hogs and pork, but have low integration in poultry and dairy because they continue to have barriers to trade.

Illinois corn farmers look forward to this sort of growth in opportunity if the recently negotiated Colombia Free Trade Agreement passes in the House and Senate later this year.  Other Free Trade Agreements that will impact agriculture are the Korea Free Trade Agreement which would increase exports of various agricultural commodities by up to 46 percent while the Panama Free Trade Agreement could mean increased U.S. agricultural exports to Panama of more than $195 million per year by full implementation.

Read more analysis of the ERS report on NAFTA here.

COLOMBIAN MARKET VALUABLE FOR IL CORN FARMERS

Fresh from the IL Corn newsroom … check out our statement on the news that a Colombia Free Trade Agreement is finally negotiated and now waits for Congressional approval!

“The Colombian market is certainly valuable to Illinois corn farmers since roughly half of the corn grown in our state is exported. The pending ratification of a free trade agreement with Colombia means that our access to that market will be equal to that of other nations around the world. By removing trade barriers, we can secure the Illinois corn farmer’s position in the effort to provide high quality feed grains while enabling the Colombian people access to corn at a price relative to the world market, rather than prices distorted by politics.”  ~ James A. Reed, Illinois Corn Growers Association President

You can also read what the U.S. Grains Council has to say about the potential for trade with Colombia here.

And you might be interested in our fact sheet on the Colombia Free Trade Agreement here.

BRAWN OF 16 MEN ENSURES $17 BILLION U.S. WATERWAYS SHIPMENTS

Four times this year, as many as 16 men working at Lock 52 on the Ohio River near Brookport, Illinois, have climbed onto a floating platform to hook 487 wooden barriers on the river floor to a steam-powered crane.

It takes as long as 30 hours to pull up the wickets, one by one, to form a dam that adjusts water levels to keep the river navigable, a process that’s automated elsewhere. Deterioration of the 82-year-old lock, the busiest by shipping tonnage in the U.S. inland-waterways system, risks a breakdown that could snarl $17 billion a year in shipments of coal, grain and steel. A project to replace Lock 52 and its downstream twin is 18 years
behind schedule.

American Electric Power Co., the largest U.S. electricity generator, is so reliant on coal barges navigating Lock 52 that its failure may lead to power outages for some of its 5.3
million customers, said Mark Knoy, president of AEP River Operations.

“I want to be careful not to cause too much concern but that’s the reality of the situation,” he said. “Lock 52 is critically important, but any lock failure on inland  waterways would have a direct impact on the economy, not just at our power plants but for oil refiners, steel companies and others.”

Although President Barack Obama proposes spending about 88 percent of his inland waterways budget next year on a project to replace Lock 52 and Lock 53 downstream, work won’t be completed until 2018.

Billions Needed

About 12,000 miles of rivers weave through the U.S. heartland, carrying almost $70 billion in goods annually, according to Waterways Council Inc., an industry group. Lock 52 handles $17 billion in annual shipments, according to the council.

About 20,500 barges operate on the Mississippi River and connecting waterways including the Ohio, Missouri, Arkansas, Tennessee and Cumberland rivers, according to a 2010 report by Informa Economics Inc., a Memphis, Tennessee-based research
firm.

About $7 billion will be needed over 20 years to keep inland waterways navigable, said Rick Calhoun, president of Cargill Marine and Terminal Inc. Minneapolis-based Cargill Inc., which depends on inland waterways to transport grain, is the largest closely held company in the U.S.

Delays caused by lock breakdowns “add to the cost of shipping whether it’s the end product to the consumer or by making products less competitive on the world market,” Calhoun said in a telephone interview.

Advocating Tax Increase

U.S. inland waterways projects are financed by a 20-cent-a gallon fuel tax on barge and tow operators. The tax provides about $85 million a year and is matched by federal funds.

Companies and industry groups are asking Congress for a 35 percent increase in the tax, Calhoun said.  “The only people who pay the fuel tax are the tow boat industry, and we’re asking for an increase,” he said.

Congress will consider the industry’s request if the money is dedicated to inland waterways, said Representative Bob Gibbs, an Ohio Republican, who chairs the House Water Resources and Environment subcommittee.

“This is more like a user fee rather than a tax,” Gibbs said in a telephone interview. “If this is something the industry wants, we’ll be willing to look at it.”

Congress allocated $775 million in 1988 to replace Locks 52 and 53, and construction was expected to be completed in 2000, said Cornel Martin, chief executive officer of the Waterways Council, based in Arlington, Virginia. The estimated cost of replacing Locks 52 and 53 has climbed to $2.1 billion because of the delays, he said.

Funds Diverted

Money has been diverted over the years to emergency repairs on other locks or other projects requested by members of Congress, said Calhoun, who is chairman of the council’s board. 

“It’s devastating to see what’s happening to the inland waterways because of lack of funding,” Mike Morris, chief executive officer of Columbus, Ohio-based AEP, said in an
interview.

In 2004, $20.6 million of Lock 52’s funding was redirected to repair the McAlpine Lock in Louisville, Kentucky, after a gate failed, resulting in a 10-day shutdown, according to a
report by the Corps of Engineers. Money to repair the McAlpine Lock was authorized in 1991 but shifted to other projects, the report said.

“We’re seeing that going on across the system,” Martin said. If Locks 52 and 53 were fixed, “it would save shippers hundreds of millions of dollars,” he said.

1,050 Trucks

Obama’s fiscal 2012 budget dedicated $170 million to the Inland Waterways Trust Fund. Of that about $150 million of the amount would go to the Olmsted Dam and Lock project, which will replace Locks 52 and 53.

“We’re on track with funding this year to make the progress we need, but it’s hard to predict if the funding stream will continue or not,” said Carol Labashosky, a Corps of
Engineers spokeswoman.

AEP, which in 2012 will move 36 million tons of coal along the Ohio River to 25 power plants, is bracing for a complete breakdown of Lock 52 by 2015 because of its age and lack of maintenance, Knoy said. That may cause power outages as coal supplies dwindle, Knoy said.

If the lock fails, 1,050 tractor trailer trucks per day would be needed to replace the barge loads, he said.

Lock 52 was down for 32 days in September and October 2010, resulting in as much as 206 hours of traffic delays for AEP, Knoy said. That added $1.70 per ton in costs on 972,000 tons of coal, increasing AEP’s shipping costs by $4.6 million, he said.

 1929 Technology

 Nucor Corp., the biggest U.S. steel producer by market value, ships about 4 million tons of raw material, including pig iron, and finished products, like tubing and piping, on the inland waterways, said John Guin, materials manager for the Charlotte, North Carolina-based company.

“A lot of our mills are located by the river and that’s not by accident,” Guin said in an interview. “With the congestion on the highways and railroads and the weight of our
materials, the inland waterways are critical to our business.”

The wickets that make up the dam at Lock 52 lay across the floor of the Ohio River attached to hinges.

When the wickets must be hoisted, two of the 16 men lean over the floating platform’s edge to attach what Labashosky called “oversize crochet hooks” to holes at the top of the wicket. The men hook the wickets one by one to the crane, which pulls them into place to form the dam.

The work is done much the same way as it was in 1929, when the lock opened, said Randy Robertson, Lock 52 lock master, in an interview.

“It’s dangerous, backbreaking work, but it was the technology of the time and we’re still dealing with that technology,” Martin said.

By Carol Wolf

–Editors: Bernard Kohn, Joe Winski

To contact the reporter on this story: Carol Wolf in Washington at +1-202-624-1868 or
cwolf@bloomberg.net
To contact the editor responsible for this story: Bernard Kohn at +1-202-654-7361 or
bkohn2@bloomberg.net

ALL WE WANT FOR CHRISTMAS: FREE TRADE AGREEMENTS

Dear Santa,

Over the past year Illinois farmers feel that they have been very well behaved. We have worked diligently to once again feed the world while making several changes to help our environment, protect the safety of our consumers, and produce high quality products. In fact, America’s corn farmers have cut soil erosion forty-four percent by using innovative conservation tillage methods! As far as yields are concerned, nationwide there has been a twenty percent increase since the year 2000. We hope that you will please take our Christmas list into consideration and do whatever you can to help us make the best better in the agricultural industry. Have a Merry Christmas!

Yours Truly,

Illinois Corn

  1. Free trade agreements with Korea, Colombia, and Panama

The state of Illinois is currently working extremely hard to pass free trade agreements with Korea, Colombia, and Panama. Given Illinois’ unique position on the Mississippi River, we would reap endless benefits including job opportunities, increased agriculture exports, a boost to the economy and stronger relationships with foreign countries. The passage of any of these agreements would be extremely advantageous, not only to the Illinois agricultural industry, but to the United States economy as a whole. 

Korea is currently one of the United States’ larger corn markets and a strong prospective candidate for corn co-products such as distiller’s dried grains. In 2009, the country of Korea imported over five million tons of corn from the United States. In 2008, Korea imported 184,065 tons of distiller’s dried grains. While this number may not seem very big, it is very likely that Korea will increase their imported distiller’s dried grains in the future. President Obama recognized the importance of this market and has traveled to Korea and negotiated a free trade agreement with them, which now waits in Congress for ratification.  Beef and automobiles still pose some problems. 

For many years Colombia has been a strong corn export market for the United States. However, over the past couple of years we have started losing Colombia exports to our toughest competitors, Argentina, Brazil, Paraguay, and most of the Mercosur countries. This is due to the Andean-Mercusor Trade Agreement. During the 2008-2009 year the United States exported approximately 48 million bushels of corn down from the 114 million bushels that were exported throughout the 2007-2008 year. Experts are predicting the 2009-2010 year will not be any better. The Colombia Free Trade Agreement would grant the United States Colombia’s need for 2.1 million metric tons of corn, which potential for an additional 133.8 million bushels over time. Increasing the amount of corn exported from the United States will strongly impact the Illinois economy.

The United States has already lost several trade opportunities with Panama due to delayed actions among the United States government. The market is declining significantly through imports of $463 million in 2009 to $383 million in 2010. Currently, the United States is exporting corn, soybean meal, wheat, rice, and horticultural products to Panama while importing high quality beef, frozen turkeys, sorghum, soybeans, soybean meal, crude soybean and corn oil, almost all fruit products, wheat, peanuts, whey, cotton, distilled spirits, and many other processed products. It is predicted that if the free trade agreement is passed the United States to Panama exports could increase $165 million per year until full implementation. In the pork industry specifically, it is estimated that hog prices would raise twenty cents. It is vital in today’s recovering economy that the United States Congress passes the Free Trade Agreement with Panama before it is too late.

United States farmers are extremely reliable and hardworking people. They spend their lives providing for families similar to their own all over the world. In order to allow them to continue what they do best we must allow the passage of the Korea, Panama, and Colombia free trade agreements.

Kelsey Vance
Illinois State University Student

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