So, now the strong prices coming from Chicago and the signals being flashed from the rest of the world will just have to wait. Acreages is expected to increase over last year by about 6 % to 7 %, but that will just get acreage back at 2005-06 levels. If the export market remains strong throughout the rest of this year, and expectations hold out that U.S. soybean acreage stays historically low in 2008 (even in light of the projections that acres will rebound next year, acreage will be lower than normal) the Brazilian market will be poised to make a dramatic comeback. It just won’t happen until the 2008-09 growing season. [More]

Labels: international, production

It's been a rough start to the fall for British farmers, with reports of sporadic cases of BSE (mad cow disease) and more cases of foot-and-mouth disease. And then on Friday, British public health officials officially pronounced an outbreak of bluetongue disease among the nation's cattle. So what makes British cattle so sickly?

Heathrow Airport. Agriculture experts say the outbreaks in the United Kingdom are the result of bad luck more than anything else. But the country does have the distinction of being Europe's primary landing spot for global travel, and that could put livestock at risk. Travelers from every continent pass through London Heathrow Airport (the busiest airport in the world for international traffic), and with them comes food waste from airplanes. Pathology researchers consider airline food waste, which is sometimes processed into food for livestock, the greatest danger to animal health in the world. Airline garbage that's contaminated with foreign diseases can end up in livestock troughs, or it goes to landfills where it might infect wild animals—who could then spread illness to domesticated livestock.

It's also possible that British cattle are simply the victims of bad publicity. Most European countries, as well as nations in Africa, Asia, and North America, have had confirmed cases of the three major livestock diseases—mad cow, foot and mouth, and bluetongue. But the United Kingdom happens to have one of the best systems in the world for reporting these outbreaks. Since the country was struck with a devastating BSE epidemic in 1968, British health officials have developed a surveillance network with a very high degree of transparency. This ensures that individual cases of diseases are immediately reported to the government, and appropriate action is taken. So the British cattle may not be any more sickly than those in other parts of the world; they might just be getting watched a bit more closely. [More possible reasons]

Labels: health, international, livestock

But when it comes to referring to the nation in English, there's little debate. Myanmar is the name invented 18 years ago by the benighted junta, known as SLORC* back then and the State Peace and Development Council now, when it seized power through force. When Westerners say "Myanmar," they're not being culturally respectful to the people of a beautiful but oppressed nation. (We don't call China Zhongguo or Germany Deutschland just because the locals do.) They're bowing to the whims of the generals who still imprison Aung San Suu Kyi.

There is no reason to humor them. Say Burma, as George Bush did. And CNN, grow some backbone when it comes to terminology! [More]

Labels: culture, international

If enough people did not take up the exit grants, further increases to the asset test could be made, he said.

University of Adelaide water expert Mike Young said measures to assist farmers move off the land represented a significant shift in attitudes to primary production.

"An important signal is being sent to everybody to make them think about whether or not it is appropriate to remain in agriculture," he said.

"We're now trying to farm and irrigate in a drier regime. A lot of the practices that have been in place won't work in the future unless it rains again."

James Stacey, a dairy farmer from Langhorne Creek in South Australia, said the asset limit was unrealistic for farmers in the Murray-Darling Basin who might want the exit grants but had valuable water licenses putting them above the $350,000 mark.

"I think a lot of people along the Murray system would think about it seriously, and that includes dairy farmers from NSW, Victoria and South Australia," he said. "The problem is, everyone is asset rich and cash poor."

Mr Stacey, who has applied for an exceptional circumstances interest rate subsidy, has been forced to sell his calves born this year because of high feed costs. [More]

Labels: international, weather

The United States is prepared to negotiate a multilateral trade deal on the basis of a WTO proposal calling for big cuts in agriculture subsidies, a government official said Wednesday.

But a spokeswoman for the office of the US Trade Representative, Sean Spicer, said other countries "must step up to ensure the strongest possible market access outcomes" in agriculture as well as manufacturing and services.

The comments in Washington came after a high-ranking WTO official said in Geneva that US officials had accepted WTO proposals as a basis for negotiations.

"They said they were prepared to negotiate within the range of numbers put forward in the agriculture paper, provided everybody else would work within the same parameters," said the WTO's chief agriculture negotiator, New Zealand ambassador Crawford Falconer.

In July, Falconer published a series of proposals for WTO members which suggested that the United States reduce its agricultural subsidies to between 12.8 to 16.2 billion dollars (9.2 to 11.6 billion euros). [More]

Labels: international, policy, politics, trade

• The ever-mischievous French. We kinda expect it from farmers like the Danes, but...
  

France plans to present a "radical reform" of European agricultural subsidies when it takes over the presidency of the European Union next year, President Nicolas Sarkozy said Tuesday.

Sarkozy said a major overhaul of the EU's Common Agricultural Policy (CAP) was "indispensable to ensure that this policy once again enjoys legitimacy."

"The French presidency of the European Union will prepare a new political framework for our agriculture in Europe, based on fundamental principles," he said in a speech on agriculture delivered in the western city of Rennes.

France, Europe's agricultural powerhouse and the EU's top recipient of farm subsidies, will take over the rotating presidency of the 27-nation EU in July next year for a period of six months.

Sarkozy's call for reform of EU farm subsidies marked a major shift from his predecessor Jacques Chirac, who steadfastly opposed changes that would inevitably penalize French farmers. [ More]

• Eroding popular support for farmers in general - even surprisingly, the much beloved agrarian sector.

Michael Pollan's bestseller, The Omnivore's Dilemma, has gotten people all riled up about farmers again. The last time this happened was when the first Farm Aid concerts reminded America that we have strong feelings about the family farm and its economic viability. The new round of farmer feelings is more directly related to issues of trade and the impact of globalization. As Pollan writes:

"I’m thinking of the sense of security that comes from knowing your community, or country, can feed itself; the beauty of an agricultural landscape; the outlook and kinds of local knowledge the presence of farmers brings to a community; the satisfactions of buying food from a farmer you know rather than the supermarket; the locally inflected flavor of a raw-milk cheese or honey. All those things—all those pastoral values—free trade proposes to sacrifice in the name of efficiency and economic growth."

My general feeling about farmers is that they can go f*** themselves. Perhaps this is strong. But farmers also come on strong in their own sort of farmer way. They take a homespun approach but they often wrap themselves up in a hell of a lot of self-righteousness. It all has to do with the land, I suppose, the importance and simplicity of the land. Americans love the simple even if we've been destroying it for generations. A few pithy sayings and we’re eating out of their hands. The farmers. [More]

• Brazilian lawyers - these guys have tasted victory in the cotton case and see a chance for lots more billable hours.

Brazil will ask the World Trade Organization for a formal investigation of U.S. farm subsidy programs, which it says includes payments for ethanol production, a senior Brazilian official said Wednesday.

The South American country, which has already won a series of WTO rulings over U.S. cotton subsidies, will make its request for an investigative panel soon, said Roberto Azevedo, the Brazilian Foreign Ministry's trade chief.

The dispute could become a major case for the global commerce body, which has largely steered clear of energy issues in its 12-year history. Brazil is a major ethanol producer.

It also could become a hot topic for U.S. presidential candidates as they gear up for primary contests, including voting in Iowa, the state that produces the most ethanol.

"Brazil will have to ask for a panel," Azevedo told The Associated Press.

The two countries held consultations last month after Brazil accused the United States of exceeding the $19.1 billion that it is permitted under WTO rules to spend on the most controversial forms of farm subsidies in six of the past eight years. Brazil also accuses the U.S. of giving illegal export credit guarantees, largely echoing an earlier complaint by Canada.

While most of the measures it questioned Washington about concerned farm produce, Brazil included in its complaint what it called "energy subsidies," which included tax exemptions on diesel fuel and gasoline.

"Ethanol results from agricultural subsidies," Azevedo said. "You don't produce ethanol from rocks or underground. It's derived from agricultural commodities." [More]

All these separate influences could be dissected on their own merits, but it appears to me to be the actions the Adam Smith's fabled invisible hand. Our farm policy impacts the whole world, and the whole world is reacting. Even our reliable domestic political "lovability" may soon be more constrained to smaller, quainter operations. Oddly enough, I think one reason global pushback is picking up steam is because their economies are more and more like ours - market responsive.

Besides, it's becoming obvious farm policy isn't where we need to be. We're now clients of energy policy.

The U.S.' ethanol production capacity will probably total 20.43 billion gallons as of August 2009, up sharply from 6.707 billion gallons as of August this year, due to high profit forecasts and government support, a U.S. commodity risk management consultancy firm said Wednesday.

That means corn consumption for ethanol will total 7.46 billion bushels in the 2009-10 crop year, more than double the 3.62 billion bushels in 2007-08, Bill Tierney, executive vice president of research and marketing for John Stewart & Associates, said during the International Corn Industry Conference in Dalian. [More]

In other words we could win a skirmish on the farm program and be waylaid by the energy bill.

Labels: culture, energy, farm bill, farm program, international

A suspected case of foot and mouth disease has been found on a farm in southern England and the herd in question is to be culled, a government source said on Wednesday.

The return of the disease has raised fears of a repeat of a foot and mouth crisis in 2001 that devastated farming and cost Britain about 8.5 billion pounds. [More]

Labels: international, livestock

Some Danish colleagues told me recently that the Danish Parliament on 30 May last unanimously passed a resolution requiring the Danish government to propose a strategy for how it would actively work for the elimination of EU agricultural support. The strategy should include a timeframe and plan of activities which should take into account the planned CAP Health Check in 2008 and the review of the EU budget in 2009. The strategy should be presented to Parliament before the end of 2007. [More]

Sometime in the next five years France,
the country that has done the most to
defend a unified European farm policy,
will move from being a net beneficiary of
the CAP to become a net contributor,
paying in more than it is getting out. This
will fundamentally change the outlook
of the French government towards the
‘financial solidarity’ of the CAP. The
new government of President Sarkozy
has already signalled a desire for more
national responsibility for the financing of
agriculture policy. This is code for French
taxpayers paying for French farmers
but not for Spanish, Polish or Romanian
farmers. [More]

Labels: farm program, international, policy

“The trend all over Europe shows returning confidence. Whilst this is also true in the UK, the recovery is not as marked as in Poland and France or as in Germany which comes out on top. From a low point in late 2005 and early 2006, German and Polish farmers have become much more confident. German farmers expect significantly higher prices for key products. Polish farmers have the confidence which springs from relatively recent entry into the EU”, says Dr. Jochen Köckler, Managing Director of the DLG Exhibitions Department.

A staggering 88 % of German farmers view the economic future for the industry from “very good” to “normal” compared with 81% in Poland, 58% in France and 54% in the UK. When farmers were asked how they see the state of their own business at present, just 16% of UK farmers judged current performance to be “good” or “very good”. This compares with 27% in France, 37% in Poland and 38% in Germany. [More]

• The EU in general is optimistic.

The outlook for economic growth in Europe is running at
its highest level for years, according to a Commission
survey, which shows a strong improvement in economic
confidence in the biggest EU economies, particularly
in Britain, followed by France and Germany.

Better-than-expected consumer confidence is the main
driving force behind the improved outlook, reports the
Economic Sentiment Indicator, which also shows
improvements in services confidence in the EU and
retail trade confidence in the eurozone.

This optimism comes at a time of firm oil prices and a
strong euro, with every prospect of higher interest rates.
Analysts now believe that there is increasing hope that
Europe will be able to sustain its recent economic revival.

• The Australian drought has decreased competition for lamb, wheat and dairy.
• The massive effort to reunify Germany is beginning to pay off.
• The Brits are unhappy - which tends to make Germans smile just a little.
• Germans can also smugly say "I told you so" to the US about Iraq.

Labels: international

The story demonstrates some of the weaknesses in Blinder's contention that an employment apocalypse approaches. On the one hand, pure price competition can't continue for long; rising demand for services in the primary destinations for offshoring companies has lead to rapid wage convergence. This has combined with dollar depreciation to erode the cost advantages available to firms moving jobs overseas. On the other hand, growth in the size and sophistication of back-office nations like India has begun to create economic opportunities for American companies and workers. America can't, after all, have a comparative disadvantage in everything.

But the American workers who benefit from growth in India and Eastern Europe may not be the exact workers who lose jobs to back office enterprises abroad, and as long as transition costs for some exist, there will be political traction available to those willing to sell the notion of an offshoring menace. So much the better, then, if new data on the scope and scale of the offshoring phenomenon provides a little perspective on what exactly might be lost, or gained. [More]

Labels: economics, international, trade

India can accept the recent WTO draft on agriculture as a basis for further talks in the Doha Round, but proposals on industrial goods were "fundamentally flawed and essentially biased", a senior government official said Thursday.
...
The WTO mediators also proposed that US farm subsidies be capped at $16.4 billion, compared to the $17 billion Washington has offered. The EU would have to cut its farm import tariffs by about 64 per cent. [More]

Labels: international, trade

The administration unleashed its admonition as Paulson visited China once again, pursuing his favored course -- high-level talks with Chinese counterparts on a range of trade issues. Paulson has maintained that this Strategic Economic Dialogue remains the best channel for persuading China to allow its currency to float freely and to respect the norms of international trade.

Since the dialogue was launched in December to fanfare in Beijing, however, the main achievements have been minor deals, such as additional airline routes and promises of more talk. Growing numbers of lawmakers from both parties have joined a chorus of aggrieved manufacturers and labor unions, who maintain that China artificially depresses the value of the yuan to keep its goods unfairly cheap on world markets, costing American jobs. [More]

Labels: economics, international, trade

A simmering spat over food quality is fast replacing the cheap Chinese yuan as the focus of trade disputes between the U.S. and China. [More]

Politicians on both sides also need to keep their calm. There have been hawkish voices coming out of Washington demanding the US government pursue serious trade sanctions against China after the meat import bans.

Meanwhile, lawmakers in China have accused the Western media of stoking the fears over food safety in China. With next year’s Beijing Olympics fast approaching, there is a danger that China will over-react in cracking down on food safety in a ham-fisted attempt to demonstrate to the world that it treats food safety with paramount importance, punishing undeserving businesses.

Food safety and protecting the health of consumers should be a central concern of all governments. However, politicians should not lose sight of the importance of trade to economic health. Food safety issues must be looked at with a calm head – not with the patriotic zeal currently on display in some quarters of Beijing and Washington. [More]

The games had a profound impact on the city of Atlanta and many in the Atlanta metro area consider the games to be instrumental in transforming Atlanta into the more modern city it has become since. Examples of this are the mid-rise dormitories built for the Olympic village. One of these complexes became the first residential housing for Georgia State University, and has recently been transferred for use by the Georgia Institute of Technology. Other examples include Turner Field, which was a modification of the original Centennial Olympic Stadium, and where the Atlanta Braves baseball team now makes its home. Centennial Olympic Park was also built for the events and is still in use. Atlanta used no public money to finance the games, which cost US$1.8 billion to host. It was the first city in Olympic history to use ticket sales, commercial endorsements, advertising, and private money alone to fund the hosting of the Olympics. The consequence of this, however, was that many felt that the games in Atlanta were over-commercialized and were less exciting than previous games.[2] [More]

Labels: food, international, sports

In other words, the Department of Defense is about 210 times larger than USAID and State combined—there are substantially more people employed as musicians in Defense bands than in the entire foreign service. [More]

Labels: culture, international, policy

The Great Leap Forward is now widely seen, both within China and outside, as a major economic disaster, effectively being a "Great Leap Backward" that would affect China in the years to come. As inflated statistics reached planning authorities, orders were given to divert human resources into industry rather than agriculture. The official toll of excess deaths recorded in China for the years of the GLF is 14 million. Western writers using demographic assumptions and other manipulations have estimated the number of famine victims to be between 20 and 43 million.^[4] The three years between 1959 and 1962 were known as the "Three Bitter Years" and the Three Years of Natural Disasters. Many local officials were tried and publicly executed for giving out misinformation^[5]. [More]

Second, the Chinese people, especially the peasant farmers, deserve a huge amount of credit. Here's a couple of paragraphs I wrote recently:

The Great Leap Forward was a great leap backward - agricultural land was less productive in 1978 than it had been in 1949 when the communists took over. In 1978, however, farmers in the village of Xiaogang held a secret meeting. The farmers agreed to divide the communal land and assign it to individuals – each farmer had to produce a quota for the government but anything he or she produced in excess of the quota they would keep. The agreement violated government policy and as a result the farmers also pledged that if any of them were to be jailed the others would raise their children.

The change from collective property rights to something closer to private property rights had an immediate effect, investment, work effort and productivity increased. “You can’t be lazy when you work for your family and yourself,” said one of the farmers.

Word of the secret agreement leaked out and local bureaucrats cut off Xiaogang from fertilizer, seeds and pesticides. But amazingly, before Xiaogang could be stopped, farmers in other villages also began to abandon collective property.

Deng and others in the central leadership are to be credited with recognizing a good thing when they saw it but it was the farmers in villages like Xiaogang that began China's second revolution. [More]

Labels: history, international, trade

The National Bureau of Statistics raised its estimate of China's 2006 growth rate from 10.7 percent to 11.1 percent. It nudged up its estimate of total output by 146.4 billion yuan ($18.8 billion) to 21.1 trillion yuan ($2.705 trillion).

The revision brought China closer to Germany, the world's third-largest economy after the United States and Japan. Germany's 2006 output was $3 trillion but its 2.5 percent growth rate was well below China's. [More]

Labels: economy, fun, international

This military expansion is made possible by startling economic growth. China's GDP now surpasses that of Britain or France. According to Goldman Sachs, China will overtake America around 2027 and become by far the world's biggest economy by 2050 (see chart 3). Even now, it is helping to prop up the weak American dollar by buying large chunks of American debt. China is pushing America aside as the world's biggest exporter, and last year it produced more cars than the United States. Europe, too, poses challenges to America: London is vying to replace New York as the most important financial centre, and the euro has displaced the dollar as the main currency of the international bond market. [More]

Labels: economics, international

The 2007 Farm Bill is critical to Australia's interests because US subsidies to wheat, cotton sugar and dairy farmers have the potential to distort prices of some of our major agricultural commodities.

The 2002 legislation, which is due to expire in September, has long been a source of concern to the Australian Government because it directly subsidies the incomes of American farmers, making it harder for countries such as Australia, New Zealand and Brazil to compete, despite being efficient low-cost producers. [More]

The White House and key members of Congress had been pushing for major reforms aimed at cutting overall subsidies, capping payouts to millionaire farmers and generally bringing the regime into line with international trade rules.

The agriculture committee chose to ignore all that.

If ever there was a sign that the United States isn't serious about reaching a global free-trade deal, there it was. Talk about backtracking and intransigence. [More]

Gov. Arnold Schwarzenegger is urging Congress not to forget their fruits and vegetables as they write a new federal Farm Bill.

Schwarzenegger and the governors of New York, Florida and Texas co-signed a letter sent Tuesday to the congressional Agriculture Committees that outlines what the four most populous states want out of the legislation.

But what California wants may not matter when it comes time to write the bill, because the committees are stacked with Midwestern members. [More]

Labels: farm bill, farm program, international, trade

The result has been a torrent of money into a finite pool of assets. There is no precedent for such fortunes suddenly to find their way into global financial markets, and they help explain the waterfall of liquidity that has driven up the value of risky (and less risky) assets of all descriptions around the world. The world's entire supply of shares is $55 trillion, and bonds account for a similar amount. Sovereign-wealth funds could soon become the most important buyers of such assets, and many others besides. If so, the world will witness the intriguing spectacle of its largest private companies being owned by governments whose belief in capitalism is often partial. [More]

The growing importance of SWFs and diversification into other markets is beginning to attract both worry and criticism.

First, there is the impact on U.S. Treasury bonds. The IMF estimates that central bank buying has depressed yields on long-term U.S. Treasury bonds by between 30 and 100 basis points. Sudden portfolio adjustments by, say, China's SWF, could lead to a collapse of U.S. bond prices, making it more expensive for the United States to finance its debt.

Second, there is the issue of transparency. Few SWFs give details of their operations. If monitoring the currency and asset compositions of official reserves is difficult, tracking the investments of SWFs is nearly impossible. Only Norway provides anything close to transparency. The Abu Dhabi Investment Authority (ADIA) seems to be the model for most SWFs. ADIA has a reputation as a highly professional organization with a diversified portfolio and a cadre of talented managers. Yet despite managing $875 billion, there are next to no public details on AIDA's operations. It makes the most secretive hedge funds look like an open book. [More]

All of that borrowed money had to come from somewhere, and most of it came from Asia. When China stopped turning up at bond auctions in 2007 and started investing directly in companies instead, alarm bells should have rung. They didn't....

...Lots of the banks had sold insurance on those IOUs and on a bunch of other stuff that they bundled together into derivatives called collateralized debt obligations. When those investments started to blow up, we all realized that nobody knew who owed what to whom. And banks and hedge funds had become such a big part of the global economy that they dragged everything else down with them. [More]

Labels: economics, finance, international, policy

Such frustration has now boiled over into the threats of violence by the Crav, made in a video message sent to France's new President, Nicolas Sarkozy.

In the video - shot in a secret location late at night - seven wine-makers, their faces hidden by black balaclavas, read out the spine-chilling warning that "blood will flow" if Nicolas Sarkozy does not act fast to raise the price of wine. [More]

Labels: globalization, international

When President Vladimir Putin delivered a stinging critique of US foreign policy at a security conference in Munich in February, stunned politicians in the audience described it as the most anti-Western speech made by a Russian leader since the Cold War.

But Mr Putin was only just getting started.

In the past five months his fury over American plans to erect a missile defence shield in eastern Europe has become increasingly evident. [More]

Other dangers remain: corruption, the inefficiency of the state apparatus, high levels of social inequity. But generally Russia is in better shape today than seven years ago, when Putin assumed power. Russia now needs more than anything to strengthen law and order and to restore the institutional capacity of the state. Democracy is also needed, but only later, when the rule of law has been established. There is, of course, a danger that the leadership will use political centralization to line everyone up along the ‘vertical of power’ and eliminate opposition in order to live in serene comfort at the citizens’ expense—and perhaps also to embark on the occasional escapade. This has happened in Russia before. But one must choose the lesser of two evils. Strengthening law and order is only possible under a centralized system. Without centralization, there is no chance at all of it happening; unbounded chaos and lawlessness would rule. This seems to be the choice facing Russia today. [More]

But there's one place -- Russia -- where reserve estimates just seem to go up and up. In its annual statistical survey of world energy, BP PLC (BP ) has recently revised its estimates of Russia's total proven oil reserves to 69.1 billion barrels, 6% of the world's total, up from 45 billion bbl. in 2001. But according to auditors with a worm's-eye view of what's actually going on in the depths of Siberia, such estimates may just scratch the surface of Russia's real potential. According to a recent study by Dallas-based energy reserve auditors DeGolyer & MacNaughton, whose clients include leading Russian energy companies such as Gazprom and Yukos, Russia's true recoverable reserves are between 150 billion bbl. and 200 billion bbl. That's up from industry estimates of 100 billion bbl. a few years ago.

Why such a big gap in the estimates? Because it's one thing to be sitting on oil reserves, another to be able to exploit them commercially. In Russia's main oil-producing region in western Siberia, proven reserves represent just 18% to 24% of all oil in the ground, in contrast to about 45% in Western oil-producing regions such as Alaska and the North Sea. But as Russian oil companies adopt technologies, such as horizontal wells and computerized reservoir management systems, the estimated recovery rates are being revised. Thanks to new techniques, which make it possible to obtain oil even from apparently depleted fields, Russian oil companies already have managed to boost their output by 50% since 1998. "The biggest thing is the [new] technology being deployed in western Siberia. The results are beginning to show," says Martin Wiewiorowski, senior vice-president of DeGolyer & MacNaughton in Moscow. [More]

Labels: economics, energy, international, trade

What's more, the good and peaceful leaders of Sudan were prepared to retaliate massively: They would cut off shipments of the emulsifier gum arabic, thereby depriving the world of cola.

"I want you to know that the gum arabic which runs all the soft drinks all over the world, including the United States, mainly 80 percent is imported from my country," the ambassador said after raising a bottle of Coca-Cola. [More]

The administration's list of targeted firms is noteworthy for what it left out.

For one, the China National Petroleum, which operates in Sudan, was not included. Likewise, Sudan's government-dominated Gum Arabic will not be subjected to sanctions. The company is one of the world's largest exporters of a sticky tree resin used in hundreds of consumer products, including soft drinks and makeup. It was exempted from previous U.S. sanctions after American manufacturers said they needed Gum Arabic to continue making their products. [More]

Labels: food, international

Labels: farm program, international, policy

Labels: international, politics