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November 2010 Archive for The Truth about Trade

RSS By: Dean Kleckner, AgWeb.com

Dean is Chairman Emeritus of 'Truth About Trade & Technology, a nonprofit advocacy group led by a volunteer board of American farmers.

Changes in Wheat Breeding in the U.S.

Nov 26, 2010

By Ross Korves - Economic Policy Analyst, Truth About Trade & Technology  

www.truthabouttrade.org

Virginia Tech University and Monsanto recently announced a collaborative wheat breeding effort in which Monsanto will gain access to Virginia Tech’s wheat germplasm pool and Monsanto will provide Virginia Tech with current advanced breeding technologies and new ones as they are developed. Attributes that affect yield will be the initial breeding focus, including Fusarium head blight (scab) and drought tolerance. This agreement is the latest development in the U.S. over the last five years that will affect wheat breeding around the world.

 
The National Association of Wheat Growers (NAWG) and the North American Millers’ Association held a Wheat Summit in September 2006 to discuss the 30 percent decline in U.S. wheat acres planted since the early 1980s, the fall off in wheat’s share of U.S. field crop receipts from 20 percent to 11 percent, flat exports and shrinking domestic use. In June of that year the two groups plus U.S. Wheat Associates (USW), the export market development arm of the industry, and the now-disbanded Wheat Export Trade Education Committee released Addressing the Competitiveness Crisis in Wheat that served as the basis for the Wheat Summit. Follow-up summits were held in April of 2007 and October 2009, with the last summit focused on research and biotechnology. In September 2009, NAWG, the Millers’ Association, USW, the Independent Bakers’ Association and the Wheat Foods Council released The Case for Biotech Wheat: How the Introduction of Modern Genetic Technology in Wheat Can Help Address a Competitiveness Crisis.
 
Based on the activities of the past five years, NAWG has established a goal of increasing wheat yields by 20 percent by 2018. The U.S. three-year average yield for 2007-09 was 43.2 bushels per acre. A 20 percent increase would be 8.6 bushel and put average yields at 51.8 bushels per acre in 2018.  The three-year average yield over the previous eight years increased from 41.6 bushels in 1999-01 to 43.2 bushels in 2007-09, a 3.8 percent increase. Over that same time period, U.S. three-year average corn yields increased by 14.7 percent and soybeans by 9.7 percent.
 
The agreement between Monsanto and Virginia Tech University reflects unique characteristics of wheat breeding in the U.S. The agreement is non-exclusive, meaning Monsanto and Virginia Tech can both work with other public and private wheat breeding efforts. The university will continue its current public breeding program for certified-seed varieties marketed by local, state and regional seed companies. These programs are common in wheat production and the NAWG and USW Joint Biotechnology Committee’s Wheat Industry Biotechnology Principles for Commercialization considers the certified-seed model as the "most acceptable to the value chain and is the preferred approach." Representatives of the Virginia wheat industry met with Virginia Tech and Monsanto to understand the detail of the agreement before it was signed.
The university will have immediate access to marker assisted breeding technology for trait and line selection to speed-up conventional breeding to improve yields. As unique value-added traits are developed, it will also have timely access to them. Monsanto reentered the wheat breeding business in 2009 after suspending an earlier biotech wheat program in 2004 after receiving mixed messages from the wheat industry on the market acceptance of biotech wheat. 
 
The wheat industry appears to be following two breeding development paths that use new technology to speed up conventional breeding to increase yields and resist pests and develops biotechnology tools to maximize the achievable production of the new varieties. Monsanto is a logical partner with Virginia Tech University and other public breeders. In June, Monsanto announced a similar effort with Kansas State University. In 2009 the company purchased WestBred, a private wheat breeding company, and its library of germplasm. This year, Monsanto acquired a minority interest in InterGrain, the leading Australian cereal breeder partially owned by the Western Australia state government.
 
According to the NAWG website, other companies have become more active in U.S. wheat breeding. In 2008, Syngenta bought two wheat seed companies to add to its existing wheat business, and in 2009 Bayer CropSciences and Dow AgroScience increased their activities in U.S. wheat breeding. Bayer also formalized a long-term agreement with CSIRO, Australia’s national research organization, focusing on higher yields, efficient nutrient utilization and drought tolerance. In April of this year, Syngenta announced a five-year, public-private partnership with CIMMYT, an international wheat research organization, including native and biotech traits, hybrid wheat and the use of seeds and crop protection products.  These international arrangements will allow for new knowledge and technology to be used to respond to specific local wheat breeding needs.
 
Wheat currently accounts for about 20 percent of the calories consumed in the world, with one acre in four of the major grains and oilseeds worldwide devoted to wheat.  About 20 percent of current world wheat production enters international trade. The Food and Agriculture Organization of the UN estimates that world population will increase from the current 6.8 billion people to 9.1 billion by 2050. Total world food output will need to increase by 70-100 percent, with most of that increase coming from higher yields on existing cropland. Dry weather this summer in Russia, Ukraine, Kazakhstan and neighboring countries and in Western Australia shows the need to improve drought tolerance. The continued migration of the virulent stem rust Ug99 also requires a worldwide effort in wheat breeding.
 
The deliberate approaches to new wheat breeding technology taken by the wheat industry in the U.S. have created the opportunity for increased funding needed in wheat breeding consistent with the existing seed distribution systems. The owners of that new technology are seeking a return on investment consistent with the risks incurred with technology development. Wheat growers are looking for varieties that increase yields at competitive costs with other crops. Wheat consumers want ample supplies and high quality at affordable prices. These new relationships on wheat breeding have the potential to provide a win-win-win for all three groups. 
 

Ross Korves joined Truth About Trade & Technology in 2004 and writes a weekly economic and trade policy analysis. Mr. Korves served the American Farm Bureau Federation as an Economist from 1980 – 2004. He served as Chief Economist from April 2001 through September 2003 and held the title of Senior Economist from September 2003 through August 2004.  His analyses can be found at http://truthabouttrade.org/news/editorials/trade-policy-analysis

 

Epic Fail: Obama's Korean Disaster

Nov 18, 2010

 By Tim Burrack - Arlington, Iowa (www.truthabouttrade.org)

 
 
First President Obama was defeated at home. Then he toured Asia and was defeated abroad.
 
His inability to secure a trade agreement with South Korea represents a major setback for a White House that had staked a lot on the successful completion of the accord. It also raises serious questions about the president’s comprehension of the challenges to achieve trade agreements and the importance of America’s economic engagement with the world.
 
On free trade, the president has over-promised and under-delivered.
 
Earlier this year, during his State of the Union address, he appeared to understand the vital importance of international trade. "The more products we make and sell to other countries, the more jobs we support right here in America," he said. "We have to seek new markets aggressively, just as our competitors are. If America sits on the sidelines while other nations sign trade deals, we will lose the chance to create jobs on our shores."
 
Then he set the goal of doubling U.S. exports by 2015--a worthy objective that we and others have publicly applauded and supported -  but also an ambitious one that requires genuine political skill and diplomatic leadership. Farmers and many other Americans whose livelihood depends on exports had the audacity to hope that Obama would do everything in his power to make good on this personal commitment.
 
One of the first steps was to approve three trade agreements that had languished for years. The Bush administration had finished accords with Colombia, Panama, and South Korea, but they had yet to receive congressional approval due to obstructionism, mainly within Obama’s own party.
 
The pacts with Colombia and Panama remain important, but they’re also dwarfed by the deal with South Korea, our seventh-largest trading partner. A successful agreement with Korea would become America’s biggest trade accord since NAFTA--a pact finalized by Bill Clinton, Obama’s Democratic predecessor--and mark a significant step toward the goal of doubling exports.
 
Obama said he would get it done. In June, he gave himself the deadline of last week’s G-20 summit in Seoul. This seemed like a reasonable date because it pushed the issue beyond the midterm elections, safeguarding it from demagoguery.
 
On the Sunday after the elections, Obama contributed an op-ed to the New York Times. He offered a powerful argument for free trade.
 
"The great challenge of our time is to make sure that America is ready to compete for jobs and industries of the future." he wrote. "It can be tempting, in times of economic difficulty, to turn inward, away from trade and commerce with other nations. But in our interconnected world, that is not a path to growth, and this is not a path to jobs."
 
Obama also singled out the specific opportunity with South Korea. "President Lee Myung-bak and I will work to complete a trade pact that could be worth tens of billions of dollars in increased exports and thousands of jobs for American workers. Other nations like Canada and members of the European Union are pursuing trade pacts with South Korea, and American businesses are losing opportunities to sell their products in this growing market. We used to be the top exporter to South Korea; now we are in fourth place and have seen our share of Korea’s imports drop in half over the last decade."
 
What happened to the man who wrote these words? Well, he didn’t seal the deal. The president’s self-imposed deadline has come and gone and he has done nothing tangible to increase trade –just more words.
 
This is what kids call an "epic fail."
 
Right after the elections, Obama confessed to a "shellacking" by voters. His failure in Korea is a variation on the same theme--a shellacking suffered at the hands of Big Labor, which rigidly opposes just about any trade policy that doesn’t involve economic isolationism.
 
The president says that he still wants an agreement. He has suggested that perhaps he’ll get it done in the next few weeks.
 
I sincerely hope he’s right because success would benefit Americans and begin to ease our economy out of the doldrums. At the same time, I’m becoming less hopeful that he really wants to accomplish anything in this area.
 
Obama should go back and read his own words--and then he should lead like a president who really wants to lead America forward on trade.
 
Tim Burrack raises corn and soybeans on a NE Iowa family farm. Tim volunteers as a Board Member of Truth About Trade and Technology www.truthabouttrade.org

Soda Pop Tax: "The Sell By Date" has Passed

Nov 11, 2010

 

By Bill Horan – Rockwell City, IA (www.truthabouttrade.org)
 
The soft-drink tax is a bad idea whose time has come--and gone.
 
Last week, voters in the state of Washington spurned a plan to impose a special tax on soda pop. Consumers spoke loudly and clearly.  An overwhelming majority of 62 percent rejected the scheme. 
 
The more people thought about it, the more the whole concept began to taste like a can of Coke that had been cracked open and left on the counter all night.
 
In other words, the soda-pop tax fizzed out.
 
As a political issue, it’s dead. Legislators and candidates who try to recycle the soda-pop tax will find themselves crushed like aluminum cans beneath the heels of irritated voters.
 
This was by no means inevitable. A year ago, a soda-pop tax was at the height of political fashion. Even President Obama talked it up. “I actually think it’s an idea that we should be exploring,” he said in an interview. “There’s no doubt that our kids drink way too much soda.”
 
They do?
 
That’s an opinion. I suppose that some kids really do chug too many Big Gulps. Others probably sip soda in moderation and many avoid the stuff entirely. The same goes for adults.
 
This is one of the consequences of freedom: Americans will choose to behave in a variety of ways. This includes their selection of food and drink. They don’t want or need interference from politicians who think higher taxes somehow will deliver smaller pant sizes.
Voters in Washington made this plain on November 2 when they approved Initiative 1107 by such a big margin.
 
Earlier this year, their state legislators in Olympia passed a package of tax hikes. The centerpiece was a tax of two cents per 12 ounces of carbonated beverage. There was also a tax on bottled water, taxes on certain kinds of food processing, and a complicated tax on candy that only a paper-pushing bureaucrat could love. It performed bizarre exercises such as distinguishing between marshmallows (taxable) and marshmallow cream (not taxable).
 
Some of these taxes were billed as “temporary.” Yet as Nobel laureate Milton Friedman once warned, there’s nothing as permanent as a temporary government program. The same politicians who want to dictate our food and drink choices never seem to put government itself on a diet. So we’re wise to view “temporary” tax increases with a super-sized dose of skepticism.
 
Two motives lay behind the tax hikes in Washington. The first was a desire to create a new source of funds for government spending. The second was a hope that driving up the cost of certain kinds of food and beverages will influence the choices consumers make when they roam the aisles of grocery stores or sit down at restaurant tables.
 
In a sense, the politicians behind the tax hike wanted to reclassify soda pop, treat it like alcohol and cigarettes, and slap it with a “sin tax.” One of the supporters of this approach is David Zinczenko, the editor of Men’s Health magazine, whose goal apparently is to treat corn-growing family farmers like drug pushers. “It’s time to fight back against the corn peddlers who are making our children fat,” he wrote last year.
 
From Seattle to Spokane, citizens in Washington were upset by this strategy, so they decided to file a popular referendum. They collected hundreds of thousands of signatures, qualified for the ballot, and carried a heavy majority on Election Day. Technically, voters approved I-1107, which tossed the soda-pop tax and its ilk onto the political trash heap.
 
No matter how you slice it, Americans of all persuasions would prefer not to have their soft drinks slapped with special taxes. Maybe the experience of I-1107 will convince politicians in other states to quit trying.
 
So the next time you sip your favorite fizzy drink, put a smile on your face--and thank the voters of Washington for what they’ve just done.
 
Bill Horan grows corn, soybeans and grains in Northwest Iowa. This fourth generation family farm has been involved in specialty crop production and identity preservation for over 20 years. Mr. Horan volunteers as a Truth About Trade & Technology Board member. www.truthabouttrade.org

Let's Get It Done!

Nov 04, 2010

 

By Carol Keiser – Belleair, Florida (www.truthabouttrade.org)
 
A few poll-watching pundits have claimed recently that Americans are turning their backs on free trade. You sure wouldn’t know it from this week’s election results. The next Congress, when it meets in January, almost certainly will be more supportive of economic engagement with the world than the outgoing Congress has been.
 
The poster child of this welcome trend may be Rob Portman, Ohio’s senator-elect. This former U.S. trade representative in the Bush administration carried his union-heavy state by a comfortable margin, 57 percent to 39 percent.
 
“The people have spoken forcefully and clearly,” said Portman at his victory party on Tuesday night.
 
Many have interpreted the 2010 elections as a political defeat for President Obama. In at least one area, however, the results may help Obama achieve one of his stated policy objectives: approval of the U.S.-Korea Free Trade Agreement.
 
It’s time to quit the drama and get the deal done.
 
We’ve waited long enough. Discussions started in 2006, when Portman was a trade diplomat. They concluded under his successor but Congress never acted on the agreement, which now has languished for years--to the frustration of just about everybody who tries to sell goods and services abroad, and especially among ranchers who see Korea as an excellent market for beef exports.
 
As a presidential candidate, Obama campaigned against a trade accord with Korea. But confronting the burden of leadership during an economic crisis--and attracted to the potential of an export-fueled recovery--Obama changed his mind in the White House. “We will strengthen our trade relations in Asia and with key partners like South Korea,” he said in his State of the Union address last January.
 
Ever since, American and Korean officials have tried to iron out a few key differences. They were at it as recently as last week in San Francisco. Additional talks are scheduled. There’s a sudden sense of urgency because Obama travels to Seoul next week for the G-20 summit--an ideal forum for announcing a consensus.
 
Obama has said that he would like to submit a Korean free-trade agreement to Congress early next year. If he does, approval wouldn’t represent merely an economic victory but a political one as well. Americans will expect Obama and the new Congress, with its Republican-controlled House, to work in bipartisan fashion for the benefit of the country. Early passage of a trade pact with Korea would demonstrate a mutual commitment to this principle.
 
It would also benefit the United States for reasons that have nothing to do with politics and everything to do with economics. South Korea is one of the world’s great emerging nations--a country of nearly 50 million people and increasing prosperity. We cannot afford to ignore these potential customers, especially if we’re to meet Obama’s goal of doubling U.S. exports by 2015.
 
We simply won’t get there without an agreement. Korean leaders understand that their country’s economic future depends on their ability to trade goods and services with the rest of the world. They’re in the process of lowering trade barriers with all of America’s competitors as they negotiate trade agreements with the European Union, Japan, and the Mercosur nations of Latin America.
 
Australia is also in the mix. For ranchers in the United States, this is a special concern because our beef-producing friends Down Under are on the verge of gaining a tariff advantage of nearly 3 percent over the next 15 years. This would cripple our ability to sell American-raised meat to grocery-store shoppers in Seoul. We stand to lose an enormous amount of business--I hesitate to think of what Washington’s failure to act will cost the industry.
 
This is about far more than beef, of course. Americans in all economic sectors will gain from improved access to the South Korean market. The simple elimination of South Korean tariffs--a key provision of the agreement--will boost our GDP by as much as $12 billion annually, according to the U.S. International Trade Commission.
 
The mid-term elections are yesterday’s news. The time for playing politics is over--and the time for seizing this historic opportunity is uponus.
 
Carol Keiser owns and manages cattle feeding operations in Kansas, Nebraska and Western Illinois. Mrs. Keiser is a Truth About Trade & Technology board member. (www.truthabouttrade.org)
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