" I heard it through the AgLine"

April 6, 2011

 

 

·        Don’t blame farmers for rising food prices

·        Battle on to reverse methyl iodide approval

·        Corn seed gains propel Monsanto 2Q profit

·        Bayer opens $28M seed research lab in Asia

·        Plants get their revenge on feeding bugs

 

 

Don’t blame farmers for rising food prices

 

(Penn State University via physorg.com) – Wholesale food prices rose last month by the most in 36 years, and experts can't say how high they'll ultimately go. As the effects appear everywhere from the supermarket to fast food restaurants, an economist in Penn State's College of Agricultural Sciences said farmers probably won't be reaping much of the increase.

 

James Dunn, professor of agricultural economics, said prices for corn, wheat, soybeans and just about all large-production crops are higher than they were one year ago. He points to a long-term increase in global demand as the most salient of several factors.

 

"We had a big spike in commodity prices in 2007-2008, when there was a good worldwide economy and the prices of everything went high that year, too," he said. "Then the global recession hit. As we come out of it, we're seeing increasing demand resume. Then last season's bad weather in northern Europe, Poland and Russia really hit the feed-grain markets."

 

The United States typically exports grain to cover worldwide shortfalls, but U.S. production also faltered last year. Demand for soybeans outstripped supply despite a record crop, and there was record demand for wheat. It all results, Dunn said, in a perfect storm for high commodity prices.

 

"Last year was a particular challenge, and we're going into this growing season with a very small crop inventory," he said. "Ethanol production now consumes nearly 40 percent of the nation's corn crop, up from about 10 percent a decade ago, and there's growing demand for meat and dairy products in places like India and China.

 

"The combination of more people, low agricultural production and weather snafus means we'll have pretty high commodity prices for the next year or so."

 

Dunn cautioned that the current high food prices originate at the farm level, but few people buy food at the farm level. Most of the modern American food dollar goes to processing, transportation and marketing and not to the producers. So, rising farm prices won't hit all foods equally.

 

"The fact that corn prices are doubled doesn't mean that foods made from corn will double," he said. "In fact, the basic commodities are a relatively small portion of retail food prices. Labor, packaging, transportation and processing represent the majority of your food prices, and those don't change as rapidly as farm commodities.

 

"The actual food-cost increase will vary, first according to what percentage of the retail price the farm value represents, and second, how much the commodity price has gone up, because all commodities haven't risen equally," he said. "So we're going to see particular items in our market basket cost more. Some of them, like milk, have a fairly large component in the retail price, and so if milk prices are higher, the consumers will notice that."

 

Most products have a fairly small agricultural component, but Dunn says some manufacturers won't let these facts hinder their pricing strategies.

 

"Sometimes the processor will use the excuse of higher farm prices to recoup some profit that slipped away because of other input costs," he said. "We've seen cereal companies cite high corn prices when raising their prices much higher than the value of the corn in the flakes.

 

"Sometimes you can increase the palatability of a price increase with an argument that sounds better than it actually is."

 

Internationally, the specter of high food prices is much more threatening. Dunn explained that for countries with lower standards of living than the United States, high commodity prices could bring serious hardship. And it may not be limited to nations that traditionally struggle with poverty.

 

"For example, in Ukraine, which seems like a relatively prosperous country, about 50 percent of their income is spent on food," he said. "So, when food prices go up quite a bit, their real income goes down sharply. Americans only spend 10 percent of their income on food, so the doubling of commodity prices is less important.

 

"And if you're spending half your income on food, you're not buying a lot of processed product. You're buying unprocessed ingredients, and they're more like the commodities -- they'll go up and down more than pizzas and things that have a lot of marketing in them already. But for onions and potatoes, the farm value is a big part of the retail price."

 

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Battle on to reverse methyl iodide approval

 

(Fox News) SALINAS, Calif. - There's a battle in Sacramento to reverse a controversial decision approving the use of Methyl Iodide on our California agriculture fields.

 

The product, manufactured by Arysta LifeScience (the brand name is called Midas), has been approved in 47 states and 6 countries. Methyl iodide is used mainly on strawberry crops and is seen as a replacement for methyl bromide, which is being phased out across the globe on concerns it depletes the ozone.

 

Central Coast Assemblyman, Bill Monning (D-Carmel) is fighting the California Department of Pesticide Regulation (CDPR) after it gave methyl Iodide it's stamp of approval in December, 2010. Monning has said, "Methyl iodide, while it is not an ozone depleter, is perhaps more highly toxic, more unstable in the ground. We think it poses even greater risk than even methyl bromide to work force and rural residents."

 

Monning has joined an advocacy group called Pesticide Watch.

 

According to Arysta LifeScience, the first research on their methyl iodide product (midas) as a pesticide began in the early 1990's at University California Riverside. It was submitted to the Environmental Protection Agency in 2002 and was approved for use in October, 2007.

 

Central Coast News spoke to Jeff Tweedy, Head of Business Development at Arysta LifeScience. "Methyl iodide is different in that it delivers the broad spectrum of control that methyl bromide would deliver... control of diseases, control of nematodes and control of weeds. That makes (methyl iodide) unique," said Tweedy.

 

The California Department of Pesticide Regulation has some strict guidelines for it's use. There would be buffer zones between the nearest schools and homes. Plus, restrictions on how much/often it's used and mandatory tarps to cover up the ground.

 

Applicators would also need to pass a test and would wear respirators for safety. Tweedy explained, "You or I could not go out and buy (Midas) and apply it ourselves, we need to have someone certified and trained in this (application process) and the equipment to do it correctly."

 

While speaking in Sacramento in March, Monning said, "This chemical, and nobody disputes this, it is cancer causing, it is birth defect causing, it is a neurotoxin, and it is a water contaminant, that is not in dispute, that's what comes with this chemical. What is in dispute is can it be applied and used safely."

 

Tweedy told Central Coast News that information is based on old data. "If you look at the new research done by the Cancer Institute, other agencies and the EPA... It's not cancer causing at all," said Tweedy.

 

The California Strawberry Commission said banning Methyl Iodide would be a bad idea.

 

At this point, neither Santa Cruz nor Monterey County has received an application from a grower to actually use Midas. Central Coast News was told those applications would not arrive until later this year, as local growers prepare for the 2012 crop.

 

Tweedy ended with saying, "Listen to both sides, we've got good information on our product and the stewardship on how it's been used. We want to be good stewards of the land we want to make sure there's a good urban/agriculture balance."

 

The EPA is accepting public comments until April 30th on a petition to remove methyl iodide from the marketplace. To find more information, visit the website www.regulations.gov.

 

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Corn seed gains propel Monsanto 2Q profit

 

(AP via Yahoo! News) ST. LOUIS -- Rising corn seed sales helped Monsanto Co. boost its second-quarter profit by 15 percent compared to last year.

 

The world's biggest seed company said Wednesday that corn seed revenue jumped 7 percent. The company is rolling out more expensive brands of genetically altered corn seeds, and competing fiercely for market share against seed developers like DuPont.

 

The St. Louis company reported Wednesday its net income rose to $1.02 billion, or $1.88 per share, for the quarter ended Feb. 28 compared with $887 million, or $1.60 a share, a year ago.

 

Revenue increased 6.2 percent to $4.13 billion from $3.89 billion. That included $2.4 billion in corn seed revenue.

 

Analysts surveyed by FactSet had expected earnings of $1.84 per share on overall revenue of $4.15 billion.

 

Second quarter results are critical for Monsanto, because they cover a period when the company books its seed sales to farmers. Analysts had questioned whether Monsanto would be able to convince farmers to pony up more money for strains of corn seed that had several genetically altered traits. Competitors like DuPont's Pioneer Hi-Bred have been trying to steal away customers, in part by lowering prices.

 

Monsanto CEO Hugh Grant said the second quarter results show Monsanto's sales strategy is working.

 

"Given the tempo of the year, we are where we should be, and we have the right pieces and the right execution to feel very good that mid-teens earnings growth in 2011 is on track," Grant said in a statement.

 

The company affirmed its full-year earnings forecast of $2.72 to $2.82 on an ongoing basis and between $2.66 and $2.79 per share on an as-reported basis. Analysts expect earnings of $2.85 for the year.

 

Shares fell 43 cents to $72.89 in pre-market trading.

 

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Bayer opens $28M seed research lab in Asia

 

(Asia News Network) – New high-quality seeds, ranging from rice to cotton, may soon carry the 'developed in Singapore' stamp.

 

German-based nutrition, health care and high-tech giant Bayer yesterday opened a $35.8 million (US$28.3) seed research laboratory in Singapore

 

Its unit Bayer CropScience's new research centre will focus on creating seeds to supply to the Asia-Pacific market that are more resistant to diseases, pests and environmental stress.

 

This will help to improve food security in the region, particularly as Asia is 'the world's food bowl' and home to many agricultural countries, said Bayer CropScience chief executive Sandra Peterson at the centre's opening yesterday.

 

Bayer will invest €20 million (U$28.3 million) in the 16,700 sq ft lab at Golden Agri Plaza in Pasir Panjang over the next five years.

 

It is an expansion of a smaller rice seed analytics lab that the firm set up three years ago in Pandan Loop. Currently employing 15 scientists, the lab has enough capacity to employ more than 30 researchers in the future, said Bayer.

 

With this investment, Bayer CropScience will be able to develop new seeds that will help boost yields and crop production by anywhere from 20 per cent to 50 per cent, Ms Peterson told The Straits Times.

 

Recent food price shocks - prices soared for the eighth consecutive month in February to hit new records - have put the spotlight on global food security.

 

The World Bank warned recently that global food prices have reached 'dangerous levels', and this could complicate fragile political conditions in the Middle East and Central Asia.

 

Climate-related disasters are also expected to disrupt supply, even as demand increases.

 

The task of Bayer's scientists, therefore, is to develop seeds that are more resistant to natural disasters - such as making rice crops more tolerant to flood conditions, said Bayer in a statement.

 

The firm's scientists at the new facility will integrate innovative traits in canola, corn, cotton, wheat, soya bean and rice.

 

This will make it easier to store and lead to easier processing and improved grain quality, among other benefits, it said.

 

Speaking at the launch yesterday (April 4), the Economic Development Board's deputy managing director, Choon Shian Tan, said Bayer CropScience's new lab 'is an important addition to the growing cluster of agri-technology activities in Singapore'.

 

"While we are not an agricultural country, we have the capabilities, infrastructure and an intellectual property environment that leading agri-businesses can leverage to undertake regional research and development activities," he said.

 

Peterson added that Bayer CropScience is looking at more investments in Singapore as it has proved a strategic location for the unit's regional headquarters, with a highly skilled workforce.

 

Last year, Swiss-based agri-business giant Syngenta set up a similar agricultural research centre that aims to improve crop yields and devise better sprays to control pests.

 

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Plants get their revenge on feeding bugs

 

(MSNBC) – Eat all you want and still lose weight sounds like a line from a late night infomercial, but it's exactly how some plants are getting away with murder.

 

After a caterpillar starts chomping on their leaves, some potato and tomato species take revenge by producing a defensive chemical that stops insect growth. The chemical, TD2, breaks down a key nutrient, threonine, which insects need to grow.

 

The salad bar presented by the plants' leaves proves to be a deadly mirage. Like Erysichthon in Greek mythology, who was cursed with unending hunger, the unfortunate insects starve even though their bellies are full.

 

The chemical, TD2, only does it's dirty work once it's inside the caterpillar's stomach. So eating more of the plant only makes the hapless leaf-muncher hungrier.

 

This sadistic self-defense mechanism was recently studied by Gregg Howe of Michigan State University. He found that some plants, like tomatoes and potatoes, could produce TD2, a special form of the enzyme threonine deaminase, after being attacked by insects.

 

All plants have threonine deaminase, or TD1, but only certain ones can produce TD2. The chemical structure of TD2 is more stable than TD1, which makes it easier to store and longer lasting. That means TD2 could someday be useful in the development of new pest control methods.

 

“The arms-race paradigm is quite important for explaining plant chemical diversity and interactions between plants and herbivores in general,” Howe said in a Michigan State press release, “Unfortunately, our understanding of the molecular evolution of chemical defensive traits is still in its infancy.”

 

The research was recently published in the Proceedings of the National Academy of Sciences.

 

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