December 2005

Index

• Ontario Grain & Oilseed Group's Letter to Ontario Federal MPs
• Presentation to Standing Committee on Agriculture
• The result?
• Canadian Corn Producers' Solution: Short, Medium and Long-Term Actions
• Canadian International Trade Tribunal Nov. 15 Announcement Finds Injury
• Canadian Corn Producers' November 16 Statement
• Second Highest US Farm Income and Near-Record Support Payments
• Dramatic Difference In Canada
• Carpet Tiles Utilize Corn By-Products
• Satellite Technology to Determine if crop is GM or Non-GM
• Farm Group Renews Battle Against 'Suicide Seeds'
• Improved Corn Varieties Stood Up To The Heat
• Transplanted Corn Gene Protects Rice
• Maizex Seeds Adds Several Direct Seeds Hybrids
  

Ontario Grain & Oilseed Group's Letter to Ontario Federal MPs

On November 19, 2005, this letter was sent to all Ontario Federal MPs urging their help for our strategy to provide Federal funding to support our Risk Management Program:

To: Ontario's Federal Members of Parliament

Ontario's seven Grain and Oilseed organizations represent the interests of Ontario's field crop sector which:
" Produced field crops worth $3.6 billion in farm gate sales in 2004.
" Is the largest crop sector of any Canadian province.
" On Ontario's total cropland of 3.6 million hectares, 85,000 farm operators devoted 2.4 million hectares to the major field crops.
" Ontario's field crop sector is the foundation for much of the rest of agriculture and the rural economy providing feed for livestock, feedstock for further food and industrial processing, as well as products for direct human consumption.

Grain and oilseed producers need assistance to address three risks beyond their individual ability to manage: production risk, income stabilization, and financial injury resulting from foreign market interference. Both levels of government now agree that while Production Insurance (PI) addresses the first risk, and the existing Canadian Agriculture Income Stabilization (CAIS) program may partially address the second, neither program addresses the financial injury to Canadian grain and oilseed producers caused by foreign subsidies and tariffs. Contemplated CAIS modifications cannot adequately resolve the issue either. Therefore, in addition to CAIS and PI, additional assistance to grain and oilseed producers is required until WTO agreements actually eliminate such injury.

We have therefore proposed that injury caused by foreign subsidies and tariffs
be calculated annually for each Canadian grain and oilseed commodity; that
funding equivalent to offset this calculated injury be distributed from the
Federal government to individual provinces based on this calculation and
provincial production of each commodity; and that this combined Federal/Provincial injury funding be paid to grain and oilseed producers in each province in a manner determined as most suitable by the individual provinces.

To meet the needs of Ontario field crop farmers, we developed our Risk Management Program (RMP) to make CAIS work more effectively for our sector. We propose that Federal funding allocated to Ontario as above would be used in Ontario, along with new provincial funding, to finance our RMP. As an Ontario Federal Member of Parliament, we need your assistance to make this happen.

Sincerely,
Peter Tuinema, Chairman, Ontario Grain & Oilseed Safety Net Working Group

Presentation to Standing Committee on Agriculture

On October 26, the Canadian Corn Producers (a coalition of Manitoba Corn Growers Association, La Federation des Producteurs de Cultures Commerciales du Quebec, and OCPA) presented the following brief at a hearing on Corn Trade with the US before the Standing Committee on Agriculture of the House of Commons.

Corn in Canada

The business environment for the production of corn in Canada is anything but a level playing field with our major competitor, the U.S. Since at least 1997, and likely earlier, the entire expansion in demand for corn in Canada has been met by imports of artificially low priced and subsidized corn from the U.S. rather than through expansion of domestic corn production. The injurious impact of US subsidies through artificially low prices has made the production of corn in Canada economically unwarranted and pushed aside Canadian corn producers. Trade injury caused by US subsidies has meant that Canadian corn producers have the choice of continuing to produce corn at less than the cost of production for years on end, or not producing corn at all.

While artificially cheap corn benefits corn buyers and users, corn producers cannot compete against the U.S. Treasury unaided. When market prices are artificially driven below cost of production, the shortfall must be made up through one of three options:

" producers continue to produce and lose equity in doing so to cover costs
" processors and buyers assume more of the shortfall through higher prices
" taxpayers pick up the difference through increased income support programs

We, as Canadian corn producers, cannot continue to produce corn under the current situation. Both levels of government in Canada have chosen to ignore our situation. That has left us with no alternative but to take drastic action on our own to counteract the artificial depression of price, an action that pushes more of the burden of covering the shortfall onto processors and buyers.

There is an alternative: improving the Canadian Agriculture Income Stabilization program by implementing and jointly funding a "patch" on CAIS to make it meet the needs of Canadian Corn Producers. Adopting such a "patch" would:

" permit the expansion of domestic corn production to meet domestic demand by offsetting artificially low prices and trade injury thus leveling the business environment for corn production with the US;
" permit processors and buyers to continue to access artificially low priced domestically produced corn and thus compete against likewise artificially cheap US corn products;
" permit time for Canadian governments to achieve meaningful reform of US Farm Bill subsidies through successful WTO negotiations and/or to use the tools available within current and proposed WTO agreements to remedy illegal and injurious US subsidies. When WTO negotiations actually result in elimination of US subsidies, the "patch" on CAIS would automatically disappear because artificial depression of price disappears.

1) The US Farm Bill artificially depresses grain prices.

" US production and pricing are major factors in determining world prices.
" World prices for grains are therefore artificially depressed.

That's not opinion; that's the legal decision from the WTO Brazilian upland cotton case, is the proof of the linkage and causality, and has withstood legal challenge.

2) Artificially low grain prices benefit all grain buyers in the US by artificially lowering the cost of their major expense.

" Whether those benefits are passed upward through the food chain is very unlikely. The extreme concentration in the processing and further value-added sectors ensures benefits are retained as artificially inflated margins;
" The same lack of competition ensures that the benefits are not passed downward to the grain producer; but US Farm Bill subsidies insulate US producers.

3) Because of scale and volume, US production and pricing for livestock, livestock products, and processed grain products are major factors in determining world prices for these products of grain.

" Thanks to artificially low grain prices, US pork, beef and processed grain products are likewise artificially lower priced;
" Which means world prices for these same products are artificially lower.

4) Canadian corn users and processors compete against world prices for products of corn that are thus artificially lower thanks to the US Farm Bill.

" But, just as US buyers do, they benefit because their major expense, grain corn, is also artificially low-priced in Canada due to the impact of the US Farm Bill on domestic Canadian grain pricing;
" And because of the lack of competition, they can ensure their margins by both pushing down on grain pricing and pushing up on their output pricing;
" Canadian grain buyer margins are artificially inflated (including those Canadian pork and beef producers who purchase feed) because of the artificial depression of grain corn prices both internationally and domestically;
" Being heavily export-oriented, Canadian grain processors (and livestock producers are simply feed grain processors) are extremely reluctant to challenge the US Farm Bill. Easier and more profitable to buy artificially cheap grain than fight the US Farm Bill.

5) Canada is heavily export dependent in many sectors, not just agriculture, and especially on trade with the US.

" Therefore, Canadian governments, at all levels, are reluctant to take any action or initiative they can conveniently interpret as potentially enticing US retaliation (the fact that the US launches such retaliation regardless is apparently irrelevant);
" Canadian governments are conveniently swayed by export-oriented ag sector players who do not want to ruffle the US or any other trading partner;
" Canadian governments are therefore anxious to be seen as complying with every sentence in ag trade agreements, but are very reluctant to initiate trade complaints using the tools those agreements make available. Therefore, Canadian governments "talk the talk", but they don't "walk the talk";
" Canadian governments are reluctant to implement farm income support programs they can interpret as a target for retaliation (saves money too).

6) As a net importer, Canadian corn producers don't fit with this scenario.

" We used to be an exporter, but 20 years of successive US Farm Bills have forced us out of production while buyers enjoyed artificially cheap corn;
" Governments refuse to take action against artificially low prices because the majority of ag & food sector participants benefit from low grain prices. Of course, taking action against low prices would also cost governments money;
" Governments refuse to offset the injury caused to grain producers by artificially low prices because they claim to do so through safety net programming could incur trade actions from the US and others, which would threaten export-oriented domestic players. Of course, the fact that not one Canadian ag export to the US is of sufficient volume in the US marketplace to cause legally-defined injury is conveniently overlooked;
" Governments therefore impose allegedly trade-friendly programs such as CAIS supposedly designed to provide benefit without triggering trade actions (regardless, the US filed against CAIS anyway in their recent hog countervail complaint). Because of artificially cheap prices, grain buyers enjoy artificially inflated margins and CAIS provides support based on historic margins; therefore, CAIS benefits grain buyers far more than grain producers;
" Governments therefore cancel programs such as Market Revenue Insurance
" Governments therefore reject programs such as Risk Management Program

The result?

Canadian Corn Producers are driven out of production; Canadian corn buyers and users are forced to depend on imported US corn incurring additional in-bound freight costs; which make them un-competitive in the US marketplace; and in our Canadian marketplace against imported US finished goods and products.

Canadian Corn Producers' solution: short, medium, and long-term actions

Short-term:

1) Add grain corn to the Canada's Byrd Amendment retaliation list.
2) "Patch" CAIS (ie. using programs such as RMP) through a jointly-funded initial down payment early this winter.
3) Our anti-dumping and countervail duty action is a short-term band-aid.

Medium-term:

1) Fully implement and jointly fund flexible "patches" to CAIS (such as RMP) that may look, and be cost-shared differently, in different provinces depending on provincial circumstances and business environments.
2) Launch our requested WTO complaint against illegal subsidy and support provisions of the US Farm Bill using grain corn as the commodity of interest.

Long-term:

1) Successful Doha Round WTO negotiations that eliminate trade-distorting domestic subsidies (actually eliminate, not merely permit reclassification or hiding with "smoke and mirrors"), expand market access while adequately protecting sensitive products, eliminate export subsidies.

The Canadian Corn Producers want WTO negotiations to be successful, but cannot survive unaided waiting in the meantime. As many in Ottawa have told us countless times, we are using the tools at our disposal to get more from our marketplace. We ask that the Federal government do the same.

Canadian governments (both federal and provincial) are the real problem. They chose not to take action against the injurious and illegal subsidy policies of the US. They chose to put the interests of export-oriented sectors and processors who benefit from cheap corn above the interests of those who produce the corn and are hurt by artificially cheap prices. The obvious message is that corn producers are expendable, corn buyers are not.

When all around you refuse to help, you help yourself. We are.
The following has been written about taking action in a desperate situation:

" if by helping yourself your best customer disappears, that's collateral damage;
" if by not helping yourself your best customer remains but you disappear, that's stupidity.

Canadian International Trade Tribunal Nov. 15 announcement finds injury

IN THE MATTER OF a preliminary injury inquiry, under subsection 34(2) of the Special Import Measures Act, respecting:

THE DUMPING AND SUBSIDIZING OF GRAIN CORN ORIGINATING IN OR EXPORTED FROM THE UNITED STATES OF AMERICA

PRELIMINARY DETERMINATION OF INJURY WITH RESPECT TO UNPROCESSED GRAIN CORN AND TERMINATION OF THE PRELIMINARY INJURY INQUIRY WITH RESPECT TO PROCESSED GRAIN CORN

The Canadian International Trade Tribunal, under the provisions of subsection 34(2) of the Special Import Measures Act, has conducted a preliminary injury inquiry into whether the evidence discloses a reasonable indication that the dumping and subsidizing of grain corn in all forms, excluding seed corn (used for reproductive purposes), sweet corn and popping corn, originating in or exported from the United States of America, have caused injury or retardation or are threatening to cause injury to the domestic industry.
This preliminary injury inquiry is pursuant to the notification, on September 16, 2005, that the President of the Canada Border Services Agency had initiated an investigation into the alleged injurious dumping and subsidizing of the above-mentioned goods.
The Canadian International Trade Tribunal finds that unprocessed grain corn constitutes a class of goods separate from processed grain corn. Unprocessed grain corn includes whole kernel grain corn and grain corn which has been milled to a limited degree, such that the milled grain corn, regardless of its physical form, preserves all the constituent parts of whole kernel grain corn and is chemically identical to whole kernel grain corn.
The processed grain corn subject to this preliminary injury inquiry, in contrast, results from dry milling operations that separate or remove constituent parts of the whole kernel grain corn, such as the bran layer or pericarp, germ, tip cap or endosperm.
Pursuant to paragraph 35(1)(b) of the Special Import Measures Act, the Canadian International Trade Tribunal hereby concludes that the evidence does not disclose a reasonable indication that the dumping and subsidizing of processed grain corn have caused injury or retardation or are threatening to cause injury to the domestic industry. Therefore, pursuant to paragraph 35(3)(a) of the Special Import Measures Act, the Canadian International Trade Tribunal hereby terminates the preliminary injury inquiry with respect to processed grain corn.
Pursuant to subsection 37.1(1) of the Special Import Measures Act, the Canadian International Trade Tribunal hereby determines that there is evidence that discloses a reasonable indication that the dumping and subsidizing of unprocessed grain corn have caused injury to the domestic industry.

Canadian Corn Producers' November 16 Statement

With this successful initial decision by the CITT supporting our injury complaint, OCPA now awaits the Canadian Border Service Agency's determination of preliminary duties against imports of US grain corn scheduled for December 15, 2005. The possibility remains for the imposition of retroactive duties on all imports of US grain corn from September 16, 2005 onward. On November 16, in response to the CITT November 15 announcement, we issued the following statement:

Canadian Corn Producers encouraged by CITT's preliminary injury
determination on unfairly traded U.S. grain corn

Guelph, ON. Canadian Corn Producers (CCP) are encouraged that the Canadian International Trade Tribunal (CITT) has made a preliminary determination on November 15th that there is a reasonable indication that the dumping and subsidizing of unprocessed U.S. grain corn imports have caused injury to Canadian corn farmers. CCP is confident that Canada Border Services Agency (CBSA) will soon make a favourable preliminary determination of dumping and subsidization resulting in the imposition of substantial provisional duties by December 15th. This would provide much needed relief to the dire conditions facing Canadian corn growers.

While surprised and disappointed that the CITT has terminated its inquiry with respect to processed grain corn, such corn is currently not a major feature of Canada - U.S. trade. CCP remains concerned that processed U.S. grain corn imports could increase in the future as a strategy to avoid the imposition of anti-dumping and countervailing duties (as occurred in a similar case involving subsidized U.S. grain corn in 1986).

CCP will remain vigilant for signs that circumvention is occurring and will pursue available legal remedies to prevent it from undermining any anti-dumping or countervailing duties imposed on U.S. grain corn. As well, CCP will be asking CBSA to direct the CITT's attention to evidence of massive importations of U.S. grain corn that have been occurring prior to the CBSA's preliminary determination in order that the CITT may impose duties retroactively to the maximum extent permitted by law.

CCP is disappointed by the Canadian Government's apparent inaction on CCP's request that it commence WTO consultations with the U.S. regarding the illegality of U.S. grain corn subsidies. CCP has provided the Canadian Government with extensive supporting information and has also appeared before the House of Commons Standing Committee on Agriculture and Agri-Food to encourage Canada to exercise its WTO rights. Furthermore, many downstream users (including the Canadian Pork Council and Canadian Cattleman's Association) have recognized that WTO action is the preferred long-term solution to the distortive effect of U.S. subsidies because it will level the playing field for all North American producers.

CCP has also added a fourth prong to its strategies for protecting Canadian corn growers against unfairly traded U.S. grain corn described in its August 31st press release. It has asked the Canadian Government to work jointly with relevant provincial governments to provide compensation that would help Canadian corn farmers withstand the financial injury incurred as a result of unfairly traded U.S. grain corn. CCP hopes that the Government will take action on this quickly to help preserve the corn growing industry in Canada.

2nd Highest US Farm Income and Near-Record Support Payments

On November 4, 2005, the USDA projected that US government payments to US farmers will increase 41.5% to $22.7 billion in 2005, up from $13.3 billion in 2004 and the highest since the record $22.9 billion in 2000. Payments come from a broad array of programs ranging from direct and counter-cyclical payments, market loan and loan-deficiency payments, conservation payments and crop disaster assistance. The USDA Economic Research Service (ERS) also projected that US farm income in 2005 will fall to $71.5 billion, but still the 2nd highest on record behind only 2004 income of $82.5 billion. The ERS also pointed out that US farm production expenses will increase $12.2 billion from 2004 to $221.9 billion, the largest one-year increase since 1979. US farm production expenses have increased 14.8% in the last three years.

Dramatic Difference in Canada

While Canadian agriculture deals with the same sharp increase in production costs described above, not being covered by the US Farm Bill has resulted in a dramatic difference. As the Canadian Federation of Agriculture points out, in 2003-2005 while US agriculture enjoyed its best three years in a decade, the same years will be the three worst recorded years of Canadian Realized Farm Net Income. Not being covered by the US Farm Bill has meant that in the decade 1993-2003, Canadian farm debt has doubled to $47.7 billion and average Realized Net Farm Income has fallen 5% every year. Not being covered by the US Farm Bill has meant that while per farm income in the US in 2004 was
Cdn$ 43,178, per farm Net Cash Income in Canada was Cdn$24,606. Not being covered by the US Farm Bill has meant that while average per farm debt in the US in 2003 was Cdn$113,402, average per farm debt in Canada in 2003 was Cdn$199,024. Such statistics demonstrate vividly that the single biggest issue in Canadian farm policy must be dealing with the negative impact of US farm policy.

Carpet Tiles Utilize Corn By-Products

Energy efficiency and sustainability are, according to this story, the buzzwords for interior design these days, as paint chips and rug samples take a backseat to the environment.

As reported by the Toronto Star, this was obvious at the IDEX/NeoCon Canada trade show in October at the National Trade Centre. It was there, where more than 350 manufacturers showcased products which used safer, healthier and energy-efficient materials, along with products designed to make homes and offices feel more comfortable.

The story noted that one-sixth of Vancouver-based Interface Flooring's new carpet tiles are made up of corn by-products. Not only does the flooring boast no fumes, but stains can't penetrate it nor can moulds seep through it.

Satellite Technology to Determine if crop is GM or Non-GM

According to this article, there is potential for satellite technology to be used to help distinguish between genetically modified (GM) crops and non-GM crops. Anthony Fletcher of Food USA Navigator says that the US Environmental Protection Agency is now working with the National Aeronautics and Space Administration (NASA) to adapt hyperspectral imaging for agricultural use.
Through hyperspectral imaging, data can be obtained on a crop's health status, need for irrigation, pest attacks, weed status, soil nutrients and other previously unquantifiable variables, including gene drift. A special camera is used to cut a single photograph into 120 color-specific images. Each image is able to show a unique characteristic not visible to the human eye.

This hyperspectral camera, including its applications, was developed by the Institute for Technology Development at NASA in Mississippi, USA.

Farm Group Renews Battle Against 'Suicide Seeds'

The National Farmers Union was repeating its call for Canada to ban what has been historically dubbed as terminator technology; this after discovering that Canada recently granted a patent for the technology to a U.S. company and the U.S. government.

National Farmers Union vice-president Terry Boehm said Greenpeace and the 'Ban Terminator Campaign' learned that on October 11, a patent had been granted to Delta and Pine Land and the U.S. Department of Agriculture. Even though 'suicide seeds' have not been licensed to be sold in Canada, Boehm said he doesn't want to see any movement towards technology that he called dangerous and against nature. Boehm would like to see farmers and Canadians tell our government that we don't want any varieties that contain this sterilization gene.

Apparently, a representative from Delta and Pine Land could not be reached for comment at this time of this article. John Radin of the USDA's Agricultural Research Service, was cited as saying the USDA had stopped research into the technology over the last five years.

Improved Corn Varieties Stood Up To The Heat

An article originating out of Des Moines Iowa suggests that the high yields prove today's seeds tolerate drought far better than farmers ever expected. Across the Corn Belt, farmers are finding that last year's exceptional yields were no fluke. As harvest nears completion, many producers are reporting high-yielding corn and soybean crops from areas where excessive heat and prolonged dryness last summer diminished yield expectations. Many crop experts credit farm management practices, timely rains and luck for the production of what is expected to be the second largest U.S. corn and soybean crops ever.

Soil moisture is preserved through management practices farmers have adopted such as tillage reductions. Growers, agronomists and market analysts also point to crop genetic improvements, particularly in the area of drought tolerance which was key to this year's unexpected bounty.

Palle Pederson, an Iowa State University Extension Agronomist agreed that there was no doubt that the corn breeders need to be thanked for getting the kind of corn yields experienced this year, despite the drought. Kan Wang, a plant molecular biologist at Iowa State in Ames, agreed that genetic improvements are the main contributor to increased yields but also added that the corn plant's full potential is much higher than today's highest yields and one of the biggest barriers is environmental stresses which we have no control over.

Pioneer Hi-Bred International Inc. and Monsanto Co. are touting this year's surprising crop yields as they gear up for the 2006 seed sales season. Both companies have improved corn yields through conventional plant breeding programs by selecting higher yielding hybrids that withstand dry conditions and other stresses. Within their product pipelines, both companies also have crops designed with biotechnology to resist drought. Pioneer, who has a slight lead over Monsanto, expects to bring its first engineered drought-tolerant hybrids to the market within four to five years. Monsanto hopes to commercialize its own engineered drought-resistant corn hybrids after 2010.

Transplanted Corn Gene Protects Rice

Kansas State University scientists say they've demonstrated resistance to bacterial streak disease in maize can be transferred to rice. Researchers in Manhattan Kansas transferred a disease resistance gene from maize to rice and found it controls the disease, which is prevalent in Asia. The resistant gene recognizes the bacterium that causes bacterial streak in rice, a disease in which water-soaked lesions spread throughout the leaves. The gene also controls resistance to an unrelated bacterium that produces stripe disease in sorghum and maize. The scientists say that the ability to transfer resistance between two distantly related plants may open the possibility for using 'non-host' resistance genes to control diseases in a variety of crops.

Maizex Seeds Adds Several Direct Seeds Hybrids

In a news release dated November 7, 2005, Maizex Seeds announced it is expanding its already extensive corn hybrid line-up adding 9 additional hybrids previously marketed under the Direct Seeds Brand. This is possible through a cooperative agreement with Direct Seeds of Chatham, Ontario which is in the process of winding down its business operation. These key varieties will be made available under the Maizex Brand to select Direct Seeds Dealers that join the Maizex Dealer team. These new dealers will also offer products from the extensive Maizex line-up with the eventual phase out of the Direct Varieties.
Maizex Seeds recently completed a major expansion, including a new warehouse to accommodate its ever-expanding product offering and a new drying system with eight self-unloading ear corn dryers that doubled its capacity to handle 24 lots simultaneously. The company is widely recognized for its unique single-pass shallow column driers that consistently produce top quality seed.

Maizex Seeds offers YieldGard® Corn Borer and Roundup Ready® Corn 2 as well as stacked hybrids. The company also has an excellent offering of soybeans, including both Roundup Ready® and conventional varieties.
Maizex Seeds is the only fully integrated hybrid seed company in Canada, applying excellence at every step of the way. Maizex Seeds employs over 20 seed professionals and markets hybrid corn seed across all growing regions in Canada and several regions of the north eastern United States. For more details about Maizex Seeds, visit www.maizex.com.