February 2007

Index

Canada Requests WTO Consultations on U.S. Agricultural Subsidies

On January 8, 2007, the Honourable David Emerson, Minister of International Trade, and the Honourable Chuck Strahl, Minister of Agriculture and Agri-Food, announced that the Government of Canada has requested consultations with the U.S. at the World Trade Organization (WTO) on subsidies provided to U.S. corn growers, as well as on the total level of U.S. trade-distorting agricultural support.

More information on Canada’s request for consultations and Dispute Settlements at the WTO is available on the Foreign Affairs and International Trade Canada website, www.international.gc.ca/tna-nac/wto-ds-en.asp.

In response to the Canadian government’s announcement, the Canadian Corn Producers issued the following news release on January 9.

Canadian Corn Producers encouraged by Canada's decision to challenge U.S. farm subisdies at World Trade Organization

Canadian Corn Producers (CCP) are encouraged by the request made yesterday by Canada for WTO consultations with the United States on subsidies provided to U.S. farmers under the U.S. Farm Bill, especially those provided to U.S. corn growers. In explaining why Canada has taken this
action, Agriculture Minister Chuck Strahl said "Canada is concerned that these U.S. subsidies continue to cause economic harm to our corn farmers". With the collapse of the Doha Round of WTO trade negotiations, a successful challenge of these U.S. subsidies (through WTO consultations and, if need be, WTO litigation) is the only viable long-term solution to level the playing field for both corn producers and corn users in Canada.

While CCP is grateful that Canada is finally using the WTO rights and remedies at its disposal, the launch of Canada’s WTO case does not address the immediate needs of Canadian corn growers who continue to be challenged by a serious farm income crisis. This is why CCP (and its member associations in Quebec, Ontario and Manitoba) continue to ask the Federal Government (and their provincial counterparts) for a made-in-Canada, WTO-compliant, fully funded (both federally and provincially) and effective income support program (to offset the injury caused by U.S. farm subsidies).

To this same end, CCP continues to pursue its domestic trade remedy case under Canada’s Special Import Measures Act to re-impose high antidumping and countervail duties to offset the injurious impact of significantly dumped and subsidized U.S. corn imports. On this front, CCP has filed an application in the Federal Court of Appeal to review the Canadian International Trade Tribunal’s April 18, 2006, finding that U.S. subsidies are not causing material injury to Canadian corn growers. CCP is currently waiting for the Federal Court to set a date for the application to be heard (which could be as early as this Spring).


Canadian Federation of Agriculture Congratulates the Government

The Canadian Federation of Agriculture (CFA) congratulated the Canadian government in a press release for taking the initiative to address U.S. oversubsidization and level the international playing field.

CFA President, Bob Friessen, expressed hope that these consultations signal the beginning of real action to fix this inequitable situation and make the U.S. live up to their international trade obligations.


Brazil Considers Joining Canada in Challenging U.S. Corn Subisdies

In a recent Dow Jones article, it was reported that Brazil’s Foreign Affairs Ministry is considering joining Canada’s efforts in challenging the U.S. corn subsidies under the WTO.

It was reported in a DTN story that Brazil is studying the impact of the U.S. corn subsidies on corn prices internationally.


CFA drives farm policy

The Canadian Federation of Agriculture (CFA) has been working on adding more details to a proposal for a Canadian Farm Bill. This discussion
document, available on the CFA website, will be used as a discussion document when public consultations begin on the next generation of Canadian
agriculture policy.

According to CFA’s press release, their Canadian Farm Bill lays out a three-pillar structure for agriculture policy: Public Goods and Services, Business Risk Management, and Strategic Growth.

The Public Goods and Services Pillar presents a vision for a Canadian agriculture sector that is environmentally, economically and socially sustainable, internationally competitive and a provider of high quality, safe and healthy food to Canadians and the world. It outlines specifics for
environment (such as environmental farm plans), implementation funding for food safety and a framework for animal and plant health strategies.

The Business Risk Management Pillar offers seven-part plan for programs that will create stability, address markets that are distorted by international subsidies, be flexible to address regional and commodity needs, and be predictable and bankable for producers. The program
components include an improved NISA-like program, provincial companion programs and a component to address declining margins.

The vision of the Strategic Growth Pillar is of a framework policy that proactively facilitates innovation, growth and profitability for producers within a financially sustainable industry. This pillar offers a business model approach supporting innovation with examples such as focused research funding, a Green Label program promoting home grown Canadian products, a Cooperative Investment Plan, and new Business Development and
Innovation Centres as one-stop shops to provide producers with cutting-edge information they need to succeed.

Complete details are available on the CFA website www.fcafca.ca.


Ontario Federation of Agriculture: Planning on RMP

The Ontario Federation of Agriculture (OFA) has become involved in the planning for a Risk Management Program (RMP) for Ontario’s grain and
oilseed producers.

OFA, working in the role of a facilitator, arranged a meeting in January with senior representatives from the Ontario Ministry of Agriculture, Food
and Rural affairs, directors and staff representatives from Ontario’s grains and oilseed groups and OFA leaders.

The framework for an aggressive agenda has been developed as the group works on designing a RMP for government review. The RMP, as it was developed over a year ago by farmers for farmers, will serve as the backbone in the program design process.

OFA has indicated that they will continue to work with their provincial counterparts across Canada to ensure a countrywide demand of the federal
government to participate financially in such provinciallybased companion programs.

U.S. Corn Supplies Dwindling

Reports are indicating that U.S. corn supplies are dwindling due to foreign buyers and ethanol plants buying up a lot of corn and pushing prices higher than farmers have seen in several years.

Overall, the crop came in slightly lower than last month’s forecast at 10.5 billion bushels, down from 10.7 billion bushels. The acres planted and harvested were slightly smaller than expected.

APF Consultations: Round One

Round one of the consultations on the Next Generation of Agriculture and Agri-Food Policy has been completed and a report has been made available on the government website www.agr.gc.ca/nextgen. The documents that have been used for the consultations are also available on the website.

Producers can participate in one of two ways; attend one of the in-person sessions or participate in the online session on the website indicated above. The Ontario in-person sessions will be taking place as follows:

February 6 – Sudbury
February 9 – Kemptville
February 13 – Belleville
February 15 – Ridgetown
February 16 – Woodstock
February 26 – Toronto

Although separate consultations were held for each of the pillars, there were some common ideas and issues that were raised in more that one
session. These included regulatory reform, improved collaboration between different levels of government and different government departments, more support for consumer education and the need to ensure that new policies are designed to provide an improved return to primary producers.

The consultations currently taking place for the BRM (Business Risk Management) pillar will complete round one of the consultations. Round two
will occur early in 2007 and consist of public consultation sessions on all pillars including BRM. Round three will consist of working sessions with invited participants to assess the feedback from the first two rounds and provide consolidated input to federal, provincial and territorial governments.

National Safety Nets Advisory Committee Winding Down

Minister of Agriculture and Agri-Food, Chuck Strahl, announced in late December that the federal government will rely more on processes that
bring federal, provincial and territorial governments and industry to the same table for discussions as apposed to using federal advisory committees.

The NSNAC is a federally appointed committee which has played a significant role in providing the federal government with advice towards developing BRM programs. As the consultations take place for the next generation of agriculture and agri-food policy, the operations of the National
Safety Nets Advisory Committee (NSNAC) will wind down.

Government Takes New Step to Protect the Environment with Biofuels

The Honourable Chuck Strahl, Minister of Agriculture and Agri-Food, announced $345 million in late December through two new programs to assist farmers and rural communities seize new market opportunities in the agricultural bioproducts sector.

Capital Formation Assistance Program for Renewable Fuels Production

$200 million was committed to provide producers with incentives for participation in new renewable fuels production capacity.

Agricultural Bioproducts Innovation Program

$145 million was committed to provide support for crosssector research networks conducting scientific research and development related to the
advancement of a Canadian biobased economy.

The (former) Minister of the Environment, the Honourable Rona Ambrose, announced that the Government would regulate the use of renewable fuels in Canada with an annual average renewable content of five percent in gasoline by 2010. In addition, the Government intends to regulate a two percent requirement for renewable content in diesel fuel and heating oil by 2012. For more information on the programs and how to apply, visit
the Agriculture and Agri-Food Website www.agr.gc.ca.

EU Plans More Biofuels

The European Union recently outlined its proposed energy policy which indicates an increased usage of renewable sources.

The report calls for a 20 percent reduction of greenhouse gas emissions by 2010, an increase in renewable sources like wind power, a cut back on
nuclear power and a target for biofuels to replace oil in vehicles.

The proposal must be approved by the European governments before it goes into effect.

Government Investment of $93 Million in Rural Infrastructure

On January 10, 2007, the Government of Canada and Government of Ontario announced that they have invested $93 million in the Canada-Ontario Municipal Rural Infrastructure Fund (COMRIF). Several small urban and rural communities across Ontario will benefit from the $46 million allocated to Ontario.

The COMRIF funds will be used in upgrades that will provide clean and safe drinking water, better sewage systems, improved waste management
processes, and safer roads and bridges.

Food Safety Initiative

The Food Safety Initiative is an element of the Agricultural Policy Framework The goal is to ensure that Canada is a world leader in producing safe, high quality food for both Canadian and international markets.

In Ontario under the Food Safety Initiative, the Ministry of Agriculture, Food and Rural Affairs (OMAFRA) will officially launch two programs on February 12, 2007; the Traceability Grant Program and the Traceability Pilot Project.

Traceability Grant Program – direct grants will be available to assist applicants to implement a facility level traceability system. Traceability Pilot Project – approximately 20 pilot facilities will be selected to work with OMAFRA on projects to develop and implement a facility level traceability system.

For more details, contact OMAFRA at 1-866-641-3663, by email at FSI.omafra@ontario.ca or the website www.ontario.ca/omafra.

Volunteer Recognition Awards

Annually, the Ontario Agricultural College, University of Guelph (OAC) hosts a Recognition Banquet to honour outstanding volunteers who have contributed their time, effort and expertise for the benefit of Ontario’s agri-food, rural and environmental sectors.

Nominations are now being accepted for the 2007 awards until February 24, 2007. Nomination forms are available online at www.oac.uoguelph.ca
or by calling the OAC Dean’s Office at 519-824-4120 extension 52284.

Awards will be announced at the Recognition Banquet which will be held at the Creelman Hall at the University of Guelph on April 25, 2007.

Corrections

In the editorial of the January issue, the CAIS fee calculation was reported at 0.045% of the reference margin. The correct fee for CAIS is 0.45% of the reference margin.

In the CAIS P1/P2 Inventory Valuation by Coralee Foster, CA, in the January issue, the correct name of the provincial program is the Ontario Inventory Transition Payment (OTIP).

Dupont Seed Business Restructuring Cuts 1,500 Jobs

Canadian Press announced in mid December, chemicals maker Dupont Co. would cut 1,500 jobs and consolidate manufacturing in its seeds unit in a move to lower operating costs by $100 million USD per year. Dupont expects to book a related $200 million pre-tax charge in the fourth quarter to
cover the restructuring.

In a separate announcement, the company sharply increased its fourth-quarter earnings target to reflect a series of tax gains that will more than offset the restructuring charges. Dupont said it now expects to earn $3.25 per share in the quarter, including $370 million or 39 cents per share, in net one-time gains. The previous estimate was for profit of $2.86 per share, including a gain of one cent per share.

Dupont plans to reinvest the savings from the restructuring into its seeds business as it steps up competition with industry leader Monsanto. Most of the changes are expected to be done in 2007, the company stated.

Syngenta Starts Testing of GM Corn Crops in Romania

Syngenta Agro SRL is, according to this story, the first company to test genetically modified corn in Romania. This move comes as the Romanian
authorities have decided to ban GM soy crops because the ‘problem’ was not managed properly in the country at a time when the European Union is pushing to stop such crops. The Environment Ministry authorized the testing of GM corn in May of 2006. The authorization is valid until 2009.

Ontario Farmers Urged to Get Familiar with New Water Laws

John Fitzgibbon, chair of the Ontario Farm Environmental Coalition, was cited as saying at the December Huron-Perth dairy committee’s annual information day, that new provincial legislation regarding the protection of drinking water sources will eventually have its impact on most areas in the province. That is why it’s important for farmers to seize local opportunities to become involved in the legislation’s delivery as soon as possible.

The story goes on to say that the act is intended to address 12 recommendations made in the 2002 Walkerton Inquiry Report and was passed in October 2006.

Fitzgibbon went further, saying that by calling for the development of communitybased drinking water protection plans, it extends provincial control in land use and land management in connection with municipal water, to form an extremely powerful piece of legislation. This legislation will supersede municipal official plans and bylaws as well as provincial nutrient management and water resources legislation and, for the first time, empowers conservation authorities to enforce land use.

Fitzgibbon stated the development of the plans will begin this spring. Reformed conservation authorities will oversee the process, noting that they would be changed into 16 water protection authorities organized around watersheds. The plans would begin with detailing how much and the quality of water in a watershed. Municipalities will be asked where they plan to get their water over the long term. Ground and surface water
vulnerabilities will also be examined with the intent of compiling an inventory of potential contamination threats. Manure storage is considered to
be a significant threat, as are fuel and pesticide storage facilities, meaning it’s likely the legislation will affect not only farms but also farm input
businesses, he said.

The authorities will compile reports requiring municipalities to take action even before a final plan is in place, he commented. The province has already shelled out millions of dollars to make sure the appropriate technical expertise is located in the conservation authorities. The authorities will also be involved in gathering feedback and will have representation on the committees responsible for developing the plans.

CFIA: New Regulations to Protect Canadian Consumers and Support Growth of Organic Products Industry

In a December press release, the Honourable Chuck Strahl, Minister of Agriculture and Agri-Food and Minister for the Canadian Wheat Board, announced final publication of the Organic Products Regulations that will protect consumers against false organic claims and will govern the use
of a new Canada Organic logo. Through these regulations, Canada’s government is providing a competitive advantage for the Canadian organic sector and protecting consumers, stated Minister Strahl. He continued by saying not only will Canadians be protected against deceptive and
misleading claims on organic products, but the organic industry’s capacity to respond to international and domestic market opportunities will be
strengthened.

Phased in over the next two years, the Canada Organic logo will be permitted for use only on those food products certified as meeting the revised Canadian standard for organic production and that contain at least 95 percent organic ingredients. Following this phase-in period, it will be mandatory that all organic products be certified for inter-provincial and international trade.

Canada now joins more than 40 other countries world-wide with organic regulations. These regulations are a result of comprehensive national
consultations which began in 2003. The Organic Products Regulations may be obtained on the CFIA’s website at www.inspection.gc.ca or the
Canada Gazette website at www.Canadagazette.gc.ca.

Chinese Pesticide Producers Slow to Apply for Patents

A report from English News Service cited Yang Ming, an official with the State Intellectual Property Office agricultural and chemistry section, as saying that Chinese pesticide producers are lagging behind the rest of the world in applying for patents even though the country is the world’s second largest pesticide producer. SIPO statistics were cited as saying that of all the pesticide patent applications handled by the Chinese
government, applications submitted by foreign companies were about five times that of Chinese companies, with Ming suggesting the lack of awareness in patent protection hindering the development of Chinese pesticide companies, since the sector has been fully opened up to foreign competitors. Ming said a similar problem was evident in China’s chemical fertilizer industry, which registered the world’s biggest output and became fully open to foreign competition in December 2006 under China’s WTO commitment.

Canada and India Sign MOU

In January 2007, Agriculture and Agri-Food Canada (AAFC) announced that Canada and India signed a Memorandum of Understanding (MOU) to
expand scientific collaboration in exchanging technology and expertise and in conducting research. The agreement will provide opportunities to
exchange information and expertise in agriculture, agrifood and rural development.

According to AAFC, Canada and India have had a long history in co-operation in science and technology. Both countries have particular interest in agricultural biotechnology, bio-pesticides and bio-fertilizers, functional and nutraceutical foods and environmental technologies.

The MOU establishes guidelines for setting research priorities and projects but does not involve any exchanges of funds.

North America Acts to Reduce Risk of Exposure to Lindane

In early December, the Commission for Environmental Co-operation (CEC) announced the signing on November 30, 2006 of the North American
Regional Action Plan (NARAP) on Lindane and Other Hexachlorocyclohexane Isomers to reduce the risk of exposure to the toxic pesticide and waste
isomer by-products. The NARAP is a continental strategy for the governments of Canada, Mexico and the United States to address exposure risks through a variety of national regulatory and management actions, outreach and education efforts, science and research, capacity building and collaborative cross-border activities. Specifically, the NARAP commits Canada to continue to assess and manage the risks from the sole current use of Lindane in Canada as a pharmaceutical drug. Mexico agrees to eliminate all agricultural, veterinary, and pharmaceutical uses of Lindane through a prioritized, phase-out approach. The United States will work with pharmaceutical companies to develop alternatives for lice and scabies use.

Earlier this year, the U.S. Environmental Protection Agency announced that Lindane manufacturers in the United States had voluntarily agreed to
withdraw registration of this persistent, toxic and bioaccumulative chemical for its last six remaining agricultural uses. This followed the suspension in Canada of Lindane pesticide products for all agricultural uses in 2001. A review of that suspension is ongoing. Use of the chemical as a pharmaceutical treatment for head lice and scabies, however, will still be authorized in Canada and the United States as a second line agent (ie. in cases where patients have not responded to or cannot tolerate other treatments).

Adrian Vazquez, executive director of the CEC, said that although it has been used for decades, Lindane remains a dangerous chemical that needed
to be addressed. He also added, that by signing this action plan, the governments have responded with a comprehensive strategy that will eliminate uses of Lindane in North America that carry unacceptable risks.

Lindane belongs to a family of toxic chemicals known as organochlorines. It is used as an agricultural and veterinary insecticide and also, in low
concentrations as a pharmaceutical for treatment of lice and scabies in humans. This wide-ranging, persistent, organic pollutant accumulates in living organisms and is associated with skin irritation and nausea. It can even cause convulsions and death with high levels of acute exposure.

Similar NARAPs on chlordane and DDT successfully eliminated the use of these pesticides in North America and plans are currently in place to
reduce the impact of mercury and PCBs on the environment.

New Zealand Farmers to be Compensated for GM Corn Losses

In a recent report, the company that provided GM contaminated sweet corn seed that has been sown in Hawke’s Bay and Gisborne has confirmed
growers will be compensated for their losses.

The Ministry of Agriculture and Forestry (MAF) has ordered the destruction of hundreds of hectares of planted corn in the two regions after tracing the distribution of seed containing low levels of genetically modified material. MAF has commissioned an independent inquiry into the biosecurity slip
up that allowed thousands of tonnes of suspect seed imported from the United States to be cleared and released for sowing.

Representatives of Syngenta, the U.S. based company that supplied the seed, have been in Hawke’s Bay and Gisborne talking to the food processors that bought the seed and distributed it to their contract growers. A spokesman for Syngenta, John Walsh, was cited as saying it looks at this stage as if a reasonable amount of the condemned corn crop can be replanted – up to 80 percent in Gisborne and about 20 percent in Hawke’s Bay. Beyond that, he says Syngenta will compensate the farmers for their costs and loss of income.

Researchers Developing Machinery to Harvest Corn Stalks and Leaves

A John Deere 9750 STS combine slowly made its way though an Iowa State University research field, all the while dumping a crop of corn kernels
into the combine’s hopper and blowing a crop of stalks, cobs and leaves into a trailing wagon. That dual-stream, single-pass harvesting system was
developed by Stuart Birrell, an Iowa State associate professor of agricultural and biosystems engineering, and graduate students Mark Dilts and Ben
Schlesser. They’re working to design, build and test machinery that will harvest corn stover – the stalks, cobs and leaves – when farmers bring in their grain. The stover could be the source of plant fiber that feeds the next generation of ethanol plants.

The researchers ran their latest version of a stover harvester through about 50 acres of corn near Ames this fall. Birrell recently showed some video of the tests on his office computer and explained how the system works. The researchers are developing stover attachments that can be
used on standard combines. The result would be an additional cost to farmers of about $10,000 to $15,000 instead of the six figures it would take for a separate combine to harvest stover. The attachments would also allow farmers to harvest grain and stover with one pass through a field.

The system the researchers have come up with includes a modified row crop header and corn reel attached to the front of the combine and a chopper and blower attached to the back. The header and reel feed leaves and stalks into the combine so the biomass can be harvested
before it touches the ground and is contaminated with soil. The chopper cuts stover into two inch pieces and the blower throws the chopped stover into a wagon.

Although tests with the prototype machine have been successful, Birrell said there is more development work to do in the following areas; harvest
equipment capacity, economical stover transportation, biomass storage and fertility effects of stover removal.

This research is being supported by U.S. Department of Agriculture, U.S. Department of Energy and Deere & Company of Moline, Ill. Birrell stated that significant resources have been dedicated to the process of converting cellulose into ethanol but, very little has gone into answering how one
would get a supply of stover from the field to the biorefinery. This will be critical to the success of the bioeconomy.

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