As food prices soar, Brazil and Argentina react in opposite ways (IHT)

SÃO PAULO, Brazil: Luciano Alves planted beans, corn and grain on about 7,500 acres of his farm in southern Brazil last year. This year, he is planting 8,600 acres. And he credits Brazil's president, Luiz Inácio Lula da Silva, with the increase.
"The government is helping us finance the purchase of new machinery," said Alves. "They reduced the interest rates we pay and have given us more time to pay off the loans. It's vital."
Rising food prices mean many farmers around the world are reaping record profits. And South America's agricultural powerhouses, Brazil and Argentina, are responding to the farming windfall in opposite ways.
da Silva's government recently announced record farm credits, a form of indirect subsidy, to encourage Brazil's farmers to produce more while the price of their exports are high on world markets, a move that should improve Brazil's economy. But Argentina, Brazil's economic and political archrival, decided to share the agricultural windfall at home.
Worried about the wave of inflation rippling around the world, the government of President Cristina Fernández de Kirchner of Argentina increased export taxes on some crops, a move meant to keep down domestic food prices by encouraging farmers flush from global profits to sell more at home.
http://www.iht.com/articles/2008/08/28/business/28farm.php

P.S!

• I am afraid that I have lost many of your recent emails, specifically any sent to me between 15th August 2008 and 26th August 2008. Obviously I am annoyed at my stupidity, but also offer my apologies for all those people who took the time to write to me at what is, for most people, a busy time of year.
• If you did write to me between the above dates, I can only apologise, and ask you to re-send your email to me.

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U.S. environmental agency won't ease requirements for ethanol in gas

WASHINGTON: The Environmental Protection Agency rejected on Thursday a request to cut the quota for the use of ethanol in cars, concluding, for the time being, that the goal of reducing the U.S.'s reliance on oil trumps any effect on food prices from making fuel from corn.
The EPA administrator, Stephen Johnson, said that the mandate was "strengthening our nation's energy security and supporting American farming communities," and that it was not causing "severe harm to the economy or the environment."
The effect of the decision on fuel and food markets is hard to determine. Recently, high energy prices have led to even more ethanol production than the quota required. On the other hand, rising corn prices made some ethanol operations unprofitable, especially as oil prices started to fall.
So ending the quota might not have reduced the use of ethanol, but it might decline even with the quotas remaining in place. Still, the debate is fraught with symbolism — as a sign of unease over government intervention in the energy and food markets, with all the unintended consequences that ensue. The decision is an indication that Washington is unwilling to retreat from a policy that is very popular among grain farmers, if not among ranchers.
Companies that use corn to fatten livestock and poultry, along with others in the food business, had called for lifting the requirements, saying that their costs were rising as millions of pounds of corn were diverted from feeding livestock to fueling cars. Farmers argued that the jump in corn prices was driven not so much by the demand for ethanol as by growing demand for grain-fed meat around the world, and their own higher costs for diesel fuel.
Governor Rick Perry of Texas, a leading cattle state as well as a bastion of the oil business, made the request in late April, and the EPA said it received 15,000 comments during its three-month-long review.
The rules that the EPA reconsidered on Thursday set a floor for ethanol use, not a ceiling, and not even the floor was firm, because under the rules, the EPA could issue a waiver if the requirement became "onerous."
Renewable fuel use in 2004 was 3.5 billion gallons, according to the EPA — mostly ethanol, which is a form of alcohol, but including some biodiesel, which contains oil from crops. The goal for this year had been 5.4 billion gallons but in December, with the price of oil soaring, Congress raised the renewables quota to 9 billion gallons for this year, and laid out a schedule of annual increases that would bring it to 11.1 billion gallons in 2009. In 2022, the quota would be 36 billion gallons.
The agency has not completed an analysis of the effect of the mandate as the quota rises.
That target requires not only more ethanol but new cars and new filling station equipment, because nationally, gasoline consumption of fuel for cars, vans, sport utility vehicles and motorcycles is only in the range of 140 billion gallons, and ordinary cars can burn ethanol in blends with gasoline no higher than 10 percent. But ethanol is part of the auto industry's long-term strategy; General Motors plans that by 2012, half the vehicles it builds will be able to accept blends of up to 85 percent ethanol.
The long-term hope, backed up with generous government incentives, is to make motor fuel from "cellulosic," or non-food, sources. Private companies are feverishly pursuing technologies for using wood chips, wheat straw, waste plastic and even municipal garbage to make ethanol and other liquid vehicle fuels. But none of these is commercial at the moment.
http://www.iht.com/articles/2008/08/07/business/08ethanol.php







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President of Argentina withdraws tax increase on grain exports

BUENOS AIRES: The president of Argentina, Cristina Fernández de Kirchner, has said that she would revoke tax increases on grain exports, a measure that had set off months of farm revolts, food shortages and nationwide protests.
The move on Friday to revoke the tax increases was a humbling retreat by the president and was necessary to stop the hemorrhaging of her seven-month-old presidency, political consultants and risk analysts said, after the Argentine Senate rejected the plan and Kirchner's own vice president, Julio Cobos, broke a tie to defeat the measure.
Kirchner's government has lost much of its support during the conflict, with her approval rating falling to as low as 20 percent in some polls.
In explaining the decision to rescind the tax plan, Alberto Fernández, the president's chief of staff, said that in a democracy one had to "respect the popular will" and "preserve the quality of institutions."
He gave no indication of whether the government planned to revisit the measure, but he said it was committed to its vision of redistributing income to the lower classes, a justification the government had used for the tax increases.
http://www.iht.com/articles/2008/07/20/america/argentina.php




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EU raids Cargill and Bunge in price-fixing investigation

BRUSSELS: Cargill, the largest U.S. agriculture company, Bunge and grain traders in two countries were raided by European Union authorities in an antitrust investigation into alleged price-fixing.European and Italian antitrust officials made surprise visits at Cargill offices in Italy, said Francis DeRosa, a spokesman for Cargill in Cobham, England.The European Commission, the EU's antitrust regulator, carried out inspections in two countries, the agency said in a statement."We have provided and will continue to provide full cooperation," DeRosa said Thursday.Commodity prices have advanced for six consecutive years, with wheat, corn, rice and other foods reaching records this year. World food imports will cost a record $1.04 trillion this year, $215 billion more than last year, the United Nation's Food and Agriculture Organization has said.
http://www.iht.com/articles/2008/07/11/business/10raid.php




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Worst seen over for U.S. Midwest floods

EAST ST. LOUIS, Illinois: The worst Midwest flooding in 15 years eased on Saturday after the swollen Mississippi River crested in St. Louis, but the toll was still rising as billions of dollars in damage to crops, communities and infrastructure were assessed.
Emergency workers at river levees and floodwalls feared more rain could swell river levels again and complicate recovery efforts. But the skies remained mostly clear and thousands of relief workers could finally exhale.
"It really is looking positive. The weather has cooperated and that's made a difference," said Maggie Carson, a spokeswoman for Illinois Emergency Management in Alton, Illinois, a few miles north of St. Louis.
Thunderstorms seen for the northern Midwest in the next few days were expected to be scattered and pose no new threat.
The flooding and storms blamed for 24 deaths since late May have caused billions of dollars in damage to the heart of the U.S. grain belt, pushing corn and other food commodity prices to record highs and feeding fears of higher world food prices.
http://www.iht.com/articles/reuters/2008/06/21/america/OUKWD-UK-USA-FLOODING.php








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Some farmers devastated by flooding; others brace for what might come

CANTON, Missouri: Looking out from the highest hill in this town, it suddenly seemed that there were two rivers: the Mississippi, of course, and now a new river, a nameless renegade that had appeared out of nowhere on Wednesday when the Mississippi's waters broke over a levee near the tiny hamlet of Meyer, Illinois, and surged over tens of thousands of acres of farm fields.The runaway river was gruesome news for the farmers and the residents — about 100, the authorities said — near Meyer and in other towns near where more than 20 levees have overflowed so far, creating their own bodies of water during this week's flooding along the upper Mississippi. Around Meyer, part of a region of endless fields of soybeans, corn and cattle, state conservation police officers rode door to door in boats to ensure that everyone had left, and flew over in a helicopter, scanning for anyone stranded.So it went all along the Mississippi on Wednesday, through Iowa, Illinois and Missouri, north of St. Louis: People marching along levees and flood walls, scanning for the slightest puddle or hint of pressure in the sand, waiting for what might come. In Quincy, Illinois, local officials raced to reinforce a levee they were worried about south of town; at stake were 100,000 acres of farmland and access to the Mark Twain Bridge. And federal authorities said they were closely monitoring more than 20 other levees they view as vulnerable, as the waters continue to rise downstream in the coming days.Around Meyer, farmers were devastated. "That's all been lost, and it's not going to be replanted this season," said Gerald Jenkins, general manager of Ursa Farmers Cooperative, not far from Meyer. One of the cooperative's grain elevators, in Meyer, was swamped, Jenkins said, another at risk.Worse, Jenkins said he feared that so many fields under water would mean not much grain for the cooperative to sell come the fall harvest. "It's a very sickening feeling," he said.
http://www.iht.com/articles/2008/06/19/america/19flood.php








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