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Doha, and the Ag Economy

Doha

Bradley S. Klapper reported late last week that, “The World Trade Organization was set to admit Friday its failure to secure a new global commerce pact before the end of the year because of a row between the United States and emerging economies over agricultural and industrial goods, officials said.

“WTO Director-General Pascal Lamy had hoped to invite top trade negotiators to Geneva this weekend to work out the many issues hindering a deal designed to lift millions of people out of poverty and add billions of dollars to the global economy through lower trade barriers.

“Lamy pushed back the meeting earlier this week, and was to announce Friday that he would not recall ministers for crunch talks until perhaps sometime next year, officials said.”

The AP article noted that, “After Thursday criticizing U.S. President-elect Barack Obama for failing to show commitment to the trade round, [Brazilian Foreign Minister Celso Amorim] softened his tone on Friday. ‘We are not in any kind of blame game here,’ he said.”

Reuters writer Jonathan Lynn reported on Friday that, “The World Trade Organization (WTO) dropped plans on Friday to seek a breakthrough for a new trade deal this year, risking an increase in protectionism as the world economy suffers its worst crisis in decades.

“Key members voiced disappointment at the decision, but vowed to push on with the negotiations next year, when economic conditions will be harder and the new administration of Barack Obama will have taken office in the United States.

“WTO Director-General Pascal Lamy told members he had decided against calling trade ministers to Geneva this month to push for a deal in the WTO’s seven-year-old Doha round, because they were not showing enough political will to narrow differences.”

Mr. Lynn indicated that, “Lamy said he had detected willingness to reach a deal on cotton, where poor African producers want to see a big cut in trade-distorting U.S. subsidies.

“But there was no willingness to move on the sectoral deals and farm safeguard, which pitch the United States against big emerging countries like China, India and Brazil.”

Dow Jones writer Tom Barkley reported on Friday that, “U.S. Trade Representative Susan Schwab expressed disappointment Friday that a meeting on the long-stalled Doha round of global trade talks has been called off, but acknowledged that differences remain too wide.

“‘Due to numerous outstanding issues voiced by several WTO members, it became apparent that the gaps were too large to bridge at this time,’ said Schwab in a statement. ‘There were several significant unresolved issues on the table that needed to be addressed for a deal on modalities to come together.’

“Schwab said the U.S. remains committed to a successful conclusion of the Doha round, though a new administration will be in place in a little over a month.”

Reuters writer Roberta Rampton reported on Friday that, “Congressional leaders warned against rushing to accept the latest draft of Doha, saying U.S. farmers and manufacturers will not gain enough access to export markets to make up for what they would give up in subsidies and protective tariffs.

“Senate Finance Committee Chairman Max Baucus said Lamy’s decision to forego the meeting was appropriate, an aide to the Montana Democrat said, noting Baucus did not think Congress would support a deal without more gains in market access for U.S. companies and farmers.

“‘It would be detrimental to the U.S. trade agenda if Congress failed to support a Doha deal,’ the aide said. ‘And it would be detrimental to the WTO to have yet another failed ministerial.’”

The Reuters article added that, “There is no point in trade ministers meeting until other countries are willing to make concessions, said Charles Grassley, the ranking Republican on the finance committee.

“‘It might take the continued worldwide economic slump for countries to wake up and realize that expanded trade is one of the keys to growing prosperity,’ Grassley, a senator from the farm state of Iowa, said in a statement.”

And Senate Agriculture Committee Chairman Tom Harkin (D-Iowa) issued a statement on Friday, which noted that, “Director-General Lamy rightly decided against holding a Ministerial meeting next week. The draft texts released last week highlighted a number of key open issues that would have been very difficult to resolve in a short meeting, and many of the proposed compromises included in the texts were not satisfactory to U.S. concerns. I fear that any product of such a rushed process would have faced poor prospects for approval in the U.S. Congress.

“But I continue to be disappointed that WTO member countries have been unable to reach an agreement over the long course of Doha Round negotiations. The world economy would clearly benefit from a successful multilateral agreement.”

Xinhua news reported on Saturday that, “The European Union (EU) expressed regret late Friday at lack of progress in the Doha Round of global trade talks after WTO chief Pascal Lamy decided not to convene a ministerial meeting by the end of the year.

“‘We have come tantalizingly close to the finish line with an outline agreement that would have been good for everyone and a major boost for the world economy,’ EU Trade Commissioner Catherine Ashton said in a statement.

“‘Having come this far, we must not give up,’ she added.”

The article stated that, “Ashton called for new efforts with U.S. President-elect Barack Obama, eyeing a deal next year.

“‘We should continue the work and engage with the new U.S. administration in January to see how quickly a ministerial meeting can be called in 2009,’ she said.”

Alan Beattie and Frances Williams reported on Saturday at the Financial Times Online that, “Since the G20 meeting, Russia has announced it will increase import tariffs on cars, India has raised duties on iron, steel and soy and Indonesia has alarmed trading partners with measures to benefit local producers. Brazil and Argentina have argued for an increase in external tariffs for Mercosur, the Latin American trade bloc of which they are the two biggest members.

“The G20 was lauded by attendees as a landmark meeting that would put big developing countries at the heart of global policymaking. Following last month’s summit, Gordon Brown, the UK prime minister who will host the next G20 meeting, said there would definitely be a meeting of trade ministers this year. Downing Street did not return calls yesterday.

“The countries that have raised tariffs deny breaking the agreement. The US said yesterday that it could not be blamed for the stalemate in Doha.”

Ag Economy

A DTN article from Friday (link requires subscription) reported that, “2009 soybean acreage in the U.S. is forecast at 81.4 million acres, according to Informa Economics’ latest acreage survey. That’s 5.6 million acres above 2008 acreage and also 4.2 million above Informa’s November forecast.

“Corn and wheat acreage in the U.S. is seen falling in 2009, with corn acreage estimated at 82.3 million acres, 3.6 million below 2008 acreage and 4.5 million below November’s estimate, said Informa. Both the Eastern and Western Corn Belt are expected to decrease acreage by more than 1 million acres each.”

The DTN article added that, “Total planted acreage for the 20 major crops in the U.S. is projected to be about 314.45 million acres, up 500,000 from the 2008 total, said Informa. A portion of the increase is seen coming from a 1.2-million-acre drop in land in the Conservation Reserve Program; about one-half of that land is expected to go back to crop production. There’s also an anticipated decline in soybean double-cropping due to lower wheat seedings in soft-red-producing states, according to Informa.

“USDA will release its winter wheat seedings estimates on Jan. 12. Its Prospective Plantings report will follow in March.”

And on the issue of corn and soybean seed genetics, Ian Berry reported in today’s Wall Street Journal that, “As producers consider whether to plant corn or soybeans next year, some believe the field could be tilted in corn’s favor because of seed performance.

“The perception, if not the reality, is that corn has performed better, analysts and agronomists said.

“‘Soybeans are not having a bad year this year. It’s just that whenever it’s put up next to corn, people say ‘well, goodness,’” said Emerson Nafziger, crop production specialist for the University of Illinois extension service.

“The USDA currently projects a national corn yield of 153.8 bushels per acre, 2.7 bushels above last year’s total and the second-highest on record, behind the 2004 crop. Soybean yield is expected at 39.3 bushels per acre, down 2.4 bushels from last year.”

The Journal article pointed out that, “Seed quality should not get all, or even most, of the credit for this year’s corn crop, said Roger Elmore, agronomist with Iowa State University extension service.

“‘I would argue no hybrid, no matter how good the genetics, would have done well if it hadn’t been for the perfect weather we had’ from the silking stage of the plant’s development onward, Mr. Elmore said. Silking is a critical step in the pollination of the plant, after which the ears of corn develop, ultimately determining yield.

“Even with the perfect weather after the floods, ‘if you would have thrown an Oct. 1 freeze in, [seed quality] wouldn’t have made a bit of difference,’ he added.”

For a more detailed look at the rate of increase in corn yields and weather related factors, see this FarmPolicy update from March 2, 2008.

Meanwhile, Laurie Goering and Alex Rodriguez, writing in yesterday’s Chicago Tribune, reported that, “Around the world, food-poor but cash-rich countries, spooked by last season’s high food prices, are racing to snap up rights to farmland in developing countries and breadbasket nations. They’re aiming to boost their own food security and cash in on what might prove one of the few sound investments left in a world in financial crisis.

“South Korea’s Daewoo Logistics announced last month that it has signed a 99-year lease on 3.2 million acres of land in Madagascar, which it will use to produce corn and palm oil for shipment home. China, which already farms more than 100,000 acres of land in Australia, is buying or leasing huge swaths of farmland in the Philippines, Laos, Kazakhstan, Myanmar, Cameroon and Uganda, according to Grain, a sustainable-agriculture group based in Spain.

“Gulf states—Saudi Arabia, the United Arab Emirates, Bahrain and others—also have locked up millions of acres in Indonesia, Pakistan, Sudan and Egypt.”

The Tribune article stated that, “‘It’s literally all over’ that rich countries and corporations have been looking for land in recent months, said Carl Atkin, head of research for Bidwells Agribusiness, a British company that has helped broker some of the land deals and advises farming investment funds.

“The rush to buy or enter long-term leases on land has been fueled in part by the low levels of world grain stocks, despite record harvests this year, and by a growing sense that world markets cannot be trusted to supply adequate grain. Important grain producers like India, Vietnam and Indonesia within the last year cut off exports of key crops such as rice and wheat to ensure supplies at home, boosting prices worldwide and raising concerns about potential shortages.

“Now countries like Saudi Arabia say they would prefer to be in charge of their own grain production rather than relying on their vast cash reserves to buy what they need, particularly when cutting out the middleman can reduce costs by 20 percent or more, experts say. Fast-developing countries like China, in turn, see demand for food at home outstripping their ability to produce it in years to come and want to line up supplemental supplies with some of their huge foreign currency reserves built up through trade surpluses.”

Keith Good

 Email This Post Posted by Keith Good • December, 15, 2008 • 5:14 am