As GMOs face the court of public opinion, are you doing your part to educate the public on agriculture
The 117th edition of the National Grain and Feed Association’s (NGFA) Annual Convention, held in San Francisco in mid-March, drove this sentiment home in its general sessions: While agriculture is one of the greatest growth industries, the coming years will be filled with the unique challenge of restoring the public’s trust in the food system. For those working and living agriculture, it should come as no surprise that much of the content presented by the event’s diverse set of speakers focused on the anti-biotechnology battle being waged in this country — specifically the one against genetically modified (GM) grains and food stuffs.
Largely driven by emotion and misinformation, the vitriolic arguments presented by biotech’s opponents run contrary to the extensive scientific research backing the legitimacy and safety of GM foods. Why then does this movement have such momentum? According to Chuck Policinski, Land O’ Lakes president and CEO, agriculture has failed to manage the public’s opinions on the food supply by not effectively telling its productivity story, the one only made possible through the use of biotechnology.
Let’s face it, the public has been conditioned to be suspicious of big business (often rightfully so) — and agriculture surely is not exempt from this scrutiny. Big is bad — and the consumers intrinsically question whether or not greed-driven corporations (and politicians) have their interests and well-being in mind.
California’s Proposition 37 (also known as “The California Right to Know Genetically Engineered Food Act”) highlights this movement. The statute would have called for the mandatory labeling of genetically modified consumer food products at the grocery store. While Prop 37 was defeated during the 2012 election by a narrow margin, the push certainly didn’t end in California. In fact, many states have proposed legislation and pending ballot initiatives in motion.
Do consumers deserve to know where their food comes from and how it is sourced? Absolutely. Should the industry be more transparent? I think so; however, acknowledging that the tide has shifted, perhaps it’s time to take the initiative and address the matter on its own terms.
Earlier this month, Whole Foods became the first major retailer requiring products containing GMOs to be labeled by 2018 — and, in time, other major retailers are likely to follow suit. Not knowing where the consumer’s interest in the supply chain will end, grain handling and feed manufacturing industries should keep a keen eye on this issue because we are, after all, ultimately one industry.
Policinski urges individuals and agribusinesses to actively engage with the public in real time via social media and that they reach out to their local and state politicians to tell the story about an industry revving up to feed a growing global population.
Panama Canal expansion bodes well for U.S. grain, while weather, aging infrastructure holds us back
After attending presentations at the 2013 GEAPS Exchange, three elements stood out that I’d like to tie together for you to think about:
Weather woes will continue
Dr. Elwynn Taylor from Iowa State University made some projections about our current drought situation. Here’s my take: Don’t expect magic this year. Or, as he put it, “A year as extreme as 2012 is seldom followed by a full return to normal.”
Perhaps even more intriguing is his data that shows corn belt weather shows an 18-year/25-year cycle; 18 years of somewhat stable weather and yields, then 25-years of less stable weather and volatile yields. “I don’t know why,” he said.
That point is important because the Mississippi River likely will remain low and there is at least the potential for another high-value grain year. What if we can’t move it efficiently? And if we are in a period of volatility, how will restricted transportation options affect your merchandising strategies?
2. Panama Canal good for U.S. grain
Maria Sanchez of the Panama Canal Authority showed how the new Panama Canal will provide improved efficiency for U.S. grain shippers. Larger cargo ships, less delays and, by the way, grain accounts for about 35% of the traffic through the canal, she pointed out. Will we be ready to take advantage of that improvement? That’s the question – well, perhaps more of a statement – Rich Calhoun, President of Cargo Carriers posed to attendees.
3. U.S. infrastructure needs improving
While roads and bridges need work, Calhoun focused attention on our aging river-system lock. He said “when” not if a failure occurs, we’ll see transportation costs jump overnight. We won’t be able to leverage the value of the new canal the way we should.
Efficient transportation is a competitive advantage. In the face of what could be more yield and price volatility – or even if that doesn’t happen – wouldn’t it be nice to maintain transportation efficiencies to help alleviate risk? Support our industry associations and their efforts to keep this issue in front of budget-makers.
For more of Feed & Grain's insights on the GEAPS Exchange education programs, read other articles and blogs on our site and in the issue.
Average soybean basis across the US was down 1 cent on account of declining river markets, while corn basis remained unchanged on the week.
Average soybean basis across the US was down 1 cent on account of declining river markets, while corn basis remained unchanged on the week.
Soybean plants gained one cent on the week but weakness along the river pulled basis lower throughout the country. Soybean basis at the gulf dropped 3 cents which negatively impacted terminals along the river. Terminals along the Ohio River were affected most and declined by an average of 4 cents since last Thursday.
This week’s average U.S corn basis remained unchanged despite the gulf moving 2 cents lower and the rest of the river declining by an average of ¾ of a cent. The rally in the futures market since last Thursdays lows helped improve farm selling and capped basis from advancing higher.
Survey seeks industry insight to determine demand for a captive insurance company
The U.S. Commodity Futures Trading Commission (CFTC) is analyzing its proposed customer protections, i.e. segregated funds, after receiving a lot of criticism for its recent rulings. Customers and trade organizations have voiced concern over proposed protections they deem harmful to small to mid-sized futures commission merchants (FCM), which account for the bulk of agribusiness hedging activity.
Insurance, one form of protection for segregated funds, was excluded from the CFTC’s proposal. The Commodity Customer Coalition (CCC), a non-profit organization formed in response to the bankruptcy of MF Global, headed by co-founders John Roe, president of Roe Capital Management Inc., and James Koutoulas, CEO TyphonCapital Management LLC, is advocating creation of insurance policies for futures customers and has been working on reform initiatives such as an account insurance mechanism and testing alternative forms of collateral segregation, i.e. margining positions though bank account rather than futures broker.
The CCC’s currently pushing a captive insurance company model. To test the validity of that model, the CCC needs to determine if there is a sufficient market interest for an insurance product; what customers seeking that insurance would be willing to pay; what kind of coverage they would be looking for; and collect account-level data in order to formulate the actuarial model to make sure it’s feasible to create an insurance product.
Roe explains: “We’re talking about a small market here — very few people have a commodity trading account so we’re talking about limited exposure here. It’s not possible for an insurance company to produce such policies so we’d have to create a new company. The survey will measure demand, the actuarial ability to produce the product — and then hopefully we’ll have the data we need to roll up our sleeves and let the actuaries go to work.”
The CCC is conducting two surveys to determine the feasibility of customer account insurance. One survey is tailored to the needs of public customers of commodity firms; the other, to National Futures Association’s (NFA) member or member firms.
If the market demand is there, the CCC will develop its own captive insurance company and begin offering insurance policies to commodity customers.
To take the Commodity Insurance Survey, clickhereif you are the customer of a commodity firm or click here if you are an NFA member or member firm.
Corn and soybean basis was mixed across the United States this week with some river terminals showing positive basis gains while others terminals declined
Corn and bean basis were stagnate this week showing no change on average across the country over the past week.
At the Gulf, corn basis found modest strength of 4 cents a bushel but river terminals along the river were mixed. Areas south of St Louis have seen basis retreat while areas along the Mississippi river in Iowa and Illinois saw some limited positive gains. In the ethanol market, basis levels were unchanged on average although some buyers were noticeably weaker as basis levels fell 5 to 10 cents on the week.
For soybeans, river markets showed large variability with some terminals increasing basis 10 cents or more while others dropped by a similar amount. Strong export demand keeps underpinning river basis, but a negative carry in the futures market will keep buyers from wanting to hold inventory for long. For soybean plants, they showed a modest one-cent gain on average as crush margins continue to hold firm helping keep domestic demand strong for beans.
GEAPS is, and rightfully so, proud of it’s 2013 Exchange in Louisville this week, pointing out that it’s the largest event ever. This is my 29th GEAPS. After 29 years we’re supposed to have earned and learned from great experiences, which gives us the right to provide a bit of perspective. Here’s mine:
First, the industry always represents and reflects progress. Perhaps whether we like it or not. The mergers and consolidations we’ve all seen — from farms to feed mills to co-ops — bring some pain. But it also brings progress, builds scale and often improves our opportunity to innovate, to add services and continue growing.
Second, highlighted by the attendance we’ve seen at many sessions here in Louisville, people appreciate ongoing training and education. In talking with a few of my long-time industry friends, we all like the constant emphasis on safety — on keeping our workers safe and healthy. Mark Aljets, speaking in the opening workshop on preventing catastrophic events made that point very well. He asked us to think about the impact in a small community if there is a loss-of-life incident at that town’s elevator. When you see someone at church, watch your kids growing up together, that sense of loss is heartrending. I know we’ll all keep safety training in the forefront.
Third, this market works together. We have two customers at Feed & Grain — our audience and our advertisers. Many of the advertisers I’ve worked with point out that some of their best ideas — where they make the most progress – started with customer input. Listening is a great skill. I think this industry does that.
Finally, for all of these years and more to come, this industry represents fun. To meet again with people first met 29 years ago, to pick up conversations right where we left off, to get updates on business, on what they’re changing — and on kids and grandkids, is gratifying. I’m fortunate to be part of this industry. No wonder 29 years doesn’t feel like a long time!
Average soybean basis slipped a penny in response to this weeks bean rally; corn basis firmed amid lackluster price action
Soybean basis lost one-cent a bushel on average across the country this week, while corn basis managed to post a modest one-cent gain for the week.
Gains in corn basis were most notably tied to ethanol plants, which saw a 2-cent gain over the last week. Ethanol margins continue to improve off their lows from the start of the year as ethanol prices have firmed and corn prices have eased off. At the Gulf, corn basis was unchanged and limited changes occurred along river terminals as barge rates were mostly stable.
For beans, basis levels were off 1-cent a bushel across the country this week. Soybean crushing plants were lower by 2-cents a bushel, while some processors in the Eastern Cornbelt were off 5 to 10-cents on the week. River markets were slightly stronger as export business continues to be strong for this time of year.
Sustainability, commodity prices, weather top AFIA president's list
While at the 2013 International Poultry & Production Expo (IPPE) in Atlanta, GA, from Jan. 29-31, I caught up with American Feed Industry Association (AFIA) president Joel Newman to discuss his top predictions for agriculture as we look into 2013. Topping his list:
Focus on sustainability
High commodity prices
Market and weather volatility
“Feeding a population of 9.1 billion people by the year 2050 is a huge undertaking by the industry, but one that I think we can achieve on a global basis,” expressed Newman.
To meet this challenge, Newman said the AFIA established a sustainability initiative two years ago, which focuses on six key points and relies on a special committee to discuss and make recommendations for addressing those issues.
High commodity prices and market volatility are two more trends Newman predicted will extend into 2013. Companies in the feed industry will benefit from solid risk managements plans because “as we go into spring, we’re all hoping for a successful planting season, but we need to recognize we’re still in a drought condition,” Newman said. “The open question is how will spring planting go and will we have enough moisture to produce a good crop.”
To watch more of my interview with Newman, click here.
U.S corn and soybean basis diverged this week as soybean basis slumped in the face of corn strength.
Corn and soybean basis moved in opposite directions this week as farm soybean sales picked up and weakening Gulf bids pushed basis lower. For the week, corn basis was up 2 cents a bushel while soybean basis lost 2 cents a bushel.
For corn, basis levels were firmer by 3 cents a bushel at ethanol plants as margin levels for processing corn to ethanol improved the past week for the first time in about a month. Nonetheless, margins continue to be tight and about 6 plants have idled production in the past few weeks. At the Gulf, export basis levels were up 4 cents on the week and river terminals posted a 3-cent advance
In soybeans, basis weakness was widespread across much of the country with the exception being Eastern Cornbelt regions. On average, soybean basis dipped 2 cents over the last week as a 50-cent advance in nearby soybean futures pushed more farmer beans in to the pipeline. At the Gulf, basis levels weakened sharply, dropping 14 cents a bushel as export business starts to cool. As a result, river markets showed an 11-cent loss for the week, while soybean plants were off 3 cents for the week.
In the letter, a response to an insurance agent’s inquiry about the restrictions involved with employees working in a grain bin with an energized sweep auger, OSHA stated that it is in violation of the Grain Handling Standard (1910.272 (g) (1) (ii) to do so unless the employer eliminates all hazards posed by an unguarded sweep auger. Many believe the now infamous letter exposed a fundamental lack of understanding of how a sweep auger works — as well as how grain is handled — since the implications would make operation difficult, if not impossible, while remaining in compliance with the standard.
Politicians and industry leaders, like the National Grain and Feed Association (NGFA), have reached out to OSHA, but despite their efforts, the agency has failed to deliver concrete guidance for acceptable procedures or alternatives for in-bin energized sweep auger operation. However, more than three years later, as these cases are making their way to litigation, grain companies are finally getting a glimpse of what may be expected of them.
Recently, attorneys in Epstein Becker Green’s national OSHA practice group made headway when representing an Illinois grain handler, who despite having “employed a combination of administrative and engineering controls to ensure that no employee was ever within the zone of danger,” received a citation for allowing an employee to operate a sweep auger while in the grain bin.
The law firm contested the citation, and worked with an OSHA area director and regional administrator to develop a set of safety principles to satisfy the “equally effective means or methods” language of the grain standard.
Ultimately, OSHA withdrew the citation; and as part of the settlement agreement, the company will incorporate a set of “10 Sweep Auger Safety Principles,” which if satisfied, would allow an employee to work inside a grain bin with an energized sweep auger. It also developed and submitted for OSHA’s review and approval a “Sweep Auger Policy,” which outlines engineering and administrative controls used to ensure worker safety.
Attorney Eric Conn, head of OSHA practice with Epstein Becker Green, is confident this ruling may guide future policy, and commends the willingness of the agency to work with his client to find a reasonable solution.
While the outcome of this settlement is a step in the right direction, on a national level, an elevator who adheres to these principles is not guaranteed protection from a citation until this or another directive becomes final policy, warns Jess McCluer, NGFA’s director of safety and regulatory affairs.
The outcome of this case may not be the final word on the issue, but it does point to a potential resolution in the near future. To read a detailed account of the case as told by the attorneys involved, click here.