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John Deere promoting wind energy projects

(Monday, Jan. 23, 2006 -- CropChoice news) --

1. Iowa reaches hog production agreement with Cargill
2. An incentive for farmers: Health care aid
3. IG charges GIPSA failed to enforce law
4. NFU opposes changes in definition of cheese
5. Renewable energy advances in Missouri
6. Dumping 'threat to rights of world's poorest producers'
7. USDA using satellites to monitor farmers
8. John Deere promoting wind energy projects
9. Corn farmers smile as ethanol prices rise, but experts on food supplies worry
10. American Corn Growers and Farm Aid to sponsor renewable energy workshops

1. Iowa reaches hog production agreement with Cargill

For immediate release - January 19, 2006.
Contact Bob Brammer, 515-281-6699, or Eric Tabor, 515-281-5191.

Des Moines -- Iowa Attorney General Tom Miller announced that United States District Court Judge Robert W. Pratt approved a Consent Decree today jointly submitted by the State of Iowa and Cargill, Inc., Cargill Meat Solutions Corporation, and Cargill Pork LLC (collectively "Cargill"). The Consent Decree sets out the terms of a settlement reached between the State and Cargill resolving a dispute over the constitutionality of Iowa's prohibitions against processors vertically integrating into pork production in Iowa.

"This agreement enables Cargill to pursue its stated plans to significantly expand its hog production contracting in Iowa," Miller said, "and it protects the rights and interests of Cargill's contract producers."

Miller said:

"I am pleased we have reached an agreement with Cargill that is very beneficial for Iowa's pork industry, especially since the likely alternative was lengthy and costly litigation with uncertain results. In the agreement, Cargill states a desire to significantly expand its business operations in Iowa, including hog production contracting. The agreement will allow this expansion to proceed, which is important for economic development and competition in the pork business," he said.

"At the same time, Cargill has agreed that when it contracts with Iowa pork producers it will be bound by rules guaranteeing fairness. Cargill producers will be given a 'contract producer's bill of rights' and the ability to enforce the safeguards in court, including the prospect of receiving attorney fees if they are successful. This is an important enforcement tool," Miller said.

"The agreement also has strong protections that will allow Cargill producers to organize and use bargaining associations. This will increase the economic bargaining power of Iowa contract producers and give them the opportunity to negotiate for their fair share of the returns in swine production," Miller said.

In return for Cargill's compliance with its commitments under the settlement, the State will not pursue enforcement of the ban on packer involvement in swine production with respect to Cargill, Miller said. The agreement has a term of ten years.

"There is no allegation here that Cargill violated Iowa law," Miller said. "On the contrary: Cargill approached our office to begin negotiations prior to engaging in production contracting. The agreement settles a dispute about the constitutionality of Iowa law and avoids litigation. It permits Cargill to move ahead with its stated intention of significantly expanding its business operations in Iowa by engaging in hog production contracting -- in a manner that reasonably protects the economic and legal interests of contract producers."

Specific provisions of the agreement include the following:

Contract Producers' Rights. Cargill has agreed that its Iowa contract producers will have a set of identified producer rights, including the right to be a "whistle-blower," the right to join an association, the right to use a contract producer lien, and the right to publicly discuss and disclose the terms of their contracts.

Cargill's Obligations. Cargill has agreed to refrain from a list of activities, including:

1. Coercion. Cargill must not take actions to coerce, retaliate against, or discriminate against a contract producer who exercises producer rights. This would include actions that would affect the execution, termination, or renewal of the producer's contract, or alter the quality, quantity, or delivery times of contract inputs to the producer.

2. Capital investment. Cargill must not require a contract producer to make a capital investment in addition to the capital investment required by the producer's contract, unless fair compensation is paid to the producer.

3. Arbitration. Cargill must not require producers to use binding arbitration to resolve disputes under the settlement agreement.

4. Company-owned facilities. Cargill must not finish hogs in company-owned facilities for a period of 5 years.

Iowa Producers' Ability to Organize. Cargill has agreed that if its Iowa producers organize or adopt a collective bargaining association, Cargill will not retaliate against such producers and will negotiate in good faith with such an association.

Enforcement. Cargill has agreed that if any Iowa producer suffers damages as a result of Cargill's breach of the producer's contract or the provisions of the agreement, the producer may bring a civil action, and, if successful, may recover damages and be awarded attorneys fees.

Market Access/Transparency. Cargill has agreed that for two years 25% of the swine slaughtered at its plant in Ottumwa, Iowa, will be purchased on the open market from sellers other than Cargill affiliates.

Continued Operation of Iowa Plants. Cargill has informed the Attorney General that it currently intends to keep its Ottumwa plant in operation. If those intentions change, Cargill has agreed to provide 90-day advance notice of any plant closure to the Attorney General.

Miller was joined at a State Capitol news conference by Tom Hayes, President of Cargill Meat Solutions Corporation.

Background Information on Cargill Litigation

The Consent Decree signed today settles a lawsuit filed late yesterday by Cargill in the United States District Court for the Southern District of Iowa. In its lawsuit, Cargill asserted that Iowa Code section 202B.201 violates the United States Constitution. The Attorney General denies that Iowa Code section 202B.201 violates the United States Constitution.

Background Information on Smithfield Foods Litigation

The agreement with Cargill announced today is very similar to the resolution of litigation between the State of Iowa and Smithfield Foods announced Sept. 16, 2005. A summary of the Smithfield litigation follows:

On July 22, 2002, Smithfield Foods, Inc., Murphy Farms, LLC, and Prestage-Stoecker Farms, Inc. ("Smithfield Producers") filed suit against the Attorney General in the United States District Court for the Southern District of Iowa, Smithfield Foods, Inc., Murphy Farms, LLC, and Prestage-Stoecker Farms, Inc. v. Miller, No. 4:02-CV-90324.

The lawsuit asserted that Iowa Code section 9H.2, the predecessor to current Iowa Code section 202B.201, violated the United States Constitution.

On January 22, 2003, the United States District Court for the Southern District of Iowa permanently enjoined the Attorney General from enforcing Iowa Code section 9H.2.

Iowa Code section 9H.2 was amended by the Iowa Legislature in 2003 during the pendency of the appeal of the District Court's ruling by the Attorney General, and recodified at Iowa Code section 202B.201.

The United States Court of Appeals for the Eighth Circuit vacated the District Court's January 22, 2003, ruling and remanded the Lawsuit for further proceedings in light of the 2003 amendment.

On December 30, 2004, the United States District Court for the Southern District of Iowa issued an order scheduling trial for the case to begin on March 13, 2006.

By agreement dated September 16, 2005, and with the approval of the United States District Court for the Southern District of Iowa, the Attorney General consented to an injunction prohibiting the enforcement of Iowa Code section 202B.201 by the State of Iowa with respect to the Smithfield Producers.


2. An incentive for farmers: Health care aid
By promising to sell their grain to Cargill, farmers could get help with health coverage.

H.J. Cummins, Star Tribune
Last update: January 18, 2006

His bins filled with 65,000 bushels of corn, Hamburg-area farmer Jerome Bergmann expressed interest in a Cargill plan that would buy his crop and help pay for his health insurance. "A person is going to have to do something," Bergmann said. "Every day more and more of us are losing benefits." Glen Stubbe, Star Tribune… http://www.startribune.com/535/story/191514.html

3. IG charges GIPSA failed to enforce law
USDA Agency Failed to Enforce Packers and Stockyards Act

By Chris Clayton
DTN Staff Reporter
Wed Jan 18, 2006 08:51 AM CST

OMAHA (DTN) -- Top officials in the USDA's chief enforcement agency for Packers and Stockyards Act violations failed to create any kind of environment that allows the agency to enforce the law and inflated its investigation numbers in reports to Congress, according to an audit released Wednesday.

The U.S. Department of Agriculture's Office of Inspector General found the Grain Inspection Packers and Stockyards Administration had no official policy for defining what constitutes an "investigation." So agency staff labeled almost every activity staff engaged in as an "investigation." That included monitoring routine daily information or simply sending letters to companies requesting information.

James Link, who was appointed as GIPSA's new top administrator last October, said in an interview Tuesday he has clarified the way investigations should be conducted and GIPSA is now delegating more authority to regional office staff to conduct investigations. Lines of communication within the agency needed to be clarified, Link said.

The report was publicly issued just over a month after the deputy administrator who had been in charge of the Packers and Stockyards division since 2000, Joann Waterfield, resigned her office. GIPSA officials had received advance notification of what the report would contain. Waterfield has not responded to repeated attempts by DTN seeking comment.

GIPSA oversees the movement and storage of grain, as well as enforcing the 1921 Packers and Stockyards Act, a law meant to ensure there is a fair and competitive environment for producers selling livestock. Regional offices overseeing the Packers and Stockyards division are located in Atlanta, Denver and Des Moines.

GIPSA officials reported 1,842 Packers and Stockyards investigations in fiscal 2005, but the Inspector General's office could not identify the locations of work performed on 1,799 of those reported investigations. Records were also incomplete on more than half of the investigations reported by GIPSA.

After seeing the report, U.S. Sen. Tom Harkin, D-Iowa, called for "swift and substantial changes" within GIPSA. Harkin, who initially requested the Office of Inspector General audit last spring, said he intended to introduce legislation that would transfer some of GIPSA's activities into a different office possibly within the U.S. Department of Justice. The report showed GIPSA management had failed to protect competitive markets for livestock producers, he said.

"USDA has failed to fulfill its responsibility to enforce the Packers and Stockyards Act. This report clearly finds that top officials at GIPSA were blocking employees from pursuing investigations and then cooking the books to cover-up the agency's lack of enforcement action," Harkin said.

The Inspector General stated senior management's control for managing competition and complex investigations at GIPSA also inhibited the ability of staff to conduct such work, according to the report. A Senior Management Review Panel within GIPSA effectively inhibited investigations by failing to approve them or establishing any policies or procedures to approve such investigations. As of August, there were 50 potential investigations still waiting for the review panel to approve for staff to initiate the cases.

That meant GIPSA was not referring cases to the USDA's Office of General Counsel for possible prosecution. In February 2005, GIPSA referred one case to the General Counsel's office, the first in three years.

The Office of General Counsel has not issued an administrative action against any company since 1999 because of a lack of referrals from GIPSA.

Link said he did not think too much power over investigations had been concentrated in USDA headquarters, but it has become clear there needed to be better communication between regional employees and the Washington, D.C., office.

"I wouldn't say it was so much concentration, but I would say a little bit of confusion over who could make decisions over different levels of communication and we're trying to clarify that," Link said.

The audit also said GIPSA leaders basically ignored prior recommendations in audits from the Office of Inspector General and the Government Accountability Office dating back to 1998. GIPSA officials had basically failed to take action on 64 policy issues within the agency dealing with the way GIPSA would monitor day-to-day activities in the livestock industry or how GIPSA would conduct investigations. At least 55 of these potential regulations had been in review since 2004 with two of the proposals dating back to 2000.

In response the Inspector General's report, Link stated that GIPSA has now implemented specific guidelines for conducting investigations.

Office of Inspector General audit on Packers and Stockyards can be seen at: http://www.usda.gov/oig/webdocs/30601-01-HY.pdf

4. NFU opposes changes in definition of cheese

For Immediate Release
January 17, 2005
Contact: Emily Eisenberg
Liz Friedlander

WASHINGTON (January 17, 2005) - National Farmers Union told the U.S. Food and Drug Administration (FDA) Tuesday that it opposes its proposal to change the definition of cheese.

FDA regulates standards of ingredients for over 70 different cheeses. Current standards do not allow for the use of ultra-filtered milk, which is a highly concentrated product as the result of separation by filtration. FDA is now proposing to amend the definition of "milk" and "nonfat milk" as it relates to approved ingredients in standardized cheese production.

"The proposal could potentially jeopardize decades of work and investment by America's dairy producers and quality ice cream and cheese processors," National Farmers Union President Dave Frederickson said.

Farmers Union said efforts to use non-milk ingredients in the production of dairy products only serve to increase processor profit margins. There is no consumer demand for these changes and certainly no producer demand…

More available at http://www.nfu.org

5. Renewable energy advances in Missouri

January 17, 2006
Contact: Amy Meyer

JEFFERSON CITY (January 17, 2006) - Today Senator Chuck Graham, D-19 and Representative Jenee' Lowe D-44, join a broad based coalition of environmental, conservation and health organizations, labor unions, faith and farm groups to support Renewable Energy Standards Legislation, RES.

"We are united in a common goal to protect the environment while keeping and creating jobs, and a more secure energy future," explained Representative Jenee' Lowe. The introduction of the companion bills, Senate Bill 843 and House Bill 1384 will establish minimum requirements for all retail sellers of electricity to supply a certain amount of their power from renewable energy sources. The percentage requirement would grow from 1% in 2008 to 10% in 2020.

"Legislation like this will slowly, but surely help our state and country become less dependent on foreign oil and energy sources," Senator Graham said. "Increasing the amount of energy that comes from renewable energy sources is critical for our economic and national security." Missouri imports nearly all of the fuel to produce electricity; billions of dollars exit the state annually. A RES would provide the impetus for the development of Missouri's renewable resources and keep more energy dollars working within the local communities, creating new job opportunities. In other states farmers have begun forming their own wind power cooperatives and growing crops for energy production. "The passage of this bill will create a new cash crop for Missouri farmers," added Amy Meyer, Missouri Farmers Union Outreach and Communications Director. "Other states have passed a RES, in effect helping their rural communities stay alive and adding to the incomes of farmers." "Support for renewable energy in Missouri is enjoying bi-partisan, statewide support. We have 30 co-sponsors and 20 statewide organizations representing rural communities and cities who understand this is the future," explains Carla Klein, Chapter Director for the Missouri Sierra Club. This new coalition effort is designed to promote a positive future in which economic growth goes hand-in-hand with safeguarding our air, water and land. "We believe through the use of clean energy and energy efficiency technologies we can create new secure manufacturing jobs in Missouri," added Emil Ramirez, Sub-District Director United Steelworkers, District 11.

"Development of Missouri's renewable energy resources would diversify the state's electricity supply, increasing energy security and reliability while protecting consumers from sudden spikes in energy costs," said Win Colwill, Energy Director, Missouri League of Women Voters.

Missouri's renewable electricity potential is virtually untapped. Renewable energy is increasingly available and affordable. Many states have realized that diversifying their energy sources benefits their economy and environment. It is time for Missouri to join other leading states in adopting Renewable Energy Standards.


6. Dumping 'threat to rights of world's poorest producers'

Irish Examiner
By Ray Ryan, Agribusiness Correspondent

THE dumping of agricultural products in developing countries was described as a human rights issue at a conference yesterday in Cork.

Cairn Smaller of the Institute for Agriculture and Trade Policy, in Geneva, said farmers in developing countries are unable to protect themselves and subsequently lose their livelihoods due to competition from dumped imports.

"This threatens, in particular, the right to an adequate standard of living, food, health and work," she added.

Ms Smaller said WTO rules to address agricultural export dumping are inadequate and must be strengthened and simplified… http://www.examiner.ie/pport/web/business/Full_Story/didsgpLp03zlppeQsgadLjt5C321I.asp14/01/06

7. USDA using satellites to monitor farmers

Jan 13, 7:44 AM (ET)

WICHITA, Kan. (AP) - Satellites have monitored crop conditions around the world for decades, helping traders predict futures prices in commodities markets and governments anticipate crop shortages.

But those satellite images are now increasingly turning up in courtrooms across the nation as the Agriculture Department's Risk Management Agency cracks down on farmers involved in crop insurance fraud. The Agriculture Department's Farm Service Agency, which helps farmers get loans and payments from a number of its programs, also uses satellite imaging to monitor compliance.

Across government and private industry alike, satellite imaging technology is being used in water rights litigation and in prosecution of environmental cases ranging from a hog confinement facility's violations of waste discharge regulations to injury damage lawsuits stemming from herbicide applications. The technology is also used to monitor the forestry and mining industries.

"A lot of farmers would be shocked at the detail you can tell. What it does is keep honest folks honest," said G.A. "Art" Barnaby Jr., an agricultural economist at Kansas State University.

Satellite technology, which takes images at roughly eight-day intervals, can be used to monitor when farmers plant their acreage, how they irrigate them and what crops they grow. If anomalies are found in a farm's insurance claim, investigators can search satellite photos dating back years to determine cropping practices on individual fields.

What's catching the attention of Barnaby and others is a spate of recent cases involving the use of satellite imaging to prosecute farmers. The largest so far has been a North Carolina case in which a couple faked weather damage to their crops by having workers throw ice cubes onto a tomato field and then beat the plants.

In September, Robert Warren was sentenced to six years and four months in prison, while his wife, Viki, was sentenced to five years and five months. They were also ordered to forfeit $7.3 million and pay $9.15 million in restitution.

The Warrens and at least three other defendants pleaded guilty. But in one related trial that went to a jury, prosecutors used satellite images and testimony from a satellite image analyst to present their case. "It was impressive to the jury to have this presentation about this eye in the sky and satellite imagery and a trained expert," said Richard Edwards, the assistant U.S. Attorney in North Carolina who prosecuted the case. "In our case it did not make the case, but it sure helped and strengthened and improved the case."

The Risk Management Agency is involved in three other multimillion-dollar crop insurance fraud cases that have yet to be filed that will rival the Warren case in scope, said Michael Hand, RMA's deputy administrator for compliance.

While fewer than 100 cases have been prosecuted using satellite imaging since the RMA started its crackdown in 2001, data mining - coupled with satellite imaging - pinpoints about 1,500 farms annually that are put on a watch list for possible crop fraud, Hand said. Ground inspections are done on the suspect farms throughout the growing season.

The agency says its spot checklist generated by the satellite data has saved taxpayers between $71 million and $110 million a year in fraudulent crop insurance claims since 2001.

The agency stepped up its enforcement after the Agriculture Risk Protection Act of 2000 mandated it use data mining to ferret out false claims, Hand said. Every year, it ships claims data to the Center for Agriculture Excellence at Tarleton State University in Stephensville, Texas, where analysts look for anomalies in claims. They generate a list of claims for further investigation, with satellite imaging pulled on the most egregious cases.

Just as U.S. satellites kept track of things like the wheat harvest in the former Soviet Union, other countries have also launched satellites to monitor American crops. Germany, France and others have satellites monitoring crop conditions, and many other private firms sell those images in the U.S. "Everybody spies on everybody. I was stunned to hear that myself," Edwards said. "Someday, I may have to rely on a French satellite to convict an American citizen."

8. John Deere promoting wind energy projects

By Jim Massey, Editor
The Country Today, a Wisconsin agricultural newspaper

SIOUX FALLS, S.D. -- A company known for manufacturing and servicing agricultural equipment is now in the business of promoting rural wind energy projects.

Deere & Company, the maker of John Deere equipment, has created a business unit to provide project development, debt financing and other services to those interested in harvesting the wind. Jim Meenagh, manager of planning and communication at John Deere Credit, said the company has erected turbines at various locations across the country that range in value from $1.75 million to $2.8 million.

"While we don't provide specific details on our projects, it would be fair to say that we own over 40 turbines and get inquiries from across the U.S. on almost a daily basis," Mr. Meenagh said.

The generation of electricity from wind turbines was a Jan. 11 workshop topic at the National Farmers Organization national convention in Sioux Falls, S.D. David Senter, an NFO consultant from Washington, D.C., was among those who encouraged NFO members to consider entering into agreements to place wind turbines on their land.

"We want to figure out how to make sure family farms can get a piece of wind energy," Mr. Senter said. "Your wind rights can be a valuable asset when you have adequate wind resources."

Mr. Senter said Deere & Company covers the cost of the turbines, and pays landowners $3,000 to $4,000 rent each year for each turbine placed on their property. Landowners could own the turbines after the first 10 years, he said.

"Annual income could be $120,000 to $140,000 per year per turbine," Mr. Senter said.

Mr. Meenagh said Deere & & Company was hesitant to confirm how much landowners might make once they assumed ownership of the turbines.

"At the end of 10 years, we allow our partners to buy us out on our projects," he said. "In terms of profitability, there are too many variables -- size of turbine, wind regime, agreement with the local utility, etc. -- to provide a figure, as literally every project is different. It is fair to say that at that time, most wind projects can be very profitable."

Mr. Senter said landowners could begin research as to the feasibility of placing wind turbines on their property by finding out if their local utility is interested in purchasing the electricity generated by the turbines. Some will, and some won't, he said.

Some utilities and rural electric cooperatives are opposed to wind energy -- "they think people will put up their own turbines and quit buying electricity from them," Mr. Senter said.

Larry Mitchell, an official with the American Corn Growers Association, said a 2-megawatt wind turbine could generate enough electricity for 800 homes.

Turbines being erected by John Deere range in size from 1.25 to 2 megawatts. Turbines cost approximately $1.4 million per megawatt to install, Mr. Meenagh said.

Mr. Mitchell said some farmers could consider pooling their resources and buying their own wind turbine.

"If you got three or four farmers together, it wouldn't be much different than buying a combine," he said. "Every time we put a wind turbine up we're reducing our dependence on natural gas. It all adds up."

The federal government is offering tax credits for wind turbines erected by the end of 2007, Mr. Mitchell said.

The 2002 Farm Bill includes a provision to allow the placement of wind turbines on Conservation Reserve Program land, but the regulations are still being written four years after the enactment of the legislation, Mr. Mitchell said.

Robert Lane, Deere & Company chairman and chief executive officer, said in a news release that the company is "well positioned" to support farmers harvest wind.

"For generations, the world's most productive farmers have used John Deere equipment to provide food to the world and now, through wind energy, the same farmers can help meet the growing demand for electricity," he said.

Early Deere & Company wind-project investments were made in Minnesota and Texas, and the company "is considering projects in others states and other countries," Mr. Lane said.

Industry experts predict the amount of electricity generated by wind power will increase dramatically over the next 15 years. In 2004, wind power produced less than 7,000 megawatts in the U.S., but that figure could reach 100,000 megawatts by 2020, Deere & Company officials say.

John Deere has no plans to manufacture or service wind turbines, Mr. Meenagh said. Turbine maintenance is contracted through the turbine manufacturer.

Mr. Senter said it makes sense for John Deere to be involved in placing wind turbines on farms.

"Farmers who are bringing in some dollars from wind turbines on their farms might be a better customer to buy a new tractor or combine," he said.

For more information, call Dan Rustowicz at John Deere Credit at (800) 275-5322 or (309) 765-8000, or contact a local John Deere dealership.

Information about wind energy is also available at the American Corn Growers Foundation by calling Dan McGuire at (402) 770-5237.

Jim Massey may be reached at jim.massey@direcway.com.

9. Corn farmers smile as ethanol prices rise, but experts on food supplies worry

Jan 16, 2006 New York Times

SIOUX CENTER, Iowa, Jan. 11 - Early every winter here, farmers make their best guesses about how much food the world will demand in the coming year, and then decide how many acres of corn to plant, and how many of soybeans.

But this year is different. Now it is not just the demand for food that is driving the decision, it is also the demand for ethanol, the fuel that is made from corn.

Some states are requiring that ethanol be blended in small amounts with gasoline to comply with anti-pollution laws. High oil prices are dragging corn prices up with them, as the value of ethanol is pushed up by the value of the fuel it replaces.

"We're leaning more toward corn," said Garold Den Herder, a farmer who cultivates 2,400 acres in a combination of corn and soybeans and is on the board of directors of the Siouxland Energy and Livestock Cooperative, which opened an ethanol plant here in late 2001. Last year a bushel was selling for about $2 here, but near the plant it was about 10 cents higher.

Farmers expect it to go higher soon if oil prices stay high. Ethanol was up to $1.75 a gallon, last year, from just over $1 the year before.

The rising corn prices may be good news for farmers, but they are worrying some food planners.

"We're putting the supermarket in competition with the corner filling station for the output of the farm," said Lester R. Brown, an agriculture expert in Washington, D.C., and president of the Earth Policy Institute. Farms cannot feed all the world's people and its motor vehicles as well, Mr. Brown said, and the result is that more people will go hungry.

Others say that the price of goods that have corn as an ingredient, including foods like potato chips or Danish pastries, will rise.

But Robert C. Brown, a professor of mechanical engineering at Iowa State University and a specialist in agricultural engineering, said the use of corn for nonfood purposes sounded harsher than it was. "The impression is that we're taking food out of the mouths of babes," Professor Brown said. In fact, corn grown in Iowa is used mostly to feed farm animals or make corn syrup for processed foods.

And Bernie Punt, the general manager of the Siouxland plant, said, "It's not as big a loss as what it seems like," pointing out that the corn remnants that come out of the other end of the plant were used for animal feed.

A global shift to farm-based fuel could reduce the need for oil and slow climate change. But Lester Brown is not alone in worrying about the effect on world hunger. For 20 years, the International Food Policy Research Institute, a nonprofit group in Washington, has maintained a computer model to predict food supplies, based on population changes, farm policies and other factors.

Until now, the institute's analysis had included the price of oil and natural gas only as a factor in production costs, including the price of making fertilizer, running a tractor or hauling food to markets. But last year, after Joachim von Braun, the director of the institute, went to Brazil and India, both of which make vehicle fuel from plants, he told his economists to change the model, taking into account the demand for energy from farm products.

Even a small shift could have big effects, Mr. von Braun said, because "the mouth of your car is a monster compared to your family's stomach needs."

"I do not just expect somewhat higher food prices, but new instability as well," he said in an interview. "In the future, instability of energy prices will be translated into instability in food prices."

Gustavo Best, the energy coordinator at the United Nations Food and Agriculture Organization, said growing crops for energy could provide new opportunities for small farmers around the world and finance the development of roads and other valuable infrastructure in poor rural areas.

But, Mr. Best added, "definitely there is a danger that the competition can hit food security and food availability."

Some experts scoff at the idea of corn shortages, but others say it is possible. Wendy K. Wintersteen, the dean of the College of Agriculture at Iowa State University, said that possibly as early as this summer, "we will have areas of the state we would call corn deficient," because there will not be enough for livestock feed - the biggest use of corn here - and ethanol plants.

"It's a hard thing to imagine in Iowa," Ms. Wintersteen said. Eventually, experts say, American corn exports could fall.

Nationwide, the use of corn for energy could result in farmers' planting more of it and less wheat and cotton, said Keith J. Collins, chief economist of the Department of Agriculture. But the United States is paying farmers not to grow crops on 35 million acres, to prop up the value of corn, he said, and much of that land could come back into production.

A change is under way that experts say will tightly tie the price of crops to the price of oil: ethanol plants are multiplying.

Iowa has 19 ethanol plants now and will have 27 by the end of the year, said Mr. Punt, a former president of the Iowa Renewable Fuels Association. The Siouxland Energy and Livestock Cooperative showed a $6 million profit for 2005, Mr. Den Herder said, driven in part by the price of ethanol.

Many farmers here in the corn belt say they have the ability to grow the material for vast amounts of fuel. Another biofuel is a diesel substitute made from soybeans, which still leaves about 80 percent of the bean for cattle feed, advocates say.

Joe Jobe, executive director of the National Biodiesel Board, a trade group, predicted that more demand for soy oil as a diesel substitute would force production of meal, pushing down its price and thus making cattle feed cheaper.

"I think there's a historical shift under way, not to grow more crops for energy and less for food, but to grow more for both," Mr. Jobe said.

Nick Young, the president of an agriculture consulting firm, Promar, in Alexandria, Va., pointed out that corn products have been used for nonfood purposes for years, including to make fluids used to help drill oil wells. Mr. Young said it was an exaggeration to say that nonfood use of crops will make the world's poor go hungry, but he added that the use of vegetable oil as a substitute for diesel fuel had already driven up the price of canola oil.

"These markets are linked," Mr. Young said. "Inevitably, there's going to be some interaction on food prices."

10. American Corn Growers and Farm Aid to sponsor renewable energy workshops

For Immediate Release
Contact: Larry Mitchell (202) 835-0330

WASHINGTON ­ Jan. 12, 2006 ­ Farm Aid President Willie Nelson and Keith Bolin, president of the American Corn Growers Association (ACGA) have announced their organizations’ sponsorship and facilitation of a series of renewable energy and farm policy workshops slated for the Midwest.

In line with its mission of keeping family farmers on their land to strengthen local and sustainable food production, Farm Aid recently granted family farm groups across the country $663,544.

The $15,000 grant from Farm Aid will assist ACGA in the underwriting of the workshops and facilitate presentations on the following topics

  • Overview of Bio-Diesel Production, Acceptance and Utilization,
  • Overview of Pre-Feasibility Study Guide for Farmer-Owned Ethanol Plants,
  • Wind Energy ­ New Potentials for Rural Communities,
  • Overview of Federal Programs Available for Renewable Energy Production, and
  • How Renewable Energy Production Can Be an Essential Component to Better Farm Policy.

"Our goal is to ensure we improve our continuing endeavor to communicate, educate and advocate the opportunities, challenges and possibilities for energy production on U.S. family farms," said Bolin. "This will include issues relating to bio-diesel, ethanol, bio-mass, wind and other farm based energy producing possibilities."

The bulk of the funds, which were distributed the last week of December to 57 family farm and rural service organizations across the country, will support a variety of programs that help farm families stay on their land and build local markets. Funds will also support efforts to increase on-farm renewable energy production, confront the threat of corporate control of agriculture, and help farm families recover from disasters and financial hardships. In addition to its grant-making, Farm Aid’s program includes public education, maintaining a hotline, advocacy, and convening farmer meetings. Much of the money raised by Farm Aid this year was the result of the 20 th anniversary concert held September 18 at the Tweeter Center in Tinley Park, IL. A broadcast of the concert is currently available free via Video on Demand to select cable carriers.

"More and more Americans are demanding food from family farms because they know that family farmers are America’s best guarantee for fresh, healthful food," said Farm Aid President Willie Nelson. "Farm Aid is proud to support efforts that expand opportunities for family farmers to help them take advantage of the growing demand for organic, humanely-raised and family farmer-identified food, as well as renewable energy crops."

Willie Nelson, Neil Young and John Mellencamp organized the first Farm Aid concert in 1985 to raise awareness about the loss of family farms and to raise funds to keep farm families on their land. Dave Matthews joined the Farm Aid Board of Directors in 2001. Since 1985, Farm Aid has raised more than $28 million. FARM AID: A Song for America was released this fall and chronicles the series of concerts and the accomplishments of the organization that galvanized a grassroots movement for the independent family farm. This book brings to life the power of music to create change.

To learn more about Farm Aid, visit http://www.farmaid.org or call 1-800-FARM-AID. The American Corn Growers Association represents 14,000 members in 35 states. See http://www.acga.org .