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The outsourcing of food

(Monday, Oct. 10, 2005 -- CropChoice news) --

1. The outsourcing of food
2. U.S. trade chief makes offer to reduce crop subsidies
3. American Corn Growers Association opposes USDA service cuts
4. Sustainable Agriculture Coalition statement on Chambliss budget reconciliation package
5. Congress seeks to slash food aid for poor
6. Johanns calls for farm changes as U.S., EU move closer on subsidies
7. American Corn Growers Association applauds President Bush's signing extension of Grain Standards Act in which federal inspection of grains remains intact
8. Activists move to protect organic standards from USDA, trade group
9. Canadians win, Americans lose. What else is new?
10. The growing cost of growing wheat
11. Brazil wants retaliation on U.S. for not complying with WTO ruling on cotton subsidies
12. Canadian farmers shed their stereotype
13. ADM plans biodiesel plants in U.S., Germany
14. Wilton Wind Energy Center groundbreaking

1. The outsourcing of food

By Jason Mark, AlterNet
Posted on October 6, 2005, Printed on October 6, 2005

Ronny Sloan is a farmer to his roots. Sloan's father was a farmer, and so was his grandfather, and his great grandfather, and everyone that family history can remember since the Sloans moved from Kentucky to Illinois in the early 19th century. Today Sloan and his four sons farm near the tiny town of Pana, Illinois, where they grow corn, soybeans and oats.

The Sloans are successful farmers, their 6,000-acre operation large by local standards. In recent years, however, they have had to grapple with a problem never encountered before -- foreign competition.

"Things are tough, the farm economy is tough," says Sloan, his voice a rural twang that sounds closer to Mississippi than Missouri. "We used to be the big player and had 75 percent of the soy market. That's not the case. We're now second place, behind Brazil. That's definitely hurting us."

The Sloans are not alone. From the apple orchards of western Washington to the tomato fields of Florida to the potato heartland of Idaho, American farmers are battling a new kind of pest -- imports from international rivals who can produce essential foodstuffs cheaper than they can be grown here.

After decades of being the world's top food producer, the U.S. is poised to become a net importer of agriculture products, according to data from the US Department of Agriculture. By the end of the decade, Brazil is expected to eclipse the U.S. as the number one food grower.

Call it the outsourcing of food. Following in the footsteps of blue-collar workers and, more recently, white-collar employees, the U.S.'s two million farmers face the prospect of being offshored as well.

The shift to foreign food production is clearly bad news for farmers, who have struggled for years to get their sale prices to match the costs of production. The outsourcing of food is also troubling for the U.S.'s ever-growing debt burden, since agricultural products were among the few bright spots in the country's deficit-burdened trade balance. For now, consumers benefit by getting lower food prices. But, say some food policy analysts, the U.S. could, in the long run, face a food security threat if present trends continue.

The U.S. has always been an importer of commodities that can't be cultivated here -- coffee and cocoa, bananas and mangos. But now U.S. markets are being flooded with products that Americans are accustomed to growing themselves. An increasing percentage of the produce you buy at the grocery store comes from fields and orchards thousands of miles away. If you've had any apple juice lately, it's more than likely that the concentrate used to make it was produced in China. Those raspberries you love may have been grown in Chile, the tomatoes in Mexico, and the avocados in Central America.

Even those most American of foods -- good old meat and potatoes -- often are imported. Scandinavia, for example, exports baby back ribs to the U.S., while a portion of our spuds come from abroad. Potato processing giant J.R. Simplot recently laid off 625 workers at one of its French fry factories in Oregon and plans to have the work done overseas.

Reggie Brown, vice president of the Florida Tomato Exchange, a trade group that represents the state's $500 million tomato industry and which has suffered serious loses in the last decade, puts the issue succinctly: "The fundamental question is, 'Is it America's long term interest to produce these crops here, or to have them produced elsewhere and shipped in?' We feel it's in Americans' best interest to be a producer of our own food supply. But there doesn't seem to be a national agenda to do that. The opposite seems to be the national agenda."

Trading Away the Farm

Many farmers and academics say that a decade of free trade agreements is responsible for the plight facing U.S. agriculture. During the heated debates over the creation of the North American Free Trade Agreement (NAFTA) and the establishment of the World Trade Organization (WTO), the Washington political establishment told U.S. growers that the new trade deals would be a net benefit for farmers. In hindsight, it appears that the politicians promised too much.

"A lot of growers would be negative or skeptical toward trade agreements," says Desmond O'Rourke, a former professor at Washington State University and editor of a newsletter for the fruit and vegetable industry. "They would say, 'What has it done for me? Not a whole lot.'"

The problem, according to Phillip Abbot, a professor of agricultural economics at Purdue University, is that other nations have successfully grabbed the markets U.S. farmers were counting on. Exports of the U.S.'s biggest commodities -- cheap commodities such as corn, soybeans and wheat -- have been flat for a decade as other nations boost production. At the same time, imports of pricier items like fruits, vegetables, processed foods and some meats are surging. The largest challenge for American farmers is that foodstuffs -- just like televisions or T-shirts -- can be produced more cheaply in low-wage countries. It's simply less expensive to grow oranges and soybeans in Brazil than in Florida or Illinois.

While the new trade deals have reduced the political barriers to food imports, technological improvements in refrigeration and irradiation have reduced the physical barriers to shipping food long distances without spoiling. All of which leaves American farmers on shaky ground, desperate to keep their costs as low as possible in a market environment in which their harvest prices are not increasing. Thousands of farmers have not been able to keep up and are now out of business.

"I've seen a lot of farmers go broke because of NAFTA," says a California-based land manager for a major American food corporation who asked that his name and company not be identified for fear of getting in trouble with his supervisors. "We can't compete with the labor. In Mexico they pay $5 a day. We pay $8 to $10 an hour. It's a shame -- there are greenhouses for sale up and down the state."

Asparagus is one of the crops hit hardest by the wave of food imports. Since the 1930s, Washington state has been the center of U.S. asparagus production for the processed market. But in the last decade, overseas asparagus, most of it from Peru, has devastated the state's growers. According to an official at the Washington Asparagus Commission, who says the industry is in a "state of collapse," two-thirds of Washington's asparagus fields have been taken out of production since 1990, and 2004 marked the first time in more than 60 years that there was no asparagus processing in the state.

Jim Middleton, one of Washington's few remaining asparagus growers, says that the industry's collapse has caused an irreplaceable loss of natural and financial capital. Because asparagus is a perennial that takes several years to come to maturity and then lasts for 15 to 20 years, tearing out an asparagus stand isn't as simple as plowing in a row of broccoli -- it's more like bulldozing an apple orchard.

"It's not something you do lightly," says Middleton, whose family has been growing asparagus since 1966. "It's a tough decision to pull out your crops. But if you're making no money, what choice do you have?"

Middleton says the near destruction of the asparagus industry -- which is labor intensive in both picking and processing -- has cost thousands of people their jobs. "This has always been a real stable part of the farm economy," he says. "And now those jobs are lost. I hope our state and federal governments do what they can to keep this industry alive. The jobs it provides are really important to us."

Cultivating Influence

If the increase in food imports is a raw deal for many growers and farm workers, then in whose interest does the situation serve? Agriculture analysts say all you have to do is follow the money -- and that leads straight to major processors and commodity brokers such as Cargill and Archer Daniel Midland (ADM), corporations that continue to post impressive profits even as farmers struggle.

"Who does this really work for? It's a system set up to benefit the large food companies," says Ben Lilliston, spokesman for the Institute for Agriculture and Trade Policy, a Minneapolis-based think tank. "They are playing farmers in the U.S. off of farmers in Brazil, India, Australia, even China. These companies don't care where the food comes from. They just want the cheapest price possible."

By encouraging more food imports, corporations such as Cargill and ADM -- along with the major supermarket chains like Wal-Mart and other food processors like Philip Morris's Nabisco -- keep their costs low and their profit margins high. The major food companies' first priority is cheap food, regardless of where it comes from. If it seems as if the rules have been written mostly to the advantage of the big agribusiness companies that trade on the international markets, that's because they are. For example, a former Cargill vice president, Dan Amstutz, drafted the original text for the WTO's agriculture regulations.

The large agribusiness companies also have sought to protect their interests by halting "country of origin" labeling. The 2002 Farm Bill called for the USDA to start identifying where all imported food comes from. But agribusiness allies in the House of Representatives -- led by Texas representative Tom Delay--have delayed implementation of the labeling and are trying to make it voluntary.

Stickers or decals stating food's country of origin may be small, but the issue is a major one. That's because consumer surveys consistently show that most American shoppers would prefer to buy food that comes from the U.S. If country of origin labeling became universal, it could cramp the major food processors' business model.

"The food companies are afraid," IATP's Lilliston says. "They [the corporations] have set up a global food chain. But they know Americans want to eat local when they have the opportunity. If you're in a supermarket and have a choice between American beef and Australian beef, most people will choose American beef even if it costs a little more."

For the 270 million Americans who enjoy three square meals a day, more imported food has real benefits -- among them, lower food prices and greater variety at the supermarket. Some analysts, however, caution that being dependent on other nations for a large share of our food endangers U.S. security in an unstable world. Of course, there is little risk of nationwide food shortages any time soon; when it comes to total calories produced or tonnage of food harvested, the U.S. remains the biggest farmer in the world. Yet as the U.S. becomes more reliant on food imports, the country's vulnerability to events in far-off places increases.

Phil Howard, a researcher at the Center for Agroecology and Sustainable Food Systems at the University of California-Santa Cruz, says the U.S. is losing a key element of self-sufficiency. "This isn't like computer chips from China -- we can live without that," says Howard. "If we keep importing our food, we'll be completely dependent on other countries. Are we going to send the military around the world to protect our food imports as we do now to protect our oil imports?"

Jason Mark is the co-author, with Kevin Danaher, of "Insurrection: Citizen Challenges to Corporate Power." He is researching a book about the future of food.

(c) 2005 Independent Media Institute. All rights reserved. View this story online at: http://www.alternet.org/story/26031/

2. Trade Chief Makes Offer to Reduce Crop Subsidies

NY Times, October 10, 2005

WASHINGTON, Oct. 9 - The Bush administration will try to jump-start stalled negotiations over a global trade deal on Monday by offering to make steep cuts in domestic farm subsidies and export subsidies if other countries make similar concessions, senior administration officials said on Sunday. The American offer comes after weeks of closed-door negotiations between the United States trade representative, Rob Portman, and members of Congress who have said they would not approve any deal unless they were convinced that American farmers could make up for the loss of government aid through new access to foreign markets.

Farm subsidies in the United States total more than $19 billion annually.

Mr. Portman described elements of his proposal in an op-ed article published in the Financial Times on Monday, a venue aimed at influencing European politicians and business leaders. He said he would explain it fully at a meeting in Geneva this week of trade officials from Brazil, India, the European Union and other members of the World Trade Organization.

It is far from clear whether the Europeans and developing nations will find the American offer specific enough to satisfy their own demands. Nor is it clear that any concessions they offer in return will satisfy the administration and Congress.

The discussions this week are the latest round in trade talks begun in 2001 in Doha, Qatar, aimed at reducing trade barriers in goods as well as services.

The administration has been under pressure for months to flesh out President Bush's commitment to cut domestic farm subsidies in preparation for a summit meeting in Hong Kong in December that is supposed to create an overall framework for an accord, which is scheduled to be reached by the end of 2006.

But Mr. Bush also has received strong pressure from members of his own party and from many Democrats not to touch the politically popular subsidies. As a result, the United States has resisted going first, saying other nations must indicate how much they will cut tariffs that put American farm exports at a tremendous disadvantage.

Mr. Portman, in his article in the Financial Times, urged "ambitious tariff reduction" with cuts of 55 percent to 90 percent over five years. Those would hurt many other nations more than they would hurt the United States, which generally has had somewhat lower tariffs than other rich nations, with some exceptions for products that have long had political protection.

He also proposed a 60 percent cut by the United States in some kinds of farm subsidy programs. But it is unclear if that is enough for America's trading partners, especially Europe and Japan. "All countries must also simultaneously deliver real market access," Mr. Portman wrote.

European leaders have agreed to eliminate all export subsidies for farm products, but they still have high tariff barriers and pay tens of billions of dollars a year in farm subsidies.

The United States has lower tariffs on most farm imports, but it retains high barriers for products like sugar and orange juice - both of which have powerful lobbies in Washington - and it pays out billions of dollars in subsidies to producers of cotton, corn, beef and other commodities.

In a speech Thursday to the Commodity Club in Washington, Agriculture Secretary Mike Johanns said the United States needed to use the World Trade Organization "to force open markets for U.S. products" and called for the country to present bold proposals instead of clinging to a farm program "that is wed to the past."

"We can sit back and watch as our farm policy is disassembled piece by piece," Mr. Johanns said, "or we can begin a discussion about how to craft farm policy that provides a low-risk, meaningful safety net for our farmers and ranchers."

The reluctance by the United States and the European Union to reduce tariffs on imported crops and subsidies for domestic farmers has been assailed by large developing countries, including Brazil and India, which are demanding more access for their own farm products in exchange for lowering barriers to manufactured goods and services.

3. ACGA opposes USDA service cuts: Farm programs must be greatly simplified before we curtail essential services

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

WASHINGTON, Oct. 4, 2005 ­ The American Corn Growers Association (ACGA) have voiced their strong opposition to a recently announced plan by the U.S. Department of Agriculture (USDA) to reduce services in Farm Service Agency (FSA) county offices.

"Reduction and elimination to farmers and ranchers is the last thing we need in rural America right now," according to ACGA Chief Executive Larry Mitchell. "Because of natural and financial disasters, farm and ranch families are now facing some of the most challenging times of their lives."

Mitchell also explained that until farm programs are improved, streamlined and simplified, it is premature to downsize the field delivery structure. "The last farm bill which promised to be a simplification of farm policy was just the opposite," said Mitchell. "Crop farmers now rely on three different subsidy payments based on three different yield calculations and three different price calculations. Farm programs should not and ought not be so complicated, and until they are simplified it is way too early to start closing county service centers."

"What we need is a streamlined, simplified farm program that works better than the current inadequate and bureaucratic quagmire we have today," added Mitchell. "What we need are price support programs in place of cash subsidies. What we need are tools to manage stocks such as the Farmer Owned Reserve. What we need are tools to manage over production. What we need is a standing disaster assistance program. What we need are better farm prices and less farm crisis."

"Until we address the basic problems of the current complicated farm program structure, it is foolish, if not dangerous, to erode the service structure which now helps farmers survive in this time of devastating hurricanes, of distressing drought, of $1.40 per bushel corn and $3.00 per gallon diesel," concluded Mitchell. "We must rethink U.S farm policy and change course to secure the livelihoods of America’s farm families as well as farm families worldwide."

The American Corn Growers Association represents 14,000 members in 35 states. See http://www.acga.org .

4. Sustainable Agriculture Coalition statement on Chambliss budget reconciliation package

For Immediate Release
October 5, 2005
Contact: Ferd Hoefner

We are dismayed that Chairman Chambliss, after stating months ago that his farm bill budget cut proposal would be even handed, has decided to target conservation programs for a grossly disproportionate share of the cuts. Even more alarming, the Chairman has decided to single out the most important new farm program in a generation, the Conservation Security Program (CSP), for the bulk of the conservation cuts. We are urging the Senate Agriculture Committee to reject this proposal.

According to the Congressional Budget Office, conservation programs represent 8 percent of the five-year mandatory spending total under the jurisdiction of the Agriculture Committee, yet the chairman has targeted conservation for a third or $1.054 billion of the total budget cuts. Cuts of this magnitude are not even handed and proportionate.

Within the conservation package of proposed cuts, 75 percent of the reductions would come out of the groundbreaking CSP. The CSP is just one of the eight major mandatory farm bill conservation programs, and under current budget rules represents 12 percent of total mandatory conservation program spending.

Targeted for smaller cuts in the Chairman's package are the Conservation Reserve Program (CRP) and the Environmental Quality Incentives Program (EQIP). The Chairman's package would restore spending levels for the Conservation Reserve Program and the Environmental Quality Incentives Program in 2011, one year outside the 5 year scoring window, but would lock the CSP cuts in place for a full 10 years. Over 10 years, then, the CSP is targeted by the Chairman for 83 percent of the total conservation cuts.

The Chairman's proposed $821 million, 5-year cut to the CSP, if enacted, would force USDA to shift from its current plan to allow each watershed to participate in the program once every eight years to something approaching once every twelve years -- or approximately once every two farm bill cycles. No other federal farm or conservation program has ever been subjected to such an absurd arrangement.

The nation's conservation farmers are tired of waiting for a farm program that works for them. The Committee should reverse the Chairman's decision to single them out to bear the brunt of his budget cut package.

The Conservation Security Program is a comprehensive stewardship incentives program that provides financial and technical assistance to farmers and ranchers to reward them for investments of labor, management, and capital aimed at fostering healthy, productive, and non-eroding soils, clean air and water, energy savings, wildlife habitat, and ecosystem restorations. Unlike the US commodity programs which are under attack in the WTO, the CSP is a trade rule-compliant "green box" program aimed not at increasing production but rather at maximizing long-term environmental benefits.

The Sustainable Agriculture Coalition represents grassroots farm, rural, and conservation organizations from across the country that advocate for public policies supporting the long term economic and environmental sustainability of agriculture, natural resources and rural communities.

5. Congress Seeks to Slash Food Aid for Poor

Associated Press article in the San Francisco Chronicle
Wednesday, October 5, 2005

WASHINGTON, (AP) -- Under orders to whittle agriculture spending by $3 billion, Republicans in Congress propose to slash food programs for the poor by $574 million and subsidies and conservation programs by $1 billion each, The Associated Press has learned.

The plan by Senate Agriculture Committee chairman Saxby Chambliss, R-Ga., would reduce farmers' payments by 2.5 percent across the board, slashing spending by $1.145 billion over five years. That's half the 5 percent the Bush administration sought earlier this year.

The $574 million cut in food stamps would come from restricting access to this benefit for certain families that receive other government assistance. The restriction would shut an estimated 300,000 people out of the program.

The conservation cuts would curb the number of acres that can be enrolled in the biggest of the programs, the Conservation Reserve Program, and limit spending on two others, the Conservation Security Program and Environmental Quality Incentives Program.

Omitted from the budget-cutting plan is President Bush's idea of cutting billions of dollars from payments to large farm operations by lowering the maximum subsidies that could be collected each year.

The administration backed off of that plan in April amid fierce opposition from farmers and Congress.

The AP obtained a summary of the plan, which is scheduled for a Thursday morning vote in Chambliss' committee.

6. Johanns calls for farm changes as U.S., EU move closer on subsidies

Inside US Trade
October 7, 2005

U.S. Agriculture Secretary Mike Johanns yesterday (Oct. 6) signaled the U.S. is prepared to accept major reductions in trade-distorting domestic subsidies amid signs the U.S. and European Union are narrowing their differences on how much to cut those payments in the Doha round ahead of a key meeting in Zurich next week.

"We must chart a new course for U.S. agriculture" by developing a policy that delivers sensible support to farmers in a way that cannot be challenged, Johanns said in an address to the Commodity Club that sources said was arranged only last week. He said there is "no doubt" the U.S. can show "tremendous support of agriculture without trade-distorting subsidies."

After taking note of past and potential challenges in the World Trade Organization to U.S. farm programs, Johanns said the U.S. has two choices. It can "sit back and watch as our farm policy is disassembled piece by piece" or begin WTO talks on a new policy that would provide a safety net for U.S. producers.

"If we timidly take our seat at the world trade table with a farm program structure that is wed to the past, we can expect a future of playing defense to protect our share of trade and wondering which U.S. farm programs will be challenged next," he said. "On the other hand, if we boldly take our seat at the world trade table, then we'll have the opportunity to control the future of our farm policy -- instead of having that future dictated to us."

Johanns delivered a similar message to a Senate Agriculture Committee hearing last month (Inside U.S. Trade, Sept. 23, p. 1).

Sources in the agriculture community described the address as a signal to U.S. commodity groups that the U.S. is planning a new initiative in the Zurich meeting that will be hosted by U.S. Trade Representative Rob Portman. Johanns said he would attend the talks, which are intended to help set the agenda for the Hong Kong ministerial in December.

These sources said the U.S. goal is to get back on offense and put the EU on defense in the WTO talks. "There's no doubt that that's the goal," said one of these sources. He noted the U.S. has been seen in recent weeks as an obstacle to progress in the Doha round because of demands from the EU, Brazil and other WTO members that it agree to more cuts of domestic subsidies.

At the same time, Portman on Oct. 3 reiterated his longstanding message that the U.S. cannot move on cutting these domestic subsidies until the EU moves more on agricultural market access. In addition, Johanns did not offer any specifics when asked by reporters if the U.S. was prepared to make any specific proposals for cuts in trade-distorting subsidies next week.

Separately, Senate Agriculture Committee Chairman Saxby Chambliss (R-GA) this week warned that trading partners should not expect the U.S. to agree at this point in the Doha round to specific cuts on counter-cyclical payments. These subsidies would be included in a new blue box for support considered less trade-distorting, and the EU, Brazil and others have demanded that the U.S. agree to more cuts in that category than foreseen in an August 2004 framework for the Doha round. He said U.S. negotiators would only be able to speak in general terms on the direction of U.S. farm policy (see related story).

Portman also has indicated to the EU that he cannot agree to any specific disciplines on counter-cyclical payments because it is the role of Congress to write the farm bill, according to delegation sources.

The Johanns speech came after the EU floated a new offer in late September to reduce its allowable limit on trade-distorting domestic subsidies in agriculture by 65 percent in the Doha round provided the U.S. agrees to reduce its allowable limit of $19.1 billion by 55 percent, according to Geneva sources.

This would reduce the EU limit on so-called amber box support from approximately 67.2 billion euros to 23.1 billion euros, while the U.S. limit would fall to $8.5 billion. The EU floated the offer at meetings with officials from the U.S. in Paris in late September.

The EU actually reported approximately 39.3 billion euros in amber box support in 2001-2002, while the U.S. reported about $14 billion in 2001, the last time it reported amber box spending to the WTO.

The EU offer would appear to fall short of U.S. demands for harmonization of trade-distorting domestic subsidies, by which the gap between U.S. and EU limits would narrow because the EU would accept steeper cuts than the United States. One informed source said the U.S. had been advocating a ratio in which the EU would reduce its limit by twice the percentage of the U.S.

However, this source acknowledged that this position was unrealistic and that most observers believe the U.S. will reduce its amber box limit by at least 50 percent in a final deal. As a result, several sources in the agriculture community said they believed the EU offer would at least resemble a final deal on amber box support.

At an Oct. 4 informal meeting of the agriculture negotiating group in Geneva where the EU formally presented this offer, Chairman Crawford Falconer said a clearer picture was emerging on how to handle amber box subsidies. But he said he was "much less comfortable" with the talks so far on the blue box for support considered less trade distorting and on the overall cut to total trade-distorting support, which would cover support under the amber and blue boxes and de minimis support.

In discussing its proposals on amber box support, the EU at an Oct. 4 informal meeting of the agriculture group said disciplines on the blue box should ensure that it is less trade-distorting than the amber box. It suggested disciplining counter-cyclical payments, which increase in relation to falling world prices, by only allowing partial compensation for low prices.

Under the EU proposal for cutting trade-distorting subsidies, countries would be placed into different tiers based on how much they currently subsidize their farmers. The EU said Japan and it should be in the top tier, with both subject to the 65 percent reduction, while the U.S. would be alone in a second tier subject to the 55 percent reduction. All other developed countries would be in a third tier subject to a 45 percent reduction under the EU proposal.

The EU also proposed that current limits on product-specific and non-product-specific de minimis trade-distorting support be reduced by 55 percent, which sources said would affect the U.S. more than the EU. The EU generally has not taken advantage of the ability to spend on de minimis support, they said. The U.S. in recent years has reported emergency payments as de minimis support, and Deputy U.S. Trade Representative Peter Allgeier last week said counter-cyclical payments would be reported as de minimis.

Both product-specific and non-product specific de minimis support are now limited to 5 percent of the total value of a WTO member's agriculture production.

The U.S. did not comment on the EU amber box proposal at an Oct. 4 meeting, but Australia and New Zealand said it was insufficient. They argued that reduction rates should be higher to ensure that actual spending on domestic trade-distorting support is reduced, a Geneva source said.

Separately, Canada floated a proposal calling for higher reductions in amber box support, according to a delegation source. It called for the EU to reduce its amber box limit by 71 percent and for the U.S. to reduce its amber box limit by 66 percent, the source said. Both should agree to an overall reduction of amber, blue and de minimis support of 79 percent, according to the Canadian proposal.

Japan also objects to the EU proposal in that it wants to be in the second tier with the U.S., and not the first tier with the EU. It has said it would reduce its support more than the U.S. so that the allowable limits for the two countries would be harmonized.

Separately, American Farm Bureau Federation President Bob Stallman late last week said he saw a 50 percent reduction to the amber box as the outside limit of what the U.S. should accept as a part of a final agriculture deal in the Doha round. He also linked subsidies reductions to sufficient concessions on tariff cuts by other WTO members (see related story).

Members planning to attend the Oct. 10 meeting in Zurich are the EU, Brazil, India, Canada, Japan, Kenya, Australia, Hong Kong, South Africa, Egypt and China, sources said. This will be followed by a meeting of the Trade Negotiations Committee on Oct. 13 which is likely to be attended by some trade ministers. WTO Director General Pascal Lamy intends the TNC as an opportunity to give a clearer picture of the goals for the Hong Kong ministerial.

7. American Corn Growers Association applauds President Bush signing extension of Grain Standards Act in which federal inspection of grains remains intact

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

WASHINGTON ­ Oct. 5, 2005 ­ The American Corn Growers Association (ACGA) is pleased that President George W. Bush enacted the reauthorization of the U.S. Grain Standards Act by signing S.1752 last week. Public Law 109-083 was signed last Friday just in time to avoid the expiration of the previous authorization.

"ACGA is delighted to see the reauthorization enacted," according to ACGA President Keith Bolin. "We are even more delighted to see the retention of federal inspection of our grain exports. This is critical to preserving the reputation of U.S. grain in the international marketplace."

Last month more than 50 organizations, representing America’s farmers, U.S. labor and foreign buyers of U.S. grain, appealed to Congress to remove a provision in the reauthorizing bill’s language which would have privatized the inspection of U.S. grain exports.

"The future competitiveness of U.S. corn and other grains in world trade hinges on the credibility of the U.S. export inspection system," said Keith Bolin. "Even with today’s extremely low corn prices ­ now below $1.50 a bushel in many Midwestern communities -- U.S. corn export estimates for 2004/2005 have been reduced to only 1.789 billion bushels, down 109 million bushels from 2003/2004, according to marketing year end final exports numbers as posted on the USDA, Foreign Agricultural Service site."

"While grain exports are seldom the driving force in our agriculture economy, they are certainly an important component to that economy," added Bolin. "ACGA felt it would have been extremely unwise to have jeopardized our competitiveness in the international market for just the 1/15 th of a cent per bushel which the privatization was projected to save by international grain merchants."

The U.S. Senate passed S.1752 by unanimous consent on Sept. 22. The House passed S.1752 on Sept. 28. The law extends the U.S. Grain Standards Act for ten years. The American Corn Growers Association represents 14,000 members in 35 states. See www.acga.org

8. Activists move to protect organic standards from USDA, trade group

by F. Timothy Martin

As an industry association pushes Congress to make an end-run around recently revived organic standards, consumer advocates are scrambling to keep standards strict.

Oct 5 - A battle over the rules for including synthetic ingredients in organic foods has prompted consumer advocates to step up their campaign against a move they say threatens to degrade organic food standards.

At issue is a rider sponsored by the Organic Trade Association (OTA) and attached to the 2006 Agriculture Appropriations Bill that would continue to legalize the inclusion of dozens of synthetic ingredients in foods bearing the US Department of Agriculture (USDA) "organic" label. The OTA represents a variety of organic producers, but is increasingly accused of promoting the interests of larger corporations such as Kraft, Dean Foods and Dole, which have all acquired market share in the fast-growing organic-foods sector.

The Appropriations Bill unanimously passed the Senate on September 22, but as a compromise, lawmakers agreed to postpone their decision on the OTA rider.

"What this does is it takes away the traditional control of the organic community over organic standards and centralizes control in the hands of the politically-appointed Secretary of Agriculture," explained Ronnie Cummins, executive director of the Organic Consumers Association, a Minnesota-based industry watchdog. "This rider shows they don't have any more respect to consult with the traditional organic community."

The final rule governing allowable synthetic ingredients was established in 2000 after years of debate, which at one point included an attempt by the USDA to allow irradiation, genetically modified organisms and sewage sludge in organic production. Adopted in 2002, the rule has permitted foods labeled "organic" -- meaning 95 percent of the final product must be organic -- to include up to 38 synthetic ingredients without mention on the product's label. These include substances such as ethylene, used to ripen bananas, and the synthetic lye that gives pretzels made by Newman's Own Organics their golden sheen.

But this summer a 73-year-old organic blueberry farmer from Maine named Arthur Harvey won a court appeal against the USDA's standards, arguing that federal regulations guiding organic food standards were less stringent than the original legislation had intended. The decision, among other things, places greater limits on the number of synthetic ingredients allowed in foods with the USDA "organic" label.

Small organic producers applauded the outcome. They argued that big corporations were behind efforts to water down industry standards. By adhering to the original guidelines, they said, organic producers would be forced to be more diligent in upholding standards, thus retaining consumer confidence in organic foods.

But the current rider, say opponents, would scale back the Harvey ruling, effectively re-imposing the state of affairs that previously existed. They say it would also make it easier for the USDA to permit up to 500 additional synthetic ingredients without rigorous review from the National Organics Standards Board, which regulates organic food production.

Moreover, language in the rider would loosen restrictions on the use of non-organic ingredients in cases where organic ingredients are deemed too costly and allow farmers to feed dairy cows with more non-organic feed and still apply the organic label to their milk and cheese products, according to the Organic Consumers Association.

The Organic Trade Association disputes their critics' interpretation of the congressional rider and says that for decades a variety of synthetics have been safely used in small quantities during food production. The OTA points out that many permitted synthetic ingredients are just food-handling substances used, for example, to clean equipment, and are never directly added to the final product. Without the inclusion of benign synthetics, they say, rising production costs would make organic products less affordable.

"Organics are a market-driven success story," said Katherine DiMatteo, executive director of OTA, in an interview with The NewStandard. "The government doesn't subsidize organics so that they're competitive in price. In order to remain a success there needs to be products to buy ­ and they need to be affordable to a certain degree."

DiMatteo believes that limiting allowable synthetics would force many products into the less desirable "made with" label designating foods composed of at least 70 percent organic ingredients.

DiMatteo said critics of the rider are "shooting themselves in the foot," suggesting their high standards will shut them out of their own market.

"Once [these synthetic ingredients] are not allowed for use in the organic category, it's going to take a lot of research and development money to find substitutes. Only the big companies will be able to invest. If part of this drive is to fight against big companies," she concluded, "it may backfire."

But a number of smaller organic companies see it differently.

"It's not the small companies that are pushing for this [rider], rather it's the large, publicly traded companies that have become subsidiaries of Kraft, Smuckers and other big corporations," said Tonya Martin, a spokesperson for Eden Foods, an independent organic food company that makes EdenSoy milk and other products. "Farmers have worked so hard to grow an authentically organic product. For them to turn their crops over to a company that's going to adulterate their food is a violation of trust."

So what's wrong with a dab of synthetic lye coated on the outside of an otherwise entirely organic pretzel? Most of the synthetic ingredients that would be allowed are considered benign ­ at least for now. But by caving in to corporate pressure to approve hundreds of new synthetics, critics worry there won't be adequate safeguards put in place.

"None of these approved substances are scary," Cummins told TNS, "but if you change the process of rigorous review to a decision made by an appointed USDA bureaucrat, you open the door wide for massive erosion of standards."

The Organic Consumers Association fears that although the Senate reached a compromise to gather more information and wait on a vote for the proposed rule changes, lawmakers may nevertheless slip language into the bill as it is being discussed in the joint House-Senate Conference Committee. Consumer groups say opponents have sent over 70,000 letters to members of Congress and have encouraged countless other phone calls. Cummins says they face an uphill battle, but that he remains hopeful.

"The only thing that's going to stop this is a massive outpouring by the grassroots, and based on what we've seen this week, it's already started happening."

9. Canadians win, Americans lose. What else is new?

by Paul Beingessner
Canadian farmer, writer
Oct. 10, 2005

It is good news, of course, that the Americans have lost another battle in the endless war over Canadian wheat exports. The ruling by the U.S. International Trade Commission (an agency of the U.S. Department of Commerce) that Canadian wheat is not causing "material injury" to U.S. producers should, by rights, put an end to the 11.4 percent tariff that had largely stopped Canadian exports to that country. However, it remains to be seen if the American government will live up to its obligations under the North American Free Trade Agreement.

The precedent here is not good, as far as Canada is concerned, as any lumber exporter in this country can tell you. In the past year, the U.S. lost the final avenue of appeal in its battle to restrict imports of Canadian lumber. The American response was a large yawn. It said it would consider its next steps. Under international trade agreements, signed by both countries, there was to be no next step except to drop the tariff and return the monies that had been collected from Canadian shippers.

An American government spokesman later remarked that the two governments should sit down to "negotiate" a settlement of the issue. This has been a favorite ploy of the Americans over the years - how to turn defeat into victory. By negotiating a settlement, the U.S. believes it can force the Canadian government to impose some restrictions on lumber exports, softening the blow to American lumber producers. To its credit, the Canadian government has refused to do so, signaling a different approach from years past. Canadian farmers will remember when a Liberal government, with Ralph Goodale as CWB Minister, agreed to voluntarily restrict Canadian wheat exports to the U.S., even though that country had lost one of the endless series of trade battles.

Canadian farmers should not expect the Americans to roll over easily. The North Dakota Wheat Commission, which launched the complaint that resulted in tariffs on Canadian spring wheat and durum, was livid at the announcement it had lost. Commission Administrator, Neal Fisher, likened taking on the CWB with its "legion of lawyers" to a David versus Goliath battle. The Commission still has the option of appealing the ruling.

Failing to do that, or losing such an appeal does not spell the end of the road, though. As with softwood lumber, the American government may simply drag its feet, or ask for more "negotiations".

As usual, CWB officials voiced the hope that this would be the last such challenge. This is unlikely, though, as long as the Byrd Amendment remains in effect in the U.S. This law allows anti-dumping and anti-subsidy duties collected on goods coming into the U.S. to be distributed to the groups that launched such actions. On January 16, 2003, the World Trade Organization announced that the Byrd Amendment violated WTO rules and must be repealed. The American government has yet to abide by that ruling. The Byrd Amendment remains in effect, and is a great enticement to American companies and groups that might profit from such successful actions.

Because the U.S. failed to rescind the Byrd Amendment, the WTO gave permission to eight countries to impose duties on American products. Canada was one of these, and chose to impose duties of 15 percent on live swine, cigarettes, oysters and certain specialty fish. The Canadian list seems rather less than striking. We don't import many American hogs, American cigarettes smell bad, and I doubt we are being flooded with aphrodisiac oysters flaunting the Stars and Stripes.

In light of these trade developments, there have been calls for Canada to examine its participation in NAFTA. When these are voiced, there are immediate counter-voices that claim trade between the two countries is largely without problems. Note however, that softwood lumber was once Canada's largest dollar export to the States.

Re-examining NAFTA would allow Canada to look at the energy sections of that agreement.

Under NAFTA, Canada cannot restrict exports of oil and gas to the U.S. even should Canada itself run short. Given the global energy crisis that is looming, Canada's huge oil supplies are a precious bargaining chip. It is a chip, however, that we are unable to use. Under NAFTA, we gave up that power. Canadians should be aware that Canada, not Saudi Arabia, not Iraq, is the largest single supplier of oil to the Americans. If they wish to play hardball on trade matters, we have a finger on their most important import. Mind you, wagging that finger might take more courage than our current government can muster.

(c) Paul Beingessner (306) 868-4734 phone 868-2009 fax beingessner@sasktel.net

10. The growing cost of growing wheat

By Andy Porter of the Union-Bulletin
Sept. 24, 2005

Nobody's called it a ``perfect storm,' yet. But between rocketing costs for fuel and fertilizer, low prices for their crop, increased shipping surcharges and worries over whether this will be another dry winter, local wheat farmers say the future is looking pretty grim these days.

``I'm not sure anyone is aware of it, but energy prices are quickly making the continuation of wheat farming questionable unless something begins to change soon,' said Walla Walla County farmer Nat Webb.

Over a relatively short period of time, fuel prices have tripled and the cost of fertilizer has doubled, Webb and others said.

At the same time, the price for soft white wheat, the type which accounts for 88 percent of the wheat grown in Washington state, is hovering slightly above $3 a bushel, ``a 20-year low,' said Harold Cochran, former national legislative chairman for the Washington Association of Wheat Growers.

The bottom line, as Washington State University farm management specialist Herb Hinman said, is the rising prices are ``cutting into (farmers') profit margins, and a lot of these guys are operating on a pretty thin profit.'

Fuel and fertilizer are two constants all farmers have to deal with year in and year out, Cochran said, and lately ``our core costs of production have gone up dramatically.

``Three years ago I paid 80 cents a gallon (for diesel) and now I'm paying $2.60 a gallon,' Cochran said. ``Fertilizer has gone from 17 cents a pound to 37 cents a pound, which has more than doubled in the past year.

``We've had incremental inflation for years, but when things are doubling and tripling all of a sudden, there's nowhere to turn,' Cochran said.

On his farm, Webb said tractors consume between 70 to 100 gallons of diesel per day and a combine can consume about 100 gallons a day.

``Energy costs that were once one of our lesser expenses have become a major item and threaten our ability to continue farming,' he said.

Brad Tompkins, past chairman of the Washington Wheat Commission, said fuel and fertilizer prices ``are weighing on everyone's mind.

``We're having to watch diesel fuel like the futures market...call one day and you get one (price), call the next and you get another,' he said.

The price for fertilizer, particularly anhydrous ammonia, which is widely used by growers in this region, has also climbed.

``Fertilizer prices are almost double what they used to be...it's a pretty sad situation,' said Jack DeWitt, past president of the Washington Wheat Growers Association.

His son, Jay DeWitt, voiced similar concerns.

``I guess the worst part of the problem for me is the natural gas prices. Nitrogen fertilizer is my number one expense item, (and) it's more than doubled over the past 30 months,' he said.

To cope with the increases, DeWitt said, ``we're having to make very serious and uncomfortable adjustments' in how they farm, most immediately in their crop and rotation patterns.

``What we like to do is grow wheat every two years, (but) the economics have changed to the point where that's almost impossible,' he said.

Consequently, they are looking to change to other crops, such as dried peas ``and we're using summer fallow, and I haven't had that on my farm in 15 years.'

For farmers who use anhydrous ammonia to fertilize their fields, the reason behind the price increases lies in the price of natural gas, which is used to make the fertilizer, Webb and others said.

``Just prior to (Hurricane) Katrina we received a price increase of about $40 per ton,' Webb noted. ``After Katrina came another price hike of (more than) $100 a ton.'

In addition, the timing of the increases have hit some farmers particularly hard.

``In past years this wouldn't have had the impact that it has now since most of the fertilizing for next year's crop would have been completed,' Webb said.

``However, with the advent of no-till seeding, the fertilizer is applied with the seed, so much of the fertilizer hasn't yet been applied. Any cost savings generated by no-till seeding have just been eaten up by the effects Katrina had on fertilizer prices.'

The uncertainty over costs and worry about weather are also coming at a time when farmers are trying to draw up their budgets and arrange lines of credit for next year's crop, said Mark Grant, manager of the Bank of Whitman in Walla Walla.

``Basically, fuel is up and people are going to have to budget 100 percent more than last year, and they pay sales tax on top of that,' Grant said.

But the biggest worry for farmers, Grant said, is ``the moisture is gone.'

Two successive dry winters have left soil moisture levels extremely low. In northern Walla Walla County, where Tompkins farms, ``we have the lowest soil moisture samples I've ever seen.

``What we're seeding into right now, researchers would say there's not enough (moisture) to grow...so if we don't get decent rains this winter, we're in trouble,' Tompkins said.

According to the National Weather Service's Climate Predication Center, at present there is no clear indication of how much precipitation to expect over the next three months.

While forecasts predict below-normal precipitation in the southwestern United States, the seasonal forecast gives the Pacific Northwest equal chances of above-normal, normal or below-normal precipitation in the coming three months.

But if the latter situation plays out, another drought year could be the proverbial last straw for farmers who are now just scraping by.

Or, as Jeff Emtman, president of the Washington Association of Wheat Growers said, ``People are going to be lucky to break even, and those who don't might go under.'

11. Brazil wants retaliation on US for not complying with WTO ruling on cotton subsidies

Associated Press, 10/05

GENEVA (AP) -- Brazil will seek final World Trade Organization permission to retaliate for illegal U.S. cotton subsidies, Brazil's top trade lawyer said Wednesday.

"We are going to request authority to adopt countermeasures against the U.S. for its failure to reform its cotton regime," Roberto Azevedo told The Associated Press.

The decision to pursue retaliatory measures comes after Brazil reserved the right in July to impose $3 billion in annual countermeasures to punish the United States for its aid to cotton farmers, ruled illegal by the WTO.

"The request to the WTO's dispute settlement body will be made Thursday," Azevedo said.

In its July request, Brazil asked the 148-member WTO to allow it to increase import duties on certain U.S. goods to penalize the United States for failing to sufficiently change its export programs.

Brazil said it also reserved the right to penalize Washington under provisions in the global commerce body's intellectual property and services agreements. Such measures could include targeting U.S. trademarks, patents and commercial services.

In March, the WTO upheld a ruling condemning government help for cotton producers in the United States, saying that many U.S. programs include illegal export subsidies or domestic payments that are higher than the commerce body's rules allow.

Brazil won the original ruling in 2004 after alleging the United States has kept its place as the world's second-largest cotton grower and largest exporter because the U.S. government paid $12.5 billion in subsidies to American farmers between August 1999 and July 2003.

But Brazil said it had hoped to reach a negotiated settlement with the United States and gave Washington more time to pass new legislation. It had also suggested that it might seek trade concessions rather than retaliatory sanctions.

The United States lost its appeal of the ruling after insisting that its payments to farmers were within permitted levels and claiming many were not subsidized as defined by the WTO.

U.S. Trade Representative Rob Portman said last month that the U.S. had taken significant steps toward complying with the WTO cotton ruling. The reforms have been sent to Congress, but the legislation has not passed, in part because of the crisis brought on by Hurricane Katrina.

Under an accord last summer, WTO members set up a special committee to deal with cotton within the global body's broader agriculture negotiations. The committee is meant to consider a proposal from West Africa for the elimination of export and domestic subsidies by rich producers.

Poor nations say subsidies in rich nations cause artificially low international prices and hurt farmers in developing countries because rich country producers are able to "dump" their cheap cotton on the world market.

12. Canadian farmers shed their stereotype

by Paul Beingessner
Canadian farmer, writer

Remember the old joke that if you step on a Canadian's toe, he'll say he's sorry? Well, after decades of supporting the view that the best defense is no offense at all, Canadian farmers have started to modify their traditional image as punching bags for U.S. farm groups and legislators. You can find proof of this transformation in the current attempt by Canadian corn growers to have imports of American corn curtailed. The Canadians argue that subsidized corn from the U.S. is keeping corn prices artificially low in Canada.

Hot on the heels of the corn growers' actions, the Saskatchewan Pulse Growers announced it would be requesting an investigation of lentils and peas that are coming into Canada from the U.S. Canadian prices for these crops are far below long term averages.

In recent years, pea and lentil acres have grown in Canada as they replace traditional grains and oilseeds. These pulses, with generally higher returns, have been the salvation of many farms. American production of peas and lentils had been limited, as, prior to last year, they were not eligible for the price supports that were available to other grains. American acreage planted in peas and lentils leaped this year, and some of that production is making its way to Canada to be processed. American growers are less sensitive to price as they obtain part of their return from the market and part from the mailbox. Canadian processors don't have to be as aggressive in buying from their countrymen when they can access cheaper American product.

Compounding the problem is the fact that American processing capacity has not caught up to production levels. An even more immediate problem is the inability of American railroads to move grain to port in anything resembling a timely manner.

While Canadian farmers will generally support the actions of the Pulse Growers, the battle begun by corn growers has been more controversial. End users of American corn in Canada, from cattle feedlots to hog producers and ethanol plants are crying foul at the thought of tariffs on American corn. These industries have come to rely on imported corn to keep a lid on feed grain prices in Canada. Some also express the concern that any trade actions taken by Canada only invite retaliation from their less restrained American counterparts.

There is deep irony in the corn situation. When Canadian farmers gave up the lucrative Crow Benefit transportation subsidy, it was with the assurance the resulting cheap feed grains in western Canada would produce a profusion of new economic development, largely in the form of livestock rearing and processing. An awful problem arose when it became apparent that Canadian farmers growing feed grains need to be paid enough to stay in operation. A dollar-fifty barley just won't cut it.

It turns out that, since we are exporting much of this increased livestock production to the U.S., or to markets in which the U.S. also competes, we need to be producing it for as low a cost as the Americans themselves. The easiest way to do this is by importing their subsidized feed grain. Since Canadian farmers appear reluctant to subsidize these livestock operations, why not let the American government do it?

The industries lobbying Canadian corn growers to drop their demand for tariffs have acknowledged that corn growers are in trouble. Their weak response has been that there must be another way for them to survive. No suggestions have been forthcoming, however, and, in light of that dearth of ideas, only one conclusion is possible. Canadian corn growers will have to rely more on their mailboxes, so Canadian hog farmers and ethanol producers can continue to get cheap corn. The only trouble is, the Canadian government is much more immune to the idea of stuffing envelopes with cash than is the administration in Washington. The corn growers are quite aware of this dilemma.

Canada's primary producers are tired of waiting for manna to drop from Ottawa or for prosperity to trickle down from the processing industries. They are taking matters into their own hands and refusing to apologize for it. Unfortunately, this has again showed up the divisions that self-interest always brings.

(c) Paul Beingessner (306) 868-4734 phone 868-2009 fax beingessner@sasktel.net

13. ADM plans biodiesel plants in US, Germany

DowJones, 10/04

DECATUR, Ill. (Dow Jones) -- Archer-Daniels-Midland Co. (ADM) plans to build its first U.S. biodiesel production facility and its third in Germany.

The maker of food additives and ingredients for packaged-food companies said in a press release Tuesday it will build a 50-million-gallon facility in Velva, N.D., near the existing ADM crushing facility, and will use canola oil as its primary feedstock.

The German plant is expected to produce 275,000 metric tons a year.

"ADM is a world leader in renewable fuels," said Mike Livergood, vice president-global oleo chemicals, in the release. "Leveraging the success of ADM's experience in the biodiesel market in Europe and ADM's success in the ethanol market in the U.S., we are pleased to bring biodiesel, a cleaner burning and renewable fuel, to the U.S. market through this facility."

Archer-Daniels said construction of the German plant is scheduled to be completed in a little over a year. The construction of both plants is dependent on final engineering and permit approval.

A company spokeswoman said ADM isn't disclosing the cost of building the plants.

14. Wilton Wind Energy Center groundbreaking

Florida Power and Light news release
September 19, 2005

Wilton, N.D. -- By the end of this year, the landscape near Wilton will be home to a large wind farm. This morning, groundbreaking ceremonies were held to officially kick-off construction for the newest and now largest wind farm in North Dakota. It's called the Wilton Wind Energy Center, and when completed by the end of this year, it will have a generating capacity of 49.5 megawatts (MW).

North Dakota Gov. John Hoeven, told resident of Wilton and the surrounding area that he appreciates Basin and FPL Energy stepping forward with this tremendous project. "This, along with the other four projects now under development in our state, will add more than 300 megawatts of new wind energy.

"We're working to create the best business climate anywhere for alternative energy sources, with tax incentives for wind power that include sales, income and property tax reductions for projects like this,"Hoeven said. "In addition, we're working with companies like FPL Energy and Basin Electric to enhance our transmission infrastructure so that we can expand this energy sector even more."

The wind farm located about four miles southeast of Wilton is being constructed by FPL Energy, Juno Beach, Fla. FPL Energy will own and operate the wind farm.

North Dakota U.S. Congressman Earl Pomeroy told those at the dedication that wind and other forms of renewable energy will be a key component in this country's quest for energy independence. "I am so pleased by the mutually beneficial relationship that Basin Electric and FPL Energy have begun, and I am here today to support them in their efforts to bring wind energy to our state."

John DiDonato, FPL Energy Project Director, said FPL Energy is delighted to be able to add this Wilton Wind Energy Center to the largest wind energy portfolio in the country. "A lot of people don't realize that we at FPL Energy just don't go around the country building wind farms," he said.

"We need a local utility or cooperative that wants to buy the electricity we make. We need a long-term customer for the life of the project. Without that long-term commitment, we won't build a wind farm."

Because of Basin Electric's commitment to wind energy, DiDonato said that FPL Energy has been able to invest in North Dakota and make a long-term commitment to the people of this state. "Getting a wind generation facility in the ground takes leadership in government at all levels. The leadership and the people of North Dakota have made this state a great place to do business and you?ve always made us feel welcome," he said.

Ron Harper, Basin Electric's CEO and General Manager, said Basin Electric's ability to develop wind is the direct result of a very successful working relationship between Basin Electric and FPL Energy.

Harper said Basin Electric has an ongoing commitment to renewable energy development. "Basin Electric's directors have forwarded a resolution to our membership that sets a renewable energy goal for the cooperative. It's the first time it's ever been done in the history of Basin Electric. If the membership adopts the resolution, the goal would mean that Basin Electric would become only one of a handful of utilities in the United States that has set a voluntary goal for renewable energy."

Harper also said that Basin Electric and its membership have led the way in developing renewable energy in the Upper Great Plains, either by building and owning wind turbines, or by purchasing all the electric output of the largest wind farms in the Dakotas. "The groundbreaking today is the seventh example of this leadership."

When the Wilton Wind Energy Center becomes operational, Basin Electric will have almost 135 megawatts of electric generating capacity produced from wind resources.

In a prepared statement read by a member of his staff, U.S. Senator Byron Dorgan said the groundbreaking today was another big step forward as North Dakota moves to play an important role in the nation's energy future. "As we work to shed our addiction to foreign sources of energy, domestic sources such as this wind farm will increasingly be used to achieve energy independence. At the same time, it will provide good-paying, quality jobs that will stimulate North Dakota's economy and encourage our children to settle close to home."

Leaders of the wind energy industry in attendance also had good things to say. John Dunlop, Great Plains Regional Manager for the American Wind Energy Association, lauded the partnership between Basin Electric and FPL Energy.

"North Dakota has the potential to become a premier wind energy state. Basin Electric has taken a leading role in this effort and its proposed renewable energy goal, if approved by the cooperative members, will continue the dramatic growth in wind energy in the state. If every electricity producer in the United States followed Basin Electric's lead, AWEA would meet its goal of 100,000 MW of installed wind capacity in the U.S. by 2020."

Jay Haley, Chairman of the Wind Energy Council and the North Dakota Renewable Energy Partnership, said Basin Electric is once again showing true leadership in developing North Dakota's wind energy resources. "Taking things even further, Basin Electric's directors have now made a recommendation to its members that they achieve a generation mix of 10 percent renewables by the year 2010," he said. "I commend the directors for taking this bold step. Greater investment in wind energy and other renewable energy sources will have a significant impact on our rural economy and solidify North Dakota's position as a premier wind energy state. Basin Electric is able to add this wind generation project to the existing transmission system because of growth and investment.

"Our demand for electricity in North Dakota continues to grow, and with investments we've made in Rapid City and Groton, we'll have the ability to reduce some of the existing transmission constraints here in the state, which will allow the electricity to be used in the area," Harper said.

The electricity produced by the Wilton Wind Energy project will be an integral part of Basin Electric's generating resources that includes two coal-based power plants in North Dakota -- the Antelope Valley Station, Beulah, and the Leland Olds Station, Stanton; a coal-based power plant in Wyoming, the Laramie River Station, Wheatland; an oil-based peaking station, the Spirit Mound Station, Vermillion, S.D.; nine combustion-turbine generators (natural gas) in the Gillette, Wyo., area; four wind turbines, two near Minot, N.D., and two near Chamberlain, S.D. Basin Electric already purchased the entire output of two other 40-MW wind farms owned and operated by FPL Energy, one near Edgeley/Kulm in North Dakota and another near Highmore in South Dakota; and two other 750-kilowatt wind turbines, one located near Pipestone, Minn., and another near Rosebud, S.D.

Basin Electric is a consumer-owned, regional cooperative headquartered in Bismarck. It generates and transmits electricity to member rural electric systems in nine states: Colorado, Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota, South Dakota and Wyoming. These member systems distribute electricity to about 1.8 million consumers.

FPL Energy is a leading wholesale generator utilizing clean fuels such as natural gas, wind, solar, hydroelectric and nuclear to generate electricity. It is the nation's leader in wind energy, with 45 wind facilities in operation in 15 states. It is a subsidiary of FPL Group, one of the nation's largest providers of electricity-related services with annual revenues of more than $10 billion. FPL Group's principal subsidiary is Florida Power & Light Company, one of the nation's largest electric utilities, serving more than 4.2 million customer accounts in Florida. Additional information is available on the Internet at www.FPLEnergy.com, www.FPLGroup.com and www.FPL.com