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* Unfortunately, due to the recent absence of THE AGRIBUSINESS EXAMINER and THE CALAMITY HOWLER contributions to the work of these two newsletters fell off dramatically. It is for that reason that this SPECIAL APPEAL is being made to readers for their continued support. Checks should be made out to A.V. Krebs and mailed to P.O. Box 2201, Everett, Washington 98213-0201.

* A limited number of inscribed copies of THE CORPORATE REAPERS: The Book of Agribusiness (Essential Books: 1992) are now available from the author. Checks for $25.00 (which includes postage and handling) should be made out to A.V. Krebs and mailed to P.O. Box 2201, Everett, Washington 98213-0201.


By Rick Weiss
By Alan Guebert
By Keith Bolin
By Joe Carroll
By Associated Press
By Associated Press
By Dow Jones Newswires
By Agence France-Presse
By Bob Herbert

By Rick Weiss       
Washington Post
June 19, 2006

The high-security vault, almost half the length of a football field, will be carved into a mountain on a remote island above the Arctic Circle. If the looming fences, motion detectors and steel airlock doors are not disincentive enough for anyone hoping to breach the facility's concrete interior, the polar bears roaming outside should help.

The more than 100 nations that have collectively endorsed the vault's construction say it will be the most secure facility of its kind in the world. Given the stakes, they agree, nothing less would do.

Its precious contents? Seeds --- millions and millions of them --- from virtually every variety of food on the planet.

Crop seeds are the source of human sustenance, the product of 10,000 years of selective breeding dating to the dawn of agriculture. The "doomsday vault," as some have come to call it, is to be the ultimate backup in the event of a global catastrophe --- the go-to place after an asteroid hit or nuclear or biowarfare holocaust so that, difficult as those times would be, humankind would not have to start again from scratch.

Once just a dream --- albeit a dark one, attractive only in comparison to the nightmare that would precede its use --- this planetary larder is about to become a reality. Today, on the barren Norwegian outpost of Svalbard, the prime ministers of five nations and a small throng of other officials will lay the cornerstone for what will be, in effect, the Fort Knox of seeds.

"We will have the biological foundation for all of agriculture, which is really saying something," said Cary Fowler, executive secretary of the Global Crop Diversity Trust, the international organization coordinating the vault's creation with the Norwegian government. "It is a stunning achievement, if you think about it, and it would be about as safe as human beings can make it."

If progress continues during the short building season this summer and next, the high-tech cavern will start accepting deposits from smaller seed banks and agricultural and scientific organizations by fall 2007 under the terms of an international treaty that took effect two years ago.

Then, with a loud clank and the sound of sucking air, the door will close. And the Svalbard International Seed Vault will slip into a subzero slumber --- an insurance policy for human civilization.

Scientists estimate there are two million varieties of plants used for food and forage today. That includes an astonishing 100,000 varieties of rice, the major staple of the human diet, and more than 1,000 varieties of banana, a nutritious fruit of global importance.

Seeds from these crops, which can be smaller than poppy seeds and as large as coconuts, are invaluable repositories of plant DNA. They are the raw material that farmers and researchers rely on to develop more productive and nutritious plants that can cope with climate change, new diseases or pests.

About 1,400 seed banks already exist, including large national collections in the United States and China; international ones maintained by the Consultative Group on International Agricultural Research (CGIAR), funded by the World Bank, the Food and Agriculture Organization and the United Nations; and small ones at universities and research labs. Seeds are typically stored at minus 4 degrees Fahrenheit, and are periodically removed and germinated to grow plants, whose fresh seeds are redeposited.

But only a few dozen of these banks meet international standards, and even fewer have funding commitments that ensure their long-term maintenance. Indeed, recent surveys have revealed a slow-motion seed bank disaster in the making, with many collections seeing germination rates well below the internationally agreed upon minimum of 85%.

Worse, some seed banks have recently been destroyed, the victims of war and unrest in Afghanistan, Iraq and Rwanda and a reminder of the fragility of these resources. A backup bank could resupply regional banks like those.

Perhaps most important, most of today's seed banks are designed to be working banks --- their contents available to breeders and researchers. That means they are inherently accessible and less than totally secure.

"Svalbard is meant to be the bank of last resort," said Pat Mooney, executive director of ETC Group, a Canadian civil society organization focused on food security. "It's where you go if you can't go anywhere else. It's the backup for the whole world."

The design, described in a recently released feasibility study, bespeaks that Armageddon mentality. First, there is the location: The starkly beautiful and always frozen terrain of Svalbard is, to say the least, off the beaten track. Home mostly to a small community of scientists, coal miners and support staff, it is the northernmost place in the world with scheduled commercial air service.

Arctic foxes, reindeer and polar bears stroll the streets.

Yet it also has the basic infrastructure that's needed, including a modest network of roads and an electrical generating plant fed by local coal.

Plans call for a cavern about 50 yards long, 15 feet wide and 15 feet high. Although it will be built in solid rock, its floor, ceiling and walls will be lined with three-foot-thick layers of high-quality insulating concrete. The door will be opened only once or twice a year, to check contents and add new varieties.

Air handling equipment will bring in outdoor air during the winter months, when temperatures hover around minus 30 degrees. Refrigeration units will be available to keep interior temperatures cold during Svalbard's summer, though scientists expect the equipment will rarely be needed and no one will panic if it occasionally breaks down.

"Even if you waited a couple of years for the serviceman to show up, it won't really matter," quipped Geoffrey Hawtin, a genetic resource specialist based in England who is serving as a senior adviser to the Global Crop Diversity Trust.

"One hears so much about mammoth skeletons and that sort of thing being preserved in the permafrost," Hawtin said. "But this is the first deliberate attempt to use the permafrost to conserve what must be humanity's most important but least-known resource."

The Norwegian government is paying for the facility's construction --- an estimated $3 million, with about half of that for the concrete alone, which must be shipped. After that, annual operating expenses are expected to be $200,000 at first, dropping to $100,000 by year three. The trust has established an endowment that so far has $50 million of the $260 million that will be needed to sustain operations without depleting its principal. Contributions have come from about a dozen countries as well as foundations, seed companies and others.

The vault is one of many strategies being implemented in sync with the International Treaty on Plant Genetic Resources for Food and Agriculture, which came into force in 2004 and has been ratified by more than 100 nations. The United States has signed the treaty, but the Senate has not ratified it.

At the first meeting of the treaty's governing board last week in Madrid, representatives agreed on crucial legal language that will allow nations to maintain essential patent protections while freely sharing their seeds --- an achievement that participants said will greatly facilitate nations' willingness to donate to the Svalbard vault.

Already, Fowler said, CGIAR has promised to contribute samples from its huge network of banks, which hold about 600,000 varieties. And the Department of Agriculture, which oversees the nation's largest seed collection in Fort Collins, Colorado, will add holdings that are not in the CGIAR collection, he said.

Seeds will be sealed in aluminum foil and stored in batches averaging 500 per package, depending on seed size. The facility is designed to hold 3 million varieties, assuming an average seed size equal to that of a wheat seed.

Planners had to consider what would happen if global warming continues unabated. Computer models suggest that no matter what, Svalbard will be one of the coldest places on Earth, Fowler said.

And if, as some models predict, global warming shuts down the Gulf Stream and turns the Greenland Sea into a place even more frozen than it is now? It will still be easy enough to keep the door clear of snow, according to the analysis.

Hope Shand, research director at ETC Group, which champions farmers' rights, emphasized that banks such as Svalbard's are just one part of the global effort to conserve plant genetic resources.

"Ultimately," Shand said, "it's the farmers who grow these crops who are the true custodians of crop diversity."

By Alan Guebert
June 11, 2006

Former Secretary of Agriculture Ann Veneman couldn’t stop for a cup of coffee in farm and ranch country without waxing romantically on how “1 in 4 acres of American farm production is exported.”

Her replacement, Secretary Mike Johanns, a trained technocrat, often makes the same point with more precision. “Twenty-seven percent of U.S. farm receipts come from trade,” Johanns told a May 8 Chicago luncheon crowd.

The trouble with Veneman’s oversimplified number and Johanns’ overcooked number is that both are wrong, wrote Ed Maixner in the April 28 issue of the Kiplinger Agricultural Letter.

The actual “value” of ag exports to farmers and ranchers, noted Maixner, Kiplinger’s editor, is neither 27% nor 25%. “Analysis shows the portion is eight percent,” he explained, when “measured by value...”

The difference, he goes on to explain in the Letter, is “the government doesn’t account for extra value that gets added to goods after they leave the farm... shipping, processing, packaging and more. Ignoring such markups greatly overstates the exported share.”

For example, Maixner told Keith Good in a May 13 interview (which can be heard at, steaks exported to Japan might carry a $15 per lb. price tag at the export terminal, but the rancher gets less than a $1 per pound from the packer when the animal is sold.

Likewise, $3 North Dakota wheat may fetch $5.50 when it leaves Washington State for Shanghai, but the grower still only received $3 when he sold it in Jamestown.

As such, counting the steak’s $14 markup or the wheat’s $1.50 price boost as “farm value” is “logically ridiculous,” Maixner continues. What USDA is actually tabulating, he adds, is “added export value, not farm value.”

USDA Chief Economist Keith Collins says Maixner’s math is “a valid concept. We shouldn’t think of exports as cash receipts.” But that’s as far as Collins will take the thought without walking it backwards fast.

To say that exports are only eight percent of farm value is “ridiculous on its face,” he notes. “That means that 2006’s estimated $64.5 billion in exports is worth, let’s see...” Collins pauses to do the math... “$19 billion. That’s just crazy.”

Not so, replies Maixner in a telephone interview June 7.

“We had appropriate USDA analysts examine all the trade data to make the estimates we published.”

The difference between Maixner the editor and Collins the economist is not dismal science. Farm groups, politicians, and trade negotiators rely on accurate, definitive data to propose farm programs, write farm bills, gather votes and--like today--cut world-altering trade treaties. The data not only makes a difference, it is the difference.

USDA’s most recent examination of its trade data, published in the November, 2003 issue of its magazine, Amber Waves, shows that, by either value or volume, both Veneman and Johanns are off-the-mark.

By volume, the export share of U.S. agricultural production has averaged 22% since 1996. By value, however, the export share of U.S. agricultural products averaged 17% from 1998 to 2002, or five percentage points lower than the volume-based average.

Still, the value number includes far too much off-farm money in its total, Maixner believes.

For example, he says, three out of four bales of U.S.-produced cotton will be exported this year. “USDA would chalk up the cleaned bales of cotton sitting at an ocean or Mississippi River port as farm value. Not hardly,” he explains. What about ginning, transporting, warehousing and interest --- all included in the port price?

“We’re not raining on anybody’s parade, here. We are trying to encourage public policy statements based on fact.”

In the May 13 Good with Good, Maixner was more blunt. When asked why he looked at USDA’s trade data with a jaundiced eye, Maixner pointed to both the Doha Round of trade talks and the about-to-begin 2007 Farm Bill writing.

“When developing farm policy,” Maixner told Good, “it’s probably good to start somewhere near the truth. We don’t export everything... Maybe the first thing we need to take care of is our domestic agriculture economy.”

This "Farm and Food" column by Alan Guebert is reprinted here by the author's permission.

By Keith Bolin
June 16, 2006

In Bureau County today, cash corn bid at the Illinois River is $2.15, minus 13 cents for trucking from western Bureau County. This gives the farmer $2 per bushel to pay for seed, fuel, fertilizer, repairs and living expense. This is unsustainable for the corn farmer who wishes to remain on the land.

Now, however, with the increase of (corn) ethanol processing plants being planned and built nationwide, the National Pork Producer's Council (NPPC) is concerned with the high price of corn. What planet do they live on, and who are they representing? Obviously NOT rural schools, main streets, or anyone that lives and works in rural America.

One of the winners of low priced corn is Cargill, who buys it on the cheap side, and oh, by the way, FEED THEIR HOGS OUR CHEAP CORN. Cargill and ADM also run ethanol plants that see corn as an input cost to be cut or lowered to the chagrin and damage of all the rest of us, at the same time receiving massive tax cuts for producing ethanol.

This is why it is important for there to be independent (farmer-owned) competitive ethanol plants in this country. Example: When completed, the Annawan ethanol plant will truly compete with Cargill and ADM for 36 million bushels of corn. This will help raise the price of No. 2 yellow corn bids at the Illinois River. This is what the large hog farms --- Smithfield, Excel-Cargill, Tyson --- and the large grain traders fear, competition in the marketplace.

We must be aware these farmer-owned independent ethanol plants will be targets of takeovers down the road. Whether the corn is for ethanol or Tyson, Smithfield or Cargill hogs, they will, in the end, demand cheap corn. Unlike their public statements, they see farmers as a cost to be squeezed, thereby moving most of us off the land we love. Real hog producers know that cheap corn prices make for cheap hogs; high-priced corn delivers high-priced hogs. This is well documented. Also, the consumer marginally benefits when farmers are paid under their cost of production. The winner of low prices is the company who exploits both parties farmer and consumer.

Today's milk prices to the dairy farmer are under 11 cents a pound. One year ago, the dairy farmer was receiving 15 cents a pound; neither price is high enough. Today's milk bid for Bureau Valley schools is 16.1 cents per 0.5 pint carton of one percent white milk. One year ago, the price was 17.4 cents per 0.5 pint carton. On a 170-day school year, the consumer saved $1.70 per student while the independent dairy farmers loses thousands of dollars with only marginal benefit to consumers. Again farmers, consumers and rural communities are exploited, and processors win at both ends.

The bottom line is that many of our agriculture groups, such as NPPC and others, no longer represent farmers or rural communities, but instead they represent corporate agribusiness. In the case of NPPC specifically, when did this commodity organization decide that hog farmers need to buy corn below the cost of production to survive? Only when NPPC decided to support integrated hog production over independent family-owned farms.

Keith Bolin is president of the American Corn Grower's Association.

By Joe Carroll       
Bloomberg News
June 19, 2006

Mark Oberle, chief financial officer of ethanol maker Corn Plus LLP, is sitting out his industry's biggest building boom in a quarter century, and Microsoft Corp. Chairman Bill Gates may wish he'd done the same.

Within two years, planned expansion by ethanol producers will push U.S. supplies past demand, according to Standard & Poor's.

"The danger of a glut is very real," said J. Stephan Dolezalek, a partner at San Bruno, Calif.-based VantagePoint Venture Partners, a venture capital firm with stakes in three Midwest distilleries.

Overproduction may sour investments such as Gates' $84 million stake in Pacific Ethanol Inc., which hasn't produced fuel yet. The same may be true for shares of VeraSun Energy Corp., which this week raised $419.8 million, more than expected, in its initial public offering.

"I just hope it turns out all right for those shareholders and that it's not a fad," Oberle said in a telephone interview from the company's distillery in Winnebago, Minnesota, about 100 miles southwest of Minneapolis. "They would've got better odds in Vegas."

Producers are planning to expand after ethanol prices soared to records in response to government rules requiring more of the additive in gasoline. President Bush and former Federal Reserve Chairman Alan Greenspan also have said ethanol may be an alternative to fuel made from petroleum.

"The feel-good factor in the ethanol industry is very high right now," said Venkataraman Sreekanth, manager of North American energy analysis at Frost & Sullivan Inc., a San Jose, California-based consulting firm.

The average U.S. ethanol price rose 95% this year, touching a record $3.61 a gallon June 13. That compares with a 32% rise in retail gasoline prices and a 13% increase for crude oil.

Investors poured $14.3 billion into U.S. ethanol stocks in the past 12 months, according to data compiled by Bloomberg. An index of alternative-energy stocks rose 33% in the past year, compared with a 20% gain for the Amex Oil Index, which includes Exxon Mobil Corp. and BP PLC, the world's largest petroleum companies.

The stock market valuation of Fresno, California-based Pacific Ethanol, which plans five plants on the West Coast, doubled this year. Gates' Cascade Investment LLC bought its stake in April.

VeraSun's stock offering, the largest ever by a U.S. company solely dedicated to ethanol production, will finance expansion. The company's shares fell two days in a row to close at $25.25 Friday on the New York Stock Exchange. That followed a 30% increase Wednesday to $30 in their first day of trading.

Pacific Ethanol shares fell 88 cents Friday, or four percent, to $20.65, and have fallen 43% in the past month.

Two other distillers --- Hawkeye Holdings Inc. and Aventine Renewable Energy Holdings Inc. --- hope to tap investors' enthusiasm later this year with their own initial share sales.

Hawkeye, which is based in Iowa Falls, Iowa, and controlled by Boston buyout firm Thomas H. Lee Partners LP, is the No. 3 U.S. ethanol maker. No. 4 is Pekin, Illinois-based Aventine, controlled by Metalmark Capital LLC, the buyout firm spun off from Morgan Stanley in 2004.

Demand for ethanol, a form of alcohol derived from grain or sugar, has soared as U.S. gasoline refiners use it to replace MTBE, an additive that at least 28 states blame for polluting groundwater. In addition, the Energy Policy Act signed by Bush in August requires refiners to nearly double ethanol use to 7.5 billion gallons a year by 2012.

Thirty-seven of the 110 U.S. ethanol companies plan to add 2.2 billion gallons of new production by the middle of 2008, a 49% increase, Elif Acar, an analyst at Standard & Poor's in New York, said in a June 8 note to clients.

Supply may exceed demand by as much as 1.3 billion gallons, or 24%, within two years as production accelerates, Acar said.

"Ethanol prices are so high that people are making a ton of money, but things this good don't last that long," said Kevin Buente, who helps oversee a $2 billion portfolio of loans at 1st Farm Credit Services. "There's a lot of New York money coming into this market now and, I'm sorry to say, they will probably overdo it."

The surplus envisioned by Acar could grow if oil prices fall, stifling demand for ethanol as a gasoline extender, or if the federal tax break for oil refiners using ethanol is allowed to expire in 2010, the analyst said.

"There is a risk of enthusiasm getting out ahead of deployment," said Dolezalek at VantagePoint.

By Associated Press
June 18, 2006

CHAMPAIGN, Illinois --- Developers of a proposed ethanol plant near Champaign say it will take nearly two million gallons of water per day. Another proposed plant near Waverly could need up to 18-hundred gallons of water per minute.

And there are more than 30 ethanol plants in various stages of planning or construction to add to the seven already operating in the state. Water scientists say they're concerned about the impact of that much demand for water, but they're not sending out alarms yet.

Many of the proposed plants would draw water from the Mahomet Aquifer, which scientists estimate contains 13 trillion gallons of water and  supports a demand of 250 million gallons per day. Allen Wehrmann of the Illinois State Water Survey says that's enough water to last at least a century.

But he also says ethanol plants could affect the aquifer locally by lowering the levels of nearby wells, forcing owners to lower the well pump or even dig a deeper well.

By Associated Press
June 16, 2006

DECATUR, Alabama --- Cargill Inc., which closed its Decatur corn processing plant six months ago, is reopening it because of a current increase in demand, with its 100 former employees to get first shot at the new jobs.

According to Cargill spokesman Bill Brady, the former employees rehired will receive their previous wages or higher.

"We're calling people back now," Brady told The Decatur Daily in a story Friday. "We're gratified by the response because a very high percentage will be coming back."

He said all the senior management will return except for manager Gary Thompson, who announced his retirement when the plant closed. But Thompson will return as a consultant during the startup process. The new manager, Mitch Gardner, was previously employed at a Cargill facility in Memphis.

Brady said a bustling market for fuel-grade ethano and dextrose caused the company to rethink the Decatur plant's fate. Cargill expects the plant to be fully operational by Labor Day.

By Dow Jones Newswires
June 20, 2006

BEIJING, China --- U.S. agribusiness giant Cargill Inc. Tuesday opened its biggest soybean crushing facility in China --- also its second-largest in the world --- as it capitalizes on growing Chinese demand for soy products.

Local unit Cargill Investments (China) Co. launched a 5,000-metric-ton-a-day soybean plant in Nantong city in Jiangsu province, near Shanghai. It is Cargill's second-largest crushing plant, after the 7,000-ton-a-day plant in Argentina, said Catherine Zhang, Cargill Investments' public relations person.

The $60 million plant is located near the mouth of the 6,380-kilometer-long Yangtze River, on its northern banks, where soy products could be easily transported upstream from China's biggest city Shanghai to the country's central provinces.

Cargill is also targeting the markets of neighboring countries as well.

The U.S.-based company's annual trade with China exceeds $3 billion.

Cargill has two existing soybean crushing plants in Dongguan city in southern Guangdong province.

Crushing soybean produces soymeal, which is used to make animal feed, and soyoil.

Cargill, along with other international agricultural products traders including ADM, Bunge and LouisDreyfus, are responsible for more than 80% of China's soybean imports.

Helen Sun contributed to this article; Dow Jones Newswires. Edited by Ryan Woo

By Agence France-Presse
June 15, 2006

José Bové, the farmer who has attracted worldwide attention for his protests against globalization, said he would run in the presidential election next year, pledging to pull left-wing votes from the Socialists, the main opposition party.

By Bob Herbert        
New York Times
Jun 19, 2006

Sometimes the spotlight works. Last week I wrote the first of what I thought would be a series of columns on the plight of workers at the mammoth Smithfield Packing Company plant in Tar Heel, North Carolina, the largest pork processing facility in the world.[ Where the Hogs Come First, June 15, 2006 ]

Life inside the Smithfield plant can border on the otherworldly. To get a sense of what conditions are like on the killing floor, where 32,000 hogs are slaughtered each day, listen to the comments of a former Smithfield worker, Edward Morrison, whose job required him to flip 200- and 300-pound hog carcasses, hour after hour:

"Going to work on the kill floor was like walking into the pit of hell. They have these fire chambers, big fires going, and this fierce boiling water solution. That's all part of the process that the carcasses have to go through after they're killed. It's so hot in there. And it's dark and noisy, with the supervisors screaming, and that de-hair machine is so loud. Some people can't take it.

"I would go home at night and my body would be all locked up because I was dehydrated. All your fluids would just sweat out of you on your shift. I don't think the company cared. Their thing was just get that hog out the door by any means necessary."

The United Food and Commercial Workers Union has been trying to organize the 5,500 workers at the plant for more than a dozen years. But the company has ferociously resisted. The union lost votes to organize the plant in 1994 and 1997, but the results of those elections were thrown out after the National Labor Relations Board and the courts determined that Smithfield had prevented the union from holding fair elections.

A vast majority of the workers at Smithfield are Latino or black. The union has circulated the comments of Ronnie Ann Simmons, who worked at Smithfield when the 1997 vote was held. "It was ugly," she said. "Supervisors yelling: 'Hit this nigger! Hit this nigger! They don't need to vote.' Police was everywhere."

The board and the courts determined that Smithfield had been guilty of myriad "egregious" violations of federal labor law. The company was ordered to cease its interference with the union's organizing effort and to reinstate workers that the courts found had been illegally fired because of their union activities.

Rather than obey the directives of the board and the courts, Smithfield has tied the matter up on appeals that have lasted for years.

Until now. Late last week the company blinked.

I first noticed that something was up when I was informed in an e-mail message from a Smithfield spokesman that the starting salary for workers had very recently (and very, very quietly) been raised from $8.10 an hour to $9.20 an hour.

Then on Thursday, the day the first installment in the planned series ran, Smithfield announced that it would end the appeal process that it had pushed so vigorously for so long. The company did not admit that it had done anything wrong. But its chief executive, Joseph Luter III, said in a prepared statement:

"When a new election is called, we will comply fully with the N.L.R.B.'s remedies to assure a fair vote that represents the wishes of our plant's employees."

He said: "Smithfield respects and accepts the court's judgment, even though we strongly disagree with the findings. ...We recognize that we have lost our case in court."

While union officials welcomed the pay raise and the decision to end the appeal process, they were extremely skeptical about the company's promise to comply fully with the orders of the courts and the N.L.R.B. A spokeswoman for the union said, "This company has a long history of abuse, exploitation and mendacity."

Gene Bruskin, the director of the union's organizing campaign, said he was worried that plans to move ahead with another election could be derailed yet again by illegal tactics from the company, and that yet another court fight and then a lengthy appeals process could stretch many years into the future.

"What we are fighting for," he said, "is for them to recognize that they've got to talk to the workers and the union and work out a process that doesn't involve intimidation and interference."

Smithfield traded harsh comments with the union --- saying, among other things, that the union's allegations about conditions in the Tar Heel plant were "untrue" --- but a spokesman insisted that the company would abide by the law, and stand by its word.