agriculture

Monsanto May Have Antitrust Edge as Protecting Patents Trumps Competition

March 12, 2010

By Jack Kaskey and William McQuillen March 12 (Bloomberg) — Monsanto Co. , facing antitrust probes into its genetically modified seeds, may benefit from previous court rulings in which intellectual property rights trumped competition concerns, antitrust lawyers say. The Department of Justice and seven state attorneys general are investigating whether the world’s largest seed company is using gene licenses to keep competing technologies off the market. At issue is how the St. Louis-based company sells and licenses its patented trait that allows farmers to kill weeds with Roundup herbicide while leaving crops unharmed. The company’s Roundup Ready gene was in 93 percent of U.S. soybeans last year. “Justice is clearly trying every way it can to see whether Monsanto is exceeding its rights under the patent,” said James Weiss , a Washington-based attorney at K&L Gates LLP who helped defend Microsoft Corp. against a federal antitrust probe. “At the end of the day, they may not be able to do much with it because of the scope of those patents. In almost all the cases, the courts come out on the side of intellectual property.” Yet Monsanto’s seeds are so ubiquitous that they have become like AT&T’s telephone lines before the company’s 1984 breakup or Microsoft Corp.’s Windows operating system in the 1990s, said James P. Denvir , an attorney who represents rival seedmaker DuPont Co. and led the government’s AT&T case. “Both cases involve what I think of as a classic platform monopoly,” Denvir said. “It’s a facility that competitors need access to, to compete against the monopolist.” Monsanto and DuPont, which are suing each other over a biotech seed license, both hired former Justice Department lawyers who have handled high-profile cases. ‘Revolutionizing the Marketplace’ Monsanto’s attorney, Dan Webb , defended Microsoft in 2002 against government antitrust claims. A former U.S. Attorney in Chicago, he also prosecuted Admiral John Poindexter in the Iran- Contra affair. Webb credits Monsanto with “revolutionizing the agriculture marketplace” and said antitrust claims such as those in DuPont’s suit aren’t an uncommon response to patent infringement cases such as Monsanto’s. “The perception among farmers is that DuPont’s complaints about exclusivity are without merit,” said Webb, a Chicago- based Winston & Strawn LLP partner. Denvir, who represents DuPont, said farmers are among the victims. “Clearly, we are too,” he said. “The bigger harm, the more important harm, is to farmers in denying them the best seeds they can get at the lowest possible prices.” Legal Monopoly While patents provide some protection from antitrust claims, giving a company a legal monopoly for a specified time, patent rights can be abused, DuPont lawyers and others said. “The question becomes whether or not somebody in that position has engaged in some bad acts that either got it in that position or are designed to maintain that position or to extend that position to other markets,” said Charles “Rick” Rule, a lawyer at Cadwalader Wickersham & Taft LLP who ran the Justice Department’s antitrust unit under President Ronald Reagan . The Justice Department and Department of Agriculture will hold a workshop on competition in agricultural markets, including biotech seeds, today in Ankeny, Iowa. Christine Varney , who heads the antitrust division now, has signaled she’ll be more aggressive than the Bush administration, Rule said. The department probably is looking at whether Monsanto’s licensing restrictions on seeds have a legitimate business justification, said Rule, who occasionally advises Monsanto and isn’t working with Webb on the antitrust case. Potential for Abuse “When you have that sort of monopoly power, it can lead to abuse, which is what we’ve been experiencing over the past several years,” said Thomas L. Sager , DuPont’s general counsel. Wilmington, Delaware-based DuPont claims Monsanto protects its lead in biotech seeds, including the Roundup Ready seeds sold since 1996, by controlling whether competitors can add their own genetics. Monsanto also has begun switching seedmakers and growers from Roundup Ready soybeans to the newer Roundup Ready 2 Yield version in advance of the original’s patent expiration in 2014. DuPont says Monsanto is using incentives and penalties to switch the industry to the new product in a way that unlawfully extends the Roundup Ready monopoly. ‘Level Playing Field’ “This is about trying to obtain a level playing field so innovators can introduce combinations of choices to the farmer that increase yield and of course feed the world,” Sager said. At least seven states are investigating many of the same claims, as well as whether Monsanto illegally offered rebates to distributors who limit sales of competing seed, according to one person involved in the probe who asked not to be named because he isn’t authorized to discuss it. 3M Co.’s use of rebates to induce retailers to buy more transparent tape and curtail purchases from a smaller supplier was ruled anticompetitive by the U.S. Circuit Court of Appeals in 2003. Monsanto has amended its practices to address some criticisms. The company will help the introduction of generic Roundup Ready soybeans by maintaining foreign import approvals during the transition, a process that will be followed for off- patent biotech seeds in the future, Chief Executive Officer Hugh Grant said in a January interview. Monsanto last year stopped giving rebates to dealers who limited competing seeds’ sales, said Kelli Powers , a spokeswoman. AT&T, Microsoft Parallels DuPont filed its federal antitrust case last year after Monsanto sued to block its rival from adding the Roundup Ready trait to seeds already modified to tolerate Roundup weed killer. “Trait development has been stunted by the inability to get access to the Roundup Ready platform,” Denvir, an attorney with Boies Schiller & Flexner LLP, said in an interview in his Washington office. The firm was founded by David Boies , who led the government’s successful antitrust suit against Microsoft. Roundup Ready is “licensed so broadly that if you want to offer any trait, it has to be somehow combined with that trait.” While Monsanto has promised to allow generic versions of its products to emerge, Denvir said he is unconvinced that will happen without government intervention. Monsanto got its lead in seed biotechnology because it invested in research long before DuPont and other competitors, said Webb, Monsanto’s counsel. The company spent $6 billion on seed research in the 10 years through 2008 and $1 billion a year since then, said Powers, the company spokeswoman. Among the cases relevant to the claims against Monsanto is a 2004 Supreme Court decision that Verizon Communications Inc. and other phone companies didn’t break laws by doing too little to encourage competition, said Rule, the former antitrust division head. Xerox Ruling A Federal Circuit Court of Appeals ruling in February 2000 that Xerox Corp. can’t be sued for using patents to establish or entrench a monopoly also may apply to the Monsanto disputes, he said. The cases reflect how U.S. courts have given intellectual property owners leeway to control licensing to make the property more valuable, encourage the owner to widely license the technology and support further investment, he said. Greg Neppl , with Foley & Lardner, agreed that intellectual property rights often trump antitrust concerns. “The patent concerns are well protected in the law,” said Neppl. “Where the patent rights are clear, the antitrust issues are secondary. The antitrust concerns must respect the patent owner.” Monsanto persuaded U.S. District Judge Richard Webber in September to separate the licensing case from DuPont’s antitrust counterclaim. The seedmaker won an additional incremental victory in January when Webber ruled that DuPont violated the companies’ licensing agreement by combining Monsanto’s Roundup- tolerance gene with a DuPont gene that does the same thing. Counterclaim ‘Clutter’ Patent infringement is “a fair and proper case,” Webb said. “Monsanto will have its day in court and it will not be cluttered with the antitrust counterclaim.” Monsanto shares climbed 50 cents to $71.61 yesterday, paring the decrease since DuPont filed its antitrust case in mid-June to 15 percent. DuPont has climbed 42 percent in the same period. Justice Department probes typically move in tandem with related civil litigation because plaintiffs share information with the government, Neppl said. “The antitrust division today is more willing to look at assertions” of anticompetitive behavior, Rule said. “This is something they have a right to look at. Once they get into an investigation, they are pretty good at making up their own mind.” The case is Monsanto Co. v. E.I. DuPont de Nemours & Co., 09cv686, U.S. District Court, Eastern District of Missouri (St. Louis). To contact the reporters on this story: Jack Kaskey in New York at jkaskey@bloomberg.net ; William McQuillen in Washington at bmcquillen@bloomberg.net .

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Obama Trade Goal Fights His Clean-Energy Plan at U.S. Export-Import Bank

March 11, 2010

By Mark Drajem March 11 (Bloomberg) — President Barack Obama ’s goals of boosting U.S. exports and combating climate change are colliding as the U.S. Export-Import Bank expands financing for oil, gas, mining and power-plant projects. Bank-supported ventures approved in the year ended Sept. 30 will emit an estimated 17.9 million metric tons of carbon annually, more than triple the previous year and the most since the lender started releasing data in 2001, according to its annual reports . Among companies aided were General Electric Co. and Petroleos Mexicanos, Mexico’s state-owned oil business. “Ex-Im is on a fossil-fuel binge,” said Doug Norlen , policy director at PacificEnvironment, an environmental advocacy group in San Francisco. The Washington-based Export-Import Bank works to boost U.S. sales overseas by providing government-backed loans or guarantees to exporters. Obama, who has made doubling U.S. exports over the next five years a top goal of his administration, will address the bank’s annual conference in the capital today. Jeffrey Immelt , chief executive officer of Fairfield, Connecticut-based GE, is also scheduled to appear. Obama is set to announce he will name the chief executive officer of Boeing Co., James McNerney , and Xerox Corp.’s Ursula Burns to lead an Export Council of private-sector advisers on trade, a White House official said in a statement released on condition of anonymity. Export Cabinet Obama will sign an executive order today creating an Export Promotion Cabinet that will include officials from the departments of State, Treasury, Commerce and Agriculture, the official said. Obama is pushing for a global agreement to curtail carbon emissions blamed for climate change. In September he persuaded nations in the Group of 20 to pledge an end of subsidies to oil, gas and coal. Stopping aid for fossil fuels will mark “an historic effort” to increase energy security and combat climate change, Obama said when the announcement was made. Financing Grew As private credit dried up with the recession, the Export- Import Bank’s financing grew 50 percent to $21 billion in the last fiscal year. More lending means more projects, such as power plants, that generate carbon emissions, said James Mahoney , the bank’s vice president for engineering and the environment. “Our primary purpose is to create and sustain jobs through exports,” John McAdams , the bank’s senior vice president, said in an interview. The largest project yet approved by the lender, $3 billion in financing announced in December for a liquefied natural-gas plant and pipeline sponsored by Exxon Mobil Corp. and its partners in Papua New Guinea, will generate 3.1 million tons of emissions each year, according to company projections. In addition, the bank is considering funding for an aluminum smelter in the United Arab Emirates and has pledged $1 billion to Ecopetrol SA , Colombia’s state oil producer. The bank also may provide $5 billion in financing for U.S. suppliers of Brazil’s oil producer, Petroleo Brasileiro SA. Solar, Wind Energy The Export-Import Bank says it increased lending for solar, wind and other clean-energy technology exports to $101 million in the year ended Sept. 30, more than three times the year before. It plans to release specifics today of a plan to “restrict support for high-carbon intensity projects,” and provide “fast-track” approval for renewable-energy deals, according to a draft of the scheduled announcement. The bank says it has already taken steps, such as disclosing emissions in its annual report and requiring environmental assessments before approvals, to deal with the effects of development. “We are very sensitive to these projects and the concerns over emissions,” McAdams said. “The projects we have approved represent that sensitivity.” Exporters such as Caterpillar Inc. , GE and Halliburton Co. have relied on the government support to sell bulldozers, electric turbines and oil-field drilling equipment. Undermining Export Goal Restricting the bank in the name of clean energy “would completely undermine the president’s goal of doubling exports,” Bill Lane , Washington director for Peoria, Illinois-based Caterpillar, said in an interview. “Ex-Im Bank is the bank of last resort, so you would be ceding important export markets to our foreign competitors,” said Lane, whose company is the world’s largest maker of bulldozers and excavators. Environmental advocates such as Norlen say the Obama administration should swear off oil and gas projects. Another government lender, the Overseas Private Investment Corp., pledged to cut emissions from its projects by 20 percent over the next decade. The Export-Import Bank hasn’t set a similar goal, and none is specified in the draft of its new environmental procedures. ‘Makes a Mockery’ The bank’s new policy is a disappointment because it would allow an increase in spending on coal and other technologies harmful to the environment, said Steve Kretzmann, who runs Washington-based Oil Change International , which seeks to curb government aid to fossil-fuel companies. “It makes a mockery of the Obama administration’s supposed commitment to phase out fossil-fuel subsidies,” Kretzmann said in an interview. The project in Papua New Guinea led by Irving, Texas-based Exxon has become a particular point of contention. The pipeline’s construction will destroy pristine tropical forests, PacificEnvironment’s Norlen said in a submission to the lender in September. Exxon “is the most profitable corporation on the planet,” Kretzmann said. “This is the last place that taxpayer support should be going.” The bank says the gas produced will replace coal and other dirtier fuels, resulting in a benefit to the environment. “The project itself represents a reduction in greenhouse emissions,” McAdams said. To contact the reporter on this story: Mark Drajem in Washington at mdrajem@bloomberg.net .

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Chile Steps Up Efforts to Fight Disease as Sanitation Suffers After Quake

March 7, 2010

By Michael Smith, Matthew Craze and Ivan Weissman March 6 (Bloomberg) — Chile is boosting efforts to fight disease in areas left without running water or sewer services for a seventh day after the Feb. 27 earthquake , and the government has revised its death-toll figures. Authorities are seeking to vaccinate some of the estimated 2 million victims of the earthquake for hepatitis, tetanus and flu. The government is dispatching 600,000 liters of disinfectant bleach to regions closest to the quake’s epicenter. The death toll will be lower than the last official estimate of about 800 people because that figure included those who were missing and presumed dead, Heraldo Munoz , Chile’s ambassador to the UN, told reporters. The Interior Ministry said 452 victims have been identified, in a statement e-mailed to Bloomberg. United Nations Secretary-General Ban Ki-Moon , in Santiago yesterday to meet with President Michelle Bachelet , pledged an initial $10 million toward health and sanitation programs. He is visiting Concepcion today, the country’s second-biggest city and one of two most devastated by the quake. Chile is asking other governments and non-government organizations for help in coping with health issues, Bachelet said. “We have been told by the Chilean government that they have enough resources to deal with the food, water and power problems,” Ban said. “From what we have learned at the meetings, the more pressing concerns are housing and health.” Supplies, Field Hospitals Food and basic supplies have reached most areas hit by the 8.8-magnitude quake, the world’s fifth strongest in the past century, and ensuing tsunami waves, while 13 field hospitals have been set up, according to the Interior Ministry’s Web site. Munoz put the quake’s cost to Chile at $30 billion, including $280 million in the agriculture and wine industries. A charity telethon is under way with the aim of raising about $30 billion for relief. If successful, that would amount to about 0.02 percent of gross domestic product in 2009. Water supplies are being re-established gradually in the affected areas, although taps are still dry in some of the hardest-hit towns in the Maule and Bio Bio regions. Electric power, mostly restored elsewhere, remains spotty in those two areas, the Interior Ministry said. Garbage Piles In Constitucion, 300 kilometers (190 miles) south of Santiago, the sanitation problems are pervasive. Human excrement sits in dark corners by destroyed buildings, and people relieve themselves in vacant lots and backyards among piles of rubble. Dogs roam the streets rummaging for food in heaps of garbage that aren’t being collected. Nearby, people cook meals over open fires near their destroyed homes. So far, there haven’t been any outbreaks of diseases tied to sanitary conditions in the city, Laura Albornoz , the central government’s disaster relief representative, said from Constitucion’s city hall. Health workers will begin vaccinating children soon, seeking to avert outbreaks of hepatitis, which can be contracted by drinking contaminated water. “Children are the most vulnerable to this disease,” Albornoz said. “So that’s our first priority.” The UN is delivering to Chile 120 tons of fortified snacks, 11,000 bottles of water, 34,700 doses of chlorine, 170,000 hepatitis A vaccines and 70,000 vaccines for tetanus. Modular Hospitals The government is seeking donations of semi-permanent modular hospitals, similar to one used after the 1960 earthquake in Valdivia and was in place until 2000, Bachelet said. The government also is considering broadening a flu- vaccination campaign that’s due to begin March 15, to inoculate more people. “We may extend coverage to people over 65 years old, considering they will be living in bad conditions,” she said. Other services in the country are returning to normal. Finance Minister Andres Velasco told reporters in Santiago yesterday that 82 percent of all automatic teller machines are operational, with 52 percent working in the Maule region and 28 percent in Bio Bio. Banco del Estado de Chile, a state-owned lender, is sending mobile ATMs to two of the most affected cities in Bio Bio, he said. Lan Airlines SA increased the capacity of its domestic and international flights to and from Santiago’s airport to 54 percent of normal levels, Latin America’s biggest airline by market value wrote in a statement. “The earthquake will have a negative effect on economic activity in Chile in March and upcoming months,” Velasco said. “Private and public investment in the second half of the year will surely serve to increase demand and in the medium term will boost the economy.” To contact the reporter on this story: Michael Smith in Constitucion at mssmith@bloomberg.net ; Matthew Craze in Concepcion at mcraze@bloomberg.net .

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Drought Threatens Syria’s Economy as 300,000 Families Flee Parched Farms

March 1, 2010

By Daniel Williams March 2 (Bloomberg) — A few miles beyond an irrigated golf course on the outskirts of Damascus, scores of refugees fleeing drought in Syria’s northeastern breadbasket have settled into tents on a rocky field. “Our wells are dry and the rains don’t come,” said Ahmed Abu Hamed Mohieddin, a wheat farmer from the town of Qamishli in the Fertile Crescent, a rich agricultural area stretching from Iraq to Israel. “We cannot depend on God’s will for our crops. We come to the city, where the money is.” He and three sons work as porters in the capital’s vegetable markets. They are among about 300,000 families driven to Damascus, Aleppo and other cities in one of the “largest internal displacements in the Middle East in recent years,” according to a Feb. 17 report by the United Nations Office for the Coordination of Humanitarian Affairs. The water shortage is undermining efforts to maintain economic growth in a country where agriculture until recently accounted for about 25 percent of gross domestic product. The drought is also a potential source of tension as Syria seeks to increase its political influence in the region, where it competes for shared river resources with Turkey, Iraq and Israel. “It’s a problem for the government,” said Jihad Yazigi, editor-in-chief in Damascus of The Syria Report , an online business journal based in Paris. “They don’t like the image of Syria as a drought-ridden, Middle Eastern Ethiopia. Also, it’s not just a lack of water, it’s bad water management by the government itself.” Modernization ‘Neglected’ Much of Syria’s farmland is irrigated by flooding, which wastes water, instead of through pipes and tubes, Yazigi said. “Modernization of agriculture has been neglected.” Rainfall has averaged between 45 percent and 66 percent less than normal in three eastern provinces during the past two years, according to a February UN report . The country uses more water than it receives from rivers, and wells dug to make up the shortfall are depleting aquifers, Theib Oweis, a senior researcher at the Aleppo-based International Center for Agricultural Research in the Dry Areas , said in a telephone interview. Syria’s economy grew about 4 percent last year, a decline of 1 percentage point from 2008, the International Monetary Fund said in a Dec. 21 report . The harvest of wheat, Syria’s biggest crop, fell to about 2 million metric tons, half the usual amount, according to the U.S. Department of Agriculture . Net Importer “For the first time in two decades, Syria has moved from being a net exporter of wheat to a net importer,” said a February 2010 report by the U.S. State Department , which added that agriculture accounted for about 17 percent of 2008 GDP. The country buys wheat mainly from Mediterranean and Black Sea countries, including France, Ukraine and Russia, according to Syria’s official government news agency. Rain and snow this winter have raised hope for a revived harvest, although one isn’t assured, Abdulla Bin Yehia, a UN Food and Agriculture Organization representative in Damascus, said in the Feb. 17 UN report. “If there is no more rain in the drought-affected areas within the next six to seven weeks, then we may not have any crop,” he said. Frost could destroy produce and devastate farmers “for another year,” he added. The water shortage has contributed in the past to conflict with Israel over the Golan Heights , which the Israelis conquered in the 1967 Middle East War and Syria wants back. The area contains watersheds that flow into the Sea of Galilee, a major source of Israel’s water, and control of these resources has been a sticking point when the countries have met in negotiations. Water Policies Repeated requests to discuss the drought and water policies went unanswered by the government of President Bashar al-Assad , 44, who has ruled Syria for a decade. The lack of water has caused more than 800,000 people in eastern Syria to lose “almost all of their livelihoods and face extreme hardship,” according to an Aug. 11 report by the UN humanitarian office. About 80 percent of the hardest hit “live on a diet consisting of bread and sugared tea,” the report said. Mohieddin, 47, said he left Qamishli when his well ran dry and he couldn’t afford a new pump. He sold a flock of sheep because grazing land had withered and he didn’t have commercial feed. He came to Damascus last May and lives among the dusty lanes separating do-it-yourself tents of plastic and cotton sheets. “I’m thinking maybe we can build a little house here,” Mohieddin said. “We can’t go back to Qamishli. We prayed for rain too long.” Limited Help Complicating life for the refugees is limited humanitarian help. The World Food Programmme in Rome appealed last August for $23 million in aid. It received only about $6 million, the organization’s country director, Mohannad Hadi, told Syria Today magazine. The winter rain “means farmers in the northeast may have crops after the harvest,” he said. “But it won’t put food on the table for them today.” Or fill their tea cups. Mohieddin trudges 200 yards into Khirbet al-Waled village to get drinking water from a trickling outdoor faucet. “I’m used to this,” he said. “Water is as hard to get for us as gold.” To contact the reporter on this story: Daniel Williams in Damascus at dwilliams41@bloomberg.net .

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Drought Threatens Syria’s Economy as 300,000 Families Flee Parched Farms

March 1, 2010

By Daniel Williams March 2 (Bloomberg) — A few miles beyond an irrigated golf course on the outskirts of Damascus, scores of refugees fleeing drought in Syria’s northeastern breadbasket have settled into tents on a rocky field. “Our wells are dry and the rains don’t come,” said Ahmed Abu Hamed Mohieddin, a wheat farmer from the town of Qamishli in the Fertile Crescent, a rich agricultural area stretching from Iraq to Israel. “We cannot depend on God’s will for our crops. We come to the city, where the money is.” He and three sons work as porters in the capital’s vegetable markets. They are among about 300,000 families driven to Damascus, Aleppo and other cities in one of the “largest internal displacements in the Middle East in recent years,” according to a Feb. 17 report by the United Nations Office for the Coordination of Humanitarian Affairs. The water shortage is undermining efforts to maintain economic growth in a country where agriculture until recently accounted for about 25 percent of gross domestic product. The drought is also a potential source of tension as Syria seeks to increase its political influence in the region, where it competes for shared river resources with Turkey, Iraq and Israel. “It’s a problem for the government,” said Jihad Yazigi, editor-in-chief in Damascus of The Syria Report , an online business journal based in Paris. “They don’t like the image of Syria as a drought-ridden, Middle Eastern Ethiopia. Also, it’s not just a lack of water, it’s bad water management by the government itself.” Modernization ‘Neglected’ Much of Syria’s farmland is irrigated by flooding, which wastes water, instead of through pipes and tubes, Yazigi said. “Modernization of agriculture has been neglected.” Rainfall has averaged between 45 percent and 66 percent less than normal in three eastern provinces during the past two years, according to a February UN report . The country uses more water than it receives from rivers, and wells dug to make up the shortfall are depleting aquifers, Theib Oweis, a senior researcher at the Aleppo-based International Center for Agricultural Research in the Dry Areas , said in a telephone interview. Syria’s economy grew about 4 percent last year, a decline of 1 percentage point from 2008, the International Monetary Fund said in a Dec. 21 report . The harvest of wheat, Syria’s biggest crop, fell to about 2 million metric tons, half the usual amount, according to the U.S. Department of Agriculture . Net Importer “For the first time in two decades, Syria has moved from being a net exporter of wheat to a net importer,” said a February 2010 report by the U.S. State Department , which added that agriculture accounted for about 17 percent of 2008 GDP. The country buys wheat mainly from Mediterranean and Black Sea countries, including France, Ukraine and Russia, according to Syria’s official government news agency. Rain and snow this winter have raised hope for a revived harvest, although one isn’t assured, Abdulla Bin Yehia, a UN Food and Agriculture Organization representative in Damascus, said in the Feb. 17 UN report. “If there is no more rain in the drought-affected areas within the next six to seven weeks, then we may not have any crop,” he said. Frost could destroy produce and devastate farmers “for another year,” he added. The water shortage has contributed in the past to conflict with Israel over the Golan Heights , which the Israelis conquered in the 1967 Middle East War and Syria wants back. The area contains watersheds that flow into the Sea of Galilee, a major source of Israel’s water, and control of these resources has been a sticking point when the countries have met in negotiations. Water Policies Repeated requests to discuss the drought and water policies went unanswered by the government of President Bashar al-Assad , 44, who has ruled Syria for a decade. The lack of water has caused more than 800,000 people in eastern Syria to lose “almost all of their livelihoods and face extreme hardship,” according to an Aug. 11 report by the UN humanitarian office. About 80 percent of the hardest hit “live on a diet consisting of bread and sugared tea,” the report said. Mohieddin, 47, said he left Qamishli when his well ran dry and he couldn’t afford a new pump. He sold a flock of sheep because grazing land had withered and he didn’t have commercial feed. He came to Damascus last May and lives among the dusty lanes separating do-it-yourself tents of plastic and cotton sheets. “I’m thinking maybe we can build a little house here,” Mohieddin said. “We can’t go back to Qamishli. We prayed for rain too long.” Limited Help Complicating life for the refugees is limited humanitarian help. The World Food Programmme in Rome appealed last August for $23 million in aid. It received only about $6 million, the organization’s country director, Mohannad Hadi, told Syria Today magazine. The winter rain “means farmers in the northeast may have crops after the harvest,” he said. “But it won’t put food on the table for them today.” Or fill their tea cups. Mohieddin trudges 200 yards into Khirbet al-Waled village to get drinking water from a trickling outdoor faucet. “I’m used to this,” he said. “Water is as hard to get for us as gold.” To contact the reporter on this story: Daniel Williams in Damascus at dwilliams41@bloomberg.net .

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Europe Trades Places With Russia as Ukraine Picks Timoshenko or Yanukovych

February 4, 2010

By James M. Gomez and Daryna Krasnolutska Feb. 4 (Bloomberg) — When Yuri Davydov needed investors to expand his Ukrainian food company, he looked west to the European Union, not east to Russia, even though his VAT Creativ Industrial Group is in the Russian-speaking part of the country. “We have good connections with Russia, but we prefer to trade with non-Russian companies,” Davydov said after a Jan. 19 presentation to potential investors in Vienna. “If the European Union removes barriers, we can find a niche.” His attitude may explain why both contenders in the Feb. 7 runoff presidential election, Viktor Yanukovych and Yulia Timoshenko , have vowed to sign a trade accord with the EU. They favor it even though Yanukovych had Russian backing for his first run in 2004 and Timoshenko accused President Viktor Yushchenko of being too confrontational toward Russia. The EU is looking more attractive to executives from Ukraine’s eastern industrial centers of Donetsk and Dnipropetrovsk, as well as in Kiev and Lviv farther west. The need to diversify from Russia, Ukraine’s largest single trading partner, has business leaders pushing politicians for easier access to the 27-nation EU. Its market of 449 million people is more than triple the population of Russia. Opposition leader Yanukovych, 59, topped 18 candidates in the Jan. 17 first-round election with 35 percent support. Prime Minister Timoshenko, 49, took 25 percent, while Yushchenko was eliminated after garnering 5.5 percent. Polling less than two weeks before the vote is prohibited. Trade Accord Both finalists say they will repair relations with Russia that deteriorated under Yushchenko, and they question entry into the North Atlantic Treaty Organization. Both plan to work with the International Monetary Fund to unblock $5.8 billion in loan funds that were frozen in November when the parliament failed to adopt a budget or cut spending. Timoshenko says she wants to abolish the value-added tax, while Yanukovych would cut that tax rate to 17 percent from 20 percent and cut the corporate tax rate to 19 percent in 2011 from 25 percent now. Both also promise to sign a trade deal this year with the EU. The accord is part of a pledge made by Yushchenko, a former central bank governor, after the 2004 Orange Revolution . Yanukovych’s presidential bid that year, against Yushchenko, was supported by then-Russian President Vladimir Putin and outgoing Ukrainian President Leonid Kuchma . Kuchma courted Russia and picked Yanukovych, his prime minister at the time, as the candidate to succeed him. Changing Laws Talks over the EU trade accord have been stalled for more than a year. European Commission President Jose Barroso said on Dec. 4 that Ukraine has only “partly met” its promises to change laws needed for closer EU ties. The next discussions are set for early March in Brussels. Ukraine needs more trade: Gross domestic product probably shrank 15 percent in 2009, Yushchenko’s office estimates, as the global financial crisis cut demand for Ukraine’s products, dried up investments and weakened the currency. Exports make up more than 40 percent of GDP. The accord is intended to ease trade in all goods and services, including energy, and to eliminate a range of tariffs on both sides. The plan would also provide a blueprint for making Ukraine’s regulations on competition, public procurement and customs more transparent, according to the EU’s Web site . ‘European Perspective’ “For Ukraine, it is very important to have a European perspective,” Yanukovych said in an interview on Jan. 21 while campaigning near the Black Sea. “The most important thing is to create a real mechanism for real integration into the EU.” Timoshenko and Yanukovych were both invited by Ukrainian billionaire Viktor Pinchuk , Kuchma’s son-in-law and a 2004 supporter of Yanukovych, to address investors at a luncheon at the World Economic Forum in Davos via satellite on Jan. 29. The two also attended the opening of a soccer stadium in Donetsk financed by Rinat Akhmetov , Ukraine’s richest man. Grammy-winning singer Beyonce performed at the August event. A political leader who wants to support business needs to promote easing trade restrictions to the west, said Jathan Tucker, head of trading at BG Capital investment bank in Kiev. “Most business leaders lean towards a free trade agreement with the EU,” Tucker said an interview. “It would open up a new market for exports that they could take advantage of.” The EU restricts the import of agricultural products that don’t meet EU norms, as well as limiting such manufactured goods as steel pipes and imposing tariffs on chemicals and drugs. Exports to Russia Exports to the 11-nation Commonwealth of Independent States, which includes Russia, Belarus and Kazakhstan, accounted for 34 percent of Ukraine’s $35.6 billion in international shipments in the first 11 months of last year. Exports to Russia alone totaled 21 percent. Exports to the EU, including steel, food and chemicals, were 24 percent of the total, the government said Jan. 13. “Ukraine needs to win western market share, we need to export more,” said Mykola Tolmachov , chief executive officer of TMM Real Estate Development Plc , Ukraine’s largest property developer, in Kiev. “We believe our investors are not in Russia.” TMM is among Ukrainian companies that have raised money by selling shares in the EU, including in Frankfurt, London and Warsaw, the largest bourse in the EU’s eastern states, rather than in Russia. Kharkiv-based Sintal Agriculture Plc , which grows grains, raised $13 million in October on the Frankfurt Stock Exchange through a private placement of a 17.2 percent equity stake. Creativ offered shares on the Frankfurt Stock Exchange in 2007. After falling 75 percent from October 2007 to April 2009, the stock has soared 135 percent since then. Davydov is CEO of the company, based in Kirovograd, a Russian-speaking city 299 kilometers (185 miles) southeast of Kiev. He was at the Vienna Euromoney magazine conference seeking as much as $50 million to expand and improve production of his cooking-oil products. His EU market is limited to Italy and Spain because meeting EU standards reduces the products the company can ship there. “Ukraine has a great possibility to export” to the EU, he said. “Standards are very high and only a small quantity of Ukrainian enterprises are certified.” To contact the reporters on this story: James Gomez in Prague at jagomez@bloomberg.net Daryna Krasnolutska in Kiev at dkrasnolutsk@bloomberg.net

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Subbarao Seeks to Assure Investors on Prices, Aid India’s Economic Rebound

January 30, 2010

By Cherian Thomas Jan. 30 (Bloomberg) — India’s central bank Governor Duvvuri Subbarao sought to assure investors that he will restrain inflation, while refraining from raising interest rates to support a rebound in Asia’s third-largest economy. The Reserve Bank of India yesterday left benchmark rates unchanged and instead boosted the ratio of deposits lenders must hold in reserve by more than forecast, to 5.75 percent. The step is part of a gradual tightening of monetary policy that will lead to higher borrowing costs in coming months, said Rajeev Malik , a regional economist at Macquarie Group Ltd. The goal is to secure a recovery in economic growth toward 8 percent this year while containing a surge in inflation that would impoverish households and drive up longer-term bond yields. Subbarao, 60, is emulating a course taken across the region, with nations from China to the Philippines taking steps toward higher borrowing costs without rushing to raise rates. “The Reserve Bank of India has embarked on a handle-with- care monetary exit,” said Singapore-based Malik. “While inflation has become more important, it has not taken its eyes off growth dynamics.” Malik expects the central bank to raise interest rates by between 1 and 1.5 percentage points over the next year, starting in either March or April. India’s generic 10-year government bond yields reached 7.71 percent on Jan. 13, the highest level since November 2008, and closed at 7.58 percent yesterday in Mumbai. ‘Keeping a Vigil’ “Bond yields haven’t reacted much and are likely to remain stable,” said Jayesh Mehta , country treasurer and head of fixed income at Bank of America Corp. in India. “The RBI has been keeping a vigil on inflation and had announced its intentions several months back.” India’s benchmark stock index gained 0.3 percent yesterday, reversing earlier losses, after the central bank predicted faster growth. The rupee gained 0.4 percent to 46.18 against the dollar from 46.36. Subbarao expects India’s economy to grow 7.5 percent in the year to March 31 from the 6 percent forecast earlier as demand for manufactured goods and services rise. He also raised the bank’s inflation forecast to 8.5 percent by March 31 from 6.5 percent. As a result, the cash reserve ratio was raised from 5 percent while the benchmark reverse repurchase rate was kept unchanged at 3.25 percent and the repurchase rate at 4.75 percent yesterday. Currency Gains Analysts anticipate currency gains as strengthening economies force central banks to act. The rupee may gain almost 8 percent by year-end to 43 per dollar, according to the median forecast in Bloomberg survey. China’s yuan and Malaysia’s ringgit are estimated to advance 3.7 percent. China, Malaysia and the Philippines moved closer to raising interest rates in January. In China, the central bank ordered some banks to pare lending, raised the ratio for deposits banks must set aside as reserves and guided bill yields higher this month after loan growth surged. Malaysia kept borrowing costs unchanged on Jan. 26, while warning that rates cannot be kept “too low” for too long because of the need to prevent a build-up of “financial imbalances.” The Philippines increased its so-called rediscounting rate, one of the interest rates it charges lenders for borrowing money from the central bank. Robust Growth “The growth in emerging-market economies such as China and India is expected to be robust,” Subbarao said yesterday. He said India could sustain 7.5 percent growth in the next financial year starting April 1. The International Monetary Fund on Jan. 26 boosted its 2010 gross domestic product growth projection for India to 7.7 percent from the 6.4 percent forecast in October. India’s growth prospects are luring investments. Bridgestone Corp. said Jan. 29 that a subsidiary in India will begin production of radial tires for buses and trucks in the first half of 2011 to tap growing demand in the country. The Tokyo-based company will invest 3.3 billion yen ($36 million), for daily production of 400 units, it said. Cisco Systems Inc. Chief Executive Officer John Chambers told CNBC in Davos Jan. 29 that he would be “not surprised” if China and India grew between 7 percent and 10 percent in 2010. Subbarao said his objective is to “anchor” inflation expectations without hurting growth. “The central bank has to balance growth versus inflation because in a country like India, inflation is sometimes more important than growth,” said Anil Singhvi , vice chairman of Reliance Natural Resources Ltd., a unit of India’s third-largest utility. Inflation is politically sensitive in India as it hurts the poor the most. The Food & Agriculture Organization says 231 million people in the country are undernourished, more than in Sub-Saharan Africa. Prime Minister Manmohan Singh’s government is under pressure to tame inflation after opposition parties stepped up their criticism of his administration for failing to curb price gains. To contact the reporter on the story: Cherian Thomas in Mumbai at cthomas1@bloomberg.net .

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Corn, Soybean Record Harvests May Extend 2010 Price Slump to More Than 20%

January 13, 2010

By Jeff Wilson Jan. 13 (Bloomberg) — Record corn and soybean production in the U.S., the world’s largest grower and exporter, may extend a slump in prices this month to more than 20 percent before the next harvest in September, said Roy Huckabay at the Linn Group. Farmers will sow more of both crops this year on land used for winter wheat that was left vacant in late 2009 because of heavy rain, Huckabay said. The increase would add to corn output that the U.S. Department of Agriculture said yesterday jumped 8.8 percent last year as soybean production surged 13 percent. The USDA’s forecast sent corn prices in Chicago down by the most since June, and soybeans reached the lowest level since November. Corn futures for December delivery may drop 28 percent to $3 a bushel by September from $4.175 yesterday, Huckabay said. Soybeans for November delivery may decline 22 percent to as low as $7.50 a bushel from $9.65 yesterday, he said. “The fundamental story has changed dramatically and that means a long-term bear market in prices,” said Huckabay, an executive vice president for the Chicago-based commodity broker and researcher. The USDA also reported yesterday that U.S. wheat inventories jumped 24 percent last year as world demand slumped and production increased, sending prices to their biggest drop since June. Rice futures fell to a 10-week low after the government said global inventories of the grain will be larger than forecast a month ago because of rising supplies in India. ‘No Food Shortage’ “There is no longer a food-shortage crisis,” Huckabay said. “The USDA reports indicate at least a new chapter, and probably a new book will be written” about two years of surpluses, he said. Ample supplies from the U.S., the world’s largest exporter of corn, soybeans and wheat, may reduce costs for food and livestock producers including Kellogg Co., Archer Daniels Midland Co. and Smithfield Foods Inc. After prices surged to records in 2008, farmers around the globe increased production of corn, soybeans, rice and wheat for two straight years, boosting projected global reserves of the combined crops to the highest since 2002. World inventories of the four major food crops will reach 482.3 million metric tons this year, up 8.3 percent from the previous year, according to the USDA. “The rising supplies puts more pressure on prices,” said Dave Smoldt , the vice president of operations for FCStone Group Inc. in West Des Moines, Iowa. “The market-changing development is the drop in wheat acreage, which means farmers will plant more corn and soybeans.” Buyers Benefit Companies such as Kellogg , the largest U.S. breakfast- cereal maker, and General Mills Inc. that use the commodities to make food will benefit, Smoldt said. Commercial users of grains and oilseeds including Archer Daniels can be more selective when making purchases because sellers may have ample supply. U.S. output of corn and soybeans, the nation’s two largest crops, are likely to increase as farmers seek to use fallow land normally sown with wheat, Linn Group’s Huckabay said. Winter- wheat planting plunged 14 percent, or 6.2 million acres, to the smallest area since 1913, the USDA said yesterday. Most of that land will be planted with corn and soybeans in May and June, along with about 2.8 million acres being removed from a government conservation program to allow for more cultivation, Huckabay said. “There’s more than 9 million acres that can go into spring crops this year” that will keep driving down prices, he said. U.S. farmers harvested a record 13.151 billion bushels of corn, up from 12.092 billion last year, the USDA said . Farms and warehouses held 10.934 billion bushels on Dec. 1, the most ever for that date. Rising Inventories Unsold U.S. supplies before next year’s harvest will total 1.764 billion bushels, up from 1.673 billion last year, the USDA said. World inventories before next year’s harvest will total 136.2 million tons, up from 132.3 million tons predicted a month ago, the USDA said. U.S. inventories may rise to 2 billion bushels because of a slowdown in export demand and animal feed consumption, said Dan Basse , the president of AgResource Co. in Chicago. An increase in planted acreage this year and a slowdown in the growth of ethanol production could see corn prices at harvest time fall as low as $2.90 a bushel, Basse said. “A 2-billion-bushel carryover does not engender a bull market,” Basse said. “There has been a significant change in the supply landscape.” Soybean Output Rises The soybean harvest last year jumped to 3.361 billion bushels, the USDA said. World production will total 253.4 million metric tons in the year ending Sept. 30, up 20 percent from the previous year, according to the agency. Combined production in Brazil and Argentina may surge 33 percent in 2010, the USDA said. World inventories on Sept. 30 will reach 59.8 million tons, a 39 percent increase from a year earlier and the second-highest ever, the agency said. “We have a pool of acres to boost production” again in 2010, Basse said. “Without a renewal in inflationary concerns, soybean prices could fall to $7.50 to $8 a bushel at harvest this year.” Companies that make farm machinery, seeds, chemicals and fertilizer fell yesterday on speculation that farmers will have less money to buy their products, said Basse. Market Vectors Agribusinss ETF , which includes the Mosaic Co. , Deere & Co. , Monsanto Co. and Syngenta AG , yesterday fell 2.3 percent in New York, the biggest drop since Dec. 17. “The profitability in the farm sector is going to fall,” Basse said. “Falling farm income may play out” with lower sales for suppliers, he said. To contact the reporters on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net .

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El Nino May Curb Philippine Rice Harvest Damaged by Storms, Official Says

January 7, 2010

By Luzi Ann Javier Jan. 8 (Bloomberg) — Rice output in the Philippines, the world’s biggest importer, may decline this quarter as El Nino reduces rainfall in major producing regions, an official said. “The shortfall will naturally increase because production will be lower compared to last year,” Agriculture Undersecretary Emmanuel Paras said in an interview yesterday. “We are still assessing just how much the volume will drop.” The Philippines, which lost 1.3 million metric tons of rice in storms last quarter, may remain in the import market as it faces El Nino after securing more than 2 million tons of rice from overseas suppliers since November. The nation lost 2.36 million tons when a moderate El Nino hit in 1998, Paras said. “This time, the impact may not be as severe,” Paras said. “We’re monitoring the water levels in dams because that will determine how much water is available to the crop on the ground.” El Nino, the weather pattern that creates a warming of the Pacific Ocean, can reduce rainfall or prolong the dry season in parts of Asia, damaging agricultural output. Twenty provinces, including Nueva Ecija, Bulacan, Pampanga and Sultan Kudarat, received between 20 percent to 59 percent below-normal rainfall in the past three months, Daisy Ortega, senior weather specialist at the Philippine Atmospheric Geophysical and Astronomical Services Administration said in a phone interview from Manila yesterday. Prices Jump Central Luzon, home to the nation’s biggest producing provinces including Nueva Ecija, Pampanga and Bulacan, accounted for 18 percent of output in 2008, according to the Bureau of Agricultural Statistics Web site. Rice futures jumped 34 percent from last year’s low of $11.195 per 100 pounds in Chicago, as the Philippines accelerated imports, and on concern India, the world’s second- largest grower and consumer, may become a net importer this year, after drought parched crops in the South Asian nation last year. Philippine rice imports may expand to a record 3 million tons in 2010, from 1.78 million tons last year, “in a worst case scenario,” if El Nino damages crops, Rex Estoperez , spokesman of the National Food Authority, said Nov. 23. Rice farmers in the Philippines collect their first harvest of the calendar year between March and May. Nueva Ecija is the nation’s largest rice producing province, according to Paras. To contact the reporter on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net

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China Curbs Power Use, Florida Citrus Threatened as Cold Weather Persists

January 6, 2010

By Bloomberg News Jan. 7 (Bloomberg) — China curbed electricity use because of coal shortages, Florida citrus growers braced for more nights of freezing temperatures and snow blanketed southern England as icy weather continued to grip the Northern Hemisphere. China will be hit by a new cold front this weekend, with snowstorms forecast for the provinces of Jiangsu, Anhui, Henan and Hubei on Jan. 9, China National Radio reported. Mexico will have “severe winter” weather. In the U.S., frigid air sent orange-juice futures up as much as 4.3 percent to a two-year high yesterday and natural gas jumped to a 13-month peak. “The cold weather is hitting a lot of the more populated areas, such as western and northern Europe, a lot of the eastern U.S.,” Bob Tarr , a meteorologist at AccuWeather Inc. , said in a telephone interview yesterday. “It’s a rare pattern, and unusual to see this cold weather affecting a number of major population centers and persisting for about three weeks.” The Chinese provinces of Jiangsu, Hubei, Henan, Hunan and Jiangxi and the municipalities of Shanghai and Chongqing have limited electricity consumption because of fuel shortages, the official Xinhua News Agency said today, without giving details. Some aluminum smelters in Henan, the largest producing province, received notices from power suppliers to prepare for stoppages, according to CRU International Ltd. China is the world’s biggest maker of aluminum used in homes and cars. There have been “periodic power supply disruptions” in provinces including Henan and Hunan, though the impact “is not serious” so far, Wan Ling , a Beijing-based analyst, said by phone today. She declined to identify the smelters affected. Mexico Freezes Mexico will have “severe winter” weather in most of the nation from today, the National Meteorological Service said in an e-mailed statement. Temperatures below freezing are forecast for 10 states and Mexico City, it said. At least seven deaths in the U.S. have been blamed on icy roads or cold-related accidents, the Associated Press reported. In the U.K., which is enduring the longest cold snap since 1981, the British army was called out to help rescue motorists from as many as 1,000 vehicles. Eurostar canceled four trains between London, Paris and Brussels, a spokesman, Richard Holligan , said yesterday. Temperatures in New York City are forecast to be as much as 13 degrees below average by Jan. 10, according to MDA Federal Inc.’s EarthSat Energy Weather of Rockville, Maryland. The U.S. Northeast is responsible for about four-fifths of the country’s heating oil use. Temperatures will be 25 degrees below average in Houston and St. Louis on Jan. 9, EarthSat said. About 72 percent of households in the Midwest use natural gas for heat. Citrus at Risk Florida’s orange growers face frigid weather again early today after freezing conditions did minimal damage yesterday, according to AccuWeather Inc. The cold in the past 24 hours harmed less than 1 percent of the crop, said Dale Mohler , a senior meteorologist with AccuWeather. Citrus may sustain “light damage” overnight as freezing weather returns, said AccuWeather’s Dan Kottlowski . Oranges can be ruined when exposed for too long to temperatures below 28 degrees Fahrenheit (minus 2.2 degrees Celsius). “The entire Florida crop is at risk for these next few nights,” Pete Spyke, the owner of Arapaho Citrus Management Inc., said yesterday by telephone. The company has 300 acres (121 hectares) of citrus groves, with 60 percent producing oranges, 25 percent grapefruit, and the rest tangerines. Lower Crop Florida’s crop will fall to 135 million boxes in the season through June from a year earlier, the smallest in three years, the U.S. Department of Agriculture said Dec. 10. Last season, growers packed 162.4 million boxes, each weighing 90 pounds (41 kilograms). Florida is the largest producer after Brazil. Orange-juice futures for March delivery fell 1.5 cents, or 1 percent, to $1.4205 a pound on ICE Futures U.S. in New York yesterday. Earlier, the price rose to $1.4965, the highest level for a most-active contract since Jan. 2, 2008. French electricity demand may reach a record next week as temperatures are expected to drop as much as 7.7 degrees Celsius below average, the grid operator Reseau de Transport d’Electricite said on its Web site. Temperatures were at or below freezing across most of northern and central France, sinking as low as minus 4 degrees Celsius in Paris, according to the forecaster Meteo-France .

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Snowstorms Blanket Northern China, Korea; Grounds Beijing, Seoul Flights

January 4, 2010

By Bloomberg News Jan. 4 (Bloomberg) — Beijing’s heaviest snowfall in almost six decades grounded hundreds of flights and forced schools to shut as temperatures were set to approach the lowest in 40 years. Beijing’s airport had canceled 254 flights today as of 11:00 a.m. local time, China Central Television reported. About 90 percent of the airport’s more than 13,000 flights yesterday were withdrawn or delayed, the state broadcaster reported. Premier Wen Jiabao yesterday called on local authorities to ensure the safety of transportation, normal supply of food and agricultural production, the official Xinhua News Agency reported. Beijing yesterday had the heaviest daily snowfall since 1951, Xinhua reported today. Among those affected by the weather were Hong Kong Financial Secretary John Tsang and Hong Kong Monetary Authority Chief Executive Norman Chan , who were forced to cancel a trip to Beijing today. Tsang and Chan will rescheduled their visit, Patrick Wong , Tsang’s press official, said by telephone. At least four airports in Shandong province were closed today due to the snow, CCTV reported. More than 15,000 people were dispatched to remove snow that had forced the closure of 30 highways in northern China, the Ministry of Transportation said on its Web site. South Korean Flights Snowstorms also grounded flights in South Korea. Gimpo airport, which operates shuttle flights to Tokyo and Shanghai, suspended all services today, according to South Korea’s Ministry of Land, Transport and Maritime Affairs. A total of 31 flights have also been delayed at Incheon airport, South Korea’s largest, the ministry said. More snow and freezing rain are expected today in the Chinese provinces of Shandong, Shaanxi, Hubei, Hunan, Jiangxi, Jilin and Heilongjiang, according to the China Meteorological Administration . Parts of Hunan and Jiangxi province may be hit by heavy snow tomorrow, the weather bureau said. Temperatures in Beijing are forecast to be as low as minus 14 degrees Celsius (6.8 degrees Fahrenheit) today and may drop to minus 16 degrees Celsius tomorrow, according to the administration. Tomorrow’s temperatures could fall to an almost 40-year low, Xinhua reported. Elementary and middle schools in Beijing and the city of Tianjin were suspended today because of the snow and low temperatures, the city governments said. Suburban portions of the Chinese capital received more than 33 centimeters (13 inches) of snow yesterday, the Beijing Daily reported. Tianjin got as much as 20 centimeters of snow yesterday, CCTV reported. Snowfall in the city of Zhangjiakou in Hebei province reached 15 centimeters yesterday, the most in a decade, the state broadcaster said. The Ministry of Agriculture dispatched seven teams to help farmers in northern China ensure agricultural production, Xinhua reported late yesterday. The teams sent to the provinces of Hebei, Liaoning, Jiangsu, Shandong and Anhui will help repair damaged greenhouses and improve the use of water and fertilizer, according to the report. — Tian Ying, Irene Shen, Jiang Jianguo, Alfred Cang, Li Yanping, Kyunghee Park. Editors: John Liu , Stan James To contact Bloomberg News staff on this story: Tian Ying in Beijing at +86-10-6649-7571 or ytian@bloomberg.net Irene Shen in Shanghai at +86-21-6104-7022 or ishen4@bloomberg.net

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Charles Gasparino: New York Needs Wall Street

December 28, 2009

David Paterson hasn’t fared well over the past two years as governor of New York State: unemployment is high, taxes are out of control and the state’s budget is a mess. As Michael Barone pointed out in a recent column, people continue to flee the state in droves. But I give Paterson an “A” for honesty. He’s possibly the only liberal politician willing to admit publicly that the greed merchants on Wall Street are a necessary evil for big government liberalism to survive. It is, of course, very fashionable to beat up on Wall Street these days, particularly for those on the left. President Obama went on 60 Minutes to call the CEOs of the biggest banks “fat cats,” feasting off of government bailout money as unemployment remains high, before he herded them into a room in the White House (or at least most of them; the flights for the CEOs of Goldman, Morgan Stanley and the chairman of Citigroup, were delayed so they attended via a conference call) and asked that they start extending more loans to small business and not pay themselves too much. But Obama, unlike Paterson, is being disingenuous; aside from a few snotty remarks, the president hasn’t done much to get the banks lending right now. In fact, his policies have fostered an environment that allows Wall Street to make money — bundles of it as demonstrated by Goldman Sachs’ $20 billion bonus pool — at the expense of helping Main Street. Obama has supported Fed Chairman Ben Bernanke’s near-zero interest rate policy; he’s basically declared every big bank Too Big To Fail, meaning the federal government will save the likes of Goldman Sachs if it should somehow bet wrong in the trading markets, as it did last year. That means the banks can borrow cheaply in the open market, and in a pinch from the Federal Reserve itself, to finance not lending but their trading in bonds. Why would any bank need to take a chance by lending money to a struggling small business when it can take almost no risk and earn countless billions by simply borrowing at next to nothing, buying a bond and pocketing the difference? My guess is that Obama is allowing Wall Street to make such easy money, doing as Goldman CEO Lloyd Blankfein calls “God’s Work”, because the president knows that there’s a limit to the amount of debt the Chinese will buy to expand all the socialism he’s unleashing on the American people — from stimulus packages that don’t stimulate to health care reforms that make a bad situation even worse. At some point, he will need Wall Street to step in and buy those Treasury bonds the Chinese may soon refuse to buy. In the meantime, small businesses get the shaft so Goldman Sachs can make money to finance big government. The president wont tell you this because he knows that large portions of the electorate don’t agree with Obamanomics (check out his floundering poll numbers) so in order to get his agenda through, he spins a class warfare tale about Main Street versus Wall Street even as he uses Wall Street to advance his big government agenda. Paterson, on the other hand, is fessing up to this unholy alliance. It began a couple weeks ago when he took a not-so-veiled shot at one of his likely challengers, state attorney general Andrew Cuomo, who has continued the office’s Wall Street bashing tradition that began under another AG who became governor, Eliot Spitzer. Cuomo has been investigating Wall Street’s huge bonuses; he once threatened to go public with the names of executives earning huge bonuses at AIG, the large insurer that was bailed out by the government last year, if they didn’t return the money. Cuomo’s Wall Street attacks have earned him huge recognition, and at least according to the polls, a large lead over Paterson in a Democratic primary. Paterson, however, believes the attacks are counter productive; politicians in Iowa don’t go around attacking the agriculture industry, and they don’t attack big oil in Texas. So why are so many NY Pols attacking the investment banks that feed the monster of big government in New York State that they created and sustain? It was, of course, a great question, whether you agree with New York’s big government or not (I don’t). Cuomo, to his credit, has spoken about the need to cut taxes and slash the state’s bureaucracy, though I find it hard to believe he’s about to kill the monster his father helped create (Andrew is, of course, the son of former NYS Gov. Mario Cuomo) Over the weekend I interviewed Paterson on WABC radio (I was filling in for the regular host, Larry Kudlow) and he made the following point: Because of all the class warfare from the likes of Obama and Cuomo, the $20 billion in bonus money that Goldman has amassed will probably be handed out to executives not in cash but mostly in restricted stock (the decision to be announced shortly), which the state can’t get its grubby hands on. For all his negatives so far, Paterson’s logic on this issue appears to be resonating, at least with Cuomo. As the New York Post reported, the AG seems to be backing off his threat to publicly chastise the AIG bonus babies. He knows he will need them if and when he becomes governor.

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Cate Long: Derivatives Regulation: The Devil in the Details

December 11, 2009

The House of Representatives has begun the debate on the Wall Street Reform and Consumer Protection Act … (HR 4173) The real devil lurking in the details is the regulation of derivatives … The weeds of the competing legislative proposals are a little thick but the high level concept relates to where the derivatives trade gets done… Will the trade get done in the light or in the dark? Will the trade get done on a public exchange or alternative swap facility? Or will it be done during a phone call between two big banks and then buried deep in an opaque trading book? Where it will lurk as a weapon of mass destruction as Warren Buffett would say Derivatives trading must happen in the light… These trades must be done publicly to provide stability in our financial system… Remember the AIG darkness? Which almost melted down the global economy… it was really dark around all those AIG trades… dark as a graveyard. * * * Here are the particular details where the devil is lurking… from Baseline Scenario : Colin Peterson (D-MN), Chairman of the House Committee on Agriculture, along with Barney Frank, has added an amendment to the OTC Bill (opens large pdf). There are two relevant sentences for reformers from the long document. The first is on page 32: (49) SWAP EXECUTION FACILITY.–The term ‘swap execution facility’ means a person or entity that facilitates the execution or trading of swaps between two persons through any means of interstate commerce, but which is not a designated contract market, including any electronic trade execution or voice brokerage facility. This replaces other language in the original bill (opens even larger pdf), on page 546: SEC. 5h. SWAP EXECUTION FACILITIES. (a) REGISTRATION.– (1) INGENERAL.– (A) No person may operate a swap execution facility unless the facility is registered under this section. (B) The term ‘swap execution facility’ means an entity that facilitates the execution of swaps between two persons through any means of interstate commerce but which is not a designated contract market. So notice any differences? First the definition of a swap execution facility has been expanded to include “a person” (different from the “or entity”). It’s also expanded to an “or trading” definition, and includes voice brokerage firms. So now we are moving from the definition of something that is a platform for swaps to be traded on to instead something that simply helps swaps get traded. This could, quite simply, be a telephone over which two people trade a derivative (with one person declaring himself to be the exchange?). Instead of changing the way business is done for reform it looks like it redefines reform as the way things are currently done, and just calls it a victory. Now on page 89 of the amendment: 2) RULES FOR TRADING THROUGH THE FACILITY.–Not later than 1 year after the date of the enactment of the Derivative Markets transparency and Accountability Act of 2009, the Commission shall adopt rules to allow a swap to be traded through the facilities of a designated contract market or a swap execution facility. Such rules shall permit an intermediary, acting as principal or agent, to enter into or execute a swap, notwithstanding section 2(k), if the swap is executed, reported, recorded, or confirmed in accordance with the rules of the designated contract market or swap execution facility. * * * To see the legislation and amendments here … Here are all the amendments that are being debated on the floor: The ‘ manager’s amendment ‘ is a kitchen-sink amendment that pulls in all the last minute deals (so you can actually see handwriting on the PDF). It is 242 pages long and that is where you are going to find a lot of important policy changes.

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Avisio Appoints Agenor Mafra-Neto, Ph.D. to the Board of Diagnostic Nano Applications Corporation

December 10, 2009

RIVERSIDE, CA–(Marketwire – December 10, 2009) – Avisio, Inc. ( PINKSHEETS : AVIC ) announced today that it has appointed Agenor Mafra-Neto, Ph.D. to Diagnostic Nano Applications Corporation’s (DNA) board. He is the founder, president and CEO of ISCA Technologies, Inc., a developer of environmentally friendly, natural and pheromone-based tools and solutions for agricultural and urban applications. Dr. Mafra-Neto is a leading researcher and the recipient of multiple grants and contracts. He is currently the principal investigator of six active, fully funded, research and development programs — three awarded by the US Department of Agriculture and three by the National Science Foundation.

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JPMorgan May Lose $3 Billion in Revenue on Derivatives Rules, Analyst Says

December 2, 2009

By Elizabeth Hester Dec. 2 (Bloomberg) — Revenue at JPMorgan Chase & Co ., the second-largest U.S. bank, may drop by as much as $3 billion should most derivatives trades be moved to exchanges, a Sanford C. Bernstein & Co. analyst said. That could mean a reduction in earnings per share of up to 20 cents in a “worst case” situation, analyst John McDonald said today in a research note after meeting Steven Black , vice chairman of the investment bank. Derivatives made up about 8 percent of revenue from 2006 to 2008, he said, without providing a comparative figure if trading is shifted. JPMorgan, which had $77.3 billion in net revenue in the first nine months of this year, is among firms that face new regulations as Congress considers legislation that may restrict trading in the contracts. The proposals generally would require dealers and large investors to trade the most common derivatives on exchanges or regulated trading platforms. JPMorgan “sees the largest risk from legislation mandating that all derivatives be traded on an exchange as opposed to through the OTC market, limiting the company’s ability to create customized products,” McDonald wrote, referring to the over- the-counter market. He declined to comment beyond the note. He said earnings estimates for the New York-based bank represented a “worst case” in which the “most severe regulatory changes take place.” McDonald didn’t include gains in volume or capital relief that may come from having the majority of contracts standardized and cleared on exchanges. Fed Pressure Dealers have been under pressure from the Federal Reserve to loosen their control of how the markets are run. The gross amount of outstanding contracts reached $605 trillion at the end of June, according to the Bank for International Settlements in Basel, Switzerland. The contracts carried a gross market value of $25.4 trillion, BIS data show. Derivatives traders profit from the so-called bid-ask spread, the gap between what they charge customers and what they pay to hedge the trades. They can charge more on derivatives that aren’t actively traded, are customized or considered riskier. The more actively traded the contracts become and the more transparent prices get, the narrower the spread. Banks also could lose trading revenue from the extra fees they effectively charge clients by extending them leverage on derivatives transactions, said Brian Yelvington , head of fixed- income strategy at Knight Libertas LLC , a Greenwich, Connecticut-based broker-dealer. Geithner’s Testimony “You’re able to drive more bid-ask income through because of the fact that you have a certain financing relationship,” Yelvington said in an interview today. “If the product moves to an exchange, your financing flexibility is hampered.” Treasury Secretary Timothy Geithner reiterated his call that clearinghouses should initially determine which derivatives contracts are cleared, during testimony today to the Senate Committee on Agriculture, Nutrition and Forestry. He also said he was willing to consider some exemptions for end-users of derivatives as long as oversight loopholes aren’t created. JPMorgan’s investment bank is also awaiting compensation guidelines including the mix of cash and stock they will be able to award, and the required vesting period, McDonald said. He said the firm was trying to balance retaining employees and paying them for a profitable year while taking into account regulatory and public opinions. The firm isn’t likely to repeat its record fixed-income trading results in 2010 as credit spreads tighten and more competitors enter the market, wrote McDonald, predicting a 12.5 percent decline in revenue next year. The decline will probably be offset by higher investment banking fees and lower provisions for loan losses. JPMorgan has made “significant” investments in its commodities, equities and emerging markets businesses, especially Asia and Latin America, McDonald wrote, citing Black. The firm is planning a three-year overhaul of its technology and operations to consolidate trading platforms and employees in the division. To contact the reporter on this story: Elizabeth Hester in New York at ehester@bloomberg.net .

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Senator Says Loophole In Derivatives Regulation Undermines Reform

November 20, 2009

The effort to impose new restrictions on the financial system falls short of true reform if there’s a gigantic loophole for foreign exchange derivatives, Sen. Maria Cantwell (D-Wash.) said Thursday. “Most people who write about the ‘comprehensive reform’ — they’re missing the point, which is, you’ve got to have derivatives regulation,” she said in an interview with the Huffington Post. And indeed, bills being considered in Congress would bring transparency and accountability to the complex and opaque derivatives contracts that nearly brought down the financial markets last year — by forcing them to be traded through clearing houses or on exchanges. But the bills, based on a proposal put forth by the Obama administration, would exempt foreign exchange derivatives from disclosure requirements. That loophole is now facing opposition in both houses of Congress. As Cantwell explains it: “The whole foreign issue is a scapegoat. The real issue is that if you have a loophole that people can drive their tractor through, drive their volume through, you create a dark market.” This one loophole could be widely exploited, Cantwell argued, and “You can’t have exemptions that are 50-80 percent of the market or it won’t be reform.” Foreign exchange derivatives — private contracts to buy or sell currencies in the future -currently make up about eight percent of the largely opaque derivatives market. U.S. firms with extensive operations overseas like Nike and Apple use them as insurance against currency fluctuations. Virtually the entire market is traded in the shadows by the biggest banks. Wall Street wants to keep it that way. Banks made more than $18 billion off foreign exchange derivatives in 2007 and 2008, according to a report by national bank regulator the Office of the Comptroller of the Currency . By comparison, these same banks lost about $13.7 billion during the same period from all other types of derivatives trades. Supporters of the exemption argue that the system is working fine, and that any attempts to regulate it will simply drive the market overseas into much more opaque places, beyond the reach of meaningful regulation. Cantwell’s response to that concern: “The international community is waiting for the United States to stand up and have transparent markets before they themselves have transparent markets. Se we ought to be the beacon for how it’s done, not sit around and blame foreign countries that might have dark markets.” The two leaders responsible for shepherding derivatives reform legislation through the chamber — Financial Services Committee Chairman Barney Frank (D-Mass.) and Agriculture Committee Chairman Collin Peterson (D-Minn.) — have committed to closing the foreign exchange loophole, the Huffington Post reported earlier this week . In the Senate, the bill introduced by Banking Committee Chairman Christopher Dodd (D-Conn.) includes the loophole. However, since the Senate Agriculture Committee also has jurisdiction over how derivatives will be regulated (American farmers have been using derivatives for more than 100 years) it’s unclear what will ultimately emerge from the Senate. “This is a long battle,” Cantwell said. “It’s like a porous border. We’ve got to make sure we really are closing those loopholes.”

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World Food Summit Opens as Global Aid Groups Say It May Be `Waste of Time’

November 15, 2009

By Karl Maier Nov. 16 (Bloomberg) — World leaders start a United Nations summit on food security in Rome today that international aid agencies say may be a “waste of time” because it won’t commit donors to provide more money to end world hunger. A draft of the final declaration for the Nov. 16 to Nov. 18 “World Summit on Food Security,” which was obtained by Bloomberg News, promises no new financial commitments. Governments will “reinforce all our efforts” to halve the number of hungry by 2015, it says, and rich nations should reverse the decline of aid dedicated to agriculture, which fell from 19 percent in 1980 to 3.8 percent in 2006. Jacques Diouf, who is hosting the meeting as director general of the Food and Agriculture Organization , has urged governments to invest $44 billion a year to end chronic hunger suffered by 1.02 billion people and achieve “food security.” World hunger has continued to rise even with food prices falling from their peaks of last year, which coincided with FAO’s previous summit where donors pledged $11 billion in aid. The lack of new funding requests prompted two aid agencies, Oxfam and ActionAid, to say on Nov. 12 the summit may be a “waste of time and money,” and that “governments are at risk of throwing away a great chance” to reduce the number of hungry. Francisco Sarmento, ActionAid’s food rights coordinator, called the declaration “just a rehash of old platitudes.” Sixty heads of state and government plan to attend the meeting, which Pope Benedict XVI and UN Secretary-General Ban Ki-Moon will address, FAO said. Previous Crisis Last year’s surge in food prices sparked riots in more than a dozen countries from Ivory Coast to Haiti, where the unrest prompted the dismissal of Prime Minister Jacques Edouard Alexis. Prices for wheat, which supplies about 20 percent of food calories consumed in the world, more than doubled between the start of 2007 and a peak in March 2008. Soaring energy prices boosted costs of fertilizer and transport while also lifting demand for grain-based alternative fuels like ethanol. Today’s summit opens as the Rome-based UN agency predicts world cereal stocks will expand by about 4 million metric tons to 509 million tons next year, the highest level since 2002. Saudi Arabia has agreed to pay the $2.5 million cost of the gathering. The Group of Eight nations, at a July summit in L’Aquila, Italy, approved $20 billion in aid over three years to help farmers in developing nations grow and sell food. ‘Summit Fatigue’ “My biggest concern is that we have to make sure that there is no summit fatigue,” Abdolreza Abbassian , a senior FAO economist, said in an interview. “If FAO felt there was a need for another summit, it is probably because it felt that the previous ones haven’t achieved what they were supposed to.” Ertharin Cousin, U.S. Ambassador to the UN agencies in Rome, says the international community should use the summit as an opportunity to redefine how rich and poor countries work together to boost food production and cut poverty. “When there is an opportunity, you don’t say ‘it is just another summit,’ you say ‘OK we are having this, how do we make it add value,’ and that was our goal,” the ambassador said in a Nov. 10 interview. Developing countries must design their own plans and donor nations must work with them as partners, Cousin said. “For us to suggest at the global level that we can have a patterned answer that is going to resolve all the issues on the entire continent of Africa of 54 countries is far too simplistic and very naïve,” she said. Private Sector Role At a FAO-organized meeting with food and agriculture companies, including Nestle, Unilever , and Bunge Ltd. , in Milan on Nov. 12-13, private sector officials pledged to increase investment in farming in poor countries. “We stand ready to invest meaningfully to help build national capacities in applied agriculture and food systems research and technology transfer in developing countries,” the companies said in a statement after the meeting. Foreign direct investment in agriculture tripled to more than $3 billion since 2000, FAO said in report on its Web site. Oxfam and ActionAid say the best way to reduce the number of hungry is to target resources on small farming families, who make up a third of the world’s population, FAO estimates. Hunger Frontline “Smallholder farmers, mostly women, are on the frontline in the fight against world poverty, hunger and climate change and we must not continue to ignore them,” said Frederic Mousseau of Oxfam. While increased cereal production has slowed the rise in global food prices, Abbassian of FAO predicts future shortages and price hikes. “The one certainty is that there will be a food crisis, and the reason is simple: we haven’t done much to prevent such a thing from happening,” he said. “We have talked a lot, we have committed a lot, but we haven’t really acted.” To contact the reporter on this story: Karl Maier in Rome at kmaier2@bloomberg.net

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Walmart Earnings Advance 3.2%; Fourth-Quarter Revenue Seen Little Changed

November 12, 2009

By Chris Burritt Nov. 12 (Bloomberg) — Wal-Mart Stores Inc. , the world’s largest retailer, reported third-quarter profit rose 3.2 percent, helped by inventory management, and forecast sales for the fourth quarter would be little changed. Net income increased to $3.24 billion, or 84 cents a share, in the period ended Oct. 31, from $3.14 billion, or 80 cents, a year earlier, the Bentonville, Arkansas-based company said today in a statement. Analysts predicted 81 cents, the average of 24 estimates compiled by Bloomberg. Walmart has accelerated efforts to trim expenses under Chief Executive Officer Mike Duke as decelerating food costs and the worst U.S. unemployment rate in 26 years muted sales gains. Price reductions on bananas, vitamins and laptop computers lured new customers seeking bargains. “Management is intensely focused on lean inventory management,” Robert Drbul , an analyst at Barclays Capital in New York, wrote in a Nov. 10 note to clients. “We expect Walmart to remain aggressive on price throughout the holidays, particularly in key holiday items such as fresh, toys and electronics.” Drbul rates Walmart stock “overweight.” The U.S. jobless rate will exceed 10 percent through the first half of 2010, according to a monthly Bloomberg News survey of economists. The rate jumped to 10.2 percent in October, the highest level since 1983, according to a Labor Department report on Nov. 6. Lower food prices reflect a global oversupply of meat and milk during the recession. Meat costs, excluding poultry, may rise as much as 0.5 percent or fall that much this year, the U.S. Department of Agriculture said last month. It predicted price drops of 6 percent to 7 percent for dairy products and declines of 0.5 percent to 1.5 percent for fresh fruits and vegetables. Walmart rose 66 cents to $52.97 yesterday in New York Stock Exchange composite trading. The shares have slumped 5.5 percent this year. (Walmart executives discussed results on a pre-recorded call today. U.S. and Canadian callers should dial 1 800-778- 6902; others call 1-585-219-6420.) To contact the reporter on this story: Chris Burritt in Greensboro, North Carolina, at cburritt@bloomberg.net

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`Davos of Wine’ Links John Wayne Jokes, Vintners, Physicists: Elin McCoy

November 11, 2009

Review by Elin McCoy Nov. 11 (Bloomberg) — Piemontese winemaker Angelo Gaja paced back and forth, his hand stuffed in the pocket of his Brioni suit, as he addressed about 200 attendees for the first World Wine Symposium , dubbed the “Davos of Wine.” “Cabernet is like John Wayne ,’’ Gaja said, poking fun at the influence of rich fruity wines from the New World during the past 30 years. A giant image of the actor in a cowboy hat filled a screen. “It’s good-looking, friendly and has a large smile,’’ Gaja said, grinning. Then he clicked to a photo of film legend Marcello Mastroianni , whom he compared to more subtle and sophisticated nebbiolo, the grape of his own much-praised Barbarescos. This Davos entailed two packed days of seminars at the luxurious Villa d’Este hotel on Lake Como, Italy, with translation into three languages and welcome espresso breaks. Gaja also fulminated against European anti-alcohol campaigns. “Producers must take a position. We must insist on a distinction between spirits and wine,” he said. Other speakers highlighted current economic, political and social issues in the world of fine wine and sparked heated discussions. Attendees from 24 countries included top international winemakers – such as Piero Antinori , Pablo Alvarez of Vega Sicilia , Germany’s Egon Muller — as well as wine investment fund managers, physicists, a representative of the French Ministry of Agriculture, the Japanese ambassador to Australia, and even an opera singer. Wine Think Tank “Yabba dabba doo,’’ organizer Francois Mauss called out at the opening-night dinner, grabbing everyone’s attention. Trained in economics and diplomacy, French-born Mauss founded the Grand Jury Europeen , a fine-wine judging association, in 1996. For three years he has had the dream of creating a global wine think tank. “‘Davos of wine’ is not really the right term for this event,’’ he told me, “but people know what it means. Not only the economic sector needs an idea exchange.’’ As for the venue, forget a glitzy Alpine retreat. It’s much better to network and clink glasses at the sybaritic 16th- century Villa d’Este. Since it became a hotel in 1873, its palatial rooms, Venetian glass chandeliers and panoramic lake views have welcomed everyone from King Leopold of Belgium to Woody Allen . No Breakfast Wine Naturally, the wine and food were stellar. Tastings of 30 to 40 wines preceded every meal but breakfast. Michelin- and Gault-Millau-starred chefs from Italy, Austria and Croatia tantalized with a mix of the classic and the experimental, although not all dishes won acclaim from the sophisticated diners. The main course at a lunch featuring Croatian wines (who knew some were so good?) created by chef Sonja Peric of restaurant-hotel Valsabbion in Istria were black and green squares of mashed sardine accompanied by sauces in shiny toothpaste-style tubes. Struggling to open one, a guest squirted its contents on his designer suit. I was happier with the starter at the first night’s welcome dinner — a creamy egg in a glass cocotte covered with shaved white truffles and presented in a wooden box, a signature dish of Piemonte restaurant La Ciau del Tornavento. Star dinner wines included plush, 2006 Luciano Sandrone Barbera d’Alba ($35) and hyper-elegant Gaja Sori Tildin ($300). ‘Intelligence Hour’ Mauss had orchestrated a few surprises, like the “pure intelligence hour’’ with French physicist Etienne Klein, who explained how to test the age of a wine without opening the bottle by using gamma rays to measure a radioactive isotope in the wine. Obvious application: identifying wine fraud. On day two, Jean-Robert Pitte , former president of the Sorbonne, picked up the neo-prohibition theme in a talk about wine’s history as a cultural beverage. “Wine is not a sin,’’ he intoned. “It’s a cultural value that has created happiness for a thousand years. We must say, wine is good.’’ Jacques Berthomeau, a controleur general of the French Ministry of Agriculture, pointed out that ministries of health, intent on curbing alcoholism, have turned the younger generation away from wine by condemning it as harmful. Spanish journalist Victor de la Serna cited a 40 percent consumption drop in Spain in the past five years. The European Union subsidizes consumption of wine in the rest of the world, but doesn’t promote it in the EU. To my surprise, the wine industry in Europe has no coordinated lobby against all this. “We’re watching the erosion of our cultural heritage in one generation,’’ bemoaned Bernard Hervet, the managing director of Burgundy negociant Faiveley. Personally, I liked Pitte’s suggestion: wine-tasting clubs for those 17 to 19 as a “vaccination against alcoholism.’’ That could recruit a few new consumers, too. ( Elin McCoy writes on wine and spirits for Bloomberg News. The opinions expressed are her own.) To contact the writer of the story: Elin McCoy at elinmccoy@gmail.com .

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Katherine Spillar: Will We Ignore Brooksley Born Again?

November 3, 2009

Eleven years ago, U.S. economic leaders should have listened to Brooksley Born. Then head of the Commodity Futures Trading Commission (CFTC), Born was concerned about new and unregulated futures markets. They were growing at tremendous rates, yet their risks were not fully understood. She was especially wary of the lack of transparency in trading over-the-counter private “derivatives,” so she issued a call for comments about the need for regulation and oversight. As Narda Zacchino and Robert Scheer point out in their piece about Born in the just-released Fall issue of Ms . magazine , instead of recognizing Born’s foresight, “they shot the messenger.” The old boys’ club of U.S. economic advisors — including former treasury secretary Robert Rubin, former Federal Reserve chair Alan Greenspan and the current director of the National Economic Council Lawrence Summers — did everything they could to stop Born from asking more questions and to block Congress from taking action. We all know where that head-in-the-sand approach got us: into a deep recession, triggered in large part by unregulated derivatives trading. But it’s do-over time: Will the U.S. Congress listen to the echoes of Born’s voice when they tackle forthcoming legislation to better regulate the over-the-counter derivatives market? So far, the news is frustrating. The bill that passed out of the House Finance and Agriculture Committees in October has loopholes big enough to drive billions of dollars through. “If people are paying attention they will see that there is still a house of cards and that these loopholes are going to codify that,” Sen. Maria Cantwell (D-Wash.) told the Boston Globe . Yes, there will be more regulations, but, as the legislation now stands, large banks and financial institutions can still escape much of the needed oversight. As Born told Ms ., “I did feel to some extent as though I was the little boy saying, ‘The emperor doesn’t have any clothes.’ I was absolutely mystified that both the industry and the other financial regulators did not even want to ask questions about an enormous financial market [about $600 trillion] that none of us had any insight into.” After the financial meltdown, much insight has been gained. And more will certainly be learned when the Financial Crisis Inquiry Commission, a 10-member group appointed by Congress which includes Born, delivers its report in December 2010. But the emperor that is the U.S. Congress is still displaying a lot of naked flesh. If it doesn’t tighten regulations further when the bill comes to the floor of the House this month, and then on to the Senate, we risk a replay of the economic crisis. “There was nothing inevitable about the current financial meltdown other than the stupidity, greed and arrogance that enabled it,” wrote Zacchino and Scheer in Ms . “The price for not heeding Brooksley Born will be paid for generations to come.” So Congress, don’t ignore the warning again. For the complete Ms. article on Brooksley Born, “They Shot the Messenger,” look for the Fall issue of Ms. on newsstands now, or have it delivered to your door by joining the Ms. community .

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Wheat Tailspin Accelerates Signaling 13% Drop to SocGen on Record Harvest

November 1, 2009

By Tony C. Dreibus, Madelene Pearson and Jeff Wilson Nov. 2 (Bloomberg) — Wheat’s steepest weekly drop since December may be just the start of a fourth-quarter slump as the biggest harvests on record turn this year into the worst for prices since 1990. Wheat will decline 13 percent to $4.30 a bushel in Chicago by the end of December, according to Emmanuel Jayet , head of agricultural-commodities research at Societe Generale in Paris. Prices had staged the biggest October rally in at least 50 years, rising 26 percent to $5.7475 on Oct. 23, after rain delayed U.S. planting. Last week’s 9.8 percent drop shows the gains were “overdone,” Jayet said. Global output rose 12 percent to a record 682.3 million metric tons in the year through May and will total 668.1 million in the current season, the second-most ever, the U.S. Department of Agriculture said Oct. 9. The surplus will likely lower costs for General Mills Inc. , the maker of Cheerios cereal, and reduce profit for flour millers including ConAgra Foods Inc. “Inventories are more negative for wheat than just about any other commodity in the world,” said John Brynjolfsson , the chief investment officer of hedge fund Armored Wolf LLC in Aliso Viejo, California. “There is a glut.” Stockpiles worldwide will jump 12 percent by the end of May to 186.7 million tons (6.9 billion bushels), or almost 19 times more than what’s harvested in Kansas, the USDA estimates. Leftovers from this season’s crop will equal 29 percent of what’s needed in the current marketing, the biggest buffer since 2003, when the grain was 31 percent cheaper. While demand is the highest ever, the supply of inventories from last year plus what is produced in the coming season will be a record 834.9 million tons, the agency estimates. Options, Planting Surge Investors are signaling further declines. On Oct. 30, there were 6,265 December put options at $4.50 a bushel, more than any other contract to sell the grain and 9 percent less than that day’s close of $4.9425 on the Chicago Board of Trade. The last decline of at least that amount during the final two months of the year was a 19 percent drop in 2002. Armored Wolf’s Brynjolfsson said prices may trade as low as $4. A decline of that much by the end of December would mark a 35 percent slide for the year, the most since 1990. Wheat, the world’s most-planted crop, was among the best- performing commodities early last year, as concerns about food shortages sparked more than 60 food riots from Bangladesh to the Ivory Coast to Haiti. The price surged to a record $13.495 a bushel in February 2008, triple the year-earlier level, prompting farmers to increase planting from Australia to Canada . Futures fell 29 percent in the second half of 2008 as the recession and strengthening dollar eroded commodity demand. They lost 25 percent in the first nine months of this year, the biggest drop among 24 futures tracked by the Standard & Poor’s GSCI Commodity Index. General Mills Wins General Mills said Sept. 23 that lower costs for wheat and fuel helped boost profit margins in the fiscal first quarter. The Minneapolis-based company, which makes Gold Medal Flour and Pillsbury baked goods, expects falling flour prices in 2010, Chief Executive Officer Kendall J. Powell told analysts on a Sept. 23 conference call. Omaha-based ConAgra, which produces flour for restaurants and food makers, said Sept. 22 that low prices may contribute to a decline in its milling profit. In the fiscal quarter ended Aug. 30, ConAgra Mills saw sales drop by more than $100 million. Prices rebounded last month after U.S. growing areas got as much as 10 inches (25 centimeters) of rain, or more than six times the normal amount. About 76 percent of the so-called winter-wheat fields were planted as of Oct. 26, compared with a five-year average of 85 percent, the USDA said. Winter varieties account for 70 percent of output in the U.S., the world’s largest exporter . Late Planting As farmers struggled to sow fields, they also fell behind in harvests, collecting corn at less than half the average pace and soybeans at 64 percent of the normal rate, USDA data show. Wheat futures jumped as much as 26 percent to a two-month high of $5.7475 on Oct. 23. Had the month ended then, the rally would have been the steepest for October since at least 1959, exchange data show. The market resumed its slide last week as the dollar rose and the global supply outlook improved. “While there were localized concerns, the crop is still generally in pretty good shape,” said Mitch Morison , general manager of commodities at Melbourne-based AWB Ltd., Australia’s former monopoly wheat exporter. “The market got a little ahead of itself.” The International Grains Council said Oct. 29 that global stockpiles will rise to 188 million tons at the end of June from 165 million tons a year earlier, up from a September forecast, as production exceeds demand for a second year. Dollar’s Drop Wheat may get a boost if the dollar resumes its slide. The currency weakened to a 14-month low against the euro on Oct. 26, sparking demand for commodities from oil to sugar to cotton. Gold reached a record $1,072 an ounce on Oct. 14, and copper has doubled this year. Hedge-fund managers and other speculators have become less bearish, trimming bets on declines in six of the past seven weeks. So-called net-short positions in Chicago futures and options, excluding those held by index funds, dropped 52 percent since Sept. 11. To some analysts, prospects are improving because this year’s decline may lead farmers to reserve land instead for corn and soybeans. More rain in the weeks ahead may force growers to abandon wheat altogether. “There are increasingly positive signs that we will see some upside for prices in 2010/11, as production around the world is adjusted downwards with growers responding to the current lower prices,” Luke Chandler , an analyst at Rabobank Group, the world’s largest lender to agricultural producers, said Oct. 22. Big Foreign Crops Whatever happens in the U.S., bigger crops in Canada, the European Union, the former Soviet Union and Argentina will help compensate, said Dan Cekander , the director of grain research at Newedge LLC in Chicago. In the European Union, stockpiles rose 48 percent in the year that ended May 31. Russian and Canadian farmers harvested bigger crops from a year earlier, USDA data show. “You are already past the major problem areas for this season in a lot of areas, so right now, it’d be difficult to have a real production scare in wheat for the next couple of months,” said Ed Jernigan , the managing director, Australia, for INTL FCStone Inc. in Sydney. Another concern for U.S. growers is increasing international competition. Shipments since the crop marketing year began June 1 have plunged 30 percent to 12.9 million tons , based on USDA data as of Oct. 15. U.S. Losing Customers U.S. grain sells for about $10 a ton more than supplies from France and Russia, Societe Generale’s Jayet estimates. Soft-red winter wheat at Gulf of Mexico ports fetched $210 a ton on Oct. 23, the highest since June, according to data from F.O. Licht. Egypt , the world’s biggest importer, bought 180,000 tons from France at $189.50 a ton on Oct. 15, two weeks after purchasing 150,000 tons from Russia for $170 a ton. “Recent major purchases by Iraq, Jordan and Egypt were for more competitively priced European and Black Sea wheat,” Jayet said. “U.S. wheat is not competitive at all.” To contact the reporters on this story: Tony C. Dreibus in Chicago at Tdreibus@bloomberg.net ; Madelene Pearson in Melbourne on mpearson1@bloomberg.net ; Jeff Wilson in Chicago at jwilson29@bloomberg.net .

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Porn-Film Maker Turned Farmer Joins Japanese Movement to End Co-Op’s Grip

October 29, 2009

By Stuart Biggs and Sachiko Sakamaki Oct. 29 (Bloomberg) — Ganari Takahashi’s first career, making pornographic movies, made him $10 million. He hopes his second, growing fruit and vegetables, will help upend a farming system that costs Japanese taxpayers $45 billion a year. He’s one of an increasing number of Japanese farmers who say they can make a profit by leaving the world’s most heavily subsidized agricultural industry and selling directly to consumers rather than through the national cooperative. “Profitable farming is the same as pornography,” Takahashi, 50, said in an interview near the 3.2 hectares (7.9 acres) of farmland near Tokyo he bought in 2006. “You have to create an image and make it cool.” He sells eggplants and peppers online and at his vegetable-themed restaurants. Farmers like Takahashi are challenging Japan Agricultural Cooperatives Group , the country’s dominant distributor of rice and vegetables, which sets the price of everything from feed to fertilizer for its members. Their initiative may help cut subsidies as Japan’s new government struggles to contain spending, as well as lower prices for consumers and make trade agreements easier, said academic Masayoshi Honma . “This is already happening,” said Honma, a professor of agriculture at the University of Tokyo . “These farmers are smart. They’re looking at the market and making their own decisions.” More than half the members of the JA, as the cooperative is called, expressed dissatisfaction with its distribution channels, an association survey published in May found. No details were given on the number of respondents. Declining Membership In the two years through 2007, farmer members of the JA declined by 100,000 to 4.9 million, the association says. The number of people entering farming rose to 10,400 last year from 8,700 in 2006, Agriculture Ministry statistics show. Many are independent farmers growing vegetables, Honma said. “It’s no surprise these farmers are succeeding with the least help,” Roger Martini, co-author of an Organization of Economic Cooperation and Development report on Japanese agriculture, said at a press conference in Tokyo on Oct. 21. “They’re focused on the consumer and they’ve developed their own supply chains and marketing.” Japanese farmers typically derive 50 percent of their revenue from subsidies, price supports and restrictions on imports, compared with 12 percent for the U.S., the OECD says. “I have no intention of taking subsidies and I don’t want people to think farming is weak,” said farmer Masaaki Saito, 30. “Farmers need to take control from production to packaging to sales.” Very Veggie Saito is a JA member who founded Very Veggie , a group of farmers with their own store to bypass the JA’s channels. A 5-kilogram (11-pound) bag of rice costs about $29 in Japanese supermarkets, against $7 for a 10-pound bag in the U.S., based on the price at Tokyo-based Isetan Co. supermarkets and the online price from Pleasanton, California-based Safeway Inc. Red Fuji apples cost $2 apiece in Japan compared with 90 cents in the U.S., according to the same sources. Japan’s agriculture system was born from food shortages after World War II as the government sought to encourage production. The OECD says Japan’s average farm size is 2.3 acres outside Hokkaido, the sparsely populated northern island, against 1,065 acres in the U.S. The JA negotiates a price with wholesalers, then adds a 2 percent profit margin and charges as much as 30 percent for distribution. As the association expanded into loans and insurance, it gained an interest in maintaining the number of farms and policies that prevent consolidation, said Aurelia George Mulgan, a Japanese politics professor at the University of New South Wales in Canberra, Australia. Blame Game The JA isn’t monolithic, said Shinichiro Kaino, general manager for policy and planning at the group’s Tokyo headquarters. “People often blame JA for preventing large-scale farming,” Kaino said in an interview. “The reality is when Japanese farmers didn’t want to handle the distribution or storage of produce, the JA stepped in and did it for them.” Kaino said while the JA’s share of distribution of farm produce is declining, independent farmers don’t yet have the volume to undermine the co-operative. The group has also set up direct sales channels and Internet shopping . “Japan’s agricultural system made sense in a country recovering from war and during the economic boom,” said Yusuke Miyaji, a pork farmer south of Tokyo. “Since the economy declined, the JA hasn’t secured high prices.” Mail-Order Pork Miyaji, a 31 year-old graduate of Tokyo’s Keio University , returned to his family farm from a job in an information- technology company. He markets hogs with promotional barbeques and sells pork to consumers by mail order. Still a member of the JA, he said income in the two years he’s been handling distribution and marketing has doubled. Ex-porn maker Takahashi said he turned to farming so he wouldn’t have to hide his profession from his children. He’s yet to make a profit as he waits for his white strawberries to catch on, in part because of high startup costs, he said. “Our aim is to make eating vegetables a delicacy,” he said. “You have to provide a sensory experience.” To contact the reporter on this story: Stuart Biggs in Tokyo at sbiggs3@bloomberg.net ; Sachiko Sakamaki in Tokyo at Ssakamaki1@bloomberg.net .

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Global Rice Market `On Thin Ice’ as Prices Set to Surge in 2010, Yap Says

October 28, 2009

By Luzi Ann Javier Oct. 28 (Bloomberg) — Rice prices may return to record levels as bad weather curbs output in major growers including India, a Philippine minister and the U.S. Rice Producers Association said. “We are not very far from another rerun of 2008 prices,” Arthur Yap , the Philippines’ Agriculture Secretary, said at a conference in Cebu, central Philippines today. Higher oil prices may push up fertilizer costs, boosting prices further, he said. Food price protests swept the globe from Bangladesh to Haiti last year after fears of supply shortages prompted producers including India and Vietnam to cut exports. Rice futures surged to a record $25.07 per 100 pounds in April 2008 as shipments slowed and the Philippines, the biggest buyer, increased purchases to secure supplies and cool inflation. “Circumstances present that possibility” of rice prices returning to record levels, Dwight Roberts , president of the U.S. Rice Producers Association, said in an interview in Cebu yesterday. “We’re on thin ice.” Spot rice prices in the U.S., the fourth-largest exporter, may surge to $16 per 100 pounds early next year from more than $12 now, as cool, wet weather reduces output there and drought and storms limit supplies from Latin America, India and the Philippines, Roberts said. U.S. output may miss a Department of Agriculture estimate by as much as 15 percent and help push spot and futures prices even higher, through last year’s records, he added. Demand High Global demand for milled rice in the marketing year through 2010 will jump to the highest level since at least 1960 and exceed output by 2.4 million metric tons, the USDA said Oct. 9. That forecast assumes a 2.7 percent decline in global output to 433.6 million tons and an 8.3 percent gain in U.S. output from a year earlier to 7.056 million tons. Rough rice for January delivery rose as much as 1.3 percent to $13.945 per 100 pounds in electronic trading on the Chicago Board of Trade. The contract traded at $13.855 at 10:36 a.m. in Singapore and has gained 9.8 percent the past six months. The risk of rice prices returning to record levels requires governments to support his call for a global food reserve to ensure supplies, Yap said. “In 2008 when prices shot up, when fertilizer prices moved up, when export bans were imposed, a free liberalized international trading order was not able to do anything for the world, especially the world’s poor and hungry,” he said. Transparency Lacking Futures and spot prices have yet to reflect the global supply and demand situation because of a lack of transparency in some of the government data that traders rely on, the U.S. Producers Association’s Roberts said. “Sooner or later when there’s a big purchase, and stocks are low, then reality hits,” he said. “And that’s not just in the United States.” The Philippines is bringing forward rice imports for 2010 after losses in the domestic crop from cyclones the past month, National Food Authority administrator Jessup Navarro said yesterday. Drought in South America has also reduced irrigation, forcing some producers to cut acreage this planting season and curbing exports, Roberts said. Declining output in India, the second-biggest producer, may also turn the South Asian nation into an importer, triggering a surge in global prices, he added. “I think India is a real wild card in the next few months, or the next few weeks,” Roberts said. Still, India has no plans to import rice because its reserves are adequate, Nanda Kumar , the country’s farm secretary, said in New Delhi yesterday. To contact the reporter on this story: Luzi Ann Javier in Cebu at ljavier@bloomberg.net

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Derivatives Bill Amended To Let Big Banks Keep Some Contracts Secret

October 21, 2009

The House Agriculture Committee approved legislation Wednesday beefing up regulation of the kind of opaque derivatives many blame for causing the financial crisis, but while proponents celebrate, critics say the bill exempts some transactions involving the very institutions — big banks — most responsible for the collapse. Over-the-counter (OTC) derivatives — essentially privately-negotiated derivatives contracts — aren’t traded on exchanges nor do they pass through clearinghouses. These contracts, which can act either as insurance (to transfer risk) or as a simple bet (like what many say brought down AIG), have been blamed for accelerating what was a credit crisis into a full-blown financial crisis and subsequent recession. They brought down the likes of AIG and the Wall Street investment houses Bear Stearns and Lehman Brothers. There’s been a big push by Democrats in Congress, reform advocates and the Obama administration to bring federal regulation to these deals. At the very least, advocates wants these contracts to go through clearinghouses or be traded on exchanges in order to make their terms public. The Agriculture Committee’s bill, shepherded by Chairman Collin Peterson (D-Minn.), does increase oversight of these previously mysterious and exotic financial instruments, experts say. Many derivatives trades would now have to go through clearinghouses or an exchange. But there are exemptions. In an effort to protect companies like airlines and manufacturers that use derivatives to hedge against things like price fluctuations and currency exchange rates, these so-called end-users would not be required to make public the terms of their contracts. Rather, they would continue to operate in the dark. But Peterson on Wednesday amended the bill to extend the exemption to big banks and financial institutions, as long as their contracts were with these end-users. Friday’s bill said contracts are exempt from the new requirements if, among other things, none of the counterparties is a “Tier 1 financial holding company” — essentially a big bank. Peterson’s amendment this week eliminated that line. So as long as a firm like Goldman Sachs enters into a contract with a company that’s hedging against some kind of commercial risk (like rising oil prices), the terms of that contract don’t have to be publicly disclosed. Peterson’s amendment “fatally weakens the bill,” said Barbara Roper, director of investor protection at the Consumer Federation of America. “[Peterson's] amendment now provides a broad exemption for contracts where one party to the contract is using the derivative to ‘manage risk.’ Mandatory central clearing is the basic reform that is essential to eliminate the potential for the failure of a single institution – such as Lehman Brothers or AIG – to bring down the entire financial system,” Roper said in a statement. During Wednesday’s debate of the bill, Bloomberg News reported that Peterson said that the “target for greater regulation and oversight is not the end-user but their swap dealer or major swap participant counterparty. End-users did not get a bailout of billions of dollars. End-users are not responsible for what happened in markets last year.” Peterson’s spokespersons did not immediately return repeated calls for comment. In a Wednesday speech , the chairman of the Commodity Futures Trading Commission (CFTC) — the federal agency that regulates derivatives — said that banks should not benefit from the exemption. “If Congress decides to exempt end-users from a clearing requirement, that exception should be very narrowly defined to include only nonfinancial entities that use swaps as an incidental part of their business to hedge actual commercial risks,” CFTC Chairman Gary Gensler said. “I do not believe that hedge funds, financial firms or other investment funds should be exempted from a clearing requirement.” The Obama administration said much the same thing in its proposed bill that it sent up to Capitol Hill. Before Wednesday’s debate, Peterson himself criticized efforts by big banks to evade further regulation of their derivatives activity. “If it were up to me, a bill to regulate these markets would have been signed into law a long time ago,” Peterson said in opening remarks . “However, large banks have a long history of using their financial and political advantage to try to gum up and slow down reform efforts by sowing discord between members and Committees.” That seems to be exactly what happened with Peterson’s amendment. “With Wall Street pulling out the stops to gut the bill, Congress appears all too willing to renege on the promise it made when it called on American taxpayers to bail out the big banks: that in return it would adopt the comprehensive reform that was needed to prevent a recurrence,” Roper said. “After all we have been through, mandatory central clearing of standardized derivatives should be a given. In the immediate wake of the market’s collapse, it looked as though the only debate would be over whether we would also get mandatory exchange trading of standardized contracts (a must for meaningful price competition) and how big the exemption for customized contracts would be,” she continued. The Treasury Department declined to comment. “Now, we are back to square one, the big banks are back in the driver’s seat, and the prospects for meaningful reform grow dimmer every day,” Roper said.

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Monsanto Forecasts African Farmers Will Increase Planting of Biotech Crops

October 9, 2009

By Aya Takada Oct. 9 (Bloomberg) — Monsanto Co. , the world’s biggest seed producer, expects African countries to increase planting of genetically-modified crops to boost food security and economic development as the region is affected by climate change. Burkina Faso plans to double the area planted with the company’s insect-resistant cotton next year from 129,000 hectares (318,766 acres) this year, Natalie DiNicola, director at Monsanto’s public policy and sustainable yield division, said in an interview yesterday. Corn modified to tolerate drought may be introduced to the sub-Saharan region by 2017, she said. Farming in developing countries needs $83 billion of annual investment for production to feed the world in 2050, the United Nations’ Food and Agriculture Organization said in a paper this week. Monsanto is introducing new modified seeds to boost yields as part of a plan to double gross profit from 2007 to 2012. Africa is affected by climate change as more than 95 percent of sub-Sahara cropland is rain-fed, DiNicola said in Tokyo. “Genetic modification technology will be increasingly accepted by developing countries as they face the problem of how to feed rapidly growing populations,” said Takaki Shigemoto , a commodity analyst at research and investment company TOS in Tokyo. “Crops modified to produce better yields under limited water supply will be attractive to them.” Developing countries may experience a drop of between 9 and 21 percent in overall potential agricultural productivity as a result of global warming, the FAO said in a Sept. 30 report . Poorest regions with the highest levels of chronic hunger are likely to be among the worst affected by climate change, according to the report. Crop Planting Africa is the only continent where per-capita food output is falling, as a lack of investment and technology curbs yields, DiNicola said. St. Louis-based Monsanto is the largest producer of GMO crop varieties. Area planted with GMO crops, including corn, soybeans and cotton, topped 1.8 million hectares in Africa last year as Egypt and Burkina Faso began production of modified corn and cotton respectively, according to the International Service for the Acquisition of Agri-Biotech Applications . In the western African country, less than 50,000 hectares were planted with modified cotton in 2008, the industry group estimates . Area planted with GMO cotton rose by more than 158 percent this year, covering about 25 percent of Burkina Faso’s cotton acreage, as the biotechnology is forecast to boost yield by 35 to 45 percent, DiNicola said. Cotton Farmers “Cotton is a very important income-generating crop for smallholder farmers,” DiNicola said. Increased yield makes “a very big impact on their livelihood,” she added. Monsanto’s earnings will fall in fiscal 2010, the company has forecast, ending eight consecutive years of gains as U.S. farmers spend less and Chinese competitors sell cheaper generic versions of its Roundup herbicide. The shares have rallied 6.6 percent this year, closing at $74.97 in New York yesterday. Monsanto is conducting field tests on corn modified to increase yield under drought conditions for commercialization in 2012 in the U.S., the world’s largest exporter of the gain. The new varieties will help achieve a goal of doubling the crop yield to 300 bushels per acre by 2030, DiNicola said. The company is cooperating with government and non-profit organizations to develop drought-tolerant corn suitable for Africa and may release varieties in the region five years after the U.S. introduction, she said. Corn yield in sub-Saharan Africa is about one metric ton per hectare, compared with eight tons in the U.S. and the global average of five tons, according to Monsanto. Drought-tolerant crops could boost African yields by 20 to 35 percent in 10 years, DiNicola said. “Water is definitely a very serious challenge for agriculture today, and that’s likely to get even more challenging going forward,” DiNicola said. About 218 million people in Africa, or around 30 percent of the total population, are estimated to be suffering from chronic hunger and malnutrition, according to the FAO report last week. To contact the reporter on this story: Aya Takada in Tokyo atakada2@bloomberg.net

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Agriculture Lobbyists Not Happy With Climate Change Legislation

October 5, 2009

The Hill reports that the agriculture lobby is troubled by aspects of the Senate climate change bill. The American Farm Bureau and the National Corn Growers Association reportedly are concerned that farmers will not qualify for carbon offset benefits laid out in the legislation — projects to remove carbon dioxide from the atmosphere. Carbon offsets could hugely benefit farmers who use farming methods to curb carbon emissions. According to the American Farm Bureau’s Web site: “America’s farmers and ranchers did not fare that well in the House-passed climate change bill and they fare even worse in the Senate bill,” said American Farm Bureau Federation President Bob Stallman. “There are few benefits and even greater costs to agriculture and the American public.” Farming groups are also concerned that the Environmental Protection Agency will be overseeing the carbon offset program — many in the industry, including the National Corn Growers Association, would prefer it if the Department of Agriculture was in charge. Senators Barbara Boxer and John Kerry introduced a draft of the climate change bill last month after the House narrowly passed its version of the bill in June. The Senate’s bill aims to reduce carbon dioxide emissions by 20 percent in 2020 — the House’s version would cut emissions by 17 percent in 2020, according to the Washington Examiner.

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Typhoon Parma Kills 15 People, Destroys Crops, Cuts Power in Philippines

October 4, 2009

By Francisco Alcuaz Jr. and Ian C. Sayson Oct. 4 (Bloomberg) — Typhoon Parma killed at least 15 people as it crossed the northern Philippines yesterday, destroying rice crops, felling power lines and blowing off roofs. It’s forecast to head toward Taiwan, which has issued a land warning. “It wrought a lot of damage where it passed,” Chief Superintendent Roberto Damian, regional police chief, said in a telephone interview. “Our camp was really destroyed. Many trees fell, rice-lands flooded, roofs flew off.” Reported damage “will rise; we haven’t seen all of it.” One person died in Isabela province and 12 were killed in two landslides in Benguet province, police said today. Parma earlier yesterday left two dead in Camarines Sur province. About 170,000 persons evacuated their homes to avoid injury, according to the National Disaster Coordinating Council . Parma entered Cagayan province from the Pacific Ocean yesterday. It had veered further than forecast northward from Manila and nearby provinces, some parts of which remained flooded after Tropical Storm Ketsana dropped the most rain in more than 40 years in the area Sept. 26 and 27. Parma’s speed was about 148 kilometers per hour when it hit land in Cagayan. Land Warning The Taiwan Central Weather Bureau issued a land warning for the Hengchun Peninsula in southern Taiwan, as Parma approached. It was 340 kilometers from Oluanpi, Hengchun’s southernmost tip, at 8 a.m. local time. National Grid Corp. of the Philippines said it has repaired one of the two high-voltage lines that were downed by the winds. Large parts of Cagayan, Isabela, Kalinga-Apayao, Ilocos Norte, Ilocos Sur and Abra provinces remained without power because distribution lines hadn’t been repaired, NGCP said in a statement. Parma destroyed crops and infrastructure in Cagayan without causing any further deaths, Governor Antonio Alvaro said in an interview on GMA Network radio. “The damage hasn’t been as extensive as we feared,” Ed Pascua, a civil defense officer in Santa Ana, Cagayan, said in a telephone interview. “The strong winds didn’t last long.” Most roads in Tuguegarao, Cagayan’s capital, are passable after the military and government agencies started clearing them of fallen trees and electric poles last night after the typhoon passed, Mayor Randolph Ting said in a telephone interview. Floods may have receded by tomorrow, he said. Two Landslides Further south in Aurora province, the typhoon destroyed rice fields without causing any deaths, Governor Bellaflor Angara-Castillo said on GMA radio. Inland, there were two landslides in La Trinidad, Benguet province, Senior Superintendent Alfred Espineli said in a phone interview. Three of four affected families have been rescued, he said. Philippine Agriculture Secretary Arthur Yap said he was “confident” of the country’s rice supply for the rest of the year in spite of damage brought on by the storm. He said he doesn’t yet have data on the damage wrought by Typhoon Parma. To contact the reporters on this story: Francisco Alcuaz Jr . in Manila at falcuaz@bloomberg.net ; Ian Sayson in Manila at isayson@bloomberg.net

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Asian Economies May Escape From `Almost Unprecedented’ Natural Disasters

October 2, 2009

By Michael Dwyer Oct. 3 (Bloomberg) — Asia-Pacific countries may escape major economic damage from an “almost unprecedented” series of natural disasters that struck the region in the past week. “There will be minimal economic impact because the regions affected are not major sources of growth,” said Song Seng-Wun , an economist at CIMB-GK Securities Pte in Singapore. “For now, this is a human rather than economic story. In fact, there could be a mild boost from reconstruction works.” Typhoons in the Philippines, Vietnam and Cambodia, an earthquake in Indonesia and a tsunami in the South Pacific highlighted the region’s position as the world’s “disaster hot spot,” according to the United Nations . Asia is leading the global economy from its deepest recession since the 1930s after policy makers slashed interest rates and governments announced more than $950 billion of stimulus measures. “I don’t think these idiosyncratic shocks will throw the Asian recovery story off course,” said Wai Ho Leong , Barclays Capital’s senior regional economist in Singapore. “We have seen the experience of Sichuan and more recently in Taiwan. Over an extended time period, there was no discernible impact on gross domestic product on a net basis.” At least 1,100 people were killed by a 7.6-magnitude earthquake that struck off Indonesia’s Sumatra island on Sept. 30, according to the UN. The toll will probably rise as rescuers reach damaged areas, John Holmes , the agency’s humanitarian chief, said Oct. 1. ‘Disaster Hot Spot’ Tropical Storm Ketsana devastated Manila and other parts of the Philippine island of Luzon on Sept. 26, leaving 293 people dead and as many as 676,235 in evacuation centers. In the South Pacific, a recovery operation is under way after a tsunami killed more than 150 in the Samoan islands. “It is almost unprecedented for any region to experience so many disasters over such a short period of time,” UN Under- Secretary-General Noeleen Heyzer said in a statement. “The disasters of the past week remind us that Asia-Pacific is the world’s disaster hot spot.” China’s southwest Sichuan province is spending more than 3 trillion yuan ($440 billion) to rebuild houses, highways and railways destroyed by a 7.9-magnitude earthquake that struck in May 2008, according to Vice Provincial Governor Wei Hong. The World Bank estimated direct economic losses from the temblor that killed at least 87,000 people at 844 billion yuan. Reconstruction spending after Taiwan’s deadliest typhoon in 50 years in early August may improve the island’s economic performance, the statistics bureau said Aug. 20. Planned outlays on typhoon-hit areas would result in the economy contracting 3.75 percent this year instead of 4.04 percent, the agency said. Reconstruction Projects “Rebuilding has an accelerating effect on GDP,” said Barclays’ Leong. “Typically, it more than makes up for such shocks. The overall impact on the economy might even be positive, if we factor in rebuilding programs.” Indonesia has 100 billion rupiah ($10.4 million) ready to be spent on relief efforts after this week’s quake on Sumatra and has set aside an additional 150 billion rupiah as backup funds, Finance Minister Sri Mulyani Indrawati said Oct. 1. “The quake has implications for the economy due to the damage on infrastructure. West Sumatra is a region with an important economic role,” Sri Mulyani said. “The government is serious in dealing with this infrastructure problem.” Indonesia’s economy may not suffer too much from the temblor as the three western provinces affected — West Sumatra, Bengkulu and Jambi — contribute less than 3 percent of the country’s GDP, said Helmi Arman , an economist at PT Bank Danamon Indonesia in Jakarta. Philippine Evacuations “From a national perspective, the disaster in Sumatra will not significantly impact Indonesia’s economy,” Arman said. The Philippines yesterday started evacuations as a second typhoon headed for Luzon. The government has declared a “state of calamity” for the Manila metropolitan region and other parts of Luzon island as well as Mindoro island to the south. “It is too early to assess the impact on the Philippines economy,” said Dennis Botman , the International Monetary Fund’s country representative in the Philippines. “But early indications suggest that the economic costs pale in comparison to the human suffering caused by this calamity.” The damage caused by Tropical Storm Ketsana may reduce Philippine economic growth by at least 0.043 percentage points, Economic Planning Secretary Augusto Santos said Sept. 29. Growth may slow to a range of 0.7 percent to 1.7 percent compared with a target of 0.8 percent to 1.8 percent, he said. ‘Miniscule’ Effect The “surprisingly miniscule” impact from the storm was “because the calamity spared much of the country’s agricultural and manufacturing heartlands,” said Anton Periquet , an analyst at Deutsche Bank AG in Manila. “Banks, brokers, call centers, shops and even the entertainment industry — a large part of the metro Manila economy that was hit by the typhoon — can function as long as the telephones work.” The heaviest rains in Manila and surrounding provinces in more than four decades may still reduce the nation’s rice production in the October-December harvest by about 3 percent, the Department of Agriculture said Oct. 1. “The Philippines is no stranger to natural disaster,” said Deutsche’s Periquet. “The country has always bounced back.” To contact the reporter on this story: Michael Dwyer in Singapore at mdwyer5@bloomberg.net

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Egyptian Swine-Flu Slaughter Leaves Cairo Without Pigs to Devour Garbage

September 29, 2009

By Daniel Williams Sept. 29 (Bloomberg) — Egypt’s pigs are getting their revenge. Five months after anxiety about swine flu prompted Egyptian President Hosni Mubarak’s government to order the slaughter of all the country’s 300,000 hogs, the organic waste they once devoured is piling up on Cairo’s streets, contributing to a garbage crisis. The government’s action destroyed the livelihood of about 70,000 families known as zabaleen, who were freelance trash collectors and urban pig farmers. It forced all pork processors and retail outlets to close and created a potential health hazard as neighborhoods reek of decaying garbage. Some residents, concerned that yesterday’s discarded kebab might become tomorrow’s cholera outbreak, are burning refuse in bonfires. “No one took into consideration the economics, much less the environmental problems” the pig cull would create, said Magdi Fouad, 47, whose pork-processing and sales business, founded by his grandfather in 1945, was wiped out overnight. To locate the impact on Mohandessin, an upscale area on the Nile River’s west bank , follow the flies. Gobs of moldering meat and vegetables lie wedged between parked cars, clustered against lamp posts and clumped under bushes. Dumpsters are rare; people customarily placed refuse in bags outside their front doors for pickup. Building superintendents try to keep them from tossing it into the street. “You could always count on the zabaleen,” said Fayez Aissa, 51, who oversees an apartment block. “They came every day, took everything. Now rats and snakes are hiding in our garbage.” Harvesting Rubbish Zabaleen — trash collectors in Arabic — are rural migrants who have harvested Cairo’s rubbish since the end of the 19th century. Families in the central district of Embaba and in Manshiet Nasr, an outlying neighborhood, were dedicated to picking up trash and sorting organic matter from metal, glass and paper. They disposed of as much as 80 percent of organic waste, feeding it to the hogs, which often lived in sties next to zabaleens’ homes along undrained dirt lanes. Families made money from recycling and from selling pigs to meat processors. The Agricultural Ministry ordered the pigs eliminated in April, after the outbreak of H1N1 virus in Mexico and the U.S. Police clubbed the pigs to death and bulldozed them alive under desert sand. The United Nations Food and Agriculture Organization called the action a mistake, partly because no link was proven between pigs and transmission of flu. Islamic Rules Parliament had clamored for the cull. Zabaleen are Coptic Christian, 10 percent of Egypt’s overwhelmingly Muslim population. Pigs and pork are taboo under Islamic rules, and Copts complained the ministry’s order was based on religious bias. Some zabaleen rioted in protest. No Egyptian came down with flu before the slaughter began. Since then, 891 cases have been reported, including two deaths, according to the World Health Organization . In 2003, city districts hired foreign firms with trucks and compactors to collect garbage as part of Egypt’s privatization drive. The enormity of the job still left plenty for the zabaleen, who would climb stairs in apartment buildings without elevators, haul down trash bags and navigate alleys too narrow for trucks. Tons of Trash Cairo produces 14,000 tons of rubbish a day; the zabaleen handled half, said Laila Iskandar, 62, an expert in grassroots development and chairperson of CID Consulting , a Cairo-based marketing, management and communications firm. Now that the pigs are gone, many families have stopped picking up the trash. Some are also abandoning the recycling business, because without hogs, the tedious work of sorting through paper, cans and bottles isn’t worthwhile, said Samir Saber, 48, a zabaleen who raised pigs and a member of the Garbage Collectors and Transporters Association in Embaba. “Now there’s nothing,” said Saber, who spends his time in cafes. He said the government paid him between $10 and $50 for each pig he lost, depending on its size; meat processors would give him as much as $200. Compounding the rubbish problems, International Environmental Services, contracted six years ago by Cairo’s Giza district to collect garbage, suspended operations last month in a financial dispute, said Ahmed Nabil, the company’s general manager. That left no one to haul away any waste in large parts of the capital, which has 17 million people. ‘Cash-Flow Problems’ IES, with offices in Cairo’s Dokki district, resumed work the week of Sept. 14, even with the “cash-flow problems,” Nabil said. Giza officials didn’t respond to requests for comment. Agriculture Minister Amin Abaza defended the cull, saying the H1N1 virus might combine with the H5N1 bird-flu virus to produce a new strain. “We had been planning to get rid of the pigs for three years,” he said in an interview. “The swine-flu fears gave us the opportunity.” Eliminating the pigs may create other hazards, said Abd-el Rahman Shaheen , spokesman for the Health Ministry. “If the garbage problems continue, the organic waste can be a source of infectious diseases,” he said. The zabaleen are scrambling to pool their resources, said Gamil Aweida, an Evangelical preacher who works with the families. Some want to open a grocery store or buy a taxi — “anything they think will make money,” he said. To contact the reporter on this story: Daniel Williams in Cairo at dwilliams41@bloomberg.net

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Egyptian Swine-Flu Slaughter Leaves Cairo Without Pigs to Devour Garbage

September 29, 2009

By Daniel Williams Sept. 29 (Bloomberg) — Egypt’s pigs are getting their revenge. Five months after anxiety about swine flu prompted Egyptian President Hosni Mubarak’s government to order the slaughter of all the country’s 300,000 hogs, the organic waste they once devoured is piling up on Cairo’s streets, contributing to a garbage crisis. The government’s action destroyed the livelihood of about 70,000 families known as zabaleen, who were freelance trash collectors and urban pig farmers. It forced all pork processors and retail outlets to close and created a potential health hazard as neighborhoods reek of decaying garbage. Some residents, concerned that yesterday’s discarded kebab might become tomorrow’s cholera outbreak, are burning refuse in bonfires. “No one took into consideration the economics, much less the environmental problems” the pig cull would create, said Magdi Fouad, 47, whose pork-processing and sales business, founded by his grandfather in 1945, was wiped out overnight. To locate the impact on Mohandessin, an upscale area on the Nile River’s west bank , follow the flies. Gobs of moldering meat and vegetables lie wedged between parked cars, clustered against lamp posts and clumped under bushes. Dumpsters are rare; people customarily placed refuse in bags outside their front doors for pickup. Building superintendents try to keep them from tossing it into the street. “You could always count on the zabaleen,” said Fayez Aissa, 51, who oversees an apartment block. “They came every day, took everything. Now rats and snakes are hiding in our garbage.” Harvesting Rubbish Zabaleen — trash collectors in Arabic — are rural migrants who have harvested Cairo’s rubbish since the end of the 19th century. Families in the central district of Embaba and in Manshiet Nasr, an outlying neighborhood, were dedicated to picking up trash and sorting organic matter from metal, glass and paper. They disposed of as much as 80 percent of organic waste, feeding it to the hogs, which often lived in sties next to zabaleens’ homes along undrained dirt lanes. Families made money from recycling and from selling pigs to meat processors. The Agricultural Ministry ordered the pigs eliminated in April, after the outbreak of H1N1 virus in Mexico and the U.S. Police clubbed the pigs to death and bulldozed them alive under desert sand. The United Nations Food and Agriculture Organization called the action a mistake, partly because no link was proven between pigs and transmission of flu. Islamic Rules Parliament had clamored for the cull. Zabaleen are Coptic Christian, 10 percent of Egypt’s overwhelmingly Muslim population. Pigs and pork are taboo under Islamic rules, and Copts complained the ministry’s order was based on religious bias. Some zabaleen rioted in protest. No Egyptian came down with flu before the slaughter began. Since then, 891 cases have been reported, including two deaths, according to the World Health Organization . In 2003, city districts hired foreign firms with trucks and compactors to collect garbage as part of Egypt’s privatization drive. The enormity of the job still left plenty for the zabaleen, who would climb stairs in apartment buildings without elevators, haul down trash bags and navigate alleys too narrow for trucks. Tons of Trash Cairo produces 14,000 tons of rubbish a day; the zabaleen handled half, said Laila Iskandar, 62, an expert in grassroots development and chairperson of CID Consulting , a Cairo-based marketing, management and communications firm. Now that the pigs are gone, many families have stopped picking up the trash. Some are also abandoning the recycling business, because without hogs, the tedious work of sorting through paper, cans and bottles isn’t worthwhile, said Samir Saber, 48, a zabaleen who raised pigs and a member of the Garbage Collectors and Transporters Association in Embaba. “Now there’s nothing,” said Saber, who spends his time in cafes. He said the government paid him between $10 and $50 for each pig he lost, depending on its size; meat processors would give him as much as $200. Compounding the rubbish problems, International Environmental Services, contracted six years ago by Cairo’s Giza district to collect garbage, suspended operations last month in a financial dispute, said Ahmed Nabil, the company’s general manager. That left no one to haul away any waste in large parts of the capital, which has 17 million people. ‘Cash-Flow Problems’ IES, with offices in Cairo’s Dokki district, resumed work the week of Sept. 14, even with the “cash-flow problems,” Nabil said. Giza officials didn’t respond to requests for comment. Agriculture Minister Amin Abaza defended the cull, saying the H1N1 virus might combine with the H5N1 bird-flu virus to produce a new strain. “We had been planning to get rid of the pigs for three years,” he said in an interview. “The swine-flu fears gave us the opportunity.” Eliminating the pigs may create other hazards, said Abd-el Rahman Shaheen , spokesman for the Health Ministry. “If the garbage problems continue, the organic waste can be a source of infectious diseases,” he said. The zabaleen are scrambling to pool their resources, said Gamil Aweida, an Evangelical preacher who works with the families. Some want to open a grocery store or buy a taxi — “anything they think will make money,” he said. To contact the reporter on this story: Daniel Williams in Cairo at dwilliams41@bloomberg.net

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Sugar Futures Ban in India to Remain Beyond December as Shortage Persists

September 26, 2009

By Thomas Abraham Sept. 26 (Bloomberg) — India, the world’s biggest user of sugar, will extend the seven-month ban on futures trading in the commodity beyond December to keep prices from rising because of a shortfall in supplies, the Forward Markets Commission said. The regulator will assess prospects for the 2010-11 sugar cane crops globally before making a decision to lift the curb, B.C. Khatua, chairman of the FMC, told reporters at an edible oils conference in Mumbai today. Sugar has almost doubled this year, reaching a 28-year high on Sept. 1 in New York, as a drought in India and excess rain in Brazil, the top producers, ravaged crops. The South Asian nation will remain the largest buyer with a shortfall of 8 million tons in 2009-10 season, Czarnikow Group Ltd. said this month. “It looks difficult to restore the futures in December,” said Khatua. “We would rather be overcautious.” India, expected to import 6 million metric tons this year, may have to rely on imports to meet almost a third of its total demand of 23 million tons in the year starting Oct. 1, Narendra Murkumbi , Managing Director of Shree Renuka Sugars Ltd., the country’s biggest refiner, said Sept. 1. The weakest monsoon rainfall since 2002 has caused drought in half the South Asian nation, damaging crops of cane, rice and oilseeds. Sugar production may total 16 million tons in the year starting Oct. 1, the government and producers have said. Output this year is expected to slump 44 percent to 15 million tons. Duty-Free Window To alleviate the shortage, the country will permit duty- free imports of refined sugar until May or June, extending an earlier exemption, Agriculture Minister Sharad Pawar said this week. Last month, the duty-free window was widened to Nov. 30 for refined sugar and until March 31 for raw stock. “The reasons that led to the ban on futures trading still exists,” said Khatua. “It is clear we will continue to have a shortage” of sugar, he said. Raw-sugar futures for March delivery rose 0.25 cent, or 1.1 percent, to 23.17 cents a pound on ICE Futures U.S. in New York yesterday. Prices have jumped 96 percent this year, reaching a 28-year high of 24.85 cents on Sept. 1. Demand from other nations, including Russia, Pakistan, Egypt, Indonesia and Japan, will help support prices before Brazil’s next harvest. The global deficit in the year starting Oct. 1 may be 8.3 million tons, compared with a June estimate of 5.1 million tons, Switzerland-based sugar broker Kingsman SA said yesterday. To contact the reporter on this story: Thomas Abraham in Mumbai at tabraham4@bloomberg.net

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Video: Corn’s Big Year And Big Challenges

September 25, 2009

United States Department of Agriculture recently forecasts this year’s output with total close to 13 billion bushels which makes corn as the second-biggest ever crop on an annual basis. (Taking Stock)

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Monsoon Revival Signals Worst Over for India Crops, Weather Official Says

September 7, 2009

By Thomas Kutty Abraham Sept. 7 (Bloomberg) — A revival in India’s monsoon rains is helping ease dry weather that’s caused drought in more than a third of the country, aiding crops in the world’s second-biggest producer of rice, wheat and sugar, a weather official said. Rainfall this year may be 15-to-20 percent less than the 50-year average, making it the weakest monsoon since 2002, Ajit Tyagi , director-general of India Meteorological Department , said in a phone interview today. The deficit narrowed to 21 percent last week from as high as 52 percent in June. The worst start to the June-September monsoon season in at least eight decades caused drought in 278 of the country’s 626 districts, damaging crops of sugar cane, rice and oilseeds. Raw sugar reached a 28-year high last week on speculation India, the biggest consumer, will boost imports to bolster supplies. “The worst is over,” Tyagi said from New Delhi. “Most parts of the country got good rains in the past 10 days,” improving prospects for winter crops of wheat and lentils. India’s benchmark stock index advanced to the highest level in 15 months on optimism a revival in rains may lift incomes of the 742 million people living in the villages, increasing demand for consumer goods. October-delivery soybean futures dropped as much as 2.9 percent to 1,948 rupees for 100 kilograms, an eight- month low. Corn for delivery in September fell as much as 0.7 percent to 954 for 100 kilograms. Sugar prices at Vashi, the nation’s biggest wholesale market for the commodity, lost 2 percent to 3,188.35 rupees per 100 kilograms. The monsoon will remain “active” for the next week to 10 days, helping replenish water levels in reservoirs . Farmers use this water to grow wheat and oilseeds sown between October and December. The country’s 81 main reservoirs were 45 percent full on Sept. 3, up from 42 percent a week earlier. Winter Crops “With the water reservoir levels looking up, the impact on winter crops may be limited,” said Sonal Varma , an economist at Nomura Securities Co. in Mumbai. “Standing crops may not be affected as much as one expected a month back” Planting of wheat and other winter-crops will begin early this year to make up for the 10 million tons loss of rice, Farm Minister Sharad Pawar said last month. Wheat may be seeded to a record 28 million hectares this winter, Agriculture Commissioner N.B. Singh told reporters Sept. 4. The grain, used in local flat breads, makes up a third of the total grain output. El Nino won’t impact the monsoon because the weather event hasn’t “accentuated and remains mild,” the weather bureau’s Tyagi said. The withdrawal of the rains, which typically starts in the second week of September, may be delayed this year, prolonging the rainy season, he said. El Nino El Nino occurs about every four to seven years and causes dry weather conditions in many Asian nations. India got below normal rains in 15 of the 36 El Nino years it had in the 1875- 2008 period, the weather office said June 24. “It’s good news that worries of El Nino impacting rains is receding,” Nomura’s Varma said. Rain deficit in northwest India, the country’s grain-bowl and biggest sugar cane producer, may narrow to 25-35 percent by the end of this month from as high as 50 percent in July, the weather bureau’s Tyagi said. Central and southern states may end the monsoon season with near normal falls, he said. The central region includes Madhya Pradesh, the biggest producer of soybeans, while the southern region includes Karnataka, Kerala and Maharashtra states, top growers of sugar cane, peanuts, cotton and coffee. The deficit in the northeastern states, the biggest tea grower, may narrow to 15-20 percent by the end of this month, from as high as 55 percent in June, Tyagi said. To contact the reporter on this story: Thomas Kutty Abraham in Mumbai at tabraham4@bloomberg.net .

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Somali’s Invest Shs1.4 Billion in Agriculture

August 25, 2009

Somali’s Invest Shs1.4 Billion in Agriculture

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Drought Hastens Argentina’s First Imports of Beef as Cattle Ranchers Quit

August 18, 2009

By Matthew Craze Aug. 18 (Bloomberg) — Argentina, the biggest beef- consuming nation, may resort to imports for the first time within two years as a drought kills cattle and export controls prompt ranchers to quit the business. Pastures have dried up and forage prices gained so much that farmers are allowing livestock to die in the fields, said Arturo Llavallol, a director of Buenos Aires-based farm group The Rural Society . Ranchers are killing higher than usual numbers of breeding stock, compromising future output, he said. The nation’s herd has dwindled 7 percent since 2006, when the government restricted beef exports to boost supplies in the local market, Llavallol said in a telephone interview from his farm in Saavedra, southwest Buenos Aires province. The country may need imports within a couple of years, he said. “If we want to keep exporting, we have to lower consumption,” said Llavallol, also the vice president of the Paris-based International Meat Secretariat , an association that represents ranchers worldwide. “If you don’t have enough raw materials, you shut down the factory or you import.” Argentines will consume about 70 kilograms (154 pounds) of beef per person this year, according to Miguel Schiariti, an analyst who compiles a monthly report for the Argentine Beef Industry and Commerce Chamber . Consumption has risen from less than 60 kilograms a person in 2006 when the export restrictions began, according to Ciccra, as the chamber is known. Prices in the Latin American nation are the cheapest in the world at about $1.65 a kilogram, compared with $2.82 in neighboring Brazil and $2.86 in the U.S., Miguel Gorelik , a spokesman for Argentine meatpacker Quickfood SA, said in a telephone interview from Buenos Aires. Exports Argentina, which was the world’s largest beef exporter in the 1970s, slipped to seventh place last year, according to the U.S. Department of Agriculture . Brazil, now the world’s largest exporter, will ship four times as much beef as Argentina this year, according to the USDA. Lifting the export restrictions set in place by former Argentine President Nestor Kirchner would allow ranchers to get better prices and stop them from selling breeding cattle for slaughter, according to Llavallol. A drop in Argentine beef production and exports could hurt earnings at companies such as Brazil’s JBS SA , the world’s biggest meatpacker, and Marfrig Alimentos SA , which both own slaughterhouses in Argentina. JBS, which became Argentina’s largest beef producer after its 2007 acquisition of U.S. meatpacker Swift & Co., has ceased investment in the Latin American nation because government controls are hurting economic growth, Marcus Vinicius Pratini de Moraes , a member of the company’s board and a former agriculture minister of Brazil, said from Sao Paulo. ‘Problems’ “We stopped growing in Argentina because of those problems,” Pratini de Moraes said in an Aug. 14 interview. “The world is currently divided into three types of countries: the developed ones, the emerging nations and Argentina.” A call to Argentina’s Agricultural Secretariat in Buenos Aires by Bloomberg News wasn’t immediately returned. Calls to President Cristina Kirchner ’s press office, including a listed cell phone number, also weren’t immediately returned. Alfredo Scoccimarro , a spokesman at the Presidential Palace, didn’t respond to a call to his mobile telephone. Parts of central and western Buenos Aires province are suffering a “severe drought,” the Buenos Aires Cereals Exchange said in an Aug. 12 crop report. The exchange said its report this week may show rains failed to alleviate the drought in the area, prompting ranchers to sell off their herds. Affect the Herd “Undoubtedly, it’s going to affect the herd,” said Quickfood’s Gorelik. “There have been deaths, but it’s difficult to quantify.” The Argentine diet consisting of large amounts of beef dates back three centuries ago, when cowboys, known as gauchos, in the Spanish colony would feed from wild cattle on the grassy Pampas and sell the hides. Ranchers are hoping downpours will arrive later this year as the El Nino weather pattern forms, which warms ocean temperatures and creates excess precipitation on the Pampas. So far, the effects of El Nino have only alleviated the drought nearer the eastern coastal areas of the Pampas agricultural zone, according to the Buenos Aires Cereals Exchange. Opposition parties are seeking to eliminate government restrictions on beef and other farm exports in December, when they assume seats won during mid-term elections. Still, ranchers who have given up on raising cattle to grow crops instead “aren’t going to come back,” said Luciano Miguens , a farm advisor to Union Pro, a coalition of opposition parties, in an interview from Buenos Aires. “We need to stimulate the ranching and dairy industries, which are going through critical moments.” Markets Last week, the yield on Argentina’s benchmark 8.28 percent dollar bonds due in 2033 rose 43 basis points to 15.89 percent, according to JPMorgan Chase & Co. The peso rose 0.47 percent to 3.845 per U.S. dollar from 3.833 on Aug. 10. The Merval stock index declined 2.1 percent to 1,761.61. Banco Macro SA declined 8 percent, while Empresa Distribuidora y Comercializadora Norte SA fell 7.5 percent. The following is a list of events in Argentina this week: *T Event Date Budget Balance Aug. 18-21 Trade Balance Aug. 20 To contact the reporter on this story: Matthew Craze in Santiago at mcraze@bloomberg.net .

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Deadly Typhoon May Force Action to Fix Taiwan’s Fragile Infrastructure

August 15, 2009

By Weiyi Lim Aug. 16 (Bloomberg) — Jiang Siu-an, 48, a farmer in Taiwan ’s Taoyuan township, thought she had built a secure future, with two grown children, land and a house. Last week, Typhoon Morakot reduced her to the status of a refugee. “The mountain collapsed on us — our house and land are washed away,” said Jiang at a temple-turned-shelter in Chishan after being rescued from her village. “There aren’t even roads left to deliver our mangos and yams, if we had any.” Morakot, more than 1,600 kilometers (994 miles) wide, dumped 3 meters (118 inches) of rain on Taiwan Aug. 6 to Aug. 9. At least 123 people died in the worst flooding in 50 years, state agencies said. The scale of the disaster may force the government to act on warnings about poor infrastructure, economists including Cheng Cheng-mount said. “The government will heed a strong lesson from this typhoon,” said Cheng, at Citigroup Inc. in Taipei. “There are too many deaths this time round that they cannot avoid the issue. Previously it was just property damage. They will pull up their socks this time round.” Taiwan’s Council of Agriculture said it plans to spend NT$18.8 billion ($571 million), including NT$5 billion in cash handouts, after Morakot caused more than NT$10 billion in losses, it said on Aug. 13. The government said it will spend an additional NT$20 billion to rebuild roads and bridges and give NT$1 million to each family that lost a member. “I am calling for the first national security meeting since I came on board as chairman of the nation’s security,” Taiwan’s President Ma Ying-jeou said in a televised speech on Aug. 14. “Given the severity of the typhoon, we must mobilize the whole nation.” Ma said the death toll may rise to 500. Control Yuan “Morakot once again highlights the government’s failure in flood prevention,” the Control Yuan , Taiwan’s government ombudsman, said in a statement. The agency said the government had not made coordinated use of a NT$116 billion anti-flooding budget passed after damage from Typhoon Kalmaegi last year. The Cabinet promised 700 temporary jobs for people affected by Morakot. People like Chen Tianyuan, 55, a bell-fruit farmer, who said he cries each night, thinking of his lost orchards and grim future. “I don’t know where I can find income,” Chen said in Lin Bian, a rural township in Pingtung county , southern Taiwan, with tears in his eyes. “I can only take one step at a time. The trees won’t grow back immediately.” As well as uprooting crops and washing away soil, the typhoon destroyed roads, bridges and whole villages. The mountain townships of Maolin, Taoyuan and Sanmin, with the biggest chain of natural hot springs in Taiwan, were wiped out by landslides. Tourism Hit “The damage has a very adverse effect on our tourism,” said Yang Chiu-hsing, magistrate of Kaoshiung county , the worst- hit region with a majority of the reported deaths. “My estimate is that we would be losing as much as NT$3 billion a year.” The county, home to 1.2 million people, or 5 percent of the island’s population, will need at least NT$30 billion for rebuilding, Yang said in an Aug. 13 interview. The reconstruction could take at least three years. “People’s standard of living was improving over the past few years,” Yang said. “Suddenly, they’ve lost everything.” One fifth of the NT$10 billion in agricultural damage was in Kaohsiung, he estimated. Taiwan’s economic growth in the current quarter may drop by 0.53 of a percentage point because of Morakot, Sinopac Financial Holding Co. said in a report. The economy shrank by a record 10.2 percent in the first quarter as exports fell and businesses cut spending. Food Prices Lost crops are causing a spike in local food prices, said Duncan Wooldridge , an economist at UBS Securities Asia Ltd. The price of bananas jumped to NT$17 per jin (605 grams) from NT$11 and will continue to rise, said Gao Ming-yuan, 37, a banana wholesaler in Pingtung County. “Bananas are the most vulnerable in a storm,” Gao said. “We are trying to minimize the damage by picking up all the bananas on the floor. I don’t dare to calculate the loss.” Many survivors are angry and blame the government for failing to improve infrastructure. “Every time there is an earthquake, typhoon or natural disaster, we have to be worried for our lives,” said Chen Ding- hsiang, 45, whose wife went missing on Aug. 7. “Why is it that the government always closes roads and bridges after they have collapsed?” Ma’s government plans to submit a proposal for a special budget for relief and reconstruction work to the legislature for approval. Yesterday, Ma apologized on television for the government’s failure to respond more quickly. “The typhoon has exposed the flaws in infrastructure in Taiwan,” said Ma Tieying , a DBS Bank economist in Singapore said by telephone. “The government will probably increase its budget for infrastructure next year after this episode. However, the actual implementation still needs to be observed. There was an infrastructure budget this year too. GDP data doesn’t show much contribution from infrastructure this year.” To contact the reporter on this story: Weiyi Lim in Taipei at Wlim26@bloomberg.net

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Taiwan Faces More Rain, Mudslides as Rescuers Search for Typhoon Survivors

August 12, 2009

By Yu-huay Sun and Tim Culpan Aug. 13 (Bloomberg) — Taiwan warned of more rain and mudslides as rescuers searched for scores of people missing after Typhoon Morakot triggered the worst floods in half a century and left more than 100 dead. Southern Taiwan, worst-hit by the storm, may experience heavy rains today and landslides are possible in mountainous areas, the Central Weather Bureau said in an advisory. The death toll climbed to at least 103 people yesterday, after rescuers found a total of 32 bodies buried in two mudslides in Kaohsiung county, the state-run Central News Agency reported , citing the Central Emergency Operation Center. Sixty- one people are still missing and mud and debris have cut off remote villages and left hundreds awaiting rescue, CNA said. Almost 1,000 people were found alive in southern villages buried by mudslides after the typhoon hit from Aug. 6 to 9. Helicopters were sent to help about 700 survivors discovered in Shiao Lin and Namahsia in Kaohsiung, Martin Yu, a National Defense Ministry spokesman, said yesterday. About 200 people were found in Ching Ho village and 70 in Wu Li Pu, CNA reported. Hu Li-chu, a 30-year-old housewife and her three children, aged between 5 and 7 years old, were covered in mud when they were rescued from Namahsia. “We were praying for a helicopter to come save us,” she said. “The rest of our family is still back in Namahsia.” They slept on the mountainside for three days and drank rainwater, she said. President’s Visit President Ma Ying-jeou visited two rescue centers in the south yesterday. Speaking at one center, he said there isn’t any need to issue an emergency order in the aftermath of the typhoon because existing measures are adequate. Premier Liu Chao-shiuan instructed agencies to come up with a resettlement plan for survivors within two days, comparing the destruction and loss of homes with the earthquake that struck Taiwan 10 years ago, killing more than 2,400 people and leaving as many as 100,000 homeless. The National Fire Agency airdropped food to the 700 people in the two villages, Liang Yu-chu, senior executive officer with the fire agency, said by phone yesterday. As of noon yesterday, about 10,944 people had been evacuated from the disaster zone, with 8,338 in shelters, according to the NFA. Taiwan plans to spend around NT$20 billion ($607 million) to rebuild roads and bridges as the Cabinet considers whether to implement a special budget for typhoon relief, Deputy Transport Minister Yeh Kuang-shih said by phone yesterday. The Taiwanese premier said yesterday the government can redirect more than NT$40 billion from its 2009 budget for reconstruction, CNA reported . Probe Ordered The government ombudsman, the Control Yuan, ordered an investigation into the administration’s preparation for Morakot after advice following Typhoon Kalmaegi last year wasn’t followed. Kalmaegi lashed the island in July 2008, killing at least 18 people and causing millions of dollars of damage to agriculture. The Control Yuan is one of Taiwan’s five branches of government and has the power to impeach, audit and censure government agencies. More than 754,000 customers remained without water yesterday, 28,476 without power and 61,730 have phone lines that remain disconnected, the fire agency said. Morakot brought more than 3,000 millimeters (118 inches) of rain to Taiwan, the most for a 48-hour period in 100 years of record keeping, the Central Weather Bureau said. Flooding was the worst in 50 years, Wu Yueh-hsi, deputy director general of the Water Resources Agency, said this week. Agricultural losses climbed to NT$9 billion, the Council of Agriculture said on its Web site. The government is warning against “price collusion” and said it will provide frozen vegetables and meat to stabilize supplies, the Cabinet said in a statement yesterday. To contact the reporter on the story: Yu-huay Sun in Taipei at ysun7@bloomberg.net ; Tim Culpan in Taipei at tculpan1@bloomberg.net .

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Taiwan Rescuers Search for Scores Still Missing After Typhoon Slams Island

August 12, 2009

By Yu-huay Sun and Tim Culpan Aug. 12 (Bloomberg) — Rescuers in Taiwan found almost 1,000 people alive in villages buried by mudslides after Typhoon Morakot triggered the worst floods in half a century. Helicopters were sent to help some 700 survivors discovered in the southern villages of Shiao Lin and Namahsia in Kaohsiung county, Martin Yu, a National Defense Ministry spokesman, said today in a phone interview. He didn’t say how many people are unaccounted for. About 200 were found alive in Ching Ho village and another 70 in Wu Li Pu, both also in the south, the state- run Central News Agency said. The death toll from Morakot increased to at least 103 people, with 59 of them from Kaohsiung county, including 32 who were buried in mudslides, Agence France-Presse cited the National Fire Agency as saying. The fire agency said earlier today that 61 people have been confirmed missing since the typhoon struck Taiwan Aug. 6 to Aug. 9. President Ma Ying-jeou visited two rescue centers in southern Taiwan today. “There are so many policemen here today because President Ma is coming. Why aren’t they out there searching for people?” Joseph Hong, a 58-year-old pastor, said at the Chishan rescue center. “There are fewer helicopters out there as they are waiting for Ma to arrive. This is the wrong use of resources.” Ma, speaking at the center, said there isn’t any need to issue an emergency order in the aftermath of the typhoon because existing measures are adequate. Resettlement Plan Taiwan Premier Liu Chao-shiuan instructed agencies to come up with a resettlement plan for survivors within two days, comparing the destruction and loss of homes with the earthquake that struck Taiwan 10 years ago, killing more than 2,400 people and leaving as many as 100,000 homeless. The NFA airdropped food to the 700 people in the two villages, Liang Yu-chu, senior executive officer with the fire agency, said by phone today. As of noon, about 10,944 people had been evacuated from the disaster zone, with 8,338 in shelters, according to the NFA. Hu Li-chu, a 30-year-old housewife and her three children, ages 5 to 7, were covered in mud when they were rescued from Namahsia village. “We were praying for a helicopter to come save us,” Hu said. “Even when a helicopter came, we had to queue up to be picked up. The rest of our family is still back in Namahsia.” They slept on the mountainside for three days and drank rain water, she said. Minister Is Jeered More than 200 people waiting at the Chishan center, which was converted from a high school, jeered when Justice Minister Wang Ching-feng arrived early today. “The relief workers don’t really understand the severity of the problem,” said Chen Yu-chen, 45, operator of a hot- spring spa in Baolai village in Kaohsiung county. “They need to send more helicopters and drop food to the people who are affected.” Taiwan plans to spend around NT$20 billion ($608 million) to rebuild roads and bridges as the Cabinet considers whether to implement a special budget for typhoon relief, Deputy Transport Minister Yeh Kuang-shih said by phone today. The government ombudsman, the Control Yuan, ordered an investigation into the administration’s preparation for Morakot after advice following Typhoon Kalmaegi last year wasn’t followed. Kalmaegi lashed the island in July 2008, killing at least 18 people and causing millions of dollars of damage to agriculture. ‘Government’s Failure’ “Typhoon Morakot once again highlights the government’s failure in flood prevention,” the Control Yuan said in a statement on its Web site . “The Control Yuan on Aug. 5 censured 14 government departments including the Cabinet for failing to coordinate a NT$116 billion budget for flood prevention following the Typhoon Kalmaegi disaster last year.” The Control Yuan is one of Taiwan’s five branches of government and has the power to impeach, audit and censure government agencies. More than 754,000 customers remain without water, 28,476 without power and 61,730 have phone lines that remain disconnected, the fire agency said in its report today. As many as 500 people were feared dead in Shiao Lin after mudslides destroyed around 150 houses in the remote village, the agency said yesterday. A rescue helicopter delivering food crashed yesterday, killing the three people aboard, it said. “I have nothing now,” said Lee Ching-ming, 35, an unemployed resident of Namahsia. “Three relatives have passed away. I don’t have a house now. I don’t know what I can do for my future any more. I am very lost and helpless.” He and his parents and two daughters were rescued by helicopters today. Record Rainfall Morakot brought more than 3,000 millimeters (120 inches) of rain to Taiwan, the most for a 48-hour period in 100 years of recordkeeping, the Central Weather Bureau said. Flooding was the worst in 50 years, Wu Yueh-hsi, deputy director general of the Water Resources Agency, said yesterday. Agricultural losses climbed to NT$9 billion, causing the destruction of 57,071 hectares of agriculture land, 54 million chickens and 106,370 pigs as of 3 p.m. today, the Council of Agriculture said in a statement on its Web site. The government is warning against “price collusion” and said it will provide frozen vegetables and meat to stabilize supplies, the Cabinet said in a statement today. To contact the reporter on the story: Yu-huay Sun in Taipei ysun7@bloomberg.net Tim Culpan in Taipei at tculpan1@bloomberg.net .

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Typhoon Morakot Leaves 12 Dead in Taiwan, Record Rain Damages Banana Crop

August 9, 2009

By Tim Culpan Aug. 10 (Bloomberg) — Typhoon Morakot left at least 12 people dead in Taiwan and destroyed more than NT$2.1 billion ($64 million) in agricultural production after the worst rains on record, the government said. Fifty-two people were missing and 32 injured as of 8 a.m. today, according to Taiwan’s National Fire Administration. Taiwan’s banana crop was the most severely affected with 3,218 hectares destroyed as of 2 p.m. yesterday, the Council of Agriculture said yesterday. Morakot dumped more rain on Taiwan than any 48-hour period since records began 100 years ago, Taiwan’s chief weather forecaster Lee Hsiang-yuan said. Fifty one bridges remained closed after severe flooding, the transport ministry said in an e-mailed statement. Taiwan’s banking association has been instructed to help victims by providing low-interest loans and simplify borrowing procedures, the Financial Supervisory Commission said. Fees at nine highway toll booths will be waived for 24 hours, the transport ministry said. More than 2,800 millimeters of rain fell on Alishan in southern Chiayi County between Aug. 6 and 7 a.m. today, the fire administration said. A single-day record of 1,415 millimeters fell during the typhoon, it said. Typhoon Morakot destroyed 20,432 hectares, or 25 percent of unharvested land, as of 2 p.m. yesterday, the Council of Agriculture said. The King Shai Hotel in Taidong in south-eastern Taiwan collapsed into a river after flooding undermined its foundations. To contact the reporter on this story: Tim Culpan in Taipei at tculpan1@bloomberg.net .

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Farm Values Fall in U.S. for First Time Since 1987, Price Revival Forecast

August 5, 2009

By Alan Bjerga Aug. 5 (Bloomberg) — Farmland prices , which advanced for 21 years, couldn’t escape the worst plunge in real estate since the Great Depression.

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U.S. Child Born Last Year May Cost $221,190 to Raise to Age 18, Study Says

August 4, 2009

By Alan Bjerga Aug. 4 (Bloomberg) — Middle-income U.S. families will spend $221,190 to raise a child born in 2008 until they become adults in 2026, according to a government estimate.

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Recession-Free "Safe" Zone In Midwest Is Shrinking

August 1, 2009

TORRINGTON, Wyo. — Carl Rupp and his neighbors follow the old rancher’s creed: “Keep your money in your pocket.” Rupp has farmed his whole life. He lives in Goshen County, a rural spot along the Nebraska line where cattle outnumber humans 16 to 1 and you can still see the ruts cut by wagons that hauled pioneers along the Oregon Trail.

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El Nino May Ease Worst Texas Drought in 90 Years, Cut Florida Storm Risks

July 29, 2009

By Shruti Date Singh July 29 (Bloomberg) — The return of an El Nino climate pattern to the Pacific Ocean may relieve the worst Texas drought in 90 years and may reduce the threat of hurricanes ravaging orange groves in Florida. El Nino, characterized by warming waters in the Pacific, “could bring relief” in the fall and winter to Texas, where farms are suffering from the lack of rain , the National Weather Service said July 16. The El Nino will last through the Northern Hemisphere winter and into 2010, presaging winter storms in the Southwest and a reduction in Atlantic hurricanes, the U.S

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