U.S. farmers face devastation following Midwest floods

U.S. farmers face devastation following Midwest floods

By Humeyra Pamuk, P.J. Huffstutter and Tom Polansek

WINSLOW, Neb./CHICAGO (Reuters) – Midwestern farmers have been gambling they could ride out the U.S.-China trade war by storing their corn and soybeans anywhere they could – in bins, plastic tubes, in barns or even outside.

Now, the unthinkable has happened. Record floods have devastated a wide swath of the Farm Belt across Iowa, Nebraska, South Dakota and several other states. Early estimates of lost crops and livestock are approaching $1 billion in Nebraska alone. With more flooding expected, damages are expected to climb much higher for the region.

As river levels rose, spilling over levees and swallowing up townships, farmers watched helplessly as the waters consumed not only their fields but their stockpiles of grain, the one thing that can stand between them and financial ruin.

“I’ve never seen anything like this in my life,” said Tom Geisler, a farmer in Winslow, Nebraska, who said he lost two full storage bins of corn. “We had been depending on the income from our livestock, but now all of our feed is gone, so that is going to be even more difficult. We haven’t been making any money from our grain farming because of trade issues and low prices.”

The pain does not end there. As the waters began to recede in parts of Nebraska, the damage to the rural roads, bridges and rail lines was just beginning to emerge. This infrastructure is critical for the U.S. agricultural sector to move products from farms to processing plants and shipping hubs.

The damage to roads means it will be harder for trucks to deliver seed to farmers for the coming planting season, but in some areas, the flooding on fields will render them all-but-impossible to use.

The deluge is the latest blow for the Farm Belt, which has faced several crises in the last five years, as farm incomes have fallen by more than 50 percent due to a global grain glut. President Donald Trump’s trade policies cut off exports of soybeans and other products, making the situation worse.

Soybeans were the single most valuable U.S. agricultural export crop and until the trade war, China bought $12 billion worth a year from American farmers. But Chinese tariffs have almost halted the trade, leaving farmers with crops they are struggling to sell for a profit.

CORN AND SOYBEANS DESTROYED

As prices plummeted last year amid the ongoing trade fight, growers, faced with selling crops at a loss, stuffed a historic volume of grain into winding plastic tubes and steel bins. Some cash-strapped families piled crops inside their barns or outside on the ground.

Farmers say they are now finding storage bags torn and bins burst open, grain washed away or contaminated. Jeff Jorgenson, a farmer and regional director for the Iowa Soybean Association, said he has seen at least a dozen bins that burst after grains swelled when they became wet.

Under U.S. Food and Drug Administration policy, flood-soaked grain is considered adulterated and must be destroyed, according to Iowa State University.

Some farmers had been waiting for corn prices to rise just 10 cents a bushel more before making sales, which would earn them a few extra thousand dollars, Jorgenson said.

“That’s the toughest pill to swallow,” Jorgenson said. “This could end their career of farming and the legacy of the family farm.”

As of Dec. 1, producers in states with flooding – including South Dakota, Nebraska, Kansas, Minnesota, Iowa, Missouri, Wisconsin and Illinois – had 6.75 billion bushels of corn, soybeans and wheat stored on their farms – 38 percent of the total U.S. supplies available at that time, according to U.S. Department of Agriculture data.

Iowa suffered at least $150 million in damage to agricultural buildings and machinery, and 100,000 acres of farmland are under water, said Keely Coppess, a spokeswoman for the Iowa Department of Agriculture and Land Stewardship.

Jorgenson surveyed more than two dozen local farmers to assess the damage and tallied about 1.25 million bushels of corn and 390,000 bushels of soybeans lost just in Fremont County, Iowa, worth an estimated $7.3 million.

EXTENT OF DAMAGE UNCLEAR

The record flooding has killed at least four people in the Midwest and left one person missing. The extent of damage is unknown as meteorologists expect more flooding in the coming weeks.

Early estimates put flood damage at $400 million in losses for Nebraska’s cow-calf industry and another $440 million in crop losses, Nebraska Governor Pete Ricketts told a news conference on Wednesday.

“The water came so fast,” said John Hansen, president of the Nebraska Farmers Union. “We know our farmers didn’t have enough time to move all the cattle or empty all their grain bins.”

Multiple washouts and high water on BNSF Railway Co’s main lines have caused major disruption across parts of the Midwest, the company warned on its website. The flooding also has disrupted part of Hormel Foods Corp’s supply chain, the company told Reuters.

The roads are so bad that Nebraska’s National Guard on Wednesday will push hay out of a military helicopter to feed cattle in Colfax County stranded by floodwaters, Major General Daryl Bohac said. It is the first time in at least half a century that such an airdrop has been conducted, he said.

Cattle carcasses have been found tangled in debris or rotting in trees, while tractors and other expensive machinery are stuck in mud, unable to be moved. At Geisler’s farm in Winslow, Nebraska, two trucks and a tractor were seen buried in mud in wooden barns where water pooled.

“We should have been getting into planting for next season, but now all of our equipment is flooded and it’s going to take at least three to four weeks to bring back that equipment into shape,” said Geisler.

(Reporting by P.J. Huffstutter and Tom Polansek in Chicago and Humeyra Pamuk in Winslow, Nebraska; Additional reporting by Julie Ingwersen and Mark Weinraub in Chicago; Editing by David Gaffen and Matthew Lewis)

‘We need it now’: U.S. farm country pins hopes on China trade deal

FILE PHOTO: A tattered U.S. flag flies on an old tractor in a farm field outside Sutherland Springs,Texas, U.S. November 8, 2017. REUTERS/Rick Wilking

By Humeyra Pamuk

(Reuters) – Corn and soybean farmer Lorenda Overman from North Carolina has been selling her crops at a loss and delaying paychecks to her workers since the U.S. trade war with China tanked agriculture prices, and her farm’s debt recently topped $2 million.

If the Trump administration fails to clinch a deal with Beijing soon to end the trade dispute, she says, her operation may have a hard time staying afloat.

“We need some stability, we need some action and we need it now,” Overman, who farms in Goldsboro, said via telephone.

Her desperation reflects the mounting urgency across U.S. farm country over ongoing talks aimed at ending Washington’s trade dispute with China and pulling the U.S. agriculture industry out of its worst crisis since the 1980s.”

U.S. trade negotiators currently locked in talks with their Chinese counterparts are demanding Beijing change the way it does business with the United States, providing more access for U.S. companies, enforcement of intellectual property protection and an end to industrial subsidies.

While the talks mark the closest point yet to an end to the nine-month trade war, the two sides are yet to agree on the core issues which are essential for a deal that would reopen a critical market for U.S. farm goods like soybeans, sorghum and corn-based ethanol.

So far, the American rural heartland that helped carry President Donald Trump to victory in 2016 remains largely supportive of his hard line on trade, saying unfair Chinese practices had to be addressed for longer-term economic gain.

But it has also taken the brunt of the dispute, losing a massive export market. With credit conditions eroding in the agrarian economy and total debt hitting levels unseen for decades, the pain has deepened and patience is wearing thin.

“I voted for Trump and I have no regrets. I still feel like he has a handle on what needs to be done but I am frustrated that we are still sitting here with no deal,” Overman said.

Beijing imposed tariffs last year on imports of U.S. agricultural goods, including soybeans, grain sorghum and pork as retribution for U.S. levies. Soybean exports to China have plummeted over 90 percent due to the trade dispute and sales of U.S. soybeans elsewhere failed to make up for the loss.

Trump last week delayed plans to deepen tariffs on China, citing progress in the current talks.

PLANTING AMID UNCERTAINTY

Agriculture Secretary Sonny Perdue last week said the current debt levels in farm country have rapidly risen to levels seen in the 1980s, when thousands of farm operations financially collapsed after producers dealing with low crop prices fell behind on high-interest land and equipment loans.

Meanwhile, Chapter 12 bankruptcy filings have hit the highest level in a decade in parts of the U.S. Midwest and Great Plains states, according to federal data, though stable farmland prices and low-interest rates have helped.

The administration sought to protect farmers from some of the impacts of the trade war with an aid package of up to $12 billion last year. But it has said it will not provide additional support in 2019 even if the dispute continues.

That heaps pressure on farmers, who must decide what to plant this spring without guarantees they will have a market for it, and without any safety net if they make the wrong choice. U.S. farmers planted 89.1 million acres of soybeans in 2018, the second most ever, but without a market, much of it ended up plowed under, rotting in piles, or in storage.

“If we get a trade deal done and soybeans are worth 20 percent more over the next six months, but we decided to plant all corn because we didn’t know – that’s something that worries a lot of people,” said farmer Derek Sawyer, 38, from Kansas.

He said his debt has risen into the millions of dollars.

“Bankers so far have been OK to work with us as far as restructuring some debt,” he said. “But that rope keeps getting shorter.”

Delays to a trade deal have also kindled worries over the permanent loss of market share, as other suppliers such as Argentina and Brazil replace the tariff-blocked U.S. supply.

“It’s going to be a long time before we gain some of those markets back,” said Bill Tentinger, a 69-year-old third-generation corn, soybean and hog farmer from Le Mars, Iowa.

“If we could have settled this with China in a month or two, we would have seen more excitement in the market,” he said.

He said he borrowed $500,000 to plant this year’s crop, after an “absolutely brutal” 2018.

Chris Pollack, a dairy farmer from Wisconsin which saw hundreds of milk producers go out of business last year, says it is getting harder for the industry to embrace the administration’s focus on long-term gains targeted from the China trade standoff.

His farm has suffered from Chinese tariffs on U.S. cheese and other dairy products, and has been further hurt by Trump’s trade disputes with Canada and Mexico.

“Agriculture didn’t have a whole lot to gain but we had a whole lot to lose,” he said. “Certainly, we want to get stuff straightened out… but right now it’s a real tough sell to a hurting agriculture industry,” he said.

(Reporting by Humeyra Pamuk in Washington; editing by Richard Valdmanis and Lisa Shumaker)

As opium poppies bloom, Mexico seeks to halt heroin trade

Soldiers cut opium poppies as they destroy a field of illegal plantation in the Sierra Madre del Sur, in the southern state of Guerrero, Mexico, August 25, 2018. REUTERS/Carlos Jasso

By Lizbeth Diaz

JUQUILA YUCUCANI (Reuters) – In the mountains of Mexico’s tropical Sierra, an ever-growing expanse of pink poppy flowers has pushed prices so low for opium paste, the gummy raw ingredient of heroin, that farmer Santiago Sanchez worries how he will feed and clothe his family.

The area of Mexico that illegally farms opium poppies grew by more than one-fifth last year, to an area the size of Philadelphia, according to a U.N.-backed study published in November.

A soldier burns an illegal opium plantation near Pueblo Viejo in the Sierra Madre del Sur, in the southern state of Guerrero, Mexico, August 24, 2018. REUTERS/Carlos Jasso

A soldier burns an illegal opium plantation near Pueblo Viejo in the Sierra Madre del Sur, in the southern state of Guerrero, Mexico, August 24, 2018. REUTERS/Carlos Jasso

That, along with a trend toward mixing synthetic opiate fentanyl in Mexico’s tarry black heroin, has slashed what criminal gangs pay farmers like Sanchez for a kilo of opium. Now, Sanchez earns about $260 per kilo, a fifth of the average price two years ago.

While Mexico’s top drug traffickers still make billions of dollars supplying U.S. addicts, at the bottom of the supply chain, the villagers are hardly surviving.

“We can’t keep living like this,” said Sanchez, who is a local leader in the remote Mixtec Indian village of Juquila Yucucani, where hundreds of poppy farmers have seen already meager incomes shrivel. “We can barely afford our food.”

HEROIN TRADE

In the United States, overdose deaths from opioids have increased almost six-fold in the past two decades, according to the Centers for Disease Control and Prevention. More than 15,000 people died of heroin overdoses in 2017 alone.

Heroin from Mexico accounted for 86 percent of the heroin found on U.S. streets, according to the Drug Enforcement Agency’s most recent annual narcotic report.

The heart of illegal poppy cultivation is in the hills of Guerrero state, in some of the poorest mountain districts – such as Juquila Yucucani, some 800 miles south of the U.S.-Mexican border. Guerrero is now among the country’s bloodiest states. 

Despite unprecedented violence across the country, Mexican President Andres Manuel Lopez Obrador said last week that the government had “officially” ended its war against drug trafficking, a military-led offensive launched in 2006 that led to a surge in bloodshed as criminal groups splintered.

The government’s focus will now be on meeting the needs of marginalized communities, Lopez Obrador said, as part of a broader strategy to curb an illegal drug trade that is thriving despite the capture of high-profile kingpins like Joaquin ‘El Chapo’ Guzman, who is on trial in New York for drug trafficking that spanned more than two decades.

Lopez Obrador has not entirely turned his back on using soldiers to tackle violence stemming from drugs – he plans to create a new militarized National Guard police force. But he is also exploring a crop substitution program, relaxing prohibition and amnesties for low-level drug dealers and farmers.

On a visit to Guerrero in January, Lopez Obrador pledged price supports for grains, including around $300 a tonne for corn, part of a strategy meant to give farmers alternatives to planting illicit crops.

“Here, in the hills, we are going to pay a little more, so that corn is planted and people are compensated for their effort. So that other crops are not planted,” he said.

Lopez Obrador has backed a legislative bill to legalize marijuana, and along with the former head of Mexico’s military and other members of his team, he suggested last autumn that legalizing medical opium could be part of the solution.

The government appears to be backing away from that idea after opposition from the United States.

“WE ARE NOT TRAFFICKERS”

The farmers in Juquila Yucucani do not consider themselves criminals and say current poppy eradication efforts by the army also sometimes destroy legal crops.

“They have killed the food crops that my family use to eat,” said Lazaro Lopez, 65, who said the military should apologize. Although Reuters could not independently verify Lopez’s account, human rights groups have documented military abuses in parts of Guerrero. The army did not respond to requests for comment for this story.

For Sanchez, who said his village would embrace legalization, crop substitution is a poor alternative.

Other than poppies, few plants take to the thin soil on Juquila Yucucani’s stony slopes. Some land is apt for planting mango or avocado trees, Sanchez said, but they would take years to mature. The narrow ribbon of twisted dirt road connecting the village to the outside world would make it almost impossible to transport bulky or delicate crops to markets, he added.

Arturo Garcia, a farmers rights activist in the state, said the government’s new ideas would only work if a really sustained and well-funded effort were made to offer residents a way out of the drug trade.

“The state must throw all its weight into this region so that it begins to alleviate the conditions that have allowed violence,” he said.

For now, several hours journey from the nearest hospitals or schools, Juquila Yucucani’s poppy farmers say they have two choices to make a living: sneak illegally into the United States, or grow poppies.

“We are not drug traffickers, we want a dignified life,” said elderly Nieves Garcia, who has grown poppies since she was a child and speaks a variant of the indigenous Mixtec language, but no Spanish. “My kids have left this place because there’s no way of getting ahead,” she said.   

For photo essay, please click on: https://reut.rs/2UJSwSF

(Writing by Michael O’Boyle and Frank Jack Daniel; Additional reporting by Michael O’Boyle; Editing by Diane Craft)

Turkish dam project threatens rift with Iraq over water shortages

A general view shows a costruction site of the Ilisu dam by the Tigris river in southeastern Turkey, September 27, 2017. REUTERS/Umit Bektas

By Ahmed Aboulenein and Ali Kucukgocmen

BAGHDAD/ISTANBUL (Reuters) – Iraq is surprised by Turkey’s decision to start holding back water behind its Ilisu dam earlier than promised, Prime Minister Haider al-Abadi said on Tuesday, suggesting it was done to win support for the government in upcoming elections.

Turkey has started filling the dam basin, a step that has alarmed neighboring Iraq, which is struggling with a water crisis.

“The Turkish prime minister had promised me they would start filling the dam at the end of June, not the start, so I was surprised to see they started,” Abadi told a news conference.

“I am aware that they have elections on June 24 and perhaps need to get the support of farmers,” he added, referring to Turkey’s planned general elections for president and parliament.

Turkey’s ambassador in Baghdad said Ankara is cooperating.

“We will not take any step without consultation with the neighboring country on how we can cooperate and provide support during any problem, Fatih Yildiz told a news conference through an Arabic translator.

A spokesman for Turkey’s Ministry of Forest and Water Management spokesman said Turkey was “partially” filling the dam’s basin.

Around 70 percent of Iraq’s water resources flow from neighboring countries, especially in the Tigris and the Euphrates rivers. Both flow through Turkey.

Abadi was at lengths on Tuesday to show his outgoing government was doing everything it can to tackle the issue.

“There are plans to secure our water resources on both the domestic and foreign fronts. Yes, there is a water shortage this year, but it is not a crisis,” he said.

The government has plans to provide water to farmers, Abadi said, especially for Iraq’s strategic wheat crop. At the same time, it might reduce plots of land reserved for planting other crops that consume a lot of water.

Iraqi media suggested Baghdad had asked Ankara to delay holding back water because of its own election, which took place on May 12. Abadi’s bloc came third, but he may yet secure a second term if he gathers support from the winning groups.

The dam issue was not the only point of contention between Baghdad and Ankara on Tuesday. Abadi demanded Turkey respect Iraq’s sovereignty in its approach to Kurdish militias.

Turkish Interior Minister Suleyman Soylu had said on Monday that Turkish forces were waiting for the right time to carry out an operation in northern Iraq’s Qandil region where high-ranking members of the outlawed Kurdistan Workers Party (PKK) are located.

Soylu had said that “Qandil is not a distant target” anymore. Abadi countered that the Turks had been “talking about that for over 35 years” and again suggested the statement was an attempt to score points before the Turkish elections.

“We will not accept any violations of Iraq’s sovereignty,” he said, adding there was no military coordination with Turkey on this issue.

(Reporting by Ahmed Aboulenein in Baghdad and Ali Kucukgocmen in Istanbul; additional reporting by Maha El Dahan in Dubai; writing by Michael Georgy and Ahmed Aboulenein; editing by Larry King)

Farmers worldwide struggle with rising fuel costs

By Stephanie Kelly and Tom Polansek

NEW YORK/CHICAGO (Reuters) – Farmers worldwide are feeling the pinch as fuel costs rise to near four-year highs just as they plant and harvest their fields, eroding agricultural income already hamstrung by depressed crop prices.

The agricultural sector from the United States to Russia, and Brazil to Europe, is seeing profits harmed by the rise in diesel prices. The global oil benchmark, Brent crude, touched $80 a barrel for the first time since late 2014 on Thursday.

Coupled with local economic issues, the increase is making it even harder for many farmers worldwide to turn a profit in the estimated $2.4 trillion agriculture industry, casting a cloud over future investments.

In the United States, fuel accounts for about five percent of farmers’ overall costs, and is hurting margins at a time when farm income is already half that of 2013. Massive harvests have depressed prices of staples such as corn, wheat and soybeans.

Diesel fuel is essential for planting, harvesting, and shipping crops to market. In the United States, farmers will spend an estimated $15.25 billion on fuel and oil in 2018, an 8 percent increase from 2017, U.S. Department of Agriculture data showed.

The price of ultra-low sulfur diesel used for farming equipment and transporting crops has not been this high in May since 2014. Heating oil futures, the proxy for ultra-low sulfur diesel, traded at $2.29 a gallon on Thursday.

Ron Heck, who grows soybeans in Perry, Iowa, said his fuel costs could go up $1,000 to $2,000 during the northern hemisphere’s spring.

“You feel the pain right away,” Heck said.

In Russia, fuel prices for farmers are up 50 percent compared with a year ago, Arkady Zlochevsky, the head of Russia’s Grain Union, a non-governmental farm lobby, told Reuters. Farmers will need to spend more ahead of harvesting, which starts in about a month in Russia, he said.

For a graphic on farmers’ cash expenses, click https://tmsnrt.rs/2rXHHQf

FINANCIAL STRESS

U.S. farms are also factoring in potential losses of income due to a 25 percent tax China announced on major American imports following the U.S. government’s decision to slap duties on steel and aluminum.

“We’re seeing financial stress occurring in agriculture that we probably haven’t seen for a decade or so,” said Scott Brown, director of strategic partnerships at the University of Missouri’s College of Agriculture, Food and Natural Resources. “If diesel prices continue to go higher, it continues to put more pressure on [farmers].”

Net farm income is forecast to fall to $59.5 billion in 2018, an 8.3 percent decline from 2017, according to the USDA. It has fallen by 55 percent since 2013.

In Holly Grove, Arkansas, Tim Gannon paid about $17,000 in February to fill a 7,500-gallon tank with diesel used to run equipment and irrigation. The price increase means it may cost up to 25 percent more, or an extra $4,000, to refill it in coming weeks, he said.

“That’s a fairly significant amount of income to lose,” he said. Gannon has been taking steps to cut his diesel costs over the past year by reducing the number of times he plows, or tills.

In Brazil, farmers are also taking steps to deal with higher costs, as diesel prices have climbed 43 percent in the country since July 2017. Eder Ferreira Bueno, a farmer in grain state Mato Grosso, said increased fuel costs meant he had “no other option but to spend less to treat the soil.” Other farmers might hire fewer workers or delay investment plans, he added.

In neighboring Argentina, the top shipper of soybean meal and oil worldwide, farmers are having to deal with a weakening currency at the same time fuel costs are rising.

“Where the impact is felt greatest is in trucking costs. We are already at a disadvantage when compared to our competitors on freight costs within Argentina,” said David Hughes, a farmer in Buenos Aires province and president of Argentine wheat industry chamber Argentrigo.

In Europe, French grain producers say rising oil costs may have a knock-on effect on fertilizers and crop protection products.

“It comes at a time when things are already difficult for farmers economically,” said Philippe Pinta, head of grain growers group AGPB in Paris.

Wamego, Kansas, farmer Glenn Brunkow said he may lock in diesel prices in advance for the first time ever next year, to avoid the pain of future increases.

“You just kind of all of a sudden realize, ‘Wow, it’s pretty high,'” he said.

(Reporting by Stephanie Kelly in New York and Tom Polansek in Chicago; additional reporting by Sybille de La Hamaide and Valerie Parent in Paris, Polina Devitt in Moscow, Ana Mano and Marcelo Teixeira in Sao Paulo, and Hugh Bronstein in Buenos Aires, Editing by Rosalba O’Brien)

Snowstorm, high winds, targets northern U.S. Plains, may stall spring planting

By Julie Ingwersen

CHICAGO (Reuters) – A blizzard is expected to bring high winds and 12 inches (30 cm) of snow or more to parts of South Dakota and Nebraska on Friday and Saturday, an agricultural meteorologist said on Thursday.

The snowfall, along with cold temperatures in the wake of the storm, could delay the planting of corn and spring wheat in the Dakotas and Minnesota into May.

Nebraska and Minnesota were the No. 3 and 4 corn producers last year in the United States, the world’s top supplier of the feed grain, and South Dakota was No. 6. For spring wheat, North Dakota and Minnesota are the top two U.S. growers.

“In addition to adding on to the snow pack in the northern Plains, it’s also a persistently cold pattern going forward,” said Joel Widenor, meteorologist with the Commodity Weather Group, adding, “It’s going to make it tough to dry out the soil.”

The storm should dump 6 to 12 inches (15 to 30 cm) of snow across parts of South Dakota, Widenor said. The National Weather Service projected 12 to 18 inches across northern Nebraska and posted blizzard warnings for both states.

“At this point, it seems like it’s going to be out into May before we get our first chance at some warming,” Widenor said.

He noted that in a typical year, farmers in the Dakotas, Minnesota and Nebraska by mid-May are at least halfway finished with seeding corn and spring wheat.

RAIN CHANCES IMPROVE FOR SOUTHERN PLAINS

Forecasting models indicated that another storm late next week could bring much-needed rain to the southern U.S. Plains winter wheat belt, although meteorologists were skeptical.

“The models definitely shifted wetter today versus where they have been the last couple days. But we are still very low confidence on that,” Widenor said.

The region’s hard red winter wheat has struggled with months of drought. The U.S. Department of Agriculture on Monday rated 30 percent of the overall U.S. winter wheat crop in good to excellent condition, compared with 32 percent the previous week and 53 percent a year ago.

Widenor said his firm’s current forecast called for about half of the Plains hard red winter wheat belt to receive 0.25 to 1 inch of rain from the storm arriving April 20, with the other half, including west Texas, western Oklahoma and southwest Kansas, missing out.

(Reporting by Julie Ingwersen; Editing by Bernadette Baum)

Trump administration weighs high-ethanol fuel waiver to placate farmers

A gas pump selling E15, a gasoline with 15 percent of ethanol, is seen in Mason City, Iowa, United States, May 18, 2015. REUTERS/Jim Young

By Jarrett Renshaw and Chris Prentice

NEW YORK (Reuters) – The Trump administration is considering allowing the sale of a higher ethanol fuel blend in the summer, a source familiar with the issue said, a move that would placate corn growers worried about the future of U.S. biofuels policy.

President Donald Trump recently met with the heads of the Environmental Protection Agency and the U.S. Department of Agriculture to discuss ways to make the Renewable Fuel Standard less expensive to the oil industry without undercutting demand for ethanol.

The RFS requires refiners to add increasing volumes of biofuels like corn-based ethanol into the nation’s fuel supply each year. That is a boon to farmers but a headache for refining companies, which must either blend the fuels themselves or purchase credits from those who do.

Over the past several months, Trump has unsuccessfully tried to broker a deal between “Big Oil” and “Big Corn” over the issue, and has faced mounting pressure from lawmakers in the Midwest, who are concerned that he will weaken domestic demand for ethanol at a time farmers are potentially facing a trade war with China that could hurt export demand for corn and soybeans.

Sources had told Reuters this week that Trump was temporarily suspending his consideration of a refining industry-backed proposal to cap prices for blending credits, an idea that the biofuels industry has opposed as damaging to farmers.

But in the meantime, the administration is considering moving forward with plans to allow for the ethanol industry’s long sought waiver to sell gasoline containing 15 percent ethanol in the summer, instead of the usual 10 percent blend, the source familiar with the issue told Reuters on Wednesday.

The higher ethanol blend, called E15, is currently banned by the Environmental Protection Agency because of concerns it contributes to smog on hot days, a worry that biofuels advocates say is baseless.

“EPA has been assessing the legal validity of granting an E15 waiver since last summer,” said EPA spokeswoman Liz Bowman in an emailed statement, noting the agency is awaiting an outcome from discussions with the White House, the USDA and Congress before making any final decisions or preparing regulatory actions.

White House spokeswoman Kelly Love did not comment on the E15 waiver but said that during Trump’s meeting Monday he “instructed his cabinet to continue to explore options that protect American farmers and America’s refinery workers.”

Biofuels proponents have heaped pressure on the White House after reports that the EPA was granting dozens of small refineries exemptions from the RFS to help them avoid the costs of compliance, something the ethanol industry says will weaken demand for their product.

On Monday, Trump acknowledged farmers may bear the brunt of the economic harm if China retaliates against Washington’s threat of tariffs, adding that “we’ll make it up to them.” Many U.S. farmers are battling debt after years of excess global supplies and depressed prices.

“We need some good news out here,” said Monte Shaw, executive director of the Iowa Renewable Fuels Association.

“The best news (Trump) could give us right now is year-round sales of E15,” he said.

(Reporting by Chris Prentice and Jarrett Renshaw; Editing by Steve Orlofsky)

Indonesia shrinks danger zone around grumbling Bali volcano

Mount Agung volcano erupts as seen from Kubu, Karangasem Regency, Bali, Indonesia, December 1, 2017.

JAKARTA (Reuters) – Indonesia shrank the exclusion zone around a grumbling volcano on the resort island of Bali on Thursday after fears of an imminent eruption, allowing farmers to return to their homes.

The 3,000-meter Mount Agung remains on alert for a major eruption, but officials said the danger zone around the crater would be reduced to a six-km (four-mile) radius from 10 km.

“Mount Agung remains in an eruption phase and could affect settlements. All parties are urged to remain cautious,” Agung Pribadi, press relations officer at the natural resources ministry, said in a statement.

The volcano has been spewing lava and ash since late November, when authorities raised the alert status to the highest.

Bali airport was closed for three days, leaving thousands of tourists stranded and prompting others to cancel their year-end holiday plans.

(Reporting by Wilda Asmarini; Writing by Kanupriya Kapoor; Editing by Nick Macfie)

Fake meat from soy bean oil, free markets ease North Koreans’ hunger

North Korean leader Kim Jong Un smiles as children eat during his visit to the Pyongyang Orphanage on International Children's Day in this undated photo released by North Korea's Korean Central News Agency (KCNA) in Pyongyang

By James Pearson and Seung-Woo Yeom

SEOUL (Reuters) – Take the dregs left from making soy bean oil, which usually go to feed the pigs. Press and roll them into a sandy-colored paste. Stuff with rice, and top with chilli sauce. The dish’s name, injogogi, means “man-made meat.”

In North Korea for years it was a recipe for survival. Today it is a popular street food, traded alongside other goods and services on informal markets, known as jangmadang. Defectors say there are hundreds of these markets. The creation and informal trade of injogogi and other foods offers a window into a barter economy that has kept North Korea afloat despite years of isolation, abuse and sanctions.

“Back in the day, people had injogogi to fill themselves up as a substitute for meat,” said Cho Ui-sung, a North Korean who defected to the South in 2014. “Now people eat it for its taste.”

North Korea was set up with backing from the Soviet Union as a socialist state. The Soviet collapse in 1991 crippled the North Korean economy and brought down its centralized food distribution system. As many as three million people died. Those who survived were forced to forage, barter and invent meals from whatever they found. Since people started to use their own initiative, studies indicate, person-to-person dealings have become the way millions of North Koreans procure basic necessities such as food and clothing.

But the prevalence of informal markets also makes it hard to understand the exact state of the North Korean economy. And this makes it hard to measure how badly sanctions, which do not apply to North Korean food imports, are hurting ordinary people.

Pyongyang has said the curbs threaten the survival of its children. Defectors say a poor corn harvest this year has made it hard for people in rural areas to feed themselves. The agencies who want to help find all this hard to measure.

Pyongyang says 70 percent of North Koreans still use the state’s central distribution system as their main source of food, the same number of people that the U.N. estimates are “food insecure.” The system consistently provides lower food rations than the government’s daily target, according to U.N. food agency the World Food Programme (WFP). The U.N. uses this information to call on member states to provide food aid for North Korea – $76 million for “nutrition support” alone at its last request – of which it has received $42 million.

But surveys and anecdotal evidence from defectors suggest private markets are the main source of supply for most North Koreans.

“It becomes sort of ridiculous to analyze food distribution in North Korea by focusing on an archaic system that’s lost so much of its significance over the past couple of decades,” said Benjamin Silberstein, an associate scholar at the Foreign Policy Research Institute who researches the North Korean economy.

The WFP and the U.N.’s other main food aid agency, the Food and Agricultural Organization, said the U.N. relies on all available information and inputs, including official statistics. The agencies have a permanent office in Pyongyang and make regular visits to Public Distribution Centers, farms and occasionally markets in North Korea.

“We recognize that the data and their sources are limited but it’s the best we have available at present,” said the U.N. agencies in a joint statement, referring to the official North Korean government data.

The agencies said they have seen no sign that more food than needed is delivered to North Koreans. “The main issue … is a monotonous diet – mainly rice/maize, kimchi and bean paste – lacking in essential fats and protein,” the statement said.

The North Korean diplomatic mission in Geneva did not respond to questions about how international sanctions might be harming food availability and whether U.N. aid agencies had access to markets in North Korea to assess the products on offer.

Women wearing traditional clothes enjoy ice-cream in central Pyongyang, North Korea April 16, 2017.

FILE PHOTO: Women wearing traditional clothes enjoy ice-cream in central Pyongyang, North Korea April 16, 2017. REUTERS/Damir Sagolj/File Photo

SAND EEL SAUCE

Last year, North Korea’s economy grew by 3.9 percent – its fastest in 17 years and faster than many developed economies, according to South Korea’s central bank. It was helped largely by mining, market reforms, and dealings with China, its neighbor and now the world’s largest economy. Reporters saw signs of chronic hunger in North Korea as recently as 2013, but people who have defected say the food supply has improved in recent years.

Eight defectors told Reuters they ate much the same thing as people in the South. Asked about the contents of their food cupboards, most said they were stocked with privately grown vegetables, locally made snacks and rice, or if they were poor, corn, which is a cheaper staple.

Younger and wealthier defectors say they had plenty of meat, although it was often seasonal because electric power is too erratic to power fridges. Pork is common, but defectors also talked of eating dog meat, rabbit, and badger.

Even so, on average North Koreans are less well nourished than their Southern neighbors. The WFP says around one in four children have grown less tall than their South Korean counterparts. A study from 2009 said pre-school children in the North were up to 13 cm (5 inches) shorter and up to 7 kg (15 pounds) lighter than those brought up in the South.

The North’s Public Distribution System (PDS) stipulates that 70 percent of people receive ration coupons to spend at state distribution shops. The other 30 percent are farmers who are not eligible for rations because they grow their own vegetables in private plots. According to the WFP, the PDS had been reinstated by 2006.

Defectors say Kim Jong Un, who came to power in 2011, also quietly loosened the rules on private trade.

Some markets, known as “grasshopper markets” for the speed with which traders set up and take down the stalls, are still illegal. But there are also officially sanctioned markets, where traders are free to buy and sell provided they pay stall fees to the state.

Dog meat or "Dan go gi" in North Korean expression, is placed on a table at a famous restaurant

FILE PHOTO: Dog meat or “Dan go gi” in North Korean expression, is placed on a table at a famous restaurant in Pyongyang November 13, 2008. REUTERS/Lee Jae-Won/File Photo

Inventions like injogogi are among foods traded on these stalls. It is low in calories but rich in protein and fiber, to help muscle growth and keep hunger at bay, said Lee Ae-ran, a chef from the North Korean town of Hyesan who took a doctorate in nutrition in Seoul. “Because it contains so much protein, it’s also very chewy,” Lee said.

The sauce can be delicious, said Cho. “People who lived by the sea put shredded anchovies in the sauce; people living in the countryside used spicy peppers. I lived close by shore so I used shredded sand eels.”

The jangmadang are remotely monitored by a website called Daily NK, a Seoul-based operation staffed by North Korean defector journalists. It said in a report released this August that there are 387 officially sanctioned markets in the country, encompassing more than half a million stalls. Over 5 million people are either “directly or indirectly” reliant on the markets, “solidifying their place in North Korean society as an integral and irreversible means of survival,” the report said.

In 2015, a survey of 1,017 defectors by Seoul University professor Byung-yeon Kim found that official channels such as the PDS accounted for just 23.5 percent of people’s food intake. Around 61 percent of respondents said private markets were their most important source of food, and the remaining 15.5 percent came from self-cultivated crops.

So the official system may mean little to many North Koreans.

“WFP has consistently been asking (the North Korean government) to carry out a more detailed study on market activity and the role of markets in achieving household food security,” a spokeswoman said.

 

PIZZA IN PYONGYANG

As in other countries, North Korea’s wealthy have choice. Residents of the capital can order up a pizza in one of Pyongyang’s hundreds of restaurants, say regular visitors. Many of the eateries are operated by state-owned enterprises. Some used to cater only to tourists. Increasingly they now also collect dollars and euros from locals.

At a place people know as the “Italian on Kwangbok Street,” for example, moneyed locals and western tourists alike can pick vongole pasta for $3.50, or pepperoni pizzas for $10, the menu says. This compares with $0.30 for a kilo of corn or $0.50 for a portion of injogogi in the markets.

Reuters was unable to determine how the restaurant sources its ingredients such as pepperoni, although North Korea imports processed meats and cheeses from European countries and Southeast Asia – such imports are legal. Calls to the phone numbers on the menu failed and an operator for the Pyongyang switchboard said the numbers could not be connected to international lines.

As the economy in North Korea has changed, so have the tastes of a moneyed middle class keen to try new foods. Kim Jong Un has called for more domestically produced goods, according to state media, and there are more locally made sweets, snacks and candies. The country does not publish detailed import data but China’s exports of sugar to North Korea in January to September this year ballooned to 44,725 tonnes, Chinese data shows. That is about half of all China’s global sugar exports and compares with 1,236 tonnes in 2016 and 2,843 in 2015.

North Korea does not produce sugar. According to the International Sugar Organization, the North’s sugar consumption is fairly steady at around 89,000-90,000 tonnes a year – a very modest amount per head. Each South Korean consumes about nine times more than that.

At the other end of the social scale, Chinese data shows corn exports to North Korea also jumped in the first nine months of this year, to nearly 50,000 tonnes, compared with just over 3,000 tonnes in the whole of 2016.

Daily NK reporters say they call secret sources in North Korea several times a week to get the market price of rice, corn, pork, fuels and the won currency – which is traded at around 8,100 to the dollar, as opposed to the official rate of around 100 to the dollar.

So far, their reports suggest, petrol and diesel prices have doubled since the most recent round of U.N. Security Council resolutions. The market price of rice and corn has increased less sharply. Reuters was not able to independently confirm their reports.

And there are other ways North Koreans can supplement their diets.

“My dad often received bribes,” said one 28-year-old defector who asked to be identified only by her surname, Kang, because when she moved out in late 2010 she left her father behind.

He was a high-ranking public official. The bribes he received included goat meat, dog meat and deer meat, she said.

(For a graphic on ‘Rising costs, falling aid’ click http://tmsnrt.rs/2h95QBL)

 

 

(Additional reporting by Heekyong Yang in Seoul, Nigel Hunt in London and Vincent Lee in Beijing; Edited by Sara Ledwith)

 

Monsanto, BASF weed killers strain U.S. states with crop damage complaints

Monsanto's research farm is pictured near Carman, Manitoba, Canada on August 3, 2017.

By Tom Polansek

CHICAGO (Reuters) – U.S. farmers have overwhelmed state governments with thousands of complaints about crop damage linked to new versions of weed killers, threatening future sales by manufacturers Monsanto Co and BASF.

Monsanto is banking on weed killers using a chemical known as dicamba – and seeds engineered to resist it – to dominate soybean production in the United States, the world’s second-largest exporter.

The United States has faced a weed-killer crisis this year caused by the new formulations of dicamba-based herbicides, which farmers and weed experts say have harmed crops because they evaporate and drift away from where they are applied.

Monsanto and BASF say the herbicides are safe when properly applied. They need to convince regulators after the flood of complaints to state agriculture departments.

The U.S. Environmental Protection Agency (EPA) last year approved use of the weed killers on dicamba-resistant crops during the summer growing season. Previously, farmers used dicamba to kill weeds before they planted seeds, and not while the crops were growing.

However, the EPA approved such use only until Nov. 9, 2018, because “extraordinary precautions” are needed to prevent dicamba products from tainting vulnerable crops, a spokesman told Reuters in a statement last week. The agency wanted to be able to step in if there were problems, he said.

Next year, the EPA will determine whether to extend its approval by reviewing damage complaints and consulting with state and industry experts. States are separately considering new restrictions on usage for 2018.

Major soybean-growing states, including Arkansas, Missouri and Illinois, each received roughly four years’ worth of complaints about possible pesticide damage to crops this year due to dicamba use, state regulators said.

Now agriculture officials face long backlogs of cases to investigate, which are driving up costs for lab tests and overtime. Several states had to reassign employees to handle the load.

“We don’t have the staff to be able to handle 400 investigations in a year plus do all the other required work,” said Paul Bailey, director of the Plant Industries division of the Missouri Department of Agriculture.

In Missouri, farmers filed about 310 complaints over suspected dicamba damage, on top of the roughly 80 complaints about pesticides the state receives in a typical year, he said.

Nationwide, states launched 2,708 investigations into dicamba-related plant injury by Oct. 15, according to data compiled by the University of Missouri.

States investigate such complaints to determine whether applicators followed the rules for using chemicals. Those found to have violated regulations can be fined.

Monsanto has said that U.S. farmers spraying this past summer failed to follow detailed instructions of up to 4,550 words printed on labels.

The companies will change usage instructions in hopes of avoiding a repeat of the past summer’s problems.

“With significant adoption and a lot of interest in this new technology, we recognize that many states have received a number of reports of potential off-target application of dicamba in 2017,” Monsanto spokeswoman Charla Lord said last month.

 

PHOTOGRAPHING DAMAGED SOYBEANS

State investigators try to visit fields within days after farmers report possible damage to take photos before signs of injury, such as cupped leaves on soybean plants hit by dicamba, disappear. They question farmers and the people who applied the herbicide, and often gather samples from plants to test.

In Arkansas, farmers filed about 985 complaints associated with dicamba, the most of any state. Investigators are probing about 1,200 total complaints involving pesticide use, which includes weed killers, said Terry Walker, director of the Arkansas State Plant Board.

Arkansas delayed inspections of animal feed and allowed overtime to handle the dicamba cases, which is not normal practice, Walker said. He was unable to provide a cost estimate for dealing with the complaints.

Among the farmers who reported damage was Reed Storey, who said he wanted to ensure state officials knew dicamba caused damage even when users follow the instructions.

“I’m calling strictly to let y’all know that we have an issue with this product,” Storey, who spoke last month, said he told Arkansas regulators.

Illinois received about 421 total pesticide complaints, the most since at least 1989, said Warren Goetsch, acting chief of the Bureau of Environmental Programs at the Illinois Department of Agriculture. That includes at least 245 complaints associated with dicamba, which could take until next year to finish investigating, he said.

“It’s frustrating I think for us that we’re as behind as we are,” Goetsch said.

 

MONSANTO’S BIG BET

Monsanto is betting on dicamba-tolerant soybeans to replace those that withstand glyphosate, an herbicide used for decades but which is becoming less effective as weeds develop resistance. The company aims for its dicamba-resistant seeds to account for half the U.S. soybeans planted by 2019.

Monsanto, which is in the process of being acquired by Bayer AG  for $63.5 billion, said it plans to open a call center to help customers use dicamba next year and is talking with states about the product.

Monsanto’s net sales increased $1.1 billion, or 8 percent, in fiscal year 2017 due partly to increased sales of its dicamba-resistant soybean seeds.

The company and BASF already face several lawsuits from farmers alleging damage to plants from dicamba used by neighbors.

 

ANALYZING PLANT SAMPLES

The EPA provides grants to states that help fund investigations into pesticide damage and this year offered 35 states extra assistance analyzing plant samples for dicamba, according to the agency.

Minnesota and Illinois turned to the EPA for help, with the latter saying the federal agency has better equipment to detect low levels of dicamba.

In Iowa, the state’s laboratory bureau received 515 samples to test this year, up 35 percent, as dicamba use helped drive up the total number of pesticide complaints to 270 from a typical range of 70 to 120, according to the state. Each test costs up to $9.

“We are really anxious to flip the page and look ahead to 2018 and try to figure out the things that can be done to improve the situation,” said Mike Naig, deputy secretary of the Iowa Department of Agriculture and Land Stewardship.

 

(Reporting by Tom Polansek; Editing by Jo Winterbottom and Matthew Lewis)