China buys U.S. soybeans after declaring ban on American farm goods

FILE PHOTO: Soybeans fall into a bin as a trailer is filled at a farm in Buda, Illinois, U.S., July 6, 2018. REUTERS/Daniel Acker

By Tom Polansek

CHICAGO (Reuters) – China snapped up a small volume of U.S. soybeans last week after pledging to halt purchases of American farm products due to the escalating trade war between Washington and Beijing, U.S. Department of Agriculture data showed on Thursday.

The world’s largest soybean importer struck deals from Aug. 9 to 15 to buy 9,589 tonnes for delivery in the current marketing year and 66,000 tonnes, approximately one cargo, for the next year, the data showed.

China’s Commerce Ministry said on Aug. 5 that Chinese companies stopped buying U.S. farm products in the latest escalation of the trade war between the world’s two largest economies.

“You do have some buying going on,” said Arlan Suderman, chief commodities economist for INTL FCStone. “It’s a little bit of a surprise.”

China last year imposed retaliatory tariffs that remain in place on imports of U.S. farm products including soybeans and pork. The duties have slashed exports of U.S. crops and prompted the Trump administration to compensate American farmers for losses over two years with as much as $28 billion.

China said on Thursday it hopes the United States will stop a plan to impose new tariffs, adding that any new duties would lead to a further escalation.

China has largely turned to South America for soybeans since the trade war began last year. U.S. soybean sales to China in 2018 dropped 74% from the previous year.

“Compared to what they used to buy, they essentially have halted – but some have gotten through,” Suderman said.

The sales of 9,589 tonnes for delivery in the current marketing year will probably be rolled ahead to be delivered in the next year, which begins on Sept. 1, said Don Roose, president of Iowa-based broker U.S. Commodities.

The cargo sold for delivery in the next marketing year could have been in the works before Beijing said Chinese companies would suspend purchases of U.S. farm goods, said Terry Reilly, senior commodity analyst for Futures International.

“The government may have just given the green light to say, ‘Let this one go through,'” Reilly said.

“One cargo is not going to change the fact that they’re not buying millions of tons of soybeans.”

(Reporting by Tom Polansek; Editing by Marguerita Choy)

U.S. Midwest farm economy hit hard by record floods – Fed banks

FILE PHOTO: A levee breach is shown in this aerial photo, from flood damage near Bartlett, Iowa, U.S., March 29, 2019. REUTERS/Tom Polansek/File Photo

By P.J. Huffstutter

CHICAGO (Reuters) – U.S. farm incomes in the Midwest and Mid-Southern states declined yet again in the second quarter of 2019, as record floods devastated a wide swath of the Farm Belt, according to banker surveys released on Thursday by the Federal Reserve Banks of St. Louis and Kansas City.

Nearly two-thirds of the bankers surveyed by the St. Louis Fed said a majority of their farm customers were either significantly or modestly impacted by the flooding and other adverse weather earlier this year.

But in parts of the Midwest, federal trade-related aid to farmers and corn prices rising this spring due to the wet planting conditions slowed the pace of that income drop, according to bankers surveyed by the Kansas City Fed.

“These developments may have led to less pessimistic expectations about farm income in coming months,” the Kansas City Fed wrote in its survey.

The floods added more pain on farmers who have also been hurt by low crop prices and the trade war between Washington and Beijing, which has slashed shipments of U.S. agricultural products to China. The floods also battered earnings for global grain traders Cargill Inc and Archer Daniels Midland Co <ADM.N>, as heavy rains halted barge traffic on the Mississippi River, disrupted cattle shipments and caused some plants to be shuttered.

The St. Louis Fed said the second quarter marked the 22nd consecutive quarter for farm incomes dropping in the Eighth Federal Reserve District, which includes all or parts of seven Midwest and Mid-South states: Arkansas, Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee.

The weaker income trend is expected to continue in the third quarter, dragged down by the ongoing trade fight between the United States and China, problems with crop production and depressed commodity prices, bankers in the Eighth District said.

The flooding and extreme weather also impacted local economies in western Missouri, Kansas, Nebraska and Oklahoma, according to the Kansas City Fed’s survey. The bank’s Tenth District also includes Colorado, Wyoming and portions of northern New Mexico.

Farm household spending and farm capital expenditures also were lower for the quarter for the Eighth District, compared with a year earlier, raising concerns about potential ripple effects overall on rural communities.

But bankers there said they did expect such belt-tightening to ease in the third quarter, as farmers prepare for the fall harvest season.

(Reporting By P.J. Huffstutter in Chicago; Editing by Matthew Lewis)

U.S. cows and pigs gorge on bakery rolls, pet food as corn prices surge

FILE PHOTO: Cattle rest in a field outside a farm in Peosta, Iowa, U.S., July 26, 2018. REUTERS/Joshua Lott/File Photo

By Tom Polansek

CHICAGO (Reuters) – U.S. farmers are feeding their livestock everything from outdated pet food and leftover bakery rolls to crops imported from South America after unprecedented spring planting delays boosted prices for locally grown corn.

Corn is typically used to fatten hogs, cattle and poultry, but its high price has farmers in the $150 billion U.S. meat and dairy industry looking elsewhere to keep down costs.

Agricultural cooperatives, equipment dealers and plants that process corn into ethanol have already been strained because farmers were unable to plant millions of acres this spring due to widespread flooding.

Meat producers are now turning to substitutes in an attempt to keep production costs down and stretch out supplies of corn held in storage. Many expect corn prices will climb even higher once harvesting starts this fall because yields are expected to be weak due to springtime flooding.

Feed is typically the biggest cost of raising farm animals, so adjusting diets has become critical for producers who are also grappling with a U.S.-China trade war that has hurt exports of American agricultural products including pork.

Higher corn prices could raise costs for meat producers like Tyson Foods Inc, which reports earnings on Monday.

CAKES AND CANDIES, ANYONE?

Ohio farmer Jim Heimerl, who sells 700,000 pigs a year, swapped out corn for dry pet food, which he acquires through a broker and can be outdated or mislabeled. Heimerl is also feeding his hogs more wheat middlings, which are a byproduct of the flour milling process.

“We’re already starting to ration our corn out,” he said.

The U.S. Department of Agriculture predicted in July that farmers will harvest the smallest corn crop in four years. Many grain traders and analysts expect the agency will lower its harvest estimate after surveying farmers again about plantings.

Most-active corn futures hit a five-year high in July and are now trading around $4 a bushel on the Chicago Board of Trade, up 7% from a year ago. Farmers have seen prices climb even more in cash markets in areas where rains washed out plantings.

“It’s only going to get worse and it’s all because of the weather,” Heimerl said.

In Minnesota, farmer Randy Spronk is using recycled bakery byproducts such as breads, cakes and candies for 10% of his hogs’ rations to reduce his need for corn.

“The bushels that are here are precious,” he said. “We’re trying to make them last as long as we can.”

Spronk buys the crushed bakery goods from ReConserve, which says it is the country’s largest recycler of bakery, cereal grain and snack food byproducts.

The bakery goods are safe and nutritious for livestock but do not meet manufacturers’ packaging or quality standards for human consumers, said Bryan Bergquist, ReConserve’s vice president of feed sales.

“In times like this, when your main input in feeding livestock goes up, you start looking for best cost alternatives,” said Omarh Mendoza, nutrition director for The Maschhoffs, the largest U.S. family-owned pork producer.

CORN FROM BRAZIL

North Carolina-based Prestage Farms has been feeding distillers’ dried grains, an ethanol byproduct, to hogs in Iowa and has also imported corn from Brazil, said John Prestage, whose family owns the company. North Carolina farms use corn from Midwest states including Ohio and Indiana, where cash corn prices will be strong, he said in an email.

“We are looking everywhere to minimize the impact of high priced corn,” Prestage said.

Smithfield Foods [SFII.UL], a Prestage Farms partner, books the corn imports and is looking to bring in more, Prestage said. Smithfield, owned by China’s WH Group Ltd, declined to comment.

The USDA last month also increased its estimate for the amount of wheat that will be used for feed and residual purposes in 2019/20 by 7% from June to 150 million bushels. That is much smaller than corn feed and residual use of 5.175 billion bushels, but up 65% from the previous year.

Poky Feeders, which raises about 125,000 cattle on three feedlots in Kansas, changed its grain rations to be half wheat from all corn in July, said Chief Executive Joe Morgan. Cattle gain weight well when they eat wheat, he said.

“Most of the time it’s just too high compared to corn,” Morgan said about prices. “Right now, it’s not.”

(Reporting by Tom Polansek in Chicago; Editing by Caroline Stauffer and Matthew Lewis)

U.S. says trade aid payments to farmers to range from $15 – $150 per acre

FILE PHOTO: A farmer drives tractor along a road in Pearl City, Illinois, U.S., July 25, 2018. REUTERS/Joshua Lott

The U.S. government will pay American farmers hurt by the trade war with China aid ranging between $15 to $150 per acre starting from mid- to late August, Department of Agriculture officials said on Thursday, as part of President Donald Trump’s up to $16 billion support package.

The fresh aid program would be the second round of assistance for farmers after the USDA’s $12 billion plan last year to compensate for lower prices for farm goods and lost sales stemming from trade disputes with China and other nations.

Agriculture Secretary Sonny Perdue said farmers have been disproportionately hurt by the trade dispute with China and therefore a fresh round of aid was justified. “They are fighting the fight and they are on the front line,” he said.

U.S. farmers, a key Trump constituency, have been among the hardest hit in the trade war between the world’s two largest economies. Soybeans are the most valuable U.S. farm export, and shipments to China dropped to a 16-year low in 2018.

In the new package, the USDA has developed varying county rates, calculated based on estimated trade damage caused by retaliatory tariffs imposed by China, the top export market for many U.S. agricultural products.

Sign-ups for the payments will begin on Monday and last until Dec. 6, USDA officials said in a conference call. Additional tranches of the payments are scheduled for November and January but will be subject to whether the trade disputes with China and other countries are still ongoing or not by then.

To be considered eligible for payments, acreage of non-specialty crops and cover crops must be planted by Aug. 1, 2019, the USDA said.

The number of farm acres that could not be planted due to weather were at historic levels this year, USDA officials said but added that the department was still working to finalize its estimate.

(Reporting by Humeyra Pamuk; additional reporting by P.J. Huffstutter and Karl Plume in Chicago; writing by Caroline Stauffer; editing by Chizu Nomiyama and Jonathan Oatis)

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.&nbsp;

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,&rdquo; 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.&nbsp;&nbsp;&nbsp;

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)