January 2002

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January 2002 Idaho Agricultural Outlook Beef Demand Is Strong In U.S. Homes, But Industry's Long-Term Well-Being Depends On Expanded Exports By Marlene Fritz, University of Idaho Despite an ailing economy and shrinking exports, demand for beef in the American kitchen remains robust, says C. Wilson Gray, University of Idaho Extension agricultural economist. Writing in the University of Idaho's January 2002 Idaho Agricultural Outlook, Gray says consumer demand for beef at grocers' counters increased steadily during 2001&emdash;by 3.7 percent in the first quarter, 5.8 percent in the second quarter and 3.4 percent in the third quarter&emdash;compared with year-ago figures. The source of that data, Kansas State University, doesn't keep similar figures for beef consumed at restaurants, but Gray says weakness in some high-value wholesale cuts indicates lower demand for beef eaten away from home. Indeed, high prices and smaller supplies have shaved 1.9 pounds from overall per-capita beef consumption, which is now at 67.5 pounds per American. Domestic consumption&emdash;90 percent of U.S. beef production&emdash;is increasingly critical to the industry's health, Gray says. That's because exports have been seriously jeopardized by the discovery of bovine spongiform encephalopathy, or BSE, in Japanese cattle this September. Gray calls the trade implications "decidedly negative, especially in the near term. As in Europe, Japanese consumers have taken the road of extreme caution toward beef by not consuming it." While U.S. beef marketers can exploit an advantage in selling beef from a BSE-free environment, Gray cautions that the "distrust may extend to beef in general." In fact, U.S. beef exports to Japan have decreased nearly 50 percent since September. "For the past 15 to 20 years, annual increases in beef exports were the typical situation and domestic consumption was less certain," Gray writes. "Things may now be in the reverse, with the uncertainty of exports to Japan and an apparently strong domestic desire for beef." He advises producers to look to the newly re-initiated World Trade Organization negotiations for aid in increasing exports. The 1994 Uruguay Round Agreement on Agriculture expanded both U.S. and world beef trade, he says, and the current negotiations may improve market access and thereby further expand U.S. export potential. According to a report just released by the USDA Economic Research Service, 85 percent of the world's beef consumption and 90 percent of its production now occur within a very limited circle of 13 countries. The report counts the European Union as one nation. More than half the world's beef is produced and consumed in the U.S., European Union and Brazil. Five nations&emdash;the U.S., Russia, Mexico, Japan and Korea&emdash;now consume more beef than they produce, seven nations buy 90 percent of the world's beef imports and 10 nations sell 95 percent of the world's beef exports. Fortunately, the U.S.&emdash;the world's second-largest exporter behind Australia&emdash;enjoys important comparative advantages, among them its current freedom from BSE and foot-and-mouth disease. Indeed, during the period of agricultural trade liberalization that occurred in the 1980s and 1990s, the U.S. experienced a 10-fold growth in beef exports, Gray reports. As a percentage of world beef trade, U.S. exports increased from about 2 percent to 20 percent. "Although our volume of imports continues to exceed our volume of exports, it is very critical to note that the value of U.S. exports has exceeded the value of U.S. imports since 1992," Gray says. That's because we export mainly higher-value cuts, which go to high-income markets. Under present trade policies, world trade in beef by its nine major importers is expected to expand by 20 percent by 2010, Gray says. "Much of that increase will be by higher income countries and most will be for grain-fed beef." Gray believes the U.S. will be able to supply about a quarter of the increased demand. Concerns about export demand are among the factors currently plaguing the beef industry, Gray says. Pacific Northwest cattle prices have "glided down" since June, and the November average of $63.62 per hundredweight is 9 percent below a year ago and 5 percent below average. Large supplies of heavy cattle on feed are weighing down the market and feedlots have been "showing red ink" since late summer. Fed cattle prices typically trend upward after September, Gray says, and a late fall decline has only occurred in five years since the mid-1970s. Commercial beef production for 2001 is likely to be down about 2.8 percent compared with 2000 and to drop another 2.5 to 3.0 percent during 2002, Gray projects. He expects fed cattle prices to "languish" in the low to mid $60s through January, pull into the low $70s by late February or March, stay in the $70s at least through the first half of the second quarter, then decline seasonally into the upper $60s by late May. The UI's January 2002 Idaho Agricultural Outlook is available in its entirety, with supporting tables and graphs, on the Web site of the UI Department of Agricultural Economics and Rural Sociology, http://www.ag.uidaho.edu/aers. Once on the home page, Internet users should click first on Publications, then on the January 2002 outlook. China's Ag Policy Focuses On Meeting High Quality Food Demand The U.S. Department of Agriculture expects China's imports of wheat, soybeans, vegetable oils, and cotton to rise in the years after accession to the WTO to cause changes in China's grain industry because ofas new pressures from external competition and internal shifts in consumer preferences reshape the industry. A new report from the USDA's Economic Research Service, China: Agriculture in Transition, focuses on the long-term expectations for China's agriculture in the face of continued growth and openness to trade. The report says that China's demand for soybeans to feed its emerging livestock and edible oils industries will continue to grow. Soybean imports are expected to top a record 13.2 million tons in 2000/01.  China's livestock sector is expected to play a key role in reshaping China's agriculture in the coming years and it is competitive in terms of production costs but sanitary issues limit export opportunities. The expanding scale of the sector and the shift from backyard to modern feeding operations will expand the demand for feed ingredients, including grains and protein meals. The report notes that China's government is starting to move away from past policies that emphasized quantity of grain produced over quality. Protection or support prices for certain types of low-quality wheat and rice have been discontinued. Premium prices are offered for high-quality grains. China is the world's largest agricultural producer and is the largest producer of many of the world's major agricultural commodities. China is also the world's largest consumer of agricultural products. China's economy is still one of the fastest growing economies in the world, with a reported 8-percent gross domestic product growth in 2000. A surge of foreign investment and continued government spending stimulated the country's economy during the first half of 2001. In the long term, greater openness to trade and social reforms will boost economic growth, stimulating demand for food and fiber. This report also includes a summary of the agricultural provisions of the 1999 U.S.-China bilateral agreement that served as the foundation of China's terms of accession to WTO. The ERS report, China: Agriculture in Transition, is available online at  http://www.ers.usda.gov/publications/wrs012/.            Clearfield Wheat: New Weed Management Tool For Montana Wheat Growers By A.J. Bussan, Crop Weed Specialist, Montana State University Montana wheat growers are facing greater weed populations both because of increasing weed resistance to herbicides and because some weed seeds never germinated due to drought, leaving more seeds to sprout when conditions permit. A new wheat variety may give growers fresh options. First the background: For years Montana wheat growers have managed downy brome, feral rye and jointed goatgrass with crop rotation and fallow. It has been a necessity, because no selective herbicides have been available to manage these in winter wheat. Unfortunately, these weeds persist in crop production systems even in the most optimally managed fields. For example the drought of the past three to four years in central Montana has built up a downy brome seed reservoir. The drought prevented downy brome from germinating in fallow fields. As a result, the downy brome seed has persisted into the following winter wheat crops where it germinated and resulted in heavily infested crops. Many winter wheat fields were destroyed to manage downy brome over recent years. Maverick and Olympus are new selective herbicides available (Olympus is not labeled yet) for managing downy brome in winter wheat. Neither of these will manage feral rye or jointed goatgrass and only have limited activity on spring annual grass weeds such as wild oat or Persian darnel. Maverick and Olympus are both injurious to barley and have the potential to carryover for at least 12 months (Olympus) to 24 months (Maverick). The new tool: Clearfield wheat is a new herbicide resistant wheat developed by BASF and both university and private breeding programs in the Northern Great Plains. Clearfield wheat is resistant to imadazolinone herbicides such as Pursuit and Raptor. Beyond will be labeled for use in Clearfield wheat potentially as soon as spring of 2002. Beyond has good to excellent activity on downy brome, jointed goatgrass, feral rye, wild oat, green foxtail and Persian darnel. In addition, it is good to excellent on Russian thistle, annual mustard and other broadleaf weeds. Availability of winter and spring wheat varieties with resistance to Beyond herbicide is limited at the moment. Montana adapted winter wheat varieties with resistance to Beyond are still 12 to 24 months from being available. Montana adapted spring wheat varieties with resistance to Beyond will not be available for another 3 to 4 years. Current resistant spring wheat varieties have been evaluated and found not to have acceptable levels of tolerance to Beyond herbicide. MSU and private companies are working to develop spring wheat with double the current level of resistance. Beyond herbicide has the same mode of action as other herbicides that are already commercially available. Beyond targets the same enzyme as all sulfonylurea herbicides (Glean, Finesse, Ally, Amber, Peak, Harmony, Harmony Extra, Express, Pursuit, Raptor (same active ingredient as Beyond), Everest, Maverick, Olympus and Assert). As such herbicide resistance is a legitimate concern. Beyond will not manage Glean-resistant kochia (prevalent throughout Montana) or Assert-resistant wild oat, which occurs in isolated regions of Montana. Continuous use of Beyond or rotation of it with other herbicides with the same site of action (Maverick or Olympus) could lead to herbicide resistance in other species. Downy brome resistant to herbicides with this site of action are a concern in grass seed production regions of Oregon. Studies have shown herbicide resistant hybrids of jointed goatgrass and winter wheat. Resistance to Beyond herbicide was still present in back crosses of the hybrids to jointed goatgrass, although the backcrosses only occurred at low frequency. The final drawback of Clearfield wheat with resistance to Beyond is the price. The price of Beyond herbicide will likely be similar to that of other post emergence wild oat herbicides ($10 to $15 per acre). This price allows for rescue management and will be an extremely valuable weed management practice on a limited basis. However, the cost of applying Beyond during every winter wheat or spring wheat year of the rotation will quickly become cost prohibitive. For the long term economic success of Montana crop production systems, growers must implement crop rotations (i.e. grow winter wheat one in four years), effectively manage weeds in fallow, delay seeding of winter crops to allow for management of early establishing downy brome and jointed goatgrass and implement other cultural management practices. Large China Imports Unlikely Until Late 2002 Reprinted from WAWG's Green Sheet China's purchase of 33,100 metric tons of U.S. wheat last week got traders excited, as they speculated that China was shopping to sample qualities. Speculation that the purchases are due to interest by the government or private buyers is just that&emdash;speculation&emdash;in the opinion of USW regional vice president Matt Weimar. Weimar, who directs USW's market development activities in China, reports that there are still no clear signs of increased imports for the immediate future. "At this point I am optimistic for increased import demand in the second half of 2002," Weimar says, "but many observers, including me, doubt that we will see substantial action in this marketing year (which ends May 31, 2002)." Most imports before the marketing year ends are likely to fulfill private sector quota under WTO tariff rate quota requirements, and "expectations are these will be higher quality wheat demanded by processors." Weimar reports that it appears that the recent purchases are basically "add-ons" to prior buys. "We expect that imports of wheat will increase by the latter part of 2002, as domestic stocks dwindle," he says, "but ample domestic availability will likely dictate the market in the first half of the year." January 2002 Idaho Agricultural Outlook Milk Prices Headed For An Average Year In 2002 By Marlene Fritz, University of Idaho With a reasonable feed cost outlook and near average milk prices, 2002 "should be a decent year for most Northwest dairy producers," says C. Wilson Gray, University of Idaho Extension agricultural economist. "It probably just won't be a record-setting one." The November 2001 price for manufacturing grade milk was $11.31 per hundredweight&emdash;very near the five-year average and above the November price for the previous two years, Gray says. December's price should be "near-average" as well, and, indeed, prices throughout 2002 "may be more 'average' than not." For the first 11 months of 2001, milk prices have averaged $13.41 per cwt., considerably better than the $9.37 average for 2000. Currently, the USDA is forecasting manufacturing grade milk prices to bounce between $10.50 and $12.70 per cwt. during 2002, with the low point expected in the second quarter and the high point in the third quarter. Cornell University, in a compilation of forecasts, projects the average 2002 price at $11.92, moving from a low near $11 in March to a high near $13 by September/October. Gray's dairy outlook is part of the University of Idaho's January 2002 Idaho Agricultural Outlook. In it he notes that heifer replacement costs averaged $1,655 in the third quarter of 2001, and early figures indicate a fourth-quarter average of more than $1,700 per head. Although November dairy cow numbers for Idaho were 369,000 head&emdash;4.2 percent higher than year-ago figures&emdash;the herd was still 7,000 head smaller than it was in July. "Numbers have been slowly declining since August," says Gray. "High replacement costs and uncertainty over milk prices and demand have likely combined to limit expansions, and some producers continue to exit the industry." The U.S. dairy herd, now at 7.727 million head in the 20 reporting states, actually increased 8,000 head from October, though numbers have been generally declining since January, Gray says. Compared with year-ago figures, U.S. milk production decreased each month until November, and total cheese production through October has averaged 91 percent of year-ago figures. "This decrease in total production has helped bring cheese stocks lower," Gray says. "Unfortunately, butter has not followed suit." By the end of October, the nation's butter stocks were up nearly 63 percent over the same time in 2000. Idaho's total cheese production was up 4.1 percent over year-ago levels for October and 6.8 percent for September, Gray says. Per-cow milk production for November rose 50 pounds to 1,720, due in part to mild weather, leaving the Gem State's per-cow production 16 percent higher than the 1,480-pound national average. For 2002, the USDA is projecting a 2.7 percent increase in total U.S. milk production, to 169.9 billion pounds. Gray says the national economy "will hold a major key to dairy fortunes" during the new year. The current slowing of demand for meals away from home is already having a significant effect: commercial disappearance of dairy products for the first nine months of 2001 rose a "paltry" 0.4 percent over the same period in 2000, and the USDA projects it will rise only 1.8 percent in 2002. That compares with annual increases over the past three years in the 2.7 to 3 percent range. "Dairy products are a big part of the 50 percent of meals eaten away from home," Gray says. "Many of these are fast-food meals that are heavy on cheese." Because of lackluster demand, cheese prices tumbled from $1.72 a pound at the beginning of September to nearly $1.20 by the end of October and have been moving sideways since. "Much depends on the economy and whether recovery will happen as quickly as most would like," Gray says. Although debates over the dairy title in the upcoming Farm Bill are "contentious" as usual, Gray says extending the support price at some level near the current $9.90 "is virtually certain." However, "Patching up a worn-out and possibly outmoded Federal Order system that sets prices will take considerable time." Because nearly all milk produced today is fit for fluid consumption or Class I, Gray questions the necessity for continuing regional market orders based on milk class. Requiring all milk to be Class I would allow milk to be priced by the market for end-use. "With too many special interests involved, such a simplification is unlikely, but in the longer term it might actually improve milk markets for dairy producers, compared to the swamp they are wading in now," he says. The UI's January 2002 Idaho Agricultural Outlook is available in its entirety, with supporting tables and graphs, on the Web site of the UI Department of Agricultural Economics and Rural Sociology, http://www.ag.uidaho.edu/aers. Once on the home page, Internet users should click first on Publications, then on the January 2002 outlook. Alfalfa Variety Trial Results By Tim Woodward, WSU Cooperative Extension, Benton-Franklin Counties The results of the Washington State Hay Growers Association/WSU variety trials are now available. Five alfalfa trials were harvested for yield in 2001. Two trials near Othello, WA and three trials near Pasco, WA were conducted by the WSHGA and Washington State University. Due to a shorter growing season, the Othello trials are cut four times while the Pasco trials are cut five. Each trial is arranged in a randomized complete block design with four replications. Entries are made up of both experimental and commercial varieties. Forage yields for each harvest in 2001, the total yield in 2001, and the total for all years of the current trials to date are reported. Also available is a summary of yields (reported in % of mean for easier comparisons) over seven trials for varieties currently on the market. Information on dormancy, disease and insect resistance for the same varieties is included. Copies of the results can be obtained from the Pasco Extension Office.

Barley Export Opportunities In Latin America From the U.S. Grains Council Continued growth in Latin America's brewing and dairy industries translates into market opportunities for the U.S. barley industry, according to participants in a recent U.S. Grains Council mission to Mexico, Costa Rica and Peru. Among those traveling on the mission November 26-December 7 were barley growers Tom Conroy of the Minnesota Barley Council, Richard Groven of the North Dakota Barley Council, and Douglas Scoville of the Idaho Barley Commission. They headed south to assess the market potential for U.S. barley in the food, feed and brewing sectors, to take a first-hand look at the Council's ongoing market development efforts in Central and South America, and to help determine the Council's future market development strategies in the region. Their first stop was Mexico, where the brewing industry is a major and growing market for U.S. barley. "Mexico is already the top importer of U.S. malting barley and malt, and beer consumption there is expected to continue to grow five percent per year," noted Groven, who raises barley in Northwood, N.D. "So we are working through the Grains Council to build our export levels and our market share by strengthening our relationships with the players in the industry, including Mexico's two largest brewers, CCM and Modelo." Scoville, who farms in Potlatch, ID said these relationships will be particularly important in coming years, as the United States faces increased competition from Canada under the North American Free Trade Agreement. "But we're confident that the U.S. can retain our advantage in Mexico, thanks to the foothold that we already have, the quality of the product we provide, and our advantage as the supplier in closest proximity to Mexico," he added. Mission participants also saw opportunities to promote the use of barley as feed for dairy cattle in Mexico and Costa Rica. "Neither country is importing much barley for feed purposes right now, but adding barley to dairy cattle rations has been proven to increase milk production," explained Conroy, a producer from Wheaton, Minn. "By working through the U.S. Grains Council to educate the dairy industry about barley's benefits, we hope to spur sales of feed barley to both Mexico and Costa Rica." January 2002 Idaho Agricultural Outlook UI Ag Economist Is "Still Optimistic" About Prices for Most Idaho Dry Beans By Marlene Fritz,University of Idaho USDA estimates for 2001 national dry bean production crept upwards by 1.1 percent between October and December, but a University of Idaho Extension agricultural economist says he is "still optimistic" about the price of southern Idaho's traditional dry bean classes. Weighed down by hearty supplies, northern Idaho's garbanzo beans are bringing just $16.50 per hundredweight, but prices for some of Idaho's other bean classes could approach $30 by the end of the 2001-02 market year, says Paul Patterson in the UI's January 2002 Idaho Agricultural Outlook. At 19.602 million cwt., the nation's 2001 dry bean crop is the smallest since 1988. Because of reduced acreage, Idaho's 1.424 million cwt. crop was 17 percent under last year's, but yields were unchanged from the previous year's 1,950 pounds per acre. Patterson expects U.S. carryover stocks to erode significantly, dropping to 4.9 million cwt. by this August and possibly to as low as 1 million cwt. by August 2003. That means supplies&emdash;particularly 2002 production&emdash;"will have a more dominant influence on the market than has been the case for several years." On the demand side, exports are key, Patterson says: The USDA currently forecasts 2001 exports at 8.25 million cwt., higher than last year's 7.86 million cwt. but below the five-year average of 8.71 million cwt. Patterson now forecasts Idaho's composite dry bean price for the 2001-02 marketing year at $22, compared with $17.35 last year and a five-year average of $18.80. The stronger composite price reflects the greater than 25 percent drop in U.S. production over last year. However, production and mid-December prices of individual classes vary widely: * pintos, down 19.6 percent nationally in production and 18.3 percent in Idaho and trading at $21 * garbanzos, up a third nationally and now steady in Idaho after recent years' steep gains, trading at $16.50 * pinks, up 1.25 percent nationally and 52.9 percent in Idaho, trading at $24-25 * great northerns, down 17.1 percent nationally and off nearly 40 percent in Idaho, trading at $18 * small reds, down 45 percent nationally and 43.5 percent in Idaho, trading at $22-25 * small whites, down 40.6 percent nationally and 34.5 percent in Idaho, trading at $20.50 First published in USDA's December estimate, the specific information on production by class "may help explain why the prices of some bean classes have remained relatively weak," Patterson says. Exports for the first three-quarters of 2001, up 14.1 percent overall compared with 2000, vary dramatically by class as well&emdash;from an increase of 98.6 percent for light red kidneys to a decrease of 88.2 percent for pinks. Exports for other classes: pintos up 22.3 percent, garbanzos down 20.3 percent, great northerns up 17.6 percent, small reds down 29.7 percent and whites down 13.6 percent. In their November Vegetables and Specialties Situation and Outlook Report, USDA economists indicated that the aggregate dry bean price should continue to strengthen throughout the remainder of the marketing year. "Will the dry bean market behave like the 1995 market, when the composite price jumped from $18 in the first third of the market year to a high of $26 by July?" asks Patterson, "or will it follow the 1993 market year, when prices strengthened during the fall but drifted lower after January?" Patterson believes the first scenario is "most likely, given the current market fundamentals." For the 2002-03 marketing year, Patterson estimates U.S. production of between 24.5 and 28.5 million cwt., U.S. exports of 7.5 to 8.5 million cwt., Idaho production of 1.78 to 2.065 million cwt. and an average Idaho price of $19 to $23. His likeliest scenario for 2002-03 projects U.S. production at 26 million cwt., U.S. exports at 8 million cwt., Idaho production at 1.895 million cwt. and an average Idaho price of $21. The UI's January 2002 Idaho Agricultural Outlook is available in its entirety, with supporting tables and graphs, on the Web site of the UI Department of Agricultural Economics and Rural Sociology, http://www.ag.uidaho.edu/aers. Once on the home page, Internet users should click first on Publications, then on the January 2002 outlook. Give Your Old Christmas Tree A Second Turn In The Garden By Peg Herring, Oregon State University Don't burn that tree. And don't send it to the landfill, either. After Christmas, there are many useful things you can do with your used tree, according to Ross Penhallegon, horticulture agent with the Oregon State University Extension Service. "Burning a dry conifer can be dangerous, particularly if you decide to burn it indoors in a fireplace or wood stove," Penhallegon warned. Instead, he adds, consider a few better uses: * Convert the tree into wood chips. Use a chipper or mechanical tree grinder and use the chips as mulch around flowers and shrubs or along a path to prevent compaction. * Strip the boughs from the trunk and use them as a mulch around low-growing landscape plants. * Cut up the trunk and use it for firewood or a "Yule log," next year, after the wood dries out. * Prop your tree up in the yard for the winter and hang treats for birds. Decorate it with seed and suet balls, or pine cones coated with peanut butter and seed. Or, check with your local landfill and service groups for ideas. Some community groups pick up old Christmas tress for a small fee or accept them at drop-off points. Many disposal companies shred trees and use the material as mulch in public parks. Request Registration For Folicur & Beyond From the NAWG In a letter recently sent to the Environmental Protection Agency (EPA), NAWG requested EPA to "expedite completion of registrations for 2 very important products for wheat producers: Folicur fungicide and Beyond herbicide (imazamox). Folicur (tebuconazole) is important for activity on Fusarium Head Blight and other fungi, and Beyond in conjunction with Clearfield wheat is important to control herbicide-resistant grassy weeds (such as goatgrass, rye, or cheatgrass) in wheat Both of these compounds have been in the regulatory process for some time, and should he nearing the end of the path for registration. A letter from NAWG, signed by NAWG President Dusty Tallman, included these statements: "It is our understanding that imazamox registration was on the EPA work plan to be completed by the end of September 2001. It is imperative that EPA approves the registration of imazamox as soon as possible, since several varieties of Clearfield wheat are currently under substantial seed increase in a number of major winter wheat producing states. A timely registration is needed so wheat growers can capitalize on this new tool, and so that we may inform them at fall and winter meetings that are currently underway. As we understand it, imazamox has cleared all regulatory hurdles and only awaits finlshing the paperwork before the release is finaL "Agency personnel promised the tebuconazole registration by June of 2001 in a meeting with NAWG representatives over a year ago. States have had to resort to Section 18 petitions, in some cases for over 6 years, to gain access to the product. While the Section 18 process has worked, and we greatly appreciate the quick turnaround of the North Dakota request for 2002, finalizing a Section 3 label for tebuconazole would relieve the agency of processing burdens for emergency petitions, and provide certainty to producers of ongoing product availability. Every year of delay results in greater inoculum concentrations in the field and expansion of the affected area. Economic impacts from Fusarium infestations have amounted to some $3-billion since 1998. Fusarium infestations also result in grain that cannot be used for human consumption, and only in limited amounts in other uses; we believe that part of the mandate of the Food Quality Protection Act is to protect the quality of the U.S. food supply by providing tools to mitigate impacts from pests like Fusarium. "Timely action by EPA in approving both of these compounds is of great importance to U.S. wheat growers. Please advise us on anticipated release dates for these two compounds." Farmers Fight For Livelihoods In Klamath Basin From the NAWG Farmers in the Northwest are making a case that the most endangered species in the region is their livelihood, not the short-nosed sucker and two other fish that the federal government seeks to protect under the Endangered Species Act by shutting off the water supply for local agriculture. On Oct. 11, farmers in Oregon's Klamath Basin filed a $1-billion lawsuit against the federal government alleging a Fifth Amendment takings violation concerning water rights. In the most recent development in a yearlong legal and public relations battle, farmers in northern California and southern Oregon are seeking compensation for loss of irrigation water resulting from a federal water project to protect three species of fish&emdash;in addition to arguing an unconstitutional taking, the farmers also claim that the Klamath Basin Compact adopted between California, Oregon and the federal government in 1957 constitutes the governing legal authority with respect to regional water use. The Klamath Basin battle arose when the U.S. Department of Interior's National Marine Fisheries Service (NMFS) "issued a biological opinion on the endangered Lost River sucker, the endangered shortnose sucker, and the threatened Klamath River Coho salmon." As a result, the U.S. Bureau of Reclamation reduced from 500,000 acre-feet to 70,000 acre-feet per year of the water normally available to 1400 farmers. The water shut off, amounting to an 80% reduction in the local farmers' and ranchers' water supply, has devastated the region's agriculturally based economy in order to attain questionable environmental goals. In an effort to appease local landowners, however, this summer the USDA sent checks to eligible farmers pursuant to the $20-million Klamath Basin Water Conservation program. The USDA payments "ranged from $90 to $110 per eligible acre." Although many landowners "welcomed the payments, they were far short of the economic damage estimated to have resulted from the water shut offs." Considerations For Agriculture It is heartening to see farmers using litigation as an effective tool to not only protect their financial interests, but to raise public awareness of the often absurd environmental challenges they face. The ag community will want to monitor Klamath Irrigation District v. the United States and possibly use similar tactics in confronting future challenges posed by environmental laws that sometimes favor biological organisms over American livelihoods and food security. January 2002 Idaho Agricultural Outlook Farm Bill Wrangling In Congress Leaves Future Farm Support Unclear By Bill Loftus, University of Idaho Congressional wrangling will mean 2001 ends without a farm bill. The nation's New Year's resolution for making better food and agricultural legislation next year should include finding a way to reach consensus, a University of Idaho agricultural economist says. Neil Meyer, UI Extension economist at Moscow, reviewed some of the issues that have derailed efforts to pass a new farm bill. In the UI's January 2002 Idaho Agricultural Outlook, he looked at the differences in viewpoints that are influencing members of Congress in the debate. The full series of reports, developed by faculty of the UI College of Agricultural and Life Sciences, is posted on the Internet at www.ag.uidaho.edu/aers/publications.htm. One of the key issues is how commodity programs will be handled. Producers want to know how a new farm bill will affect their farm or ranch, both in how it operates physically and economically. Conservation measures could mean changes in how their fields are tilled or what measures they must use to prevent nutrient runoff, Meyer noted. "Another very important factor is who benefits from these management actions," he said. "Will the cost be shared in a manner that reflects how the benefits are shared?" Commodity users or consumers do not add in the cost and safety of farm products, and require a broader social perspective that includes air particulates, water quality and wildlife habitat, Meyer said. "Policies that adjust cost to consumers become a type of subsidy to someone. Low-cost grains become a subsidy to livestock feeders. Low-cost food becomes a subsidy to employers because it permits them to pay lower wages," Meyer said. Low-cost exports are a subsidy to foreign consumers and users. Trade has sometimes served as the catchall answer to agriculture's problems. What benefits may be true in theory, such as low-cost food from global sources, also can inflict damage on individuals, Meyer said. For an exporter, policies that stimulate sales encourage higher production and lower costs per unit. That equals higher profits. Meyer said, "The critical questions are how much to export and at what price?" "When the U.S. subsidizes exports, we are reducing the cost to foreign consumers of those products or services. We are also charging taxpayers and giving the subsidy to domestic producers," he said. "Is the nation better off?" When it comes to consumers of imports, which includes Americans in general, three main reasons drive the nation's policies. Another nation can supply something that is higher quality, has a lower cost than we can produce it, or it can grow something American producers can't. Coffee and bananas are two non-competing products. In the case of commodities produced both here and abroad, if the quality is the same, prices become the determining factor, Meyer said. "Consumers may benefit from these lower prices but at the expense of domestic producers," he added. "This can set up some interesting political dynamics." Food nutrition and safety may have the largest effect of the new farm bill. "Food safety is becoming a more complicated subject almost daily," Meyer said. Some worry about biological contamination or pesticides in their food. Imports from nations with different regulations can heighten that anxiety. Genetically modified foods or food additives are also issues that a farm bill may address in one way or another. Consumers often have differing opinions on such issues beyond their demand for a safe, healthy food supply. "Terrorism risks are the new thing on the block," Meyer noted. "As a result we will likely see new sections in the farm bill aimed at protecting food and assuring consumers of the safety of our food." Conservation issues in the farm bill can have many faces, Meyer noted. They range from the Conservation Reserve Program that pays growers to plant highly erodible lands to favor wildlife or the Environmental Quality Incentives Program to help livestock operators better protect water quality. Other issues include credit programs to help finance new and beginning producers, and rural development services to aid rural residents and communities. Agricultural research, which can boast a century of success, may face challenges because its benefits have been most evenly applied at the level of the general public, which benefits from low-cost food for all consumers. Meyer said, "Producer benefits from new research have been unevenly distributed. Early adapters clearly received benefits. Late adapters may lose competitive position because their production costs were above average." Meyer said the fate of various proposals to shape a new farm bill next year remain clouded. "There are some very serious questions being asked by non-food producer residents. Because potentially, agricultural programs are becoming larger, they are being examined more closely," he said. "Agricultural producers need to articulate why consumers should continue to fund specific individuals at levels far above the average incomes of taxpayers," Meyer said. "The question is: would the product be produced without the government payment?" "There are benefits to consumers in having safe food and water. They need to be articulated to consumers for continued support of agricultural programs. Commodity and general agricultural membership groups would do well to spend time and efforts articulating these benefits," he added.

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