World Agriculture Outlook 2015-2016 Edition by Faircount Media Group

WORLD AGRICULTURE

OUTLOOK 2015-2016 EDITION

RIPE FOR THE PICKING U.S. and China strike a trade deal on the fresh apple market

INTERVIEWS DR. BARB GLENN,

CEO, National Association of State Departments of Agriculture

BILL NORTHEY,

Secretary of Agriculture, Iowa Department of Agriculture

RON DE YONG,

Director, Montana Department of Agriculture

LAURA BATCHA, CEO and Executive Director, Organic Trade Association

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WORLD Agriculture

OutlooK 2015-2016 edition

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table of contents Q&As Dr. Barb Glenn CEO, National Association of State Departments of Agriculture.......2 Bill Northey Secretary of Agriculture, Iowa Department of Agriculture.............. 6 Ron de Yong Director, Montana Department of Agriculture............................... 9 Laura Batcha CEO and Executive Director, Organic Trade Association............... 28

FEATURES California Almonds: Here to Stay ................................................. 12 By Craig Collins Ripe for the Picking......................................................................16 The United States and China strike a trade deal on the fresh apple market. By Eric Seeger U.S. Beef: Bouncing Back.............................................................20 By David A. Brown Will China’s Sorghum Boom Go Bust?.......................................... 24 How U.S. sorghum growers came to supply nearly all of China’s sorghum imports – and what to expect when things calm down. By Craig Collins The Trans-Pacific Partnership....................................................... 32 What’s in it for agriculture? By Craig Collins U.S. Agriculture and the Cuban Détente: Dreams vs. Reality......... 36 By Craig Collins A Tight Rein................................................................................40 Regulation and safety of U.S. GMOs By J.R. Wilson Feeding a Need.............................................................................44 Kansas State University takes aim at world food challenges. By Pat Melgares, Communications Specialist, Kansas State University International Focus Enhances Mississippi State Opportunities........ 48 By Bonnie Coblentz, MSU Ag Communications Product Showcase......................................................................... 51 WORLD AGRICULTURE OUTLOOK

Q&A: Dr. Barb Glenn

Q&A

Dr. Barb Glenn,

CEO, National Association of State Departments of Agriculture Dr. Barb Glenn has decades of experience as a scientist and policy advocate for agriculture. She joined the National Association of State Departments of Agriculture (NASDA) as CEO in August 2014. She previously served as senior vice president of science and regulatory affairs for CropLife America, where she was responsible for developing policies and regulations to support agriculture through crop protection. Glenn also served as managing director of the Animal Biotechnology, Food, and Agriculture Section of the Biotechnology Industry Association in Washington, D.C. As a past president of the American Society of Animal Science (ASAS), she switched careers to work for the Federation of Animal Science Societies (FASS) as the second executive vice president– scientific liaison. Prior to that, she was a dairy cattle nutrition researcher with the U.S. Department of Agriculture’s Agricultural Research Service in Beltsville, Maryland, for 17 years. Glenn holds a Bachelor of Science degree in animal science and a doctorate in ruminant nutrition from the University of Kentucky. World Agriculture Outlook: Why must NASDA, as a nongovernment entity, exist to go to bat for government departments? What does NASDA achieve that the departments can’t on their own? Dr. Barb Glenn: While state departments of agriculture are unique and powerful in their own voice, NASDA’s collective voice is much louder than the voice of any one state. NASDA is at such a critical nexus and we know our credible expertise can truly influence policy priorities in the agencies and Congress. NASDA’s mission is “to represent the state departments of agriculture in the development, implementation, and communication of sound public policy and programs which support and promote the American agricultural industry, while protecting consumers and the environment.” Can you talk a bit about what such policies and programs look like?

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Our mission has changed to adapt to a more nimble and strategically poised NASDA. Our new mission is to grow and enhance agriculture by forging partnerships and creating consensus to achieve sound policy outcomes between state departments of agriculture, the federal government, and stakeholders. We are doing this through the advancement of our policy priorities through strategic relationships and fulfillment of our cooperative agreements with the federal government. What is NASDA’s ultimate vision for U.S. agriculture? We see wonderful commitment and drive budding within our next generation of farmers and ranchers. We hope to see critical investments in additional industry-driven scientific research and implementation of cutting-edge technologies by both current and future generations of farmers and ranchers. By taking these steps, we will advance agriculture further towards feeding our global populations with

Q&A: Dr. Barb Glenn

Photo courtesy of the National Association of State Departments of Agriculture

American-grown, safe, nutritious, and affordable food. NASDA represents state agriculture departments’ interests, but certainly the diversity of the states – their particular geography, agricultural output, and challenges – means that those departments have different priorities. How does NASDA f ind common ground among the needs of all the states? In other words, how does NASDA determine which issues it will champion in order to provide the most benefit to its members? All of NASDA’s work and prioritysetting is driven by our members. NASDA members put forth action items and policy statements for the full membership to discuss, amend if needed, and vote on. Action items drive home the need for pointed and quick action on a subject. The policy statements are enduring and the foundation of NASDA’s work. All of this is done by finding common ground and putting forth the best policies to meet the needs of American agriculture. Just as in Congress, sometimes we find common ground very quickly and other policies take years to settle and pass. What are NASDA’s current policy priorities? For the first time, our board of directors has approved a NASDA Policy Priorities document to drive the work of our Public Policy Team. Our three Tier One issues are Pollinator Health, Waters of the United States, and the Food Safety Modernization Act. International Trade is a portion of our portfolio that is trying to nudge itself up on the list of Tier One priorities. We are spending quite a bit of time on it! The Trans-Pacif ic Partnership (TPP) stands to have substantial

effects on trade. What seems to be the consensus among state departments of agriculture – do they support the potential agreement? What do they feel are the pros and cons? Promoting their state’s agricultural products and working to enhance export opportunities are key responsibilities of

our members. Many are traveling the globe to get their state’s unique products in the hands of the global consumer in a way that is safe for both the consumer and the environment. International trade is absolutely cr itical for A mer ican agr iculture. Agricultural producers depend upon

International trade is absolutely critical for American agriculture. Agricultural producers depend upon export opportunities to ensure a market for their products. In fact, nearly 20 percent of U.S. farm income today comes from exports. WORLD AGRICULTURE OUTLOOK

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Q&A: Dr. Barb Glenn

export opportunities to ensure a market for their products. In fact, nearly 20 percent of U.S. farm income today comes from exports. With a world population of almost 7 billion and thriving agricultural export markets in Asia and elsewhere, state departments of agriculture cannot afford to allow other countries to take advantage of these additional customers. While we support TPP, there must be increased market access to foreign markets and no product-specific exclusions. Allowing for these exclusions will open the door to discriminator y and non-science-based regulatory proposals, which could do great harm to producers and exporters in the United States. Looking forward to the 2018 Farm Bill, what does NASDA want to see in that legislation that’s different from the 2014 bill?

By working with its members – state departments of agriculture – the federal government, and stakeholders, the National Association of State Departments of Agriculture aims to grow and enhance U.S. agriculture through development and implementation of sound policy.

As we approach the next Farm Bill, our members will set priorities for the bill which will drive the work of the Public Policy Team on Capitol Hill. While we can’t think of any sweeping changes that should be made, we hope to see continued investment in locally driven and flexible conservation and specialty crop block grant programs. As mentioned before, investments in agricultural research and extension programs must be protected and built upon in the next Farm Bill. NASDA also hopes we will see continued and even advanced funding of the Market Access Program (MAP) and other foreign market development programs. As the

international trade arena expands, it’s important that Congress invests in these programs so our farmers and ranchers can reach these new markets. Next year marks the 100th anniversary of NASDA. Are there plans in the works to commemorate that milestone? What’s on the horizon for NASDA in the next 100 years? We have some very exciting things in the works for our centennial celebration in Lincoln, Nebraska, next Sept. 21-24. We also hope to host all of our agriculture stakeholder family for a reception during our Washington, D.C.-based Winter Policy Conference this February. There are many other unique surprises coming down the pipeline as well. It will certainly be an exciting year of celebration for NASDA. We are better than we’ve ever been this year, and we will continue the trend of excellence in our 100th year and beyond.

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Q&A: BILL NORTHEY

Q&A

Bill Northey,

Secretary of Agriculture, Iowa Department of Agriculture Iowa Secretary of Agriculture Bill Northey is a fourth-generation Iowa farmer who grows corn and soybeans on his farm near Spirit Lake. He started farming with his grandfather, Sid Northey, after graduating from Iowa State University in 1981. The people of Iowa elected Northey to be Secretary of Agriculture in November 2006, and he was sworn in on Jan. 2, 2007. As secretary, Northey has committed to traveling to each of Iowaâ&#x20AC;&#x2122;s 99 counties to hear from farmers and rural residents with a stake in the future of agriculture. These meetings allow him to listen to their needs and better lead the Iowa Department of Agriculture and Land Stewardship as it seeks to serve the people of the state. Throughout his career in agriculture, Northey has been a leader in a variety of farm groups, including the National Corn Growers Association and the Iowa Farm Bureau. Northey has also served on the Iowa USDA Farm Service Agency State Committee, was a Dickinson County Soil and Water Conservation District commissioner, and was a board member of Ag Ventures Alliance. As a result of his involvement in these organizations, Northey has traveled around the world to view agriculture. He has traveled to Taiwan, Japan (five times), Indonesia, and Singapore (to the World Trade Organization Secretariat) representing Iowa farmers. He has also traveled to another 17 countries spending time studying agriculture production and policy. World Agriculture Outlook: What are the current priorities of the Iowa Department of Agriculture? Bill Northey: Our department has been very focused on the Iowa Water Qua l it y Initiative the last severa l years. The Initiative is really a model nationally in working with farmers in a voluntar y, science-based way to increase adoption of practices that help protect water qualit y. We are really excited about the support we have gotten from the governor and legislature to get the program up and running and extremely encouraged by the positive response from Iowa farmers interested in using additional

WORLD AGRICULTURE OUTLOOK

conservation practices on their farms to improve water quality. Also, we have been very focused on the avian influenza situation in the state. Iowa is the leading egg-producing state, and our farms have been very hard-hit by the disease. Finally, I would say it is a priority for the department to get out and tell the story of Iowa agriculture. Agriculture is so important to our state it is important we get out and talk about what is happening in agriculture. What are Iowaâ&#x20AC;&#x2122;s top commodities? Which of them are the most in-demand exports?

Iow a le a d s t he n at ion i n t he production of corn, soybeans, hogs, and eggs. Exports are an important part of the demand for all of those p r o d u c t s , b ut e s p e c i a l l y c o r n , soybeans, and pork. Over 40 percent of all soybeans are exported, with China the top market by far. Over 10 percent of corn is exported. In addition, dried distillers grains [DDGs], a co-product of ethanol product ion, have seen signif icant growth in exports as well. U.S. pork exports exceed $6 billion per year, and with Iowa home to 28 percent of U.S. pork production that is a critically important market for our producers.

Photo courtesy of the Iowa Department of Agriculture

Q&A: BILL NORTHEY

The “Choose Iowa™” program is intended to promote the quality of products grown, raised, processed, or manufactured in Iowa and to increase awareness of them, but it seems geared toward addressing domestic markets. Is there an international component to the Choose Iowa endeavor? I would say that Iowa is known around the globe for our agricultural production, but due to the types of products we produce, there isn’t always a strong “Choose Iowa” component to that. The commodity nature of corn and soybeans, our two top crops by far, [doesn’t] really lend itself to a state-specific branding. That said, we do work hard across the agriculture sector in Iowa to promote trade. There are dozens of trade missions a year that officials across the agriculture industry in Iowa participate in to promote international trade. What is the best way for importers and distributors to f ind out what Iowa has to offer in the way of agricultural products? Iowa is fortunate to have wonderful agriculture organizations that have invested heavily to promote our agricult ura l products inter nat iona l ly. For the state, the Iowa Economic Development Authority leads the state efforts for trade promotion. I work closely and have traveled extensively with officials from state government, USDA, and a variety of organizations to promote trade. Due to the scale and diversity of production in Iowa, we are fortunate to have several organizations focused on working with and reaching out to distributors and importers to encourage expanded trade of Iowa agriculture products.

How does your department work to connect Iowa producers with foreign markets? Our department typically participates in several trade missions a year with Iowa farmers and companies to travel to promote our products. Also, we meet regularly with international delegations visiting Iowa in our office to encourage them to do business in Iowa. Building relationships with trading partners is very important, and it takes a long-term commitment. I think you are seeing some of the fruit of those efforts as trade continues to expand. The world needs the products we produce here in Iowa, whether it’s corn or soybeans to support their domestic livestock industries or meat products. Which countries right now are the top recipients of Iowa-produced goods?

Our neighbors Canada and Mexico continue to be very important trading partners. Outside of that, it is a lot of the Asian countries. Iowa has a long and very productive trade relationship with Japan and continues to see growth in trade with South Korea. China is a huge market, especially for soybeans. Sixty percent of the soybeans in international trade goes to China. There are other emerging markets in Southeast Asia that have the potential to be key trading partners. Our state government and ag organizations have activities in all of these countries and others to encourage expanded trade of Iowa products. What incentives do foreign buyers have for “choosing Iowa”? Iowa has a ver y strong reputation around the globe for being a reliable supplier of high-quality ag products.

Due to the scale and diversity of production in Iowa, we are fortunate to have several organizations focused on working with and reaching out to distributors and importers to encourage expanded trade of Iowa agriculture products.

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USDA photo by Eric Ma

Q&A: BILL NORTHEY

Often we get international groups that visit Iowa because they know we are a leading agriculture producer and are interested in building a trading relationship. We take great pride in that recognition and our agriculture organizations, economic development officials, and farmers themselves work very hard to make sure that reputation is maintained.

Iowa Secretary of Agriculture Bill Northey (center), pictured with Acting Under Secretary for Farm and Foreign Agricultural Services Michael Scuse (left) and Oklahoma Commissioner of Agriculture Jim Reese (right), speaks at an American Chamber of Commerce breakfast in Shanghai, China, on March 27, 2012. Northey has traveled extensively to study agriculture in other countries and to represent Iowa farmers abroad.

According to your bio, you’ve traveled extensively to study agriculture in other countries and to represent Iowa farmers abroad. What insights have your travels given you into the increasing globalization of agriculture and commodities trade?

Farmers are similar everywhere. Even when they don’t share a language, they still share a love of agriculture, and that comes through in their interactions.

As a part of that, farmers are always looking for an even better way to raise their crops and livestock. Whether to increase production, reduce inputs, or minimize off-site impacts, farmers are ready to try something new. So globalization and trade is a big part of that. A lot of the groups that come through Iowa are doing so to learn more about new technologies to improve productivity in their country or to expand trade opportunities that will improve the quality of life in their country. Again, Iowa is recognized as an agricultural leader, and farmers and those involved in agriculture in other countries are anxious to expand the relationship between their country and Iowa.

Farmers are similar everywhere. Even when they don’t share a language, they still share a love of agriculture, and that comes through in their interactions.

WORLD AGRICULTURE OUTLOOK

Q&A: RON de Yong

Q&A

Ron de Yong,

Director, Montana Department of Agriculture

Photo courtesy of the Montana Department of Agriculture

Farmer and economist Ron de Yong was appointed director of the Montana Department of Agriculture in 2007 by then-Gov. Brian Schweitzer and was reappointed in January 2013 by Gov. Steve Bullock. De Yong studied philosophy and agricultural science at Montana State University, then farmed for 20 years – his 320-acre family farm in Kalispell, Montana, is currently rented to a dairy farmer – before deciding to pursue a master’s degree in economics at the University of Montana. In the seven years prior to becoming director, he taught agricultural policy and economics at Cal Poly State University. De Yong has been an economist for the National Farmers Union; served as a Montana State Committee Member for the USDA Farm Service Agency; has been a state director for the Montana Farmers Union; and served as president of the Western Association of State Departments of Agriculture from September 2009 to September 2010. He is a member of the National Association of State Departments of Agriculture. In his capacity as director, de Yong serves on the Rail Service Competition Council, Noxious Weed Summit Advisory Committee, Montana Wheat & Barley Committee, Montana Agriculture Development Council, and various other committees. “Agriculture is Montana’s No. 1 industry, and changes are occurring that bring new opportunities and challenges for Montana producers and rural communities,” says de Yong in his director’s message on the Montana Department of Agriculture website. “As a longtime student of economics and change in agriculture, my goal is to work hard with family farmers and ranchers, entrepreneurs, and agriculture-related industries to take advantage of the opportunities while minimizing the impacts of changes that adversely affect our industry.” World Agriculture Outlook: When people think of agriculture in Montana, it seems they tend to think of cattle and wheat, but what other Montana commodities should readers know about? Ron de Yong: Readers should know about pulse crops like lentils, dry peas, and chickpeas. Montana is the leading producer of dry peas and lentils in the United States. Some Montana producers are finding that nitrogen fixing pulses are an excellent rotational crop for wheat on

what had previously been fallow ground. This year, we are expecting record dry pea acreage and a 38 percent increase in lentil acreage. Montana is home to several other crops that are exceptional. Our potatoes are grown for seed and are the industry standard, in part, because of extensive research done at Montana State University, and the geographic isolation of our potato-growing areas helps prevent disease. Montana-grown barley is highly sought after by brewing

companies large and small. As we like to say, if you are enjoying a cool beer, odds are it has Montana barley in it. We also raise Flathead cherries, flax, canola, sugar beets, corn, alfalfa, oats, and safflower. Montana is currently the second-largest honey producer in the nation. Water issues in the West, particularly in California, have been covered extensively in the news. Has Montana experienced challenges in accessing water for crops and livestock due

WORLD AGRICULTURE OUTLOOK

Q&A: RON de Yong

Montana has traditionally increased value by producing products with exceptionally high quality. For example, our hard red spring wheat and our beef genetics are recognized as among the best in the world. to the drought? If so, how have producers dealt with it? Montana is unique in that we are a headwaters state. In fact, we are the hydrological apex of North America; where depending on where the rain and snow lands on Triple Divide Peak in Glacier National Park, it can either end up in the Pacific, Atlantic, or Arctic oceans. However, this does not mean we are immune to the impacts of drought. This year, like a lot of the West, Montana received approximately 60 percent of our average annual snowpack. The state legislature created a drought advisory committee in 1991 to monitor weather, moisture patterns, and water supply. The committee, including the lieutenant governor and local, state, and federal partners, meets on a regular basis to discuss current conditions, upcoming forecasts, and plans for the water year. This has been a useful tool in our state’s water management practices. While many states in the West have a “use it or lose it” provision in their water law, which inherently creates disincentives for water conservation, Montana allows water rights holders to lease part or all of their water rights without fear of losing their allocation – giving water rights holders another option in how to allocate their water effectively, while preventing unnecessary overwatering. Maintaining adequate water is a major challenge, but we are implementing farming techniques such as cover crops and no-till farming that help retain soil moisture and technology that monitors soil moisture and applies water efficiently. What are Montana’s top export commodities? Wheat is Montana’s No. 1 export at approximately $1 billion in value

WORLD AGRICULTURE OUTLOOK

annually, with three-fourths of the product going to Asian markets. We also export lentils, peas, malt barley, cattle, seedstock, oil seeds, and pasta. It may surprise some, but Canada is our largest trading partner, with about 40 percent of our total exports heading north. Is Montana taking any particular steps to help producers add value to those commodities or otherwise make their products more appealing to importers? Montana has traditionally increased value by producing products with exceptionally high quality. For example, our hard red spring wheat and our beef genetics are recognized as among the best in the world. Our wheat is often blended with wheat from other areas to raise their overall quality. We continue to work to add more ag r iculture manufactur ing to our state’s portfolio. Ag manufacturing was recently identified as having the highest growth potential in the state. Through state and federal programs, we have been able to assist new and existing ag businesses to grow and prosper. The department’s Growth Through Agriculture program was specifically designed to assist food and agricultural startup businesses through grants and loans, and has assisted hundreds of ag-related businesses. We have also tripled our Specialty Crop Block Grant funding levels over the last few years, which should help advance our crop diversification. According to the five-year Census of Agriculture done by the U.S. Department of Agriculture, the average value of a Montana [farm’s] production increased by 59.1 percent, outpacing the national average by over 20 points.

Montana is a good distance away from any ports. How does your state manage transportation of agricultural exports to ensure they reach overseas destinations in a timely and cost-efficient fashion? Farmers have limited transportation options; either you ship it by rail or by truck. Montana is primarily served by one railroad company: Burlington Northern Santa Fe [BNSF]. The Union Pacific, running south out of the Port of Montana in Butte, is the other option for our producers. Unfortunately, this port isn’t very close to our prime growing regions. The captive shipping market has forced Montana to be price takers when shipping products to the West Coast, which can be frustrating as costs are typically transferred from the shipper to the farmer. By working with BNSF, the department has been able to develop a dialogue with the railroad to address shortages and delay issues as they arise. This has made the railroad more responsive to producers and the needs of grain elevators. We are also working with the Surface Transportation Board on rail rates and service issues. The state also formed the Rail Service Competition Council [RSCC] to try to enhance service and address rates. The committee is made up of transportation experts, industry representatives, department directors, and two state legislators. What programs or infrastructure does Montana have in place to introduce foreign buyers to Montana commodities and help them connect with U.S. producers? Montana exports roughly 75 percent of the wheat we grow to Asian markets. Those trade relationships developed out of the work done by the Montana

Q&A: RON de Yong

USDA photo courtesy of Betsy Rakola

A grain operation in Montana. Montana is a leading producer of wheat, dry peas, lentils, and flax.

Wheat & Barley Committee’s efforts to promote and expand wheat markets. The committee, created 40 years ago by wheat and barley growers and represented by growers, hosts trade teams throughout the summer to give buyers a chance to meet the farmers and get a firsthand view of the high-quality crops they are purchasing. Committee members will travel to meet with foreign buyers during the winter. Our Meat and Livestock Marketing Officer has ventured to faraway places such as Russia, South Africa, Uruguay, and recently Austra lia to develop market opportunities for Montana beef genetic seedstock. These missions have grown our beef genetics industry within the state. The department also works with the Office of Trade and International Relations to expand Montana’s export opportunities, which, in addition to working with our trade partners and trade team, has a trade office located in Japan. In addition, we have close working relationships with all the farm organizations in the state, including Grain Growers, Farm Bureau, Stockgrowers, and Farmers Union.

We recently published a magazine titled Grown in Montana: Farming and Ranching Under the Big Sky as a guide for those interested in Montana commodities that is being used to provide a narrative for both domestic and international purchasers. Montana has moved into production of lentils, dry peas, and flax. Can you tell us why Montana is branching into these commodities and how it’s working to meet and/or create foreign demand for these products? I grew lentils and dry peas when I was actively farming in northwest Montana, and understood their value as a rotational crop. Our department held work sessions for producers and developed spreadsheets that demonstrated the economic value of rotating pulse crops with wheat. We primarily worked with the U.S. Dry Pea & Lentil Council to establish market opportunities for our growers as our pulse acres and production increased dramatically. C o nve n ie nt l y, t he Mo nt a n a Depa rtment of Agr iculture

p a r t ic ip at e d i n t he Sp e c i a lt y Grains and Edible Beans Inbound M ission, where i mpor ters a nd distributors come to the United States a nd ma ke contacts w ith U.S. producers, in June 2015. In your estimation, how ef fective have such events been at creating trade opportunities between agricultural producers in your state and foreign buyers? It is always beneficial to build networks between producers, buyers, and distributors. This is especially true for Montana pulses, where production is undergoing dramatic increases. Montana also strives to produce very high quality products, which require additional attention to marketing details. Can you please highlight any new trade opportunities or developments for Montana producers that you are particularly excited about? I am most excited about the opportunities in pulse crops. Montana has led the nation in lentil and dry pea production for the last three years running, with record acres planted again this year. Producers have discovered that pulses are an excellent rotational crop for wheat with their nitrogen fixing properties. So what used to be idle fallow ground is now a productive pulse crop, which has added tremendous value to our industry. In addition to growing demand domestically, there is an incredible international market for these crops. Next year will be the International Year of the Pulse as declared by the United Nations. We are hoping to leverage that marketing opportunity to further expand Montana’s pulse crop production and welcome investment in increased processing capabilities that will accompany our increased production.

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ALMONDS

CALIFORNIA ALMONDS: HERE TO STAY It became clear, as California emerged from the winter of 2014-2015, that the state remained firmly in the grip of a devastating multiyear drought – and soon thereafter, government agencies took unprecedented measures to preserve the state’s water supply. In February, the federal Bureau of Reclamation announced that California farmers, for the second year in a row, would be allocated a zero percent share of the water delivered by the irrigation canals of the federal Central Valley Project. In April, Gov. Jerry Brown ordered California’s first-ever mandator y water cutback, imposing a 25 percent reduction in water use by cities and communities. And then the finger-pointing began: Critics of Brown’s plan complained that the state’s farmers were exempt from the mandator y conser vation order. The governor countered that farmers had already suffered greatly from the drought, but it was less obvious that residents and municipal facilities – many of which were still watering their lawns and filling their swimming pools – had suffered much at all. Over the next few weeks, several media outlets became intensely focused on California almonds and the amount of water it takes to grow them. The focus seemed only natural; almonds don’t really grow anywhere else on the continent, and they are the state’s leading agricultural export. California grows 80 percent of the world’s almonds, and 99 percent of the almonds consumed in the United States. The state’s growers

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have struggled to keep up with a soaring global demand fueled largely by a growing Asian middle class; over roughly the past decade, this demand for almonds has increased tenfold – 1,000 percent. Several journalists seized on this trend as a negative, in terms of the water consumed to fuel this boom, and some referred to a statistic cited a year earlier in an article in Mother Jones titled, “It Takes How Much Water to Grow an Almond?” Others piled on: On April 12, a National Public Radio story included almonds in what it called a “Rogue’s Gallery of Guzzlers.” On April 30, the Public Broadcasting Company’s NewsHour ran a segment titled, “Is it nuts to grow almonds during a drought?” Two statistics, in particular, seemed a particular source of outrage for almond critics: • Almonds consume 10 percent of California’s water supply. According to the Almond Board of California, the federal commodity checkoff organization for the industry, this is false: Almonds consume 8 percent of the state’s agricultural (not total) water supply. • It takes a gallon of water to produce a single almond. This statement is true,

more or less, but it lacks the context necessary to make it mean anything at all.

It Takes Water to Grow Food Richard Waycott, president and CEO of the Almond Board, is happy to supply this context: “When you dig into the data available on water footprints, and applied water versus rainfall versus water used for processing, and so forth, the numbers tend to vary quite a bit,” he said. “That [gallon-per-almond] number came from a European study that was done a few years ago out of Holland, and it looked at the average uses of water for different crops around the world. It’s not a California number.” California’s almond growers, accustomed to limited water supply, actually wring several uses out of an almond: The kernel eaten by humans is only about 30 percent of the almond by weight. The hull – the fibrous outer covering, comparable to the f lesh of a peach – accounts for about half the weight of an almond, and is used to supplement livestock feed, reducing the inputs that go into silage, feed grains, and hay. The shell – 20 percent of the almond’s weight – is ground up for use as absorbent animal bedding.

Photo courtesy of the Almond Board via USDA Flickr feed

By Craig Collins

Dan Goldberg photo courtesy of the Almond Board of California

ALMONDS

Above: Though almond growers have come under fire in light of the drought conditions in California, they are innovative in their water savings. This almond orchard uses microirrigation, which efficiently directs water. Right: Almonds are California’s leading agricultural crop, one that was valued at more than $4 billion in 2014. Proponents of the almond industry argue that growing almonds is a better use of agricultural water than growing other water-intensive, less profitable crops.

The gallon-per-almond statistic, aside from giving an incomplete picture of an almond’s water eff iciency, is also misleading by itself. California provides half the nation’s fruits and vegetables. And it takes water to grow food: The Dutch study often cited by Mother Jones included several other “gallon-per” statistics. It takes 5.4 gallons of water, for example, to produce a head of broccoli.

An interactive graphic published on April 8 on the Los Angeles Times website profiled the amount of water needed to produce a single ounce of certain foods, including 23.5 gallons to make a single large (2-ounce) egg; 100 gallons for a 6-ounce serving of pasta; and 850 gallons for an 8-ounce steak. It takes about 23 gallons to grow an ounce of almonds, making the almond

four times more water-eff icient, by weight, than beef. When the value of the product is taken into account, the almond looks like a bargain. In 2014, California produced nearly 1.85 million pounds of almonds, a crop valued at more than $4 billion. By comparison, one of the most water-intensive crops in California – alfalfa hay, which uses an estimated

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ALMONDS

Dan Goldberg photo courtesy of the Almond Board of California

California almond growers maximize water efficiency by using as much of the almond as possible. The kernel is sold for human consumption, the hull can be used in livestock feed, and the shell can be ground up to serve as animal bedding.

20 percent of the state’s agricultural water, compared to almonds’ 8 percent – is produced mostly to provide forage for dairy cows, and it earns about $700 million to $1 billion annually. A study last year conducted by the University of California-Davis (and sponsored in part by the A lmond Board) concluded that the state’s almond production generates more than 100,000 jobs and directly and indirectly contributes more than $21.5 billion a year to the state’s economy. The almond’s nutritional content, argued Waycott, makes it even more valuable: “A lot of the products from California and the Central Valley – and almonds would be right at the top of the list – are precisely the types of products that are recommended by all of the dietary guidance we have now, in terms of being plant proteins, having good fat profiles, being high in Vitamin E and fiber, and so on.” Interestingly, the media’s counterbacklash against the almond’s detractors was just as sw ift, sometimes offering staggering context. An April 22 editorial in the Vacaville Reporter, “Almond Complaints a Little Nutty,” pointed out: “A golf course in the Coachella Valley can use a million gallons a day, and there are 123 courses in that resort area. That’s 123 million

almonds a day. Which is the better use of water?”

More Demand Means More Almonds The Central Valley’s growing conditions were poor in 2014: Many growers, denied water from the federal and state projects, instead turned to lower-quality groundwater which, combined with poor pollination, reduced yields. Last year’s total crop of 1.85 million pounds was 12 percent smaller than 2013’s record crop. But a report published by Rabobank’s Food & Agribusiness Research and Advisory Group (FAR) in April 2015 outlined the reasons that, despite little likely improvement in growing conditions for the 2015 crop, California almond growers actually will continue to increase plantings (about 2 percent annually) and overall production (about 3.5 percent annually) over the next decade. The primar y driver behind these increases, Waycott explained, is the continued strong demand for California almonds. Record prices have generated such profits that growers are investing in more almond plantings. “They’re making choices very wisely right now,” he said. “There may be growth in almond acreage on land that previously was growing alfalfa or cotton, or some

other crop that now is not generating the type of revenue that tree nuts do.” Waycott also said many growers are taking out older trees, which require much more water to maintain, and planting younger ones on existing orchard land. The author of the Rabobank report, Vernon Crowder, is a senior vice president and senior analyst for the FAR. Despite his expectations for overall growth, continued poor growing conditions, he said, could mean somewhat smaller yields for the next year or two, despite the addition of around 20,000 acres of almond orchards annually. “The growth we’re projecting is about half of what the growth has been in the last 10 years,” Crowder said. “I do expect the growth to slow down, simply because there’s just not that much in terms of resources ... but there’s been considerable planting in the last year or two, so assuming you get normal rain, you’re going to have some young trees coming into production in the next couple of years. If we get normal weather, the potential is there for a sharp rebound.” Whether rainfall increases or not, California agriculture – and particularly almonds, the state’s leading agricultural export – will remain at the heart of discussions about the state’s water resources. Though almond growers – who pay dearly for the water they use, just as all Californians do – might wish for other crops to share some of the scrutiny, it’s likely most, like Waycott, welcome an honest debate. “Our growers are incredibly efficient at what they do,” Waycott said. “They’re producing food. I’m glad to see there’s a more balanced conversation going on now about how we deal with this drought, and about how we ensure the efficient use of water for everyone who needs it.”

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APPLES

Ripe for the Picking

The United States and China strike a trade deal on the fresh apple market.

By Eric Seeger

The apple is an iconic fruit for Americans: Nothing tastes better in a baked pie or packs away as easily in a bagged lunch. And for a century, it has been the customary student-teacher gift that says, “What’s really the difference between a B+ and an Abetween friends?” But no matter how American apples might seem, the marketplace for them is quite international. And that marketplace has become far more complex for U.S. and Chinese growers in 2015, as trade restrictions on apples have loosened between the two countries.

A variety of apples for sale at a Washington, D.C. farmers market. With loosened trade restrictions on apples between the United States and China, U.S. apple growers are hoping to feed Chinese consumers’ growing demand for apples and more varieties of them.

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USDA photo by Lance Cheung

According to U.S. Department of Agriculture (USDA) statistics, China is by far the largest producer of apples – more than 37 million metric tons per year. Next is the European Union (13 million), followed by the United States (5 million). Much of China’s crop is either consumed domestically or sold on the apple concentrate market. By contrast, the United States exports more tonnage of fresh apples every year than China, and many experts think that the opening of apple trade between the two countries will be a benefit for U.S. apple growers. For decades, the two countries have kept very strict trade laws in place. China was allowed into the U.S. apple concentrate market, and U.S. growers were only allowed to export two varieties (Red

APPLES

Photo by APHIS Xu Yan

U.S. Department of Agriculture (USDA) Animal and Plant Health Inspection Service (APHIS) International Services Asia-Pacific Regional Manager Lou Vanechanos and Chinese officials take a close look at newly arrived U.S. Anjou pears, which originated in Ft. Hood, Oregon, on Feb. 23, 2013. The United States and China have agreed on regulations for the apple trade that are adapted from protocols already in place for trade in pears.

Delicious and Golden Delicious). Since both countries are leading producers of apples and both share similar growing seasons, there may have been concerns of competing head to head, but issues of screening potentially invasive species took center stage in negotiating this newly open trade relationship. According to Jim Bair, president and CEO of the U.S. Apple Association (USApple) who helped represent stateside growers as the deal was struck, before either country would accept the other’s apples, they needed to agree on protocols for exporters in the handling and sanitation of fruit. Numerous invasive plants and pests have been transmitted across the oceans, and growers on both sides wanted assurance that imported crates of fruit would not ruin their own crops. The USDA identified 21 pests present in China that had quarantine significance, including varieties of moths, weevils, mites, and rots. Rather than risk waiting until fruit reaches its port of entry, the countries have agreed on control practices that will be applied to fruit before it is shipped, to reduce the chances of contamination. Many of the regulations are adapted from protocols already in place for the trade of pears. The agreement states that apples bound for the United States should be bagged when they are no more than an inch in diameter and allowed to grow like that until two weeks before harvest, when the bags can be removed. Prior to harvest, the orchard must be inspected by Chinese plant quarantine officials to ensure effective pest management practices have been used. Prior to export,

the apples must be inspected again by Chinese quarantine officials to ensure the fruit meets U.S. requirements. But then there’s the issue of opening any new trade with China. Will U.S. supermarkets suddenly become flooded with cheap Chinese apples? Probably not, say most from growers groups and the Department of Agriculture. “Domestic apple prices have been low,” said Bair. Fuji apples make up 70 percent of China’s crop; that’s a variety already grown in large numbers stateside. It wouldn’t make business sense to ship more Fujis across the Pacific Ocean into an already saturated market, according to Bair. The USDA estimate reads similarly: “Based on historic trade data, not more than 10,000 metric tons of fresh apples is expected to be imported from China into the continental United States annually, which would be the equivalent of about 5 percent of U.S. imports and 0.44 percent of the U.S. domestic fresh apple supply in 2012.” Stateside orchards have had some very good years recently, and they are in a state of oversupply. The way to bring U.S. prices back up is by offloading more of the crop into the export market. Even though U.S. exports to China have been limited to two varieties for many years, they have sold well there.

“As China’s economy has improved, its citizens have been acquiring broader tastes,” said Bair. “When you talk about Chinese culture, apples are very popular around the traditional New Year’s celebrations. And by now having a big red American apple has become part of that exper ience.” Chinese consumers have a growing demand for apples (one that leaves little domestic production available for export) and are becoming accustomed to more variety in their food shopping, so he sees some opportunities for American growers. Sixt y percent of the U.S. apple crop comes from central and eastern Washington. Once they are picked, they are put into a storage system that basically sucks the oxygen out of the air and stops the process of ripening, says Rebecca Lyons, export marketing director for the Washington Apple Commission, which represents approximately 1,700 growers. “Then they are ready to be kept or shipped.” Properly picked and stored apples can last up to a year. The Red Delicious and Golden Delicious varieties served as ambassadors of American apples, and now growers are poised to start exporting more varieties to China. Lyons sees much of the exports to China coming from her home state because of Washington’s volume and its proximity to Pacific shipping facilities.

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APPLES

In Good Taste

Potential Growth in India

Photo courtesy of Iowa State University Extension

Get to know the top five varieties that are shipping worldwide from Washington State. Red Delicious – The quintessential American apple, the Red Delicious accounts for more than 50 percent of Washington’s exports. It is medium-sized and has mild, sweet flavor. Gala – A hybrid of Golden Delicious and a few other varieties, Gala is one of the most common supermarket apples in the world because it tolerates being grown in a wide variety of climates. It offers a reliably sweet and mild taste. Its skin is usually red with areas of greenish yellow. Golden Delicious – Though its name sounds similar, the Golden Delicious is not related to the Red Delicious. This variety was one of only two American apple breeds allowed for sale in China for many years. Best eaten fresh, the Golden Delicious can serve as a cooking apple as well. Fuji – Compared to some of the other apples on this list, Fuji is a relative newcomer. It was introduced in the United States from Japan in the 1980s and has become a very popular variety in grocery stores. Its skin is typically reddish-pink with some yellow, and it offers a crisp and snappy bite. Granny Smith – Perhaps the most popular of the green apples, Granny Smith has been an export staple for a very long time. This apple is popular among people who prefer eating fresh apples with a tart taste, and it serves well as a good cooking apple, too.

Apples grow in bags on a tree in China. The bag technique is implemented to prevent insect and disease infestations.

And Bair says what’s good for Washington is good for other American growers. He and Lyons believe that exporting more of Washington’s crop will create space in the domestic market for apples from other states. “U.S. apple harvests have been up, but the U.S. domestic market is fairly flat,” said Lyons. “So to stabilize prices, that surplus of apples needs to go into the foreign market. “We see the potential to at least double our volume into that market. If you put the Hong Kong and China markets together, we’re shipping about 2.3 million bushels per year,” she added. “We think that could go as high as 5 million bushels in the short term.” Since those previous trade rules were negotiated in the 1980s and ’90s, Washington apple growers have diversified their crops tremendously, says Lyons. “Red and Golden Delicious apples only account for about one-third of our crop now, but that’s all we have been able to sell until now.” U.S. growers produce an extremely wide variety of apples and are poised to bring that selection to Chinese shoppers. The Granny Smith apple is already in demand there and is a common variety among stateside orchards. There is a new trend toward “club varieties” of apples, whereby new varieties – like Envy or Ambrosia – are licensed to a limited number of growers who supply only

The next big market that U.S. apple growers want to see developed is in India. Apple trade opened up there in the early part of the last decade. “We have watched that market really blossom – from a few hundred containers when we first started out,” said Rebecca Lyons of the Washington Apple Commission. “This year, we surpassed 5 million bushels with them.” That number is more impressive considering that India places a 50 percent tariff on imported apples to protect their domestic growers. “For all other fruits – cherries, apricots, pears – the tariff is around 30 percent. We would like to see the apple tariff come down [in line with the other fruits].” Jim Bair of the U.S. Apple Association has been lobbying for approval of recent Pacific trade agreements to help open the India market to U.S. growers.

to select food stores. Lyons points out that some universities are constantly developing new apple varieties, often using common rootstock that allows farmers the ability to work with what they already know. Stateside g rowers stand a good chance in the Chinese market for many reasons. But Lyons sees it coming down to one main competitive advantage: “In a word, quality. We have ideal growing conditions in Washington. And it’s not enough to grow a perfect apple; you have to get it fresh to market on the other side of the world.” It takes expert packing, shipping, and handling to make sure the consumer at the end of that chain has an enjoyable eating experience. “And in the end, that’s what it’s all about.”

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BEEF

U.S. Beef: Bouncing Back Porterhouse, ribeye, short ribs, flank steak, chuck – the cuts of U.S. beef are many and so are the foreign consumers with a taste for the nation’s highquality export, whether they are seeking top-end extravagance or simply to meet modest nutritional needs. Indeed, international demand helps fuel this vibrant sector of U.S. agriculture. According to U.S. Department of Agriculture (USDA) Economic Research Service (ERS) data, the United States has the largest fed-cattle industry in the world and is the world’s largest producer of beef – primarily high-quality, grainfed beef – for domestic as well as export use. As noted in a March article in BEEF, the nation’s leading cattle publication, exports of beef cuts and variety meats can increase the value of a slaughtered animal by hundreds of dollars. Most of the past 30 years have seen U.S. beef exports steadily growing, despite a dramatic decline in 2004 caused by concerns stemming from the f irst U.S. case of bovine spongiform encephalopathy (BSE), or mad cow disease, in 2003. While the U.S. government works tirelessly to convince countries banning U.S. beef to eliminate, or at least relax, these bans, the U.S. Meat Export Federation (USMEF) has labored to assure potential foreign buyers that

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Photo by Ryan Thompson via USDA Flickr feed

By David A. Brown

U.S. beef is completely safe. There’s still ground to cover, but the progress has been substantial.

WHO’S BUYING BEEF While major markets in Russia and China remain closed, U.S. beef exports have made recent progress in countries like Mexico, Sri Lanka, the European Union, Hong Kong, Vietnam, and Singapore. For example, Vietnam removed all cattle age and product restrictions on U.S. beef and beef products, provided these items are derived from cattle slaughtered on or after March 27, 2015. This change eliminated the requirement for the USDA Agricultural Marketing Service Export Verif ication (EV) program, which outlines the specif ic product requirements for individual countries, and in the case of beef exports, establishes that a beef production facility meets specific standards. Singapore maintains some of its nation-specific requirements, so U.S. beef establishments must keep their Singapore EV programs in place.

Elsewhere, U.S. beef exporters benef it from international deals like the Dominican Republic’s tariff relief that followed implementation of the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR). U.S. beef exporters have found one of their fastest-growing opportunities in the production of halal products. Halal certification indicates that products have been processed and prepared according to Islamic guidelines. This is a requirement for exporting to most Middle Eastern markets, as well as Indonesia and Malaysia. Halal beef demand is growing in other countries with large Muslim populations, such as Singapore, Thailand, the Philippines, Canada, and certain Caribbean nations like Trinidad and Tobago, though halal certification is not required for export to those countries. Regaining access to all markets that still impose BSE-related restrictions is a top priority for the U.S. beef industry, as this is essential for competition in the global marketplace. Among the top targets: Argentina, Australia, Brazil,

BEEF

USDA ARS photo by Peggy Greb

OPPOSITE: The United States is the world’s largest producer of beef. LEFT: A Western blot analysis done by technicians Deborah Clouser (sitting) and Semakaleng LebepeMazur was crucial in tracking the first U.S. bovine spongiform encephalopathy case in the early 2000s. Beef exports undergo thorough inspection to ensure that international markets consistently receive safe, high-quality products. RIGHT: Dry livestock tanks show the effect of drought in Schulenberg, Texas, on Aug. 23, 2013. Though drought conditions have posed a challenge, the U.S. Department of Agriculture and cattle ranchers have implemented strategies that help producers continue to provide beef for both export and domestic use.

Israel, Morocco, Saudi Arabia, and South Africa.

USDA photo by Bob Nichols

QUALITY BEYOND QUESTION Heeding cultural and religious preferences, foreign countries often impose certain requirements or restrictions on the beef products they import, but across the board the high standards maintained by the USDA Food Safety and Inspection Service (FSIS) ensure that international markets receive consistent quality. Essential inspection assurances are an increasingly crucial part of the U.S. beef export picture in the years following the BSE outbreak, and they include: • Confirmation that the slaughtered cattle were born and raised only in the United States, or legally imported from Canada or another accepted country. • Slaughtered cattle had no connection with BSE cases, as defined in the Terrestrial Animal Health Code adopted by the World Organization for Animal Health. • Slaughtered cattle were found to be sound and healthy before and after the slaughter, as confirmed by licensed veterinary inspectors. • The exported beef fulfills all of the specif ied product requirements outlined in the EV for the country of destination.

• The exported beef was handled at the designated facilities in such a way as to prevent contamination with any causative agents of animal infectious diseases until shipment to the destination. At times, the details can seem overwhelming, but FSIS offers an Export Checklist to help keep U.S. beef producers on track throughout the process, while Export.gov offers them vital insight and direction on how best to make their beef available to the global market.

DEALING WITH DROUGHT Apart from concerns over tariffs, import regulations, shipping, and port labor issues, recent years have found U.S. beef producers struggling with forces that do not negotiate. Merciless drought conditions plaguing the Southern Plains states and California’s prominent agricultural regions present an ongoing challenge to the U.S. beef industry – both directly, in terms of watering and grazing, and indirectly through the impacts on feed stock production. The Western Farm Press reports that extreme drought cond itions have forced some South Texas cattle ranchers to employ a centuries-old emergency method of feeding cattle that utilizes a highly resilient plant seemingly able to defy the dry. “Chamuscando,” in

Spanish, refers to the process of burning off spines from prickly pear cactus so cattle can eat the pads for food and water. Complement in g such in herent resourcefulness of U.S. ranchers, May saw USDA Secretary Tom Vilsack announce the National Resources Conservation Service’s (NRCS) commitment of nearly $21 million in additional Farm Bill funding to help apply science-based solutions to short- and long-term drought mitigation. Central to this objective is the application of conservation practices that can increase irrigation efficiency, improve soil health and productivity, and ensure reliable water for livestock. “Since the historic drought of 2012, dry conditions have persisted in many parts of the country, particularly in the West,” Vilsack said in a USDA press release. “Every day, NRCS conservationists work side by side with agricultural producers and help them conserve water and increase resilience in their operations. This investment will provide additional resources in drought-stricken areas to help farmers and ranchers implement solutions to mitigate the impacts of sustained drought.” NRCS state off ices have targeted significant portions of their fiscal year Environmental Qualit y Incentives Program (EQIP) allocations to help producers apply certain conservation

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BEEF

USDA Flickr feed

Organizations like the U.S. Department of Agriculture’s (USDA) Agricultural Marketing Service (AMS), the USDA Foreign Agricultural Service (FAS), and the U.S. Meat Export Federation (USMEF) help to establish relationships between U.S. beef producers and buyers abroad who are drawn to the variety and quality of U.S. beef and provide assistance in navigating the process of exporting.

practices to combat drought conditions. Strategies include prescribed grazing, livestock watering facilities, cover crops, nutrient management, irrigation systems, and other water conservation practices. Elsewhere, federal assistance has come by way of Livestock Forage Disaster Program payments and reduced interest rates for emergency loans to droughtstricken ranchers, along with Vilsack’s request for relaxed terms from insurers. Moreover, increased USDA incentives for farmers to let hay grow on their property has helped boost feed supplies, while the NRCS works with ranchers to restore native grasses and establish more drought-appropriate grazing plans. Also, by opening the Conservation Reserve Program (CRP) to emergency haying and grazing, the USDA provides relief to livestock producers in areas affected by a severe drought and helps them continue to raise the high-quality beef that importers seek.

PARTING POINTS Logistics: Given the signif icant time, effort, and resources that U.S. beef producers invest into their product, ensuring eff icient and cost-effective delivery to foreign markets takes paramount importance. Facilitating the process, Export. gov provides a resource hub for all the relevant details on packing, labeling,

documentation, and insurance requirements for sh ipping the products outside the countr y. Invaluable are the readily available advice on shipping options, tariffs, and import fees, and the summar y of International Commercial terms (INCOTERMS) – a series of sales terms published by the International Chamber of Commerce (ICC) and widely used in commercial transactions. Promoting the Product: Complementing the USMEF’s ongoing marketing and promotional efforts, beef producers seeking international opportunities f ind Export.gov abounding with resources that leverage the U.S. government’s network of international business experts and global partners. Market research, strategic planning, advertising and promotional events, market entry/expansion, counseling, support, and direction – whatever the need, a solution is there for the asking. And when it comes to making those key connections, the U.S. Commercial Service’s International Partner Search has trade specialists in more than 80 countries who excel at finding suitable strategic partners. Complementing this individual assistance, beef producers benefit from the USDA Foreign Agricultural Service’s Market Access Program (MAP), which helps open the door to the world marketplace. Partnering with U.S. agricultural

trade associations, cooperatives, regional trade groups, and small businesses, MAP shares the costs of overseas marketing and promotional activities that create valuable opportunities between U.S. beef exporters and buyers in other countries. More Than Meat: Gone is the chuck, the ribs, the shanks, and all the traditional beef cuts in between. But considering a market steer yields about 50 to 60 percent of its weight in beef, that carcass still has a lot to offer in terms of edible, inedible, and medicinal beef byproducts. In the edible categor y, we know the nutritional value of liver, kidneys, brains, tripe, sweetbreads, and tongue, but there are also fats for oleo stock and oleo oil for margarine and shortening. From oleo stearin, we get chewing gum, while gelatin from bones and skins contributes to marshmallows, ice cream, canned meats, and gelatin desserts. Enjoy sausage? Beef intestines provide natural casings. Inedible beef byproducts include leather products, f ine hairs for the artist’s paint brushes, industrial oils and lubricants, tallow for lipstick and hand cream, and fatty acids for detergents and pesticides, along with bones, horns, and hooves for buttons, piano keys, glues, combs, and toothbrushes. Medicinal byproducts include insulin for diabetes treatment, surgical suture thread made from cow intestines, and various drugs for a range of ailments from upset stomach to circulatory issues. Vast is the reach of America’s beef industry, and despite challenges, its role in the global marketplace is an everdeveloping story.

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sorghum

WILL CHINA’S SORGHUM BOOM GO BUST?

How U.S. sorghum growers came to supply nearly all of China’s sorghum imports – and what to expect when things calm down.

By Craig Collins

It happened very suddenly in September 2013, and it’s going to take a while to sort out: China entered the global sorghum market in a big way. In October, the first bulk shipment of U.S. sorghum, more than 60,000 metric tons designated for animal feed, was unloaded at the Port of Guangzhou. The country had never before imported more than 84,000 tons of sorghum in a year. Since then, China’s demand for U.S. grain sorghum, or milo, has soared, with imports more than tripling in 2014, to more than 4 million metric tons; the U.S. Department of Agriculture’s (USDA) Globa l A g r icu lt ura l I n for m at ion Network (GAIN), in a report dated May 8, 2015, forecast this amount would more than double again for the marketing year (MY) ending September 2015, to around 8.5 million tons: “More than 98 percent of [China’s] sorghum imports,” the report read, “currently come from the United States.” How the United States came to supply nearly all of China’s sorghum imports in 2015, after supplying virtually none in 2013, is a complicated story, because it deals with China’s state-controlled agricultural system. But it starts with corn: China was a net exporter of grains until 2008, and the nation’s emphasis on self-suff iciency led to increased agricultural production, especially in livestock and poultry. China’s hog herd is the world’s largest – more than half the world’s pigs live in China – and the

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country is the second-largest poultry producer in the world. Hogs and birds eat a lot of grain, and the best feed is corn. To encourage more domestic corn production, the Chinese government propped up the price, in recent years, by buying it from Chinese farmers for around $9 a bushel. Chinese millers, put off by such steep prices, have looked to buy corn from elsewhere, but corn imports from the United States came to a halt in 2013 when the Chinese government turned away about 600,000 tons of U.S. corn because it contained a strain – MIR162, a variety genetically modified by the Swiss biotech firm Syngenta to be pestresistant – that hadn’t yet been approved by the government for import. In the wake of these rejections, ensuing corn shipments were cancelled. According to Robert Hurley, director of programs in the Beijing office of the U.S. Grains Council, the nonprofit that develops export markets for American grains, this is where most people agree the demand for U.S. sorghum began. “You

can draw a line to that,” he said. “You had the initial surge in September 2013, and the de facto ban – not on GMO corn per se; there was never a ban on GMO corn; it was only on a specific strain – which created an implicit risk in trading corn.” There was no such risk in trading sorghum. Previously, China’s sorghum imports had come mostly from Australia and Myanmar, and were used primarily in the distillation of baijiu, informally known as China’s national spirit and the most widely consumed liquor in the world. But with domestic corn at $9 a bushel and little or no corn being imported, millers found an alternative in sorghum, which, while a less efficient feed than corn, apparently has served hog and poultry farmers well. Sorghum has been used extensively, for example, as a ground and pelletized duck feed. Chinese demand for sorghum has continued to increase, even after the government lifted the ban on MIR162 corn in December 2014. U.S. sorghum growers, particularly in regions that have suffered drought in

sorghum

USDA photo by Lance Cheung

USDA photo by Bob Nichols

RIGHT: Grain sorghum grows in Texas in August 2013. U.S. sorghum growers have welcomed the new Chinese market for their crop. BELOW RIGHT: Feed corn ready to harvest on a Virginia farm. China imports U.S. corn, in part, to feed its livestock, but a government-instituted ban on certain U.S. corn imports from September 2013 to December 2014 is widely cited as the prompt for a shift to sorghum imports.

recent years, have welcomed this new market for several reasons: Sorghum is an incredibly drought-tolerant, highenergy crop, much easier – and cheaper – to grow than corn. Traditionally, corn’s higher price – based in part on its superiority as animal feed – made it a more attractive crop to grow, said David Widmar, an agricultural economist and research associate at Purdue Universit y’s Center for Food and Agricultural Business. “In the States, there’s a sorghum-to-corn price relationship that people keep an eye on, and sorghum is always at a little bit of a discount, especially as cattle feed.” Typically, sorghum is about 10 percent cheaper, per bushel, than corn. But China’s demand surge has shaken up the market: Farmers in the U.S. Great Plains states, with wheat and corn in surplus, have swapped out their plantings. USDA reports that domestic sorghum acreage has risen by 11 percent for this year, but still forecasts tight supplies. With Chinese importers paying a premium for sorghum, a price about 5 percent higher than the U.S. domestic price for corn, traditional sorghum importers, such as Mexico, have been pushed to alternative feeds. The U.S. domestic price for sorghum also spiked in the face of tightening demand, surging well above $4 a bushel, at some outlets, in the spring of 2015. It’s worth questioning, certainly, whether such an upheaval can be an entirely good thing: Relying on a single partner for more than 98 percent of your imports – or your exports – of a single commodity goes against the principles taught in any “Introduction to Business”

course. And yet the sorghum trade continues to be a great thing both for U.S. farmers and Chinese importers and millers. “How long can that continue?” asked Widmar. “I think the question really is – and I don’t have a good answer to this:

How much milo has to go into China before they start caring?”

What Lies Ahead As it turned out, the Chinese government started caring almost immediately.

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sorghum

U.S. sorghum exports had been on a mostly downward trend prior to 2013, as many countries tend to prefer corn over sorghum in livestock feed. Chinese demand for U.S. sorghum has meant dramatically increased exports as well as a higher price for the crop.

While the sorghum f looded in, the corn the government had bought from Chinese farmers remained stored in silos and warehouses around the country. USDA’s May 8 report forecast China’s corn stocks to reach almost 89 million tons in MY 2015/16, and that the government had tried to auction off the excess stocks but found few buyers due to high prices and inconsistent quality. “The temporary reserve price for corn in China is currently around $9.20 per bushel,” stated the report, “compared to a season average farm price of $3.55 to $3.85 per bushel for corn in the United States in MY 2014/15.” So the Chinese government is under increasing pressure to get rid of corn, which isn’t competitive with imported sorghum. Under existing trade agreements, however, it can’t just throw up barriers, such as higher tariffs, against incom ing crops. The appropr iate agency – the General Administration of Quality Supervision, Inspection and Quarantine of the People’s Republic of China (AQSIQ) – must first identify a legitimate concern, such as an agreed-upon sanitary and phytosanitary (SPS) measure. The unapproved genetic modif ication, for example, that compelled AQSIQ to ban imports of M I R162 cor n fel l under th is classification. In a Februar y 2015 report titled, “Ch i n a’s Grow i n g Dem a nd for Agricultural Imports,” a group of USDA economists related that Chinese authorities began looking for ways to limit sorghum imports around July and August 2014, when customs officials were instructed to more closely scrutinize sorghum and barley cargoes. On May 4, the AQSIQ reported that off icials in Shenzhen had detected a

fungus that caused “grapevine blight” in a 49,000-ton U.S. sorghum shipment; in the same week, a Kansas-based commodity futures brokerage, Country Futures, reported that a shipment of Australian sorghum had been rejected by AQSIQ because it contained a single Johnson grass seed. It’s hard to assign motivations to the Chinese government, but these actions do seem to indicate a desire to limit sorghum imports. By how much, and for how long, remains to be seen. The USDA warned, in its May 8 GAIN report, that U.S. sorghum’s incredible run may be about to taper off: “Farmers and traders may want to take measures to mitigate risk of trade disruptions and related price volatility in sorghum.” Over the longer term, however, many see reasons for optimism in the new Chinese sorghum market. Said Hurley of the U.S. Grains Council: “In the grain trade, there are two main factors that determine staying power: price and quality. The fact is, after sorghum got its foothold in the Chinese market, it was really well received. Users and the feed mills learned how to value it in their inclusion – for pork or poultry,

including duck, the guys really like to use it.” The “USDA Agricultural Projections to 2024,” published in February 2015, project a more stable – and substantial – Chinese demand in sorghum over the longer term: “… since sorghum is a lowcost feed substitute for corn,” the report read, “China is projected to remain a large sorghum importer in the next decade.” Jennifer Bond, an economist with USDA’s Economic Research Service (ERS) who researches export markets, isn’t convinced China’s stopgap inspections alone are enough to disrupt the current trade. Agricultural exports to China “are continuing apace,” she said. “And there seems to be increases in sections of a number of agricultural products, not just sorghum.” ERS projections, Bond cautioned, are based on current conditions – which she acknowledged do appear to be in flux. “But unless I see some clear evidence that imports are going to be curbing, I think we stay the course. We have a fairly robust export forecast for 2015/2016, at 335 million bushels of sorghum. Our baseline report also suggests robust trade to China will continue.”

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Q&A: Laura BATCHA

Q&A

Laura Batcha,

CEO and Executive Director, Organic Trade Association Laura Batcha is CEO and executive director of the Organic Trade Association (OTA). OTA, an umbrella organization uniting more than 7,000 member companies across the entire supply chain, promotes and protects today’s $35 billion organic industry. Under her leadership, OTA has established its Farmers Advisory Council to improve communication with organic producers, brought back Sector Councils to build community among groups of members, and developed OTA’s voice in Washington through Organic PAC. She brings 20 years of direct experience as a certified organic producer and handler, and more than 10 years of hands-on experience in the private sector of the organic industry. Batcha is a member of the Agricultural Policy Advisory Committee (APAC) appointed by USDA and the U.S. Trade Representative’s Office, and is a member of USDA’s Advisory Committee on Biotechnology and 21st Century Agriculture (AC21). She also serves on the Board of Trustees for The Organic Center, an independent nonprofit research and education organization operating under OTA’s administrative umbrella. World Agriculture Outlook: What is the global perception of U.S. Department of Agriculture (USDA) certified organic products? Laura Batcha: Awareness is strong for the USDA organic seal worldwide. However, there is no one perception of USDA certif ied organic products. Each country or region has a perception of USDA certif ied organic products based on factors specif ic to that country. For example, China has faced many food safety challenges, therefore USDA organic food is considered to be the safest food on the market. Whereas in Germany, there is skepticism about whether or not organic is actually organic, not just from the U.S. but from anywhere except Germany. The most important information we can share about USDA certif ied organic products around the global are the facts. USDA certif ied organic products are the most traceable, safest, verif iable, and regulated food products on the market. USDA certif ied organic means non-GMO and so much more. Sharing

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these facts with global consumers is a key goal of OTA’s international work. Where are such products most popular? The United States sells the most USDA certified organic products to Canada. Other key markets are Europe, Japan, Korea, Taiwan, and, more and more, emerging markets like China and the Middle East. The demand of high-quality, safe food products is on the rise all over the globe. What kinds of products? Most often foreign buyers seek fresh produce. The United States is one of the largest producers of fresh organic produce specifically for export in the world. Next, buyers are looking for baby food, dairy, snack foods, super foods, and anything that is trending here in the United States. The U.S. organic industry trends are of great interest to every market around the world, but especially important in Asia.

Q&A: Laura BATCHA

Photo courtesy of the Organic Trade Association

product ion requirements for the domestic manufacturing industry. OTAâ&#x20AC;&#x2122;s policy work helps inform our marketing and promotion strateg y. OTA uses policy gains through organic equivalency to then further develop markets where trade has now been made easier. This is done through trade shows, consumer promotions, retailer and importer education, and study tours that help spread the story of the USDA certified organic industry to interested buyers around the world. Past activities have included reverse trade missions [RTMs], media tours, educational seminars, and in-store promotions.

What does OTA do to support export of organic products â&#x20AC;&#x201C; both policy-wise and marketing-wise? OTA has a two-pronged approach for growing the demand of USDA certified organic products abroad. First, OTA works with USDA, the office of the U.S. Trade Representative (USTR), and the National Organic Prog ram ( NOP) to reduce trade barriers for USDA certif ied organic exports. This includes cooperative partnership with industry and USDA to analyze, develop, and execute organic equivalency arrangements. Organic

equivalency is a mutual recognition in the form of bilateral arrangements between key trading partners that allows for successful trade by reducing trade barriers and supporting the strengthening of the supply chain. Organic equivalency recognizes two systems as comparable and verifiable, though not necessarily identical. When it comes to the development of standards, they are seen as comparable without compromising the integrity that has come to be expected from the organic designation in both markets. This policy tool creates major market opportunity for both exports but also counter-seasonal

How do you quantify international organic trade? IFOAM [International Federation of Organic Agriculture Movements] estimates the global market for organic trade is around $72 billion USD for 2014. $39.1 billion USD was spent on organics here in the U.S. in 2014 by comparison. OTA uses USDA, U.S. Census, and USTR trade data captured through Harmonized Tariff Schedule Codes to help quantify some organic exports and imports. OTA released a landmark study in April. This watershed report compiles, for the first time ever, a comprehensive picture of the officially tracked organic food products sold by U.S. exporters and bought by U.S. importers between 2011 and 2014. Unfortunately, right now there are only a handful of organic codes. So tracking all that trade that happens through USG data sources is not possible. As such, OTA relies on our annual industry survey to collect data, and other major research sources like Euromonitor to help quantify the market. What do you see as the biggest barriers to trade of U.S. organic

The United States sells the most USDA certified organic products to Canada. Other key markets are Europe, Japan, Korea, Taiwan, and, more and more, emerging markets like China and the Middle East. The demand of highquality, safe food products is on the rise all over the globe.

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Q&A: Laura BATCHA

At the end of 2014, there were a record 19,474 certified organic producers in the United States and 27,814 certified organic operations around the world. OTA is working to develop domestic production of organic crops and ingredients to meet increasing demand.

with exporters representing the U.S. organic industr y. While buyers are visiting the OTA Pavilion, OTA is out scouring the trade show floor for logistics and marketing experts in that country. OTA then relays lessons learned to the domestic organic industr y through webinars and articles so exporters have some vetted contacts when they are considering a new market. Acting as a resource for our membership translates to all of OTA’s work, domestic and international. Next, OTA publishes several market reports each year to give interested exporters a boilerplate in key markets. OTA leads in-countr y activities to help understand the local market place, and helps exporters develop collateral that is countr y specif ic. OTA leads webinars that share trends in markets of interest and works closely w ith in-country contacts to answer unique questions. Finally, as in the United States, understanding the price of organic requires a lot of communication, education, and reinforcement. OTA leads various marketing activities, education events, and provides

POS [point of sale] material for international trade partners throughout the year. OTA’s export promotion activity is funded through the support of USDA’s Market Access Program (MAP). What are some OTA efforts that are geared specifically toward importers of U.S. organic products? OTA leads a reverse trade mission each year to Natural Products Expo West in Anaheim, California. NPEW is the largest natural and organic trade show in North America with thousands of organic brands represented. OTA works closely with USDA FAS [Foreign Agricultural Service] to find qualified buyers to bring to the show. Then OTA in partnership with Food Export Midwest sets up one-to-one meetings for interested buyers and suppliers off the hectic trade show floor. This activity has been very effective, with more than $4.8 million USD of projected purchases reported for 2015. In addition to the RTM, OTA leads in-countr y educational events for importers and retailers. For example, in November 2014, OTA led a seminar

OTA’s chief objective is to ensure the integrity of the organic system is upheld in all international agreements, and that existing organic equivalency arrangements will be honored. 30

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products abroad? In what ways does OTA work to eliminate or mitigate such obstacles? The most obvious and specific barriers are the need to maintain dual organic certification to USDA standards and the importing country’s standards and the duplicative costs, recordkeeping, and inspections that go along with certification. Outside of certification barriers, if you asked that question to exporters and importers, you will likely get two sets of answers. For exporters, it comes down to fulfillment, knowing the market, and selling price. First, for fresh produce, developing a fast and efficient cold-chain while keeping fulfillment cost down is a challenge. Next, understanding the customer and the nuance of a food culture in a particular market takes a lot of research. Packaging, marketing, cross-merchandising are often very different from one country to the next because market demands are different. Finally, organic exporters face a price premium on the store shelf. Many consumers do not know all the benefits and guarantees the USDA organic seal brings, so the sticker shock can be a put off. But all of these challenges are manageable. First, OTA works diligently to reduce certification barriers through support from USDA in the form of the Technical Assistance for Specialty Crops (TASC) program. Second, OTA attends at least two major international trade shows a year

Q&A: Laura BATCHA

USDA photo courtesy of Miles McEvoy

LEFT: The USDA announced an organic equivalency agreement between the United States and Korea in July 2014. Such partnerships reduce trade barriers to American organic products, which is one of OTA’s goals. BELOW LEFT: U.S. Department of Agriculture Secretary Tom Vilsack spoke and took questions at the Organic Trade Association’s 2011 Policy Conference and Hill Visit Day on April 6, 2011, in Washington, D.C. OTA collaborates with the USDA, the U.S. Trade Representative, and the National Organic Program to support the export of American organic products to the global marketplace.

USDA photo by Lance Cheung

tariffs, making U.S. organic products competitive in markets where interest in organic is accelerating. Any bilateral or regional trade agreement must respect international norms for organic standards and in no way limit the ability for rigorous oversight of organic production claims, and OTA does not support membership for countries that block access to U.S. organic products. They must support adoption of organic practices and conversion of acres to organic in the United States, rather than suppressing U.S. production. Of course, this is in the context of the broader need to bolster environmental standards and protect U.S. workers – particularly the rural workforce. OTA’s chief objective is to ensure the integrity of the organic system is upheld in all international agreements, and that existing organic equivalency arrangements will be honored. in Japan on the Japan-U.S. equivalency arrangement and how that arrangement can help importers access more U.S. products with less paperwork and associated costs. The seminar drew over 200 participants and was the largest gathering of the organic importer/ retailer community in Japan to date. How might the Transatlantic Trade and Investment Partnership and the Trans-Pacific Partnership agreements, if passed, affect global trade of U.S. organic products? In

OTA’s estimation, what are the pros and cons of these agreements? Resolution of the primar y technical barriers to trade in organic, i.e. dual certification, rests outside of any bilateral or multilateral trade agreement. The United States currently has signed organic trade arrangements with Canada, Japan, the European Union, and Korea. These arrangements of course do not address tariffs or other sanitary and phytosanitary barriers to trade. Regional trade agreements, IF properly constructed, could significantly reduce

What developments in the organic industry does OTA hope to see and/ or bring about in the next several years? OTA is working to develop domestic supplies of organic crops and ingredients. The strong market demand for organic is outstripping domestic production. Facilitating the transition to organic will allow more U.S. farmers to take advantage of the benef its of organic production, including access to burgeoning export markets.

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the trans-pacific partnership

THE TRANS-PACIFIC PARTNERSHIP What’s in it for agriculture? By Craig Collins

In May 2015, as the bill aimed at granting President Barack Obama Trade Promotion Authority (TPA) – the “fast track” authority to negotiate international agreements Congress can approve or disapprove, but cannot amend or filibuster – was introduced in the Senate, it was clear the bill faced a bruising fight between unlikely allies. On one side, Obama and legislators in the House and Senate – mostly Republican, but including a substantial bloc of Democrats – argued that TPA was a necessary step to streamline negotiations and, through the presentation of a united front unmarred by amendments or lengthy debates, to strengthen the U.S. position at the bargaining table. Another group of legislators – mostly Democratic but including a substantial bloc of Republicans – asserted that TPA effectively enabled the president to bypass Congress when negotiating trade deals. By late June, however, the bill had passed both the House and Senate and was on its way to the White House, and Obama signed it into law on June 29. If it was unclear to the average person what the fight was about, it might have been because the terms of the TPA debate – issues such as currency manipulation, trade enforcement, and labor and environmental standards – had become inextricable from the draft provisions of one of the highest-profile trade agreements currently being negotiated by the Office of the United States Trade Representative (USTR): the TransPacific Partnership, or TPP. So what is the TPP, and what might it mean for agricultural trade? The short answer: Nobody can be completely sure,

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until the final agreement is negotiated and released to the public. But that hasn’t kept many people from offering opinions.

What Is the TPP? The Trans-Pacif ic Partnership is an ambitious and complex free trade agreement proposed among 12 countries around the Pacific Rim: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam. In April 2015, a 13th nation, the Republic of

Korea, formally asked to join the negotiations, but at this late stage, the other parties – particularly the USTR – seemed reluctant to re-open and further complicate the process, especially while the TPA bill was, at the time, being introduced in the U.S. Congress. At least one U.S. official did voice the opinion, however, that South Korea’s membership in a TPP was inevitable. It’s hoped and expected that more countries in the region will join over time. Others interested in TPP membership include Taiwan, Laos, the Philippines, Colombia, Indonesia, and Thailand.

the trans-pacific partnership

U.S. Trade Representative photo

Ministers from the Trans-Pacific Partnership (TPP) member countries at the TPP Ministerial Meeting in Sydney, Australia, in October 2014. The TPP, if concluded, would create the largest free-trade zone in the world.

The TPP, if concluded, would establish the world’s largest free-trade zone: a combined population of about 800 million, accounting for 11 percent of the world’s population, and a combined gross domestic product (GDP) of about $28 trillion – almost 40 percent of global GDP in 2012. The two largest economies among prospective TPP members, the United States and Japan, together account for nearly 30 percent of global GDP. While many of these parties, over the past 30 years, have negotiated bilateral and regional free trade agreements (FTAs) that have provided greater market access, there are still many barriers to trade, and trade flows between TPP members that haven’t already negotiated FTAs are considered ripe for improvement. The treaty would cut tariffs and quotas, reduce non-tariff barriers to trade, establish guidance on patents and copyrights, and level the playing field for competition between private companies and governmentbacked or state-owned businesses. The original signatories to the TPP were Brunei, Chile, New Zealand, and Singapore, who ratified an agreement in 2006. The United States and three other countries joined negotiations in 2008. In March 2013, Japan joined the negotiations. While FTAs have historically dealt primarily with agricultural and manufactured goods, the TPP – by spring 2015, more than 2,000 pages long – has 29 draft chapters, dealing with sectors from financial services to textiles and issues such as intellectual property rights, rules of origin, and sanitary and phytosanitary (SPS) standards. The most obvious omission from the TPP is China, which, according to the International Monetary Fund, overtook the United States last year as the world’s largest economy (adjusted for purchasing power). The TPP is touted by its nations’

leaders – particularly Obama – as an effort to provide leadership in writing the rules for trade in a rapidly developing Asia-Pacific region where many remain skeptical of China’s state-dominated trade policies, its respect for intellectual property, and its reluctance to welcome international investment. The Chinese government initially regarded the TPP as an alar m ing encirclement by adversaries, a perception shaped in part by public rhetoric from TPP members. But in diplomatic channels, antagonism has softened in recent years. TPP members have made it clear they don’t view the pact is about containing or excluding China; it’s about codifying a set of rules they’ll all eventually abide by – perhaps including, someday, China. While accelerating its own trade initiatives in Asia, China has shown some interest in the TPP; in 2013, Chinese President Xi Jinping asked Obama to keep him informed about negotiations. In October 2014, China’s vice minister of finance publicly stated there was a clear consensus among China’s leadership that the nation should become more integrated with the global trade system, including trade agreements such as TPP.

Agriculture in the TPP In October 2014, the U.S. Department of Agriculture’s (USDA) Economic Research Service (ERS) published the report, “Agriculture in the Trans-Pacific

Partnership,” describing the scope of agricultural trade among TPP members: The total market for agricultural imports averaged $279 billion annually from 2010 to 2012, with more than 51 percent of it sourced from TPP partners. The ERS study concludes that the hypothetical elimination of existing tariffs and tariff-rate quotas (TRQs, the “tiered” tariffs that apply higher tariff rates once a certain import level is reached) would increase the annual agricultural trade among TPP countries by 6 percent, or $8.5 billion, by 2025, compared to the present network of trade agreements. Not surprisingly, the largest portion of this trade would occur between the United States and Japan: The United States will supply about 33 percent of this expansion in intraregional agricultural exports, while Japan will account for 70 percent of the increase in agricultural imports. But the study’s hypothesis is based on a scenario – the elimination of tariffs and TRQs – that seemed unlikely in the spring of 2015. One of the crucial elements of the entire TPP agreement is Japan’s closely guarded agricultural sector, and particularly what the country refers to as its “five sacred commodities”: rice, wheat, dairy products, beef, and pork. Negotiating with a country that begins by labeling commodities “sacred” has been a rough go. Japan’s agricultural protectionism is a cultural remnant of post-World War II famines, during which small farmers organized into an adm inistrative

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the trans-pacific partnership

U.S. Department of Agriculture (USDA) Farm and Foreign Agricultural Services (FFAS) Under Secretary Michael Scuse talks with Florida agriculture leaders in March 2015 at the Port of Tampa to discuss trade issues and the Trade Promotion Authority (TPA). The passage of the TPA in June 2015 could potentially expedite approval of the TPP, which stands to create significant increases in agricultural trade among partner nations.

WORLD AGRICULTURE OUTLOOK

ready for ambitious trade agreements that break down barriers to products grown and made in America, so our trading partners know we mean business.” Japan has agreed to minimum levels of rice imports in past trade agreements, but almost all of it is used for animal feed, or even re-exported as food aid, and none of it is ever identified to consumers as having come from elsewhere. Additional rice imports are discouraged by tariffs of more than 700 percent. To Dave Salmonsen, the AFBF’s senior director of congressional relations, this is a sign that the issue goes far beyond economics. “That becomes, to me, much more political, maybe cultural,” he said. “I never thought you needed more than a 50 percent, at most a 100 percent barrier, to keep things out.” Japan’s beef producers, likewise, are protected by a 38.5 percent tariff, and pork imports are subject to a complex “gate price” system that adjusts duties in accordance with an administratively established reference price. Japanese traditions were shaken up, however, in April, when Prime Minister Shinzo Abe’s Cabinet approved a bill to reform its agricultural system, stripping JA-Zenchu of much of its power and allowing other entities a role in activities such as accounting and lending. JA-Zenchu’s president, Akira Banzai, promptly stepped down, saying another

What Farmers Want from TPP Much about the TPP is controversial. Critics in negotiating countries have protested the secrecy of the negotiations themselves, the extralegal means by which the treaty proposes to arbitrate disputes between corporations and governments, and the fact that one of

USDA photo

body eventually known as the Central Union of Agricultural Cooperatives, or JA-Zenchu. From an organization that fended off starvation, JA-Zenchu evolved into a political powerhouse that distributed farm supplies, marketed food and agricultural products, dominated farm lending, and performed accounting services for the agricultural sector. It has used its policymaking influence to advocate for price supports, tariffs, and other protective measures, and it’s been so powerful that many of those protections have remained, even as Japan has signed on to international trade agreements, such as the General Agreement on Tariffs and Trade (GATT), and the World Trade Organization. Access to Japan’s agricultural markets is the key to whether many U.S. organizations will support the TPP. The nonprofit American Farm Bureau Federation (AFBF), the largest general farm organization in the United States, publicly supported “fast-track” authority for the president, seeing TPA passage as a necessary step to inspire confidence in TPP partners – including Japan – that trade negotiations could proceed more efficiently. Upon passage of the TPA, Bob Stallman, AFBF president, released a statement that read, in part, “The American economy stands stronger when we work together – and that’s just what Trade Promotion Authority enables us to do at the bargaining table. U.S. agriculture is

president would be needed to carry out such reforms. On April 29, Abe, in a historic address to a joint session of the U.S. Congress, announced that Japanese agriculture was “at a crossroads. In order for it to survive, it has to change now.” Negotiations, however, remained hard-nosed: While Japan appeared to give ground on beef, signaling a willingness to reduce the 38.5 percent tariff to 9 percent over time, it wasn’t budging on rice. U.S. negotiators urged Japan to allow in an additional 215,000 tons of U.S. rice per year, but the Japanese counter-offer was 50,000 tons. The United States also sought guarantees that Japanese consumers would have the chance to purchase American rice, but had not received a Japanese response on that issue, at least publicly, by mid-May. Because agriculture is an industry so closely tied to land and culture, said Salmonsen, it’s often among the most difficult trade issues. “Countries protect their agriculture, or establish traditional systems,” he said. “It makes it hard for them to change them. And those are the kind of issues that always seem to be resolved at the very end. … I’m sure changes are difficult on a lot of levels for [ Japan]. But their prime minister wants to get this done, it seems.”

the trans-pacific partnership

the most pervasive tactics used by Asian manufacturing countries to boost exports and gain a trade advantage, currency manipulation – devaluing one’s currency by buying up the currency of other countries – isn’t addressed at all in the treaty. Other protests have been more generalized. FTAs, opponents argue, result in greater inequality both among and within countries. In the United States, opponents of the TPP – including the nation’s second-largest farming organization, the National Farmers Union (NFU) – claim that past trade agreements, including the North American Free Trade Agreement (NAFTA), have worsened the agricultural trade def icit and cost American jobs. “We’ve been burnt before on trade treaties,” said Donn Teske, NFU’s vice president. “The trade deficit ballooned annually from $16 billion to $82 billion 10 years after NAFTA was enacted. If that’s the best our trade negotiators can do for us, then we’ve got problems.” The numbers Teske cites, from a 2003 study by the nonprofit Economic Policy

Institute, encompass all economic sectors, a fact that opens them up for debate: Few analysts, for example, could have foreseen the boom in U.S. energy imports from Canada and Mexico over the past decade, and few Americans would regret the increasing U.S. focus on North American energy resources. Other organizations, citing other variables, have reached different conclusions about free trade. Most agricultural groups, naturally, are more narrowly focused on their industry’s interests. In the United States, the AFBF is hoping for a treaty that breaks down barriers to access and helps negotiate food safety or SPS regulations based on sound science, rather than arbitrary bans on additives, hormones, or genetic modifications. AFBF also hopes to see an improved dispute-settlement process for disagreements over SPS or other shipment-related issues, said Salmonsen. “These things can take forever,” he said. “Somebody at the port says something isn’t right – the standard, your paperwork, all the things that

normally happen in trade. But if you’re sitting there with a ship’s hold of fresh product, well, you’re losing money. It’s deteriorating – even if foods are chilled or frozen, they still lose quality when you have to sit around and wait – or you’re paying the cost of keeping it refrigerated. So we’d hope to have some kind of rapid-response mechanism, in which the TPP members would pledge to resolve those simpler port or customs issues more rapidly.” Salmonsen and AFBF appreciate the size and scope of the task that remains for TPP negotiators, and that agriculture is just a part – though a significant part – of the process. While the organization remains neutral about the treaty, at least until its members see the final draft, it’s also hopeful that it will help to create what Abe called “a fair, dynamic, sustainable” market in the Asia-Pacific region. “This is also about setting the rules of trade in a big and developing part of the world economy,” Salmonsen said. “So there’s quite a bit riding on it.”

U.S. AGRICULTURE AND CUBA

U.S. AGRICULTURE AND THE CUBAN DÉTENTE: Dreams vs. Reality By Craig Collins

On Dec. 17, 2014, President Barack Obama announced the United States and the Republic of Cuba would begin to reestablish diplomatic ties and end more than five decades of mutual antagonism. “Neither the American nor Cuban people,” the president said, “are well served by a rigid policy that is rooted in events that took place before most of us were born.” In his address, the president outlined three substantive actions the administration would be taking to normalize relations: first, reestablishing the diplomatic ties broken since 1961 (both nations’ embassy buildings reopened July 20, 2015), and second, reviewing Cuba’s inclusion on the U.S. State Department’s list of State Sponsors of Terrorism (Cuba was removed from the list on April 14, 2015). “Third,” the president said, “we are taking steps to increase travel, commerce, and the flow of information to and from Cuba.” For now, the president reminded everyone, that’s about all the executive branch could do; the socioeconomic sanctions known collectively as the Cuban embargo long have been codified by U.S. law, and it’s up to Congress to change them. Still, the president’s announcement aroused some enthusiasm among those – including agricultural producers – who saw, in the White House’s policy shift, the possibility of exporting food and agricultural products to the neighboring country. The idea makes sense: Before the 1959 revolution that eventually transformed Cuba into a Marxist dictatorship, it enjoyed a vigorous trade relationship with the United States. About two-thirds of its exports went to America, and about 70 percent of its imports came from there. That trade vanished after the United States imposed the unilateral trade embargo in 1962.

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Relations between the two nations followed a tortuous path throughout the Cold War and beyond; today, under a system established by the Trade Sanctions Reform and Export Enhancement Act (TSRA) of 2000, U.S. producers export modest amounts of agricultural products to Cuba. This trade is subject to several conditions, the most significant of which is the requirement that no credit be extended to the Cuban government, which purchases all agricultural imports through a state agency, Alimport. U.S. exports to Cuba could be paid for only in cash, routed in advance through a third-party intermediary. Despite this restriction, exports to Cuba resumed and grew steadily over the next few years – particularly exports of corn, soy, rice, wheat, and poultry – reaching an annual peak of about $710 million in 2008. For several reasons, U.S. agricultural exports to Cuba have since fallen to less than half that amount. Some commodities, such as rice – Cuba’s was the largest market for U.S. rice before 1962 – are no longer exported at all. The most important reason is simply that cash in advance is too restrictive. “Other countries realized this,” explained Kirby Jones, founder and president of Alamar Associates, a consulting firm for companies and organizations interested in doing business with Cuba. “And they stepped in and offered lots of credit.

U.S. AGRICULTURE AND CUBA

The Carol M. Highsmith Archive, Library of Congress, Prints and Photographs Division

Official White House photo by Pete Souza

LEFT: President Barack Obama speaks on the phone with President Raúl Castro of Cuba from the Oval Office on Dec. 16, 2014. The next day, Obama announced that the United States and Cuba would begin to reestablish diplomatic ties. BELOW LEFT: Morro Castle in Havana, Cuba, guards the entrance to Havana Bay, with the city of Havana visible in the background. The United States and Cuba enjoyed a robust trade relationship before the trade embargo was put in place in 1962.

Brazil offered credit for soybeans. China and Vietnam offered credit for rice. That’s why the U.S. rice market dried up. The U.S. is not operating on the same playing field as the rest of the world.” Obama’s Dec. 17 announcement has led many to wonder about prospects for leveling this playing f ield – and Americans are falling into one of three modes of thinking:

The Optimists Many American producers have argued it shouldn’t be so difficult to sell food and other products to Cubans who are already buying them. As U.S. Secretary of Agriculture Tom Vilsack has pointed out, Cuba imports more than $2 billion in food and agricultural products annually, about 80 percent of its food supply.

Its 11 million citizens live about 90 miles from the Florida Keys. From March 1-4, 2015, a lobbying organization know n as the U.S. A g r icu lt ure Coa l it ion for Cuba (USACC) dispatched a group of more than 75 leaders from the agriculture industry, commodity groups, and state and federal governments on a “learning journey” to Cuba to learn about the needs of Cuba’s agricultural leaders, farmers, and consumers. USACC seeks to lift the embargo that has hampered U.S. exports for more than 50 years. Paul D. Johnson, the coalition’s vice-chair, points out that U.S. producers already enjoy several strategic advantages – most obviously their proximity, which would allow lower shipping costs and just-in-time distribution. Rice growers in the southeastern United States, for example, have asserted they can offer Cuba a higherquality product at a lower price than the rice it currently imports from Asia. “We can get products there – less at one time, but more frequently, which is something Cuba desperately needs, because their logistical infrastructure and warehousing conditions are not up to par,” Johnson said. “And I think the exchange of know-how and best practices, once we start getting Cuban farmers and others to the United States to understand how we operate a business, is going to help their internal procedures a great deal.” The optimistic view is that lifting the trade embargo, and establishing better relations, will f irst open the market to commodity crops such as rice, soy, and grains. “Some of the big

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commodities and products that are going to gain the most would be soy, wheat, and corn,” said Johnson. “Rice would be a big one, considering that Cuba would become the second-largest market for U.S. rice exporters.” Over time, improved economic conditions and a more open Cuban society could pave the way for increased imports of higher-value American products such as beef and pork. Advocates such as Vilsack have pointed out that if pre-embargo levels of trade were restored between the United States and Cuba, more than $1 billion in U.S. food and agricultural products could find their way into Cuba. Said Johnson: “When you get behind the scenes and start talking to these Cubans, these business folks, they want to do more business with the United States. There are cultural, historical, geographical, and familial ties between both countries,

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and there’s a real nostalgia in Cuba for products made in the United States. I think our services and products are still better than what they’re getting from other countries.”

The Nay-sayers While many of the USACC’s press releases and public statements mention interactions with Cuba’s small farmers, business people, and cooperatives, critics of resuming trade with Cuba point out that these are not the people with whom U.S. exporters would be doing business if trade were to resume. There is only one Cuban importer: the Cuban government, which distributes food to its mostly impoverished people as it pleases. And that government doesn’t have the best record when it comes to paying its debts. “What’s limiting U.S. commerce in Cuba, notwithstanding U.S. law and

USDA ARS photo by Keith Weller

Above: After the Trade Sanctions Reform and Export Enhancement Act (TRSA) of 2000 was passed, U.S. producers were able to export a modest amount of agricultural goods to Cuba under certain conditions. The U.S. share of the Cuban market reached 42 percent in FY 2009, but has since slipped to 16 percent in 2014. The United States is Cuba’s third-largest supplier, after the European Union and Brazil. RIGHT: U.S. long grain rice. Cuba could potentially become the second-largest market for U.S. rice exporters, according to Paul D. Johnson of the U.S. Agriculture Coalition for Cuba.

regulation, is Cuba’s ability to pay for things,” said John Kavulich, president of the U.S.-Cuba Trade and Economic Council, a private nonprof it clearinghouse of information and analysis regarding U.S.-Cuban relations. “They can only pay for what they can afford. And they’re a poor country.” Mauricio Claver-Carone is a director of the U.S.-Cuba Democracy PAC, which supports the trade embargo. In an editorial for The Hill published in February 2015, he wrote that creditors’ claims against Cuba now total more than $35 billion – aside from the “nearly 6,000 unpaid, certified claims, worth nearly $7 billion arising from the Castro government’s confiscation of American-owned business and properties.” Claver-Carone charged that the USACC, in lobbying Congress to lift the embargo and drop the cash-in-advance requirement, was aiming to shift the risk of extending credit onto American taxpayers, via the federal Export-Import (Ex-Im) Bank of the United States. “It’s one thing to lobby to do business with one of the world’s last remaining totalitarian dictatorships for the sake of profit,” he wrote. “It’s quite another to peddle the deceit to the American public that trade with Cuba serves some public interest here or in Cuba.” Other opponents of doing business with Cuba are focused on the idea of allowing its imports into American markets. While 49 of the state Farm Bureaus support lifting the embargo, Florida’s does not, on the grounds that the state – by far Cuba’s closest neighbor and the only state that shares its subtropical growing climate – will suffer the agricultural equivalent of the Mariel Boatlift, its markets swamped with Cuban sugar cane, fruit, and winter vegetables. While at first glance it might seem the state’s farmers – and especially its sugar growers, who have thrived under the embargo – are being merely protectionist, it’s more complicated than that. Florida Farm Bureau president and CEO John Hoblick said “leveling the playing field” won’t really be an honest proposition until Cuban farmers are allowed to own their own

FAS Global Agricultural Trade System graphic

U.S. AGRICULTURE AND CUBA

land and grow their own crops. “We don’t want a socialistic government subsidizing agricultural products and competing with farmers and ranchers at subsidized rates,” he said in an April 21 interview in the Palm Beach Post. Florida Senator – and 2016 Republican presidential candidate – Marco Rubio, whose parents emigrated from Cuba in 1956, is among the small but vocal minorit y that remains strenuously opposed to opening trade between the two nations. In March 2015, speaking in front of four state Farm Bureau delegations, Rubio said: “Every single piece of farmland in Cuba today, every major agricultural crop, was once owned by private owners, including American companies. They were stolen. They were confiscated. If you allow the import of agricultural goods from Cuba into the United States, you are allowing them to traffic in stolen goods.”

Republican presidential candidate Sen. Marco Rubio is opposed to lifting the trade embargo with Cuba. His stance may prompt fellow Republicans to shy away from legislation aimed at lifting the embargo until after the 2016 election so as not to undermine the potential Republican presidential nominee.

Office of Sen. Marco Rubio

The Pragmatists Rubio and Sen. Robert Menendez, D-N.J., are the only U.S. senators, so far, to voice such staunch opposition to lifting the trade embargo; lawmakers from both parties generally favor some degree of trade liberalization between the United States and Cuba. For this reason, Johnson of the USACC remains hopeful that Congress will lift the embargo during Obama’s term. “But would I be happy with small steps to get there?” he said. “Sure. Every time we pass legislation that allows us to compete and export more products, or talk about importing Cuban products, these are steps toward normalization of trade relations. It’s a victory.” Lifting the embargo, said Jones of Alamar Associates, has an unusual level of bipartisan support. “I think people are going to find this is not a Republican/ Democrat issue,” he said. “It doesn’t have the typical political framework, because you’re going to have a lot of Republicans in a lot of red states who want to see their constituents sell their product.” Still, Republicans have seemed wary of lining up behind a bipartisan bill

aimed at lifting the embargo, introduced by four Democratic and two Republican senators in February. Kavulich said this issue is muddied by the political calendar: Though most Republicans disagree with Rubio on Cuba, they wouldn’t want to publicly undermine someone who may well become the party’s standard-bearer in the 2016 elections. “If he’s either a potential top of the ticket, or No. 2 on the ticket,” he said, “then despite what the Republicans from agricultural states may feel, they’re going to not want to sandbag him on this.” Kavulich is more optimistic about a bill introduced by senators Heidi Heitkamp, D-N.D., and John Boozman, R-Ark., more narrowly aimed at lifting the prohibition on credit sales, especially since amendments were added to ensure any Cuban defaults wouldn’t be simply forwarded on to taxpayers. But he still doesn’t think Republican lawmakers want anything to do with the bill until after the 2016 elections. If this is truly the state of things – lawmakers delaying debate on the embargo for more than a year – what can

the agriculture industry do to increase exports to Cuba? Jones thinks it may be possible for a legal team to find some wiggle room in the regulatory framework – the “general” and “specif ic” licenses to conduct commerce in Cuba, established under TSR A – given the Obama administration’s willingness to ease restrictions and establish direct banking relationships. “Were I an attorney for a food company,” said Jones, “the first thing I would look at is: What f lexibility, what maneuverability can there be for a general license to circumvent the restrictions imposed by the law? There may not be any, which may mean these companies have got to get their Republican brethren to pass or amend the law and ... let agricultural companies make their own risk analysis and say: ‘I will offer you credits or the bank will offer you credit.’ That’s a business decision. It should not be a political decision.” It shouldn’t be, but it is, for the foreseeable future – and even if it were a business decision, Kavulich said, it might be a questionable one. “During the last 14 years, Cuba has been generally in the top 50 of the 220-plus agricultural markets in the world for U.S. companies,” he said. “I’ve been all over the world saying Cuba is the safest export market for U.S. companies, because it’s all cash, and it’s required by law. If you take that away – well, who wants to be the first to report a payment issue? That doesn’t help Cuba at all.” In other words, American producers should be careful what they wish for, and see Cuba’s market potential for what it is: an intriguing future prospect, but currently both small – $2 billion in annual agricultural trade sounds exciting only when you ignore, say, U.S.-Canadian agricultural trade, which topped $50 billion in 2012 – and fraught with risk and uncertainty. “Until Cuba makes commercial and economic changes, it will never increase its purchases, notwithstanding the political relationships that factor into this,” Kavulich said. “Companies need to make sure they’re not drunk when they approach Cuba. They’ve got to be sober.”

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GMOs

a tight rein Regulation and safety of U.S. GMOs By J.R. Wilson

Genetic modification of plants and animals is as old as the development of agriculture more than 10,000 years ago. Almost all of today’s domesticated animals, food or otherwise, and plants used for human or animal food have changed substantially through the millennia due to selective cross-breeding in the field. However, food and food ingredients from genetically engineered plants were first introduced into the food supply only in the 1990s. Since then, the facts about genetically modified organisms (GMOs) – in which the United States is the world leader in R&D, regulation, and implementation – have been largely overlooked by opponents in favor of attacks based on speculation instead of more than two decades of research, regulation, and results. “There’s no question ordinary breeding techniques have resulted in a lot of changes. If you had enough time and resources, you could do some of the same things by selective breeding; genetic engineering allows you to do things more rapidly and precisely,” said Pat Westhoff, director of the Food and Agriculture Policy Research Institute. “What is unique is taking genes from one species and introducing them into another. Many people argue that the new ways of doing things, still operating within species boundaries and not introducing genes from another species, but turning on or off genes that already exist in the plant, [are no different from ancient techniques]. Europeans say it is. “But we do a lot of testing on genetic modifications, however they are done. In many ways, GMOs are treated with greater safety regulations than traditional breeding. A recent survey showed 88 percent of U.S. scientists believe, on balance, GMOs are a safe product; in Europe, a larger number are concerned about genetic modifications. Ironically, the general public seems to

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believe both sides, depending on how the question is phrased.” Westhoff continued: “Many of the concerns raised have been about things people think could happen – and how do you regulate against something that hasn’t happened, but might? In Europe, this is called the precautionary principle – no proof, but a wide concern that something might happen. Other people, mostly in the U.S., are dismissive of those views because, to some extent, the U.S. has become the major champion of GMOs, while some Europeans have out-and-out banned some GM products.” Still, importation of U.S. GM foods and products and domestic research and use around the world are mixed. India, Mexico, and Europe have seen a widespread growth in GM cotton, but strong opposition to GM food. South Africa has been relatively friendly toward GMOs, which are used there by corn farmers, but much of the rest of Africa does not allow their use. While South America has almost universally adopted GMO soybeans, there are big fights over even

doing GMO research in Mexico. The Chinese government is not opposed to GMOs and is doing a lot of research, but there have been some restrictions imposed – sometimes on products the United States expected China to approve – that have disrupted U.S./Chinese trade in corn and soybeans. “Different people in China are motivated by different things, and I wouldn’t want to question the validity of those who say they are concerned with human health. But there also are at least some people involved in the process who take a more cynical view and see it as a way to restrict the Chinese market for U.S. products and thus raise the market for domestic products,” Westhoff noted. “Overall, while the march upward in use is not inevitable, in some parts of the world, I think we will see increased use as higher yields become increasingly important. “It will be a big challenge for the world to face as diets continue to change, with China, for example, consuming far more grains due to increased livestock production and the feed that requires. However,

GMOs

GM Versus GE

Photo by Keith Weller via USDA Flickr feed

When discussing the landscape of genetically altered foods and/or organisms, it’s helpful to understand that a distinction can be drawn between “genetic modification” and “genetic engineering.” As of 2013, the USDA defined the terms as follows in a “Glossary of Agricultural Biotechnology Terms” on its website: Genetic modification: The production of heritable improvements in plants or animals for specific uses, via either genetic engineering or other more traditional methods. Some countries other than the United States use this term to refer specifically to genetic engineering. Genetic engineering: Manipulation of an organism’s genes by introducing, eliminating or rearranging specific genes using the methods of modern molecular biology, particularly those techniques referred to as recombinant DNA techniques. The terms often are used interchangeably, with the result that “genetically modified” and “genetically engineered” both bring to mind images of genetic adjustments being made in labs using biotechnology techniques. However, under the USDA definition, genetic modification can also refer to traditional techniques of selective breeding of plants or animals for specific traits.

while the global population is growing, it is at a declining rate and even the absolute number of people being added each year is about to peak, so population growth won’t increase at the rate we’ve become used to. We’ve also increased food production greatly in recent years and won’t need to maintain that level of growth in the future.” The majority of genetically engineered plants are corn, canola, soybeans, and cotton, the first three typically used as livestock feed or to make ingredients used in other food products for humans.

Those include cornstarch in soups and sauces; corn syrup as a general purpose sweetener; and cottonseed oil, canola oil, and soybean oil in mayonnaise, salad dressings, cereals, breads, and snack foods. Other crops for which the Food and Drug Administration (FDA) GE consultations have been submitted include alfalfa, cantaloupes, creeping bentgrass, flax, papaya, plums, potatoes, radicchio, squash, sugar beets, tomatoes, and wheat. While GE is more widely used on plants, many kinds of GE animals also are in development, most to produce substances, such as milk or blood, used in human or animal pharmaceuticals, or to supply scarce cells, tissues, or organs for human transplants. Others are developed to improve disease resistance, growth, or nutritional characteristics or in the production of high-value consumer products, such as highly specific antimicrobials to combat human and animal pathogens, such as E. coli 0157 or Salmonella. According to the FDA, “from a scientific perspective, the only intrinsic

The late U.S. Department of Agriculture (USDA) Agricultural Research Service (ARS) agronomist Edgar E. Hartwig, who is sometimes referred to as “the Soybean Doctor” in deference to his plant-breeding successes and his half-century devotion to soybeans research, worked to develop productive plants with built-in resistance to insects, nematodes, and diseases. Genetic modification of plants and animals is an age-old practice, but food and food ingredients derived from genetically engineered plants were only introduced into the food supply in the 1990s.

difference is that GE animals contain an rDNA [recombinant deoxyribonucleic acid] construct that gives them a new trait or characteristic, such as producing a pharmaceutical or growing faster. The degree of difference between a GE animal and its conventional counterpart will depend on the new trait the GE animal possesses. “In general, most GE animals are developed so they will pass their new

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GMOs

GE traits on to their offspring. Such traits are called heritable. ... Most GE animals contain an rDNA construct that was introduced into early embryos or cells that go on to make embryos that develop into the GE animal. These constructs are heritable because they will be in every cell of the resulting animal, including those that are responsible for making sperm and egg for the next generation.” GMOs are regulated by three U.S. government agencies – the FDA, the U.S. Department of Agriculture (USDA), and the Environmental Protection Agency (EPA). The FDA prefers the term “genetic engineering” to “genetic modification” for methods scientists use to introduce new traits or characteristics to an organism. “FDA regulates the safety of foods and food products from plant sources, including food from genetically engineered plants. This includes animal feed, as under the Federal Food, Drug and Cosmetic Act [FFDCA], food is defined in relevant part as food for man and other animals. FDA has set up a voluntary consultation process to engage with the developers of genetically engineered plants to help ensure the safety of food from those products,” according to the agency. “Foods from genetically engineered plants must meet the same requirements, including safety requirements, as foods from traditionally bred plants.

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“FDA has a consultation process that encourages developers of genetically engineered plants to consult with FDA before marketing their products. This process helps developers determine the necessary steps to ensure their food products are safe and lawful. The goal of the consultation process is to ensure that any safety or other regulatory issues related to a food product are resolved before commercial distribution. Foods from genetically engineered plants intended to be grown in the United States that have been evaluated by FDA through the consultation process have not gone on the market until the FDA’s questions about the safety of such products have been resolved.” A February 2014 USDA Economic R es e a rch R ep or t , “G enet ic a l l y Engineered Crops in the United States,” acknowledges “questions persist regarding their economic and environmental impacts, the evolution of weed resistance and consumer acceptance.” The report examined issues related to GE seed suppliers and technology providers (biotech firms), farmers, and consumers. According to the report, in 2013 (the most recent year for which figures have been reported), herbicide-tolerant (HT) soybeans accounted for 93 percent of all planted U.S. soybean acres, HT corn represented 85 percent of corn acreage, and HT cotton made up 82 percent of cotton acreage. Insect-resistant (Bt)

cotton, to control pests such as tobacco budworm, cotton bollworm and pink bollworm, comprised 75 percent of U.S. acreage that year, while Bt corn, to control the European corn borer, corn rootworm, and corn earworm, accounted for 76 percent of corn acres. “The adoption of Bt crops increases yields by mitigating yield losses from insects. However, empirical evidence regarding the effect of HT crops on yields is mixed,” according to the report. “Generally, stacked seeds – seeds with more than one GE trait – tend to have higher yields than conventional seeds or than seeds with only one GE trait. GE corn with stacked traits grew from 1 percent of corn acres in 2000 to 71 percent in 2013. Stacked seed varieties also accounted for 67 percent of cotton acres in 2013.” Consumer acceptance of foods with GE ingredients, however, varies by product characteristics, geography, and the information available to consumers. In testimony before the U.S. House Energy and Commerce Subcommittee on Health on Dec. 10, 2014, Michael M. Landa, then-director of the FDA’s Center for Food Safety and Applied Nutrition, compared age-old methods of creating new food plants with GE. “Many of the foods that are already common in our diet are obtained from plant varieties that were developed using conventional genetic techniques of breeding and selection. Hybrid corn, nectarines – which could be considered genetically altered peaches – and tangelos, a genetic hybrid of a tangerine and grapefruit, are all examples of such breeding and selection,” he told lawmakers. “Today, by inserting one or more specific genes into a plant, scientists are able to

USDA photo by Keith Weller

Unusually colored and shaped maize from Latin America. Efforts have been made by the Germplasm Enhancement for Maize (GEM) project to combine exotic germplasm from such crops with domestic corn lines to increase the genetic diversity of U.S. corn and therefore decrease its vulnerability to pathogens, pests, and abiotic factors.

GMOs

USDA photo by Larry Rana

A cotton farmer holds a cotton boll harvested from a field in Texas. In 2013, genetically engineered herbicide-tolerant cotton made up 82 percent of all U.S. cotton acreage.

produce a plant with new characteristics [more quickly]. “These techniques give scientists the ability to isolate specific genes of interest and introduce them and their corresponding traits into plants without simultaneously introducing undesirable genes and traits. This is an improvement over traditional plant breeding because it can reduce the time-consuming process of breeding out undesired genes and traits when developing a new variety. Genetic engineering also expands the range of new proteins and other substances that can be introduced into plants.” As to GE animals, the FDA notes scientific efforts to develop cattle resistant to bovine spongiform encephalopathy – aka “mad cow disease”; others to accelerate growth, requiring less feed; some to reduce their environmental impact by reducing the level of pollutants in their wastes; to improve fat composition through increased levels of omega-3 fatty acids, providing a more healthful nutrient profile; to produce certain human pharmaceuticals that are otherwise hard to produce in sufficient quantities or with the potential to completely change treatments for chronic diseases, such as bleeding disorders. “The FFDCA generally makes it unlawful to introduce unapproved new animal drugs into commerce. Therefore, pre-market approval requirements apply to GE animals before they are marketed; potential signif icant environmental impacts, if any, must be examined before approval as required by NEPA [National Environmental Policy Act]. The implementing regulations for new animal drugs are also applicable to rDNA constructs in GE animals,” the FDA says. Because GE animals can pose human health risks that would not arise with GE plants, the U.S. government applies different regulatory approaches to address those different risks.

“Food sold in the United States must be safe, whether it is from plants or animals, and whether it is GE or non-GE. Although the regulatory process for food from GE animals is different than that for food from GE plants, as dictated by different statutory requirements, ultimately they both must be safe to be legally marketed,” the agency says. “In fact, the food safety assessments are quite comparable, with some appropriate differences to accommodate the key differences between plants and animals, and look at the same information as recommended in the respective Codex guidelines that provide internationally accepted recommendations for assessing the safety of foods from GE plants and GE animals. “Most of the food safety issues are the same. However, all animals, including GE animals, can cause zoonotic diseases – animal diseases that cross over to humans – because some viruses and microorganisms from animals can infect humans. Because it is possible to genetically engineer animals using viruses or segments of DNA that can recombine and possibly transfer to humans or other animals and cause disease, there are some specific issues that must be evaluated in GE animals that are not relevant in GE plants. Addressing potential risks of introducing and spreading livestock pests or disease is also within the scope of USDA’s APHIS [Animal and Plant Health Inspection Service] regulatory authority.” Regulatory agencies and laws affecting GMOs also include the Animal Health

Protection Act, the Virus-Serum-Toxin Act, the Federal Meat Inspection Act, the Poultry Products Inspection Act, the Egg Products Inspection Act, the Animal Welfare Act, and USDA’s Food Safety Inspection Service. At present, according to the FDA, no GE animals traditionally consumed as food are on the market in the United States or elsewhere. Instead, they include a non-food GE aquarium fish, GE laboratory rodents sold to aid in research around the world, and other research animals. Even so, those developing GE animals of any species traditionally consumed as food, for whatever reason, are required to notify the FDA and cannot introduce such GE animals into the food supply without prior FDA authorization. “Evaluating the safety of food from a genetically engineered plant is a comprehensive process that includes several steps. Generally, the developer identifies the distinguishing attributes of new genetic traits and assesses whether any new material that a person consumed in food made from the genetically engineered plants could be toxic or allergenic. The developer also compares the levels of nutrients in the new genetically engineered plant to traditionally bred plants. This typically includes such nutrients as fiber, protein, fat, vitamins, and minerals. The developer includes this information in a safety assessment, which FDA’s Biotechnology Evaluation Team then evaluates for safety and compliance with the law,” the agency states. In his House testimony, Landa summed up the GMO position of the major government regulatory agencies. “FDA’s consultation process for foods derived from GE plants provides for a rigorous food safety evaluation of GE foods. As a result of these pre-market consultations, we are confident that GE foods in the U.S. marketplace today are as safe as their conventional counterparts,” he told lawmakers. “The agency, in cooperation with EPA and USDA, will continue its oversight of new and emerging GE food products and will be vigilant in ensuring the safety and integrity of the food supply.”

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KansaS state University

Feeding a Need Kansas State University takes aim at world food challenges.

By Pat Melgares, Communications Specialist, Kansas State University

When Kansas State University President Kirk Schulz announced to the Kansas Board of Regents in early 2014 that the university was ready to take on the challenge of helping the world’s farmers feed nearly 10 billion people in the next 30 years, it wasn’t something he decided to do on the spur of the moment. Indeed, the university had been working for more than two years to fortify its position as a leader in the global food system. And most would agree that the university’s more-than-150-year landgrant heritage – and its passion for safely feeding the world – has strategically positioned Kansas State University to do so. “Kansas State University is already a global leader among research universities in addressing the world challenge of feeding a growing population,” Schulz said. “With the imminent construction of the $1.2 billion National Bio and Agro-defense Facility (NBAF) on the Manhattan [Kansas] campus, the window is open to claim the leadership position in global food systems.” The university’s Global Food Systems Initiative was invigorated by the U.S. Agency for International Development (USAID), which has awarded more than $100 million to Kansas State University since 2013 for projects to help with food challenges around the world. And in spring 2014, the Kansas Department of Commerce directed $5 million to help fortify the university’s mission.

Feed the Future Innovation Labs In just over two years, Kansas State University has become a major player in USAID’s goal to reduce hunger and improve food security in the most impoverished nations of the world.

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In that time, USAID has committed more than $100 million to Kansas State University under its Feed the Future initiative. The funding has helped create four innovation labs, the second-most among U.S. universities. In July 2013, USAID awarded $13.7 million for the Feed the Future Innovation Lab for Collaborative Research on Sorghum and Millet, which will improve the productivity, disease resistance, agronomy, and economic value of sorghum and millet in Ethiopia, Senegal, and Niger. Later the same year, Kansas State University’s Feed the Future Innovation Lab for Applied Wheat Genomics was funded for $5 million. The project’s main goal is to develop heat-tolerant, highyielding, and farmer-accepted wheat varieties for South Asia, where approximately 20 percent of the world’s wheat is grown. Then, again in 2013, USAID awarded $8.5 million for the Feed the Future Innovation Lab for the Reduction of Post-Harvest Loss, a project that serves Bangladesh, Ethiopia, Ghana, and Guatemala. Major crops being studied include wheat, maize, sesame, and chickpea. It is estimated that as much as onethird to one-half of the world’s harvest is lost every year for a variety of reasons, including production, storage, transportation, and consumer waste.

In 2014, the university received $50 million to establish the Feed the Future Innovation Lab for Sustainable Intensification for work in Cambodia, Bangladesh, Senegal, Burkina Faso, Tanzania, and Ethiopia. Sustainable intensification means producing more nutritious food on the same land base while protecting the natural resources on which the food system depends.

Continue Serving U.S., Kansas Farmers John Floros, dean of the College of Agriculture and director of K-State Research and Extension, says the university has leading programs and research capabilities related to the world’s food systems. In that sense, not much changes with Schulz’ initiative. “It is our job to address food system issues for Kansas producers,” Floros said. “But when we address items for Kansas, the solution also can be applied globally,” such as drought-tolerant wheat varieties for western Kansas and other dry areas of the world. “Ultimately, this will help Kansans today and tomorrow. This is what we have done since we began as a landgrant university and this is what we will continue to do.” Floros said the new part includes the university’s focus on a broad, global food network that will need to improve if it is

KansaS state University

Photos this page: Kansas State University

Above: Kansas State University agricultural engineer Isaya Kisekka explains the use of mobile drip lines to Monty Teeter, owner of Teeter Irrigation, near Ulysses, Kansas. Kisekka and others are involved in perfecting the technology for use with center pivot sprinklers; if successful, they estimate the mobile lines will save as much as 50 percent of water previously used on farm fields. RIGHT: Kansas State University researchers are measuring multiple traits of wheat in test plots at the Borlaug Institute for South Asia. Graduate student Jared Crain (pictured) is using a phenocorn, a device capable of collecting 75,000 data points per hour to help in breeding for higher-yielding wheat varieties. Crain is working with a project in Punjab, a state known as the breadbasket of India.

to feed an estimated 2 billion more people by 2050. University faculty and researchers will be involved in production agriculture, as well as projects that study how food is transported, stored, consumed,

and protected. It will involve every department at the university, including those that study family issues, nutrition, health, business, biology, the environment, and more. “This effort should lead toward Kansas State University becoming the place you go to if you want to improve your food system capabilities, or to learn

more about the global food system,” Floros said. “We want to improve the expectation of industry and students in this regard.”

Real-world Applications While the science is complex, the university’s focus is on discoveries that

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KansaS state University

Photos this page: Kansas State University

Above: Leonardville, Kansas farmer Ron Roth gives a tour of his family farm to visitors from Vietnam who recently participated in the USDA Cochran Grain Purchasing course. The tour was sponsored by the IGP Institute at Kansas State University to provide innovative and relevant education and technical programs to enhance the market preference, consumption, and utilization of U.S. cereal grains, oilseeds, and their value-added products for the global grain industry. Courses at the IGP Institute often include trips to local farms for international visitors to gain a better understanding of Kansas production. Above right: A Nigerian farmer carries a bundle of pearl millet from a village market in the Kouré region of Niger. Pearl millet is a staple crop in many parts of the Sahelian region in Africa. Kansas State University is helping African farmers maximize production through the Feed the Future Innovation Lab for Collaborative Research in Sorghum and Millet.

make sense to those who grow and eat the world’s food. As proof: In spring 2015, the university awarded global food systems innovation grants totaling $500,000 for faculty to pursue foodrelated studies. One project will make processed foods healthier by producing resistant starch, or starch that can’t be digested by the stomach and small intestine. Starches that are more easily digested contribute to such diseases as obesity, diabetes, and colon cancer. Postdoctoral researcher Michael Sweedman said the new starches have many applications in foods like white bread and cookies and “anything where you want functional fiber in products, but you don’t want the textural properties that come with more traditional forms of fiber.” In another project, scientists from multiple disciplines are working together to determine how to use a technology called RNA interference, RNAi, to more efficiently produce food from plants and livestock. The study looks at identifying a protein in the organism that is causing a problem, and suppressing the protein so that the plant or animal grows more healthfully. Additional work at the university includes looking at transportation systems, mobile drip irrigation, genetic mapping of

major crops, urban food systems, providing experiential learning to undergraduate and graduate students, and more.

Research Gets a Boost Kansas State University’s research muscle is highlighted by the upcoming construction of NBAF, which, combined with the university’s adjacent Biosecurity Research Institute at Pat Roberts Hall, gives Kansas State University one of the world’s greatest concentrations of facilities for research in animal health, crop protection, and food safety. Recent multimillion-dollar awards to Kansas State University also speak to its leadership in the global food system. Some of those include research on childhood obesity; E. coli in beef; sorghum and millet as dryland crops; global food waste; and wheat genetics. Manhattan, Kansas, is home to the U.S. Department of Agriculture’s Center for Grain and Animal Health Research Center, the American Institute of Baking, the International Grain Science Complex, and the Kansas Department of Agriculture. The capabilities of numerous campus facilities make Manhattan attractive to food companies. For example, in 2015, General Mills announced a partnership with Kansas State University to pump more than $400,000 into developing wheat varieties with improved nutritional, milling, and baking qualities. Floros said that as the campus’s north corridor grows, the university will offer lab space to attract research that helps companies develop and improve consumer food products. Or, as he says: “Together we will innovate the next breakthrough.” “These goals aren’t just to benefit the university,” Floros said. “I want people to know that this is to help the public. We want to address industry problems of the global food system and make things better. This will provide an even bigger impact beyond our current goals. “If we do this successfully, we can use the resources we already have on campus to meet our goals of educating others and helping industries improve their capabilities.” Learn more at www.k-state.edu/globalfood.

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MISSISSIPPI STATE UNIVERSITY

International Focus Enhances Mississippi State Opportunities By Bonnie Coblentz, MSU Ag Communications

Land-grant universities in the United States have the mission of sharing their expertise with the people of their states, but Mississippi State University (MSU) is not content to stop even at national borders. In 15 faculty-led summer programs, 288 of MSU’s 20,138 students studied abroad this year in the Bahamas, Ireland, South Africa, and beyond to study topics such as geosciences, engineering, urban spaces, and tropical veterinary medicine. The university has numerous ongoing projects that send faculty abroad to benefit other countries. Jon Rezek, interim executive director of the International Institute at MSU, said globalization is one of the university’s strategic goals. “We have an emphasis on increasing student participation in education abroad and increasing faculty participation in internationally oriented scholarly activities and funded research and outreach projects,” Rezek said. “More and more challenges are global in nature, and an interconnected, international perspective is required to address these challenges and take advantage of opportunities.” The reason for the student emphasis is simple. “Looking at the world from a different perspective helps students think critically about the challenges and opportunities our own society faces. It prepares them to live and work among people of different cultures who have different priorities and

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values, while understanding that we share similarities that unite us as peoples,” he said. “An international study experience provides a great way for ambitious students to differentiate themselves from their peers in the job market or on graduate school applications.” Naom i Taylor, a ju n ior f rom Southaven, Mississippi, completed an internship in August in Malawi with the Food and Agriculture Organization of the United Nations. Malawi experienced a national food crisis in 2004 after a severe drought. Taylor worked as an irrigation intern, helping introduce irrigation systems to small-scale farmers. “Farmers relied on a single rainy season, but with erratic rainfall, introducing irrigation was a necessary step in beginning to solve problems such as low crop yields, low crop diversity, food insecurity, insuff icient income, and malnutrition,” Taylor said. “The objective is to have multiple cropping seasons by creating irrigation schemes to be used during the dry season, as well as in cases of extreme drought.” Taylor, an environmental economics and management major pursuing a minor in international studies, used this

internship to see firsthand how issues discussed in the classroom were applied on the international level. K r isten Bloom, coordinator of the Study Abroad Off ice in MSU’s International Institute, said broadening education with international opportunities benefits students after graduation. “To have had international experience can enhance students’ opportunities to market themselves and work in this global economy,” Bloom said. “Students are pushed outside their comfort zones in a way they would not experience if they just stayed on campus. These students even have a big impact on others at MSU who don’t leave, because they bring new perspectives and other worldviews into the classroom.” Bailey Martin, a recent MSU graduate, interned for the Food and Agriculture Organization in Santiago, Chile, during the summer of 2014. She worked with childhood obesity as part of the International Year of Family Farming project. This initiative aims to focus world attention on the sig n if icant roles f a m i ly f a r m i n g a nd sm a l l holder far m ing have in improv ing livelihoods, managing natural resources,

Photo by MSU Public Affairs/Megan Bean

Photo by MSU Ag Communications/Kevin Hudson

MISSISSIPPI STATE UNIVERSITY

protecting the environment, achieving sustainable development, eradicating hunger and povert y, and providing food securit y and nutrition. Bailey contributed by researching Chile’s public policy related to childhood obesity and comparing it with that in the United States. Margaret Khaitsa, a professor of pathobiolog y and population medicine at the MSU College of Veterinary Medicine, spent four weeks in Uganda this summer with a group of veterinary students working with pandemic diseases of animals that are communicable to humans. Disease is not restrained by geographic borders, so the fight against it calls for an interdisciplinary and global approach. “Transboundar y animal diseases in particular continue to cause major livestock production losses, and inhibit or disrupt trade in livestock and their byproducts, posing a threat to food security,” Khaitsa said. She worked in sub-Saharan Africa with an African-U.S. higher education partnership grant to build the capacity of

LEFT: Jon Rezek, interim executive director of the International Institute at MSU, does his part to help the university reach its strategic goal of globalization. ABOVE: MSU weed science professor Dan Reynolds is addressing food insecurity in Ghana through the use of research and demonstration farms.

African and U.S. colleges and universities to manage transboundary animal diseases and effect change in Africa. “One of the grants focused on offering global educational experiences with an emphasis on animal production and health and food security,” Khaitsa said. “MSU veterinary students helped with various parts of the project, which included conducting outreach activities including mass vaccinations of animals, assessment surveys, and public education.” Susan Seal, an MSU assistant professor of international agricultural and extension education, said students who are engaged in international agricultural education in the classroom and through

experiential learning abroad are prepared to positively impact their own communities and those around the world. “For our students to be successful in agriculture today, it is critical that they have an understanding of the nature of the global marketplace, the interdependence of our global agricultural systems, and the current issues related to food security,” Seal said. Rezek said international exposure is good for faculty as well. “The academic reputation of faculty in many disciplines depends on how engaged they are internationally,” he said. “Maintaining membership in international organizations and having international colleagues allows faculty to collaborate with the most successful and highest-quality researchers in the world. “In many cases, the presence of international colleagues allows researchers to investigate topics they would not otherwise be able to study. They can also augment the expertise of MSU researchers in ways that lead to research outputs that are far superior to what they would otherwise be,” he said.

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Rocky Lemus, a forage specialist at MSU, has been working since 2012 with farmers in Nicaragua. Through the U.S. Agency for International Development’s Fa r mer-to -Fa r mer Program, he is working to improve forage quality and pasture management in Nicaragua. “We’re developing grazing management pr act ices for sm a l l cat t le producers,” Lemus said. “Our goal is to show how to manage new forages that are on the market for tropical areas. We’re also looking at the quality and nutritive value of the forages, and helping them know when to graze and when to cut and store the forage for the dry-season feeding program.” Just as he does when teaching similar skills in Mississippi, Lemus uses field days and farm demonstrations to show Nicaraguan farmers how to be better cattle producers. “This work in Nicaragua helps us recruit students because it gives Mississippi State a place in the world so others can understand that we have a good program. At the same time, it helps us develop training for graduate students who want to get international exposure,” Lemus said. “It also allows me to bring Mississippi producers new ideas they can incorporate here.” Barakat Mahmoud, an MSU research professor of food safety and microbiology, recently spent three weeks in Mozambique training 13 agriculture

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ABOVE: Ghanaian technicians manually sort soybeans to determine the most viable seeds for variety trials. MSU research aims to enable small-scale Ghanaian farmers to share in the rising demand for soybeans in Ghana. ABOVE RIGHT: Rocky Lemus is working to improve forage quality and pasture management in Nicaragua. Here, he collects data on native forage species.

agents on how to preserve and better market mangoes. Participants in this African nation learned about drying foods, natural preservation, analyzing quality and safety, and processing juice, jam, and jelly. Dan Reynolds, an MSU weed science professor, is addressing food insecurity in Ghana through the use of research and demonstration farms. MSU is part of a team in this West African country that has established three demonstration farms across northern Ghana. “The five-year project will provide the science necessary to enable smallscale Ghanaian farmers to share in the rising demand for soybeans in Ghana,” Reynolds said. “The research will also enable low-resource countries to address problems of food insecurity and protein malnutrition.” MSU took this project a step further by hiring MSU doctoral graduate and Ghana native George Awuni to work

in Ghana on this research and education project. Mississippi State also has an impact on the world by attracting international students. This year, the MSU student body included 913 inter nat iona l students and 95 other non-degree international students. India and China send the most students to MSU, and the top fields of study for international students are engineering, business, and physical sciences. Rezek said the fact that MSU is a solid value, providing a good, quality education at a relatively low price, contributes to its international appeal. “Even more importantly, MSU has high-quality programs in disciplines that are in high demand in many developing countries, particularly in the STEM fields,” he said. “MSU has strengths in agriculture-related disciplines, and graduates of such programs are in short supply worldwide.” The university’s location in a largely rural area is a large draw to many students, and parents of international scholars have peace of mind in sending their children to a safe location. “For a relatively large universit y, MSU’s faculty and staff are extraord i n a r i ly f r iend ly a nd accom mo dating,” Rezek said. “Many international students comment that the best experiences at MSU are related to their ver y actively involved faculty mentors.”

Submitted photo

Submitted photo/MSU Extension Service

MISSISSIPPI STATE UNIVERSITY

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