Has the missing link to the US feed chain been found?
Analysts are coming up with solutions to how US farmers will keep animals fed – given forecasts of a drop in corn use. But do the answers stack up?
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Cheap freight, behind unusual crop deals, to stay
The low shipping costs which have helped take US corn to China and, potentially, Australian wheat to Europe, look set to stick around
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FTSE today: market report – as it happened March 29, 2011
US stocks close higher, shrugging off downgrades of Portugal and Greece
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Cotton rally not finished yet despite sowing hopes
Macquarie sees “no collapse” in cotton prices despite Pakistan joining China, India and the US in voicing upbeat planting hopes
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Wheat soars after US stokes talk of China corn buy
US farm officials announce a sizeable corn sale to an unknown importer – who many investors take to be China. Wheat jumps 5% in Paris
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A poor country gets poorer
Antananarivo, Madagascar (IRIN) – Madagascar, one of the world’s poorest countries, has lost about US$400 million in donor support since the 17 March 2009 coup in which Andry Rajoelina, with the support of the military, deposed President Marc Ravalomanana.
A World Bank report, Aid Effectiveness During Political Instability: A Look at the Social Sectors, published on the second anniversary of the island’s illegal transfer of power, said donor money traditionally contributed about half the government’s budget, and around 70 percent of public spending, making it “by far, the main source of funding in social sectors”, but this had fallen by about $200 million a year.
The political crisis, now in its third year, remains unresolved, preventing donors from reviewing their decision to freeze all aid apart from emergency funding. The African Union and the Southern African Development Community (SADC), the regional body, also cannot reinstate trade benefits and lift sanctions.
However, the freezing of donor funding has been counter-balanced by increased humanitarian assistance for education, health and social protection, rising to $260 million in 2010 from a pre-crisis amount of $180 million. Infrastructure, productive activities and institutional support had experienced the steepest decline in funding, the World Bank report said.
“In the absence of donor confidence there is less financing available to fund programs for health and agriculture and economic development. In all sectors there are fewer resources to support the poorest people in Madagascar, and in this absence there are clear trends of important indicators worsening,” CARE International country director John Uniack Davis told IRIN.
According to the UN Children’s Fund (UNICEF), government funding for health dropped to $2 a head in 2010, its lowest level, compared to $5 in 2009 and $8 in 2008..
A joint survey by the World Health Organization (WHO), UNICEF, and the UN Population Fund (UNFPA) found assisted births fell from 51 percent in 2006 to 44 percent in 2009, and more than half the people living in the drought-prone south reported that financial difficulties prevented them from visiting clinics.
Increasing poverty
Madagascar’s National Institute of Statistics (INSTAT) said its latest five-yearly household survey (Enquête Périodique Auprès des Ménages), showed higher poverty levels, especially in rural areas, where about 80 percent of the 20 million population live.
Using a $230 individual annual income benchmark as the poverty line, INSTAT reported that nationwide poverty increased from 68.7 percent in 2005 to 76.5 percent in 2010, while rural poverty rose from 73.5 percent to 82.2 percent. A rising income disparity between urban and rural populations was highlighted.
“When you think that the years before the crisis were growth years, this shows poverty has increased by nine percent in just two years, which is directly attributable to the domestic political crisis and compounded by the global economic crisis,” the head of a leading international institution in Madagascar, who declined to be named, told IRIN.
UNICEF’s January 2011 newsletter noted that INSTAT’s 2010 survey showed the second highest levels of poverty since measurements began in 1993. “This indicates a slow but mounting crisis in rural households, despite two past years of comparatively good harvests.”
Frequent government interventions attempting to fix the price of rice, such as banning exports and paying for imports, have failed to prevent the price of the staple increasing to about $1 per kilogram.
Oil companies recently failed to overturn a government decree allowing the state to fix the price of petrol at the pumps.
“The government can’t keep prices down by decree forever, it doesn’t have deep enough pockets to absorb very fast commodity price rises on the international market,” Patrick Raleigh, Madagascar analyst at The Economist Intelligence Unit, commented.
In December 2010 the World Food Program said 720,000 people in eight southern districts – Betioky, Ampanihy, Beloha, Bekily, Tsihombe, Ambovombe, Taolanaro and Amboasary – were food insecure after a second consecutive year of drought.
Short-term crisis solutions unworkable
In February 2011 Cyclone Bingiza struck northeastern Madagascar, causing extensive damage to crops, which is likely to deepen food insecurity and hit cash-crop production.
“There are crises of structural food insecurity, particularly in the arid south, that will not be resolved until there is significant long-term donor investment… rather than short-term crisis solutions, and clearly this long-term kind of investment doesn’t look to be forthcoming in the current climate of [political] uncertainty,” said Uniack Davis, of CARE.
“Since the crisis, Madagascar, a highly donor-dependent country, has experienced a dramatic decrease in development assistance and national budget allocated to crucial services for children,” UNICEF Representative Bruno Maes told IRIN. “These financial shortfalls, along with political uncertainty, have threatened the continuity and quality of basic social services.”
UNICEF said each year more than 70,000 Malagasy children died before the age of five from preventable diseases, including diarrhea, acute respiratory infections and malaria.
“We should continue finding ways of protecting social basic services” Maes said. “All stakeholders, national and international, need to reinforce efforts to mitigate the impact of the crisis on the most vulnerable population, including children.”
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Struggling to cope with rising prices
Ho Chi Minh City, Vietnam (IRIN) – Vietnam’s inflation rate is among Southeast Asia’s highest and its population is struggling to keep up with sharp increases in food, fuel and electricity prices.
On 1 March the government increased electricity prices by a record 15 percent to an average 1,242 dong (US 6 cents) per kilowatt per hour. The week before, petrol prices were raised by 18 percent to 19,300 dong (93 cents) per liter.
In Vietnam, inflation has increased every month since August 2010, reaching 12.2 percent in January.
“Things are getting really uncertain,” said Nguyen Bich Hanh, 25, a public school teacher who lives on the outskirts of the capital, Ho Chi Minh City. “We are struggling to pay for electricity, and food [prices are] getting extreme.”
In the past two months, Nguyen said the price of high-quality rice, for example, had increased by almost one-third to 22,000 dong ($1.13) per kilogram.
She earns $150 a month and spends most of it on food and transportation for her family of five.
The World Bank ranks Vietnam as a lower middle-income country. Still, worries about poverty run deep in a country where 80 percent of the population lives in rural areas and most of the workforce is agricultural.
Half the population lives on less than $2 a day, and many could slide into poverty because of economic shocks and natural disasters, according to AusAID, the Australian government’s aid agency.
Nguyen saves money by turning off the electricity at home at all times, and increasingly, by skipping meals.
“Fewer kids are coming to school because they need to help their families,” she said.
Coping
Sudden price fluctuations are forcing Vietnam’s poorest to find quick and creative ways of coping, said Ben Kerkvliet, a Vietnam scholar at the Canberra-based Australian National University.
“Many rural households in Vietnam have small gardens, small fish ponds or other aqua-raising opportunities, chickens or ducks… that help to feed their families,” he told IRIN. “In hard times, these sources of food become even more important.
“Youngsters in the household may go to school without school supplies. They may have to quit school altogether,” he added. So far, Vietnam has performed well in enrolling students in primary school and keeping them there.
In 2009, net enrollment in primary school was 97 percent and 88.5 percent of children who enter primary school complete at least five years, according to the UN office in Vietnam.
But should inflation increase sharply beyond current levels, said Kerkvliet, general stability could slide. “Should shortages of key commodities like rice and wheat become extreme, villagers are likely to protest in various parts of the country,” he said. “At present levels of inflation, the likely political change will be policies aimed at addressing the problems.”
This year, the government hopes to limit inflation to 7 percent, compared with 11.75 percent last year.
For Nguyen, poverty is more pressing than numbers on paper. “They say our country is becoming richer,” she said, “but this does not matter if regular people cannot afford anything.”
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Improving yields key to boosting rice farmers’ livelihoods
AHERO, Kenya (IRIN) – After spending Ksh35,000 (US$437) on his 0.4 hectare rice plantation – preparing the land, paying for water, transplanting the rice and hiring casual labour – Vincent Opiyo hopes to make Ksh65,000 ($812) when he sells the rice, which takes about three months to mature.
“I expect to harvest 25 bags [50kg each] from this [land] but I know I could get more if I were to improve the yield,” Opiyo, 49, father of eight, told IRIN at the Ahero Rice Irrigation Scheme in Nyanza province.
In addition to the high costs of inputs, the farmers, who are “licensees” on trust land, struggle to access credit as they lack title deeds.
Were it not for what he earns working for the National Irrigation Board (NIB) – which runs the Ahero scheme – Opiyo would not meet the needs of his family from farming.
“Poverty is very high among many farmers under the Ahero scheme because they never make enough to cover needs such as school fees and payment for medicine when children fall sick; look at the structures we live in, most of them are semi-permanent,” Opiyo said.
“Many of us do not even own a cow or some goats. Our father managed to [send] us to school from the proceeds of his [1.6ha] of rice, but for us, his children, it is no longer enough.”
Low yields, better prospects
According to NIB, the average yield of Basmati rice at Ahero is 13-25 (75kg) bags per 0.4ha when it should be 20-30 bags; while the yield for Sindano rice is 15-30 bags, when it should be more than 30 bags.
At the start of operations in 1969, the Ahero Irrigation Scheme had 519 farmers, each with 1.6ha held on trust by the government. The farmers have since sub-divided their farms among their children but they are not allowed to sub-divide below 0.4ha or sell the land.
In 2009, a farmer-oriented funding arrangement, known as the Revolving Fund, was set up to support the farmers’ production and marketing efforts.
Jacob Ongere, a farmer at the Ahero scheme and an extension officer with the Ministry of Agriculture, told IRIN that with the Revolving Fund and the government’s Economic Stimulus Programme (ESP), things were now looking up.
“The profit that farmers are making is still way below average but we hope this will change with more funding and support in sectors such as marketing and capacity-building,” he said.
Through the Revolving Fund Office, Ongere said, the Ahero farmers hope to boost their livelihoods by “exploiting agronomical practices” to improve their yields – transplanting on time and using pesticides and fungicides.
He added: “The situation is so bad right now such that we are in the harvesting season but the majority of farmers with children who sat their primary school examinations last year cannot afford to take their children to secondary boarding schools. The best they can do is send them to day schools because the charges are lower.”
He urged the farmers to explore consolidation and adopt a group approach to reap better yields.
Devolving responsibility
Laban Kiplagat, senior NIB manager at Ahero, said NIB encouraged farmers to take greater responsibility of the scheme.
He said NIB was concentrating on its core business: “The NIB’s core activities include provision of water and maintenance of irrigation infrastructure as well as management of farmers’ organizations,” Kiplagat said.
“Therefore, the NIB would be offloading production, marketing and capacity-building so that farmers can manage themselves better.”
He said Nyanza had a potential to irrigate up to 200,000ha in its Lake Basin region.
Kiplagat said the farmers should embrace a culture of saving because “they tend to spend all they get from their harvests without proper planning for the high costs of operations – ploughing, water abstraction [pump-fed water supply] and tractors, which are costly to hire; and other inputs such as fertilizer and seed”.
Increasing cropping frequency would also help farmers increase their earnings, he said. “Currently many farmers plant the rice crop once a year, meaning the land is in use for only four months and then lies fallow for the other eight months.”
Kiplagat said NIB wanted to expand the scheme and to open up more swampy areas for irrigation.
“Under Vision 2030, some 40,000ha is expected to be put under irrigation per year, with the NIB having the responsibility of ensuring 30,000ha goes under irrigation,” he said. “We hope to do this by exploring the introduction of more crops, such as seed maize, cotton, as well as horticulture, for irrigation.”
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Jump in exports and Kazakh hitch lift grain prices
Strong US export data, and talk of setbacks to a Turkish wheat order from Kazakhstan, drive a rebound in crop futures. Wheat prices soar 6%
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USDA cuts hopes for rebuild in crop supplies
US officials forecast farmers will receive record prices for major crops in 2011-12, as it cuts expectations for a rebuild in inventories
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