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Higher Energy Costs Have Farmers Looking At Wind Turbines
Joe Weisshaar always knew the winds whipping across his family's farm could offer more than a cool breeze.
He just didn't how to harness it.
"I started going to a bunch of seminars, trying to figure out how to do this. But I was going no place," said Weisshaar, who has farmed on family land for 50 years in Creston, about 75 miles southwest of Des Moines.
That's when Weisshaar linked up with his son-in-law, a grad student with an expertise in grant writing. Finally able to navigate the paperwork, he obtained a federal grant and the Weisshaar Family Farm added an electric wind turbine in February.
"It's always been windy here," says Brian Zachary, Weisshaar's son-in-law and next-door neighbor. "It's a resource that's just been slipping away."
Squeezed by high energy prices and more overhead costs, some small farms are exploring ways to increase their energy efficiency and lower costs. By erecting wind turbines, making biodiesel fuel and adopting more efficient tilling practices, farmers have cut costs and reduced their environmental impact.
"It's one of those things, just like a regular homeowner, when you start talking about the things you've done at your household and how to lower your energy bill," said Kamyar Enshayan, a professor at the University of Northern Iowa's Center for Energy and Environmental Education.
Practices such as generating power from the wind or brewing biodiesel aren't new, but experts said increased costs have motivated farmers to take another look at their operations.
Tracking the number of farmers who have made such moves is difficult, but those who study agriculture think it's becoming more common, as farmers are motivated by potential profits and benefits to the environment.
China's Record Pork Prices Set To Keep Inflation High
China's inflation is set to remain high on support from meat and poultry prices, which are forecast to stay at lofty levels at least until early 2008 due to rising feedmeal prices and an eight-month hog breeding cycle, industry officials said.
Meat and poultry form a key component of China's consumer price index, and continued high prices could sustain a high level of inflation in the world's most populous country, despite government measures to curb escalating food prices.
In August, China's meat and poultry prices surged by 49% on year, which helped boost the country's consumer price index to 6.5%, a high not seen since December 1996.
"It simply takes time to increase the number of piglets and to rear pigs," Vice Chairman of China Animal Agriculture Association Qiao Yufeng said.
Porcine blue ear disease has reduced China's hog population, and given that the hog-breeding cycle takes around eight months, China's pork supply may not fully rebound to normal levels until mid-2008, Qiao told an industry conference Friday.
However, supply has increased in recent weeks, as a slight retreat in pork prices since early this month prompted farmers to sell hogs on fears of further price declines after the upcoming festive season, said Xiao Jun, an analyst with Shanghai JC Intelligence Co., an agricultural commodities information provider.
"This could mean a tighter market later on," Xiao said, especially since the hogs were premature by industry standards.
Pork is the meat of choice in China, and consumption usually rises during festive seasons such as the Mid-Autumn Festival on Tuesday and the week-long National Day Holiday beginning Oct. 1.
Pork accounts for 60% of all meat consumed in the country, and sustained high prices will lead to higher prices for substitutes such as poultry and other meats, which would increase the possibility of contagious price rise in other CPI components.
Last week, the central government intervened to cool pork and poultry prices, but analysts said the move is likely to be more symbolic than effective.
Beijing is releasing 30,000 tons of live pigs from its central reserves Sept. 10-Oct. 15, a person who saw a government notice told Dow Jones Newswires Friday.
However, China consumes 130,000-150,000 tons of pork a day, so 30,000 tons is "a drop in the bucket," said Peng Danxue, an analyst at Everbright Securities.
The move could be a symbolic gesture ahead of the upcoming festivities, when household spending will likely be the focus of family gatherings.
Even if China imports more pork to alleviate the domestic supply shortage, its efforts to curb the rise in domestic prices will likely be in vain, as prices of pork imports will probably rise, market participants said.
In 2006, China's pork production totaled 52 million tons, or around 53% of the world's total output, the National Development and Reform Commission said.
On the other hand, production in the U.S., which is a major pork exporter, totaled only 9.52 million tons.
As such, a small rise in Chinese import demand for U.S. pork will cause a jump in U.S. exports, "which could drive U.S. hog prices sharply higher," said Xiao of JCI.
At the same time, China's feedmeal prices have been rising in recent months, as a reduction in domestic production and higher international prices coincided with a rebound in Chinese feed demand.
Soybean is crushed to produce soymeal, which is used to make animal feeds and soyoil, while corn is also used to produce feedmeal.
In response to high feedmeal prices, the central government will cut its import duty on soybean to 1% from 3% from October-December, the NDRC said Friday.
"I'm not sure why the government believes that such a move could lower the feed cost," and consequently lower pork and poultry prices, said Zhu Yufeng, general manager of grains, oilseeds & sugar of LouisDreyfus Commodities (Beijing) Trading Co.
Beijing's import duty reduction is aimed at encouraging imports, but it is instead likely to drive soybean futures traded on the Chicago Board of Trade higher, and raise ocean freight rates, which would consequently offset the reduction in import duty, analysts said.
Separately, China's feed demand is likely to grow by at least 10% in 2008, as demand from the hog breeding sector is expected to rise, and the country's poultry stocks remain high, said Ji Zhihua, vice chairman of the China Feed Industry Association.
However, Chinese grain output is expected to decline, as "a drought has seriously hit soybean and corn output in the northeast," said the general manager of a major trader in northeastern Jilin province, which is a major grain producing area.
Lower domestic grain output, along with rising feedmeal demand, means China may have to increase its reliance on grain imports for feedmeal production, which could continue to underpin rising international grain prices, industry players said.
Indonesia 06-07 Coffee Crop Likely -26.7%, Exports -50% - Assoc
Indonesia's coffee output is projected to fall by up to 26.7% to 330,000 metric tons this crop year ending Sept. 30 from 450,000 tons the previous year, a senior industry association official said Monday.
Indonesia's coffee harvest this year was delayed by two months from April to June but is already tailing off and looks like it will end around the usual period by mid-October. The delayed crop had helped lift global coffee prices to nine-year highs in June, and its shorter harvest period is expected to put a squeeze on robusta supply before Vietnam's harvest commences in November.
"Production was lower due to the El Nino phenomenon earlier this year. There was too much rain during the flowering season," said Moenardji Soedargo, president of the industrial training department at the Indonesian Coffee Exporters Association, or AEKI.
Exports are estimated to have fallen by 50% to 150,000 tons from last October to September this year compared with the same period a year earlier on increased domestic consumption and high domestic prices, said Suherman Harsono, chairman of the AEKI branch in Lampung.
Domestic consumption is projected to have risen 25% to 150,000 tons this calendar year compared with 120,000 tons the previous year with the opening of more cafes, added Harsono.
Brazil Eyes Biodiesel Auction Amid Difficulties
The Brazilian government may hold another biodiesel auction in the next few months to guarantee supplies for its obligatory 2% biodiesel mix next year, a director at the Energy Ministry told Dow Jones Newswires Friday.
However, the measure is likely to do little to solve the short-term growing pains of over-supply, little domestic demand, and soaring feedstock costs, he added.
In recent months, a burgeoning crop of Brazil's eager young biodiesel producers and analysts have fretted, both publicly and privately, that climbing vegetable oil prices in the past year may make production difficult, even unviable next year. Brazil's obligatory 2% mix takes effect starting January 2008.
"The government is looking to make the transition between 2007 and 2008 as tranquil as possible," said Ricardo Dornelles, the director of renewable fuels at the Energy Ministry in a phone interview. "There have been questions in the press about whether we may run short on (the mandatory biodiesel) supply in 2008."
"This risk doesn't exist," he added.
One of the measures being contemplated to soothe the fears of both producers and distributors is a new government biodiesel auction - which would likely set delivery terms for the biofuel for 2008 - to safeguard supply for the obligatory mix, said Dornelles.
The auction could be held in November, added the agro-energy coordinator at the Agricultural Ministry, Frederique Abreu, at a Sao Paulo biodiesel conference this week.
Between November 2005 and February this year, Brazil - already the world's leading ethanol exporter - held five biodiesel auctions to spur domestic production of roughly 800 million liters of biodiesel before the start of its mandatory 2% blend.
Starting 2008, the government had planned to let free market mechanisms take over.
However, in the past 12 months, the costs for vegetable oil feedstocks have skyrocketed, pressured by growing global demand for ethanol and biodiesel.
Friday, for example, soyoil prices for the December contract on the Chicago Board of Trade were quoted at 39.70 cents per pound, or roughly 60% higher than the same day a year ago.
Such prices have slashed the margins of Brazilian companies across the board, including the country's leading supplier, Brasil Ecodiesel, which posted a net loss of BRL13.8 million ($7.39 million) in the second quarter against a BRL2.4 million loss a year earlier.
An estimated 85%-90% of Brazilian biodiesel is currently made from soy, with the rest coming from various feedtocks including oils from cottonseed, sunflower, castor, palm, and cow tallow.
Nevertheless, even if the government holds a biodiesel auction to guarantee Brazil's 2008 biodiesel needs, "this doesn't resolve the greater issues" of the marketplace, warned Dornelles.
Installed capacity in Brazil has boomed since 2005, as a spate of domestic and foreign companies - including Dutch oilseed trading company Agrenco and Archer Daniels Midland - have rushed into the sector, spying great opportunities for biofuels in a time of towering petroleum prices and rising climate change fears.
However, while Brazil needs just 800 million liters of biodiesel for its 2% mix, the country already has roughly 40 biodiesel plants in operation, with an installed capacity of 1.66 billion liters per year, according to Energy Ministry data.
Another 26 plants are being constructed or awaiting licensing approval, with an installed capacity of an additional 2 billion liters.
"Either we'll need to raise the biodiesel demand higher than the 2% mix or we'll need to export the biodiesel," said Dornelles.
Government ministers over the past year have already talked of moving Brazil's obligatory 5% mix of biodiesel - currently set for 2013 - forward to 2010, or even earlier. This would require Brazil to consume just under 2.4 billion liters of biodiesel per year.
By law, however, the government can only change the date of its 5% mix next year, said the Agricultural Ministry's Abreu.
And, with market conditions still uncertain, President Luiz Inacio Lula da Silva and his ministers are likely to wait to evaluate what happens within the sector in 2008, before decided on pushing up the blend, added Dornelles.
Still, the government is already preparing the way for increasing the country's consumption of biodiesel, by small and larger means, he said.
For example, Brazil is already conducting tests of a 5% blend of biodiesel in autos in partnership with auto manufacturers.
In addition, the government is also testing biodiesel blends of between 20%-50% in agricultural machinery and other vehicles.
"Most likely the 5% blend won't be moved up to 2008," said Dornelles. "But 2009? Let's see."
Even with this helping hand from the government, local producers will have to solve their pressing feedstock issues - and pricing concerns - on their own, said government officials.
"It's up to the producer to evaluate the market, and to pick their feedstocks," said Abreu. "If they're not studying the market as well, and looking at soy planting here, and corn planting in the States, then that's their fault."
There is one silver lining for producers amidst the gloom, he added.
With prices soaring on the international markets, Brazil's upcoming 2007-08 soy harvest looks likely to be an enormous one.
That, in turn, could help send feedstock prices lower next season.
General Mills Names Powell CEO
General Mills Inc. (GIS) named Kendall Powell chief executive, replacing longtime CEO Steve Sanger.
Powell, 53, who most recently served as president and chief operating officer, helped develop the Minneapolis-based company's five long-term growth strategies, which include broadening the channels through which the company sells its products, expanding overseas and bringing more innovation to the business.
Powell is not expected to deviate from the growth plans that he had a hand in shaping. During a shareholder's meeting Monday, he said, "I look forward to building on General Mills' strong track record of solid performance
India Official: Won't Sell Wheat In Mkt If Prices Stay Stable
India's federal government won't make any open market sales of wheat from its own stocks in the current marketing year to March 2008 if local prices continue to remain stable, a senior government executive said Monday.
"There is a consensus that domestic wheat prices will hold good and consumers won't be subjected to vagaries and uncertainties of price rise," Managing Director, Food Corporation of India, Alok Sinha said, addressing the annual general meeting of Roller Flour Millers' Federation of India.
The government generally sells wheat to mills in order to keep a check on local prices, but because this isn't required this year, the government expects to save a few hundred thousand tons of wheat for future use, to further shore up its stocks and to minimize imports.
Food Corp. of India, or FCI, is the government-run agency that procures wheat and rice from farmers at the set intervention price and sells it to consumers at subsidized rates.
FCI is the single largest buyer of wheat and rice by volume in the country.
Sinha said flour millers don't need any supply-related help from FCI this year because there is already enough volume of wheat available in the market.
Indonesia Palm Oil Output May Top 18M Tons In 08 - Assoc Exec
Indonesia will likely produce around 18.4 million metric tons of palm oil in 2008, up 1.4 million tons from a year earlier because of increased output from newly added plantations, a senior industry official said.
"Some plantations in Kalimantan and Sumatra islands of Indonesia that were planted in 2004 would start producing palm oil in 2008, which would lead to an increase in overall production," Derom Bangun, executive director of Indonesia Palm Oil Producers Association, said on the sidelines of the 11th Globoil India conference late Sunday.
The country produced around 17 million tons of palm oil in 2007.
He also said that domestic demand for both food and fuel usage would rise to 4.4-4.5 million tons in 2008, up from 4.2 million tons, leaving an exportable surplus of around 13 million-14 million tons.
Indonesia exported around 13 million tons of palm oil in 2007.
"Palm exports could have risen in 2008 as production is expected to grow, but
higher local demand is cutting export surplus," Bangun said.
Brazil Cosan Plans To Expand Cane Crush +50% By '11 - Official
Brazil's largest ethanol group, Cosan Ltd. (CZZ), plans to ramp up its crushing capacity by over 50% to 60.6 million metric tons by 2011, Paulo Diniz, Cosan's finance director, told Dow Jones Newswires Friday.
The group currently has 17 mills in the country's No. 1 ethanol state of Sao Paulo, with an industrial capacity of 40 million tons of sugarcane per harvest.
Cosan plans to add 10 million tons of additional crushing capacity in greenfield projects in the center-south state of Goias, Diniz said.
In addition, the company is looking to expand the crushing capacity of its existing mills by another 10.6 million tons.
Cosan currently accounts for roughly 8% of Brazil's total sugarcane production.
Over half of the country's crop goes to ethanol output, with the rest going to sugar production.
Brazil is the world's leading ethanol exporter and No. 2 ethanol producer after the U.S.
It is also the world's leading sugar producer and exporter.
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