Washington Insider-- Tuesday

Great Lakes Water Quality and Agriculture

Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.

Major Brazil Poultry Exporter Mulling Imports of US Corn

Brazil's largest poultry exporter BRF is looking into importing U.S. corn as local supplies are still tight, according to BRF Chief Financial Officer Alexandre Borges.

"We are still evaluating (U.S. corn imports), but we see as a positive development the fact they opened up this possibility," Borges told reporters, referring to the decision last week by the Brazilian bio safety committee -- CTNBio -- to approve some U.S. GMO corn for import.

As domestic corn supplies remain tight in Brazil, Borges said there will likely be imports of U.S. corn by the Brazilian poultry and pork industries.

"We continue to see a tight supply in the short term. This window to buy U.S. corn could help to relief this tightness," Borges said.

There remains a debate over the amount of U.S. corn that could come since the window for imports is seen as being only open a short time.


Import Duty Cut Seen Boosting India Wheat, but US Not a Player

India recently cut its import duty on wheat to 10%, from a prior 25% level, opening the way for increased imports of the grain.

The U.S. ag office in New Delhi reported the import duty reduction was on concerns over rising domestic prices and strong demand for government-held wheat in recent months.

There remains a wide spread between Indian government estimates and those in the private sector over the country's wheat crop in the wake of a below-normal monsoon.

"Market sources report that imports of wheat at 10% import duty will be economical for the millers at the current international prices, especially the southern and western mills due to the in-land freight advantage," the U.S. ag office said in a recent update. "Due to the strong speculation on the impending lowering of the import duty, the domestic wheat prices eased down in September as private trade started contracting for importing wheat to augment their requirements."

But the U.S. expects no wheat exports to India even with the duty reduction. The USDA office in India sees 3 million tonnes of wheat imports through February 2017 if there are no significant changes in domestic or international wheat prices. "However, import prospects are likely to be affected if the domestic prices decline or international prices increase by around 10% over current levels," the attaché noted.


Washington Insider: Great Lakes Water Quality and Agriculture

There haven't been as many dramatic headlines about water problems with Great Lakes systems as usual this year. However, Bloomberg is carrying a report this week about a U.S.-Canadian environmental conference in Toronto that suggests the issue certainly has not gone away.

Great Lakes regional problems always attracts attention because of their scale and the political potential of water problems—including those already in the public focus such as the ones in cities like Flint, Michigan. However, looming problems with water quality in the Great Lakes have been around a long time and the United States and Canada have a somewhat elaborate, if little known, set of activities under way.

For example, the Great Lakes Water Quality Agreement (GLWQA) was first signed in 1972 by Prime Minister Pierre Trudeau and President Richard Nixon. It was updated in 1978, 1987 and 2012 and reflects commitments of Canada and the United States to a wide range of water quality related activities in the Great Lakes and the international section of the St. Lawrence River.

While the GLWQA is not a regulatory body, it has substantial responsibilities to analyze information provided by the governments, assess the effectiveness of programs in both countries and report on progress. The initial Agreement established a Water Quality Board and a regional office in the Great Lakes basin to administer the Agreement's responsibilities.

Recently, an international conference was held in Toronto that attracted numerous interested parties from U.S. States, Provinces and both federal governments. Part of the reason this is attracting attention just now is the conference tone and its focus on the need to combat algal blooms that are affecting growing numbers of urban residents. Another concern is the extent to which agriculture is being identified as an important contributor to the problem.

Cameron Davis, senior adviser to the U.S. EPA, told the group on the final day of the three-day conference that the problem is "about as thorny as it gets, and that it took a long time to get into this mess and it's going to take a long time to get out of it." He identified harmful and even toxic algal blooms as the chief contributors to the poor environmental status of Lake Erie, rated as the most environmentally damaged Great Lake. "The blooms however also are a problem across the entire Great Lakes Basin," several speakers said.

We're seeing harmful algal blooms around the world, other parts of the U.S., other parts of the Great Lakes," Davis emphasized.

Then, he shared some really scary data. Lake Superior's water temperature, for instance, is expected to increase as much as 12 degrees Fahrenheit by 2100, he thinks "The concern is that this will create more conditions for blooms to happen. It's another reason why this imperative to tackle climate change is so important to [the Great Lakes] region," Davis told Bloomberg during the conference.

While efforts to combat Great Lakes algae blooms in the 1970s and 1980s made some inroads, the blooms remain "a massive problem," Catherine McKenna, Canada's minister for environment and climate change, said. "If we don't tackle this and it gets worse, we are going to have very serious problems," she said.

The EPA identified for conferees three priority Great Lakes watersheds where efforts to combat regional algal blooms are expected: the Maumee River watershed that empties into Lake Erie, Saginaw Bay located within Lake Huron and the Lower Fox River/Green Bay area in the Lake Michigan Basin. "We want to undertake practices that have a longer-term reduction effect. And that's kind of the name of the game," Davis said.

He also noted that there is some funding for remediation for the region, but that progress has been slow. The Great Lakes Restoration Initiative, a program launched in 2010 that targets threats to the Great Lakes Basin, such as algal blooms, has received about $300 million annually from Congress in recent years, Davis said. And the Canadian government in 2013 launched the Great Lakes Nutrient Initiative, which provided $12 million over four years specifically to address recurrent toxic and nuisance algae in the Great Lakes.

Another theme of the conference is the growing effort to identify and implement highly rigorous water quality monitoring and control programs, including focused, detailed efforts to monitor water pollution sources and their impacts, as well as potential ways these can be managed—efforts that may include restrictions on agricultural operations in some areas, especially for phosphorous. Similar programs in the Chesapeake Bay watershed are being widely used, and are highly controversial.

So, this is yet another area where consumer concerns and public health in general could have significant growing impacts on producers. There is now a growing debate on how the water improvement process should proceed under the Agreement that is being driven heavily by environmental activists. However, producers need to be aware of these developments and become involved in them wherever practical, Washington Insider believes.


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(GH/CZ)