U.S. records highest export loan guarantee program since it started in 1981. 4.35 Billion since last October. Main benefit to ADM , Cargill and Bunge.
Announcement
Collapse
No announcement yet.
U.S. Export loan program
Collapse
Logging in...
Welcome to Agriville! You need to login to post messages in the Agriville chat forums. Please login below.
X
-
Heres the link for background.
http://bloomberg.com/apps/news?pid=20601087&sid=a28NF4oL_LoA&refer=home
Quote from the first few paragraphs.
Cargill, Bunge Win Most Export Aid Since 1992 as Credit Slows
By Alan Bjerga
May 27 (Bloomberg) -- Cargill Inc., Archer Daniels Midland Co. and Bunge Ltd. are
benefiting from the most government support for farm exports since 1992 as the U.S.
steps up loan guarantees for foreign buyers unable to get credit.
About $4.35 billion was allocated to countries from Jamaica to Turkey through April 6
in the year that started Oct. 1 under the Export Credit Guarantee Program to
underwrite loans that foreign banks grant for the purchase of corn, wheat and other
U.S. farm products, government records show. That’s 40 percent more than in all of
fiscal 2008 and almost triple 2007’s total.
The U.S. is supporting exports after the Department of Agriculture predicted farm
shipments will drop 17 percent in the current fiscal year because of falling commodity
prices. Profit declined 68 percent at Cargill and 98 percent at ADM in the most recent
quarter, as the recession curbed demand for everything from fertilizer to livestock
feed. Bunge reported its second straight loss last month.
The export-guarantee program is “the perfect tool for tight credit,” said Erick
Erickson, an economist in Washington for the U.S. Grains Council, a trade group. It
“allows the U.S. to satisfy some import needs that would otherwise go to other
countries.”
The government loan guarantees, in existence since 1981, are helping finance U.S.
agricultural exports in the face of the worst economic slump since the Great
Depression. Banks and businesses worldwide have lost $1.47 trillion in writedowns
and credit losses in the past 22 months stemming from the collapse of the subprime-
mortgage market.
End quote.
-
In related news, Franny's dream-team government changes it's budget deficit projection from zero to $50 billion in 7 months. Probably be 75 billion by August. You sure can pick some winners.
Comment
-
"...even these large companies can't sell grain without government help."
Why would you think that?
Could you farm without the agri-invest payment you got? Absolutely, but you probably cashed the check anyways.
Just because government decides to "help" doesn't mean it's needed. More often than not it gets in the way. Obama Motors comes to mind.
Comment
-
Grainbeetle - I seem to recall 3 parties wanting to throw the present government out on their ear in November because they weren't quick enough on the draw to come up with a stimulus. Yesterday, IGGY was complaining only 6% of the stimulus had gone out...not fast enough. Today he yips about spending too much money. Hypocrites at best!!!!!!!!!!
Comment
-
Franny: Looks like your hog industry is in as good shape as GM/GMC, the US banks, and Freddie and Frannie.
Last time I checked there wasnt a Canadian Pig Board (CPB) to blame for low prices and American trade restrictions. Will your hero ag-minister Ritz come to the rescue for you? Perhaps his experience in the ostrich industry can help fix the pig industry?
http://www.prairiepost.com/index.php?option=com_content&task=view&id=3818&Ite mid=45
Hog industry a little sick
Written by Publisher
Thursday, 28 May 2009
By Paul Beingessner
It’s a sad time to be involved in hog industry. It might not make me very popular in some circles, but the imminent demise of the hog industry in Canada leaves me kind of cold. Oh, I’m as worried as anyone about the job losses in communities that rely on hog barns for local jobs, but the industry itself isn’t one that I brood over.
I thought about this the other day when I was discussing farm animals with my three-year-old grandson. He had seen cows, he told me, and horses and dogs, cats, chickens and sheep. But he had never seen a pig. Pictures yes, and the little piggies on the ends of his feet, but not a real live hog. And, living in Saskatchewan, I reminded his parents, he wouldn’t be likely to see one. I couldn’t think of anyone in this area who raises hogs the way my father, and most of his neighbours did four decades ago. The closest thing to a hog around here is the odour that drifts in occasionally on the south wind from the huge complex of barns 20-odd miles south of here. And if I did want to take him there to see a pig, we would be unlikely to make it past the bio-security layer around the barns.
As I said, there used to be a lot of hogs raised on diversified farms in the prairie region. Pigs had the title of mortgage lifters. Many farmers were in and out of pigs frequently. It was easy to ramp up numbers when prices were high, since pigs reproduce early, often and with large litters. It was just as easy to reduce numbers to a minimum when prices were low. Hence the notion of the four-year hog cycle.
When factory hog farms came along, the dynamic changed. Instead of reducing production in times of low prices, they doggedly kept on churning out pigs. They had to do something to cover their huge fixed costs. Prices responded by sinking and remaining low. Toss in the occasional closed border due to real or imagined disease threats, and hog farms have lost vast sums of money for over a decade. Of course, the low prices that battered the huge hog barns destroyed the little ones. Hogs disappeared from the prairie landscape, to be sequestered in massive, sealed complexes.
No doubt the state of the industry is a surprise to many in government and elsewhere who saw factory hog production as another tool in the belt of rural development. Fifteen to twenty years ago, government bureaucrats and agricultural economists were lauding the development of the massive hog operation. Saskatchewan, we were told, would soon be producing three million hogs per year. Markets were expanding worldwide. Canada, especially the prairies, had the lowest production costs in the world. We only had to build them, fill them, and prosperity would come.
The early barns looked good. What the public seldom knew was that they were propped up by government subsidies for everything from water development to building construction. Almost all of those early barns are gone now, and gone are the community dollars that poured into the pockets of the early entrepreneurs. The government of Saskatchewan still owns huge hunks of one hog empire, and loans from many years ago remain unpaid for many barns. These loans were to be repaid when profitability returned. Profitability remains elusive.
The truth is, we were never a particularly low cost producer. American corn always had us beat. And every hog added to our inventory had to be exported, with most of these going to the U.S., to a country already a huge exporter itself. Other countries, with cheaper and more plentiful labour, were also increasing production. It isn’t surprising then, that it took the bubble only a decade and a half to burst.
Now, hog farmers across Canada have asked the government for a billion dollars in ad hoc payments to drag them through the worst crisis they’ve faced. What urban Canadians won’t know is just how few people actually raise hogs. They also won’t know that there is no light at the end of the hog tunnel, only a lot of desperate people hoping for a miracle.
Driving 25 miles south of Regina last week, I got a huge surprise. Rooting around by some wooden granaries near the road was a herd of footloose pigs, older sows by the look of them. I have no idea where they came from, or where they went. But as I went by, I gave them the thumbs up. At least for a short while, they were the only lucky ones in a sad industry.
Comment
-
After reading the article and trying to figure the link between a hog industry that is struggling and the US export program. Perhaps GrainBeetle is arguing that Canada is better off exporting grain than adding value domestically. Perhaps the suggestion is that grain farmers should still wd9 tractors (sorry for abusing your name wd9) and 12 foot drills. Perhaps we would be better off with 60 sow herds everywhere and people returning from Mexico with H1N1 virus/no bio security on any of these farms.
Even more questionable is why the crop sector celebrates failure - particularly for a major customer for their grain. Most industries celebrate success and achievement.
Comment
-
Dont throw stones in glass houses Agstar...
Export Development Canada
Mr. Siegel pointed to recent initiatives launched under EDC’s new domestic powers which will facilitate additional domestic credit, surety and contract guarantees totaling $3 billion. This will allow private financial institutions to do more for their customers and take on new business.
Mr. Siegel said that, thanks to years of preparation in better economic times, EDC has been able to step into an expanded role to help Canadian companies through tough times, now that traditional credit has become a scarce commodity. By the end of April, he noted, EDC had facilitated $22.5 billion in trade and investment by Canadian companies, including 925 new customers. The amount of business is greater than at the same time last year, the year when EDC undertook the most business in its corporate history.
Comment
-
Just to bridge the gap, maybe you will remember when the Crow was killed the Hog industry would flourish because of cheap grain. It was one of the main reasons for the elimination of the crow. Well the feathers are starting to settle and it appears the hog industry success has more to do with the U.S. programs than ours.
Comment
-
Lots of years between the changes you mention and years of both profitable grain and hog operations with years of struggle in between. Hogs industry better times will come as will troubled times for the grain industry.
The hog industry has gone through the structural change and this is likely an indicator of what the grain industry will look like in 10 to 20 years. Have seen another survey recently that highed the average age of farmers remains about 56 to 58. As the upper age end of these farmers retire, they are not going to be replaced by 1,000 acre farms. Bigger farms will change the risk profile of the industry and highlight the need to change how the industry is operated.
To the original posting, it would appear both Canada and the US have programs to keep exports moving in difficult - a good thing I would think.
Comment
- Reply to this Thread
- Return to Topic List
Comment