The agreement will make it easier for CHS’s 75,000 farmer-members to enrol in Bayer’s Carbon Program, an early leader in the drive to encourage farmers to capture carbon by planting off-season crops, tilling the ground less and use fertilizer more efficiently.

It also expands the program from 17 states to 21, the companies said.

The Bayer Carbon Program pays growers up to $9 an acre for planting cover crops and reducing soil tillage. Farmers in the program log their practices on digital platforms to generate a carbon credit.

Agricultural companies use the credits to offset the climate impact of other parts of their businesses or sell them to companies looking to reduce their own carbon footprints.

It is the latest collaboration between large agricultural firms racing to sign up acres for carbon sequestration, or trapping atmosphere warming carbon underground, and environmental credit trading programs.

Some farmers have embraced the carbon programs as a welcome new stream of revenue and a potentially powerful tool to combat climate change. Others have voiced suspicion that companies will collect farming data that will be used to sell them more products.

CHS will pay its members an additional $3 an acre for enrolling in Bayer’s program and purchasing certain products such as “enhanced-efficiency fertilizers.” Payments will be distributed in the fourth quarter of 2022, CHS said.

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Uncertainty over the length of facility closures at the Gulf Coast, which accounts for about 60 per cent of U.S. exports, rattled markets at a time when global grain supplies are tight and demand from China is strong.

Grain trader ADM is not finding significant structural damage to elevators and port operations it closed in New Orleans, but power remains out in the area, according to a statement.

Elsewhere in Louisiana, Ida damaged a Cargill grain export elevator while CHS warned a facility may lack power for weeks.

“There’s plenty of uncertainty about the Gulf,” said Jim Gerlach, president of brokerage A/C Trading. “Nobody knows if it’s something that’s going to last for days, weeks or months.”

Most-active soybean futures fell 10-3/4 cents to $12.92-1/2 per bushel at the Chicago Board of Trade and touched their lowest price since Aug. 20 (all figures US$).

Corn slid 8-1/2 cents to $5.34-1/4 per bushel and set its lowest price since July 12. Wheat slipped 1-1/4 cents to $7.22-1/4 per bushel and hit its lowest price since Aug. 2.

Crop shipments are being rerouted from the Gulf of Mexico where possible following the hurricane, said Arlan Suderman, chief commodities economist for broker StoneX. However, there is “no inventory to speak of at other facilities to ship ahead of this year’s harvest,” he said.

Suderman still predicted no “appreciable lost export demand as a result of the current shutdown.”

U.S. corn and soybean supplies are set to increase as farmers begin harvests in the coming weeks.

“Better weather will help finish the soybean crop,” said Tomm Pfitzenmaier, analyst for Summit Commodity Brokerage.

In other action, traders adjusted positions on the last day of the month, brokers said.

— Reporting for Reuters by Tom Polansek in Chicago, Naveen Thukral in Singapore and Sybille de La Hamaide in Paris.

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Even with a so-called ‘Phase One’ trade pact expected to be signed in January, uncertainty over Chinese purchases of U.S. farm products — specifically what goods China has agreed to buy, in what volumes and which timeframes — means that some of the profound trade changes that have occurred during the past 18 months are at risk of becoming permanent, they said.

“It’s difficult to believe that we can just rewind the clock, and everything goes back to where we were before,” said John Griffith, senior vice-president of CHS’s global grain marketing and renewable fuels, told Reuters in an interview Thursday.

Such uncertainty is fueling agony across a U.S. farm sector that has suffered from years of falling farm incomes, low crop prices and a glut of grain.

Griffith said while President Donald Trump and one of the largest buyers of U.S. farm goods have been battling it out with tariffs, the map of how foodstuffs flow around the planet has changed.

“New customer connections have been made on the face of the planet, new infrastructure improvements have been made,” he said.

CHS has been more acutely impacted by the U.S.-China trade war than many of its agribusiness rivals because the company’s operations are concentrated in northern Midwest and Plains states such as North Dakota, which ships the bulk of its soybeans to Pacific Northwest terminals for export to China.

“We won’t go immediately back to where we were 18 months ago, maybe not for a long time,” CHS CEO Jay Debertin told grain producers at a farm conference in North Dakota last week.

“The profound trade changes resulted in new trading partners and new sources of grain for markets the U.S. once served,” Debertin said. “That is now the new world.”

U.S. Treasury Secretary Steven Mnuchin said on Thursday the United States and China would sign their ‘Phase One’ trade pact at the beginning of January, adding that it was completely finished and just undergoing a technical “scrub.”

— Reporting for Reuters by P.J. Huffstutter and Karl Plume in Chicago.

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The late harvest in the Midwest has been further hampered by wet conditions, forcing farmers to dry their grain before putting it in the bin. As many dryers use propane, there has been an increased demand.

Media reports stated the infrastructure system to move propane around the region has been largely at fault. The system of pipelines, rail and trucks has been unable to keep up with the unusually high demand.

Further exacerbating the situation has been increased demand for home and commercial heating. Some Midwest states have temporarily lifted transportation restrictions on propane in hopes of improving the supply.

For farmers in the U.S. Midwest, propane is primarily sourced from Kansas, Texas and Western Canada, according to the U.S. National Propane Gas Association (NPGA), which emphasized the issue is not a shortage of the fuel itself.

Instead, the challenge is getting propane to the right place at the right time, the NPGA said, adding the supply issues are caused by “limits on the safe transportation of propane from supply points, as well as limits on pipeline capacity.”

In Canada such supply bottlenecks haven’t been an issue, according to Nathalie St-Pierre, CEO of the Canadian Propane Association (CPA).

“With the challenging wet and cold weather, propane demand for crop drying has been strong and steady this fall. CPA members say that although it was one of the busier years for propane demand, it was less than it was last year,” she said.

“Snow and freezing rain has all but shut down harvest in the country at this time, so demand is transitioning to construction heaters and home heating.

“Our industry anticipates demand for propane to be strong during the winter and is ready to serve their customers’ needs,” she added.

Preventing future issues in the U.S. Midwest will mean taking a closer look at propane storage needs, CHS Propane vice-president Adam DeLawyer said in a release Monday from that company.

“Continued expansion of retailer storage and on-farm storage will be critical to meet the farmer’s ability to harvest crops at today’s increased yields and rates.”

— Glen Hallick reports for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market analysis and reporting. Includes files from GFM Network staff.

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The company, a joint venture between ConAgra Foods, Cargill and CHS, said the closures were necessary due to “anticipated demand and to enhance the efficiency of the Ardent Mills network.”

Its Macon, Georgia; Loudonville, Ohio; and Red Lion, Pennsylvania mills will close by June 30, while its Rush City, Minnesota mill will be shuttered in the first quarter of 2020, the company said in a release.

Ardent Mills did not specify how much capacity will be lost with the closures and did not provide details of any job losses at the mills.

The company did not immediately respond to a request for further comment. It said Friday it will “operate and invest in” its remaining 35 flour mills and bakery mix plants in the U.S., Canada and Puerto Rico.

Ardent’s Canadian sites include mills at Saskatoon, Montreal and Mississauga and mix plants at Saskatoon and Burlington, Ont.

— Reporting for Reuters by Karl Plume in Chicago; includes files from Glacier FarmMedia Network staff.

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It was included during final revisions of the tax bill that passed the Republican-controlled Congress last month. The restructuring of the tax code, the biggest in 30 years, handed President Donald Trump his first major legislative victory since taking office.

The provision gives farmers a 20 per cent deduction on payments for sales of crops to farmer-owned co-operatives, but not for sales to private or investor-owned grains handlers such as Archer Daniels Midland, Cargill and Bunge.

The modification was introduced to compensate co-ops and their farmer owners when Congress eliminated a part of the tax code, known as Section 199, which had benefited them for more than a decade.

Republican Senators John Hoeven of North Dakota and John Thune of South Dakota are among the lawmakers whose offices said their attempt to create an equivalent to the old tax code had backfired by incentivizing sales to co-ops at the expense of others in the market.

“Sen. Thune is now aware of the unintended situation this new provision could create in the agriculture industry,” his spokesman Ryan Wrasse said in a statement. He added that Thune believes tax laws should not sway where farmers sell their harvests.

The government wants to correct the disparity, and the U.S. Department of Agriculture said on Friday it expects a solution to be forthcoming.

“The federal tax code should not pick winners and losers in the marketplace,” Greg Ibach, an undersecretary at the USDA, said in a separate statement.

ADM and Cargill, two of the world’s top agricultural traders, joined talks with Hoeven, Senate aides and trade associations that represent co-ops and private firms to come up with a way to even the playing field. Representatives of grain companies and lawmakers met in Washington twice this week in a sign of the urgency of the matter.

If legislators don’t address the provision by the autumn harvest, private grain companies could lose out on deals to buy billions of bushels of corn and soybeans. Farmers already are looking at how they can transfer grain stored at private elevators to co-ops to take advantage of the new law.

“It’s a massive issue for people like us, ADM, Cargill, all the private ethanol buyers and on and on and on,” said Dale Beyer, chief financial officer for Minn-Kota Ag Products, a private grain handler in Minnesota.

Thune and Hoeven began hearing in early January that the provision would influence where farmers sell their products, according to the National Grain and Feed Association, a trade group that has met repeatedly with the lawmakers’ aides this month to discuss the issue.

The association told members in an email that it learned of the provision in late December, after it was included in the final version of the tax law, and immediately asked tax experts for advice. The group then met with Thune and Hoeven staffers to learn why the senators included it in the law.

The association, in a separate statement with the National Council of Farmer Co-operatives, said it was working with Hoeven, Thune and Senator Pat Roberts of Kansas, also a Republican, to reach “an equitable solution” that preserves benefits formerly available to co-ops under Section 199.

Tensions rise

Farmers generally decide to whom they want to sell their grain based on the prices offered by different handlers, how close they live to delivery sites and personal affiliations.

However, the wording of the new provision wrongly assumes that all farmers deliver their grain to co-ops, said Bob Zelenka, executive director of the Minnesota Grain and Feed Association, a trade group that represents co-ops and private companies.

“It tells me that someone who wrote this is unused to how things work in the ag industry,” he said.

Efforts to adjust the provision have some co-ops pushing back out of concerns farmers could lose tax benefits.

Chris Pearson, chief executive of the South Dakota Wheat Growers co-op, said on Twitter on Wednesday that the law “gives farmers some nice tax advantages when doing business with the ORGANIZATION THEY OWN!”

Pearson did not respond to calls and emails seeking comment.

“I would hate to see private companies raise our farmers’ taxes!” he tweeted on his account @CEOWheatGrowers.

— Tom Polansek reports on agriculture and agribusiness for Reuters from Chicago; additional reporting by David Morgan in Washington.

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Until now, the co-operatives, private companies and publicly traded firms had a more even opportunity to handle the grain supply used in everything from loaves of bread in supermarkets to livestock feed.

The changes mean massive grain traders such as Archer Daniels Midland, Bunge and Cargill could find it difficult to source corn, soybeans and wheat.

The perceived threat to these companies stems from a provision included in the final stages of the law’s passage in December. It gives farmers such a big tax deduction for selling their produce to agricultural co-operatives that private firms fear their grains supply will dry up.

The provision was championed by Republican farm state senators including John Thune of South Dakota and John Hoeven of North Dakota.

Privately held Cargill said on Tuesday it was surprised the provision was added to the bill at the last minute and is evaluating its potential impact.

Rival ADM, which also produces ethanol, said it too was evaluating the provision and “various potential solutions” to it.

The new tax law allows farmers and ranchers to claim a 20 per cent deduction on all payments received on sales to co-operatives.

“It is going to put us out of business as a private if something is not changed right off the bat,” said Doug Bell, president and general manager of Bell Enterprises, which operates grain elevators in central Illinois.

“There is just no reason whatsoever why a farmer would do business with anyone other than a co-op.”

The deductions could come as a massive boon to cash-strapped U.S. grain farmers, who have struggled for at least four years amid a global grain glut and sluggish commodity prices.

Some farmers seeking to take advantage of the new deduction are already asking about transferring grain they have stored at private elevators and selling it to co-operatives, Bell said. An association that represents co-operatives also has received questions from people who want to open new co-operatives.

The change focuses on a provision in the federal tax code that cuts taxes on proceeds from agricultural products –- whether corn and soybeans, or milk and fresh fruit –- that farmers and ranchers sell to farm co-operatives such as CHS Inc.

There is no comparable provision for farmers doing the same business with private or investor-owned companies.

“The advantage for the farmer is probably at least five times larger selling to a co-op versus not selling to a co-op,” said Paul Neiffer, an accountant at CliftonLarsonAllen in Yakima, Washington.

Neiffer said he has received hundreds of calls and emails from private elevators upset about the law.

Chuck Conner, president and chief executive of the National Council of Farmer Co-operatives, said his organization had begun to receive calls from people asking questions about starting a co-op to take advantage of the deduction.

“The producer/member deduction is more generous than most of us thought possible a few months ago,” he said in an email to members.

The number of U.S. farm co-operatives has been steadily shrinking in recent years, as they scramble to consolidate and stay competitive amid the merger frenzy of major seed and chemical companies.

There were 1,953 farmer, rancher and fishery co-ops in 2016 in the U.S., down 4.6 per cent from a year earlier, according to the most recent U.S. Department of Agriculture data. They handled $44.3 billion in net sales of grains in 2016, down 33 per cent from a $66.3 billion peak in 2013 (all figures US$).

CHS, the largest U.S. agricultural co-operative, said the new law ensures that “co-operatives continue to be a driver of economic growth in rural America.”

— Reporting for Reuters by Mark Weinraub and Tom Polansek in Chicago; additional reporting by P.J. Huffstutter in Chicago.

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Alberta farmer co-op UFA (United Farmers of Alberta) announced Tuesday it’s buying CHS’s interest in the two firms’ joint ag retail venture, Bridgeland Limited Partnership, for an undisclosed sum.

Bridgeland was set up in late 2015 in what the two companies described as “a competitive crop input value proposition to UFA and CHS members and customers” in the Peace region of northwestern Alberta.

“After almost two years of building a strong and collaborative relationship for the benefit of our customers, both organizations have mutually decided to enter into this transaction.”

Once the deal closes, UFA will fully own and operate Bridgeland’s assets at LaCrete, Sexsmith, Baytree, Fairview, Falher, Eaglesham and Grande Prairie and rebrand them under the UFA banner over the next month.

The sites will continue to offer crop inputs such as seed, chemicals and fertilizers, grain storage and handling equipment and livestock inputs, and will retain all Bridgeland staff as UFA employees, the Alberta co-op said.

“Complete ownership of these assets and sites allows us to realign that business back to the UFA brand — a brand that our membership and customers know and trust,” UFA CEO Carol Kitchen said in a release Tuesday.

The move, she said, “reinforces UFA’s commitment to its core business and to its members and customers in one of our most important geographies.”

Winnipeg grain company Richardson International also announced a deal for CHS assets Tuesday, buying the St. Paul, Minn.-based co-operative’s 10 wholly-owned crop input retail sites in Alberta and Saskatchewan for an undisclosed sum.

Of the Richardson deal, a CHS representative said via email late Tuesday that the co-operative is “grateful to the growers and employees who have been loyal to its Canadian retail business” and it was “with their best, long-term interests in mind that we pursued this agreement.” — AGCanada.com Network

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Winnipeg-based Richardson on Tuesday announced it would buy CHS’s Alberta retail sites at Alix, Beiseker, Bow Island, Carseland, Craddock, Lacombe, Rolling Hills, Standard and Vauxhall, and the co-op’s lone Saskatchewan site at Edenwold, northeast of Regina.

Financial terms of the sale won’t be disclosed, a spokesperson for privately-held Richardson said. The deal is expected to close next month.

All 10 of the sites are full-service crop input retail outlets, providing chemical, fertilizer and seed services, Richardson said.

“We look forward to expanding our presence in these areas and working with local producers to provide them with leading seed, fertilizer and crop inputs technologies, supported by our CropWatch agronomy team and best-in-class service,” Tom Hamilton, Richardson’s vice-president for agribusiness operations, said in a release.

St. Paul, Minn.-based CHS had bought several of those retail outlets from Calgary fertilizer and crop retail firm Agrium in 2014.

Agrium was ordered by the federal Competition Bureau to sell several retail sites after making a deal to buy Viterra’s retail agri-products business. Those sites had included Agrium’s CPS stores at Bow Island and Lacombe and the Viterra stores at Alix, Craddock, Edenwold and Vauxhall.

CHS had already set up a stake in Prairie ag retail at that time, having bought the Alberta ag retail operations of DynAgra Corp. in 2012, including its sites at Beiseker, Standard, Rolling Hills and Carseland.

CHS’s remaining businesses in Canada include its energy operations, based in Calgary; a grain marketing office in Winnipeg; its stake in flour miller Ardent Mills; and a joint venture stake with Alberta co-operative UFA on Bridgeland, a retail and fertilizer operation in the province’s Peace region.

Richardson has been expanding its Richardson Pioneer network on the Prairies in recent years through both new builds and buys. The company this summer bought outlets at Vermilion and Forestburg, Alta., opened a new site at Elrose, Sask. last summer and plans to open a new site at Pasqua, Sask. next month.

Hamilton said Richardson “will continue to target strategic locations to expand our presence and ultimately offer our services, products and expertise to more producers across the Prairies.” –– AGCanada.com Network

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Minnesota-based CHS picked Jay Debertin to take over immediately for Carl Casale, who had been CEO for six years. Debertin, who joined CHS in 1984, previously served as executive vice-president and chief operating officer for CHS’s energy and foods business.

Last month, sources said CHS was among the largest creditors of Brazilian commodities trader Seara Ind e Com de Produtos Agropecuarios Ltda, which filed for bankruptcy protection. CHS’s credits with Seara were estimated at around $200 million (all figures US$).

Debertin said in an interview it was too early to know how the bankruptcy would affect CHS’s results.

“The leadership transition occurred for a number of different reasons. I would not look at this one as being a cause and effect,” he said about Seara Ind e Com’s failure.

Major grain handlers have struggled lately to profit from their core grain trading businesses because large global supplies have created fewer opportunities to make money by moving crops to areas with deficits from areas with surpluses.

In its fiscal year 2016, CHS reported net income dropped 46 per cent from the previous year to $424.2 million. The company’s annual report said 2016 was the most challenging year in more than a decade.

Earlier this month, the stock prices for rival grain companies Archer Daniels Midland and Bunge sank when they warned of troubles making money from global trading.

ADM has shaken up its global trading unit in a bid to boost profits.

Another competitor, Louis Dreyfus, has revamped operations and its head of grain trading in North America will retire at the end of the month.

Casale’s spokeswoman, Valerie Martin, said he had reached out to CHS’s board to start discussions about his departure.

“Performance objectives had been completely achieved,” Martin said. “It made sense to all involved.”

— Tom Polansek reports on agriculture and agribusiness for Reuters from Chicago.

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