The United States and Mexico are negotiating a deal that would gradually phase out tariffs charged on U.S. poultry products.

Those tariffs, under provisions of the North American Free Trade Agreement, are supposed to cease to exist as of Wednesday.

But the Wall Street Journal reported Monday that tariffs would be maintained on some poultry parts products such as chicken thighs, and reduced gradually over a five-year period.

Mexican poultry industry officials have expressed concern about a sudden drop in tariffs, saying it would allow the U.S. poultry industry to sell its products in Mexico at prices that Mexican companies would not be able to compete with.

Officials in Mexico have said U.S. chicken could sell for as little as half the price of domestic chicken. Mexican consumers prefer dark meat like legs and thighs.

Reducing tariffs is a significant part of the trade agreement, which is meant to get the United States, Mexico and Canada to work together as one entity on many business issues.

But U.S. officials are willing to back off a sudden reduction in poultry tariffs because negotiations between the two countries also are covering issues concerning new testing and other requirements made by Mexico.

Also influencing the U.S. view, according to AgWeb news, is that two of Mexico's largest poultry producers are divisions of U.S.-based Tyson Foods and Pilgrim's Pride, both of which would suffer losses in Mexican business with a sudden shift in tariffs.

Currently, about $130 million in U.S. poultry products were sold in Mexico during 2002, despite a 49 percent import tariff.

Iowa corn becomes Japanese beer

A new type of high-starch corn grown in Iowa is being used in the manufacture of beer being sold in Japan.

The Des Moines Register reported that about 60 farmers grew 6,000 acres of the specialty corn as part of an agreement with corn millers in Japan.

Millers then provide the corn to breweries in Japan, which want the high-starch corn because it contains at least one pound more of starch per bushel than conventional corns.

Corn farmers had to plant, grow, harvest and ship their product under strict conditions, both to ensure its identity and to ensure that it is not tainted with genetically modified types of corn.

But Japanese officials were paying as much as eight to 12 cents more per bushel for the specialty corn, which Iowa officials said made the extra work worth the hassle and expense.

Organic crops may bail out farmers

Supporters of organic farming claim their methods may be the financial salvation for many struggling family-owned farms.

Organic Valley Family of Farms said Monday their model of crops grown without reliance on pesticides in methods as natural as possible may be the only way for smaller farms to compete with the large-scale corporate farms that are taking over the industry.

Officials said their cooperative of more than 500 organic farmers did $125 million in sales during 2002, with potential for that figure to increase to $155 million for 2003 and to $212 million by 2005.

U.N. says Ethiopia hunger gets worse

Prolonged drought in Ethiopia caused a worse-than-usual harvest and left more than 11 million people facing starvation, according to United Nations programs.

The Food and Agriculture Organization and World Food Program released a report Monday showing grain production in Ethiopia declined by 25 percent to about 9.2 million tons, in part because of poor rainfall and also because of farmer reluctance to use improved seed and fertilizer.

"Depressed grain prices in 2001 further contributed to this year's poor harvest, particularly in western Ethiopia where there were large surpluses," the report read.

Soybean farmers reject European complaint

The American Soybean Association said it does not believe complaints by the European Oilseed Alliance that the United States is violating World Trade Organization commitments.

The St. Louis-based association said the U.S. market share for soybeans in Europe as declined by one-third during the past year. The association says South American soybean farmers, particularly those in Brazil and Argentina, are to blame for European problems.

The European complaint says the U.S. is violating domestic support programs in ways that are causing financial losses for European oilseed producers.

Grains down on CBOT

Grains futures were lower at the close of activity Monday on the Chicago Board of Trade.

Corn futures fell because of continued speculation that a shipment of U.S.-grown corn sent to Japan was tainted with StarLink, a genetically modified type of corn that is banned for human consumption.

Wheat futures declined on slow exports and poor technical performances by the crop.

The prices:

Corn: Dec 2.27 1/4 off 3/4, Jan 2.26 1/2 off 3, Feb 2.27 off 4, Mar 2.28 3/4 off 3 1/2.

Wheat: Mar 3.80 1/2 off 8, May 3.75 1/2 off 7, Jul 3.59 1/2 off 7, Sep 3.37 off 4.