FarmWeek August 9 2010 by Illinois Farm Bureau

A NEW STUDY by Stanford University indicates advances in agriculture have slowed greenhouse gas emissions because more can be grown on fewer acres. .....................4

ABOUT 100 LEADERS with the Vision for Illinois Agriculture last week at a meeting in Bloomington received a sobering outlook on the state’s fiscal situation. ..............3

FUTURES PRICES late last week briefly topped $8 per bushel for wheat and reached $10.70 for soybeans and $4.50 for corn. The drought in Russia had an impact. ...7

Monday, August 9, 2010

Two sections Volume 38, No. 32

DOE greenlights retooled ‘Futuregen 2.0’

Durbin sees new life for state’s coal energy BY MARTIN ROSS FarmWeek

Periodicals: Time Valued

After years of planning and delays, U.S. Sen. Dick Durbin last week announced approval of a retooled, lower-cost “FutureGen 2.0” clean-coal project with touted economic and environmental benefits well beyond an originally slated Coles County project. After meeting with Energy Secretary Steven Chu, the Springfield Democrat unveiled a plan that substitutes redesign of Ameren’s idled Meredosia power plant for a previously proposed new Mattoon generating plant and a projected 175mile pipeline to transport greenhouse gases from Meredosia in Morgan County and possibly other facilities to Mattoon in Coles County. Carbon dioxide (CO2) and other emissions transported through the pipeline would be injected deep into an underground sandstone formation in Coles County for secure, longterm “sequestration,” said Durbin. The Meredosia plant will be retrofitted with cutting edge “oxy-combustion” technology

using superheated oxygen to burn coal with reduced emissions, he said. Remaining CO2 would be piped through Decatur where Sen. Dick Durbin Archer Daniels Midland Co. has explored CO2 sequestration and could use the pipeline. Durbin estimates more than 50 Illinois power plants and 200-plus Midwest plants are “within reach” of the project, and foresees refineries, factories, and others someday tapping into an expanded pipeline to store their emissions. FutureGen 2.0, which carries a reduced roughly $1.2 billion price tag, also will include a Mattoon-area training center which would educate workers in power plant retrofitting and

pipeline development. According to Durbin, the project, slated to break ground in 2011, should create 1,000plus construction jobs and more than the 150 permanent jobs originally projected under Mattoon-specific plans. Citing the possibility of new federal greenhouse regulations, he argued emissions controls “will be a challenge for electric power plants across the United States.” Under Durbin-supported climate proposals by Sens. Robert Kerry (D-Mass.) and Joe Lieberman (I-Conn.), utilities are expected to be the first to need to reduce CO2 emissions. “This is an approach which allows many of these electric generating plants to capture CO2 and other harmful pollutants and sink them underground, dramatically reducing their pollution,” Durbin told FarmWeek.

“I think that will be a viable concept which needs to be explored, and Illinois is going to be at the forefront of developing that concept.” Neither the industry FutureGen Alliance consortium nor Coles Together — the regional development group that had lobbied Mattoon siting for FutureGen — initially offered comment on the new plan, though Durbin said alliance members seemed pleased by DOE’s announcement. However, Rep. Tim Johnson, an Urbana Republican who represents Mattoon, called the revised proposal “a betrayal of Coles County and a betrayal of the people of Illinois.” Johnson called on the president to support the original plan “to build a state-of-the-art, clean-coal generation plant that we have been working toward for the last seven years.”

Under pared-back plans, $1.1 billion in federal stimulus funds set aside last year, along with a now-reduced private sector investment coordinated by the FutureGen Alliance, should cover FutureGen 2.0 startup, Durbin said. The training facility and CO2 collection center will occupy the original Mattoon FutureGen site. Preliminary plans envision using existing easements for pipeline construction, according to Durbin, to minimize local “controversy.” Durbin said “nothing is going to happen soon” with Senate climate proposals. Majority Leader Harry Reid (DNev.) instead is pushing a narrow energy package focusing largely on oil industry reform and energy conservation — in Durbin’s view, concepts “more politically realistic for us to consider this year.”

July very wet, very dry

Weather, crop conditions variable around state BY DANIEL GRANT FarmWeek

Crop farmers this year are in the same boat as those in the real estate business: Their success is dependent on “location, location, location.” Crop progress and conditions are all over the board due in large part to a weather pattern that shifted from generally very wet in June to hit-or-miss in July. Locations in Northern and Western Illinois last month received as much as 12-plus inches of rain, which created flash-flooding events, while areas in Eastern Illinois and parts of Southern Illinois in particular were much drier. “The U.S. drought monitor categorized Southern Illinois as ‘abnormally dry’ based on dry conditions in both June and July,” said Jim Angel, state climatologist with the Illinois State Water Survey. The portion of topsoil moisture rated short or very short in the state last week was 71 percent in the southeast, 49 percent in the east, and 39 percent in the southwest, the National Agricultural Sta-

tistics Service Illinois field office reported. Hot temperatures last week also took a toll on some crops and livestock. “Corn is burning, and good-looking

FarmWeekNow.com Check out the latest on crop conditions by going to FarmWeekNow.com.

soybeans will not fill pods at this rate,” said Mark Kerber, a FarmWeek Cropwatcher from Livingston County. Meanwhile, the portion of topsoil moisture rated surplus or adequate last week was 99 percent in the west/southwest, 95 percent in the northeast and northwest, 94 percent in the east/southeast, and 92 percent in the west. Overall, rainfall in Illinois last month averaged 5.6 inches, 1.8 inches above normal, while the average temperature was 77.7 degrees, 1.9 degrees above normal. In Northern Illinois, many roads were

FarmWeek on the web: FarmWeekNow.com

reopened last week and most crops survived torrential downpours and flooding that hit the area late last month, according to Ryan Keltner, a farmer from Pearl City and president of the Stephenson County Farm Bureau. “Beans took it worse,” he said. “There are areas where beans and corn are brown, but in other areas, where the water came off quickly, (crops) are still green.” Nick Tranel, a farmer from East Dubuque and president of the Jo Daviess County Farm Bureau, believes there still is a good crop in his area despite the recent flooding. “Everything is ahead of last year by a long shot,” Tranel said of corn and bean development in his area. “But hay harvest is slow. There will be lots of quantity, but the quality will be down.” The second cutting of alfalfa in the state last week was 92 percent complete, 4 percent behind average, while the third cutting was 27 percent complete, 6 percent behind average.

Illinois Farm Bureau®on the web: www.ilfb.org

FarmWeek Page 2 Monday, August 9, 2010

POLICY

Quick Takes CATTLE DASHBOARD UNVEILED — The USDA Agricultural Marketing Service (AMS) has introduced an enhanced system of electronic reporting for cattle pricing, as mandated FarmWeekNow.com by the 2008 farm bill. Check out USDA’s new Cattle AMS developed the Dashboard by going to “Cattle Dashboard” to FarmWeekNow.com. add an improved user interface, including tools for data visualization, to its primary Internet-based portal. The Cattle Dashboard feature is available on the AMS website {http://mpr.datamart.ams.usda.gov/amsdashboard/}. The Cattle Dashboard allows users to see weekly volume and price information presented in graphs and tables that can be customized for viewing and downloaded for use in reports and presentations. It provides a user-friendly format that can readily be understood by producers, packers, and other market participants. The Cattle Dashboard concept will be expanded to other species as resources allow. SOYCAM OFFERS VIEW OF BEAN PRODUCTION — The Illinois Soybean Association recently launched {SoyCam.com}, an educational website that takes visitors on an interactive journey through soybean production. The site features photos of soybeans at different stages of growth in fields on five farms in Illinois. Growers also post comments so visitors to the website can learn how the crops are progressing throughout the season. VILSACK HAILS ADS — Ag Secretary Tom Vilsack offered glowing reviews of a national Corn Farmers Coalition education/awareness campaign that’s blanketed Washington newspapers, airwaves, airport terminals, and subway stations over the past two months. The campaign, aimed at D.C. policymakers and opinion leaders, employed “station domination,” peppering every available spot with messages highlighting the productivity and achievements of a variety of U.S. producers, including Illinois farmers. Individual ads can be seen at {www.cornfarmerscoalition.org}. “I think agriculture has to be a more forceful advocate for agriculture,” Vilsack responded to the campaign. “I was particularly impressed with what the corn growers are doing to make sure that folks around the country understand and appreciate what’s behind farming by introducing them to real farmers.”

(ISSN0197-6680) Vol. 38 No. 32

August 9, 2010

Dedicated to improving the profitability of farming, and a higher quality of life for Illinois farmers. FarmWeek is produced by the Illinois Farm Bureau. FarmWeek is published each week, except the Mondays following Thanksgiving and Christmas, by the Illinois Agricultural Association, 1701 Towanda Avenue, P.O. Box 2901, Bloomington, IL 61701. Illinois Agricultural Association assumes no responsibility for statements by advertisers or for products or services advertised in FarmWeek. FarmWeek is published by the Illinois Agricultural Association for farm operator members. $3 from the individual membership fee of each of those members go toward the production of FarmWeek.

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STAFF Editor Dave McClelland (dmcclelland@ilfb.org) Legislative Affairs Editor Kay Shipman (kayship@ilfb.org) Agricultural Affairs Editor Martin Ross (mross@ilfb.org) Senior Commodities Editor Daniel Grant (dgrant@ilfb.org) Editorial Assistant Linda Goltz (Lgoltz@ilfb.org) Business Production Manager Bob Standard Advertising Sales Manager

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Cross-commodity, regional ag issues being explored BY MARTIN ROSS FarmWeek

American Soybean Association (ASA) President Rob Joslin represents growers across the nation, and he recognizes potentially varying ag policy needs within the Midwest’s soy-corn continuum and the South’s soy-cotton culture. As Illinois Farm Bureau’s Farm Policy Task Force (FPTF) launches study of statewide farm bill priorities, ASA and its affiliate state groups are convening a working group to reconcile regional program/risk management issues into a cohesive policy proposal. ASA also has met twice this year with national corn and wheat association leaders to address joint concerns and potential differences,” Joslin reported. “We’re trying to identify areas where we can collaborate,” he told FarmWeek. That’s important from a multi-regional front: he notes wheat production extends well into the Northwest, where little corn or beans are produced. IFB President Philip Nelson noted the dairy industry “has come out of the starting gate as quickly as anyone else,” seeking a comprehensive dairy program overhaul, while IFB Executive Director of Governmental Affairs and Commodities Mark Gebhards cites powerful “Southern influence and input on (Capitol) Hill.” As the FPTC develops policy proposals for American Farm Bureau Federation national delegate debate, task force member Dale Hadden of Jacksonville stresses the need to identify farm bill priorities for cotton growers and others outside the Corn Belt. “We understand corn and soybeans pretty well in this state, but we don’t understand other crops,” he said. Joslin, an Ohio producer, emphasizes the need to “enhance the overall safety net the farm bill and crop insurance offer the soybean producer.” The 2008 average crop revenue election (ACRE) program has received mixed reviews across commodity and regional lines, and Southern growers also have been highly critical of the existing crop insurance program. “It doesn’t seem to work very well in some of the southern regions,” Joslin said. “With ACRE, you have to put your whole farm into

Farm bill focus of Johnson meeting U.S. House Ag Committee member Tim Johnson, an Urbana Republican, will brief constituents and solicit thoughts on the forthcoming farm bill debate during a town hall-style meeting at 6 p.m. Sunday at the former McLean County Farm Bureau office, 402 North Hershey Road, Bloomington. Johnson plans to detail comments and concepts offered during House ag farm bill hearings to date. He also will outline a possible timetable for forthcoming debate and discuss concerns about how budgetary constraints could impact policy directions. Trade issues and livestock siting concerns are among other topics expected to surface at the Central Illinois meeting, which is open to the public.

the program, not just (individual) crops. Producers who grow some of the southern crops don’t want to join ACRE because of the marketing aspects of cotton. “One thing we’re looking at is the idea that ACRE needs to go away from a state (yield) trigger and move much closer to a producer level. There are always regions of a state that have big differences in production. For a producer, you can’t have that very large geographical area be a trigger. I think that’s true in all regions of the country.” Meanwhile, Joslin decried the amount of paperwork involved in filing loss claims under the fledgling supplemental revenue (SURE) standing disaster program. And because SURE payments are not available for nearly a year after “disaster crops” are harvested, the program complicates grower efforts to finance the next season’s crops, he said. SURE has raised concerns in the South, “and that’s permeating through the Hill,” Gebhards said. Ironically, while a World Trade Organization ruling against U.S. cotton programs is expected to flavor farm bill debate, Joslin notes “the most WTO-compliant program” — direct payments widely popular in the South — “is the program the non-farm sector has the most concern about.”

DISCUSSING ISSUES U . S . R e p . B i l l F o s t e r, r i g h t , a Batavia Democrat, discusses issues facing Congress with Kane County farmer Chris Gould following a four-county roundtable Friday at the farm of Gould’s father, Eldon. Foster, a former physicist at the Ferm i l a b n a t i o n a l l a b o r a t o r y, a d dressed the federal estate tax, energy, trade, and other issues as part of series of August recess gatherings between producers and congressmen. (Photo by Adam Nielsen)

Farm Talk meetings slated around state Illinois Farm Bureau President Philip Nelson and IFB Vice President Rich Guebert Jr. will conduct five regional Farm Talk meetings later this year throughout the state. Dates, times, and locations are: • Wednesday, Aug. 18, 5:30 p.m., Sangamon County, Sangamon County Farm Bureau, 2631 Beechler Court, Springfield. • Monday, Aug. 30, 11 a.m., Effingham Coun-

ty, Joe Thoele farm, 13550 N. 2100 St., Teutopolis; 5:30 p.m., Williamson County, John A. Logan College, 700 Logan College Rd., Carterville. • Wednesday, Sept. 1, 11 a.m., Warren County, American Legion Post 136, 1110 N. 11th St., Monmouth; 5:30 p.m., LaSalle County, Pitstick Pavilion, 3401 N. State Rt. 23, Ottawa. You may register by contacting your county Farm Bureau or the IFB president’s office at 1-800-676-3217.

FarmWeek Page 3 Monday, August 9, 2010

FISCAL CRISIS

Agriculture leaders discuss state fiscal crisis BY KAY SHIPMAN FarmWeek

About 100 leaders with the Vision for Illinois Agriculture received a sobering outlook on the state’s current and future fiscal situation last week in Bloomington. At a forum on fiscal integrity, four speakers offered different perspectives on the state budget and potential solutions. The Vision group has made fiscal integrity a top item on its Smart Agenda for Illinois. A common theme of the daylong event was that the state faces severe, long-term financial problems and serious consequences if steps aren’t taken to start addressing the situation. In one of the few light moments during the day, Tom Johnson, president of the Taxpayers Federation of Illinois, told the audience that Illinois ranked No. 1, but noted the dubious honor was for the most unfunded pension debt in the nation. California, even with all its financial problems, has funded 87 percent of its state employee pension, he added. Following are some highlights, broken down by speaker: ohnson, Taxpayers Federation: In the just-begun fiscal year 2011, the state’s cumulative debt is $160 billion, which includes the pension obligation. The state has borrowed money for operating expenses, mainly because it has underfunded the state employee pension. Unlike other states, Illinois didn’t earn money on pension investments during the earlier economic boom because Illinois continually underfunded its pension. An increasing percentage of Illinois’ major tax revenue will go toward the state employee pension fund in the future. Johnson challenged the state government to modernize its pension system, just as private industry has done, to remain competitive. His ideas include raising the minimum state employee retirement age and

changing the benefits for current state employees. He suggested offering those state employees a choice of

maintaining their current benefits with a higher employee contribution or taking adjusted benefits with a lower contribution. “If we don’t address the (state employee) pension, it will crowd out all other spending in education and health care and we will be a secondor third-class state,” Johnson said. athy Ryg, president of Voices for Illinois Children: The state deficit is projected to increase to $17.5 billion in fiscal year 2011. About a fourth of General Revenue Fund appropriations are mandated by law. Illinois has reduced spending — the fiscal year 2011 budget reflects a 5.3 percent cut in overall spending, the lowest levels of spending since 2007. State cuts in spending for education and community services for seniors and people with disabilities are putting more pressure on local governments, which rely on property taxes. The backlog of unpaid state bills is causing extreme hardships on schools, local health departments, and institutions that provide community services, she said. “The fiscal crisis is resulting in actions that are counterproductive,” Ryg said. Asked why the public should care about funding for human services, Ryg noted troubled teens and individuals who are mentally ill or abuse drugs and who don’t receive help cause problems. “They don’t go away. They threaten public safety,” she said. Ryg urged passage of legislation that would increase income and corporate taxes, expand sales taxes on services, and raise income tax credits for low-income families. eoffrey Hewings, University of Illinois eco-

nomics professor: Illinois continues to lose workers and jobs, which translates into the loss of more than $6 billion of income tax revenue over the last 10 years. He attributed half of the state’s deficit to job losses. The state has been in a recession since 2001. At a minimum, Illinois will need eight years to economically recover, even if the economy starts growing this year. “If we (Illinois) were a country, we’d need to apply to the IMF (International Monetary Fund). That’s the nature of our problems,” Hewings said. Illinois’ largest trading partners are other Midwestern states, followed by Canada and Mexico. In fact, all the Midwestern states are highly dependent upon each other for economic stability. Illinois leaders need to better understand the state’s current fiscal situation, how the state’s economy works, and its relationship within the Midwestern economy. State leaders also should use the business and economic expertise in Illinois to help find solutions, he said. For example, California’s Gov. Arnold Schwarzenegger sought advice from an Illinois Nobel Laureate economist, but Hewings said no Illinois governor has ever asked for help. ristina Rasmussen, executive vice president of the Illinois Policy Institute: The American Legislative Exchange Council recently ranked Illinois 48th among all states in economic performance and 49th in economic outlook. The state has not had a budget surplus since 2001. “This (problem) has been going on for awhile,” Rasmussen said. State spending is not based on priorities, she said. For example, the state designated $400 million for high-speed rail service, but does not have plans to fund maintenance of such a system, she said. One proposal to raise the state income tax from 3 per-

Illinois receives two broadband grants Two broadband projects in Illinois were included last week when Agriculture Secretary Tom Vilsack announced $1.2 billion in funding for 126 new Recovery Act broadband infrastructure projects nationwide. Utopian Wireless Corp., Bethesda, Md., was awarded nearly $525,000 in grants for two broadband projects, one in Cairo and surrounding area and the other in White Hall

and surrounding area. “The broadband projects … will give rural Americans access to tools they need to attract new businesses, jobs, health care, and educational opportunities,” said Vilsack. The $274,741 Cairo (Alexander County) project will allow Utopian to provide 4G portable/mobile broadband access to underserved households and businesses. It

stands to benefit 4,000 people, 87 businesses, and 40 other community institutions. The $254,374 White Hall (Greene County) project will provide the same type of service for about 3,000 people, 150 businesses, and 35 community institutions. The funding is contingent upon the recipient company meeting terms of the grant agreement.

cent to 5 percent is projected to generate $6 billion. However, Rasmussen said that revenue estimate is too high and the state would need many more workers or more highpaying jobs to generate $6 billion in revenue. To address the state’s problems, the state employee pension payment should be appropriated first, she said. Remain-

ing funds should be dedicated for priority expenses, and the state should start a pay-down fund, she added. Her organization is recommending proposed legislation include a price tag for anticipated costs and the proposed state budget be posted online for seven days of public review before it is voted on by the state legislature.

PUTTING TO AID EDUCATION

Martin Duffy prepares to putt as his fellow teammates, from left, Matthew Duffy, John Raski III, and Rick Rotramel (squatting) look on. The 14th annual IAA Foundation’s Illinois Ag in the Classroom (IAITC) Golf Outing occurred last week at the Elks Golf Club and Wolf Creek Golf Club in Pontiac. A total of 200 golfers took to the links to support the IAITC program. Early estimates indicate net funds raised by the event will top $38,000 to help support the upcoming program year for IAITC. (Photo by Cyndi Cook)

FarmWeek Page 4 Monday, August 9, 2010

MARKETS

Stanford study may help in corn/ethanol debate BY MARTIN ROSS FarmWeek

New conclusions on the greenhouse “footprint” of modern agriculture could provide corn/ethanol producers ammunition as they challenge federal “indirect land use” conclusions. According to a recently completed Stanford University study, advances in conventional agri-

culture have dramatically slowed greenhouse gas (GHG) emissions by enabling farmers to grow more food to meet world demand on fewer new acres. California researchers credited production and crop technology improvements with helping reduce ag’s carbon footprint over the past 50 years. Since 1961, “high-yield” farming has pre-

vented the equivalent of 590 billion tons of carbon dioxide from entering the atmosphere, as well as reining in methane and nitrous oxide, the researchers stated. Without advances, production over that period could have consumed an added land mass the size of Russia, the study concluded. Assumption farmer Leon Corzine sees the study verifying

USDA trade analyst: Corn meeting food/fuel needs A new report from the Development Prospects Group of the World Bank concludes biofuel production did not trigger global foodprice hikes in 2007 and 2008. The bank had issued a working paper in 2008 blaming biofuels for 70 to 75 percent of the price increases. That contention was touted by food manufacturers, livestock interests, and ethanol critics who argued food crops should not be used for biofuels. But at Illinois Farm Bureau’s recent Commodities Conference, USDA Foreign Agricultural Service senior analyst Christine Turner called the food vs. fuel debate a “mischaracterized argument.” “I think we can meet both demands,” Turner told producers, noting steady U.S. corn production and continually growing world stocks. Authors of the new World Bank report argue energy prices and market speculation played significant roles in recent commodity/food price spikes.

It was unlikely biofuels played a major role, because they don’t represent a large percentage of worldwide grain and oilseed use, they concluded. While “less corn is being fed as corn,” Turner termed booming global sales of high-protein distillers dried grains (DDGs), an ethanol feed co-product, “a huge success story.” The export value of DDGs exceeded $800 million from October through May, led by China’s recent burst in purchases, she said. “Every month, we’re setting records with DDG exports,” Turner related. “Mexico and Canada are very big markets, primarily because of proximity and transportation issues. But China’s imports have surged in the past two years. “DDGs in China alone were nearly 1.1 million metric tons for the first seven months of fiscal 2010. That’s on pace to reach 2 million tons by September. That’s well over $500 million (in export value) just to China alone,” said Turner. — Martin Ross

agriculture’s “tremendous story” — “our efficiency gains, our productivity gains, lowering our environmental footprint.” “Modern technology’s making us better farmers,” the past National Corn Growers Association president told FarmWeek. “We’re able to be even better stewards of the land. I’m the fifth generation on my farm; my son’s the sixth. We talk about this piece of equipment that helps us plant with less tillage, that helps us be more site-specific with our fertility program, that helps reduce our pesticide use. “Where would we be without biotechnology? We’d be using a lot more chemicals, and not the new generation of chemicals that are more site-specific. Yield improvements through biotechnology help give us a better and more productive corn plant so we can better utilize the nutrients in the ground.” Corn’s projected greenhouse impact is tied to future ethanol use under California’s disputed “low-carbon” fuel standard and

U.S. Environmental Protection Agency (EPA) renewable fuels standard guidelines for longterm biofuels use. Both chart limited corn ethanol potential by applying indirect land use change theory, assuming increased U.S. corn and ethanol production will spur global land clearing or conversion and raise GHG emissions. The Renewable Fuels Association (RFA) last week charged EPA “grossly overestimated” potential emissions related to land use change. In a letter to EPA, RFA cited key errors in calculating corn ethanol’s cumulative “carbon intensity.” “In the last eight or nine years, we’ve made tremendous steps in corn acreage and yields,” RFA Vice President Jim Redding told farmers at the Illinois Farm Bureau Commodities Conference. “When you throw an extra 10, 20, 30 bushels an acre into your analysis, corn ethanol has much less impact on how much land has to be cleared internationally.”

Attacks on sweeteners new farm bill concern? When 2008 farm bill debate threatened to become a forum on corn subsidies and their theoretical impact on childhood obesity, Leon Corzine was on the front line. Now, amid a growing volley of speculation regarding high fructose corn syrup (HFCS) — AKA, corn sweetener — the Assumption farmer feels a sense of policy déjà vu. From attacks on ethanol to media accounts of fructose research, Corzine sees accelerated efforts to put corn “in a bad light.” Last week, University of California-Los Angeles (UCLA) researchers suggested pancreatic tumor (cancer) cells use fructose to proliferate vs. glucose, another type of sugar. An earlier study asserted HFCS raises blood pressure in males. The national Corn Refiners Association (CRA) charged media covering UCLA’s cancer study, “and even the authors, have been too quick to extrapolate the results of laboratory research on pure fructose to real-world conditions, which is not appropriate or helpful to consumers.” CRA said controlled lab studies such as UCLA’s are “poor models for generating meaningful results.” Despite a focus on HFCS in the report and follow-up stories, cane sugar and high fructose corn syrup contain the same nearly half-and-half blend of glucose and fructose, CRA noted. During 2008 farm bill debate, media outlets including ABC News and Time attempted to link corn subsidies to growing juvenile obesity. Corzine, then National Corn Growers Association first vice president, helped address ag concerns with editors from the Wall Street Journal and Business Week. However, a report on last week’s UCLA study on MSNBC’s news website spurred a flurry of reader comments critical of HFCS, one recommending policymakers “remove tariffs from sugar imports and eliminate the subsidies for corn farmers.” “It seems like an unending wave of stuff keeps coming at us,” Corzine told FarmWeek. “If (researchers) would just use real-world circumstances when they do these studies and get all the facts, that would make such a difference. “Studies where they do an honest, true comparison show no difference (between corn sweeteners and sugar). And as far as obesity, no matter what food you’re talking about, everything in moderation is fine.” In Corzine’s view, a large part of the perceptual problem facing growers is the terminology used to describe corn sweeteners. He noted the term “high fructose” originally was used to differentiate HFCS from a second sweetener that included only 45 percent fructose. The idea that HFCS is saturated with fructose “gets people heading in a direction we really shouldn’t go,” Corzine said. — Martin Ross

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AG IMAGE

Ag groups focusing on consumer outreach BY DANIEL GRANT FarmWeek

Farmers are accustomed to handling challenges, such as weather variability, commodity price fluctuations, and pests, on a daily basis. But many farmers have less experience dealing with something that perhaps is one of the biggest challenges for the future of modern ag production â&#x20AC;&#x201D; the uninformed or misinformed consumer. â&#x20AC;&#x153;In the past, farmers have done a great job producing food but a lousy jobâ&#x20AC;? educating consumers about modern food production, said Crystal Mackay, executive director of the Ontario Farm Animal Council (OFAC), and a featured speaker recently at the Illinois Farm Bureau Commodities Conference in Normal. And the need for public outreach is growing as the world population expands while the number of farmers declines. Less than 3 percent of North Americans currently farm, according to Mackay. Meanwhile, animal rights and other activist groups have taken advantage of the information gap between farmers and consumers to promote their specific agendas. OFAC, which was formed in 1988, restructured in 2004 and shifted its focus to various consumer outreach efforts.

More than 80 percent of its resources now are dedicated to proactive efforts. â&#x20AC;&#x153;We started out providing facts and purely playing defense,â&#x20AC;? Mackay said. â&#x20AC;&#x153;But we got out of the fighting arena. (Instead) we want to have conversations with our customers.â&#x20AC;? Mackay suggested farmers present themselves to consumers as helpful experts and not salespeople. She also suggested farmers take a proactive approach to consumer outreach efforts rather than ignore the situation. â&#x20AC;&#x153;The problem with the ostrich approach is your head is in the sand, but your butt still is in the air to be kicked,â&#x20AC;? she quipped. Philip Nelson, IFB president, stressed farmers must build on the trust they have with consumers to improve their overall image. â&#x20AC;&#x153;Consumers trust farmers, but theyâ&#x20AC;&#x2122;re not sure what we do today is farming,â&#x20AC;? Nelson said in his opening remarks at the Commodities Conference. â&#x20AC;&#x153;They (consumers) have a high regard for food safety, but they get their information from some interesting places,â&#x20AC;? he continued. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;ve got challenges to tell our story of modern production agriculture.â&#x20AC;? IFB has partnered with the Illinois Beef Association, Illinois Corn Marketing Board,

Illinois Pork Producers Association, and Illinois Soybean Association to develop an

ongoing farmer image campaign. â&#x20AC;&#x153;I compliment the many

commodity groups. We found out some interesting thingsâ&#x20AC;? from consumers, Nelson said.

White: Ag industry must confront challenges Ag leaders in Ohio believe they satisfied concerns of the Humane Society of the United States (HSUS) when they signed a memorandum of understanding with HSUS that proposed making gradual changes to the stateâ&#x20AC;&#x2122;s livestock industry. The understanding proposes Ohio farmers phase out the use of gestation crates and veal crates, among other changes. The deal also reportedly ends HSUSâ&#x20AC;&#x2122; efforts to start a ballot initiative in Ohio that, if approved by voters, could have overridden the authority of the newly created Ohio Livestock Care Standards Board. â&#x20AC;&#x153;The agreement preserves the integrity and operation of the Livestock Care Standards Board,â&#x20AC;? said David White, senior director of issues management for the Ohio Farm Bureau Federation. But White, at the Illinois Farm Bureau Commodities Conference in Normal, warned farmers in Illinois and other states that challenges to ag production practices from HSUS and other activist groups likely will persist in the future. He told FarmWeek HSUS already claimed ballot-initiative victories in Arizona, Califor-

nia, and Florida along with legislative victories in Colorado, Maine, Michigan, and Oregon, all of which will alter current ag production practices in those states. â&#x20AC;&#x153;Whether youâ&#x20AC;&#x2122;re a ballot state (such as Ohio) or not (such as Illinois), you have to continue to reach out to the public to tell your story,â&#x20AC;? White advised farmers. Philip Nelson, IFB president and a Seneca pork producer, said IFB and the ag industry are taking a proactive approach to the livestock situation in Illinois. Gov. Pat Quinn last month signed legislation expanding the responsibilities of the state Advisory Board of Livestock Commissioners to ensure the well-being of poultry and domestic animals. IFB, the Illinois Beef Association, and the Illinois Pork Producers Association supported the measure. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s a good approach to have people with knowledge of livestock care, such as farmers and veterinarians, involved with the board of livestock commissioners,â&#x20AC;? Nelson said. â&#x20AC;&#x153;Those in agriculture will help determine the situation moving forward as it relates to agriculture and livestock (in Illinois).â&#x20AC;? â&#x20AC;&#x201D; Daniel Grant

Grandin receives NCBA Lifetime Achievement Award The amazing journey of Temple Grandin, a world-renowned designer of livestock handling facilities, has taken another positive turn. Grandin, who describes herself as an autism self-advocate, received the National Cattlemenâ&#x20AC;&#x2122;s Beef Association (NCBA) Lifetime Achievement Award at the Cattle Industry Summer Conference in Denver. â&#x20AC;&#x153;Temple reminds us that the American dream is still alive,â&#x20AC;? said Tom Field, NCBA executive director of producer education. â&#x20AC;&#x153;She has reminded the world that one person really can make a difference. Beyond this industry, she has Temple Grandin given renewed hope to autistics around the globe.â&#x20AC;? In 1950, Grandin was diagnosed with autism and her parents were told she should be institutionalized, according to the website {www.templegrandin.com}. Instead, Grandin got her education and eventually designed facilities currently used to handle about half the cattle in the U.S. Grandin has consulted for such firms as Burger King, McDonaldâ&#x20AC;&#x2122;s, and Swift. She currently is a professor of animal sciences at Colorado State University. HBO Films recently produced a movie about her life entitled â&#x20AC;&#x153;Temple Grandin.â&#x20AC;? The film received 15 Emmy nominations (winners will be announced Aug. 29 at the 62nd annual Emmy Award show, which will be broadcast live on NBC). â&#x20AC;&#x153;Through my public appearances for this movie, I have been in Hollywood on several occasions. You would be surprised how interested people are in what ranchers do and how they handle and take care of their animals,â&#x20AC;? Grandin told a group of U.S. cattle producers. â&#x20AC;&#x153;This tells me we need to do a better job communicating to the public about how we take care of and manage our livestock.â&#x20AC;?

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FarmWeek Page 6 Monday, August 9, 2010

CROPWATCHERS Bernie Walsh, Durand, Winnebago County: Excellent growing conditions again last week, with anywhere from 0.6 to 1.1 inches of rain for the week. The high water from all the flooding we had two weeks ago is starting to go down, but the Pecatonica River is still very high. I mentioned last week the moths that resemble southwestern corn borer are actually a celery moth that is not harmful to corn or soybeans. We traveled this past week and have found out that our crops look very good compared to everything in the eastern Corn Belt and southern Canada. I guess that’s why we farm in Illinois. Have a good week.

Jacob Streitmatter, Princeville, Peoria County: There were scattered showers early last week that totaled in the tenths of an inch but still very beneficial to the corn and soybean crops. A few more weeks will help make or break the corn crop. At the moment, I am sitting at a computer in London, England, and have seen only one field of corn and a few fields of wheat. I was told that they both belong to the Queen. Coming from temps close to 90 and a heat index of 100 plus, I am cold in the 70 degrees here. Next time, I will not have much to report on the crop at home, but maybe something from Europe.

Leroy Getz, Savanna, Carroll County: Rain on Aug. 3 and 4 totaled 0.55 of an inch. July total at my farm is 11.85 inches. Since April 1, 31.75 inches of rain have fallen. Clean-up after the floods in Northwestern Illinois continues. Some roads will remain closed for up to a month. Carpeting and other water-soaked items are being cleaned out of homes. Corn that was submerged over the ears is molding and rotting. Beans are dead. On the bright side, hot and humid weather has pushed the other crops along. The 108-day corn is now denting and looks great. Beans are very tall, up to 40 inches in height and lots of pods. Haymaking has been a challenge with all the wet weather. Growing degree units (GDUs) totaled 2,057, which is about 200 above last year.

Tim Green, Wyoming, Stark County: The beginning of the week was a little warm. The middle of the week it cooled off, and now the end of the week we are heating up again. We had a little rain at the middle of the week (0.5 to 0.6 of an inch). Some places got a little more; some a little less. We needed that. Some have been spraying beans with fungicide and insecticide. Some people are getting ready to get rid of their old corn, which may become a challenge.

Larry Hummel, Dixon, Lee County: Last week I questioned moths that were everywhere at dusk. They looked a lot like the corn borer moth. The official word is they are celery leaf tier moths. The good news is they don’t like corn or soybeans, and I’m pretty confident there isn’t much celery growing around here. As far as bugs go, I haven’t seen a whole lot of anything out in the fields. Japanese beetle numbers seem to be falling, and I am finding only a few aphids in the soybeans. About the only bug that I am seeing increased numbers of are rootworm beetles. Joe Zumwalt, Warsaw, Hancock County: Crops in the western part of the state continue to face many challenges. While some of the corn is nearing maturity, we now are seeing the consequences of the year’s weather. Ears are not filling completely, kernels are shallow in depth, and many of the ears that are filled out are falling victim to ear rots. Diplodia seems to be the most common disease. Aerial applicators continue to be busy spraying both corn and soybeans. While the heat has been good, indexes of 110 degrees might be a little extreme. Beans are looking better and their final yields will be determined by what type of August we experience. We are facing another hot week out there, so be safe and try to stay cool. Ken Reinhardt, Seaton, Mercer County: We had more than an inch of beneficial rain early last week. There are few insects in soybeans so far — Japanese beetles and stink bugs are below thresholds. No aphids yet. Early corn should reach black layer by Sept. 1 and 25 percent moisture around Sept. 10, according to one seed company. Ron Moore, Roseville, Warren County: We only received 0.25 of an inch of rain last week. One of the lower weekly totals for this year. Other areas received up to one inch. The corn has all dented now, and that is somewhat of a surprise. I did not expect that in July. It looks as though we will start harvest in four or five weeks. It is very hard to do any accurate yield checks because of the wide variation within the same field. Soybeans look better now. They have grown some and are filling the pods. There does appear to be some sudden death syndrome in some of the bean fields. It is still early to see it from the pickup truck. Late-season weeds are showing in some of the fields.

Mark Kerber, Chatsworth, Livingston County: Some rain fell on parts of Livingston County last week, but no floods like two counties north. Our Rt. 24 corridor received nothing. Crops continue to suffer. Corn is burning, and goodlooking soybeans will not fill pods at this rate. The leaftier moths are flying everywhere. Try not to drive at night, as they will fill the front of your vehicle. At least they are not an economic pest to corn and soybeans. Heat and humidity have really been bad this summer as compared to last. It’s hard to work outside in the afternoons. Air conditioning in the shop helps. The Russian drought has kept our markets up. Prices for 28 percent nitrogen for next year have been following commodities. It’s hard to book a good price yet. Harvest definitely will be earlier. Ron Haase, Gilman, Iroquois County: Our farms received a light shower of 0.1 to 0.2 of an inch of rain on July 31 followed by a shower of 0.3 to 0.6 of an inch on Aug. 3. The hot and dry weather continues to stress the crops. Cornfields have reacted by not filling the kernels pollinated at the tip of the ear and by reducing the depth of the kernel. It would not be surprising to see corn yields 20 percent lower than last year. Many fields also are showing a great increase in the loss of the plant’s green color due to remobilization of nutrients, diseases, and stress due to the heat and drought we are experiencing in this area. Cornfields are anywhere from the dough stage, R4, to the dent stage, R5. The most-developed fields have the milk line 25 percent of the way down the kernel. Most soybean fields are anywhere from the R4 to the R5 growth stage. Diseases are beginning to appear in soybean fields with the stress created from the hot and dry weather. The local closing prices for Aug. 5 were $3.78 for nearby corn, $3.79 for new-crop corn, $10.72 for nearby soybeans, and $9.97 for new-crop soybeans. Wilfred Dittmer, Quincy, Adams County: It was another nice, clear summer morning here this Friday with temperatures about 65 degrees and clear. These cool temperatures are welcome. The corn and soybeans are surviving several days in the upper 90s with high humidity as long as the winds don’t get too strong and increase the evaporation rate. Some small hoppers are growing, but otherwise, we don’t have much insect activity. Rain in the gauge for the week amounted to about 0.4 of an inch on two different occasions, so maybe the fields will finally get to dry out a little bit. I agree with the fellow a few weeks ago who said he wished the grass in the yards was a cash crop. If so, it would be a profitable year with all mowing we’ve had this summer. Have a safe week.

Brian Schaumburg, Chenoa, McLean County: Excessive heat and a lack of rainfall have taken a toll on both crops and farmers’ optimism. What looked like record potential four weeks ago is now holding out for the 10-year average. Corn is denting with 2,214 GDUs accumulated, which is on par with 2006 and 2007. An early harvest seems inevitable. Corn, $3.73, $3.76; soybeans, $10.74, $9.84; wheat, $6.61. Carrie Winkelmann, Menard County: It was warm all week, but we received 0.2 of an inch of rain on Wednesday afternoon. The warmer weather has given area farmers a chance to put up their second or third cuttings of hay. It looks like diplodia will be an issue once again for local corn farmers as evidence of the disease easily can be spotted while one drives down most roads. Soybeans really took a growth spurt the past few weeks and are now setting pods within the top two to three nodes of the plant. No sightings of soybean aphids as of yet. Todd Easton, Charleston, Coles County: Hot is the word in our area. Crops seem to be tolerating the relentless heat for now, but much more of it and the top end of potential yields may be sacrificed. GDUs for April 15 corn were at 2,300 last week, putting us at 300 units above average — quite the opposite of last year. Many large and good-looking ears are being pulled out of fields fully dented and showing developing starch lines. Soybeans are entering the R6 stage and are finishing up pod fill. They may show some yield reduction caused by this heat, but time will tell. As much of an effect as the heat may have on the crops, don’t forget the profound effect it can have on you. Keep cool, take it easy, and watch out for others. Jimmy Ayers, Rochester, Sangamon County: This past week we had only a few sprinkles of rain. There were calls for rain several times, but most of it went around us. The northern part of Sangamon County got some. Corn is yellowing up quite a bit. One test in the area showed moisture at 35.55 percent as of last Tuesday. I think it was down to about 32 here toward the end of the week. It’s been pretty hot and dry. Beans seem to be taking it well so far. Markets reacted to crop production around the world. We are pretty fortunate in our area that crops look as good as they do. Won’t be long and we will need to rest up and get ready for harvest. Think safety. Doug Uphoff, Shelbyville, Shelby County: It’s been hot. It finally cooled off last Friday. We are losing yield from all this heat in the aborted pods in beans and reduced ear size and shallow kernels in corn. I would say we have lost 20 to 40 bushels an acre so far. It looks good along the road, but when you walk out in the field, there are some pretty small ears out there. A lot of them are in the dent stage, so the only thing we could get now with cooler weather would be a little more kernel size. Baled hay last week, and it was hot. Dad is mowing roadsides, and I’m in the shop getting farm equipment ready to go for the early harvest. Be safe out there and have a good week. Dean Shields, Murphysboro, Jackson County: Another week of very hot, hot weather. We had temperatures in the 99- to 100-degree-range and a heat index of up to 110 to 115 for a few days. The hot weather is taking a toll on some of the crops. Most of the corn is pretty well made, but the hot weather is wilting the beans on the sandy ridges. Last week, I got 0.9 of an inch of rain, which I was very glad to get. This week I missed the rain — it went to the north of me in the DuQuoin area. Some of the milo is starting to head out. Now that wheat prices have moved up, the talk at the coffee shops is whether or not to plant some. We will see what kind of weather we have this fall. Everybody stay cool and take care.

Page 7 Monday, August 9, 2010 FarmWeek

CROPWATCHERS Bob Biehl, Belleville, St. Clair County: Another hot, humid week, but we did receive 0.3 to 0.4 of an inch of rain when a cool front passed through. Corn is starting to turn with the combination of growing degree units, heat, and some leaf diseases. Lots of seed tours are planned in the next couple weeks to allow companies to show off their hybrids. Beans have nice height and are still standing. They have taken the heat really well. There are still some isolated cases of Roundup being applied but haven’t heard of much fungicide application in this area. Nobody seems to want to run down their nice-looking beans.

Rick Corners, Centralia, Jefferson County: We had a “gully washing” one quarter of an inch of rain Thursday. Same old story. Inch and a half of rain in one direction and none in the other. Our beans really need a good soaker, or we are going to have a lot of hay with not much grain. Kevin Raber, Browns, Wabash County: I had 0.6 of an inch of rain this past week. The showers were spotty, so I suspect some areas got more, some less. The hot days really began to dry the early corn. The rain last week will really help the soybeans. White County had its yield tour last week, but I haven’t heard any numbers.

Ken Taake, Ullin, Pulaski County: I took a short-trip vacation last week. I returned to find things even hotter and drier than when I left. Yards are brown and crops are certainly under a lot of stress. I heard that we had a half inch of rain over the last weekend of July, but you sure couldn’t tell it by looking at the yards and crops. We also had several days over 100 degrees. I think that more than made up for the little shower. Looks like it could be an early fall. Please try to stay cool in this hot weather. Reports received Friday morning. Expanded crop information available at FarmWeekNow.com

Russian drought ignites market rally; wheat prices top $8 BY DANIEL GRANT FarmWeek

A severe drought in Russia pushed crop prices last week to recent highs amid concerns of a crop shortage there. Futures prices late last week briefly topped $8 per bushel for wheat and reached $10.70 for soybeans and $4.50 for corn. “ O b v i o u s l y, w i t h t h e Russian situation a lot less wheat is being produced so buyers have to go elsewhere at much higher prices,” said Pete Manhar t, owner of Bates Commodities in Normal. “T hose much higher

(wheat) prices have pulled corn and beans higher.” Russia on Thursday banned grain exports for the rest of 2010, having already lost an estimated 20 percent of its wheat crop to the drought. Meanwhile, Russian President Dmitry Medvedev last week called for military assistance after declaring a state of emergency in seven Russian regions, including the Moscow region, due to forest fires. “ T h e b i g g e s t ( we a t h e r ) issue in the world right now is Russia,” said Mark Russo, chief meteorologist with

Chesapeake Energy, during a recent presentation at the Illinois Farm Bureau Commodities Conference in Normal. “They (Russians) basically are having their 1988 drought,” Russo said in reference to the last major d r o u g h t i n t h e U. S. T h a t drought lowered corn production that year by more than 40 percent, according to the University of Illinois. The Food and Agriculture Organization’s global wheat production forecast for 2010 last week was cut by 3.7 percent. The drought in Russia reportedly is the worst in 130 years while adverse weather

conditions in Australia and Canada also have led to cuts in harvest forecasts for those countries. Manhart speculated $9 wheat is not out of the question before the recent bull market runs out of steam. “It’s a big weather market,” Manhart said last week. “But there’s still big usage, so we need a big (corn and soybean) crop this fall in the U.S. If we don’t g et a big crop it could drag prices higher.” USDA on Thursday will release its latest crop production estimates for U.S. corn and beans.

In the meantime, farmers should take advantage of the recent rally to clear out some old crops or sell a portion of their new crops, according to Graham Utter, senior risk manager for AgriVisor. “We encourage producers to keep selling the profitable margins,” Utter said. “I think the bottom line is we have to go back to fundamentals. We’re not going to run out of wheat any time soon,” he added. “ We m ay s e e ( c o r n a n d wheat prices) continue to battle, but I think prices (as of last week) are overinflated, particularly for wheat.”

FSA administrator: CRP sign-up period should be busy Landowners likely will not be conservative when it comes to enrolling their acres in the Conser vation Reser ve Program (CRP). General sign-up for CRP is under way for the first time since 2006 and the Farm Service Agency (FSA) expects strong demand will persist for the popular program. Jonathan Coppess, FSA administrator, last week told Fa r m We e k h e e x p e c t s landowners this month will enroll or re-enroll more than 4 million acres in CRP nationwide, or an average of about one million acres per week.

The four-week sign-up period o p e n e d Au g. 2 a n d r u n s through Aug. 27. “This is the first general sign-up in four years,” Coppess said. “We’re very excited about it.” Land that is eligible for the CRP general sign-up must have been cropped four out of the six years from 2002 to 2007 or it must be ground currently in CRP that expires this fall. Participants in CRP voluntarily remove environmentally sensitive land from ag production by entering 10- or 15-year contracts that provide an annual rental payment and a pay-

ment of up to 50 percent of the cost of establishing conservation practices. “With (commodity) prices where they’re at (well below historic highs set in 2008), this program looks to be a lot more competitive,” said Coppess, who expects total CRP acreage to hover around the 32-million-acre threshold established in the 2008 farm bill. Congress previously authorized 39.2 million acres in CRP before capping acreage at 32 million. This year, contracts for 4.5 million acres in CRP will expire nationwide. C o p p e s s e x p e c t s h e av y

competition for current openings in CRP but said it’s too early to tell if the current cap is too restrictive. “It’s a balancing act between conservation and production needs,” he said. “We will evaluate the sign-up and see how the program operates under the (current) cap. Then we’ll be in a position to report (future CRP needs) to Congress.” The current CRP sign-up period is a competitive process. FSA will evaluate and rank applications after Aug. 27 and should contact landowners by mid-September. “We want it all wrapped up

and in place for the new fiscal year (which begins Oct. 1),” Coppess said. In Illinois, about 1 million acres of land is in CRP. About 80,000 acres worth of CRP contracts in the state will expire in September. “It’s been one of the most successful volunteer conservat i o n p r o g r a m s o n p r iva t e land,” Coppess added. “It’s reduced soil erosion, runoff, and an incredible amount of wildlife habitat has been restored.” CRP has been in existence for nearly 25 years. — Daniel Grant

Waterhemp resistance continues to spread in Midwest BY BARRY NASH

Within the last couple of weeks, the University of Illinois and Purdue Univ e r s i t y announced additional herbicide resistance issues with waterBarry Nash hemp. The U of I confirmed it has identified a waterhemp population that is resistant to foliar-applied HPPD-inhibitor herbicides — often referred to as pigment

inhibitors or “bleachers.” Individual herbicides with this mode of action include such products as Laudis, Impact, and Callisto, while premix herbicides include Callisto Xtra, Camix, Capreno, Halex GT, Lexar, and Lumax. In addition to the U of I’s announcement, Purdue researchers announced they have confirmed glyphosate resistance to a waterhemp population in southwest Indiana. This means that glyphosateresistant waterhemp now encompasses three key Midwestern states (Missouri, Illinois, and Indiana). Further, the

latest announcement from the U of I regarding HPPDInhibitor resistance now confirms that waterhemp resistance occurs within four different herbicide modes of action. These include amino acid synthesis inhibitors (ALS herbicides and glyphosate), phostosynthetic inhibitors (atrazine), PPO inhibitors (Cobra, Reflex), and HHPD-inhibitors. The key to managing weed

resistance is to respect weed control as a system, not just another herbicide application. A multitude of university research has shown that by using different modes of action, the chances of developing a herbicide-resistant weed population are greatly reduced. Therefore, it is critical that we implement this strategy and begin moving away from the thought process of complete weed control being achieved with just one application or one herbicide. Each individual field should have a planned approach to address weed management. Ideally, this would include a combi-

nation of residual and postemergence herbicides with different modes of action. If a wet spring prevents the application of a pre-emergence herbicide, then consider applying a post-emergence tank mix that includes herbicides with two different modes of action. For more information on how to develop a successful weed control system in your farming operation, be sure to contact your local crop specialist. B a r r y N a s h i s G ROW MARK’s weed science technical manager. His e-mail address is bnash@growmark.com.

FarmWeek Page 8 Monday, August 9, 2010

TRADE

ASA outlines keys to future export success BY MARTIN ROSS FarmWeek

The American Soybean Association (ASA) prescribes several steps for President Obama to meet his National Export Initiative (NEI) goal of doubling exports within five years, including movement on free trade agreements (FTA). In comments to the U.S. Department of Commerce, which is developing a plan to implement the initiative, ASA President Rob Joslin noted â&#x20AC;&#x153;much of the rest of the world is moving forward rapidly to expand bilateral trade while the U.S. is at a virtual standstill.â&#x20AC;? FTAs with Colombia, South Korea, and Panama are crucial â&#x20AC;&#x153;if the NEI is to have any chance of success,â&#x20AC;? Joslin stated. As of June, 186 FTAs had been negotiated and reported to the World Trade Organization (WTO) by other countries, with another 134 currently in negotiation. In contrast, the U.S. has 17 FTAs in place, three awaiting congressional approval, and only a Trans-Pacific Partnership currently under negotiation. As FTAs languished in Con-

WIU research farm to host field day Weed management will be among the topics discussed Thursday at the Western Illinois University (WIU) Allison Farm Field Day on organic research. The event will be from noon to 5 p.m. in the Dakin farm shop, Roseville, and on the WIU Allison Research Farm. â&#x20AC;&#x153;The theme this year is cropping-system strategies for suppressing weeds, bio-energy and weatherproofing your farm,â&#x20AC;? said Joel Gruver, Allison Farm manager and assistant professor in WIUâ&#x20AC;&#x2DC;s School of Agriculture. Matt Liebman, agronomy professor at Iowa State University, will discuss his research on diversified cropping systems. A meal featuring local farm products will be offered at noon followed by the speaker presentations. At about 4 p.m., the participants will move to the Allison Farm for walking tours of research and production fields. The event is free to the public. To register, contact Andy Clayton at 309-298-1172 or 217-322-2639 or the WIU School of Agriculture at 309-298-1080. Learn more about WIU organic research at {www.wiu.edu/ag/organicfarm/}.

gress, ASA witnessed a 69.1 percent drop in the value of U.S. soy meal exports to Colombia, from $98.9 million in 2008 to $30.6 million in 2009. In Panama, U.S. meal imports fell 12.2 percent. â&#x20AC;&#x153;I was in Panama in May and met with representatives of the Panamanian Chamber of Commerce,â&#x20AC;? Joslin told FarmWeek. â&#x20AC;&#x153;They very simply said, â&#x20AC;&#x2DC;We are interested in trading with the United States. However, we are pursuing other opportunities with other regions of the world.â&#x20AC;&#x2122; â&#x20AC;&#x153;As these free trade agreements sit on the shelf, the United States is losing opportunities. Within the last year, Canada signed an agreement with

Colombia. As other regions of the world improve their buying power, they want protein. The United States can be a supplier of that protein.â&#x20AC;? ASA also urged: â&#x20AC;˘ Negotiation of new FTAs with countries â&#x20AC;&#x153;that have the potential to significantly expand imports of U.S. products.â&#x20AC;? â&#x20AC;˘ Renewal of presidential trade promotion authority, requiring Congress to vote upor-down on administrationnegotiated agreements. Joslin sees little incentive for countries to negotiate with the U.S. if â&#x20AC;&#x153;the administration doesnâ&#x20AC;&#x2122;t have final authority to strike the deal.â&#x20AC;? â&#x20AC;˘ Ensuring countries comply with existing agreements.

â&#x20AC;˘ Removal of restrictions on ag sales to Cuba. Congress isnâ&#x20AC;&#x2122;t expected to move on House Ag Chairman Collin Petersonâ&#x20AC;&#x2122;s (DMinn.) Cuban trade/travel reform bill until September, but Peterson called passage â&#x20AC;&#x153;essentialâ&#x20AC;? because Cuba relies on imports for the majority of its food needs. ASA testified last week before the Senate Ag Committee on the need for U.S.-Cuba trade liberalization. In 2009, $144 million-plus in U.S. soy products were exported to Cuba. ASA suggested sales would jump with elimination of U.S. policies requiring Cuba to use third-country banks and make cash-advance payments

for goods and restrictions on travel to Cuba were lifted. â&#x20AC;˘ Taking action against differential export taxes used by U.S. competitors to effectively subsidize exports of processed products. â&#x20AC;˘ Talks toward a â&#x20AC;&#x153;balanced and commercially meaningfulâ&#x20AC;? WTO Doha Round agreement. Joslin cited â&#x20AC;&#x153;indications there could be a breakthroughâ&#x20AC;? in stalled global trade talks, arguing simultaneous U.S. farm bill debate and WTO movement makes sense. â&#x20AC;&#x153;If weâ&#x20AC;&#x2122;re going to give up some of the safety net the farm bill and crop insurance afford us, we need meaningful market access,â&#x20AC;? he stressed.

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FarmWeek Page 9 Monday, August 9, 2010

FROM THE COUNTIES

ROWN â&#x20AC;&#x201D; Farm Bureau and Country Financial will sponsor an open house and customer appreciation day from 7 a.m. to 7 p.m. Friday at the Farm Bureau office. The event will be held rain or shine. Breakfast, lunch, and dinner items will be served. Call the Farm Bureau office at 217-7732634 or 217-773-3591 for more information. UREAU â&#x20AC;&#x201D; An informational meeting on a 14-day, 13-night trip to Alaska will be at 7 p.m. Wednesday, Aug. 18, at the Farm Bureau office. The trip will be July 25 to Aug. 7, 2011. Call the Farm Bureau office at 815-875-6468 for reservations or more information. â&#x20AC;˘ Farm Bureau will sponsor a task force planning meeting at 6 p.m. Thursday, Aug. 19, at the Wine Cellar. There are four task forces â&#x20AC;&#x201D; education, member relations, farm business, and government and policy â&#x20AC;&#x201D; in which members may choose to be involved. Call the Farm Bureau office at 815-875-6468 for more information. ASS-MORGAN â&#x20AC;&#x201D; Farm Bureau will sponsor a member appreciation dinner and meet your legislator program at 5:30 p.m. Monday, Aug. 16, at Fairway Hills Golf Club, Virginia. Call the Farm Bureau office at 217-245-6833 for reservations or more information. HAMPAIGN â&#x20AC;&#x201D; Farm Bureau will sponsor a biomass seminar from 7:30 a.m. to 11:30 a.m. Friday, Aug. 20, at the Farm Bureau auditorium. Topics will include the use of cobs, stalks, wood chips, miscanthus, and their potential markets. Cost is $10, which includes breakfast. Call the Farm Bureau office at 217-3525235 or visit the website at {www.ccfarmbureau.com} for more information. UMBERLAND â&#x20AC;&#x201D; Farm Bureau will sponsor a bus trip Sunday to see the St. Louis Cardinals vs. the Chicago Cubs game in St. Louis. The bus will leave the Farm Bureau office at 10 a.m. Cost is $65 for members and $70 for non-members. Call the Farm Bureau office at 217-8493031 or stop by the office to purchase the tickets. ORD-IROQUOIS â&#x20AC;&#x201D; An â&#x20AC;&#x153;On the Roadâ&#x20AC;? seminar will be at 7 p.m. Monday, Aug. 16, at the Farm Bureau office. Kevin Rund, Illinois Farm Bureau transportation specialist, will discuss transportation laws and regulations affecting farm trucks and equipment. Call the Farm Bureau office for more information. ULTON â&#x20AC;&#x201D; Farm Bureau will sponsor an outlook meeting at 6:30 p.m. Tuesday, Aug. 24, at the Farm Bureau office. A ribeye dinner will be served. Dale Durchholz, AgriVisor LLC senior market analyst, will be the speaker.

Cost is $8. Call the Farm Bureau office at 547-3011 or email fcfb@sybertech.net by Friday, Aug. 20, for reservations or more information. ANCOCK â&#x20AC;&#x201D; The Viewpoint Committee will sponsor a policy development meeting from 7:30 to 9 a.m. Tuesday at the Farmers Junction CafĂŠ, Ferris. Breakfast will be served. Call the Farm Bureau office at 217-357-3141 by Monday (today) for reservations or more information. â&#x20AC;˘ Hancock County Emergency Medical Services personnel and radio personality Max Armstrong will present a Farm Safety Awareness Day from 1 to 6 p.m. Saturday, Aug. 21, at the Mike Sullivan riding arena. The arena is located at the junction of Highway 336 and County Road 650 North. Topics will include anhydrous ammonia spills, farm electrical hazards, and grain bin safety. â&#x20AC;˘ Farm Bureau, West Central FS, Illinois Soybean Association, and Illinois Corn Growers Association will sponsor the annual biodiesel and ethanol promotion from 10 a.m. to 1 p.m. Friday, Aug. 20, at the Fuel 24 Station, Carthage. A hot dog lunch will be served. Call the Farm Bureau office for more information. EE â&#x20AC;&#x201D; The annual Farm Visit Day will be from 10 a.m. to 2 p.m. Saturday. Buses will load at Woodhaven Association in Sublette to go to the host farm. Tickets to board the bus are available at the Woodhaven Association office or by call the Woodhaven office at 815-8495200. Call the Farm Bureau office at 815-857-3531 for more information about the event. â&#x20AC;˘ The District 4 meeting will be at 5:30 p.m. Monday, Aug. 23, at the Quality Inn, Dixon. Dinner will be served. Call the Farm Bureau office at 825-8573531 or e-mail leecfb@comcast.net by Friday for reservations or more information. â&#x20AC;˘ Lee County plat books are available at the Farm Bureau office. Cost is $30. Call the Farm Bureau office at 857-3531 or e-mail leecfb@comcast.net for more information. IVINGSTON â&#x20AC;&#x201D; Farm Bureau will sponsor an â&#x20AC;&#x153;On the Roadâ&#x20AC;? seminar at 7 p.m. Thursday, Aug. 19, at the Farm Bureau office. Kevin Rund, Illinois Farm Bureau transportation specialist, will be the speaker. Call the Farm Bureau office at 815-842-1103 or e-mail livcfb@frontier.com for reservations or more information. EORIA â&#x20AC;&#x201D; Farm Bureau will sponsor a bus trip Tuesday, Aug. 17, to the Illinois State Fair, Springfield. Cost is $20, which includes admission. Call the Farm Bureau office at 686-7070 for reservations or more information. â&#x20AC;˘ The Grassroots picnic will be at 6 p.m. Tuesday, Aug. 24, at the Farm Bureau Park. Raberâ&#x20AC;&#x2122;s

will cater a pork loin meal. Candidates on the Nov. 2 ballot have been invited to attend. Call the Farm Bureau office at 686-7070 by Thursday, Aug. 19, for reservations or more information. â&#x20AC;˘ The photo contest deadline is Sept. 1. Members may submit photos in three categories. Cash prizes will be awarded, plus a Best of Show award will be given. Call the Farm Bureau office for more information. ICHLAND â&#x20AC;&#x201D; Farm Bureau will sponsor an â&#x20AC;&#x153;On the Roadâ&#x20AC;? seminar at 6 p.m. Tuesday, Aug. 17, at the Holiday, Olney. Dinner will be served. Kevin Rund, Illinois Farm Bureau transportation specialist, will be the speaker. Call the Farm Bureau office at 618-393-4116 by Friday for reservations or more information. ANGAMON â&#x20AC;&#x201D; The Marketing Committee will sponsor its annual AgriVisor steak fry at 6 p.m. Thursday at the Farm Bureau office. Dale Durchholz, AgriVisor LLC, will be the speaker. Cost is $10. Call the Farm Bureau office at 753-5200 for reservations or more information. â&#x20AC;˘ The Young Leaders and Marketing Committee will sponsor their annual corn yield survey at 7:30 a.m. Friday, Aug. 20, at the Farm Bureau office.

Lunch will be served. Call the Farm Bureau office at 753-5200 for reservations or more information. TA R K â&#x20AC;&#x201D; The Young Farmers will sponsor a blood drive from noon to 6 p.m. Wednesday, Aug. 18, at the Toulon Congregational Church. Call 800GIVELIFE (448-3543) for an appointment. Walk-ins are welcome. Identification is required to donate. TEPHENSON â&#x20AC;&#x201D; â&#x20AC;&#x153;Farm in the Parkâ&#x20AC;? will be from noon to 3 p.m. Saturday at Krape Park, Freeport. There will be a farm equipment display, petting zoo, kidâ&#x20AC;&#x2122;s activities, door prizes, and food. A kiddie pedal tractor pull will be held at 2 p.m. â&#x20AC;˘ Farm Bureau will sponsor a bus trip Tuesday, Aug. 17, to the Illinois State Fair. Cost is $30 for bus and refreshments. Call the Farm Bureau office at 815-232-3186 by Friday for reservations or more information. â&#x20AC;˘ Orders for Cresthaven peaches must be placed and paid for by Friday. Delivery is expected on Wednesday, Aug. 18. Cost for a 25-pound box is $20 for members and $23 for non-members. Call the Farm Bureau office at 815-232-3186 to place your order.

ARREN-HENDERSON â&#x20AC;&#x201D; A crop marketing breakfast will be at 7 a.m. Thursday at the Farm Bureau office. The program is in conjunction with a presentation by David Rehn, Wyffels Hybrids. Dale Durchholz, AgriVisor LLC, and Emerson Nafziger, University of Illinois, will be the speakers. Call the Farm Bureau office at 309-734-9401 for more information. â&#x20AC;˘ A farmer member golf outing will be at 8 a.m. Friday, Aug. 27, at the Monmouth Country Club. Call the Farm Bureau office at 309-734-9401 for reservations or more information. â&#x20AC;˘ A truck inspection education seminar conducted by the Illinois State Police will be at 9 a.m. Monday, Aug. 23, at the Twomey Yorkwood facility. A semi truck and trailer combination will be included in a demonstration. Call the Farm Bureau office at 309734-9401 for more information. HITESIDE â&#x20AC;&#x201D; Farm Bureau will sponsor a bus trip Saturday, Sept. 4, to Chicago to see the Chicago Cubs vs. New York Mets game. The bus will leave Wiersema Charter at 7:30 a.m. and stop at 7:45 a.m. at the Community Center, Rock Falls. Tickets are $65. Call the Farm Bureau office at 815-772-2165 or e-mail wcfb@frontier.net for reservations or more information.

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FarmWeek Page 10 Monday, August 9, 2010

PROFITABILITY

Global economic outlook: A limp in stride to recovery BY JIM CHARLESWORTH

The world economy contracted in 2009 for the first time in more than 60 years. The highly integrated world financial and product markets have provided a conduit to rapidly transmit recessionary pressures throughout the global Jim Charlesworth economy. Global gross domestic product (GDP) growth for 2009 decreased nearly 2 percent. This year, the global economy is forecast to grow a positive 3.7 percent. If realized, this strong rebound would raise above the historical yearly average. But the recovery will be at varying speeds across countries and regions. On the other hand, economic growth in most developing countries remains relatively strong, especially the BRIC countries (Brazil, Russia, Indian, and China). Most countries or regions with developed economies experienced a more severe economic downturn and are limping along toward recovery. As the world’s largest economy, the United States officially entered a recession in December 2007. The contraction was severe and the recov-

ery has been sluggish. If the recent economic reports are any indication, the U.S. economy has developed a limp in its jog toward recovery. Collapse of the housing market was the primary catalyst for the downturn, as easy credit and lax lending standards fueled the speculative bubble. Declining household wealth has caused a sharp pullback in consumer and business spending. The recent pace of job losses has been the largest since the Great Depression. Extremely aggressive fiscal and monetary stimulus is necessary. However, massive federal deficits raise fear of inflation, higher interest rates, and burdensome tax policy for decades to come.

BY DANIEL GRANT FarmWeek

Paul Ellinger, University of Illinois ag economist, believes there are no quick fixes for the various economic issues facing the U.S. Everything from high unemployment and state budget shortfalls to lingering problems in the housing sector likely will limit economic growth the remainder of this year and into 2011. “As for the general economy, there is not a lot of good news right now,” Ellinger said recent-

Feeder pig prices reported to USDA*

Weight 10 lbs. 40 lbs. 50 lbs. Receipts

Range Per Head Weighted Ave. Price $35.10-$44.00 $39.10 $50.00-$57.00 $56.12 $52.50-$66.20 $63.99 This Week Last Week 27,275 18,495 *Eastern Corn Belt prices picked up at seller’s farm

Eastern Corn Belt direct hogs (plant delivered) (Prices $ per hundredweight) This week Prev. week $80.80 $81.64 $59.79 $60.41

Change -0.84 -0.62

USDA five-state area slaughter cattle price Steers Heifers

This week $93.00 $93.00

tive GDP growth. The forecast in 2010 reflects a positive 2.8 percent annualized growth rate, followed in 2011 with an estimated 2.5 percent growth. The latest economic job

Jim Charlesworth is GROWMARK’s marketing research director. He e-mail address is jcharlesworth@growmark.com.

Economic outlook for ag more optimistic

M A R K E T FA C T S

Carcass Live

There are some positive economic indicators starting to surface. Beginning the second half of 2009, the United States economy has experienced three consecutive quarters of posi-

reports continue to suggest that a recovery, although slow and modest, is in the offering. Positive job growth of nearly one million new jobs is on the record for the first half of this year. Additional economic data is showing positive direction, including historically low borrowing rates, tame inflation, an uptick in personal income and consumption, record productivity growth, and strong corporate profits. The global economy will limp along at a sluggish but positive pace the second half of 2010 and into 2011.

(Thursday’s price) Prv. week Change $92.86 0.14 $92.93 0.07

CME feeder cattle index — 600-800 Lbs. This is a composite price of feeder cattle transactions in 27 states. (Prices $ per hundredweight) This week Prev. week Change 113.30 112.77 0.53

Lamb prices Confirmed lamb and sheep sales THIS REPORT IS NO LONGER AVAILABLE.

Export inspections (Million bushels)

Week ending Soybeans Wheat Corn 07-29-10 5.9 22.0 31.5 07-22-10 7.1 15.9 42.8 Last year 5.5 13.8 49.3 Season total 1395.9 148.2 1684.6 Previous season total 1187.3 117.1 1603.7 USDA projected total 1460 1000 1950 Crop marketing year began June 1 for wheat and Sept. 1 for corn and soybeans.

ly during a presentation at the Illinois Farm Bureau Commodities Conference in Normal. The economist reported about 15 million Americans currently are unemployed, about 23 percent of home mortgages have negative equity, and 10.06 percent of mortgages are past due. “When you talk about the health of the consumer, those numbers are relatively alarming,” Ellinger said. The numbers suggest the U.S. economy, which relies on consumer purchases to generate 71 percent of activity, could continue to limp along for some time. The European financial crisis, which has added nervousness in the stock market, also is expected to limit economic growth. In fact, an Associated Press (AP) survey of economists recently projected economic growth the rest of this year and into 2011 will weaken to less than 3 percent. The economy from January through May grew at a pace close to 3.5 percent. The AP survey also projected the unemployment rate, at 9.5 percent, will remain well above the historic norm of 5 percent. “The labor situation is not just an urban problem,” said Ellinger, who reported Illinois from 1990 through May of 2010 lost 354,000 of its manufacturing jobs, many of which were replaced by lower-paying jobs in the service sector. The economic outlook, however, doesn’t look quite as bleak as it did last year. Ellinger reported housing prices have come back a little bit, exports are reasonably high, and there is a good amount of cash showing on corporate balance sheets. On the ag front, credit has

tightened but still is available, farmland prices generally remained steady, and income levels slipped but are not catastrophic for most. “On the ag side, I’m still fairly optimistic,” Ellinger said. “I think ag is more insulated from this (recession) than the

general economy.” Ellinger recommended farmers stress test their operations and get a good handle on their financial situations, to prepare for an inevitable increase in interest rates, and enhance flexibility and liquidity in their operations.

New Illinois NRCS effort seeks to increase grazing The Illinois Natural Resources Conservation Service (NRCS) in cooperation with the Illinois Grazing Lands Conservation Initiative (GLCI) has launched a new effort to increase grazing management. Roger Staff and Matt Bunger, Illinois NRCS field office team and grasslands specialists, will work with landowners to plan and develop grazing operations with managed, healthy pastures. NRCS and GLCI are working together to offer farmers technical and financial resources. Grazing systems can be developed for beef, dairy, goats, sheep, and other types of livestock. Switching a livestock operation to pasture doesn’t happen overnight, according to Staff. Learning how to manage grasses and forage species and putting in the needed fencing, paddocks, and water systems takes strategy and up-front planning. “That’s where NRCS and GLCI grazing mentors can lend a helping hand,” Staff said. Cliff Schuette, Illinois GLCI representative, noted Illinois has many farmers with successful grazing operations who can share what they have learned. NRCS has specific conservation programs and practices designed to solve the resource problems faced by grazing operations, Schuette added. To access grazing information, including The Illinois Grazing Manual, go online to {www.il.nrcs.usda.gov/technical/grazing} or contact your local NRCS office.

FarmWeek Page 11 Monday, August 9, 2010

PROFITABILITY Corn Strategy

C A S H S T R AT E G I S T Emotions hike wheat prices Emotional fever might have peaked in the wheat trade last week. With prices gaining nearly 100 percent over the last five to six weeks, the market had become ripe for a “blow-off ” top, at least for the short term. Russian Prime Minister Vladimir Putin’s confirmation that grain exports would be halted from Aug. 15 to the end of the year may have triggered the blow-off. It confirmed what the grain trade had thought would be an eventuality over the last couple of weeks. Wheat futures ended with limit gains on Thursday. Asian traders chased the market sharply higher overnight, but once that was exhausted, there was no one to sustain the gains. That set the market up for the classic “buy the rumor, sell the fact” scenario. Modest profit-taking ensued, pulling prices back toward Thursday’s close by early Friday. Heavier profit-taking quickly broke prices when trading resumed at 9:30 a.m. Friday, pressing them to limit losses before the day was done. Part of Friday’s decline may have been tied to Russian government official comments indicating they still intended to honor their export commitments. But if crops are as poor as some think, that may not be possible. Even with steep losses in production in Russia, Kaza-

Basis charts

khstan, and in parts of the Ukraine, the world is not short of wheat. Nor will it be short of coarse grains, unless lateseason weather impacts the U.S. or Chinese crops. The elimination of Russia and diminished presence of Kazakhstan and the Ukraine will alter world trade flows, wheat in particular. But at this time, in no way does the picture look reminiscent of the structure that fueled the 2007/2008 grain price surge. Both the U.S. and the European Union have enough wheat inventories to easily meet potential demand. Maybe just as important is the ramification these higher price levels will have. End users and importers will shift back to a hand-to-mouth buying pattern, limiting daily and weekly cash buying. The spike in prices also will deter overall demand. No one will build inventories, and some may even allow them to deplete modestly. The widening spread between wheat and coarse grain prices (including corn) will shift some feed demand back to coarse grains. While the decline in coarse grain output, along with feed wheat, in the affected areas will cut into availability, the overall structure shouldn’t be as tight as it was a couple of years ago. In short, barring a late-season surprise, there should be plenty of grain to go around this year. At the same time, these higher wheat prices will spark increased wheat planting this fall, threatening to push supplies back near burdensome levels again in the 2011/2012 crop year. It’s also important to remember the primary buyers during the grain rally over the last four to six weeks have been the big hedge funds. As rallies stall, they will take profits, a move that will accelerate if prices slip below supports, potentially causing a short-term collapse. Once prices turn down after a major move up, it’s always difficult for them to regain upside momentum. This will be especially true for wheat. The situation reminds us of the old axiom of drought rallies: “short crop, long tail.” AgriVisor endorses crop insurance by

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309-557-2274

Cents per bu.

2009 crop: Wrap-up oldcrop sales now. 2010 crop: The surge in wheat prices pulled December corn close to an upside target of $4.43 and near major resistance at $4.52. If wheat prices turn down, removing the prop from the corn market, corn prices should decline into the sevenweek low due after the Aug. 12 USDA crop report. The first good sign the short-term trend, and maybe a trend lower into fall, has occurred would be a close below $4. Get sales up to recommended levels now. Fundamentals: The fundamental picture for corn hasn’t changed much. Prices have risen in sympathy with wheat. Russia’s temporary ban on exports will halt the Russian flow of feed wheat and barley into the world pipeline, potentially shifting some business to U.S. corn. Weekly export sales are good, but the total, 175.7 million bushels for new-crop delivery, is not especially large. Thursday’s USDA report will take center stage this week.

Soybean Strategy 2009 crop: Old-crop basis levels are increasingly giving up the premium they have to new-crop ones. Don’t give up that premium; wrapup sales now. 2010 crop: November soybeans quickly moved to resistance at the $10.50-$10.60 level in sympathy with the upward explosion in the wheat market. Boost sales to 60 percent if November futures reach $10.45 again. Fundamentals: The soybean market has less to gain from weather problems in Russia, but still faces persistently good demand from China. However, unless something happens to our crop, or China’s, in the next month, there will be an abundant supply of soybeans to meet demand. The USDA report will dominate the trade this week along with weather. The current crop condition ratings suggest the initial yield estimate will be a good one. ✘ Fail-safe: Make a newcrop sale if November falls through $9.95.

Wheat Strategy 2010 crop: If the September contract can hold the previous high at $7.64, it would suggest higher prices. Make a 20 percent sale if September trades at or above $7.98, bringing old-crop sales to 90 percent. Use current strength for catch-up sales. For producers who can store wheat, it is worth noting storage hedges are attractive this year, especially using hedgeto-arrive contracts. 2011 crop: New-crop sales were increased to 35 percent when Chicago July 2011

futures penetrated $6.98. We recommend increasing sales to 50 percent if Chicago July 2011 futures penetrate $7.95. Fundamentals: The price surge continues to be sparked by news regarding weather problems in the Former Soviet Union countries. Apparent crop losses have become large enough for them to restrict grain exports. This should push business to the U.S. ✘Fail Safe: Increase oldcrop sales to 90 percent if Sept e m b e r f u t u r e s s l i p b e l ow $7.40, and new-crop sales to 50 percent if July 2011 futures slip below $7.35.

FarmWeek Page 12 Monday, August 9, 2010

PERSPECTIVES

Vicious cycle Economists offer varying views on economic recovery in U.S. We’re waiting for the economy to recover. We’d like the unemployment rate to get back to where it was before the recession started. The rate averaged 5 percent from 2004 to 2007. It was 9.5 percent in June. That’s down from 10.1 percent last October. Down is the right direction, but the rate is still way too high. How long will it stay high? A long time, probably. The last time the unemployment rate was 9.5 percent was August 1983. That was just after the last “Great Recession.” It didn’t reach 5 percent until March 1989, almost six years later. There’s a measure of the relaLARRY DEBOER tionship between economic growth and the unemployment rate called Okun’s Law. It’s named after Arthur Okun, an economist who worked for the Kennedy and Johnson administrations.

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He figured out the link between economic growth, measured by inflation-adjusted gross domestic product (GDP), and changes in the unemployment rate. Okun’s colleagues at the Council of Economic Advisors were just kidding around when they named his equation a law. The relationship has changed over the years, but, since 1987, the GDP needs to grow about 2.8 percent per year to keep the unemployment rate steady. Sure enough, GDP growth has averaged 3.4 percent since July 2009, and the unemployment rate is down by 0.6 of a point. We’d like unemployment to drop faster. GDP has to grow about 4.5 percent in a year to bring the unemployment rate down by a whole percentage point. One reason it takes so much growth to reduce unemployment is that new jobseekers keep entering the labor force. More than a 1.5 million people join the labor force in a typical year. The economy has to grow to create new jobs for all these new workers. Suppose that GDP does grow by 4.5 percent a year. If it keeps growing that fast, the unemployment rate will fall by about a point a year, and the unemployment rate will reach 5 percent in four-and-a-half years. That’s the end of 2014. The problem is that GDP has grown by 4.5 percent for a full year only twice since 1987. That much growth in a single year is pretty rare. The unemployment rate is likely to be above 5 percent into 2015 and beyond. If we can guess about unemployment, we can guess about inflation, using another relationship called the Phillips Curve. This example is named after A.W. Phillips, an economist from New Zealand who first looked at a different link to the unemployment rate in 1958. However, no one calls the Phillips Curve a law: Maybe because it’s a weaker relationship than Okun’s,

or maybe because Phillips’ colleagues weren’t such a fun-loving bunch. The Phillips Curve says that high unemployment brings the inflation rate down. When unemployment is high, wages don’t increase much, so business costs don’t rise. Consumers spend less, too. Businesses don’t raise prices much in an economy such as that. Since 1987, there have been seven years when the unemployment rate was 6 percent or above. In six of those seven years, the inflation rate fell from the year before. The exception was 1987, when inflation went up a mere 0.1 of a point. Okun’s Law says that the unemployment rate is likely to be above 6 percent into 2014, at least. That means the inflation rate will keep falling, according to the Phillips Curve. The “core” inflation rate has been 1 percent over the past year (that’s inflation not counting the ups and downs of oil and food prices). It’s so low now that if it keeps falling, it could turn negative. That’s deflation, and that’s a problem. Deflation tends to keep consumers from spending, because they expect prices to be lower in the future. If consumers don’t spend, it’s hard to get GDP growing. If GDP grows slowly, Okun says that unemployment won’t fall very fast. If unemployment stays high, Phillips says that inflation will decline and perhaps become deflation. If we have deflation, consumers won’t spend, and GDP will grow slowly. And that brings us back to Okun. Who can prevent this vicious cycle? The Federal Reserve is the likely candidate. The Fed has created a lot of money over the past few years. If deflation is a threat, maybe it‘ll have to create some more. Larry DeBoer is an agricultural economics professor at Purdue University, West Lafayette, Ind. His e-mail address is ldeboer@purdue.edu.

Bucks changing summer rhythm on WIU farm Summer at the Western Illinois University (WIU) farm has a traditional rhythm. Some of those rhythms — the heat, storms, and rain — are shared by all in this area. Others, such as field preparation and planting, are felt by farmers. Some summer rhythms are unique to WIU. One of those is the WIU Goat Test. The bucks, what male goats are properly called, have returned, as they do each summer, as part of the research here on goat nutrition and as a service to the goat industry. While the 25 bucks are here, they participate, very willingly, in a feedWILLIAM ing test. Each goat has a small BAILEY micro chip in its ear. When a goat gets some food from the special feeder, the computer in the feeder notes which goat is eating. At the end of the test, the difference in weight between when they arrived and when they left is recorded and matched against how much feed was consumed. The goats that are most efficient at converting feed into muscle are considered winners and normally receive a premium price when they are sold. For most livestock, there is extensive feeding information available detailing how much corn,

soymeal, vitamin E or zinc, for example, are required for optimum feeding. That information is not yet fully available on goats. And part of the reason the bucks have returned to Macomb is to add to the scientific knowledge of goat nutrition. Participating in this year’s test are two distinct groupings — meat goats and heritage goats. At the test, there is one heritage goat grouping, the Spanish goat. The Spanish goats at WIU are part of an effort to maintain the lineage of a very old breed that has been crossbred with a number of other breeds. However, the bucks at the WIU are purebred and an important part of national efforts to maintain a purebred Spanish goat breed. Meat goats, raised specifically for meat, are another type of goat in the test. One of the meat goats represented here is the Boer goat. Originally from South Africa, the Boer

goat was introduced into the U.S. in the early 1990s. It is valued and well recognized for its meat-producing characteristics. A third type of goat in the WIU test is the New Zealand Kiko goat. Like the Boer goat, it is bred for its meat-producing ability. I have heard some discussion about WIU using its resources to help such a limited market. While clearly the goat industry is small, it is an industry in which WIU has the ability to make significant contributions. The goat industry is growing. With no other university in Illinois FarmWeek file photo working with goats, this presents a great opportunity for WIU to uniquely provide education, research, and service to both the goat industry and Illinois agriculture. That’s what it is all about, isn’t it? William Bailey is director of Western Illinois University’s school of agriculture, Macomb. His e-mail address is WC-Bailey@wiu.edu.