NEW ENVIRONMENTAL rules and regulations are coming at crop and livestock producers h o t a n d h e a v y, Wa s h i n g t o n observers warn. ............................4
COUNTY SHERIFFS voiced concern at the news that the Illinois State Police will need to lay off 460 officers and close five regional offices due to budget cuts. ............3
SOME HAILED AND others cursed sweeping health care reforms that were passed by Congress last week and quickly signed by President Obama. ....................................5
Monday, March 29, 2010
Two sections Volume 38, No. 13
Shimkus: Ethanol credit extension crucial BY MARTIN ROSS FarmWeek
Amid a politically contentious Capitol Hill environment, a bipartisan push seems the best way to spur long-term growth in the ethanol sector, U.S. House Energy and Commerce member John Shimkus told FarmWeek. Shimkus, a Collinsville Republican, last week joined with Rep. Earl Pomeroy (D-N.D.) to spearhead extension of the current volumetric ethanol excise tax credit (VEETC). The 45cent-per-gallon ethanol fuel blender’s credit expires Jan. 1; the PomeroyShimkus measure would extend it through 2015. The pair seeks five-year extension of a small ethanol producer credit and a 54-cent-per-gallon ethanol import tariff aimed at offsetting tax breaks for foreign biofuels. A 56-cent-per-gallon cellulosic ethanol production credit due to expire Dec. 31, 2012, would be extended for three years.
VEETC has been instrumental in improving ethanol competitiveness and thus market demand as corn-based production has developed. The blender’s credit is seen as crucial to bringing cellulosic ethanol production online.
in a very contentious (fall) election, and I think that will motivate him to move this to passage. “Ethanol and cellulosics are one of the few things we’ve done to try to decrease our reliance on imported crude oil. It would be disastrous if we
‘Extending it provides cer tainty to the market, and will help move the industry forward.’ — Rep. John Shimkus Collinsville Republican
“Extending it provides certainty to the market, and will help to move the industry forward,” Shimkus said. “Obviously, having a Democrat take the lead in a Democrat Congress is very, very important. (Pomeroy’s) also
sent a signal that we did not want to move in this direction.” Shimkus notes the impact of recent biodiesel tax credit expiration on ethanol’s sister industry, which reportedly stands to lose 23,000 jobs if an
extension doesn’t move to the president’s desk soon. According to a new study from the Renewable Fuels Association (RFA), VEETC expiration could cost 112,000 jobs and reduce U.S. ethanol production by 38 percent. Eliminating the credit would “shutter nearly two out of every five ethanol plants operating today,” RFA President Bob Dinneen suggested. The biodiesel credit was tied to tax “extenders” legislation approved last year but delayed in the Senate. Extender provisions became mired in recent “jobs” legislation debate, finally receiving Senate approval earlier this month. Shimkus believes ethanol credit/tariff extensions can clear the House as a self-contained measure — “I think the people are tired of big bills.” The Senate might “roll” extension into a larger bill for approval later this year, but he argues “that’s just the way business is operated here.”
‘Good run,’ market/risk savvy boost creditworthiness
Periodicals: Time Valued
The Federal Deposit Insurance Corp. (FDIC) arrived recently for Busey Bank’s annual audit with post-recessionary zeal — more examiners taking more time to review a larger slice of Busey’s Central Illinois’ loan portfolio.
That isn’t surprising to LeRoy-based Busey Senior Vice President John Kahle, who reported the recent closure of seven more U.S. banks (including two with $1 billion-plus in assets) and noted examiners’ “strong emphasis” on Busey’s commercial lending areas and overall loan concentration. Kahle, however, was pleasantly surprised by FDIC’s “comfort level” with his bank’s producer portfolio. “I don’t think they called for (review of) one single ag credit, which is very unusual,” he related at last week’s Illinois Farm Bureau Profitability Advisory Team meeting. Despite a troubled 2009 season, ag lending continued as a bright spot for the bank, which operates throughout the Peoria/Bloomington/Decatur/Champaign area. Kahle sees improved risk management, more strategic
marketing, and better cash flow documentation among his producers. In turn, Kahle sees good near-term availability of farm credit, “as long as you bring in a good cash flow.” “Our credits are all analyzed every year and assigned a grade,” he told FarmWeek. “Those grades have been
FarmWeekNow.com Listen to John Kahle’s comments about ag credit conditions in Central Illinois at FarmWeekNow.com.
improving the last five years. That’s based on financial strength. I’d say our farmers and operations have had a good five-year run. “With the (market) volatility out there, they’ve had to become better managers in the marketing and in analyzing government programs. They’re trying to find ways to
FarmWeek on the web: FarmWeekNow.com
manage risk with the dollars they work with now vs. three years ago. Everything’s doubled. They work with big dollars, and they’ve pretty well got their hands around that.” And that’s changed the farmer/banker relationship. Kahle cites more fall “prepays” for fertilizer to lock in prices or manage taxes. As a result, dealers are looking increasingly to lenders to verify borrower creditworthiness. Producers are leasing equipment or partnering with others to spread machinery costs — in Kahle’s view, a mutually beneficial arrangement “if both entities are strong and have the same philosophical direction.” As growers hold grain longer and push to make profits in marketing, lending cycles have lengthened. Financing for the 2010 crop began essentially in summer 2009, and what once
would have been “a sixmonth note” now may stretch to a 27- to 30-month lender “commitment,” Kahle said. Busey’s farmer borrowers, meanwhile, are helping secure that credit through improved risk management. Kahle estimates nearly a third of his bank’s producer/borrowers have enrolled in the new average crop revenue election (ACRE) program through 2012, compared with Illinois’ roughly 25 percent ACRE signup. About two-thirds of McLean County borrower acres reportedly are covered under crop revenue coverage policies — a majority with 80-85 percent crop guarantees. “That’s pretty good participation,” Kahle said. While he notes broad diversity within Busey’s ag portfolio, Kahle believes See Credit, page 2
Illinois Farm Bureau®on the web: www.ilfb.org
FarmWeek Page 2 Monday, March 29, 2010
PRODUCTION
Quick Takes OHIO LIVESTOCK BOARD CLOSER — The Ohio House of Representatives last week by a unanimous vote passed legislation to establish the Ohio Livestock Care Standards Board. Once the legislation moves through the Ohio Senate, the law will go to Gov. Ted Strickland for his signature. The governor and other parties then will appoint experts in animal care and welfare to the board. The board last year was approved by Ohio voters. It will allow Ohio authorities to control how livestock and poultry are cared for in their state. The Ohio Department of Agriculture will administer the board and investigate complaints of animal mistreatment. Producers who are found in violation of standards will be subject to civil penalties. The Ohio Farm Bureau Federation has been a strong supporter of the measure. SUPREME COURT AGAIN REFUSES TO CLOSE LOCKS — The U.S. Supreme Court rejected another attempt by Michigan to close Chicago-area shipping locks that link the Illinois River and Lake Michigan. Michigan claims the invasive Asian carp may migrate into Lake Michigan through the Chicago Sanitary and Ship Canal. In January, the high court denied Michigan’s first attempt to immediately close the locks. Illinois Attorney General Lisa Madigan has opposed Michigan’s efforts. The next showdown may occur April 16 when the Supreme Court considers Michigan Attorney General Mike Cox’s request to reopen a 1922 case that tried to stop Illinois from diverting lake water through the canal. DEFENDS MEAT CONSUMPTION — Eating less meat is not the key to reducing “global warming,” according to Frank Mitloehner, an air quality expert at the University of California-Davis. Mitloehner last week at an American Chemical Society conference in California claimed the United Nation’s 2006 report “Livestock’s Long Shadow” overstated the role livestock play in global warming and actually could dissuade researchers from finding other solutions to climate change. “Smarter animal farming, not less farming, will equal less heat,” Mitloehner said. “Producing less meat and milk will only mean more hunger in poor countries,” he claimed Mitloehner instead believes developed countries should focus on cutting the use of oil and coal for electricity, heating, and vehicle fuels. In the U.S., transportation creates an estimated 26 percent of greenhouse gas emissions compared to 3 percent from the production of hogs and cattle, he said.
(ISSN0197-6680) Vol. 38 No. 13
March 29, 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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Aging producers, rising costs, estate tax issues spur concerns BY MARTIN ROSS FarmWeek
What a difference a million or two can make. For young farmers, it could mean the difference between survival and surrender. The “asset rich, cash poor” paradox of modern production could come crashing home to many Illinois operations in coming years, especially if Washington fails to provide a federal estate tax “fix.” Busey Bank Senior Vice President John Kahle estimates 65 to 70 percent of the operators served by his bank are between 55 and 75. Consequently, over the next few years he anticipates a wave of retirements, along with “a change in heir transition” and a shift to younger producers often with “very little net worth and a lot of risk.” Given soaring input costs alone, taking on a new farm or primary proprietorship “takes a lot of dollars and a lot of commitment,” Kahle told FarmWeek. “It leverages a guy nine-toone, 10-to-one, 15-to-one to his net worth,” he warned. “Those are uncomfortable numbers.” Also, without congressional
action, the currently dormant estate tax is expected to return in 2011 with a mere $1 million individual tax exemption and a high 55 percent tax rate. A House proposal would restore 2009’s $3.5 million exemption, but Kahle notes a significantly higher-thanexpected number of Central Illinois operations worth $2 million to $5 million. Farm Bureau is pushing a proposal from House Ag Committee Chairman Blanche Lincoln (D-Ark.) and Senate Republican Whip Jon Kyl (RAriz.) to reinstate the tax with a $5 million individual-$10 million per couple exemption, adjustable for inflation. Uncertainty over the issue has complicated retirement and estate planning at an especially crucial juncture, Kahle said. “Transfer of wealth is one of the bigger problems we see as we sit down with our guys this winter,” he said. “Pulling land out of retirement plans or out of corporations as they dissolve them, there are all sorts of strange tax things that take place. “That’s not to mention managing your crops and machinery as you liquidate
those. And, of course, you have distributions from the IRAs you’ve hopefully put together.” In the past, producer loan guarantees were a “nice instrument” to bolster lender confidence in beginning farmers, Kahle said. However, their appeal has faded amid recent economic “stress-testing.” Pre-existing or mentoring relationships thus will be critical to helping “new” producers generate retained earnings, Kahle argued. “It takes a good friend, a good family, a good banker, and, possibly, the government,” he maintained.
Credit Continued from page 1 most of his borrowers today would be able to financially weather the proverbial “one bad year,” given the “cushion of the last five crops.” “Now, I don’t ask too many questions about (producer) finances. My first questions are, ‘How did you do on your leases this year? What do you have for insurance? What percentage did you put into ACRE?’” — Martin Ross
Entomologist voices concern about corn refuge compliance Ostlie reported that only about three of every four farmers last year implemented The use of refuge areas in Bt corn is vital refuge areas. He is concerned growers who for insect resistance management (IRM), skip planting refuge areas could be looking according to Ken Ostlie, University of Minat short-term gains rather than long-term nesota Extension entomologist. consequences. However, Ostlie is concerned that message He estimated an average cornfield could might get lost in the shuffle this spring as have 350,000 corn rootworm beetles per farmers attempt to catch up with fieldwork acre. rained out last fall. “If there is only 85 percent Yield advantages of numercontrol, then we’ve got a helous stacked varieties also could luva lot of survivors,” he said. tempt farmers to forego plant “That’s why IRM is so impor‘ I f y o u d o n ’ t tant.” ing refuge areas. “From a logistical standhave a refuge, it Once insects survive a conpoint, farmers are more up trol measure, they can start means resisagainst the wall this spring as a building resistant populations. tance could delot of them didn’t get things Refuge areas slow this velop sooner.’ done last fall,” Ostlie told development by ensuring susFarmWeek at the Commodity ceptible adults mate with resisClassic in Anaheim, Calif. — Ken Ostlie tant adults. “So, potentially, taking the “When resistance starts University of Minnesota Extension entomologist extra time to make a seed showing up, that will be the tip change may suffer. That is a of the iceberg,” Ostlie said. concern of mine.” He encouraged seed compaOn the flipside, heavily satnies to make it more conveurated soils could reduce rootworm populanient for growers to plant a refuge. Mixing tions. the seeds into each bag could help. But farmers shouldn’t take any chances He also urged seed companies to make when it comes to IRM, the entomologist said. sure hybrids intended for refuge areas are “Don’t ignore the refuge requirement,” current, high-yielding varieties so farmers Ostlie said. “If you don’t have a refuge, it don’t experience a noticeable yield drag in means resistance could develop sooner.” their refuge areas.
BY DANIEL GRANT FarmWeek
FarmWeek Page 3 Monday, March 29, 2010
GOVERNMENT
State police prepare for layoffs, regional office closings Rural areas will take hit BY KAY SHIPMAN FarmWeek
The Illinois State Police will need to lay off 460 officers and close five regional offices due to a $32-million budget cut, acting state police director Jonathon Monken told legislators last week. The layoffs combined with anticipated retirements means the state police will have 600 fewer officers, up to 30 per-
cent of the force, according to Monken. The five district headquarters slated to close by this fall are in Carmi, Des Plaines, Litchfield, Macomb, and Pecatonica. Fewer state police means it will take longer for troopers to respond to calls or the call will fall to other law enforcement, he noted. “Somebody is going to have to respond to those calls for service. If the Illinois State Police cannot, then somebody has to respond.
Calls will go to the local level,” Monken said. Loss of state troopers and their special expertise will be especially hard in rural counties, according to two sheriffs who spoke during a news conference last year in the Capitol. “Cuts to the state police will be a tremendous blow,” said Union County Sheriff David Livesay.
Livesay’s department relies on state police to help with homicide and sexual abuse investigations and handling of hazardous materials. The loss of those experts will be substantial, he said. “It’s going to be a tremendous burden for us ...,” Livesay said. Saline County Sheriff Keith Brown echoed Livesay’s assessment: “Southern Illinois (law
enforcement) is stressed with manpower now ... It will cause us some heartburn, so to speak, should these services not be available.” Monken has said some personnel cuts will be made on the state police’s specialty units, such as the meth response team and the tactical response team. Reductions in the meth team would occur at the same time a meth awareness project is under way in the 15 southernmost counties. (See accompanying story)
Country Trust helps IAA Foundation invest funds Southern 15 counties launch Most IAA Foundation donors probably ly beneficial this year. The foundation experifocus more on how their dollars will be used enced no decreases in the number or amounts than how they will be invested. But since 1993, of scholarships that could be awarded out of the IAA Foundation has entrusted those donafunds managed by Country Trust Bank, tions to what is now Country Trust Bank. Moore noted. Sound investments have provided the IAA The special relationship between the CounFoundation with a secure base and allowed it to try Trust Bank and the IAA Foundation fund education, research, and charitable activiincludes a donation of management services. ties that benefit Illinois farm families and agriFormer Illinois Farm Bureau President culture. John White Jr. not only wanted Mary Guinane, investment the then-IAA Trust Co. to officer in wealth management manage the foundation’s with Country Trust Bank, ‘ I t ’s b e e n v e r y investment, but he also wanted explained the IAA Foundation management services to s u c c e s s f u l a n d those has chosen to invest in highbe donated. the returns have quality bonds. That donation has proven to “It’s been very successful, be a substantial in-kind contribeen great.’ and the returns have been bution over the years, Moore great,” said Guinane, manager — Mary Guinane said. Otherwise the foundation of the foundation’s bond portwould have to pay about Country Trust Bank folio. She said the foundation $10,000 a year, Guinane estiinvests in bonds that mature mated. anywhere from one to seven years. It’s a con“The fact that Country Trust Bank provides servative portfolio with a short-term average this in-kind contribution means more of the maturity. Should inflation occur, and experts money that I raise goes directly to students think it will, then as bonds mature the money and programs,” Moore said. can be reinvested at higher rates. But Country Trust Bank employees do “Because of our trusted family of compamore than help the IAA Foundation manage nies’ relationship, I am confident in their its investments, they also help raise money by investments and in the advice they give,” said participating in the Illinois Agriculture in the Susan Moore, IAA Foundation director. Classroom’s golf outing and the bike ride. Moore added her confidence extends to “It’s for a great cause,” Guinane concluded. investment of new donor contributions, espeFarm Bureau members who want more cially for scholarships that will be funded by information about Country Trust Bank and its income earned from the investments. services should contact their local Country Those secure investments proved particular- Financial representative. — Kay Shipman
State Equine Promotion Board seeks applicants The Illinois Equine Industry Research and Promotion Board (EPB) is seeking Illinois horsemen to fill three seats on the board starting this year. The application deadline is April 30 in order for new board members to be appointed at the board’s annual meeting, according to Chairman Karen Freese. The board is comprised of Illinois horsemen who must represent a cross section of the industry by geography and sector. Members whose terms are expiring are Frank Bowman, Central Illinois, pleasure horses; Anne Gallagher, Southern Illinois, thoroughbred race industry; and Joy Meierhans, Northern Illinois, show horses. Application forms are available online at {www.Horse-mensCouncil.org}. Click on the EPB logo, then locate Board Applications under the index for Directors & Committees. A resume or brief biography is requested for each applicant. Applications also may be requested from the board office in Springfield. The telephone number is 217-585-1600. All applications must be submitted to: Illinois Equine Industry Research and Promotion Board, 3085 Stevenson Drive, Springfield, IL 62703. The fax number is 217-585-1601.
meth awareness campaign The Illinois Sheriff ’s Association (ISA) and the sheriffs of Southern Illinois are launching a methamphetamine prevention program in the state’s 15 southernmost counties. A similar program with graphic radio and television commercials, billboards, and posters proved to be successful in East-Central Illinois, noted Adams County Sheriff Brent Fischer, ISA president. The new campaign will run through Dec. 31. In addition to media commercials, posters will be distributed to 126 middle and high schools in the 15-county area. “Meth remains a huge problem for much of Illinois,” Fischer said during a news conference in the Capitol last week. “We need to educate and get the word out how dangerous it (meth) is.” U.S. Sen. Dick Durbin, a Springfield Democrat, helped obtain $250,000 to be used for the campaign, dubbed “Not Even Once.” The campaign focuses on the fact that individuals may become addicted after using meth only once. The counties targeted will be: Alexander, Franklin, Gallatin, Hamilton, Hardin, Jackson, Jefferson, Johnson, Massac, Perry, Pope, Pulaski, Saline, Williamson, and Union. In the latest report available, Illinois law enforcement in 2008 found 324 meth labs around the state, down from 940 labs in 2006 when the ISA started its meth awareness campaign. — Kay Shipman
Disabled farmer program seeks donations No money appropriated in state, federal budgets AgrAbility Unlimited is still trying to help disabled farmers although neither the federal nor state governments plan to provide any funding for fiscal year 2011. Bob Aherin, AgrAbility Unlimited project director and University of Illinois ag safety specialist, said the program is seeking other potential sources of funding, including donations. He estimated $120,000 would be needed to maintain services the agency provides for farmers and farm workers across the state. AgrAbility Unlimited provides disabled farmers with onsite technical assistance in adapting and using farm equipment and
tools and with modifying farm operations and buildings. It also provides services to help farmers who face such health issues as arthritis and heart problems. AgrAbility relies on part-time professional staff that provides services along with volunteer local AgrAbility ambassadors, including many county Farm Bureau managers. Aherin noted AgrAbility is a 501(c)(3) organization and donations would be taxdeductible. Checks should be made payable to: University of Illinois AgrAbility Unlimited Program. Contributions should be mailed to: U of I Department of Agricultural and Biological Engineering, 1304 W. Pennsylvania Ave., Urbana, Ill., 61801. For more information, contact Aherin at 217-333-9417 or raherin@illinois.edu.
FarmWeek Page 4 Monday, March 29, 2010
GOVERNMENT
EPA ‘bully’ around the corner? BY MARTIN ROSS FarmWeek
Farmers face a flurry of proposed new environmental restrictions — some from Congress, some from the U.S. Environmental Protection Agency (EPA), and some emerging from the continued interplay between the two. The result could hit crop and livestock producers at nearly every level of production, Washington observers warn. American Farm Bureau Federation analyst Don Parrish told Illinois Farm Bureau Leaders recently that a charged environment on Capitol Hill likely will “ratchet up the political atmosphere and debate over the role of ag in the environment.” Meanwhile, EPA is eyeing a variety of new air and water regulations, including proposed nutrient loading limits for Maryland’s Chesapeake Bay area the agency likely would use as a model to “roll over into your watershed,” he said. The Chesapeake plan, slated for public review this fall, “clearly is going to have an implication not only for water but for land use, as well,” Parrish told FarmWeek. Compounding concerns are congressional proposals that effectively would expand EPA regulation to all U.S. waters — possibly including standing water in fields and local ditch-
es — and a recent U.S. Sixth Circuit Appeals Court ruling classifying a pesticide sprayer and nozzle as a potential “point source” of pollution. The latest concerns arose last week as EPA Administrator Lisa Jackson outlined her “vision for
‘(The administration is) really throwing a lot of things at the wall.’ — Don Parrish American Farm Bureau Federation
clean, safe drinking water.” As her agency continues to reassess atrazine health risks, Jackson proposes a more holistic federal approach that addresses potential water contaminants “as a group, rather than one at a time.” The administration is “really throwing a lot of things at the wall, almost overwhelmingly in the water quality area,” Parrish said. Beyond talk of revisiting regulations for concentrated animal feeding operations, EPA is eyeing potential new nutrient loading standards for Florida despite ongoing implementation of the state’s own standards. Coming months likely will
bring reams of regulatory proposals and “comment periods left and right,” all “at a time when the economy is struggling to get back on its knees,” Parrish said. Ogle County Leader to Washington Daryl Cave characterizes EPA as “the bully that’s emerging around the next turn in the hallway.” According to the Florida Department of Environmental Quality, EPA’s projected standards could require the state to list as “impaired” 80 percent of the waters the Florida agency considers “pristine,” further constricting regional management practices and boosting farm compliance costs. Further, while individual compounds such as atrazine may not pose a watershed threat in and of themselves, Parrish fears Jackson’s proposed cumulative, combined analysis of drinking water “could really have a significant impact on the kinds of production tools farmers are going to need.” Jackson also proposes to “use the authority of multiple statutes” to protect drinking water. That would “increase the level of EPA oversight and probably enforcement actions beyond what it could do in any single area,” Parrish said. “We’re expecting them to be creative in how they utilize this multiple-statute approach,” he said.
Conservation/environmental $$ at risk with regs looming? Cuts in conservation funding? Not exactly a news flash. But with the U.S. Environmental Protection Agency (EPA) moving to significantly expand its regulatory scope (see above), producers and conservation interests are concerned by proposals to pare back spending for ag stewardship programs. Fifteen conservation groups have protested a proposal to shave more than $2.8 billion dollars over the next decade from the Environmental Quality Incentives Program (EQIP) — “the largest of USDA’s working lands conservation programs” — to pay for Senate child nutrition reauthorization measures. In a letter to Senate Ag Committee Chairman Blanche Lincoln (D-Ark.), organizations including the American Farmland Trust, the National Sustainable Agriculture Coalition, and the National Association of Conservation Districts argued the plan “clearly violates the carefully negotiated compromise that you supported in the 2008 farm bill.” Conservation overall would take a major hit in the administration’s proposed fiscal 2011 budget proposal, while nutrition programs are slated for increased ag funding. EQIP, with its focus on water quality, is seen as a potentially crucial tool for livestock producers grappling
with the prospect of expanded environmental regulation. Near-term cuts in conservation funding not only would impede farm gains in and “public benefits” from environmental preservation, but also would undercut the next farm bill’s budget baseline or starting point for stewardship programs, conservation groups warned. Conservation programs “have always been raided” for other ag funding needs by both parties, economist and industry consultant Ross Korves told FarmWeek. As a result, demand for participation in conservation programs “routinely far outstrips available funding,” the conservation groups concluded in their letter to Lincoln. With likely congressional efforts in 2011 to rein in a $1 trillion deficit, Korves sees across-the-board “extreme scrutiny” of all federal spending programs, especially in agriculture. “The ability to make the argument that somehow, this money is well-spent is going to be extremely important,” he said. “Everybody says conservation is extremely important, we have to have it. And yet, when push comes to shove, because we won’t cut price or income support programs, because we won’t cut other programs, we end up cutting conservation.” — Martin Ross
Environmental intervention: lawmakers, rulemakers, and ag CLIMATE Illinois congressmen agree 2009 House “cap-and-trade” measures — which proposed to stringently regulate annual utility, energy sector, and manufacturer greenhouse gas (GHG) emissions — essentially are at a dead end. But new details of a plan from Sens. John Kerry (D-Mass.), Joseph Lieberman (I-Conn.), and Lindsay Graham (R-S.C.) could revive debate. The bill eschews an economywide cap-and-trade scheme in favor of more limited restrictions imposed initially on utilities and gradually phased in for manufacturers. It initially would grant “free” greenhouse gas permits to power companies to buffer electricity costs. While Graham blasted the Democrat strategy used to move health care legislation, he pledged to maintain support for the climate plan. But Sen. John McCain (R-Ariz.) argued the health care move has “poisoned the well,” raising doubts about overall Republican support for climate initiatives. Congressional efforts have been powered largely by concerns about possible regulations under Environmental Protection Agency’s (EPA) recent “endangerment finding” on GHGs and public health and safety. EPA has proposed adding the oil/gas sector to 31 industries required to report annual emissions under the finding and is soon to issue vehicle emissions rules that could set the stage for costly livestock permit requirements. Alaskan Gov. Sean Parnell recently joined Sen. Lisa Murkowkski’s (R-Alaska) effort to overrule EPA’s authority to regulate GHGs under the federal Clean Air Act, with the government pledging to challenge its finding in court. But Senate Majority Whip Dick Durbin, a Springfield Democrat, continues to cite EPA’s threat as compelling grounds for climate legislation, arguing EPA simply is complying with a Supreme Court directive to address GHGs. “If we pass nothing, there sits EPA with not only the authority but the responsibility to do this,” Durbin told Illinois Farm Bureau Leaders to Washington. DEFINING THE WATERS Producers may need to gear up for renewed debate over proposals to extend EPA regulation from merely “navigable” waters (rivers, etc.) to all U.S. waters. The proposal has remained dormant for several months under an effective Senate “hold.” But American Farm Bureau Federation regulatory specialist Don Parrish reported the Democrat health care victory may have “emboldened” Rep. James Oberstar (D-Minn.) to revive the measure around Earth Day, April 22, in an effort to build new environmental “momentum.” THE CHESAPEAKE BAY Last week, EPA released draft guidance for federal land management in the Chesapeake Bay watershed that addresses indirect non-point pollution sources on ag lands and in urban and suburban areas. The draft hones in on farm nitrogen and phosphorus use, suggesting a whole-farm management approach to controlling total daily nutrient loads including livestock and row crop source controls and edge-of-field containment and treatment. Parrish warned Illinois farmers they could be next. SPRAY DISMAY The U.S. Sixth Circuit Appeals Court added a new wrinkle to the “federal waters” debate in January 2009 with a ruling that classifies a pesticide sprayer and nozzle as a potential direct “point source” of pollution. EPA is still feeling its way toward initial permit regulations for four categories of pesticides, focusing primarily on mosquito and areawide insect control measures and aquatic chemicals. However, Parrish is concerned about long-term potential for farm chemical requirements that would have “a huge impact on millions of acres of cropland.” Here, there may be good news. He sees EPA “leaning in the direction of trying to develop permits that probably will not cover agriculture,” as long as growers demonstrate care near ditches, grass waterways, and other “conveyances.” “I’m feeling better than I have in awhile that they may have a fairly narrow focus,” Parrish told FarmWeek. — Martin Ross
FarmWeek Page 5 Monday, March 29, 2010
GOVERNMENT
Health care bill cure, ‘aspirin,’ or headache? BY MARTIN ROSS FarmWeek
After months of debate, bipartisan bartering, and a virtually singular White House focus, Congress last week moved sweeping health care reforms that were quickly signed by President Obama. Some termed the measure historic while a University of Illinois analyst labeled the reforms “aspirin dispensed for the treatment of cancer.” Illinois Republican lawmakers and state officials nationwide offered a far less benign prognosis for the bill, which mandates individual health coverage and authorizes new health insurance “exchanges” to help the uninsured obtain coverage, and imposes stringent requirements for insurer acceptance of individuals with pre-existing conditions. Illinois Hospital Association President Maryjane Wurth hailed passage of the reform package, arguing “peo-
ple in Illinois will no longer have a much-diminished quality of life or be at the risk of dying merely because they lack health insurance.” But Peoria Republican Rep. Aaron Schock argued Democrats “rammed through a mammoth, $1.2-trillion health care package which spends $940 billion in coverage subsidies, $144.2 billion in additional mandatory spending, $70 billion in discretionary spending, and $41.6 billion in unrelated education spending.” According to Schock, the bill also includes an overall tax increase of $569.2 billion nationwide over the first 10 years, imposing new taxes on the pharmaceutical industry and medical device manufacturers. He estimates Illinois would shoulder $23.9 billion in increased health “taxes,” with employers coming in for $52 billion in new taxes “when our unemployment is hovering around 10 percent.” Last week, equipment manufacturers Deere and Co. and
Research funding next for fall-guy budget cuts? As federal stimulus funds continue to flow into “shovelready” projects nationwide, Paul Sebesta argues a compelling case for science as stimulus. That’s the basic mission of Sebesta’s National Center for Ag Utilization Research (NCAUR) — USDA’s “Peoria lab,” founded to develop uses for Midwest ag production. NCAUR’s director noted the center is “talking with a lot of people in economic development, at the local level, in Chicago, in metropolitan areas.” “Those conversations are coming down to people looking at agricultural research as a driver for economic development, for job creation,” Sebesta related in an RFD Radio-FarmWeek interview. “Glucerna (a diabetes management product) is one of our products. It was picked up by Cargill, and as they started to make the product, there was a plant they needed to reopen in Indiana. They reopened that plant to produce our product, and that put a lot of people to work within that local area.” USDA’s Ag Research Service (ARS) received $176 million in stimulus funds, $40 million of which was directed to the Peoria lab for new construction. That will enable NCAUR to provide 435 Peoria-area jobs over the next two years, Sebesta said. None of that stimulus funding went to actual research. Ag research was absent from 2009 economic stimulus legislation, “while other research sectors received billions,” lamented American Soybean Association President Rob Joslin, who called research “the driving force behind innovation in American agriculture.” The time appears ripe to capitalize on ag innovation, given the “green” consumer push powered by brand-name companies. Frito-Lay recently launched a media blitz for a new fully compostable, plant-based bag for its SunChips, and Sebesta, whose center is exploring food packaging improvements, believes biobased product demand will “continue to be strong.” NCAUR is beefing up resources with plans to hire eight new staffers, including four research leaders, biochemists, microbiologists, and other specialists. While the lab’s innovations are marketed by private sector partners, Sebesta suggested that “almost every time you go to the grocery store, there’s a product from ARS research in your bag.” But given anticipated post-election budget slashing (see accompanying story), economist Ross Korves fears ag research could wind up on the block, economic benefits notwithstanding. “Will research be the equivalent of conservation as we get into this whole budget battle?” Korves posed. “Everybody’s in favor of it, everybody thinks it’s needed, but because we won’t cut someplace else, we cut research.” — Martin Ross
Caterpillar and Valero Energy, which recently absorbed some of VeraSun’s former ethanol production holdings, projected the bill would cost them a combined $265 million. Medicaid expansion under the bill will cost Illinois an estimated $1.8 billion over a fiveyear period, “at a time when our state is already nearly $13 billion in the red,“ Schock warned. With more than a dozen states questioning the constitutionality of the measure, Illinois Republicans asked Illinois Attorney General Lisa Madigan to challenge what Collinsville Republican Rep. John Shimkus called “the unfunded mandate it would pass upon the State of Illinois.” “They’re putting the cart before the horse,” Shimkus told FarmWeek. “They’re going to force everyone to purchase a product and then use a (federal) interstate commerce clause to say they can regulate it. I’m not sure there’s a provision that forces Americans to buy anything they don’t want to buy.” U of I professor emeritus of community health Thomas O’Rourke is uncertain whether
a constitutionality challenge would stand up in federal court. He noted longstanding public benefits under Social Security and Medicare “weren’t mandated in the Constitution.” That said, O’Rourke noted “there’s no law that says a (health care) provider has to take a Medicaid patient,” thus raising questions about future access to comprehensive care by some low-income families. He believes insurers likely will
gain from mandatory coverage, but acknowledged many young people especially may opt to pay a $695 annual penalty for noncompliance vs. insurance costs. While insurers may not need to raise average health premiums, they could raise individual policy deductibles or offer “less robust coverage.” “There will be added costs one way or another,” O’Rourke said in an RFD Radio-FarmWeek interview.
Nurse practitioner scholarships offered Applications are now available for nurse practitioner scholarships through the Illinois Farm Bureau Rural Nurse Practitioner Scholarship Program. There will be five scholarships worth $4,000 each granted this year. The scholarship program, now in its 18th year, helps develop the pool of rural health practitioners to assist in meeting the primary health care needs of rural Illinois. Students who receive scholarships agree to practice for two years in an approved rural area in Illinois. To be eligible for the scholarship, students must be Illinois residents and be a registered nurse accepted or enrolled in an accredited nurse practitioner program. Funding is provided by the Rural Illinois Medical Student Assistance Program. Applications are available at county Farm Bureaus, on IFB’s website {www.ilfb.org}, or by writing Brenda Matherly, assistant director of local government at Illinois Farm Bureau, PO Box 2901, Bloomington, IL 61702-2901. Applications are due May 1. For information, call 309-557-3151 or e-mail matherly@ilfb.org.
FarmWeek Page 6 Monday, March 29, 2010
PRODUCTION
Greater crop production drives infrastructure expansion BY DANIEL GRANT FarmWeek
The farm facility construction business has not crumbled under the weight of the economic recession. In fact, the situation is just the opposite of what’s taken place the past couple years in the U.S. housing market, according to Paul Brooks, project manager for commercial grain systems with GROWMARK. “We’ve not seen a slowdown from the economic recession,” Brooks said last week during the GROWMARK media day. “Last year and this year we’ve had record sales.” The boom in grain facility construction has been driven in part by rising yields and thus greater crop production. U.S. corn production and average yields jumped from 7.4 billion bushels (113.5 bushels per acre) in 1995 to 9.9 billion bushels (136.9 bushels per acre) in 2000. This year corn production (13.13 billion bushels) and the national average yield (164.9 bushels per acre) set new records. And Brooks predicted those trends will continue due to technological advancements and improved
farming techniques. He reported GROWMARK within the last five years estimated there was a shortage of at least 350 million bushels of storage space in its territory. “We (in agriculture) are increasing the amount of bushels we produce every year,” Brooks said. As a result “our construction business is booming.” Brooks reported the surge in grain bin construction is taking place at commercial elevators and on farms. “We have farmers with half a million bushel tanks that are bigger than their local elevator,” Brooks said. Meanwhile, grain handling limitations caused last fall by the extremely large and wet corn crop pushed sales of grain dryers into overdrive. Gordon Miller, manager of Western Grain Marketing (WGM) in Rushville, said WGM is in the process of more than doubling its grain drying capacity (from 5,000 to 12,000 bushels per hour) at its new shuttle-loading facility in Adair. A new 7,000-bushel-per-hour dryer is expected to be ready for the 2010 harvest. “We were shut down from taking corn for 239 hours (last fall) because we didn’t
have the ability to dry it,” Miller said. “If we have
another season similar to this last one, hopefully we’ll be
better prepared for it.” Elsewhere, Rich Vanderpool, general manager of Sunrise Service Co. in Havana, said his grain facility in its first two years of operation on the Illinois River went from handling 12 million bushels of grain to 23 million bushels. Sunrise added a second dump pit and built a large fertilizer storage facility to meet increased demand in the area. “We’ve got a lot of potential here,” Vanderpool said during the GROWMARK media day tour of his facility. “Everything built here was designed for expansion.”
Demand could put pressure on fertilizer prices Farmers probably should not wait too long this spring to make their fertilizer buying decisions. The supplies of urea ammonia nitrate (UAN) and phosphate could be tight in some areas, according to Joe Kilgus, area sales manager in Southern Illinois for GROWMARK’s agronomy division. FarmWeekNow.com Kilgus last week during the Listen to Joe Kilgus’ comments on GROWMARK the spring fertilizer market and also check out our GROWMARK photo media day reported farm- gallery at FarmWeekNow.com. ers last fall applied only about half the “normal” amount of anhydrous ammonia due to the late harvest and poor field conditions. Meanwhile, fertilizer prices this spring could increase in the Midwest if demand is high and retailers are forced to increase imports. More than half of nitrogen and roughly 80 percent of potash fertilizer used in the U.S. is sourced from other countries. “Supplies look to be tight for nitrogen,” Kilgus said. “The question is how many corn acres will farmers plant.” If farmers boost corn plantings (USDA will release its acreage estimates on Wednesday), Kilgus believes fertilizer prices could increase due to stronger demand. “For nitrogen and phosphate the international price is above what we’re paying in the Midwest,” he said. “So if we need more, the price likely will go up so we can attract additional supply.”
The fertilizer market also is dealing with some transportation issues (barge traffic in recent weeks reportedly was slow due to high water from spring floods and rail shipments have become more expensive) along with indecision from farmers and retailers. “There’s been a lot of indecision from farmers (about locking in fertilizer purchases) due in part to declining commodity prices,” Kilgus said. As a result, “dealers have been cautious about taking large positions.” The other wildcard that could affect fertilizer availability and possibly prices is the weather. Craig Martin, manager of the GROWMARK distribution center in Alpha in Henry County, said a condensed planting season due to another wet spring could create numerous logistical challenges. “We hope to get enough good weather to keep things moving,” said Martin, who noted an earlier start to spring fieldwork in Southern Illinois is crucial to reducing the chance of bottlenecks of input supplies in the northern twothirds of the state. “That (a staggered season) alleviates a lot of craziness compared to if the weather turns in one day and everyone is in the field. That creates huge challenges.” About 63 percent of products from GROWMARK’s Alpha facility are distributed from April through July. The top three products that will be shipped in coming months are crop protection products, field and turf seed, and lubricants, Martin added. — Daniel Grant
Fertilizer market expected to remain volatile Joe Dillier, director of plant food for GROWMARK, last week delivered a rather straightforward recommendation to members of the Illinois Farm Bureau Profitability Advisory Team. “If you know what you’re going to plant, I’d go ahead and contract (fertilizer) now,” Dillier told FarmWeek. “With all the uncertainty in the market, you don’t want to be the last guy to go to your dealer to get your input supplies.” GROWMARK currently has fertilizer supplies in place, but Dillier suspects the overall supply may be down this spring due to uncertainty in the market. Some farmers have yet to finalize their plans for planting, which has left fertilizer purchases in the air. Meanwhile, fertilizer retailers who last year experienced financial losses when fertilizer prices plummeted are reluctant to expand
inventories while questions remain about planting intentions. “There is more uncertainty in the fertilizer market for this spring than there has been in a long time,” Dillier said. “We don’t know how much supply is in place (across the industry).” Dillier believes spring fertilizer prices could move higher if corn plantings increase. And the chance of a major downturn in fertilizer prices at this point appears minimal unless USDA this week drastically cuts its corn acreage estimate. Dillier, therefore, encouraged farmers to start working with ag retailers to book their fertilizer needs. Long-term, he expects the fertilizer market will remain highly volatile. Farmers can mitigate their risk by securing supplies and locking in purchases on a forward basis and selling grain to hedge that purchase, Dillier said. — Daniel Grant
FarmWeek Page 7 Monday, March 29, 2010
PRODUCTION
Tighter pork supplies could ignite ‘fireworks’ in market hundredweight. If realized, hog prices would be up about 20 to 22 percent compared to last USDA on Friday may have ignited some year. “fireworks” in the hog market with the release “I believe the industry has its eye on profof its quarterly hogs and pigs report. itability right now,” Rosa said. “Producers have Traders were caught off guard as USDA gone through many years of losses, so they’re slashed its swine inventory numcautious going ahead.” bers. U.S. pork producers the past FarmWeekNow.com “There could be some real quarter reduced the inventory Visit FarmWeekNow.com fireworks this summer,” Len of hogs and pigs 2.8 percent to to view the latest USDA Steiner, market analyst with 63.9 million head. They also cut hogs and pigs repor t. Steiner Consultant Group, said the breeding herd by 3.9 perduring a teleconference hosted by cent to 5.76 million head and the National Pork Board. “As supplies tighten, reduced the market hog inventory by 3 percent and if exports pick up, it could get this market to 58.2 million head. rocking and rolling.” “The report is very bullish,” Rosa said. “The Steiner predicted lean hog carcass prices in numbers were tighter than expected.” the second and third quarters could reach $78 Producers are expected to reduce the numto $79 per hundredweight. ber of sows to farrow by 4 percent. But the one Erica Rosa, ag economist for the Livestock number that could counter-balance tight supMarketing Information Center in Lakewood, plies is the average pigs-saved-per-litter, which Colo., and Darrell Mark, University of Nebraswas a record 9.61 in the latest report. ka Extension marketing specialist, also predictHowever, the hog market also is expected to ed hog prices in coming months could surpass be supported by a year-over-year increase in the $70 mark. exports, said Rosa, who also noted the Canadi“The supply fundamental is there for higher an swine herd and slaughter hog imports to the prices (due to reduced supplies of pork and U.S. have declined in recent months. beef),” Rosa said. “The key is demand.” Meanwhile, Steiner believes the positive outRosa predicted average hog carcass prices for look will put an end to the culling of the swine 2010 could average between $68 and $70 per herd in the U.S.
BY DANIEL GRANT FarmWeek
2009 corn crop, yields Illinois’ fourth largest The 2009 growing season in Illinois likely will be remembered for heavy rains, flooded fields, and numerous fieldwork delays. But it also produced the fourth-largest corn crop and fourthbest corn yield average in state history, according to Mark Schleusener, deputy director of the National Agricultural Statistics Service (NASS) state office in Springfield. “2009 was a challenging year for producers due to too much rain during planting and harvest,” Schleusener said. “However, the yield still was the fourth-largest ever produced in Illinois.” Illinois farmers last year produced 2.053 billion bushels of corn with an average yield of 174 bushels per acre. NASS on Friday released yield averages for each county in the state. The estimates were delayed this year because NASS re-surveyed farmers in February to account for the late harvest and corn still standing in the field. Some farmers were just finishing up their 2009 harvest last week. “With the late harvest, we did a re-contact project in February and as a result we did lower the state average yield (from the January estimate) by one bushel,” Schleusener said. Counties with the highest corn yield averages in Illinois in 2009 were Warren (193), Macon (192), Menard and Champaign (190 each), and Carroll and Sangamon (189 each). Lake County had the lowest corn yield average at 121 bushels per acre. The top corn-producing counties in 2009 were McLean (68.5 million bushels), Iroquois (64.3 million), Livingston (58.9 million), LaSalle (57.7 million), and Champaign (56.8 million). — Daniel Grant
FarmWeek Page 8 Monday, March 29, 2010
FB IN ACTION
Young Leaders talk about sharing roads safely BY FRANKLIN COUNTY YOUNG LEADERS
Franklin County Farm Bureau Young Leaders recently visited Frankfort Community High School in West Frankfort to speak to the drivers education classes about safely sharing the roadways with farmers. Their presentation empha-
sized the importance of the “Start Seeing Farmers” campaign which includes area farmers and businesses displaying those signs in appropriate locations. Young Leaders Chairman Kendall Browning showed the students a slow-moving-vehicle sign and explained what the sign means. The Young Leaders then talked about living in rural counties and how important it is to be careful on rural roads. The presentation also included a 14-minute video entitled “In the Blink of an Eye.” The video shared insight on how
Franklin County Farm Bureau Young Leader Chairman Kendall Browning (wearing hat) discusses the importance of driving carefully on rural roads with Frankfort Community High School students. Looking on is fellow Young Leader Shawn Hughes. (Photo courtesy Franklin County Farm Bureau)
farm machinery uses roadways and how important it is that others on the road show proper respect to these types of slowmoving machinery. The Young Leaders learned that many of the students now taking drivers education classes are not completely aware of the different types of farm equipment caution lights, how far to stay back from farm machinery
and many other aspects of sharing the roads with slow-moving equipment. The Young Leaders plan to continue this program in as many of the Franklin County schools as possible. Young Leaders involved in this presentation were Chairman Kendall Browning and members Shawn and Jessica Hughes.
Arthea Pleasant, center, legislative aide for Rep. Andre Thapedi (DChicago), chats with students from Durkin Park Elementary during Ag Day activities at the Chicago High School for Agricultural Sciences. The event was hosted by Cook County Farm Bureau. (Photo courtesy Cook County Farm Bureau)
Cook County students mark Ag Day with county FB, CHSAS students BY HALEY LOY
More than 400 third graders visited the Chicago High School for Agriculture Sciences (CHSAS) during Ag Week to learn about and experience Illinois agriculture.
The third annual National Agriculture Day event was titled, “High 5 Illinois!” and sponsored by the Cook County Farm Bureau Foundation. “It’s important to give students an understanding of the word agriculture, introduce them to careers available, and to let them know at a young age that agriculture is more than farming,” said Mike Rauch, chairman of the county Farm Bureau’s ag literacy team. “It’s an industry with more than 300 careers that include engineering, science, communications, and so much more.” Participating schools included St. Barnabas School,
Dawes Elementary, Durkin Park Elementary, and John F. Eberhart School, all of Chicago. At CHSAS, the elementary students through seven stations learned about corn, soybeans, horticulture, dairy/beef, pork, the farm-to-table process, and how farmers care for their animals. Presenters included representatives from Wagner Dairy Farm in Glenview, Illinois Pork Producers, Fair Oaks Dairy, University of Illinois Extension, CHSAS students, and many county Farm Bureau board members, committee members, and volunteers. Cook County Commissioner John Daley, Chicago City alderman Lona Lane, and Arthea Pleasant with state Rep. Andre Thapedi’s (D-Chicago) office also attended. Haley Loy is the director of ag literacy and public relations for Cook County Farm Bureau. She may be contacted at aitc@cookcfb.org.
FarmWeek Page 9 Monday, March 29, 2010
FB IN ACTION VIEWING DATED U OF I DAIRY
The Illinois Farm Bureau Livestock and Dairy Grassroots Issue Team toured the University of Illinois dairy farm last week and saw some of the challenges facing the university and its dated facilities. Shown in the dairy’s parlor, left to right, are Pat Titus, Arcola; Steve Becker, Breese; Jill Frueh, Bureau County Farm Bureau manager; Pat Bane, Arrowsmith; Butch Ferrell (yellow cap), Trivoli; Nate Janssen, the team’s chairperson, Wauconda; Jim Niewold, Loda; Scott Halpin, IFB director, Gardner; and Travis Michaels, manager of the university dairy farm. (Photo by Jim Fraley, IFB livestock program director)
‘Whatchamajig,’ the movie, now available on DVD A promotional brochure designed to educate consumers about agriculture in an entertaining manner has been developed into a video that can be viewed by children riding in the back seat as their family travels the state’s highways. “Look, It’s a Whatchamajig,” the name of the brochure and the DVD movie, was the brainchild of the Illinois Farm Bureau Public Relations Action Team. The DVD provides a video guide to help children identify things from the farm as they see them while traveling. Information on the video is broken down into chapters, and at the end of many of the chapters is a one-question quiz. To date, 4,700 DVDs have been produced and most have been purchased by county Farm Bureaus for distribution. The Action Team is suggesting the DVDs be provided to Country Financial representatives who could provide them to newly signed or existing clients with younger families to be used on road trips. Agriculture literacy coordinators also could use the videos in their Illinois Agriculture in the Classroom efforts, and they can be donated to schools and libraries. To purchase a copy of the DVD for $1, contact the IFB promotion and graphic arts department — nkraft@ilfb.org or 309-5572353 — or check for availability from your county Farm Bureau. Action Teams meet twice a year to brainstorm recommendations to be made to the IFB Board of Directors.
Cumberland County FB dedicates new building during Ag Week BY LINDSAY MCQUEEN
During National Agriculture Week, the Cumberland Board of Directors recognized individuals for their efforts in helping complete the
county Farm Bureau addition and remodeling and also sponsored an open house of the building. Lowell Nichols was named the Wildlife
Habitat award winner in activities during the day. Then the past presidents joined the current board for an official ribbon cutting to open the new building. Afterward, nearly 60 people toured the building and viewed booths of exhibitors from Soil and Water, Extension, Farm Credit, First Neighbor Bank, Air Evac, AgrAbility, Farm Bureau, and St. Anthony’s Hospital inside. Lindsay McQueen is manager of Cumberland County Farm Bureau until next month. She can be reached at 217-849-3031.
FROM THE COUNTIES
QUITE A MEAL FOR 60 CENTS
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OLES — Farm Bureau and Prairie State Bank will sponsor the WILL AM580 commodity panel at 6 p.m. Wednesday at the Stovepipe Grill, Charleston. Call the Farm Bureau office at 3453276 for reservations or more information. A N C O C K — The Hancock County Farm Bureau Young Leaders will be hosting an event at the Farm Bureau office in Carthage at 6:30 p.m. Thursday. A spaghetti dinner will be served followed by guest speakers Matt Sullivan and Curt Little from Martin & Sullivan John Deere. The women will be treated to free manicures. For more information, contact the office at 217-3573141 or e-mail hcfbmanager@frontier.com. EORIA — A spring health screening fair will be held in the Farm
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Nearly 950 people took part in the “Farmers Share of the Food Dollar” breakfast sponsored by the Peoria County Farm Bureau at Exposition Gardens in Peoria on Ag Day. For 60 cents a serving (the farmer’s share of the dollar), participants got a breakfast of pancakes, sausage, and eggs and a drink. Pictured standing at left is Ken Hohenbery of Princeville, a member of the Princeville Lions Club, which helped cook the sausage and pancakes. He is chatting with Bill Seele of Peoria. (Photo by Patrick Kirchhofer, Peoria County Farm Bureau manager)
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Bureau auditorium from 7 a.m. to 11 a.m. Wednesday. AYNE — The 2010 Foundation and Young Leader Collegiate scholarship application is due Wednesday. Wayne County students majoring in an agrelated field of study for the fall 2010 semester should call 618-842-3342 or email waynecfb@waynecfb.com to receive an application. HITE — The 2010 Young Leader Collegiate application is due Wednesday. White County students majoring in an agrelated field of study for the fall 2010 semester should call 618-382-8512 or e-mail whitecfb@shawneelink.net to receive an application.
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“From the counties” items are submitted by county Farm Bureau managers. If you have an event or activity open to all members, contact your county manager.
FarmWeek Page 10 Monday, March 29, 2010
PROFITABILITY
It’s not too soon to lock in propane needs BY RANDY MILLER
Spring is starting to appear as our thoughts turn to spending time outdoors. The recent heating season may already be a memory, but even so, now is a good time to start planning for the 2010-2011 heating seaRandy Miller son. But first, let’s review the season just completed. Propane prices firmed early last summer, but it wasn’t until a late, wet, and big corn crop called for unprecedented drying demand in the month of November that prices gained much upward momentum. A strong heating season followed with cold temperatures finding their way into the deep South,
keeping prices supported until the last few weeks. Propane is a byproduct of crude oil and natural gas. In broad terms, crude oil refining and natural gas processing each accounts for about 50 percent of the propane supply. Propane prices generally follow the crude oil market, the higher priced of the two feedstocks. Crude oil prices, while still far below record prices of nearly $150 in the summer of 2008, have steadily strengthened in 2010. As warmer temperatures remind us that the summer driving season is not too far ahead, most are expecting higher crude prices over the next several months. After record demand for propane this fall and winter, propane stocks are coming “out of season” at very low
levels. U.S. propane stocks are more than 20 percent below the five-year average and 33 percent below last year’s levels. Midwest stocks are in a little better shape, but currently stand nearly 8 percent below the five-year average and more than 26 percent below last year’s levels.
While economic news is mixed at best, most forecasters are calling for an “improving” U.S. economy moving forward. China continues to lead the way out of the global recession, as both its imports of energy commodities and exports of goods continue to climb. This would suggest continued improvement in
worldwide demand for propane as well. In response to this, what should a consumer do? Propane forward contracts, while likely to be higher than last year, are a good plan in light of the current pricing picture. Many retailers also offer payment plans which will allow a customer to evenly spread costs over many months. Be proactive and contact your local FS member cooperative about its contracting programs so you can “put to bed“ concerns over heating season costs and enjoy the summer weather ahead. Randy Miller is GROWMARK’s director of propane operations. His e-mail address is rmiller@growmark.com.
Economist: Investments in farmland ‘remarkably steady’ BY DANIEL GRANT FarmWeek
The farmland market the first half of last year encountered a bit of a hiccup as values flattened out or even declined in some parts of the state. But, overall, farmland as an investment has remained “remarkably steady” over the years and throughout the recent recession, according to Bruce Sherrick, professor of
ag economics at the University of Illinois. “It (farmland) has been and still is an exceptional performer,” Sherrick said during the recent Illinois Land Values Conference hosted in Bloomington by the Illinois Society of Professional Farm Managers and Rural Appraisers (ISPFMRA). “It has had less risk for the level of return than other assets.” Sherrick reported the com-
M A R K E T FA C T S
Feeder pig prices reported to USDA*
Weight 10 lbs. 40 lbs. 50 lbs. Receipts
Range Per Head Weighted Ave. Price $35.00-$44.00 $39.89 $68.00 $68.00 n/a n/a This Week Last Week 22,367 21,916 *Eastern Corn Belt prices picked up at seller’s farm
Eastern Corn Belt direct hogs (plant delivered) Carcass Live
(Prices $ per hundredweight) This week Prev. week $66.04 $66.09 $48.87 $48.91
Change -0.05 -0.04
USDA five-state area slaughter cattle price Steers Heifers
This week $95.19 $94.96
(Thursday’s price) Prv. week Change $94.00 1.19 $94.17 0.79
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 106.32 103.82 2.50
Lamb prices Confirmed lamb and sheep sales This week 1,167 Last week 428 Last year 320 Wooled Slaughter Lambs: Choice and prime 2-3: 90-110 lb., $125-$128. Good and choice 1-2: 30-60 lbs., $140-$180; few weight specific orders 43--48 lbs., $190-200. 60-90 lbs., $$159.$165. Slaughter ewes: Utility and good 1-3: $50$52. Cull and utility 1-2: $40-$50.
Export inspections (Million bushels)
Week ending Soybeans Wheat Corn 03-18-10 32.1 18.8 41.6 03-11-10 32.1 10.6 38.9 Last year 21.9 22.3 31.3 Season total 1206.4 672.2 926.0 Previous season total 900.4 827.3 888.4 USDA projected total 1420 825 1900 Crop marketing year began June 1 for wheat and Sept. 1 for corn and soybeans.
pounded rate of appreciation of Illinois farmland was 5.9 percent annually from 1970 through 2009. More recently, the average return of Illinois farmland from 1990 to 2009 was 10.4 percent compared to 5.75 percent for the S&P 500 and 6.66 percent for the Dow Jones, according to Sherrick. Farmland currently represents about 84 percent of farm assets but only 56 percent of debt. “I think that’s why there’s such a profound interest” in farmland as an investment, Sherrick said. Last year, local and nonlocal investors purchased about 29 percent of farmland sold in Illinois, according to an ISPFMRA survey. The number likely would be higher but such factors as high transaction costs and limited
availability of farmland make it difficult for investors to get in or out of the market, he said. “You can’t buy eight shares of farmland on E*Trade,” Sherrick said.
Farmers, therefore, continue to be the top buyers of farmland. Last year, producers purchased 62 percent of the farmland sold in Illinois, according to the ISPFMRA survey.
Drop in freight rates affects some grain bids A decline in ocean freight rates could be good news for grain sellers but pose a challenge for competing modes of transportation. Gordon Miller, manager of Western Grain Marketing (WGM) in Rushville, reported river bids for grain recently have been among the best in his area. WGM recently built a strategic grain handling facility in Adair that has shuttle-train loading capabilities but also can service the processing market in nearby Peoria and Pekin as well as the export market at the Illinois River. “Barge freights are cheaper than we’ve seen in five years,” Miller said last week during the GROWMARK media day tour of the Adair facility. “That improves the river bids.” USDA recently reported ocean freight rates to ship grain from the Gulf of Mexico to Japan declined 15 percent. The economic
recession reportedly lowered freight activity and increased operating efficiency. “It runs in cycles, but the river is the best market right now,” Miller said. Grain sales that will be delivered from Adair to Texas via shuttle-trains this month and next were sold ahead at better basis levels, Miller said. Railroad companies also add loading incentives that range from $50 to $150 per car that can improve the bottom line at grain facilities with shuttle-loading capabilities, according to Miller. Overall, the basis level for soybeans this month has been stagnant while the corn basis managed a minor gain of 3 cents per bushel, according to {www.Farms.com}. AgriVisor this month predicted the corn basis may not improve much until late April/early May when farmers turn their focus to planting. — Daniel Grant
FarmWeek Page 11 Monday, March 29, 2010
PROFITABILITY Corn Strategy
C A S H S T R AT E G I S T
Acreage changes likely this spring E v e n t h o u g h U S DA o n Wednesday will give us the first “honest” peek at potential acreage this year, it far from determines how many total acres will be planted and the mix of crops planted to those acres. Over the years, there’s been a tendency for the total planted acreage to grow from the March to the June report. That was more true in the 1970s than it has been in recent years. The total planted acreage grew sharply last year, not so much because of planting economics and conditions but because the March repor t underestimated plantings. Still, it’s important to note the total of all plantings and Conservation Reserve Program (CRP) acreage still fell for the year. That’s a possibility again this year with production economics even less favorable than they were a year ago. Looking back at historical sit-
Basis charts
uations, whenever there was an incentive to pull acreage back into the total, it tended to revolve around attractive payments to idle some farmland. T he total always seemed to increase when that happened. We would argue the high insurance guarantees in 2007 and 2008 had the same impact. H i s t o r i c a l l y, a s p a y m e n t s declined so did acreage. We’d argue the same features will undermine the total number of acres planted and in CRP program this year. A good portion of the 2.7 million acres that came out of CRP last fall may not get cropped this year. There’s just not the incentive to farm “marginal” land. Weather and market action will impact the actual number of acres planted this year, too. A higher number in this report will limit a possible increase in total acreage indicated in the June report and could cause it to decline somewhat. The speed of planting preparation and planting are important as well. At this writing, it doesn’t look like we’ll have the problems everyone expected during the winter. But weather can change dramatically in a short time. And soils are still wet across much of the country. As prices decline, and it now appears they are going to through the spring, there should be even less incentive for producers to take a chance on marginal land. Still, this week’s planting report should offer some useful insights. We do know one thing: Producers probably have more flexibility with their acreage decision at this time of year than any time in modern history. AgriVisor endorses crop insurance by
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Cents per bu.
2009 crop: Outside influences kept the trend in corn prices pointing down. Last week’s action suggested prices might continue a contraseasonal trend lower during spring. Use a rally to $3.65 on May futures to boost sales to 60 percent. Check the Cash Strategist Hotline after Wednesday’s prospective plantings and grain stocks report; we may increase sales more. Basis will grind higher as prices slide and spring field activity begins. 2010 crop: Use a rally to $3.95 on December futures to get new-crop sales to 40 percent. Check the Cash Strategist Hotline daily, especially after the Wednesday reports. Plan to have 50 percent priced by early May. Fundamentals: Shortterm, the focus will be on the USDA reports, but attention will quickly shift toward spring planting conditions. The current 30-day weather outlook for April is near normal for much of the Corn Belt, implying reasonably good planting progress this spring. Fa i l - s a f e : U s e a M ay break below $3.50 to trigger recommended sales.
Soybean Strategy 2009 crop: Outside influences may be turning the spring trend negative sooner than we anticipated. Leave orders to boost sales to 60 percent if May futures hit $9.55. We may increase sales more after seeing the USDA reports; check the Cash Strategist Hotline after that. 2 0 1 0 c r o p : L e ave a n order to make a 20 percent sale if November futures reach $9.27. Check the Cash Strategist Hotline occasionally for changes. Plan to have 50 percent sold by early May. Fundamentals: Demand is moderating, but is still at a strong enough pace to justify raising expectations. However, a strong dollar, a good South American crop, and a reasonably good planting pace could tilt the attitude neg ative enough to cause prices to decline into summer. Fail-safe: Get old-crop sales to 70 percent if May drops below $9.20 and new-
crop sales to 30 percent if November falls through $8.99.
Wheat Strategy 2009 crop: The trend in wheat has turned lower with Chicago May futures putting in a fresh contract low. That being the case, prices could continue to drift lower through spring. Downside support comes in at $4.55 and then at $4.29. We have lowered our target, now recommending wrapping up old-crop sales if May trades back to $4.90. 2010 crop: Use a rally to
$5.03 on Chicago July futures to make an initial 25 percent sale. Check Cash Strategist Hotline daily as this target could be adjusted at any time. Fundamentals: Weekly export sales came in surprisingly strong at 519,000 metric tons (18.7 million bushels) vs. expectations for 250,000 to 450,000. However, U.S. prices still are higher than wheat coming out of France or the Black Sea region. New-crop condition ratings are improving, and rapid snowmelt is moderating spring planting concerns.
FarmWeek Page 12 Monday, March 29, 2010
PERSPECTIVES
Agriculture in the lunch room
A
griculture is involved with solving a number of problems. Helping to feed the world and providing renewable energy are two contemporary examples. A new item has been added to that list — helping to reduce childhood obesity. WILLIAM While directly linking agriculture to BAILEY childhood obesity is a little tenuous, national efforts to reduce obesity in children are being directed by the USDA. And the key to its efforts is the food students are fed
at school through various feeding programs including the National School Lunch Program (NSLP), which is administered by USDA. USDA runs, through its Food and Nutrition Service (FNS), programs for before school, at school, and after-school feeding of children. These programs include the school lunch program and programs for after-school snacks, school breakfast, and special milk. In 2008, FNS claimed to be responsible for feeding more than 30 million children every school day. FNS provides cash subsidies and donates commodities and reimbursements to schools that meet federal nutritional guidelines. If a school wants to participate in the NSLP, it must provide food that meets federal dietary guidelines. It is USDA’s role as administrator of the NSLP that makes it the key participant in efforts by the Obama administration to reduce childhood obesity. The reauthorization of the Child Nutrition Act, which USDA administers, is the vehicle that will drive those efforts. Through that legislation, USDA “hopes to reduce hunger, promote access, and improve the overall health and nutrition of children throughout the country.” These are all laudable goals. To achieve the above goals, USDA’s priorities are to
improve nutrition standards, increase access to meal programs, increase education about healthy eating, establish standards for competitive foods sold in schools, serve more healthy food, increase physical activity, train people who prepare school meals, provide schools with better equipment, and enhance food safety. The U.S. Secretary of Agriculture Tom Vilsack has stated that USDA is “working hard toward achieving the aggressive goal of eliminating childhood hunger in America” and helping “to solve the problem of childhood obesity.” While those are goals with which no one could disagree, the question of who will produce the food to meet these goals has not yet been fully addressed by USDA. It seems as if USDA is creating a “school lunch room of dreams” — build it and the food will appear. I certainly hope so. While USDA may be establishing a framework to deliver healthy food, at some point the people who produce that food also must be engaged. When they are, they will certainly respond. William Bailey is director of Western Illinois University’s School of Agriculture in Macomb. His e-mail address is WC-Bailey@wiu.edu.
Insects seek advice for troubling behavioral questions Humans are not the only animals that have relationship problems. In fact, conflict between individuals seems to exist throughout nature, including the world of insects. What if insects turned to advice gurus to air their differences? Dear Miss Ladybug: My husband and I went out to eat TOM TURPIN the other day to celebrate our two-week anniversary. We left our family of little maggots with a babysitter and flew from our home at 433 Garbage Can Lane into a city park in search of a picnic we could crash. We found a nice banana cream pie sitting on a picnic basket where some of our friends were already dining. Immediately after landing in the pie, my husband started rubbing his front legs together mumbling, “What a feast! What a feast!”
LEADER TALK: What is the most challenging issue facing agriculture? Editor’s note: Members of the Illinois Farm Bureau Grassroots Issue Teams (GRITs) were asked for their views on several questions. Their responses will appear periodically on the Perspectives page.
Not only that, but he then rubbed his eyes with his feet and yelled, “Last proboscis in is a rotten egg!” I was so embarrassed that I could have regurgitated on the spot. Should I apologize to our friends? — DISTRAUGHT HOUSE FLY WIFE Dear Distraught: Lighten up, fly girl! Surely you recognize that as a house fly you taste with the tarsae of your feet and need to keep those taste buds clean. It is just part of house fly biology, and I’ll bet your friends didn’t even notice! They were probably too busy sponging up that banana cream pie, using their proboscis, of course. Dear Miss Ladybug: I am a winter stonefly. We stoneflies live in the water as immature insects. Those of us called winter stoneflies become adults and emerge from the water from January to March, even in northern climates. We adults live in the space between the ice and the water. Yesterday the ice began to break up and a batch of my friends said, “Hey,
let’s take a walk on the snow.” I admit the walk was fun — you know, the warm sun and all — but don’t you think it is silly for insects to be walking around on the snow in February? — CONCERNED SNOW WALKER Dear Concerned: In general, it is unusual for insects to be found walking on the snow. After all, we are cold-blooded creatures that don’t function well in low temperatures. However, some of you stoneflies take advantage of a sunny winter day to traipse about on the snow. Think of it this way: If there is ever an animal Winter Olympics, the stoneflies, like you, are sure to make the insect team. Dear Miss Ladybug: I am a moth that recently emerged from my cocoon. After my wings dried, I was admiring myself in a full-length mirror when all of a sudden I noticed
these two owl eyes looking at me. I nearly fainted! Then, after gathering my wits, I saw that those eyes are really part of the scale pattern on my back wings. Is there any way to get those ghastly eyes removed from my wings? — TWO EYES TOO MANY Dear Two Eyes: Instead of wanting to get those two owl-like peepers removed from your wings, you should thank your lucky stars that they are there. You are a type of moth known as an owlet moth, because of those wing markings. Fake eyes help protect you from predatory birds. Just as happened to you, the sight of those eyes suggests the presence of an owl and creates a startle response. That, young moth, might just keep you from being eaten by a bird someday, and that is a good thing! Dear Miss Ladybug: I am a butterfly. Why is it that we
are called butterflies when we have nothing to do with butter? — NO BUTTER Dear No Butter: As it turns out many of our names are based on some word that humans used to describe us in the distant past. In my case, ladybugs were associated with prayers offered in the church to the Virgin Mary, or Our Lady. When we showed up in the flax fields of ancient England we were dubbed, “Our Lady’s Bug.” In your case the first butterflies appeared in the spring, a time also known as the butter season, so you were called “flies of the butter season” or butterflies. Of course, the fact that some of the earliest butterflies of the season are yellow also might have contributed to the association with butter. Hope that makes you feel butter — err, better!
“The rising input costs of production.”
“Profitability in a global economic market.”
“Young farmers’ opportunity to get started.”
“Maintaining relevancy of animal agriculture for today’s general population.”
Dennis Haab Livingston County
Linda Wikoff Knox County
Curt Eisenmayer Henderson County
Deb Hogstrom Champaign County
Tom Turpin is an entomology professor at Purdue University, West Lafayette, Ind. His e-mail address is turpin@purdue.edu.