FarmWeek November 8 2010

DESPITE THE DEFEAT of a key supporter of estate tax reform last week, there is hope for action in the lame duck session. .....................3

THE NEED TO target producer priorities and lock in spending “baselines” for the 2012 farm bill was highlighted last week. .......5

IAITC OFFERED classroom Smart Board lessons for the first time this fall in an effort to reach more students. .................................9

Monday, November 8, 2010

Two sections Volume 38, No. 45

Kirk grabs Senate seat; Hare defeat unexpected

BY MARTIN ROSS FarmWeek

Capping an emotional and surprising election year, voters witnessed upheaval in the U.S. House, loss of a “veto-proof majority” in the Senate, and election of an Illinois Republican senator who could play a key role in upcoming “lame duck” debate.

That’s not to mention last Tuesday’s loss by Crete Democrat and House Ag Committee member Debbie Halvorson and an unexpected upset for Rock Island Democrat Rep. Phil Hare that leaves Illinois with a single downstate House Democrat in 2011.

Halvorson, who lost her 11th District seat to 32-year-old Iraq War veteran Adam Kinzinger, was one of roughly a dozen House Ag Committee members bumped in last Tuesday’s voting.

That’s expected to significantly impact forthcoming farm bill debate (see page 3).

“It was an interesting night, and I think it presents some challenges as well as a great deal of opportunity for what’s in front of you,” Illinois Farm Bureau President Philip Nelson told IFB Farm Policy Task Force members last week.

Republicans recaptured the House by a projected 239-183 margin, as voter dissatisfaction with incumbent lawmakers and attraction to stringently conservative “Tea Party” candidates reportedly contributed to more than 50 GOP “pickups.” Ohio Republican John Boehner is expected to succeed controversial House Speak-

er Nancy Pelosi (D-Calif.).

Senate Democrats retained their majority, with Senate Majority Leader Harry Reid (DNev.) at the helm, but new Republican wins eroded the 60-40 presidential veto-proof majority Democrat lawmakers have been able to wield to their and the administration’s advantage.

House-Senate shifts nonetheless were a mixed bag. Nelson noted ousted Rep. Jim Oberstar’s (D-Minn.) push for expanded federal water jurisdiction became “very much an issue” for producers, while departing Senate Ag Chairman Blanche Lincoln (D-Ark.) was an advocate for estate tax reform (see page 3) who had merely begun farm bill discussions.

U.S. Rep. Mark Kirk, a Highland Park Republican, narrowly edged out Illinois State Treasurer Alexi Giannoulias for Illinois’ junior Senate seat, despite President Obama’s personal endorsement of the young Democrat.

While the pair waged a heated race targeting Kirk’s padded military resume and Giannoulias’ ties to his family’s failed bank, University of Illinois Institute for Government and Public Affairs political scientist Christopher Mooney told FarmWeek Kirk played well with “the classic swing voter in Illinois” — the socially liberal, fiscally conservative “independent woman suburbanite.”

“There were few surprises — everybody knew it was going to be really tight at the top of the (statewide) ticket,” Mooney said. “That See Kirk, page 3

‘Official’ gubernatorial results coming Dec. 3 Democrats keep state majorities

BY KAY SHIPMAN FarmWeek

Any question about who won the Illinois governor’s race officially will end Dec. 3 when the State Board of Elections certifies the election results.

“The State Board of Elections will be proclaiming the winners on Dec. 3,” Rupert Borgsmiller, spokesman for the board of elections, told FarmWeek.

A narrow margin separated Gov. Pat Quinn and state Sen. Bill Brady in their quest to become governor. On Thursday, the Associated Press declared Quinn the winner, and Brady conceded the election Friday afternoon.

Borgsmiller outlined the timeline for the “official” handling of last week’s election results.

Periodicals: Time Valued

IT’S THAT TIME

With the soil temperatures having reached the 50-degree or colder threshold at the 4-inch depth in the northern two-thirds of the state, anhydrous ammonia applications have picked up steadily. Here, John Heiman, an employee of Grainco FS, Newark, applies anhydrous to a 120-acre field on the Chuck Steininger farm near Plano in Kendall County. Fall anhydrous ammonia applications in the southern third of the state (south of Illinois 16) are not recommended. (Photo by Ken Kashian)

FarmWeek on the web: FarmWeekNow.com

County boards of elections have up until Nov. 16 to process any absentee ballots that were postmarked by Nov. 1. Likewise, county election officials have until Nov. 23 to conduct their canvassing of election results.

The state election board will certify all election results on Dec. 3.

Although Republicans made inroads in gaining General Assembly seats, the Democrats continue to hold majorities in both the House of Representatives and the Senate. However, Democrats lost their veto-proof majority in the Senate.

Likewise, Republicans gained two state constitutional officer positions in the previous all-Democrat lineup.

Dan Rutherford defeated Robin Kelly in the state treasurer’s race, while Judy Baar Topinka beat David Miller to become the new comptroller.

Incumbents didn’t run in either race.

“This election cycle provided voters with a chance to vote for different (nonincumbent) individuals. Illinois Farm Bureau will work with all the members of the General Assembly and the state constitutional officers to encourage them to support agriculture,” said Kevin Semlow, Illinois Farm Bureau director of state legislation.

Statehouse changes In the Senate, the Democrats lost two incumbents, altering the majority-minority ratio to 35 Democrats and 24 Republicans, Semlow noted.

In the House, the Democrats lost six seats, including three very close races.

See Official, page 2

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

FarmWeek Page 2 Monday, November 8, 2010

GOVERNMENT

Quick Takes WIND INDUSTRY SUPPLY CHAIN — Illinois’ manufacturing link in the wind industry supply chain continues to grow, according to the Environmental Law and Policy Center. The center is to announce results of its new report “The Wind Energy Supply Chain in Illinois” today (Monday).

In its study, the center identified 104 Illinois companies that do business with the wind energy industry. A majority of the firms are based in the Chicago area, but others are located in Eastern, Western, and Southeastern Illinois.

The businesses range from manufacturers that are retooling to corporate headquarters of wind developers to software, financial, and support services.

Illinois is now home to 25 wind energ y far ms, according to the report.

B I O M A S S ‘ B U G ’ — U n ive r s i t y o f I l l i n o i s researchers have confirmed the first report of a potential new virus belonging to the genus Marafivirus in switchgrass, a biomass crop being evaluated for commercial cellulosic ethanol production.

The virus is associated with mosaic and yellow streak symptoms on switchgrass leaves and has the potential to reduce photosynthesis and decrease biomass yield.

Members of this genus have been known to cause severe yield losses in other crops — Maize rayado fino virus has been reported to cause yield reductions in corn grown in Mexico, Central America, and South America.

“Viral diseases are potentially significant threats to bioenergy crops such as Miscanthus giganteus, energycane and switchgrass,” said Bright Agindotan, research associate with the Energy Biosciences Institute (EBI), located in the Institute for Genomic Biology at the U of I. “Our team at EBI has been charged with identifying potential pests and pathogens of these bioenergy crops.”

NEW BEET — USDA last week released plans to allow biotech sugarbeets to be planted next year — a move that would nullify an August federal court ruling that invalidated the original approval issued by USDA five years ago.

USDA’s proposal represents the preliminary stage of the process and will be followed by a 30-day comment period before the department makes a final decision.

USDA laid out three possible options in the proposal, including an option not to re-approve the sugarbeet plantings, but said its preferred course of action would be to “authorize the commercial production” of genetically modified sugarbeets under strict regulations.

Recall amendment passes, but the challenges remain at least 10 Democrat and 10 Republican state representatives and at least five Democrat and Illinois voters last week approved a consti- five Republican state senators.

If the Board of Elections approves that tutional amendment that provides a means for action, the proponent would a special election to recall a have 150 days to circulate petigovernor; however, implementions calling for a special electation of a gubernatorial recall will be difficult, according to ‘The crafters of tion to recall the governor.

Signatures on the petitions Kevin Semlow, Illinois Far m Bureau director of state legisla- t h e l a n g u a g e must equal at least 15 percent wanted to make of the total votes cast in the tion.

T he measure received well s u r e s o m e o n e gubernatorial election.

Based on the current elecabove the 60 percent approval w o u l d r e a l l y tion, that would be 550,760 needed for passage.

Even though it passed, the have to wor k to signatures.

Of those signatures, at least new recall was crafted deliber- get it done.’

25 different counties each ately so the steps to do it would would need to contribute 100 be a challenge,” Semlow said.

— Kevin Semlow signatures.

“The crafters of the language Illinois Farm Bureau director Those signatures would have wanted to make sure someone of state legislation to be certified by the Board of would really have to work to get Elections before a special elecit done. Their g oal was to establish a process so the recall could not be tion could be held.

The governor’s future would depend on the used on just a limited or personal issue.”

To start the recall process, a registered vot- outcome of the special election.

“Now there are two tools to remove a gover must file with the State Board of Elections ernor, impeachment and recall,” Semlow nota notice to circulate recall petitions.

That filing must include the signatures of ed.

BY KAY SHIPMAN FarmWeek

No Senate vote on pension plan; Illinois budget deficit deepens Illinois Senators last week didn’t vote on a bill that would address the state budget deficit linked to state pension payments.

The pension hole is $4.1 billion. By law, annual pension payments must be made and those payments are consuming general revenue funds that were budgeted for other appropriations.

In May, the House had passed SB 3514, which allowed shortterm borrowing by issuing bonds; however, the Senate didn’t take up the bill then, and the matter remained unresolved.

That remains the case after last week’s inaction.

The borrowing measure will require a supermajority, or 36 votes, to pass, said Kevin Semlow, Illinois Farm Bureau director of state legislation.

Senate Democrats will have a 37-22 majority when they return for the fall veto session scheduled for Nov. 16-18 and Nov. 30-Dec. 2.

But in January, Senate Democrats will lose their veto-proof majority due to general election results.

Republicans then will have 24 seats with Democrats holding 35.

— Kay Shipman

Official (ISSN0197-6680) Vol. 38 No. 45 November 8, 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.

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Continued from page 1 The power ratios in both legislative chambers may be crucial in the next legislative session.

“To override a gubernatorial veto to increase bonds takes 36 Senate votes,” Semlow said. “The Senate Democrats will not be able to do this without some help from the Republicans starting in January.”

The two races that changed the Democrats’ power hold in the Senate were Republicans Suzi Schmidt’s and Sam McCanns’ defeats of Democrats Michael Bond and

Deanna Demuzio, respectively.

“The Illinois House saw a much larger change than the Illinois Senate, but the House Democrats retained their majority,” Semlow added.

In January, House Democrats will hold 64 seats while Republicans will have 54.

County school sales tax Three initiatives to put a sales tax on the ballot for schools passed in six counties across the state.

The sales tax initiatives for schools passed in Knox, Macon, and Warren counties.

Similar measures failed in Iro-

quois, Montgomery, and Sangamon counties.

The law allows a county government board to put before voters a question on whether to establish an additional sales tax for school construction.

The rate may be up to 1 percent with the revenue going to school construction or rehabilitation. Districts would receive a proportional share of revenue on a per-student basis.

Previously, voters in only five of 21 counties that voted on such a sales tax have passed it.

FarmWeek Page 3 Monday, November 8, 2010

GOVERNMENT

Ag Committee shifts may change focus, timeline

BY MARTIN ROSS FarmWeek

The 2012 farm bill timeline is likely to shift as a “new crew” with potentially different views comes on board, ag policy observers suggest.

With only 11 of 27 current House Ag Committee Democrats returning and new House and Senate Ag Committee leaders taking the reins next session, “we’re going to have a lot of reeducation to do” with freshman lawmakers, American Farm Bureau Federation (AFBF) policy analyst Tara Smith told FarmWeek last week.

Policy education will be “our No. 1 priority” once new

members are in place, likely pushing farm bill debate back a few months, Smith said.

“There’s going to be a whole new crew,” National Cattlemen’s Beef Association (NCBA) Government Affairs Vice President Colin Woodall said. “When you look at going into a farm bill, it’s not just about the majority party — it’s about both sides and having friends on both sides.”

Traditionally, Smith said, congressional ag policy tends to be “relatively bipartisan,” with divisions emerging largely

along regional lines. Smith sees a potentially “very different” Senate Ag Committee under Sen. Debbie Stabenow (DMich.), a likely successor for departing Chairman Blanche Lincoln (D-Ark.) in 2011.

Woodall told FarmWeek NCBA has enjoyed “a pretty good relationship” with Stabenow, who worked with cattlemen last year to promote provisions that would “protect us from climate change (legislation).”

However, while Lincoln has maintained a farm bill focus on commodity programs,

Will new Congress see ethanol benefits?

A biofuels industry leader has limited faith in a forthcoming congressional lame duck session but higher hopes for — and confidence in — the newly elected Congress.

National Renewable Fuels Association President Bob Dinneen sees “limited opportunities” for congressional approval of pro-growth ethanol policies over the next month.

Extension of the 45-cent-per-gallon ethanol excise tax, which expires Dec. 31, likely is “the best that can be anticipated” during the lame duck session, he said.

While Dinneen deemed even a one-year credit extension crucial before Congress adjourns in December, he believes key lawmakers intend to “tee up a discussion of the future of the ethanol program in the coming Congress.”

He is optimistic about the 112th Congress.

While “strong ethanol proponents” such as Reps. Earl Pomeroy (D-N.D.) and Stephanie Herseth Sandlin (D-S.D.) lost re-election bids, Dinneen anticipated continued efforts by returning biofuels backers Sen. Chuck Grassley (R-Iowa), Collinsville Republican Rep. John Shimkus, and Mark Kirk, a Highland Park congressman elected to Illinois’ junior Senate seat.

Ethanol “is not now, nor has it ever been, a partisan issue,” Dinneen stressed, noting generally that “those who were defeated were replaced with equally strong advocates for val-

ue-added agriculture and ethanol.”

He sees even the new cluster of fiscally conservative “Tea Party” Republicans embracing pro-ethanol policies, “if they come to understand that the ethanol program actually saves the government money” via reduced federal payments for corn growers and increased tax revenues through domestic economic growth.

“Does anyone believe that Kristy Noem (Herseth Sandlin’s Tea Party-backed successor) will not be a strong voice for ethanol?” Dinneen posed. “I don’t think the Tea Party members necessarily want us exporting jobs or our energy security any more than anybody else does.”

Concerns over ethanol credit extension have led to a variety of compromise proposals, including reduction of the credit, a variable-rate credit based on gas prices or fuel blender cost margins, or a credit phase-down accompanied by increased funding for ethanol infrastructure nationwide.

Dinneen maintained immediate credit extension to sustain industry confidence is most critical: “The level of the credit is probably less important.” If the credit is not in place on Jan. 1, he warned discretionary ethanol blending will “evaporate.”

Under what has become a “spot market business” with few long-term contracts, ethanol demand would then “plummet,” Dinneen said.

“That will shut plants; that will cost jobs,” he advised. — Martin Ross

Kirk Continued from page 1 comes down probably to candidates of both parties with significant flaws their opponents could exploit.

“Also, the Republican ‘wave’ bumped up against a strong Democrat political demographic base in Illinois. It was an unstoppable force meets an immovable object kind of thing.

Of course, somebody’s going to win, but it doesn’t get much closer than it did in both (Senate and gubernatorial) races.”

Because he succeeds former Senator Obama’s appointed successor, Chicago Democrat Roland Burris, Kirk will take his seat for a lame duck session set to begin Nov. 15. Spending and tax debate — including possible estate tax reforms (see

story at right) — are expected to dominate post-election debate that Nelson deemed “very critical for agriculture.”

Mooney noted that with their losses last week, Halvorson’s and Batavia Democrat Rep. Bill Foster’s respective 11th and 14th districts “reverted to form” as previously Republican strongholds.

Hare’s 17th district, held for many years by Democrat predecessor Lane Evans, was the November “wild card,” said Mooney, who characterized Hare as “a friend to agriculture and a friend to labor.”

The analyst noted “Tea Party” support for Kinzinger and Republican Bobby Schilling, the Moline pizza restaurant owner who defeated Hare.

Foster, a physicist who opposed recent House climate/cap-and-trade legislation, lost to Republican state Sen. Randy Hultgren of Wheaton, who campaigned on a platform of lower taxes and “smaller” government.

Republican Reps. Judy Biggert of Hinsdale, Don Manzullo of Egan, John Shimkus of Collinsville, and Tim Johnson of Urbana (Illinois’ other House Ag Committee member) retained their respective 13th, 16th, 19th, and 15th District seats.

Rep. Jerry Costello, a member of the House Transportation and Infrastructure Committee, became downstate Illinois’ sole remaining House Democrat with his 12th District re-election last week.

AFBF’s Smith said Stabenow could place added emphasis on specialty crops key to her state’s farmers.

Woodall suggested anticipated new House Ag Chairman Frank Lucas (R-Okla.) could play a stronger role in government “oversight” than current chairman Collin Peterson (D-Minn.), potentially spotlighting concerns about emerging U.S. Environmental Protection Agency/USDA livestock regulations.

Lucas also could play a pivotal role in farm program debate. While the Iowa Farm Bureau Federation proposes to eliminate direct payments in

favor of enhanced safety net programs, Illinois Farm Bureau President Philip Nelson notes Oklahoma’s “strong support” for maintaining them.

Budgetary forces already are expected to influence farm policy. IFB Governmental Affairs Executive Director Mark Gebhards warns Lucas faces a heightened challenge: a new crop of “extremely fiscally conservative folks” elected amid voter dissatisfaction.

“They certainly purchase a lot of crop insurance in Oklahoma, too,” Smith stressed. “I would guess Mr. Lucas isn’t going to be inclined to want to give up a lot of funding in either.”

Estate tax debate can’t ‘spill over’ Despite an election setback, National Cattlemen’s Beef Association (NCBA) Government Affairs Vice President Colin Woodall believes proponents of estate tax relief will “grab it by the horns” in the post-election “lame duck” session.

Woodall deemed last week’s election outcome “a mixed bag for the cattle industry,” noting “we lost ‘friends’” including Senate Ag Chairman Blanche Lincoln (DArk.) and Rep. Alan Boyd, a moderate Florida Democrat on the House Appropriations Committee.

Lincoln also had led efforts to boost the individual estate tax exemption to $5 million, at a 35 percent tax rate. NCBA now hopes to convince lawmakers the return of the tax next year, at a pre-2002 $1 million individual exemption and 55 percent tax rate, would exacerbate what he views as “one of the biggest obstacles to maintaining family farms and ranches.”

Woodall sees Lincoln as “unwavering in her commitment” to estate tax reform, and anticipates she and Sen. Jon Kyl, a returning Arizona Republican, will push action in the lame duck session.

“We can’t afford to let this thing spill over into the next Congress,” he told FarmWeek. “This $1 million exemption and a 55 percent tax rate on top of that are going to cover a lot of people in agriculture. We’re going to have people who lose significant portions of their farms and ranches and some who just completely go out of business because of this.

“Our message to this Congress has been, ‘Of all the things you have to get done lame duck, a fix for the death tax is one of them.’”

The nature of that fix is “anyone’s guess,” he said. The Lincoln-Kyl measure is backed in the House by returning Reps.

Shelley Berkley (D-Nev.) and Kevin Brady (R-Texas).

NCBA also supports a Senate-proposed ag estate tax exemption, and Woodall cites a proposal to temporarily extend estate tax and related Bush-era tax measures “to buy some time.”

He said the Lincoln-Kyl approach is NCBA’s preferred option: “It would provide the most certainty and cover the majority of our members.” Factoring in facilities, equipment, land, “and the animals on the land,” he argued a family operation can easily reach $1 million in estate value, forcing surviving family members to restructure or seek off-farm employment.

That doesn’t count the value of improved livestock genetics and advanced breeding. Operators who’ve invested in genetics, new practices, branded programs, or alternative marketing arrangements “have some pretty significant value tied up in those animals,” Woodall said. — Martin Ross

FarmWeek Page 4 Monday, November 8, 2010

INFRASTRUCTURE

Transportation panel mulls highway funding options

BY MARTIN ROSS FarmWeek

With federal fuel taxes failing to meet modern-day needs a regional panel is eyeing new ways of funding highway modernization.

The majority of participants in an ongoing Midwest Agricultural Transportation (MAT) summit favor gradually raising per-gallon highway fuel taxes over the next five years and dedicating a share of other transportation-related taxes for highway maintenance and improvements.

Fuel taxes feed the federal Highway Trust Fund, but they are “proving to be inadequate to even pay for current programs,” much less future highway spending, according to Linda Wheeler of the Transportation for Illinois Coalition.

The MAT panel was open to exploring statewide mileage-based user fees similar to Oregon’s proposed permile travel “tax,” and favored added federal flexibility in allowing states to adjust highway tolling and “congestion pricing.”

Beyond providing road revenues, the latter could help ease congestion on more heavily traveled highways and thus improve efficiency of ag and other freight movements.

Last week, former U.S. Transportation Secretaries Norman Mineta and Samuel Skinner urged Congress to phase in a “vehicle miles traveled” tax over the next decade.

They noted improvements in fuel efficiency and failure to adjust fuel taxes for inflation have eroded “gas tax” revenues.

While she acknowledged a mileage-based assessment is

controversial,” Wheeler noted the approach is gaining widespread attention within the transportation sector.

“The truth is, as we move away from your petroleumbased (fuels) in the cars, either our motor fuel tax is going to have to skyrocket or we’re going to have to find a different way to finance ... road construction,” she said.

In 2001, Oregon state legislators authorized a Road User Fee Task Force to examine revenue alternatives to the state’s gas tax. The “purchasing power” of the fuel tax had eroded as inflation surpassed revenues, voters opposed tax increases, and motorists were able to drive more miles on less gas.

The task force arrived at a mileage-based fee as “a fair, simple, and affordable way to generate revenue.” The Oregon Department of Transportation (ODOT) tested the fee in a Portland pilot program from spring 2006 to March 25, 2007, with temporary on-board devices installed in volunteer vehicles to measure and transmit taxable mileage.

ODOT has reasoned that at 1.2 cents per mile traveled, an average vehicle would pay the same amount in mileage fees as it would in gas taxes.

But after start-up, the department argued, a mileage fee would begin to generate more revenues than the gas tax, given rising vehicle fuel efficiency.

Proposed use of on-board devices to ensure compliance has generated concerns about agencies tracking individual movements and “location history.”

Other possible funding sources considered by MAT included customs fees levied on imported goods. Over the next 15 years, the number of shipping containers expected

to cross U.S. docks and borders is expected to grow from 40 million units to 110 million.

The American Association of State Highway and Trans-

portation Officials suggested applying 5 percent of customs fees toward freight transportation improvements could bring in $1.8 billion per year.

River infrastructure priority for MAT summit group As attention shifts to the importance of infrastructure in economic revitalization, Washington has treated river transportation as sort of a stepchild.

Midwest rail, highway, and “multimodal” transportation interests last week placed increased emphasis on future waterway needs, including concerns about the Inland Waterways Trust Fund — the currently waning repository for barge fuel taxes needed to match federal lock construction funds.

Jack Bernhardt, executive vice president with Savanna-based Riverport Railroad, told other Midwest Agricultural Transportation summit participants he was “highly respectful of shipping via barge.” He cited the role of barge navigation in easing surface traffic congestion and contributing to a more environmentally friendly “green shipping process.”

A typical 15-barge river tow can take 1,050 truckloads of freight off the highways or displace 216 rail car loads, according to the national Waterways Council Inc. (WCI).

Bipartisan Illinois congressmen criticized White House failure to include navigation improvements in a recently proposed $50 billion infrastructure initiative. Bernhardt noted U.S. Rep. Mark Kirk, a Highland Republican who won in last week’s Illinois U.S. Senate race, supports increased lock funding.

Meanwhile, senior Illinois Sen. Dick Durbin, a Springfield Democrat, is working to keep Illi-

nois/Chicago River locks open amid efforts to control the invasive Asian carp from spreading into Lake Michigan.

A new study by the environmentalist Natural Resources Defense Council recommends building two “strategically placed” dams on Chicago-area waterways to stop Asian carp from entering Lake Michigan.

The proposal would not completely separate waters above and below the dams, and the WCI argues such barriers would halt regional barge traffic.

“We’re dealing right now with so much pressure from the other Great Lakes states in terms of even closures on waterways up in the Chicago area,” warned Jim Farrell, executive director with the Illinois Chamber of Commerce Infrastructure Council.

“That could have a great detrimental effect on shipping, not just for agricultural purposes but also for construction purposes and what-have-you.”

“It would be a disaster,” Bernhardt said.

River concerns focus not only on the Upper Miss/Illinois system. At a recent Midwest waterways symposium, U.S. Army Corps of Engineers’ Great Lakes and Ohio River Division Program Director Michael White warned the Ohio River navigation system is “at a tipping point,” with 31 percent of the system at what he termed a “D” or an “F” grade and in need of urgent or immediate attention. — Martin Ross

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FarmWeek Page 5 Monday, November 8, 2010

FARM POLICY

Deficit hovers over ag in and outside ‘baseline’

BY MARTIN ROSS FarmWeek

With or without a new fiscal vanguard on Capitol Hill, the staggering federal deficit “is not a situation that’s going to go away,” a Washington economist warned Illinois Farm Bureau Farm Policy Task Force members last week.

That underlines the need to target producer priorities and then lock in program spending “baselines” for the 2012 farm bill, while accounting for current programs that operate essentially off the budget books, American Farm Bureau Federation (AFBF) senior economist Bob Young told the panel.

The task force formulated proposals for consideration

by IFB’s Resolution Committee (RC) this week. Farm bill resolutions passed on by the RC then will be acted on by producer-delegates at IFB’s December annual meeting in St. Louis.

Approved resolutions will be forwarded for nationwide debate at AFBF’s 2011 annu-

al meeting in Atlanta, Ga. IFB President Philip Nelson stressed “we need some direction coming out of Illinois,” given diverging regional and commodity-specific proposals beginning to emerge and new programs envisioned by dairy, rice, and other sectors.

New programs, as well as the merits of existing farm programs, may come under even heavier scrutiny by a new Congress salted with stern fiscal conservatives.

Young noted “We expect to continue to run pretty big deficits,” citing Congressional Budget Office (CBO) projections of an $800 billion-plus deficit heading into 2012 even should the Bush tax cuts be eliminated and the estate tax return in 2011.

Determining how the farm program impacts the deficit picture will fall to a handful of CBO commodity specialists who operate under strict federal guidelines. For CBO purposes, the ag baseline assumes continuation of 2008 farm bill provisions following the current bill’s expiration.

Direct payments, marketing loans, and the average crop revenue election (ACRE) program are included in the baseline. But some programs do not have a baseline, including the supplemental revenue standing disaster program (SURE, see accompanying story) and the wetlands reserve program (WRP).

Other initiatives outside the official baseline include beginning farmer development, a

pilot electronic “food stamp” program for fresh fruit-vegetable purchases, specialty crop research, biomass research and development, farmers’ market promotion, and the popular “McGovernDole” food aid program.

“Just because these programs are not in the baseline doesn’t mean they don’t have a constituency,” Young advised.

In addition, the baseline doesn’t consider $1.5 billion in

possible” to producers, an extension fails to address nonbaseline programs and expenditures, Young said.

And it doesn’t factor in new programs or program changes proposed by various ag groups.

The National Milk Producers Federation proposes a new “margin protection plan” to replace existing milk price supports, USA Rice Federation seeks development of cost margin protection and downed

‘Just because these programs are not in the baseline doesn’t mean they don’t have a constituency.’

— Bob Young American Farm Bureau Federation economist

payments being made to Brazil over a 10-year period as part of a settlement in Brazil’s World Trade Organization complaint against U.S. cotton and related programs.

While some believe a simple extension of the 2008 bill might pose “the least pain

rice crop insurance add-ons and ACRE and SURE revisions, and pork producers have floated a new livestock gross margin program.

“The pork folks are going to have to go out and find a new pot of money to make that happen,” Young argued.

Economist: SURE no sure bet for next farm bill SURE would appear to be a questionable bet in strengthening safety net options under the next farm bill.

University of Illinois economist Gary Schnitkey concedes SURE — the 2008 farm bill’s supplemental revenue

assistance program — can deliver significant payments to eligible producers.

But he argues “you wouldn’t want to base your risk management program on SURE payments,” given the complex eligibility-payment criteria that

Soybean growers eligible for aid Soybean growers in 58 Illinois counties will be eligible for federal crop assistance program (CAP) payments, provided they can prove a 5 percent or greater loss in bean yield or quality losses from the 2009 growing season and farm in a county designated as a primary disaster county in 2009.

The payment rate is $15.62 per planted and “considered planted” acre. Crops did not need to be covered by crop insurance or Non-insured Crop Disaster Assistance Program in 2009 to be eligible.

The sign-up period already has begun and will continue through Dec. 9 at USDA Farm Service Agency (FSA) offices. To apply, anyone with a share of an affected crop must submit an FSA 860 2009 CAP application form to their FSA office.

“I’d encourage all producers who suffered a 5 percent or greater loss on soybeans in 2009 to contact their FSA office to determine if their county is eligible,” said Illinois Farm Bureau risk management specialist Doug Yoder.

In mid-September, the administration announced it would implement a $630 million 2009 disaster assistance package under USDA’s Section 32 Program — a permanent appropriation funded through department fees. Senate Ag Chairman Blanche Lincoln (D-Ark.) had urged use of federal discretionary funds after lawmakers failed to approve 2009 ag assistance provisions.

give SURE a “roulette-wheel nature.”

For example, farmers must sustain a 10 percent yield loss on at least one crop to qualify for a SURE payment.

“Just one bushel could

at least 5 percent toward gross farm revenue.

• A producer must farm in a county designated or adjacent to a county designated as a disaster area. Cook, DuPage, Grundy, Kendall, Marshall,

prices, the majority of farms reported revenue less than the guarantee.

Recent congressional approval of ad hoc disaster assistance — annual assistance the standing disaster program

‘ Beefing up ACRE and the crop insurance program, in my opinion, would be a better alternative than continuing the SURE program.’

— Gary Schnitkey U of I ag economist

mean the difference between a $40 payment per acre and a $0 payment per acre,” Schnitkey told FarmWeek. “Most farmers in Illinois didn’t qualify (for recent 2008 SURE payments) because they didn’t have a 10 percent yield loss on a crop. It’s a complicated program.”

Further, to qualify for SURE payments: • Gross annual farm income reported to the U.S. Internal Revenue Service must be less than $2.5 million, unless 75 percent of that income comes from agriculture.

• Producers must insure all “economically significant” crops — those that contribute

Putnam, and Will counties were ineligible for 2008 disaster payments.

• SURE revenue must be less than the original SURE revenue guarantee. Because SURE is a whole-farm program, guarantee and revenue calculations are based on insurance guarantees and whole-farm production, respectively.

Base prices ($5.40 for corn and $13.36 for soybeans in 2008) are used to calculate guarantees, while season-average prices ($4.05 for corn and $10 for soybeans in 2008) are used in the revenue calculation. Because base prices for corn and beans were significantly above season-average

was designed to replace — raises the question “why we have this program at all,” Schnitkey said.

Further, he notes the average crop revenue election (ACRE) program likely would provide relief in years when SURE payments are triggered.

Schnitkey points out SURE has no official budget baseline, meaning legislators likely would have to tap other farm program funds to continue it. “Beefing up ACRE and the crop insurance program, in my opinion, would be a better alternative than continuing the SURE program,” he maintained. — Martin Ross

FarmWeek Page 6 Monday, November 8, 2010

BRAZIL

Planting finally getting under way in Brazil

BY PHIL CORZINE

As you wrap up your tillage for the 2010 crop, things are just getting rolling here in Brazil for 2010-2011.

Our company has expanded, renting two additional farms. This year, we will be planting 5,000 Phil Corzine acres in three locations in two Brazilian states.

In the state of Goias, we are planting 2,220 acres of soybeans on a farm sitting on a 3,000-foot

plateau. We started planting here Nov. 3. As in much of Brazil, the rains here came late this year, and planting is about two weeks behind normal.

In Tocantins, we rented a farm to our north where we will be planting 1,360 acres of soybeans.

On our own farms outside of Araguacu, we are planting 1,430 acres of soy and 120 acres of corn.

In Tocantins, the rains started right on schedule, and we expect to start planting Wednesday.

La Nina and the late start of the rains are the main topics of conversation in Brazil right now.

Although they started late, farm-

ers I saw in the state of Goias seemed to be making good progress with planting.

The planting window here in Brazil is very long, so the late start likely won’t have much effect on farms that only plant a single crop of soybeans. More important for those farms will be how regular the rains are for

the next four months.

The late start is a problem, however, for areas that try to do two crops. Not planting soybeans until November means planting for second-crop corn gets pushed into February or even March, and that would make it dicey to get the corn crop finished before the dry season starts and the rain runs out.

It’s more complicated on farms in Mato Grosso where cotton follows soybeans. Soybeans, although they are planted first, are in reality the secondary crop on these farms. Is there still enough time for those

farms to get the soybeans planted and harvested in time to get the cotton in on time? Or will those soybeans not get planted?

Consulting firms here are reporting that the state of Mato Grosso had just 23 percent of its soybeans planted as of Oct. 20 vs. 40 percent the year before.

But the rains have started now and the planters are moving — we should know more soon.

Phil Corzine is general manager of South American Soy, a global production management and investment company. His e-mail address is pcorzine@agpage.com.

NOAA predicts wet winter for the state

Drought could dissipate in Southern Illinois

BY DANIEL GRANT FarmWeek

Drought conditions that continue to linger in parts of Southern and Southeastern Illinois could dissipate over the winter.

Jim Angel, state climatologist with the Illinois State Water Survey, believes the combination of winter precipitation and low demands on soil moisture the next several months could help recharge soil moisture levels in time for planting next spring.

“Coming into spring, soil moisture should be in good

shape,” Angel said. “There’s no demand on soil moisture (during the winter) and we always get some type of precipitation.”

In fact, the National Oceanic and Atmospheric Administration (NOAA) recently predicted a wetter-than-normal winter for Illinois and much of the Ohio Valley where drought conditions spread in recent months.

The most recent U.S. Drought Monitor defined large portions of Eastern and Southern Illinois as “abnormally dry” with a “moderate

drought” in Southeastern Illi-

FarmWeekNow.com Check out the latest winter weather and drought outlook maps at FarmWeekNow.com.

nois. Drought conditions to the east and south of Southern Illinois were defined as “severe” and even “extreme” in parts of southern Indiana, southwest Ohio, Kentucky, and Missouri.

“We’ve got dryness issues in Southern and Eastern Illinois”

and other parts of the eastern Corn Belt, Angel said. “That area is expected to have an increased chance of above-normal precipitation (this winter). That may be good news, as long as we don’t get too much of a good thing.”

If the forecast is realized, it would be the second consecutive winter with an active storm pattern in the Midwest. Snowfall last winter was about 1.5 times above normal in Northern and Central Illinois.

Relief from dryness and drought was not in the forecast for the deep South, however.

NOAA predicted the precipita-

tion pattern this winter could be drier than normal for the Gulf Coast states.

Meanwhile, the temperature this winter was predicted to be milder than last season.

NOAA predicted an increased chance of above-normal temperatures in the southern twothirds of the state. Its temperature forecast was neutral for Northern Illinois.

Last year, the average temperature from December through February ranged from one to five degrees below normal throughout the state.

Wheat seeding winds down; acres back to normal The quick pace of the corn and soybean harvest and dry conditions this fall allowed wheat growers to plant their crop early compared to the five-year average.

Illinois farmers as of the first of last week had seeded 98 percent of the winter wheat crop compared to just 35 percent at the same time a year ago and the five-year average of 82 percent, the National Agricultural Statistics Service (NASS) Illinois field office reported.

“As wet as it was last year during the normal planting period, it was almost the opposite this year,” said John Brink, a farmer from Washington County and president of the Illinois Wheat Association. “It’s extremely dry in my area.”

The problem now is the dry conditions in some key wheat growing areas of Southern Illinois have made it difficult to establish quality stands.

The portion of soil moisture rated short or very short as of the first of last week was 100 percent in the southeast district, 83 percent in the east/southeast district, 79 percent in the southwest, and 78 percent in the east, NASS reported.

“I planted some wheat this year (to try to take advantage of attractive prices), but the stands are very spotty,” said Doug Uphoff, a farmer from Shelby County.

“We got about half an inch of rain 10 days ago that caused most of the drier spots to germinate,” Brink said on Thursday. “But there is concern if the soil will stay damp enough to keep the seedlings viable.”

Brink said most of the better-looking stands in his area are in fields that were planted early.

“There is an old adage that if you sow wheat into dust, the bins will bust,” Brink said. “We’ll see if that holds true.”

Wheat acres are expected to rebound in Illinois this year after reaching a record-low of just 350,000 acres a year ago.

“Wheat seedings, acre-wise, have been all over the place the last five years,” Brink said. “I’d estimate (acres) could be slightly above average this year.”

Wheat seedings in Illinois from 2005 to 2009 averaged 778,000 acres and peaked at 1.2 million acres in the fall of 2007.

— Daniel Grant

FarmWeek Page 7 Monday, November 8, 2010

COMMODITIES

Ag economist evaluates performance of grain delivery system

BY DANIEL GRANT FarmWeek

This past March marked the 10th anniversary of the Chicago Board of Trade’s (CBOT) implementation of new grain contract delivery terms.

CBOT, starting with its March 2000 contracts, expanded the delivery area for its soybean contracts to a 383-mile section of the Illinois and Scott Irwin Mississippi Rivers from Burns Harbor, Ind., to St. Louis. A 184-mile section of the Illinois River from Burns Harbor to Pekin was established as the delivery area for corn futures.

Originally, Chicago had been the delivery point specified in corn and soybean contracts.

The Commodity Futures Trading Commission (CFTC) approved the new grain contract delivery terms in the spring of 1998.

CFTC first directed CBOT to revise delivery specifications for corn and bean contracts in 1996, in part due to an alleged attempt in 1989 to corner the soybean market known as the “Ferruzzi episode,” according to Scott Irwin, University of Illinois ag economist.

CBOT also had been grappling for years with the fact that Chicago no longer was a prime location for a

grain terminal due to shifts in the pattern of grain flows in the U.S. “You want your delivery location to be representative of the main commercial flows of a commodity,” Irwin said.

The delivery locations, therefore, were moved downstate into prime corn and soybean country. The new focus on a river delivery system also meant claims on each commodity shifted from warehouse receipts to shipping certificates.

Shipping certificates are issued by companies, called regular firms, that meet working capital and net worth requirements set by CBOT, according to the June 2010 issue of The Journal of Futures Markets.

A minimum net worth requirement to be approved as a regular firm for delivery in corn and bean markets was set at $5 million.

The stakes were set high to ensure an efficient system, according to Irwin.

“The system never was set up to allow anyone who has a short futures contract to deliver grain,” the ag economist said. “If you have 10,000 farmers with 5,000bushel lots vs. two commercial (firms) dealing the same amount of business, (the latter) is much more efficient.”

And an efficient system is vital to help cause convergence between cash and futures prices in the marketplace, he said. Meanwhile, farmers who seem left out of the system actually benefit

because they don’t bear the costs of bringing the two markets (cash and futures) together.

“Outside of the recent episode (when cash prices did not converge with futures prices from 2006 to 2008, thus limiting the effectiveness of grain hedges), it’s worked reasonably well for corn and soybeans,” Irwin said.

Basis this year returned to normal levels for corn and soybeans. Meanwhile, the wheat basis this past harvest

improved for CBOT contracts (CBOT in 2009 added new delivery locations and switched to variable-storage rates) but continued to be weak for the Kansas City wheat futures market, which did not adopt variable-storage rates.

However, the system still needs to be monitored for flaws, and improvements should be considered, particularly for the wheat market, according to Irwin.

Irwin and other U of I

economists in recent years proposed CBOT eliminate Chicago and Toledo as deliverable markets for the wheat contract and switch to a Mississippi Waterway delivery system.

“CBOT attempted to address that,” Irwin said.

“But, in the long run, those (wheat) contract terms inevitably will have to be revisited.”

If CBOT should consider taking action, it could tweak the system or attempt to overhaul it and include more players.

“Agriculture has changed a lot,” Irwin said. “There are alternative delivery systems that could be considered that would give wider access to farmers with short futures positions.

“But it’s not automatic that it would be a good idea,” he added. “The cost vs. benefits (of expanding the delivery system) would have to be carefully considered.”

Illinois Farm Bureau continues to monitor the situation.

NGFA fears another commodity market bubble The National Grain and Feed Association (NGFA) last month warned the Commodity Futures Trading Commission (CFTC) that conditions exist that could result in a replay of the market volatility that occurred in 2008.

“The rapid escalation of agricultural futures prices during 2008 and the resulting disconnect of cash and futures values dramatically increased risk for grain purchasers and hedgers and caused extreme financial stress attributable to massive margin requirements” to maintain hedge positions, according to NGFA. “With investment capital again seeking enhanced returns and many financial advisers recommending commodities as an investment vehicle, it appears the stage is set for another investment-fueled spike in futures prices.”

If futures prices continue to push higher, some grain buyers may be forced to limit forward-contract grain purchases from U.S. farmers, a situation that played out in 2008, NGFA told CFTC. NGFA, therefore, called on CFTC to set future speculative position limits at levels that ensure proper functioning of ag futures markets for traditional commercial users, such as grain elevators, feed manufacturers, and farmers.

NGFA also urged CFTC to establish speculative position limits at levels that are appropriate for enhancing futures market performance and convergence of cash and futures market values during the futures contract delivery period.

©2010 GROWMARK, Inc. A11426_6x8_aod

FarmWeek Page 8 Monday, November 8, 2010

HISTORY

Antique tractor plowing bee creates a buzz

BY DANIEL GRANT FarmWeek

Those farmers who may have forgotten what a plow looks like had a chance to relive part of agriculture’s history recently in Central Illinois.

An antique tractor plowing bee, organized by Tazewell County Farm Bureau member Louis Weishaupt, was held Halloween day near Mackinaw.

A total of 53 farmers and antique tractor enthusiasts, a record turn-out for the eight-year-old event, plowed 80 acres of farmland using only tractors at least 50 years old and mostly two, three, and four-bottom plows. The event, which was free to the public, attracted about 100 spectators. “This was one of the best ones we’ve had,� said Weishaupt, who noted the quick harvest and dry weather made ideal plowing conditions. “We had all makes and models (entered in the bee), everything from Case, John

Deere, and IH (International Harvester) to Minneapolis Moline and Ford.�

Weishaupt came up with the idea of hosting a plowing bee as a way to showcase the capabilities of antique tractors. This year’s event featured tractors that were built no later than 1959. “There are quite a few of us here and in surrounding towns who go to antique tractor pulls,� Weishaupt said. “But there you only get to run them 300 feet down the track and that’s it. So, I thought, ‘Why don’t we have a plowing bee?’�

Weishaupt has hosted an antique tractor plowing bee every year since 2002 with the exception of last year, when the event was canceled due to the late harvest and wet field conditions. “I hope to keep it going every year, as long as there’s interest,� he added.

Weishaupt, a lifelong farmer, and his family own six antique tractors.

Louis Weishaupt of Mackinaw pulls a plow with his 1948 Farmall M during a recent antique plowing tractor bee in Tazewell County. The Farmall M has been owned by the Weishaupts for nearly 40 years.

Weishaupt also uses it each year to pick corn at the annual Half Century of Progress show in Rantoul.

(Photo by Ken Kashian. Additional photos appear at {www.ilfb.org}. Click on Ken Kashian’s photo gallery.)

GROWMARK selects Solberg as new chief executive officer The GROWMARK board of directors last week selected Jeff Solberg as its new chief executive officer.

Solberg will replace retiring CEO Bill Davisson on Jan. 3, 2011. “GROWMARK is a $6 billion organization experiencing a period of significant growth,� said Dan Kelley, chairman of the board and president of GROWMARK. “Jeff has the skills, knowledge, experience, and support to lead GROWMARK successfully into the future.�

Davisson hired Solberg 34 years ago as a Jeff Solberg financial analyst. Solberg, who is a 1974 business administration graduate of Illinois Wesleyan and received his master’s of business administration degree from the University of Illinois in 1976, also held the positions of cash manager, assistant treasurer, vice president of finance, and senior vice president of finance for GROWMARK. Solberg is the past president and chairman of the Institute for Cooperative Finance Officers. “It is an absolute privilege to be able to follow in the shoes of Bill Davisson,� Solberg said. “It’s the type of job everybody dreams about.�

GROWMARK is a regional cooperative that provides ag-related products, services, and grain marketing in 23 states and Ontario, Canada. “It’s critical we continue to provide the value to members through the knowledge we have, technology we bring, and processes we have so members continue to be successful,� Solberg said.

More information is available at {www.growmark.com}.

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The Mayflower, the ship that crossed the Atlantic in 1620 with 102 colonists, still exists — sort of. After the ship returned to England from its historic voyage, it was purchased in 1624 by a farmer named Russel. Russel floated the Mayflower up the Thames River to his farm.

He disassembled the ship and used the timbers to build a barn that still stands today in Old Jordans, Bucks, in the United Kingdom.

FarmWeek Page 9 Monday, November 8, 2010

IFB IN ACTION

IAITC adds ‘smart’ technology, reaches more students

BY KAY SHIPMAN FarmWeek Illinois Agriculture in the Classroom (IAITC) is offering agriculture concepts for the latest in educational technology with new Smart Board curriculum.

The new ag-based lessons offer “kind of a fieldtrip on the bulletin board in the classroom,” said Kelly Murphy, Illinois Farm Bureau education specialist.

Last week Murphy and Jackie Jones, IFB education manager, reported on IAITC technology and programs to members of the Illinois Committee for Agricultural Education (ICAE) and the Illinois Leadership Council for Agricultural Education (ILCAE).

Smart Boards are interactive, electronic “chalkboards” that allow teachers and students to simultaneously view and work on computer-based information.

Murphy noted Smart technology is spreading rapidly among school districts, and IAITC first offered classroom Smart Board lessons this fall.

The new technology offers teachers a helping hand and expands the capacity of IAITC materials.

For example, an IAITC Smart-based lesson about a hungry caterpillar that eats Illinois-grown commodities also will read to students, helping young readers with unfamiliar words, Murphy noted.

In addition, each Ag Mag

includes one or more interviews with agricultural professionals; however, those soon will include on-site video interviews that students may view via Smart Boards.

The electronic capacity of Smart-based technology means “we’re not limiting the space or information we share” compared to printed material, Murphy explained.

Future teachers are using Smart-based technology in college, and IAITC is taking advantage of their need for curriculum, Murphy said.

“College students are now required to do this (use Smart technology) for their curriculum. They’re excited to click on this (IAITC information) and get ideas,” she added.

IAITC also is using agbased materials and concepts to help teachers prepare students for standardized tests, Jones reported.

Across the state, public school students in the fourth and sixth grades take the Illinois Standards Achievement Test (ISAT). IAITC now offers teachers in those grades vocabulary, math, reading, and short-essay lessons based on agricultural topics presented in Ag Mags.

In addition, the IAITC question format is similar to the ISAT questions.

This repetition helps students become familiar with the standardized test format, Jones added.

In the near future, IAITC

plans to develop similar Ag Mag testing material based on Terra Nova achievement tests, which are used in many parochial schools around Illinois.

IAITC continues to reach more educators and students around the state, the women reported.

For the 2009-10 school year, IAITC materials were used by 30,454 teachers and reached 486,610 students.

About 1,300 collegiate education majors attended a workshop about IAITC materials and services, and 2,899 volunteers presented ag literacy classroom lessons. In addition, 39 summer agriculture institutes were scheduled for educators.

IAA Foundation caps successful summer, fall fundraisers The IAA Foundation netted more than $80,000 through fundraising activities this summer and is looking ahead to several fundraising activities at the Illinois Farm Bureau annual meeting in St. Louis.

“I am grateful for the support shown to the IAA Foundation through participation in our fundraising events, and am pleased with our financial results this year when both fundraisers surpassed 2009 earnings,” said Susan Moore, IAA Foundation director.

All event proceeds support the Illinois Agriculture in the Classroom (IAITC) program.

In July, 200 golfers participated in the IAITC Golf Outing at the Elks Country Club & Wolf Creek

Golf Club, Pontiac. The golf outing netted more than $43,000.

FarmWeekNow.com For additional information about the IAA Foundation, go to FarmWeekNow.com.

In September, 50 cyclists pedaled in the IAITC Bike Ride through Ford, Grundy, Iroquois, Kankakee, Livingston, and Will counties. They netted more than $37,000 and visited 30 schools, reaching more than 5,000 students with lessons on agriculture and bicycle safety.

Fundraising activities at annual meeting will start Dec. 4 with an ice cream social sponsored by Prairie Farms Dairy from 3:15 to

4:15 p.m. The live auction will start at 3:45 p.m.

The silent auction will start at 1 p.m. Dec. 4 and conclude at 4

p.m. Dec. 6. A country store highlighting several new products will operate during the same hours.

In addition, teams will compete in the seventh annual trivia contest, starting at 8:15 p.m. Dec. 5. — Kay Shipman

Teams sought for IFB annual meeting trivia contest Entries are being accepted for the seventh annual trivia contest to raise money for the IAA Foundation and Illinois Agriculture in the Classroom.

The contest will be Sunday, Dec. 5, during the Illinois Farm Bureau annual meeting in the Renaissance Grand Hotel, St. Louis, Mo. Registration is limited to the first 45 teams.

Teams of eight test their knowledge in two divisions.

One is for Farm Bureau leaders and the other is for staff and corporate members. The team with the most correct answers wins.

The cost is $12.50 per person for teams that register before Dec. 2. After Dec. 2, the cost is $17.50 per person. Registrations will be accepted at the door based on availability.

County Farm Bureaus also may sponsor a trivia round for $300.

Teams also will compete for

best representation of this year’s theme — Flashback.

Teams will be judged on creativity and originality of costumes, decorations, and props, and members’ enthusiasm.

Last year, the contest raised more than $7,000 for ag literacy programs.

For more information or to register, contact the IAA Foundation, 1701 Towanda Ave., Bloomington, Ill., 61701, or email charms-garman@ilfb.org.

FROM THE COUNTIES

C

HAMPAIGN — The Champaign County Farm Bureau Foundation will sponsor its annual “Harvest our Youth” scholarship gala at 4 p.m. Sunday, Nov. 14, at Farm Credit Services, Mahomet. A silent and live auction will be held, along with a meal and games. Tickets are $25 and are available at the Farm Bureau office. Contact Debby Rehn, foundation director, at 352-5235 for more information. Visit {www.ccfbfoundation.com} for more information on the foundation.

FFINGHAM — Farm Bureau and St. Anthony’s Memorial Hospital will sponsor a “Cultivate Your Health” fair from 3 to 6 p.m.

Wednesday at the Farm Bureau office. Complimentary health screenings will include blood pressure, blood cholesterol, and blood glucose. Dr. Lana Schmidt will conduct skin can-

E

cer screenings by appointment from 4 to 6 p.m. Appointments may be made by calling the Farm Bureau office at 217342-2103.

• The Prime Timers Thanksgiving dinner and gathering will be at 6 p.m. Thursday at the Centenary United Methodist Church, Effingham.

Marty Williamson and Gratton and Marylynne Toliver will provide bluegrass music. Cost is $8 for members and $13 for non-members. Bring one item for the local food pantry.

Reservations and payment are due by Monday (today). Call the Farm Bureau office at 217342-2103 for more information.

• The Young Farmers Committee is sponsoring a food pantry drive for all Effingham County 4-H clubs. Bring food pantry items to the Effingham County 4-H Achievement Night Sunday, Nov. 14, at the Faith Lutheran Church,

Shumway. Donations will be weighed and the club that donates the most will receive a pizza party at its next club meeting. Call the Farm Bureau office at 217-342-2103 for more information.

ANCOCK — The annual meeting will be at 7 p.m. Thursday, Nov. 18, at the Farm Bureau office. Call the Farm Bureau office for more information.

ASALLE — The annual meeting will be at 6:30 p.m. Wednesday, Dec. 1, at Pitstick Pavilion, Ottawa.

Cost is $7.50. Call the Farm Bureau office at 815-433-0371

by Monday, Nov. 29, for reservations or more information.

EE — A harvest crop marketing workshop will be at 7 p.m. Tuesday, Nov. 23, at the Rock River Golf and Pool, Rock Falls. Steve Johnson, Iowa State University Extension farm management

H L

L

specialist, will be the speaker.

The program is sponsored by Lee, Ogle, and Whiteside County Farm Bureaus and Sauk Valley Bank. Call the Farm Bureau office by Monday, Nov. 15, for reservations or more information.

ENARD — The annual meeting will be at 5:30 p.m. Friday, Nov. 19, at the PORTA High School.

There will be a report from Lincoln Land FS. Mary Ellen Fricke, Illinois Farm Bureau promotion manager, will be the speaker. Call the Farm Bureau office for more information.

EORIA — The deadline to order Florida citrus and Terri Lynn nuts is Monday, Nov. 22. Orders may be picked up Wednesday, Dec. 15, at the Farm Bureau auditorium.

ERMILION — The Young Leaders Committee will sponsor a market

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V

outlook meeting at 7 p.m.

Monday (today) at the Farm Bureau auditorium. Chuck Shelby, Risk Management Commodities, will be the speaker. Call the Farm Bureau office for more information.

• Florida citrus is available to purchase in 2/5 and 4/5 bushels, along with nuts and snacks. Orders and payment are due to the Farm Bureau office by Wednesday, Nov. 24.

Delivery will be Monday, Dec. 13. Call the Farm Bureau office for more information or download an order form from the website {www.vcfb.info}.

• The Vermilion County Farm Bureau Foundation will sponsor its annual silent auction during the annual meeting Monday, Nov. 22. Past items included sports memorabilia, food items, and saving bonds.

Contact the Farm Bureau office at 217-442-8713 if you have an item to donate for the auction so it can be publicized.

FarmWeek Page 10 Monday, November 8, 2010

PROFITABILITY

U.S. farm income outlook positive for 2010

BY JIM CHARLESWORTH

I remember my economics professors at the University of Wisconsin four decades ago stating the importance of agriculture in feeding the growing world population.

Looking back, they were right, but how does Jim Charlesworth agriculture look going forward?

World food demand is expected to double by 2050, influenced by global population expansion and rising income levels. World grain production and consumption have increased fourfold since 1990.

Net cash farm income reached a record high of slightly more than $90 billion

in 2008 but dropped significantly in 2009 to approximately $69 billion.

Net cash farm income for 2010 is expected to increase 23 percent, or $16.2 billion, and move well above the previous 10-year average.

Total cash receipts are expected to increase 6.5 percent to slightly more than $300 billion in 2010.

Crop cash receipts are forecast at $164 billion in 2010, $600 million above 2009, reflecting offsetting trends in different crop categories: • Sales of corn for grain, the largest single source of crop cash receipts for U.S. farmers, is forecast at $40.3 billion in 2010.

• Soybean receipts in 2010 are expected to reach a record $30.5 billion, reflecting an expected record harvest and high soybean prices.

Livestock cash receipts are forecast at $137.5 billion in 2010.

• Dairy cash receipts are expected to increase $6.4 billion to $30.7 billion in 2010.

Milk production is expected to increase through productivity gains. Milk prices also are expected to increase.

• Cattle cash receipts could increase to $48.6 billion in 2010, based on expected

higher prices.

• Hog receipts could rise to $18.1 billion in 2010, due to lower hog numbers and improved domestic and foreign demand.

Producers will rely less on government farm payments compared to recent years, leveling out at nearly 14 percent of net cash farm income.

Fixed direct payments and conservation program pay-

ments will anchor government support to producers.

Farm production expenses are expected to increase 1.1 percent in 2010 after a 4.1 percent decline in 2009.

The farm sector balance sheet will remain favorable. A solid foundation for net cash farm income boosts asset accumulation and debt management.

The future outlook for agriculture is positive. I would offer today’s students the same advice my economics professors gave 40 years ago: U.S. agriculture will continue to play a prominent role in the global economy and will provide excellent opportunities for those who elect to work in this industry.

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

Analyst: Funds, not fundamentals, behind bull market

BY DANIEL GRANT FarmWeek

The crop markets have responded, both positively and negatively, to supply and demand issues this harvest season.

Prices dropped in September when USDA boosted ending stocks and prices shot back up the following month when USDA cut its production esti-

mates for corn and soybeans.

But, while many traditional crop marketers have been watching the fundamentals for market direction, it actually is the speculators in the markets who are behind the recent bullrun, according to Dale Durchholz, AgriVisor market analyst.

And it could be those same speculators who end the bullrun, he warned.

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 $30.67-$42.45 $37.41 $42.00-$56.09 $49.34 n/a n/a This Week Last Week 25,300 26,724 *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 $59.02 $58.27 $43.67 $43.12

Change 0.75 0.56

USDA five-state area slaughter cattle price Steers Heifers

This week $96.37 $97.28

(Thursday’s price) Prv. week Change $99.97 -3.60 $99.79 -2.51

CME feeder cattle index — 600-800 Lbs. This is a composite price of feeder cattle transactions in 27 states.

(Prices $ per hundredweight) Prev. week Change 111.07 0.25

This week 111.32

Lamb prices Slaughter Prices - Negotiated, Live, wooled and shorn 125-170 lbs. for 120149.98 $/cwt., dressed, no sales reported.

Export inspections (Million bushels)

Week ending Soybeans Wheat Corn 10-28-10 60.3 16.2 25.6 10-21-10 70.7 23.6 24.0 Last year 67.0 12.0 27.5 Season total 314.4 470.2 283.8 Previous season total 225.7 362.5 301.8 USDA projected total 1520 1250 2100 Crop marketing year began June 1 for wheat and Sept. 1 for corn and soybeans.

“Money has been the driver of this bull market,” Durchholz told FarmWeek. “It’s not the fundamentals, necessarily, although the fundamentals have enhanced the moves on a couple occasions.”

Speculative/hedge funds as of the end of September were long (a position in which a commodity contract is purchased with the expectation it will rise in value) in futures and options on more than 2 billion bushels of corn and about 800 million bushels of soybeans. “(Investors) are attracted to the (commodity) marketplace because the yields are so low on traditional investment media,” Durchholz said. “The funds viewed commodities as having better potential risk/reward rates.”

Index fund investments in the commodity markets subsequently soared from roughly $277 billion in 2009 to about $320 billion this year.

However, the bull-run that fund traders helped drive in crop markets actually could slow the rate of future investments.

“The risk/reward is not as good as it once was (as corn futures nearly reached $6 per bushel and soybean futures surpassed $12),” the analyst said. “The spec money (in commodities) has slowed down.”

The danger now is any downward market action could trigger fund investors to pull out of the market.

“There is risk of a huge liquidation break,” Durchholz

said. “And it could be brutal.

I’m not saying we’re going back to $3 (corn), but futures that were $5.70 to $5.80 in a heartbeat could be back under $5.”

Durchholz urged farmers

to use risk management strategies to survive the market volatility. Market updates and tips are posted each week at {twitter.com/agrivisor} and available to those with accounts.

Milk price climbs for 7th straight month The Class III price for milk adjusted to 3.5 percent butterfat for the month of October was $ 16.94 per hundredweight. This is 68 cents higher than the previous month and the seventh straight month prices have increased.

Producers are pleased milk prices are keeping pace with steep rises in corn and protein costs.

FarmWeek Page 11 Monday, November 8, 2010

PROFITABILITY Corn Strategy

C A S H S T R AT E G I S T

Cents per bu.

2010 crop: Corn futures continue to push to new highs but have yet to display an ability to sustain upside momentum.

Even though higher prices are possible, we believe the risk of ownership has become too large to hold corn unpriced.

Hedge-to-arrive (HTA) contracts for winter/spring delivery may be the best marketing tool. But because the cost of carry has diminished, check them against the cost of carrying inventories.

2011 crop: From a riskmanagement perspective, the gross income offered by newcrop sales is too large not to start pricing next year’s output. Once prices start to diminish demand, the impact could last into the new crop.

Fundamentals: The decline in the dollar, and expectations the November USDA reports will show a tighter fundamental structure yet are holding up corn prices. After the USDA report, there will be less opportunity for news about big fundamental changes, making the situation more vulnerable to a wave of profit-taking.

Soybean Strategy

Commodity turning point ahead The three major commodity indices have moved close to critical benchmarks. Because

Basis charts

these indices are made up of a number of commodities, one has to be a little “flexible” in observing the absolute support and resistance points.

While there’s nothing to indicate the trend in commodity prices is about to turn down, because these indices are all near important benchmarks, it’s important to watch for any sign of a change until they push significantly through the key levels.

Both the CRB (Commodity Research Bureau) and Goldman Sachs indices have been less robust in their gains from the 2008 lows as the commodities included are weighted, especially to energy. Nevertheless, even though they look different, they can tell us something about what may lie ahead.

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2010 crop: The Federal Reserve news and its impact on the dollar triggered another wave of speculative buying in soybeans, lifting prices to the next key resistance level. We continue to believe the large speculative positions have made the risk too large to justify holding significant unpriced inventory.

2011 crop: Gross income per acre is too large to not make an initial sale. We still believe having 20 percent priced is a good risk-management strategy.

Fundamentals: The pace of soybean export sales slowed a little this past week, including the pace of Chinese business. This past week, there were no sales to China reported on USDA’s daily reporting system, hinting sales may be even slower. Even though sales are being accumulated at a faster-thanexpected pace, they can slow sharply at any time, even come

to a temporary halt. And although shipments are good, they aren’t any better than last year if you adjust for the harvest pace the last two years.

Wheat Strategy 2010 crop: Upside momentum returned to the market because of the decline in the dollar. The Chicago December contract penetrated the 50-day moving average and the psychological $7 level. The next resistance comes at $7.28.

Use the current strength to wrap-up sales if you still have inventories. HTA contracts for winter delivery still appear the

best marketing tool.

2011 crop: Use rallies above $7.90 on Chicago July 2011 futures for catch-up sales. If basis is wide compared to this past summer, consider a HTA contract.

Fundamentals: Wheat prices rode the wave of commodity enthusiasm emanating from the decline in the dollar this past week. The western part of the Great Plains continues to remain dry, as does the western part of Australia.

But weather forecasts include rain for soft red areas in the Corn Belt and the South.

FarmWeek Page 12 Monday, November 8, 2010

PERSPECTIVES

Freedom is not free An Illinois veteran’s WW II story Editor’s note: Ernest Thorp, 89, is a member of the DeWitt County Farm Bureau and still flies his own plane. Wednesday is Veteran’s Day, and FarmWeek honors all veterans for their service to our country.

Ernest Thorp had two consuming passions when growing up on a farm outside Wapella — farming and flying. A child of the Depression, he has had plenty of opportunity to pursue both over the course of years.

Thorp was a college student at Illinois State University in 1941 when he earned his civilian pilot’s license. Two years later, he was training to fly B-17 Flying Fortresses.

By early 1944, Thorp was engaged and in England, serving as a copilot on missions over MARK DEPUE Nazi-occupied Europe. He felt guest columnist very much like a target whenever he flew missions in the lumbering B-17, always part of a tight formation of aircraft headed to Germany and back. They were exposed and vulnerable in those formations, prey to German fighters, and fat targets to alert flak gunners.

“Average life of a B-17 – 231 days or 21 missions,” Thorp wrote in the diary he faithfully maintained throughout the war. Even so, it was safer to stay in the formation, protected by an intricate web of interlocking machine gun fire woven by scores of .50-caliber machine guns.

The target for Thorp’s 18th combat mission on Aug. 4, 1944, was an oil refinery in Bremen, Germany. Not until

the morning mission briefing did he discover he would be the copilot for a green crew in a beat up old aircraft; otherwise, it seemed like a routine mission.

The formation was hugging the German coastline when it ran into flak, with Thorp’s No. 1 engine taking a hit. Thorp and the navigator were able to get things under control, and argued for staying in the formation, but the pilot insisted on turning back for England.

That maneuver took them away from the safety of the formation and back into the sights of vigilant flak gunners.

Soon No. 4 engine was gone as well, and the resulting fire gave the crew no choice but to bail out over the North Sea. A thankful Thorp was eventually fished out of the water by a sympathetic German fisherman, himself a POW in England during World War I. For the next year, Thorp concentrated on surviving while being shuttled through a succession of POW camps.

The first stop was Stalag Luft III (later to become famous as the Great Escape camp). Unbeknownst to him, the Red Cross had initially reported him dead to his fiancée and parents back in Illinois.

Only when Thorp got a chance to mail a letter home did they discover the truth.

Ernest Thorp

“Dear Folks,” he wrote in that first letter. “By now you know I’m safe and well. I have been very lucky and grateful to God …

Don’t forget to cover all the past home news.

Please send me double-edged razor blades, shorts, wool socks, toothpaste, and pajamas — and chocolate.”

When Soviet armies pressed into the German homeland, the prisoners were transferred from camp to camp, moving steadily deeper into the German interior. Chaos and uncertainty ruled the day, and through it all, a gnawing hunger was Ernest’s constant companion.

Only the occasional Red Cross package kept the specter of starvation at bay, and those became scarcer as the German empire crumbled around them. Despite the constant turmoil, Ernest managed to maintain his diary,

chronicling his daily struggle to survive, carefully recording both the significant and mundane.

By the spring of 1945 rumors of the war’s end and the Americans’ liberation swirled through the camps. Thorp was at Stalag VII-A near Mooseburg when he spotted several “P-51s with red tails manned by Negroes,” strafing the railroad that ran near the camp. “We could see them circle into position, dive down and see the flash of fire from their machine guns,” he wrote.

April 29 was Thorp’s personal “liberation day,” the day when American troops finally reached the camp.

“We shook hands with all the G.I.s we could get a hold of ... My feeling of elation gave me a funny feeling in the throat and stomach as well as tears in my eyes.”

It was the first of many emotional moments for Thorp as he made the slow but inexorable journey home to Wapella, ever closer to realizing his dream of a reunion with his fiancée and family.

Thorp remembers well his arrival in New York City harbor. “The biggest impression I had” he related 64 years later, “was when we passed by the Statue of Liberty … There wasn’t one word — it was strictly silent as we passed by that Statue of Liberty.

What we were fighting for was that statue — what it stood for ... That was really a moment that I didn’t think would happen, but it did.

We were home.”

Too many of us today take our veterans and their sacrifices for granted.

Hearing stories like Thorp’s reminds us of the real price of freedom.

Mark DePue is the director of oral history at the Abraham Lincoln Presidential Library, Springfield. You can listen to Ernest Thorp’s entire story and those of other veterans online at {http://www.alplm.org/oral_history/projects .html}.

LETTERS TO THE EDITOR Editor’s note: Spending for all agriculture subsidies totals $13.66 billion. That represents 1.05 percent of the federal deficit of about $1.3 trillion.

Agrees now is time to end farm subsidies Editor: I am writing to support Tony Thoele (Oct. 25 letter) in that this would be a good time to end farm subsidies. The U.S. government’s role in agriculture increased dramatically under the Roosevelt New Deal.

And the programs have persisted long after the end of the economic conditions that were used to justify them. The two explanations for the farm programs are they are in the public interest and they redistribute wealth to the agriculture sector and maintain the small family farm.

However, the programs convey most of the benefits to those individuals and corporations whose wealth and incomes are much more than the average taxpayer who is footing the bill.

DORIS GOSNELL, Lawrenceville

Eliminate subsidies after Uncle Sam leaves farming Editor: Most farmers readily agree with Mr. Thoele’s letter in the Oct. 25 edition. However, a glimpse at history is in order.

Our government decree was WE are expected to supply the world with cheap food.

Most would gladly bid farewell to all subsidies as long as government gets out of farming first. Some claim that supply and demand does not work with agriculture. Consider that “Uncle Sam” has been in control of the process for about a generation.

If you think Washington is “hands off ” of agriculture, recall the annual census forms.

It used to have strong language within the opening paragraph, which led us to believe that failure to respond would surely result in the death penalty.

A now-deceased friend, George Handel, was manager of one of the largest cow/calf herds in the state. He did not care for the census and one day got a visit from some “G” men.

With colorful vernacular, George told them the census is what the government uses to wreck the markets. I seem to recall that George also told them that he might have a use for their census forms, as long as they printed them on smooth paper. He must have nailed it right, they never bothered him again.

CHET PEUGH, Chadwick

New GIPSA rules carry large price tag Editor: I read about the recent Grain Inspection, Packers, and Stockyards Administration (GIPSA) upgrade of the Packers and Stockyards Act in the Oct. 25 FarmWeek.

It quoted a study by the American Meat Institute which said Illinois consumers would have to pay $105 million more for meat products. It didn’t say over what time period.

If you extended this to 50 states, it would be well over $1 billion. The president of the National Pork Producers Coun-

cil and the National Cattlemen Beef Association predict it will cause financial disaster to many producers.

Who will get the extra spread in billions of dollars between producer and consumer?

One hundred fifteen congressmen wrote Ag Secretary Tom Vilsack to delay the new GIPSA rules. Six of the biggest meat packers gave more than $400,000 to current congressmen.

I haven’t seen or read the new GIPSA rules. Perhaps

some enthusiastic regulator has included a rule that isn’t practical to carry out.

USDA’s effort to establish a national cattle identification program failed in part because zealous regulators inserted a requirement that farmers and ranchers had to report to USDA every time they moved cattle to another pasture on the farm. They had to report this in four days. Had this been known earlier by more, it might have been possible to change.

WILLIAM SCHRAGE, Greenville

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