A NOV. 10 DEADLINE to comply with U.S. EPA Spill Prevention, Control, and Countermeasures rules faces certain farmers. .............2
STATE SENATORS this week are to deal with part of the state budget deficit that stems from billions in state pension payments. ...3
PRAIRIE FARMS recently l a u n c h e d a “ Fa r m e r O w n e d ” campaign to highlight the farm families who supply all its milk. ....4
Monday, November 1, 2010
Two sections Volume 38, No. 44
Ideal harvest conditions interrupted by powerful storm BY DANIEL GRANT FarmWeek
The nearly ideal harvest conditions that persisted for much of the past two months were interrupted last week by a powerful storm that pummeled much of the Central U.S.
FarmWeekNow.com Listen to Jim Angel’s comments about October’s weather at FarmWeekNow.com.
Wind gusts of 60-plus mph were recorded over much of Illinois on Tuesday and the storm spawned three tornadoes in the state, according to Jim Angel, state climatologist with the Illinois State Water Survey. “This is the first time in a long time we’ve seen one that strong (in the fall),” Angel said of the storm. “It was fueled by warm air to the south (that clashed with) cold air to the north. In some cases, it set a record for low pressure.” The storm reportedly produced barometric pressure readings (which are a measure of the downward force the
atmosphere exerts per unit of a certain area) similar to a Category 3 hurricane. Fortunately, no serious injuries or fatalities were reported in Illinois, although there was significant wind damage, and about 75,000 electricity customers were without power from Northern Illinois and the Chicago suburbs down to southern parts of the state. Angel compared the strength of last week’s storm to a powerful system that on Nov. 11, 1940 surprised many residents of the Upper Midwest and took the lives of a number of stranded hunters. That event is known as the Armistice Day storm, having occurred on the anniversary of the end of World War I. Some market analysts predicted the storm last week could cut deeper into final corn yields. USDA last month already had cut its corn production estimate by about half a billion bushels due to disappointing yields in some areas. Corn harvest as of the first of last week was 68 percent
complete nationwide, well above the average of 49 percent. However, about 13.8 million acres of corn remained to be picked prior to the storm. There wasn’t much concern about crops in Illinois, though, as 97 percent of corn and soy-
according to Angel. Preliminary numbers on Friday showed Illinois received only about 1.4 inches, half its normal rainfall, for the month of October while the average temperature for the month was about 2.5 degrees above normal, Angel reported.
Ag consultant advises: Don’t turn back the clock BY MARTIN ROSS FarmWeek
John Eckley is an ag business consultant whose family acquired its farm in 1946. He takes estate tax concerns personally as well as professionally.
For more thoughts, see page 16 Eckley, a Bloomington marketing specialist, sees “extreme” worry about impending estate tax requirements among the Central Illinois producers with whom he interacts daily. If Congress fails to act, the
FOUR-LEGGED GLEANERS
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beans were in the bin as of the first of last week. Farmers in the state had a quick harvest due to summer temperatures that were 2 to 3 degrees above normal, a dry August that sped up crop maturity, and nearly ideal fall conditions,
Angus cattle owned by Rick and Bob Ackerman of Freeport graze lazily in a harvested cornfield owned by the Ackermans’ father, Earl. There was a little ice on the stubble last week as the state experienced its first hard freeze. Does that mean Indian summer is not far behind? (Photo by Ken Kashian)
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basic estate tax exemption will drop back to a pre-2002 $1 million on Jan. 1, exposing many Illinois families to increased financial vulnerability. The exemption reached $3.5 million in 2009 before the estate tax was eliminated in 2010; Farm Bureau seeks a $5 million exemption when the estate tax returns in 2011. In an October letter to U.S. senators, the Family Business Estate Tax Coalition, which includes groups ranging from the American Farm Bureau Federation to the National Newspaper Association, chided Congress for failing to pass “meaningful estate tax relief ” prior to November elections. The coalition warned that “without a permanent solution, there are no assurances that these businesses and family farms will continue to operate in future generations.” “Our family’s been lucky enough not to hit any of the really major (estate tax) cycles,” Eckley told FarmWeek. “I remember in 1980 my grandfather was hoping to see Ronald Reagan change the exemption from $60,000 to $600,000. In his mind, that was huge. To go backward is absolutely to go the wrong way. “I definitely hear farmers talk about two things. One is estate planning; the other’s the day-today taxation issues, which are pretty significant, as well.” Beyond estate tax reversion, taxes on dividends are due to
‘ I definitely hear farmers talk about two things. One is estate planning.’ — John Eckley Ag business consultant
rise to the taxpayer’s top marginal rate — 39.6 percent for couples making $250,000-plus a year — from a current 15 percent on Jan. 1. And taxes on capital gains are set to bump from 15 percent to 20 percent. Amid the administration’s continued push for what it deems “middle-class” tax relief, Eckley suggests President Obama and congressional leaders are “very conflicted and confused about who is the middle class.” Because higher-income taxpayers have the resources to create their own tax “shelter system,” he argued “it’s the true middle-class who gets affected” by the return of the estate tax.
Illinois Farm Bureau®on the web: www.ilfb.org
FarmWeek Page 2 Monday, November 1, 2010
COMPLIANCE
Quick Takes POST-ELECTION CONCERNS — Sen. Richard Lugar (R-Ind.) believes a potential power shift in Congress after Tuesday’s election will have a major impact on U.S. farm policy. “We are likely to have curtailment of farm subsidies and other income support programs,” Lugar warned. He noted 70 percent of the USDA’s budget goes to food and nutrition programs, and those programs will not be touched. But he expects the cuts will come from farm programs. Because of this, Lugar believes writing the 2012 farm bill will be very contentious. “The South will want to protect the subsidy programs for cotton, rice, and sugar. My guess is that at the end of the day the subsidies will be curtailed,” Lugar said. CNH REOPENS DAMAGED TRACTOR PLANT – CNH resumed operations today (Monday) at its tractor plant, training center, and North America parts operation facility in Racine, Wis. Operations were halted there last week when a tornado, part of a massive storm that pummeled the Central U.S., struck the facility. The twister damaged the roof, garage doors, and access doors and caused significant water damage to internal ceilings after it triggered the sprinkler system. The plant produces Case IH’s latest models of Magnum tractors. WATER WORRIES? — Farmers would face burdensome federal regulatory control if provisions of a restrictive Senate water bill make it through the “lame duck” session of Congress, according to the American Farm Bureau Federation (AFBF). AFBF and a coalition of other groups are vowing to oppose any effort to attach the Chesapeake Clean Water and Ecosystem Restoration Act to any bill that might be addressed during the post-election session. “While carrying a title that suggests it is limited in scope, provisions of this bill would have drastic negative impacts on agriculture,” AFBF President Bob Stallman said. “The bill makes sweeping changes to the Clean Water Act and sets adverse water policy precedents that would impact watersheds throughout the nation.” According to Stallman, the bill strips state and local governments within the Chesapeake Bay Watershed of their authority under the Clean Water Act and grants it instead to the Environmental Protection Agency.
(ISSN0197-6680) Vol. 38 No. 44 November 1, 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.
Address subscription and advertising questions to FarmWeek, P.O. Box 2901, Bloomington, IL 61702-2901. Periodicals postage paid at Bloomington, Illinois, and at an additional mailing office. POSTMASTER: Send change of address notices on Form 3579 to FarmWeek, P.O. Box 2901, Bloomington, IL 61702-2901. Farm Bureau members should send change of addresses to their local county Farm Bureau. © 2010 Illinois Agricultural Association
STAFF Editor Dave McClelland (dmcclelland@ilfb.org) Legislative Affairs Editor Kay Shipman (kayship@ilfb.org) Agricultural Affairs Editor Martin Ross (mross@ilfb.org) Senior Commodities Editor Daniel Grant (dgrant@ilfb.org) Editorial Assistant Linda Goltz (Lgoltz@ilfb.org) Business Production Manager Bob Standard Advertising Sales Manager
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USDA-notified producers have compliance options BY MARTIN ROSS FarmWeek
When nearly 36,000 Illinois farm program recipients receive letters seeking U.S. Internal Revenue Service (IRS) documentation and raising the possibility of losing or having to repay program payments, concerns can arise. But Derek Struebing, program specialist with Illinois’ state Farm Service Agency (FSA) office, told FarmWeek producers who’ve failed to submit or incorrectly filed USDA-required adjusted gross income (AGI) tax review consent forms will have multiple options to restore their program eligibility. FSA has alerted some 520,000 program participants nationwide of the need to submit CCC-927 individual or CCC-928 entity consent forms within 30 days “to avoid any delay or interruption in the receipt of program or payment benefits.” The forms acknowledge USDA can use federal tax data to ensure compliance with 2009/2010 payment eligibility. The 2008 farm bill required producers to prove AGI compliance every three years, starting with program year 2009. Under a new interagency review procedure, IRS provides names to FSA for further inquiry without supplying tax records or specific income figures, and FSA gives program recipients identified by IRS 30 days to provide thirdparty verification that they haven’t exceeded income limits. Program recipients who do not submit 927-928 forms receive an initial notice of
non-compliance before incurring any program penalties. Producers who received an October letter already had submitted a CCC-926 AGI certification form during the 2009 or 2010 program years. Struebing told FarmWeek IRS will run a second compliance “cross-reference” with FSA information, tentatively in December, before USDA re-notifies producers. “When we run this second cross-reference, if someone comes back up on this list, they will receive a letter saying they’re ineligible for ’09 and ’10 FSA or (Natural Resources Conservation Service) program payments,” he advised. “At that time, they are going to owe that money back (to USDA). “At some point after that letter, they can regain AGI compliance and eligibility by providing FSA with a copy of their tax returns for the previous three applicable years for ’09 (2005-07) or ’10 (2006-08) and or a certified statement from their CPA or attorney.” Struebing noted the possibility in some cases that the IRS may have lost or rejected questionable consent forms. Producers who received an October letter and who believe they have submitted proper forms to IRS should consult FSA and resubmit a new 927 or 928 form to the IRS as soon as possible. Producers may find CCC-927/298 forms at {www.fsa.usda.gov/ccc297} or {www.fsa.usda.gov/ccc298} and mail completed documents to the IRS at Box 24033, Fresno, Calif., 93779.
Farmers reminded storage plan deadline is Nov. 10 BY KAY SHIPMAN FarmWeek
Farmers whose on-farm fuel storage meets certain thresholds must meet the Nov. 10 deadline to comply with U.S. Environmental Protection Agency (EPA) Spill Prevention, Control, and Countermeasures (SPCC) rules. Recently EPA extended the deadline for one year, but only for farms that started operation after August 2002. The deadline has been extended — but the exact date has not been specified — for facilities that must address milk and milk product containers, associated piping and accessories constructed according to currently applicable 3-A Sanitary Standards, and that are subject to the currently applicable Grade “A” Pasteurized Milk Ordinance (PMO) or the equivalent state regulatory requirement. For those facilities, the deadline will be one year from
the effective date of a final related rule, but that date has not been finalized. While EPA changed the compliance date for certain “new” farms and dairy farms, farms in operation before 2002 already were under the requirements and should have a plan in place or updated by Nov. 10. The SPCC rule pertains to facilities, including farms, which have above-ground oil storage with an aggregate capacity greater than 1,320 gallons or completely buried oil storage capacity greater than 42,000 gallons.
Residential home oil containers and oil tanks smaller than 55 gallons are exempt. Farms that meet the threshold must prepare and implement a plan to be kept at the farm and have a secondary containment structure around their tanks or use doublewalled tanks. Information needed to prepare a plan include: • A list of the oil containers at the farm, including the contents and location of each container; • Brief descriptions of the procedures that will be used to prevent oil spills, the measures installed to prevent oil from reaching water, and the measures that will be used to contain and clean up an oil spill to water; and • A list of emergency contacts and first responders. For information, the SPCC rules are online at {www.epa.gov/-emergencies/spcc}, and a plan template for smaller-capacity facilities is online at {www.epa.gov/ emergencies/content/spcc/tier1temp.htm}.
FarmWeek Page 3 Monday, November 1, 2010
STATE
State, USDA expanding CREP to Kaskaskia watershed habitat corridors of bottomland forest, Bruce added. The State of Illinois and Illinois Farm Service Under the program, a landowner signs a 14Agency (FSA) are expanding the Conservation to 15-year Conservation Reserve Program Reserve Enhancement Program (CREP) to (CRP) contract with the federal government. include the Kaskaskia River Watershed. Once enrolled in the federal program, he or she The state will contribute $45 million in capital may sign a 15- or 35-year contract extension or a funds over three years for its portion of the volpermanent conservation easement with the untary conservation program. Illinois FSA Exec- state. utive Director Scherrie Giamanco and Illinois Eligible land must fall into one of two cateDepartment of Natural Resources (IDNR) gories: Director Marc Miller announced • Highly erodible riparian areas the expansion last week. immediately adjacent to the 100FarmWeekNow.com Under CREP, participating year floodplain of the Illinois or For additional informalandowners receive rent payments Kaskaskia rivers or tion on CREP, go to and other financial incentives to • Flooded or wetland riparian FarmWeekNow.com. remove farmland from producareas within the 100-year floodtion. Since 1998, the program had plain of the Illinois and Kaskaskia been limited to the Illinois River watershed. The rivers and their tributaries, last reopening of the Illinois CREP program • If it is to be wetland restored, it must be occurred in late 2005. located in the watershed and either a farmed Signup tentatively will start Dec. 1, according wetland, a prior converted wetland, or a wetland to Don King, FSA chief program specialist. farmed under natural conditions. FarmWeek will publish additional information Conservation practices that are available when it becomes available. include planting of permanent native grasses, A total of 105,500 acres in all or parts of 68 trees, filter strips, riparian buffers, wildlife food counties (see map) may be enrolled during the plots, and permanent wildlife habitat. Wetland new signup. The original goal was to enroll restoration is another available practice. 232,000 acres, of which 126,500 acres already CREP participants receive incentive payhave been signed up. ments, annual rent payments, and cost-share Signup will be continuous and will start simul- assistance from FSA. Participants in the state taneously in the eligible counties, King said. conservation option receive additional costThe state’s goals are to address water quality share assistance and a one-time lump sum payissues and habitat needs, according to Debbie ment based on soil rental rates and the easement Bruce, resource conservation program support duration. administrator with IDNR. For more information, contact the local FSA IDNR will attempt to target watershed areas office or Soil and Water Conservation District. that may have impaired water quality because of Additional information also will be available sedimentation and areas that would complete online at {www.fsa.usda.gov}.
BY KAY SHIPMAN FarmWeek
This week
Illinois Senate plans session on pension Two days after the election, state senators this week are scheduled to deal with part of the state budget deficit which stems from billions in state pension payments. “The Senate is coming back to consider the pension hole in the current budget,” said Kevin Semlow, Illinois Farm Bureau director of state legislation. “By law, annual pension payments have to be, and are being, made. But that is taking general revenue funds away from other bills the state has,” Semlow added. The pension hole is $4.1 billion. Lawmakers started digging that hole when they passed a budget but didn’t appropriate all the necessary funding to cover obligations. With a one-vote margin, the House had passed SB3514 that allowed short-term borrowing by issuing bonds. The cost of issuing the bonds is $1 billion. However, the Senate didn’t take up the bill, and the matter remained unresolved. They plan to consider the borrowing plan’s fate on Thursday. Senators may find the choices remain as difficult in November as they did in May. The borrowing measure will require a super-majority, or 36 votes, to pass, Semlow noted. If the measure passes, it would be forwarded to Gov. Pat Quinn for his consideration. — Kay Shipman
Illinois developing new voluntary program for recreation access on private property The Illinois Department of Natural Resources (IDNR) will use a $525,250 USDA grant to work with landowners on providing public access for hunting and fishing on their property. IDNR is planning to work with landowners in the Kaskaskia River and Illinois River watersheds but is still developing the Illinois Recreational Access Program (IRAP), Debbie Bruce, IDNR’s resource conservation program support administrator, told FarmWeek. Those watersheds are in the newly expanded Conser vation Reser ve Enhancement Program (CREP), which includes a state conser vation contract. However, IRAP will not be limited only to landowners enrolled in CREP, Br uce noted. Landowners who participate in IRAP will receive annual payments for access leases and technical and financial assistance to improve wildlife habitat. In
return, they will provide free access on enrolled property to hunters, fishermen, and boaters. The agency is considering legislation that would focus on addressing landowner liability on IRAP-leased land, Bruce explained. IDNR also is working on liability waivers for participating landowners, she added. At first, IDNR plans to focus on providing access for fishermen and canoers on the Kankakee and Iroquois rivers and for youth turkey hunters
and youth deer hunters. IDNR’s goals include providing access for 100 youth turkey hunters, access on 500 acres for youth deer hunters, and walk-in fishing access on 200 acres of impounded water and five miles of nonnavigable streams. Bruce was not sure when landowners will be able to start enrolling in IRAP. The state must first complete an environmental land assessment, and that may take four months, she said. — Kay Shipman
Buffer demonstration applicants sought Twenty Illinois sites are being sought for buffer demonstrations in 2011. Trees Forever and the Illinois Buffer Partnership, which includes the Illinois Farm Bureau and GROWMARK, promotes and showcases the voluntary efforts of farmers and landowners to develop conservation buffers. Selected participants will be reimbursed up to $2,000 for half of the expenses that remain after funding through the Conservation Reserve Program or other federal, state, or local funding has been applied to the project. Field days for farmers, landowners, and others will be held on the sites. Applications are being accepted through Dec. 31. For more information or an application, contact Debbie Fluegel, a Trees Forever coordinator, at 309-925-9925 or dfluegel@treesforever.org.
FarmWeek Page 4 Monday, November 1, 2010
DAIRY
Prairie Farms campaign highlights company’s roots BY DANIEL GRANT FarmWeek
A new campaign and product logo recently launched by Prairie Farms Dairy will emphasize the strength of the Carlinville-based cooperative — the farm families who supply all its milk. Prairie Farms recently launched a “Farmer Owned” campaign to heighten awareness of the company’s quality line of products, put a spotlight on its farmer members, and emphasize the fact that Prairie Farms products are
produced near each area where they are sold. “The new direction emphasizes the values of our farm families and our commitment to being good citizens in the community,” said Ed Mullins, CEO of Prairie Farms. The new logo has the traditional red lettering for the
company name with a gold “Farmer Owned” banner above it. “It (the new logo) was designed to honor all our (800-plus) producers,” Rebecca Leinenbach, sales program director for Prairie Farms, told the RFD Radio Network last week during National Cooperatives Month. Prairie Farms operates 36 manufacturing plants in 11 states, including nine in its
home state of Illinois. The broad reach allows Prairie Farms to convert fresh milk into a variety of dairy products and have them on store shelves as quickly as two to three days after the milk leaves each farm. Retail dairy products from Prairie Farms generally are produced within a 200-mile radius of each store’s location. “Reducing food miles (the distance food is transported from farm to fork) benefits producers, Prairie Farms, the environment, and consumers,” Leinenbach said.
FarmWeekNow.com View Prairie Farms’ latest TV ad and listen to our interview with a company spokesman at FarmWeekNow.com.
The “Farmer Owned” campaign also included the launch of television commercials, billboard advertising, and trade and web-based promotions. Prairie Farms Dairy was founded in Illinois in 1938. The cooperative has grown over the years and last year posted sales of $2.3 billion.
Dairy plan fresh farm bill ‘go-to concept’? BY MARTIN ROSS FarmWeek
With farm bill debate approaching and farm subsidies under the budget/policy microscope, National Milk Producers Federation (NMPF) has devised what it calls a “goto concept” aimed at buffering volatility in dairy production. NMPF’s “Foundation for the Future” plan, the product of a cross-regional planning process that began in spring 2009, would replace current Milk Income Loss Contract (MILC) and Dairy Product Support programs with the Dairy Producer Margin Protection Program (DPMPP), a margin “insurance” approach. Federal support would kick in when a national margin tied to U.S.-average feed costs and all-milk prices dropped below a predetermined level. Producers could buy added “cov-
erage” to protect a higher feed cost-milk price margin. “The purpose here is not necessarily to boost farm-level prices,” NMPF spokesman Chris Galen told FarmWeek. “It’s really to help reduce volatility and protect farmer margins. “Certainly, the cost of feed has gotten more variable, and so has the cost of energy. But I think a lot of this problem has just been volatility in demand. “We’re much more reliant than we ever have been in the past on export markets. But two years ago, the global credit crunch, the onset of the recession, kicked dairy in the teeth. We saw an important source of demand go away for awhile.” American Farm Bureau Federation senior economist Bob Young noted the current dairy program targets a set price level “that has meant less as production-cost inflation
continues to work.” The plan has received a favorable reaction from U.S. House Ag Committee Chairman Collin Peterson (DMinn.), who Galen said sees “the value in focusing on margins, and not just pricing assurances.” But budget will be a key factor in farm bill development, and Young stressed the potential cost of the margin protection plan would depend on future nationwide production and dairy consumption trends. Galen noted the predominantly domestic fluid milk market has remained fairly stable. Foundation for the Future would restructure the farmerfunded, voluntary Cooperatives Working Together program, currently aimed at reducing milk production and increasing demand, as an export assistance program.
OUTSTANDING DIRECTOR
An accompanying Dairy Market Stabilization Program (DMSP) would reduce milk supplies when producers experience tight margins. NMPF
recommends changes in federal milk marketing orders reportedly to create a “competitive” milk price and maintain Class I differentials.
Downs dairyman: NMPF plan seems ‘good move’ Richard Streutker, who milks 90 cows at his McLean County operation near Downs, suggests the National Milk Producer Federation’s margin protection plan is “probably a good move forward.” Streutker, who raises 120 acres of corn entirely to feed onfarm or use for silage, feels any policy shift that would help dairymen deal with fluctuating feed prices “will be a huge benefit.” “Say I have to expand or replace some buildings: I can tell my banker I’m going to have a much more stable price for milk and it will be much easier to forecast profits in the future,” Streutker told FarmWeek. “All commodities seem to follow corn. When the prices are not very stable, it’s not a good thing for a guy in my position who buys a lot of feed. “I’d like to see a more stable milk price and a more stable commodity price. Foundation for the Future is not going to control feed prices, but it would protect us if the price goes up.” He is skeptical the plan will survive farm bill debate, though he’s buoyed by support among “large herd” interests. Those producers traditionally have addressed low prices by adding cows, but he noted small and larger operators alike suffered when California prices “tanked” last year. — Martin Ross
Scientists make biodegradable plastic from milk protein, clay
Chenoa dairyman Myron Erdman has been recognized by the Illinois Cooperative Council as its outstanding member director for 2010, the first dairyman to receive the award in more than 20 years. Erdman has served on the boards of directors of the Corn Belt Electrical Cooperative, Associated Milk Producers Inc., and Foremost Farms USA. Erdman and his wife, Neta, operate a dairy with their son, Mark, near Chenoa in McLean County. The Erdman Dairy is a member of the Prairie Farms Dairy cooperative. (Photo by Ken Kashian)
Scientists are reporting development of a new ultra-light biodegradable plastic foam material made from two unlikely ingredients — milk protein and ordinary clay. The new material could be used in furniture cushions, insulation, packaging, and other products, according to a recent report in the American Chemical Society journal “Biomacromolecules.” David Schiraldi, a professor at Case Western Reserve University in Cleveland, Ohio, and his colleagues explained that 80 percent of the protein in milk is casein, which is used to make adhesives and paper coatings. However, casein is not very strong and can be washed away. To strengthen casein and boost its water resistance, the scientists blended in a small amount of clay and a reactive molecule to line the casein protein molecules together. The researchers freeze-dried the mixture, removing the water to produce a light, spongy substance. Then they cured it in an oven and tested its sturdiness. The scientists concluded the substance is strong enough for commercial uses, and it is biodegradable, with almost a third of the material breaking down within 30 days.
FarmWeek Page 5 Monday, November 1, 2010
ENERGY
Illinois primed to be producer of next-gen fuels? BY MARTIN ROSS FarmWeek
With public/private energy crop research well under way, blueprints for biomass conversion on the boards, and a positive policy/finance foundation already laid, Illinois appears well-positioned to help meet U.S. biofuels needs. So said federal and state officials, ag researchers, and energy entrepreneurs at one of a series of nationwide USDA-sponsored Biofuels Forums last week in Bloomington. The federal renewable fuels standard (RFS2) mandates 36 billion gallons of annual U.S. biofuels use by 2022, including 21 billion gallons of non-corn ethanol and other renewables. According to USDA’s RFS2 “regional roadmap,” the U.S. central-eastern region, which includes Illinois, is in line to supply 43.3 percent of that “advanced” biofuels volume, second only to the Southeast. Participants in the Illinois Farm Bureau-hosted forum noted numerous challenges for prospective biomass producers and processors.
Those include evaluation and development of candidate crops; sourcing of biofuels feedstock “rootstock”; biomass harvest, storage, and transportation logistics; infrastructure improvements crucial to moving biomass to the biorefinery and fuel to key bicoastal markets; and producer adoption of crops with currently uncertain market potential. That’s on top of a USDAestimated $168 billion cost to build the equivalent of 527 40million-gallon-per-year biorefineries needed to convert biomass into fuel nationwide. But USDA Rural Development State Director Colleen Callahan said Ag Secretary Tom Vilsack was “very direct about the opportunities” in unveiling new USDA biofuels initiatives recently. She argued a USDA “trifecta” — Rural Development, the Farm Service Agency (FSA), and the Natural Resource Conservation Service (NRCS) — is “here to help.” Callahan noted USDA funds are available to help finance fund biorefinery startups and
Farm bill conservation title key to Illinois fuel biomass? The next farm bill could offer important inroads for Illinois biomass producers, according to Bill Gradle, state conservationist with USDA’s Natural Resources Conservation Service (NRCS). Producer adoption of biomass crops such as switchgrass, miscanthus, and prairie grasses, as well as collection of crop residues for biofuels conversion, could depend heavily on evolving conservation policies and practices, Gradle told FarmWeek at last week’s USDA biofuels forum in Bloomington. Eric Rund, a Pesotum farmer who began experimenting with miscanthus production after visiting German and Austrian energy crop producers, notes the perennial grass “can do well on poor ground.” That suggests Conservation Reserve Program (CRP) acres as fertile ground for miscanthus, but he noted growers currently can’t plant it in CRP filter strips. Rund argues “we need to change that,” possibly allowing growers to forfeit CRP payments in exchange for periodically harvesting energy grasses. He sees energy crop profits as a fair tradeoff for keeping important conservation practices in place, warning that “if you see $6 corn, you’re going to see a lot of land come out of the CRP.” Gradle sees opportunity for biofuels-friendly changes in conservation programs coming in 2012. “The House and Senate Ag Committees are both starting to have hearings for our next farm bill,” he said at the USDA forum. “If anything’s going to happen, by law, that’s where it’s going to happen. Folks in this room will have a chance to make a difference in those hearings.” Gradle noted NRCS’ plant material center in Elsberry, Mo., has been conducting switchgrass and miscanthus trials to identify “the best varieties and the best vegetative stock.” NRCS will monitor plans to harvest corn and other crop residues for biofuels production. Farm conservation compliance requires leaving at least 30 percent of residues on highly erodible soils, but Gradle sees “plenty of leeway” in remaining stalks and stover and believes that if growers coordinate residue harvest with their district conservationist, “things will work out just fine.” NRCS officials also are eyeing woody biomass species that could provide dual economic and environmental benefits. “Illinois does have a pretty good, sizable forest in the southern part of the state, where I think there’d be an awful lot of potential for biomass — poplar, willow,” he said. “We’re not going to do anything with the Shawnee National Forest, but we do have a lot of private forest land in the southern and western parts of the state.” — Martin Ross
installation of “blender pumps” that offer consumers a choice of ethanol fuels and thus should spur increased biofuels demand. FSA is potentially at the forefront of securing investment needed to encourage farm biomass production: It oversees the 2008 farm bill’s newly retailored Biomass Crop Assistance Program (BCAP). “Hopefully, what we can do here is make matches — introduce one kind of person to another kind of person,” FSA State Executive Director Scherrie Giamanco related. “There’s money out here we can borrow. There’s a wealth of technology available that we can put together and move on.” USDA’s strategic biofuels plan ranks the central-eastern region as second only to the U.S. Southeast in advanced biofuels production potential. However, William Bailey, Western Illinois University‘s biofuels specialist and director of the university’s school of agriculture, noted the centraleastern region has received only about 7 percent of the $240some million in BCAP funds allocated to date — “about half of what California has received.” But biomass progress is being made, from long-term miscanthus trials conducted by Pesotum producer Eric Rund to USDA trial production of miscanthus,
switchgrass, prairie grasses, and tropical maize (an outsized corn variant) at the Dudley Smith Farm in Christian County. The U of I-supported Energy Biosciences Institute is gauging the economic and environmental impacts of various energy crops. Goodfield-based Chip Energy Inc. hopes soon to bring on-line the first in a series of local biomass conversion facilities that could serve as a platform for future cellulosic ethanol production. Further, Illinois Finance Authority Director Christopher Meister, whose agency oversees beginning farmer and other former Illinois Farm Development Authority loan/grant programs sees strong state interagency support for biofuels development and bright prospects for financing of Illinois biomass fuel plants through loan guarantees and grants. Promising development tools include Midwestern Disaster Area Bonds, which offer federally tax-exempt financing to biofuels facilities in 18 Illinois counties through 2012. According to Meister, Illinois’ ethanol-biodiesel fuel tax exemption, which encourages sale of higher allowable biofuels blends, “sets this state apart,” generating $1.1 billion to date in “taxpayer incentives and investment in this industry.”
Danville’s Renewable Energy Group biodiesel facility “continues to be viable” amid widespread plant closings, thanks largely to the state exemption, he said. Industry downsizing has continued with congressional failure to extend the recently expired $1-per-gallon biodiesel blenders credit — “one of the policy premises of this plant,” Meister noted. The 45-cent-pergallon ethanol blenders credit also is set to expire on Dec. 31. Meister said he is “disconcerted” by a July Congressional Budget Office report that “seems to argue for a rather dramatic drop off in the production subsidies.” “Policy uncertainty, policy ambiguity probably caused banks not to lend you money,” he told biofuels interests. “This may ultimately be the right policy, but you’re going to have to do something that will ease this transition from a long-established set of subsidies to what is a rather dramatic upsurge in (biofuels) use and production mandates. “When those mandates take effect, we want to have Illinois producers producing the feedstock and giving that feedstock to Illinois production facilities — not having Brazilian ethanol and biodiesel come up the Mississippi (River) on tanker barges.”
FarmWeek Page 6 Monday, November 1, 2010
Final report of the season Bernie Walsh, Durand, Winnebago County: The 2010 harvest is nearly complete here in Winnebago County. We finally got some welcome rain last weekend (Oct. 23-24) for the first time in more than a month, but that has all soaked in, and fieldwork has resumed. About 10 percent of the corn is left, but that will be done as soon as there is room in the elevators to get rid of it. It has been a very good year for us, and we know we are the lucky ones this year. There was some flooding near the Pecatonica River in early August from heavy rains, but other than that, we had excellent crops. The beans were the best we’ve had in 10 years and the corn was very good also. It should be a very good Thanksgiving this year, and I look forward to reporting to you again next year. Pete Tekampe, Grayslake, Lake County: Got a little more than 1 inch of rain for the week. It sure helped the wheat. The fields looked really green Thursday, but with the temperatures in mid-20s this Friday morning, it doesn’t look quite as green. It was a very good year in Lake County for corn and beans. Some great yields, but some very poor yields in the low areas. Personally, I would take a year like this every year. Thanks again for the opportunity to be a Cropwatcher for this year. Have a safe and happy holiday season. Leroy Getz, Savanna, Carroll County: The dry weather ended with 3.9 inches of rain from Oct. 23 to 26. Fifty mph winds flattened most of the final 1 percent of the corn left in fields. Temperatures Friday morning were in the low 20degree range, giving us a hint of what is yet to come. Summing up the year, corn yields were good to excellent; bean yields were on the excellent side. Hay quality was down with July rains and much flooding. Milk prices have been up for the year, and grain prices moved up rapidly at harvest time. It was a year marked with tragic accidents. Hope 2011 is better. Ron Frieders, Waterman, DeKalb County: Harvest is pretty much complete. An unusually large amount of lime was applied this fall. Tillage and anhydrous applications continue but are winding down. After skimming 16 years of my Cropwatcher notes, it’s clear every year is different. Different weather, different yields, different prices, and different world events that affect U.S. farmers. If you visit with senior farmers, you realize there have always been challenges in farming, and you will always find a way to persevere. Larry Hummel, Dixon, Lee County: It’s time to put the wraps on another season of Cropwatchers. Looking back over the past growing season, several things stand out. With the excessive rains we had this summer, the hills of Northwestern Illinois were a true blessing. Excess water was channeled into the rivers and sent on its way, allowing the soils to breathe a little between downbursts. That advantage showed up in the bin with 200-bushel corn and 60-plus bushel soybeans. Corn yields were fairly consistent between varieties and cultural practices. Soybeans, on the other hand, had huge differences of up to 25 percent between varieties and in side-by-side comparisons. As this season starts to wind down, I am already looking forward to next year. See you then. Ken Reinhardt, Seaton, Mercer County: This is the last report of the season. It is fitting that as I write this the growing season is ending with the first hard freeze. Even July replanted corn was able to make it this year. Just a few late-planted beans and a few cornfields remain to be harvested. Some have left corn to fill November sales contracts. The high winds didn’t seem to hurt the standing corn much. Two to three inches of rain really helped soften the ground for tillage.
CROPWATCHERS Joe Zumwalt, Warsaw, Hancock County: The harvest of 2010 is nearly in the record books and so is the growing season … thank the Lord! What a year! Several producers are wrapping up harvest and tillage and many are toying with the idea of beginning to apply fall ammonia. Rainfall totals for the county ranged from 30 to 40 inches above the normal 34 inches for the year, and we still have two months of 2010 yet to go. Mother Nature sure presented some challenges this year, but for the most part, we have withstood the punches and will be here to take whatever she throws at us next year. It has been a pleasure for me to bring you the crop news from western Hancock County (eastern Missouri) and I thank you for reading my short, sometimes weekly crop report. I look forward to the 2011 crop season. Have a safe and happy winter and holiday season. Ron Moore, Roseville, Warren County: We had 1.5 inches of rain last weekend (Oct. 23-24) and it was very welcome. After the rain, lots of anhydrous was being applied. We are almost done with tillage now and then we can get ready for winter. We might even have time to do some of the projects that we planned to do in August that got delayed because of the earlier-than-expected harvest. We are getting a good start on a more normal season for next year with the ability to eliminate some compaction and fill in rutted areas in many of the fields that had water erosion. Have a great holiday season and good luck next year. Jacob Streitmatter, Princeville, Peoria County: I finished harvest last week, which is around the same time I started harvest last year. This year, corn had moisture readings around 20 percent as we started harvest. Last year, I started corn with moistures around 36 percent. I finished harvest with the moisture at 11.7 percent. There are a few fields of corn standing, a lot of fall tillage is in progress, and some had started to apply nitrogen last week. Have a safe fall and we all shall see how next spring goes. Hopefully, when I write my next article, I will have a lot of corn in the ground. Tim Green, Wyoming, Stark County: Harvest is pretty well complete. Fertilizer availability is starting to get on the tighter side. Some of the fertilizer people have to wait on certain fields, bean fields mostly, to apply fertilizer mostly because of a lack of potash. Nitrogen application started in the middle of the week after the rain that we greatly needed. We ended up with about 1.3 inches, which is the most rain we’ve had in a long time. Overall the crop was a little disappointing, but it could have been worse. At least it was dry. We had a pretty decent year. I enjoyed being a Cropwatcher. Everyone have a safe winter and spring and I’ll talk to you later. Mark Kerber, Chatsworth, Livingston County: As I report this last Cropwatchers‘ report, we can look back at how 2010 was different. First, we planted the corn timely. Then it rained. Then came soybean planting. Then a lot more rain. Then summer approached with heat and drought setting in, leading us to an early harvest. Yields were lower, but still respectable with these higher prices. Farm work is pretty much completed except for waterway and tiling projects. I see a small amount of NH3 going on, but not as much as other years. This tells us that 28 percent is just as cheap. The supply of corn is down, as there are fewer corn piles around the elevators. Also, free delayed pricing is starting soon. Be prepared to pay even higher taxes if the Bush tax cuts aren’t reinstated. Also, one had better stay healthy after Jan. 1, or the “death tax“ will take the farm that took lifetimes to pay for. Have a great winter, and we will see you at the Peoria Farm Show this year.
Ron Haase, Gilman, Iroquois County: Technology is great when it works, but our tractor is now down waiting for a software upgrade. This software problem and the strong winds of the past week delayed our tillage progress. We are waiting on dry fertilizer to be applied on more fields and the return of our largest tractor. The year 2010 was almost completely opposite of 2009 as far as crop development and weather are concerned. This year was a record early harvest following a record late harvest in 2009. What will the 2011 crop year be like? The local closing prices for Oct. 28 were: $5.55 for nearby corn, $5.64 for January corn, $4.97 for fall 2011 corn, $11.98 for nearby soybeans, $12.15 for January soybeans, and $11.30 for fall 2011 soybeans. Where will these bids be when the Cropwatcher reports return next spring? Steve Ayers, Champaign, Champaign County: A wild weather week with a whole lot of huffing and puffing going on! Storms rumbled through Sunday and Monday nights (Oct. 24-25) into the windy Tuesday with 60 mph gusts. Not much moisture with 0.15 of an inch of rain Sunday and 0.45 of an inch of rain Monday night. Wind downbursts snapped power poles like twigs, took off roofs, and damaged trees as the cold front moved through. We had a hard freeze Thursday night with temperature at 26 degrees at 4 a.m. Soil temperatures are at 50 and tool bars and tanks are being delivered. Farmers are tilling, tiling, fertilizing, liming, doing conservation work, mowing, soil testing, and prepping equipment for storage. Happy trails to you, until we meet again! Wilfred Dittmer, Quincy, Adams County: It looks like another growing season has come and gone, and since there is hardly any crop left in the field to watch, I guess we will just have to watch the crops in the bins. And that is pretty important as the temperatures get colder like they were Friday morning with the thermometer at 28 degrees. Rainfall since our last visit totaled about one inch over last weekend and into Monday (Oct. 2425). Total precipitation for the summer comes in at 31.35 inches with a high of 5.5 inches for June, 10.1 inches for July, and 5.6 inches for September. So overall, I guess the season was pretty good with all the rainfall, late planting, and numerous replanting. The fall was nearly perfect to get it all gathered in, and the prices are good. We really do have a lot to be thankful for. So here is wishing everyone well for reading my comments, and perhaps we will visit again next season. Happy holidays to all. Tom Ritter, Blue Mound, Macon County: It was a wonderful fall season with a lot of fieldwork done. Corn yields were all over the board depending upon drainage and nitrogen, but for the most part, farmers seem very pleased. Soybeans were the pleasant surprise, with a lot farmers saying this was the best soybean crop they have ever raised. The common word was 70 bushels per acre. A lot of tillage work has been done partly because of time and partly for compaction and tillage that did not get done last year. Anhydrous ammonia tanks are just starting to roll. Soil temperature the last two days on my thermometer has been stuck at 63. Farmers feel that the forecast is for a cooling trend and are starting that operation. Overall, it has been a great season. Jimmy Ayers, Rochester, Sangamon County: We received no rain for the week. Friday morning was our first real freeze as the temperature dipped down to 27 degrees and frost covered everything. As we finish up our 2010 production year, we are still on a mighty roller coaster ride for our pricing. Our thoughts go with those people who had injuries and sicknesses this fall. Most of the ground work has been completed in Sangamon County and surrounding areas. There is still a little more anhydrous being applied. I haven’t seen a lot of wheat that is up yet, but there was some planted. Hope everyone has an excellent remainder of 2010.
Page 7 Monday, November 1, 2010 FarmWeek
CROPWATCHERS Todd Easton, Charleston, Coles County: Finally, our long lost friend rainfall came back into the area for a brief visit Tuesday morning calming the dust and putting a half inch in the rain gauge. It was great to get something, but we could sure take at least another inch. Area producers are caught up and looking for things to do. Who would have imagined that at this time last year? Everyone is extremely anxious to begin fall ammonia application and a few, as always, have jumped the gun and gone over a few fields already. I hope the cooler weather, promised by forecasters, comes in to help them keep most of their investment in the root zone where it belongs. One thing that cannot be stressed enough is to use extreme caution when you are around anhydrous ammonia. Give it the fear and respect it deserves. It has been a pleasure to report a much less stressful Cropwatcher season this year, and best wishes for everyone in the coming year. See you again next May. David Schaal, St. Peter, Fayette County: It’s chilly here on this Friday morning with lots of Jack Frost around and the temperature sitting on 30 degrees. Can’t say it was another totally dry week around here because we received 0.5 of an inch of rain earlier in the week that came in two different showers. This is the final report for 2010. It’s been another interesting and different type of year, from a lot of rain in the spring and early summer, to real hot and dry here at the end of the fall going into winter. Everyone have a happy holiday and rest of 2010, and best wishes for the 2011 growing season. Ted Kuebrich, Jerseyville, Jersey County: This has been a harvest for the record books weatherwise, that is. We had the driest weather for harvest that anybody can remember. I think there may have been one little rain shower that stopped the combines for a day, but for the most part it was perfect. The corn yields on most farms were from 150 to 240 bushels per acre. In fields that had poor drainage, the yields were not as good. The beans yields were from 40 to 75 bushels per acre, some of the best yields the county has seen. The wheat is up and needing rain. Temperature Friday morning was 31 degrees. Prices at Jersey County Grain, Hardin: cash corn, $5.62; January 2011 corn, $5.70; cash beans, $12.02; January 2011 beans, $12.39.
Reports received Friday morning. Expanded crop information available at FarmWeekNow.com
Doug Uphoff, Shelbyville, Shelby County: Our last FarmWeek report. I really appreciate comments (good and bad) from growers across the county and sometimes neighboring counties. We really haven’t done much since last week. We are wanting to apply anhydrous and may try today (Monday). The only thing that will possibly work is disked bean stubble. There is no way it can go on the flat black chiseled ground because of the lack of moisture. We received 0.2 of an inch of rain last week, but with the wind that was gone before it got here. Wheat stands are patchy. Some are good; some need a rain. Yields were down in corn and up in soybeans, according to 5-year average anyway. Values in the fertilizer industry are climbing dramatically. I think the managers of that industry can’t wait until grain prices go up so they can jack prices up. The only price to come down from last year is seed cost. Farm diesel, $2.675; soy diesel, $2.62; truck diesel, $3.151; truck soy, $3.079; gas, $2.82; town, $2.79; cash corn, $5.60; Decatur, $5.65; December corn, $5.64; January cash, $5.70; Decatur, $5.75; beans cash, $11.97; Decatur, $12.07; November cash, $12.03; Decatur, $12.13; December cash, $12.08; December Decatur, $12.18; January cash, $12.08; January Decatur, $12.18. Decatur bids have had trucking taken off. Shake a veteran‘s hand. Veterans Day is coming up and because of them we enjoy the freedoms we take for granted. Bob Biehl, Belleville, St. Clair County: It’s the last reporting date, and for once in our county, harvest is done and fertilizer and fieldwork are on the downhill slide. After last year’s late harvest and this year’s early planting spring, this winter will be a good time to catch up on the unfinished jobs, equipment repair, etc. In summary, bean yields throughout the county and area were pretty decent — upper 40s to low 60s — and most everyone was pleased, especially after figuring the rise in prices. On the corn front, yields did vary quite a bit — 100 to 200 bushels per acre because of a prolonged dry spell in June and July in the southeastern part of the county. There was a fair amount of wheat sowed in the county, but limited wheat supply, rising corn and bean prices, and wheat’s uncertainty on final yield and especially quality, put a damper on the acres sowed. Have a safe and joyous fall, winter, and holiday season. Rick Corners, Centralia, Jefferson County: Hope you brought in the brass monkeys Friday morning. Had some rain early Tuesday morning and also some strong wind gusts. The rain varied from 0.8 of an inch to nothing in just a few miles. Hope it brings the wheat up. Sure don’t see anything peeping through yet. Haven’t seen one wheat field that is decent enough to make a stand. Harvest is pretty much like the Yankees — over until next year. See ya all in the funny papers.
Dan Meinhart, Montrose, Jasper County: It was 26 degrees Friday morning with heavy Jack Frost. For most, the growing season has ended. The vast majority of harvest is complete. Tuesday morning a half inch of rain fell accompanied by strong winds blowing down silos, damaging buildings, uprooting trees, blowing a grain leg down at a local elevator, and damaging the roof of a nearby school. There was a large area without power for several hours. Farmers are busy spreading fertilizer and lime, working on waterways, cleaning out ditches, and fixing washouts, along with fall tillage. Temperatures this week are expected to range from the 30s to the 60s. Everyone have a safe and enjoyable winter. Kevin Raber, Browns, Wabash County: We finally received rain this past week. Amounts were varied widely because the wind blew so hard. I don’t know if it went in the gauge or blew over the top of it. Hopefully, it will be enough to germinate the wheat crop. I find it hard to summarize this past growing season. Let’s just say it is one that will be remembered for a long time. But, as always, I feel blessed with what has been given to us. Dean Shields, Murphysboro, Jackson County: We finally got 0.5 of an inch of rain or so. First rain we have had in a long, long time. It helped the wheat crop – it seemed to perk up right away. Harvest is pretty well done. There is still some going on, but not much. Overall the corn is down in yield and the beans, too. So, we will have try a little harder next year. Since the rain, the wheat crop is looking pretty decent, and I would say we have about the normal number of acres of wheat — not any more than normal. One interesting thing: One farmer tried some sunflowers. He planted late because of how many other crops flooded out and then the storm the other night came through and blew half the sunflowers down. It was a tough year for him. Hope everybody had a safe harvest. Ken Taake, Ullin, Pulaski County: It’s my final report of our 2010 crop year. It was a challenging year that went from wet early with a lot of replanting, to hot and dry from July through harvest. At least harvest was early and there was no mud to fight. Corn and soybean yields were probably 20 to 25 percent below our average. Wheat is still struggling to emerge from the dry soils. After a challenging year, I’m really ready to write off 2010 and look forward to 2011. Please have a good winter and enjoy some time off.
Harvest winds down
ICGA leader: Corn supply adequate; more acres needed
BY DANIEL GRANT FarmWeek
Farmers in Illinois completed harvest in record or near-record time and have been able to get a good deal of field preparation work done for next season. And that’s a good thing, according to Tim Lenz, Tim Lenz president of the Illinois Corn Growers Association. Farmers next year may need to plant more corn to keep up with
demand growth. The International Grains Council (IGC) last week increased its world corn consumption forecast for 2010/11 by 3 percent compared to 2009/10. IGC also projected ending stocks of corn could fall to a four-year low. “It is looking like we’ll need a few (million) more acres of corn next year,” Lenz said. “If we have average weather, the yield trend is still up.” The possible need for more corn acres next year cropped up due to stronger demand (the U.S. Environmental Protection Agency
recently raised the amount of ethanol that can be blended into gasoline for some vehicles, and cattle and poultry inventories posted recent gains) and lower-thanexpected yields this year in the U.S. USDA last month cut its U.S. corn production forecast from 13.2 billion bushels to 12.7 billion bushels. “In my area (Shelby County), it was more the wet June (that took the top end off corn yields),” Lenz said. “Plants in low areas lost nitrogen, (excessive moisture) restricted roots, or plants got behind and never caught up.
“The heat (in August) didn’t help, either,” he continued. “It took away kernel depth.” On the plus side, rapid dry-down of the crops and nearly ideal weather conditions allowed farmers to complete one of the fastest harvests in years. Corn and soybean harvest in the state as of the first of last week was 97 percent complete compared to the five-year averages of 63 percent for corn and 75 percent for beans. Now, it’s up to the crop markets to help farmers decide what mix of crops to plant next year.
“Combined acreage of corn and soybeans may need to increase by 4 million to 5 million acres or more in 2011, depending on the market’s assessment of yield risk,” said Darrel Good, University of Illinois ag economist. “High prices of other crops suggest there will be competition for acres in 2011.” U.S. corn plantings this year totaled 88.2 million acres, 1.74 million more than 2009 but 5.3 million fewer than in 2007. U.S. soybean plantings this year were a record-high 77.71 million acres, up 263,000 acres compared to 2009.
FarmWeek Page 8 Monday, November 1, 2010
MARKETS
No clue on farm energy improvements? SEDAC has the answers BY KAY SHIPMAN FarmWeek
Farmers and rural businesses seeking ways to cut their energy bills and become more energy efficient can find answers at the Smart Energy Design Assistance Center (SEDAC) at the University of Illinois, Champaign. The savings will start with the first phone call – all SEDAC services are free. “Many people don’t have a clue where to start with energy efficiency (questions),� said Ron Fournier, SEDAC managing director. “There are tremendous opportunities out there. These are the glory days of energy efficiency.� Fournier spoke at the 2010 Illinois Energy Expo last week in Normal. “Energy prices will continue to be volatile,� Fournier warned. “Don’t be lulled to sleep. We’ve got steady oil prices, but as soon as the world recovers
‘ We want to help the business and the public sectors identify opportunities to save money.’ — Ron Fournier SEDAC managing director
from the recession, you’ll see oil prices go up. “Natural gas looks like it might be fairly stable (prices) for awhile,� he noted. SEDAC offers four levels of services, ranging from quick answers to simple questions to an in-depth building energy analysis and detailed recommendations compiled in a written report. Since September, SEDAC has launched and/or completed more than 3,700 services on all types. If all of the SEDAC specialists’ rec-
ommendations were implemented more than 1.8 million British thermal units in energy usage would be saved, reducing energy costs by $28 million, Fournier said. After working with SEDAC, an owner of a typical building can reduce energy use by 31 percent and energy expenses by 30 percent. The average annual savings is $50,442. SEDAC also will assess new building designs for energy efficiency. On average, the design recommendations reduce energy usage
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by 38 percent and energy costs by 37 percent. The average annual saving is $50,627, he said. Fournier noted the dollar savings is similar to an older building because a new building design initially would use less energy compared to older structures. Although SEDAC is interested in working with the agriculture sector, it so far has assessed mostly grain dryers. “We would assess livestock buildings, but we
haven’t done any yet,� Fournier said. In addition to providing one-on-one assistance, SEDAC also publishes energy-conservation fact sheets for different sectors and provides outreach programs. “We want to help the business and the public sectors identify opportunities to save money,� Fournier said. For information, go online to {www.sedac.org}, call 800-214-7954, or e-mail info@sedac.org.
Foglesong: GIPSA rule could create generic beef market in U.S. BY DANIEL GRANT FarmWeek
Cattle producers aren’t the only ones who could take an economic hit if new regulations proposed by USDA’s Grain Inspection, Packers, and Stockyard Administration (GIPSA) are added to the Packers and Stockyards Act of 1921. Consumers could end up paying higher prices for fewer beef selections if the new GIPSA rules take effect, according to Steve Foglesong, president of the National Cattlemen’s Beef Association and a producer from Fulton County. The new rules seem to take aim at packer Steve Foglesong ownership of livestock in an effort to address concerns about a lack of competition among packers. The GIPSA rule infers all cattle will be valued on an average or standard price, regardless of quality. Any deviation from the standard price must be justified to the government, which could lead to litigation that livestock buyers seek to avoid, according to the NCBA president. “This will lead to a generic market and generic product,� Foglesong said. “Where would the incentive be for producers to make investments in higher-quality products?� Foglesong said packers have indicated to NCBA the new GIPSA rule will make it tougher to offer premiums to producers, the NCBA president said. Cattle producers under the regulations would have to focus their business models squarely on feed efficiency and rate-of-gain in their herds, which are sound strategies to make money, the NCBA president said. “But we’ll be giving up quality grades to get to that point,� Foglesong said. “That’s where it really comes back to the consumer.� A recent study commissioned by the American Meat Institute concluded the new regulations would increase retail meat prices nationwide by about 3.3 percent. Higher meat prices could lead to about a 2 percent reduction in consumption, which then could lead to the elimination of about 104,000 jobs in the meat production, processing, and food industry, the study suggested. Meanwhile, the regulations, which are aimed at competition issues, actually could make the situation worse by pushing some small producers and packers out of business due to higher costs and reduced returns, according to Foglesong. “It will drive further consolidation in the packing industry,� he said. Foglesong again called on USDA to conduct a more thorough economic review of the new regulations before implementing them. USDA last month ignored a similar request from 115 members of Congress. “Ultimately, (the new GIPSA rules) would turn the clock back 50 years,� Foglesong said. “We deserve a full-blown cost-benefit analysis.�
FarmWeek Page 9 Monday, November 1, 2010
RURAL ISSUES
Stover bale project raises biomass storage issues BY KAY SHIPMAN FarmWeek
Current technology and management practices do not prevent moisture problems in corn stover intended for use in the biomass industry, an Archer Daniels Midland (ADM) researcher reported recently. Mike Cecava, director of ADM’s feed technology
research, discussed the results of a two-year project to test technology and practices to harvest, store, and process corn stover in Iowa. ADM, Deere & Co., and Monsanto Co. have worked cooperatively on the project. Cecava spoke at a recent forum at the University of Illinois’ Center for Advanced BioEnergy Research.
Moisture levels in the stover bales proved to be one of the biggest problems, according to Cecava, Stover with moisture levels between 21 and 35 percent caused problems for the grinding equipment. The slimy material clogged the grinding screens and then oozed onto the facility floor, he explained.
Researchers tried different combinations of plastic and net wraps and multiple layers of wraps. They wrapped bales individually and as a group. Some bales were stored under a tarp in a barn. Tests were conducted on both round and square bales. “Bale moisture varied within and across cornfields,”
USDA loans, awards to boost business lending, provide off-farm income USDA Deputy Secretary Kathleen Merrigan last week announced four Illinois groups were among recipients in 36 states to receive funds to make loans to boost small business development, create jobs, and provide more offfarm income opportunities. The money is provided through the Rural Microentrepreneur Assistance Program (RMAP) that was authorized in the 2008 farm bill. “This program creates opportunities for small businesses to prosper by giving them access to capital and it also helps to create new offfarm income opportunities that help to support owners of small and mid-sized farm operations,” Merrigan said. Four Illinois recipients will
receive a total of $1.45 million for revolving micro-loan programs and $272,500 in grants to provide training and technical assistance for micro-enterprises. The funding will affect Alexander, Clay, Effingham, Fayette, Franklin, Gallatin, Hamilton, Hardin, Jackson, Jasper, Jefferson Johnson, Marion, Massac, Perry, Pope, Pulaski, Randolph, Stark, and Union counties. Southern Illinois Coal Belt Champion Community Inc. will receive a $500,000 loan and $105,000 grant. It will partner with Southern Illinois University‘s office of economic and regional development to provide technical assistance to rural small businesses. The economic
Farmers may donate to local non-profits via Monsanto fund Illinois farmers in 96 counties may be able to designate donations to local non-profit organizations by participating in Monsanto Fund’s America’s Farmers Grow Communities. The program offers farmers the opportunity to designate a $2,500 donation to their favorite local nonprofit organization. “I signed up to support the local FFA chapter and to help them prosper,” said Steve Rogge, a Roanoke farmer. “I believe in anything that helps support youth in agriculture.” The program benefits nonprofit community groups, such as ag youth organizations, schools, and other civic groups. In Illinois, the Monsanto Fund expects to donate $240,000 in 96 counties. The Monsanto Fund is the philanthropic arm of the Monsanto Co.
Farmers may apply online at {www.growcommunities.com} or by calling 877-267-3332. Eligible farmers must be at least 21, actively engaged in farming a minimum of 250 acres of corn or soybeans, or 40 acres of open-field vegetables or at least 10 acres of tomatoes, peppers and/or cucumbers grown in protected culture. The application period continues through Dec. 31. No purchase is necessary to enter or win. In Illinois, one winner will be drawn from each of the state’s 96 participating counties. Monsanto Fund will announce winning farmers and recipient organizations in February. For a copy of the program official rules, go online to {www.growcommunities.com} or send a written request to Eileen Jensen, 914 Spruce St., St. Louis, MO 63102.
development organization serves 12 counties in SouthCentral and Southeastern Illinois. Stark Co. Economic Development Partnership will use a $150,000 loan and $37,500 grant to retain, expand, and attract businesses to Stark County. Southern Five Development Corp. will use a $500,000 loan and $105,000 grant to encourage business start-up and expansion in its service area’s retail, commercial and manufacturing sectors. It will offer prospective borrowers free access to edu-
cators and/or one-on-one consulting. South Central Illinois Regional Planning and Development Commission will use a $300,000 loan and $25,000 grant to support micro-entrepreneurship in its five-county service area. It will partner with Post Oak Flats Resource Conservation and Development and the University of Illinois Extension in Effingham County to help micro-borrowers and micro-enterprises. For more information, go online to {www.rurdev.usda.gov/BCP_RMAP. html}.
Cecava said. Moisture levels also varied within single bales, he added. The project has shown practical storing and process issues remain, Cecava said. “If you put stover under a barn or a tarp, you can maintain moisture content. However bales in the net wrap will gain moisture — even (plastic) tube-wrapped bales were not significantly protected,” Cecava explained. Biomass processors won’t have problems processing stover at 20 percent or lower moisture levels, he said. Likewise, processors could use anaerobic methods to process stover with moisture levels higher than 35 percent, he said. But stover with moisture levels between 21 and 35 percent cause significant processing problems, and researchers are still searching for the most efficient and economic storage methods. “My conclusion is that damp stover is going to be a reality for us (biomass processors),” Cecava said.
Growing Specialty Soybeans Makes More “Cents!” Increasing your profit doesn’t always mean increasing the amount of land devoted to soybeans. By selling differentiated soybeans, you can bring in extra revenue without having to expand acres. Customers are looking for quality soybeans, and farmers choosing to grow unique varieties can receive a higher return price. Isn’t it time you looked into getting more per bushel?
Visit soybeanpremiums.org to see what premium programs are in your area.
SOYBEAN P R E M I U M S.O R G
Funded by the soybean checkoff.
FarmWeek Page 10 Monday, November 1, 2010
MARKETS
Korean FTA key piece in dairy’s Asian quest BY MARTIN ROSS FarmWeek
With up to 12 percent of U.S. milk production now flowing overseas, National Milk Producers Federation trade analyst Jaime Castenada stresses the sector today is “not your grandfather’s dairy.” Castenada attributes export growth over the past decade to bilateral and regional free trade agreements (FTAs) that have lifted barriers to U.S. milk powder, butter, cheese, and evolving new ingredients and products. Congressional approval of FTAs with Panama, Colombia, and especially South
Korea is crucial to maintaining momentum, he told FarmWeek. Chile and Peru are two of the U.S.’ top South American dairy markets thanks largely to FTAs approved in 2003 and 2007, respectively, Castenada said. The Central American Free Trade Agreement, signed in 2005, added several small markets that nonetheless “are contributing to our overall success.” “Now, we have Korea, which would give a significant boost to our exports,” Castenada said. “We’re just waiting on that. The problem is, the more we wait, the more we not only aren’t
going to increase market share — the more we’re going to lose it to the EU (European Union), New Zealand, and Australia. The EU already has negotiated an agreement with Korea; the others are in the process. “Definitely, Asia is a very important market. It’s a growing market: The Asians were not really very much into dairy products, and this is a change for them. They started from a very low level of consumption, so the growth is exponential.” Korean FTA approval is but one key piece in efforts to capture Asian market share:
Chicago Farmers plan rural development meeting The Chicago Farmers will discuss rural development and hear success stories Nov. 8 in the Illini Center, 200 S. Wacker, Chicago. Registration will start at 11:30 a.m. with the lunch and program starting at noon. The advance registration deadline is Friday. John and Jordan Rocke of RMH Foods, Morton, will discuss their family food processing company. Donna Lehrer of Esther’s
Place, Big Rock, will discuss her fiber art studio and identity-preserved wool. Jenna Kilgus of Kilgus Farmstead, Fairbury, will talk about the family’s dairy and milk-bottling enterprise. Advance registration is $25 for members. Registrations at the door are $35 for members and $50 for non-members. For more information or to register, call 312-388-3276 or go online to {www.chicagofarmers.org}.
The U.S. is negotiating to join the Trans-Pacific Partnership (TPP), a multilateral trade pact that would include New Zealand, Chile, and Singapore. Australia, Vietnam, and Malaysia also seek TPP membership, and with New Zealand dominating global dairy sales, Castenada sees U.S. participation as vital to competing within the region. He noted China already is consuming “huge quantities” of whole milk powder. While
Chinese dairy producers have begun to recover from shaky public confidence in domestic milk safety, Castenada sees it being “many, many, many years before they can supply their own demand.” Meanwhile, he noted whey, once a dairy byproduct fed largely to livestock, is garnering demand among increasingly health-conscious Asians. “Whey now has a high level of protein — it’s a very sophisticated product,” he said.
Anaerobic digester workshop offered for pork producers A workshop on anaerobic digesters for pork operations will be offered Tuesday, Nov. 23, at the University of Illinois Extension Ford-Iroquois office, 912 W. Seminary Ave., Onarga. The early registration deadline is Nov. 10. The workshop will start at 9 a.m. and will conclude at 2 p.m. Topics will include anaerobic digesters and biogas energy recovery technology concepts, steps to develop a biogas-to-energy project, connecting to the power grid, a pork producer’s anaerobic digester tips, and available technology assistance and resources. The registration fee is $15 on or before Nov. 10 and $25 after that date. To register online, go to {www.chpcentermw.org/easternillinibiogas2010/index.ht ml}. For more information, call Sam Rinaldi with the U of I Chicago at 312-996-2554 or e-mail him at samr@uic.edu. Program sponsors include USDA Rural Development, Eastern Illini Electric Cooperative, U.S. Department of Energy Midwest Clean Energy Application Center, the Association of Illinois Electric Cooperatives, the Illinois Pork Producers Association, and the Illinois Department of Commerce and Economic Opportunities.
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FarmWeek Page 11 Monday, November 1, 2010
PRODUCTION
Study: Land price declines unlikely in near future BY DANIEL GRANT FarmWeek
U.S. farmland values have increased 58 percent since 2000, creating some concerns about the bubble possibly bursting similar to what happened in recent years to the housing and stock markets. Sheila Bair, chairman of the Federal Deposit Insurance Corp., last month told attendees of a risk management conference in Baltimore it is important to monitor farmland values for signs of instability, Reuters news service reported. “A sharp decline in farmland prices similar to the early 1980s could have a severe adverse impact on the nation’s 1,579 farm banks,” Bair said. Fortunately, the farm economy and factors affecting farmland values currently are more supportive than in the 1980s, according to a University of Illinois study. In fact, an economist with
the American Farm Bureau Federation (AFBF) questioned whether the term “bubble” even applies to the current state of the farmland market, despite its high values. “I think it makes sense to define a bubble as prices for an asset that are just too high and not really justified by market fundamentals,” said John Anderson, AFBF economist. “There are some pretty strong fundamentals in the farm real estate market. Commodity prices are historically quite high and interest rates are very low.” A U of I study came to a similar conclusion. It noted farmland prices in the state from 1987 to 2004 averaged a yearly increase of 4.8 percent before the high-growth period when annual land prices jumped by an average of 15 percent from 2004 to 2008. “Before a large farmland price decline will occur, farmland returns likely will have to
Grain bin safety: age, size factors? BY MARTIN ROSS FarmWeek
The advanced age of many farm grain bins and the larger scale of new grain storage facilities may contribute to the seemingly growing frequency of farm and elevator fatalities. Safety in the modern grain-handling environment thus remains largely a matter of mind over mass, Grain and Feed Association of Illinois (GFAI) Executive Director Jeff Adkisson warns. Last week, Adkisson joined Illinois Farm Bureau, federal and state officials, and university safety specialists from Illinois, Indiana, and Iowa in setting goals and strategies for a new Grain Handling Safety Coalition. The coalition is looking initially at raising farmer/handler awareness through public service announcements and media outreach statewide. The nationwide death toll related to grain engulfment, electrocutions, and falls in and around bins continues to climb. A 13year-old Indiana boy and a 77-year-old Minnesotan were added to the list over a single late October weekend. Coalition participants noted many farm bins have reached or surpassed their reasonable life expectancy. Older bins may include missing outside rungs that increase risks of a fatal fall or rust or leaks that could allow moisture to build inside and cause bridging (fragile zones of grain that offer the illusion of solid footing) or other hazardous grain-quality conditions. Meanwhile, at roughly a $2-per-bushel average cost to build new grain storage, economies of scale have driven increased bin capacity, Adkisson reported. Amid continued high grain production, new construction should continue, he said. While “it wasn’t that long ago that a half-million-bushel bin was a pretty good bin,” Adkisson cites at least one 1.3-millionbushel Western Illinois bin that spans 130 feet in diameter. That kind of size can hamper access to trapped workers, and increased capacity can slow efforts to empty grain from bins before workers submerge and “drown.” Further, Adkisson notes larger bins are equipped with larger augers to extract grain, potentially raising odds of entanglement or other mechanical hazards. Whatever the size or age of the bin, he argues the human factor — personal safeguards and sound grain management — is key to reducing fatalities. “It all comes back to behavior — somebody making the right decision,” Adkisson said. “If you go into flowing grain, does it matter if you’re engulfed within three seconds or seven seconds?”
decrease or interest rates will have to increase,” said Gary Schnitkey, author of the study and a farm management specialist at the U of I. “Neither seems likely in the near future.” Schnitkey noted farmland prices and cash rents appear to be under no downward pressure for the next several years. High commodity prices in recent months actually could push cash rental rates to higher levels, he said. However, a major drop in farm income or a rise in interest rates could change the situation. “In my opinion, the longerrun risk for a large decrease in farmland prices comes more from interest rate increases than from farmland return declines,” Schnitkey said. It will not take much of an increase in interest rates to put downward pressure on land prices, according to the farm management specialist. For example, a 1 percent increase in interest rates (from 3.33 percent to 4.33 percent) could reduce the capitalized value of farmland (valued at $5,075 per acre in 2010) by $961 per acre to a new capitalized value of $4,112.
The full U of I report on land and cash rent values is
available at the website {www.farmdoc.illinois.edu}.
FarmWeek Page 12 Monday, November 1, 2010
FROM THE COUNTIES
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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. E N RY — Bureau, Henry, Knox, and Stark County Farm Bureaus and the University of Illinois Extension will sponsor a fall equine seminar from 6:30 to 8:30 p.m. the first
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three Thursday evenings in November. The sessions are free for 4-H members, FFA members, and Black Hawk East students. Cost for others is $9 or three sessions for $20. Call the HenryStark Extension office at 309-853-1533 or the Farm Bureau office at 309-9372411 for reservations or more information. • Darin Newsom, DTN senior analyst, will be the speaker at a meeting at 6:15 p.m. Thursday, Nov. 18, at the Moline Viking Club. Following dinner, updates from Mike Schaver, Gold Star FS grain merchandiser, and a WQAD meteorologist will be given. Cost for the series is $60 or a single session for $18. Call the Henry County Farm Bureau office
at 309-937-2411 or the Rock Island County Farm Bureau office at 309-736-7432 for reservations or more information. E N DA L L — The annual meeting will be at 5:30 p.m. Monday, Nov. 15, at the Yorkville Legion. A Foundation silent auction will be held. Cost is $15. The Young Leaders are requesting those who attend to bring non-perishable food items to be donated to the Kendall County Food Pantry. Call the Farm Bureau office at 630-5537403 by Wednesday, Nov. 10, for reservations or more information. • The Young Leader and Newark FFA annual farm toy show will be from 9 a.m. to 2 p.m. Sunday, Nov. 21, at
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the Newark High School. If you would like to rent a table or have questions, call the Farm Bureau office at 630-553-7403. E E — 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 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. E O R I A — The annual meeting will be at 5 p.m. Saturday, Nov. 13, at the Dunlap High School.
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Andy Wiesenhofer, a cowboy poet, will provide the entertainment. Tickets are $10. Call the Farm Bureau office by Wednesday for reservations or more information. TA R K — Bureau, Henry, and Stark County Farm Bureaus, and Mike Taylor and Ron Behrends, Country Financial agents, will sponsor a defensive driving course from 10 a.m. to 3 p.m. Tuesday and Wednesday, Nov. 9-10, at the Black Hawk College Community Education Center, Kewanee. Both days must be attended to receive certification. Cost is $30, which includes materials and lunch. Call the Farm Bureau office at 286-7481 by Friday for reservations or more information. E R M I L I O N — The annual meeting will be at 5 p.m. (Illinois time) Monday, Nov. 22, at the Beef House Banquet Center, Covington, Ind. Tickets are $10 for “M” members and $20 for “A” members and may be purchased at the Farm Bureau office or from a Farm Bureau director. State Rep. Bill Black (R-Danville) will be the speaker. Deadline for purchasing the tickets is Thursday, Nov. 18. The Vermilion County Farm Bureau Foundation will hold its silent auction during registration. ARREN-HENDERSON — The annual meeting will be at 6 p.m. Thursday, Nov. 18, at St. Pat’s Center, Raritan. A silent auction will be held with proceeds going to the scholarship program and Ag in the Classroom. Call the Farm Bureau office at 309734-9401 or e-mail whfb@whfarmbureau.org for reservations or more information.
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MAINTAIN YOUR PROPANE For safe and efficient heating.
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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 Farm Bureau manager.
Learn more by touring a virtual propane farm at
agpropane.com
FarmWeek Page 13 Monday, November 1, 2010
IFB IN ACTION
CCFB Foundation exposes students to urban ag BY HALEY LOY-SIERGIEJ
Under the auspices of the Cook County Farm Bureau (CCFB) Foundation Agriculture Leadership Academy, 29 Chicago-area high school students recently were exposed to urban agriculture. The students, from the Chicago High School for Ag Sciences and John Marshall and Hubbard high schools, learned of leadership and college opportunities at various sites in the Chicago area.
“The Cook County Farm Bureau Foundation is giving students a wonderful opportunity to not only see agriculture in Cook County, but attending this one-of-a-kind event also exposes the students to new life experiences,” said Harry Stuenkel, CCFB board member and a farmer from Matteson. The students heard pre-
sentations by Illinois State FFA President John Edgar and Laura West, a University of Illinois recruiter. They learned about homeland security and agriculture safety at O’Hare International Airport, the distribution of food at Jewel-Osco distribution center in Melrose Park, and horticulture and the green industry at Ted’s Greenhouse in Tinley Park. They concluded their day with a visit to Stuenkel’s farm, where they learned about
farming operations and farm life and had a wiener and marshmallow roast, a first for many of the students. Coordinators for the program were Haley Loy-Siergiej, director of ag literacy and public relations for CCFB, and Sarah Song, Facilitating Coordination in Agricultural Education urban program adviser.
Through the leadership academy, “Students get to experience agricultural careers in their own neighborhoods that they never even dreamed of,” said Song. Haley Loy-Siergiej is director of ag literacy and public relations for Cook County Farm Bureau. Her e-mail address is aitc@cookcfb.org.
Dairy, technology highlights for ‘adopted’ legislator An “adopted” state representative recently gained a new perspective on how farmers care for their dairy cattle and how technology is used in crop production. State Rep. Deb Mell (DChicago) and her staff member, Melissa Poulos, recently toured three McHenry farms. Mell was “adopted” by the McHenry County Farm Bureau earlier this year and hosted several Farm Bureau leaders for a summer tour of her district. Dan Volkers, McHenry
McHenry County dairy farmer Linnea Kooistra, right, discussed milk production with state Rep. Deb Mell (D-Chicago) during Mell’s recent visit. (Photo by Christina Nourie, Illinois Farm Bureau northeast legislative coordinator)
Auction Calendar Mon., Nov. 1. 10 a.m. 239.61 Ac. Woodford Co. Jones Family Farm, EL PASO, IL. Terry Wilkey Auction Service. www.terrywilkey.com Mon., Nov. 1. 10:30 a.m. 137.54 Ac. Vermilion Co. Womacks Estate, ROYAL, IL. Gordon Hannagan Auction Co. www.gordyvilleusa.com Wed., Nov. 3. 960 +/- Ac. Lee Co. Soy Capital Ag Services. www.soycapitalag.com Wed., Nov. 3. 10 a.m. 40 Ac. Moultrie Co. Trust of John E. Reuss, c/o Scott State Bank Trustee, BETHANY, IL. biddersandbuyers.comkeyword-lamendola. autionzip.com-ID #5614 Wed., Nov. 3. 960 Ac. Lee Co. Soy Capital Ag Services. www.soycapitalag.com Fri., Nov. 5. 10 a.m. Farmland Auction. Suzanne Pennington, DELAVAN, IL. Nehmelman Auction Co. Fri., Nov. 5. 10 a.m. 157.5 Ac. Stark Co. Merwin Burhorn Trust, LAFAYETTE, IL. Van Adkisson Auction Service, LLC. www.biddersandbuyers.com Mon., Nov. 8. 10:30 a.m. 80.27 Ac. Champaign Co. Atkins Bros., URBANA, IL. Gordon Hannagan Auction Co. www.gordyvilleusa.com Tues., Nov. 9. 7 p.m. 80 Ac. Clay Co. The Family of Arthur Phillips, CLAY CITY, IL. Carson Auction, Realty & Appraisal Co. www.carsonauctionandrealty.com Tues., Nov. 9. 223.86 Ac. Carroll Co. Soy Capital Ag Services. www.soycapitalag.com
County Farm Bureau manager; Bona Heinsohn, Cook County Farm Bureau public policy director; and Christina Nourie, Illinois Farm Bureau northeast legislative coordinator, accompanied the Chicago visitors on their farm tour. At the Kooistra Dairy in Woodstock, dairymen Joel and Linnea Kooistra showed the visitors around their farm, which has 250 milk cows and 250 calves. “Representative Mell gained an understanding of the hard work it takes to operate a dairy and how livestock farmers go to great lengths to ensure their animals are healthy and receive proper care,” Nourie said. The Kooistras also discussed legislative issues facing the dairy industry and offered to be an information resource for Mell on livestock issues. Mell and Poulos also visited McHenry County Farm Bureau President Bruce Meier’s grain farm and rode in his combine. “Like many ‘adopted’ legislators, Representative Mell was surprised by the amount of technology used today to grow and harvest crops,” Nourie said. The third stop was Tues., Nov. 9. 10 a.m. 300 Ac. LaSalle Co. John Kuhn Farms, Inc., KERNAN, IL. Bradleys’ and Immke Auction Service. www.bradleyauctionsinc.com Tues. Nov. 9. 6 p.m. 29.86 Ac. near Mascoutah, IL. The Gustav and Irene Lanter Trusts, MASCOUTAH, IL. Mark Krausz Auction Service. Wed., Nov. 10. 6 p.m. Mega Real Estate Auction. UNION, MO. Adam’s Auction & Real Estate Services Inc. www.adamsauctions.com Wed., Nov. 10. 10 a.m. 80 Ac. Warren Co. Margaret Bricker Heirs, BUSHNELL, IL. Van Adkisson Auction Service, LLC. www.biddersandbuyers.com Wed., Nov. 10. 551 Ac. Ogle Co. Russell Johnson. Soy Capital Ag Services. www.soycapitalag.com Wed., Nov. 10. 551 Ac. Ogle Co. Soy Capital Ag Services. www.soycapitalag.com Thurs., Nov. 11. 6 p.m. 147.8 Ac. Coles Co. Charles Bailey Estate, CHARLESTON, IL. Stanfield Auction Co. www.stanfieldauction.com Fri., Nov. 12. 10 a.m. Public Auction. Ron and Rose Ann Moore, SIBLEY, IL. Bill Kruse, Auctioneer. www.billkruse.net Fri., Nov. 12. 9:30 a.m. 80 Ac. LaSalle Co. Anne M. Brennan, WENONA, IL. Lauf Auction Service. Fri., Nov. 12. 10 a.m. 191.73 Ac. Warren and Henderson Co. Helen G. (Eileen) Flanagan Trust, MONMOUTH, IL. Van Adkisson Auction Service, LLC. www.biddersandbuyers.com
Hebron’s Von Bergen Country Market, a family-operated vegetable farm and agri-tourism business. In addition to growing several kinds of vegetables, the farm/market also offers a corn maze and petting zoo. Tracie and Bobette Von Bergen provided Mell an overview of their business. Mell and the McHenry County Farm Bureau are considering future Adopt-a-Legislator events, including a possible field trip for students from her district.
Mike Rauch, a Cook County Farm Bureau (CCFB) board member and committee chairman of the county’s ag literacy/public relations team, tells students from three Chicago high schools about corn and soybean production at one of three stations set up on the Harry Stuenkel farm at Matteson. The stop was one of several for the students sponsored recently by the CCFB Foundation Agriculture Leadership Academy. (Photo by Haley Loy-Siergiej)
FarmWeek Page 14 Monday, November 1, 2010
PROFITABILITY
A refresher offered for crop basis fundamentals BY DARREL GOOD AND SCOTT IRWIN
Editors’ note: There have been some wide swings and unusual seasonal patterns in crop basis in Illinois in recent years. There also have been concerns with lack of convergence of cash and futures prices at futures delivery markets at times since late 2006. These conditions have raised concerns among Illinois Farm Bureau members, so FarmWeek has decided to re-examine factors that influence the basis as part of its ongoing market coverage. This installment was produced by Darrel Good and Scott Irwin of the University of Illinois’ department of agricultural and consumer economics. In commodity markets, basis is defined as the difference between cash and futures prices (usually calculated as cash minus futures). The cash price of grain typically is below the futures price in surplus (production) areas and above futures prices in deficit areas, such as export loading facilities. Since more than one futures contract is traded simultaneously and cash prices vary by location and time of delivery, basis is specified by market location, time of delivery, and futures contract delivery month. Most commonly, basis is quoted as the spot cash price relative to the nearest-tomaturity futures contract. Assume that the cash bid
for immediate delivery of corn at Anytown, Ill., elevator was $5.47 on Oct. 20, 2010. The December 2010 futures contract settled at $5.74, so the basis was minus 27 cents or “27 under.” July 2011 futures settled at $5.94, $0.20 higher than DecemDarrel Good ber futures, reflecting the market’s payment for storage. Basis on Oct. 20 was “47 under” July 2011 futures. Anytown elevator was bidding $4.87, or “45 under” the price of December 2011 futures for corn delivered at harvest in 2011. For each location, the history of basis behavior results in a notion of a typical or expected basis at various times during the year. Basis is referred to as “strong” (“weak”) when cash prices are higher and “weak” when cash prices are lower than expected relative to futures. Of special interest is the basis at markets deliverable for futures contracts. Cash and futures prices are expected to “converge” (basis to approach zero) at futures contract maturity since cash and futures become nearly identical commodities.
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 $29.00-$42.90 $36.00 $43.00-$55.40 $51.25 n/a n/a This Week Last Week 26,724 26,663 *Eastern Corn Belt prices picked up at seller’s farm
Some general observations can be made about crop basis behavior in Illinois: 1. New-crop basis tends to vary erratically around a historical average during the preharvest period. There is no storage cost incurred for a growing crop. Basis during the growing season is the basis that is expected to prevail at harvest, often influenced by the magnitude of harvest basis the previous year and expectations about the size of the upcoming harvest. 2. The cash price of grain typically gains on futures prices, or strengthens, as the storage season progresses. Cash prices tend to go up more or down less than futures prices because it is costly to store grain and less expensive to hold futures contracts. 3. Typically, basis strengthens most rapidly in the immediate post harvest period since the bulk of storage costs are incurred in providing storage space. 4. Deferred futures contracts are typically higher priced than nearby contracts, with the “carry” reflecting the
market payment for storage. Occasionally, futures become “inverted,” with deferred contracts priced lower than nearby contracts. 5. Basis patterns are erratic, with considerable year-to-year variation in their magnitude and behavior. In Scott Irwin addition to the cost of storing grain, basis is influenced by the supply of and demand for storage. Large crops may result in a weaker-than-expected basis at harvest and a large strengthening of basis during the storage period. Conversely, a small crop and reduced demand for storage may result in a strongerthan-expected basis at harvest and less strengthening during the storage period. The strength of grain demand, the pace of farmer selling, and transportation logistics also can influence basis behavior. Corn basis for the 2010 crop has followed the general-
ly expected pattern — very stable during the pre-harvest period at typical levels and strengthening in the immediate post-harvest period. The soybean basis followed a typical pre-harvest pattern, weakened some at harvest under the influence of a large crop, but slow to strengthen following harvest. Wheat basis behavior has been very erratic in recent years and that has continued for the 2010 crop. Pre-harvest basis was relatively constant at 50 to 55 cents under in Southwest Illinois, much stronger than the harvest basis of the previous three years. Basis was even stronger at harvest, with cash prices equaling futures prices at times, as a small crop was harvested. Basis became extremely weak in the postharvest period with cash prices 90 cents or more under December futures on Oct. 20. Periods of non-convergence of cash and futures prices at delivery markets persist. Most concern is centered on the wheat market.
Demand driving fertilizer prices higher BY JOE DILLIER
Fertilizer prices have been on a one-way ride higher. The big driver is an explosion in fall demand. The biggest increase in demand appears to be happening right here at home. Wholesale fertilizer prices domestically for nitrogen and phosphate are up anywhere from 40 to 75 percent above summer lows. Potash is up less, closer to 15 percent, but after falling continuously for 18 months right through spring, and finally bottoming last summer, even that’s been a surprisingly strong turnaround. In many cases, wholesale prices for these
increase in corn prices was in store for us. And, of course, prices for wheat, cotton, sugar, coffee, and a host of other commodities have risen, too. The impact of higher ag commodity prices has driven up buying interest globally and, of course, world prices for fertilizers. U.S. prices, especially for phosphate and potash, have gone up even more because of the immediacy of our demand and the volume of demand we are witnessing this fall. Something to note: The U.S. is generally a large exporter of phosphates, but this fall we
Eastern Corn Belt direct hogs (plant delivered) Carcass Live
(Prices $ per hundredweight) This week Prev. week $58.27 $61.07 $43.12 $45.19
Change -2.80 -2.07
USDA five-state area slaughter cattle price Steers Heifers
This week $99.97 $99.79
‘ The impact of higher ag commodity prices has driven up buying interest globally and, of course, world prices for fertilizers .’
(Thursday’s price) Prv. week Change $102.00 -2.03 $102.00 -2.21
— Joe Dillier GROWMARK
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 110.07 1.00
This week 111.07
Lamb prices Slaughter Prices - Negotiated, Live, wooled and shorn 120-165 lbs. for 120149.84 $/cwt., dressed, no sales reported.
Export inspections (Million bushels)
Week ending Soybeans Wheat Corn 10-21-10 68.3 21.5 19.8 10-14-10 64.9 21.2 29.7 Last year 52.2 14.5 25.7 Season total 251.7 451.9 253.8 Previous season total 158.7 350.5 274.3 USDA projected total 1520 1250 2100 Crop marketing year began June 1 for wheat and Sept. 1 for corn and soybeans.
products are running higher than retail-to-thefarm price levels. It’s been a crazy, “one-surprise-leads-to-the-next” kind of market for fertilizers since July. What we knew at the end of spring was that U.S. inventories had been pretty well depleted at the producer-manufacturer, wholesaler, and retailer levels. This was for most all products, and maybe most acutely for phosphate and potash. There are no statistics on this (some for the producer level, but nothing beyond that) but it “felt” pretty dry in early July for inventories overall, and coming off the fertilizer price implosion of 2008/09, targeting zero inventory post-spring season seemed smart. What we didn’t foresee was how much of an
are importing large quantities from Russia, North Africa, and even China, and we are still falling short of meeting demand. Where are fertilizer prices heading? They are tied at the hip right now to grain markets as “demand-pull” will continue to be the driver. If grain markets fall, fertilizers likely will decline, too. If grain continues to spiral up, fertilizer values will rise. The value of the dollar will have a direct impact, too. None of this is very satisfying answer to the question of which way are fertilizer prices headed, right? One thing is certain: The volatility in fertilizer prices will continue. Joe Dillier is GROWMARK’s director of plant food. His e-mail address is jdillier@growmark.com.
FarmWeek Page 15 Monday, November 1, 2010
PROFITABILITY
C A S H S T R AT E G I S T
Corn Strategy
Cents per bu.
2010 crop: The uptrend in corn remains intact. However, to signal additional gains, the December contract needs to overcome its $5.88 contract high. Even though higher prices are possible, we believe the risk of ownership has become too large to hold corn unpriced. Hedge to arrive (HTA) contractsfor winter/spring delivery may be the best marketing tool, but because carry has diminished, check them against cost of carrying inventories. 2011 crop: We continue to think initiating sales of the 2011 crop is warranted based on the income current prices offer. Once prices start to impact demand, the change could last into the new crop. Fundamentals: The trade expects USDA to report a smaller crop in the Nov. 9 report, with many expecting the yield to be dropped another 1 to 3 bushels. Against this, corn export sales are accumulating slower than expected. That’s being countered by talk that China could be buyer later in the marketing year.
Soybean Strategy
Keep an eye on export sales Export activity among the grains is like a “tale of two
Basis charts
cities.” Soybean sales, to China in particular, are accumulating extremely fast. But wheat sales have been slower than expected, and generally slow corn sales are starting to get attention. The only feature keeping the trade from responding to the disappointing corn and wheat sales is talk they could improve later in the marketing year. Soybean sales have been good, but the rapid early accumulation increases the risk they could fall sharply at any time. Soybean meal sales are not nearly as robust as they were last year, either, which could lead to a slower U.S. crush pace this year. AgriVisor endorses crop insurance by
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2010 crop: Persistent Chinese soybean buying keeps the uptrend intact. If January futures can hold $12.10, the door will remain open for a move up to $12.60 to $12.90. But we believe the large speculative long positions have made the risk too large to justify holding significant unpriced inventory, if any at all. 2011 crop: At these prices, the gross income per acre is too large to justify not making a sale. We still believe having 20 percent priced is a good marketing strategy. Fundamentals: Chinese soybean purchases continue to be accumulated at an aggressive pace but not one significantly different from last year. Even giving them an extra 2 million metric tons (73.5million bushels) out of the U.S. because of a possible harvest lag in Brazil this year, their purchases from us need only to average .3 million metric tons the rest of the marketing year. Our crush
margins have gotten so poor that some smaller plants already are curtailing activity.
Wheat Strategy 2010 crop: Upside momentum returned to the wheat market, with the Chicago December contract penetrating the 50-day moving average and the psychological $7 level. The next resistance comes at $7.39. 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 to
$7.80 on Chicago July 2011 futures for catch-up sales. If basis is wide compared to this past summer, consider HTA contract. Fundamentals: Renewed strength in wheat prices has come from persistent dry conditions in the western Great Plains and western areas of Australia. Portions of the Midwest soft red winter wheat area are dry as well, but that is not of as much concern. Weekly export sales, 604,500 metric tons (22.2 million bushels), came in at the high end of expectations, but the there’s still concern about the generally slower-than-expected pace.
FarmWeek Page 16 Monday, November 1, 2010
PERSPECTIVES
‘Death tax’ real threat for six-generation farm Life’s two certainties may be death and taxes but ment that will be mostly taken from the famiwhat about the death tax? The Illinois Farm Bureau is ly when we die. Partly, of course, we hope the calling on Illinois farmers to spread the word to tell law will change. our story. Human motivation that defies reason can On Jan. 1, 2011, the second-highest death tax in the come from deep within. My wife is a farm girl world returns to plague not only farmers but other from the German Far East. In ethnic cleansbusiness owners and investors. ing, the Russians took her family’s farm at the I will start “in medias res” (the mid- end of the war. This is as close as she can dle) with the Varner Farms story. Last come to getting it back. summer a “For Sale” sign appeared on What about me? Recall from the Bible that ground contagious to 34 acres we own the worthless servant who buried the talent on a ridge in northern Edgar County. was cast into the outer darkness where men Could we swing it? weep and gnash their teeth. The Lord has givVarner Farms began May 6, 1853, en me talent to put together a first-class operwhen my 3x great grandfather Sarsfield ation. I fear if the talent is unused, the outer Clark received a patent from the govdarkness awaits. Do I really believe that? Why ernment for 40 acres. That means we risk it? CARSON are the only family ever to own that Death taxes began in 1916 but really came VARNER land. A dozen years later in 1865, then into their own at a maximum rate of 77 per65-year-old Sarsfield bought the afore- cent under President Franklin Roosevelt in mentioned ridge ground. the 1930s. I long wondered what a guy that old was doing buyBy the end of the 1990s, the top rate was 55 pering land. Wasn’t it time to sell things off and live? Dad cent, but a new era was dawning. It was the Internet took over as a fifth generation owner in 1949. He built and high tech. A lot of creative, hard-working people up a run-down operation but never added ground. had earned new wealth. When my turn came, I thought it was time to grow This business-crippling tax, which accounted for and we have. Currently our share is 20 percent inherit- less than 1 percent of federal revenue, seemed unjust ed and 80 percent from our own and unnecessary. sweat, including earnings from Congress with fairly strong bipartisan hundreds if not thousands of support voted a nine-year phase-out nder current classes my wife and I have taught with the tax expiring Jan. 1, 2010. Then at Illinois State University as well in a devil’s pact — I believe — unless law, we then as farm income. The labor has Congress reaffirmed the phase-out or face a combeen more love than sacrifice. agreed upon a compromise, the old 55 bined federal and I am now 65 and Sarsfield is percent tax would return on Jan. 1, getting his revenge. I went to the 2011. state death taxes cemetery, rubbed his tombstone, The pact allows conservatives to of 60 percent. No and whispered, “Great, great, claim liberals want to punish business countr y except great grandpa, I need you to be and liberals to say conservatives favor with me. Bring me luck and Japan does this to the rich. courage at the auction.” He was What are the arguments for the tax? I its citizens. there and the land is ours. have seriously heard the argument that Well, sort of. The bank has a the privilege of living in America is so claim on the majority. We will great that turning more than half of make the final payment as I turn 85. Under current law, what you have over to the government should not be we then face a combined federal and state death taxes thought of as a burden. The Russians took everything, of 60 percent. No country except Japan does this to its so why complain about a 60 percent death tax? citizens. Next is that few people pay the tax, and they are So why on earth are we doing this in our later years? dead anyway. We put very few people to death, so why Reason says that we should spend away, have fun, and should anyone complain about capital punishment? live high rather than putting so much into an investNext, the tax is necessary to prevent excess accumu-
U
lations of wealth and the attendant power going with the money. Varner Farms is owned by six family units. We own 0.0034 of a percent of Edgar County farmland. A dangerous plutocracy of wealth? Next, even though it represents less than 1 percent of revenue, the government needs the money. Every study shows that the disincentives and time and money spent on tax avoidance actually cost more than is collected. Imagine the benefits to our society if all those lawyers, accountants, and financial planners could be put to more constructive tasks. Most venal, cruel, and false is the zero sum-game argument. If your business or investment has made you well off or rich, someone else must have less. Death tax is thus a just redistribution of often ill-gotten gain. Investors and entrepreneurs create wealth, not take it from others. Ironically socialist Sweden, Australia, New Zealand, Canada, and even Russia have abolished death taxes. Most others have rates of 20 percent or less. In Australia, the death rates of those who would have been liable went down significantly in the months before the tax expired. Many were able to hang on so their families, not the government, got their property. Will we see the opposite here? Die now and the farm stays in the family, but survive to January and it is on the block. Carson Varner is a professor of finance, insurance, and law at Illinois State University, Normal.
U.S. farmers riding agriculture roller coaster Riding agriculture’s economy roller coaster can be exciting, hopeful, and sometimes scary. Prices are up. Prices are down and then back up. The weather is completely out of our control. Too hot. Too cold. Too wet. Too dry. The level of JOHN uncertainty BLOCK exceeds most any other business. However, right now the situation looks good. The farm economy is on a roll. Net farm
income is projected to surge 24 percent this year to $77 billion — the fourth highest on record. The global demand for what we produce is strong. The Asian economies are growing three times as fast as our own, and they want our pork, poultry, corn, cattle, and cotton. The farm and rural economy is stronger than much of the rest of the country. The farm debt-to-asset ratio is an enviable 13 percent. Recently I attended a luncheon and heard Dan Glickman, former agriculture secretary for President Bill Clin-
ton. He reinforced the position for agriculture. “We need to double food production in the next 40 years, and we need to do it without any big increase in acres,” Glickman said. That’s our challenge. To further increase demand for our production and acres, the Environmental Protection Agency is opening the door to allow 15 percent ethanol in our fuel for cars sold after 2006. On top of that, USDA cut this year’s corn yield projection for the second time, which is inflating corn prices. The rising price of corn and other grains presents a
challenge as well as an opportunity: • The “food vs. fuel” conflict may become an issue like it was in 2008. In fact, you can expect to hear from livestock producers and food processors about this added cost. • Food price inflation could become a concern. However, few economists expect us to experience the 5 percent jump in food prices we experienced in 2008. Most are expecting a modest 1 or 2 percent increase. This year’s crop is worth more than we had expected, and if the weather will coop-
erate, we are in a position to produce a big crop next year. And it is going to be worth a lot of money. The farm economy and rural economy that go hand in hand are positioned to “let the good times roll.” We ride this roller coaster year after year. We go up. We go down. Hold on, because now we are ready to go up. John Block of Gilson, a former U.S. agriculture secretary in the Reagan administration, is a senior policy adviser with the Washington, D.C., firm of Olsson, Frank, Weeda, and Terman. His e-mail address is jblock@ofwlaw.com.