Agriculture iS a bright spot in the state’s economy, ag leaders were told on Illinois Agricultural Legislative Day last week at the Capitol in Springfield. .............3
t h e i l l i n o i S S tA t e Water Survey has found no significant draw-down on the Mahomet Acquifer from irrigation in the Mason County area. .......................5
chineSe Agriculture has come a great distance toward catching up with agriculture in the U.S., but it still has a long way to go, a study group learned recently. .............7
Monday, April 2, 2012
Two sections Volume 40, No. 14
Schilling emphasizes firm commitment, ‘robust’ safety net BY MARTIN ROSS FarmWeek
Illinois farmers seek no handouts or guarantees, but simply certainty, U.S. House Ag Committee member Bobby Schilling told FarmWeek last week. In a followup to a March 23 farm bill field hearing in Galesburg, the Colona Republican pledged committee efforts to help assure that certainty through a Rep. Bobby “strong and Schilling robust” crop insurance program, a continued producer safety net, and a long-term
ag policy commitment. “The biggest takeaway I got, not only from the people testifying (at the hearing) but also from the farmers who came to me before and afterward, was that they want a five-year farm bill,” Schilling said. “They don’t want something temporary. I tend to agree with them. “It gives them peace of mind knowing we’re locked in for five years. We know what the game rules are here. “If we need that new piece of equipment, or if we want to hire some people for a little bit longer term, we’re able to do that.” Ag Chairman Frank Lucas (R-Okla.) acknowledged challenges in designing a 2012 farm bill that accommodates
“so many different regions and so many different commodities.” He admitted “a one-sizefits-all (farm) program will not work,” stressing instead the need for flexible options that best suit individual ag sectors. Lucas deemed crop insurance “the cornerstone of the safety net,” and sought recommendations for improving the system moving forward. Farmers are willing to contribute to budget savings through reductions in program benefits, Schilling said. But he argued bipartisan ag lawmakers would write a farm bill that meets farm and consumer needs notwithstanding a House budget plan that includes $10 billion more in long-term ag spending cuts than has been proposed by
House and Senate ag committees. Last week, the House OK’d a $3.5-trillion, 10-year budget plan, voting along party lines to revamp Medicare and cut programs ranging from food stamps to transportation. House Budget Chairman Paul Ryan (R-Wis.) argued a proposed $33 billion in ag cuts “reflect(s) the economic reality of record-high farm income by restructuring farm programs, saving taxpayers money, and increasing farmer independence.” Schilling noted the Senate has failed for more than two years to pass a major budget plan, and questions whether senators will even take up the House plan. He stressed the value of
conservation funding in helping farmers remain “out there in the front” of U.S. resource stewardship. Lucas said he will seek ways to simplify programs to make them easier for farmers use. At the same time, Lucas noted producers are worried about expanding U.S. Environmental Protection Agency regulations “and how they can comply with them.” One potential point of contention between House and Senate ag leaders is the extent to which nutrition spending should be cut and where cuts can be made. Schilling believes Congress can target current “waste, See Schilling, page 4
Lower corn stocks, fewer bean acres cause price flurry BY DAVE MCCLELLAND FarmWeek
Periodicals: Time Valued
So much has been speculated lately about farmers planting a huge corn acreage in the U.S. this year that when USDA’s prospective plantings report Friday confirmed that speculation, it wasn’t really that much of a surprise. What was significant was that corn stocks came in much lower than expectations, caus-
ing old-crop corn prices to climb 30 to 35 cents a bushel immediately following the report and later to move limit up and new-crop prices to increase about 12 cents. Equally significant was the soybean acreage farmers indicated they plan to plant: 73.9 million acres, down 1 percent from last year and down 5 percent from 2010. That caused old-crop prices to soar 50 cents per bushel higher and the new crop to hit 60 cents. The corn acreage estimate
to plant 12.5 million acres of corn, down 1 percent from last year and in 2010, and 9 million acres of soybeans, up 1 percent from 2011 but below the 2010 planted acreage. Illinois wheat farmers indicated they planted 660,000 acres of wheat last fall, about 17 percent less than in 2011 but twice as much as in 2010. Nationwide, an estimated 41.7 million acres of winter wheat was planted, up 3 percent from last year. “There was almost no surprise in the (soybean) stocks report (1.37 million bushels nationally),” said Bill Tierney, FarmWeekNow.com chief economist for Ag Listen to analysts’ comments Resources Co., Chicago, speakabout the latest prospective planting Friday at a teleconference Hopefully, the only frost this corn will encounter this year is that of Terry i n g s r e p o r t a t F a r m We e k hosted by the CME Group. Frost of Flora, left, and his son, Andy. The Frosts showed the corn they Now.com. “The big surprise in soyplanted in a field near Flora on March 7 and sidedressed with anhybeans was in the acreage numdrous ammonia on March 26 can easily be rowed. (Photo by Steve Hoswas put at 95.9 million, up 4 ber.” selton, Illinois Farm Bureau District 14 director from Louisville) percent from last year and 9 The estimate came in lower scenario for soybeans, he said. window, they will plant all their percent higher than in 2010. than trade expectations, someFriday’s report was based on corn seed, and that typically That acreage represents the thing that has happened only conditions as of March 1, so means they will cut back on highest since 1937 when an twice in the last 29 years, said there is a possibility rising soysoybean acreage. estimated 97.2 million acres Tierney. bean prices could entice more “And right now, it looks like were planted. Add to that lower number the corn crop could get plantSurprisingly, Illinois farmers the prospect of a smaller South acres to beans, but Tierney doesn’t believe that will haped at a very rapid pace.” indicated they plan to buck American crop and continued pen. So far, that seems to be the both national trends. soybean purchases by China, “If farmers have an open case in Illinois. Farmers here said they plan and you have a “very bullish” FarmWeek on the web: FarmWeekNow.com Illinois Farm Bureau®on the web: www.ilfb.org
FarmWeek Page 2 Monday, April 2, 2012
Quick Takes ‘AWESOME’ AG EDUCATORS — Following a recent farm bill field hearing in Galesburg, Colona Republican House Ag Committee member Bobby Schilling praised farmers for providing not only food for thought but also needed fodder for consumers. He cited Warren County farmer Deb Moore’s extensive work with the group Illinois Farm Families (IFF), which, Schilling said, is doing “an awesome job of going into the bigger cities” and helping shape and correct urban perceptions about farming and food production. Moore’s was one of five Illinois families featured in an online program that enabled more than 115,000 consumers to virtually “tour” their farms. In June, she plans to welcome IFF-sponsored urban “field moms” to her operation. EXPO SETS RECORDS — The recent Illinois Products Expo, a two-day show in Springfield that features products from 77 Illinois companies, broke sales and attendance records. More than 7,700 consumers attended and companies reported sales of more than $130,000. The Product Expo “is one of the easiest ways to get your product into the hands of Illinois consumers,” said Julie Hubbard, owner of Julie’s Corner Store. The expo is one avenue the Illinois Department of Agriculture (IDOA) uses to expand markets for Illinois products. Last fiscal year, IDOA also participated in 16 international and domestic trade shows, led 13 foreign buyers’ missions and industry tours, assisted with more than 7,100 buyer-seller introductions, and disseminated 383 trade leads to Illinois companies. Those activities generated $59 million in sales and another $119 million in projected sales for Illinois food companies and agribusinesses. H I G H C O U RT A N D H E A LT H — T h e U. S. Supreme Court is not expected until summer to issue a final decision on whether key provisions of “Obamacare” will stand. But House Energy and Commerce Committee member John Shimkus is encouraged by what he sees as an opportunity to reactivate the health care debate. The Collinsville Republican noted predictions that the court will rule planned federal health insurance mandates unconstitutional. “I hope they’re cor rect,” he told FarmWeek. “We’ll find out at the end of June.” Despite claims by supporters of administration-supported health care reforms, Shimkus remains concerned some consumers could lose existing coverage plans. He argued new state Medicaid expansion requirements would challenge health care providers and would prove especially burdensome for Illinois, “a state that’s already going bankrupt.” “If (the justices) strike down the individual mandate — I hope they strike down the entire bill — then we can start addressing a market-based solution to how we can ensure everyone has access to an insurance product that has catastrophic coverage and is affordable,” Shimkus said.
(ISSN0197-6680) Vol. 40 No. 14
April 2, 2012
Dedicated to improving the profitability of farming, and a higher quality of life for Illinois farmers. FarmWeek is produced by the Illinois Farm Bureau. FarmWeek is published each week, except the Mondays following Thanksgiving and Christmas, by the Illinois Agricultural Association, 1701 Towanda Avenue, P.O. Box 2901, Bloomington, IL 61701. Illinois Agricultural Association assumes no responsibility for statements by advertisers or for products or services advertised in FarmWeek. FarmWeek is published by the Illinois Agricultural Association for farm operator members. $3 from the individual membership fee of each of those members go toward the production of FarmWeek.
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STATE
Illinois House OKs paying down debt, less spending Deep cuts anticipated BY KAY SHIPMAN FarmWeek
The Illinois House on a 91-16 vote last week approved a plan to pay $1.3 billion in old bills and make $5.1 billion in state pension payments in addition to other obligations from $33.719 billion in estimated general revenue. The House also voted to divide $15.65 billion in revenue among education (both elementary-secondary and higher ed), FarmWeekNow.com human servicCheck out Quickview for the es, public latest updates from the State- safety, and general servhouse at FarmWeekNow.com. ices. House Democrats and Republicans negotiated the budget outline. Kevin Semlow, Illinois Farm Bureau director of state legislation, noted the House members put payments to the state employee pension fund at the front end of the budgeting process. “The General Assembly is attempting to make it clear that the pension payments are a large drain on the budget and cannot be delayed or sidestepped,” Semlow said. The appropriations approved were: $6.49 billion for elementary and
secondary education, $1.98 billion for higher education, $5.09 billion for human services, $1.57 billion for public safety, and $1.17 billion for general services. “When the General Assembly returns from Easter break, the appropriation committees will sit down and discuss the specific appropriation of funds in the individual categories,” Semlow said. “The proposed spending levels also are contingent upon a $2.7-billion cut in Medicaid, as called for by the governor,” Semlow said. “If Medicaid reform and reductions are not made, there could be less funding for operating state agencies and programs. “If the $2.7-billion reduction is not accomplished, there could be even more cuts in core programs,” Semlow continued. Of state funding taken off the top, $6.638 billion would be spent on Medicaid and $500 million would go for overdue Medicaid bills. The proposal would spend $300 million to reduce other unpaid state bills. The state’s unfunded pension liability is an estimated $82 billion, and the state now owes an estimated $8 billion in overdue bills.
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STAFF Editor Dave McClelland (dmcclelland@ilfb.org) Legislative Affairs Editor Kay Shipman (kayship@ilfb.org) Agricultural Affairs Editor Martin Ross (mross@ilfb.org) Senior Commodities Editor Daniel Grant (dgrant@ilfb.org) Editorial Assistant Linda Goltz (Lgoltz@ilfb.org) Business Production Manager Bob Standard (bstandard@ilfb.org) Advertising Sales Manager
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Michael Foley and Corrine Stoewer, both members of the Scales Mound High School FFA chapter in Jo Daviess County, separate baskets that FFA members later filled with Illinois products and distributed to legislators and state officials on the 42nd Annual Agricultural Legislative Day. Foley and Stoewer joined more than 700 FFA members from across Illinois who assembled and delivered the baskets last week. Representatives of many ag groups chatted with lawmakers over breakfast, then received a legislative briefing before making separate visits with their senators and representatives. (Photo by Ken Kashian)
Page 3 Monday, April 2, 2012 FarmWeek
AROUND ILLINOIS
Illinois ag economy praised on Ag Legislative Day BY KAY SHIPMAN FarmWeek
Agriculture is a bright spot in the state’s economy, ag leaders were told on Illinois Agricultural Legislative Day last week at the Capitol in Springfield. “The field of agriculture is a beacon of opportunity and things going right in Illinois,” Lt. Gov. Sheila Simon told assembled ag leaders. “The budget is stretched, and forces are working to squeeze the money we want to spend on other things.” Representatives of farm and commodity groups along with other agFarmWeekNow.com related groups View video from the Illinois and ag educaA g L e g i s l a t i v e D a y a t tors gathered early at the FarmWeekNow.com. Howlett Building to speak with lawmakers and state officials over breakfast. Agricultural exports were highlighted by Simon and acting Illinois Agriculture Director Bob Flider, who focused on the governor’s goal to double exports from Illinois.
“The best approach to increasing exports is to make sure you (agriculture sector) are successful,” Flider said. Kevin Semlow, Illinois Farm Bureau director of state legislation, briefed ‘The field of agri- leaders on sevculture is a bea- eral bills before con of opportunity they discussed legislative and things going ag priorities with right in Illinois.’ their legislators. Last week — Lt. Gov. was the deadSheila Simon line for passage of bills in the chamber of origin. IFB President Philip Nelson reminded ag leaders the state is facing an $8 billion deficit, $6 billion in overdue bills, and $82 billion unfunded pension liability. He encouraged ag leaders to stay abreast of pension reform proposals.
Illinois Farm Bureau Director Chris Hausman of Pesotum, left, chats with Bob Easter, the new University of Illinois president designate, last week during Agricultural Legislative Day activities at the Capitol. During an issue briefing, Easter received a round of applause after Illinois Farm Bureau President Philip Nelson congratulated him on his forthcoming U of I leadership position. (Photo by Kay Shipman)
Local farmers sought-after commodity at buyer meeting Local far mers were in demand as buyers sought new suppliers of locally grown foods at a meetthe-buyer meeting last week at the Champaign County Far m Bureau in Champaign. “We’re looking for everything that can be grown in Illinois,” chef Alisa DeMarco told far mers. The meeting attracted a variety of growers. Some were new to specialty crops and others had years of experience. Conventional and organic far ms were represented, and the far m operations ranged from small to large. The event was hosted by the county Far m Bureau and the University of Illinois Extension. Other collaborators were Illinois Far m Bureau, Central Illinois county Far m Bureaus, and the Illinois Specialty Growers Association. Individual buyers presented general infor mation to the far mer audience. After each presentation, far mers lined up to speak one-on-one with buyers. “I’m here to learn more what buyers are looking for and to see how to meet them,” said Kankakee County far mer John Pilcher, who is starting his third year of growing aronia berries on his Momence far m. Ver milion County far m-
Variety of markets pitched for locally grown crops
Woodford County farmer Brian Springer of Metamora discusses his plans to plant an orchard with Sue Dawson, the food service director of Hendrick House, a privately owned residence hall on the University of Illinois Urbana-Champaign campus. Dawson was one of several buyers who discussed buying locally grown foods during last week’s meet-the-buyers meeting at the Champaign County Farm Bureau office in Champaign. (Photo by Kay Shipman)
ers Frank and Janet Butler are considering expanding their vegetable crops operation. “We’re looking to see what’s available in our area,” Janet said. Frank added the couple is considering regional markets because Indianapolis is only 90 miles from their far m. The buyer meeting was a new experience for secondyear far mer Terry Nuetz Hayden of Monticello. She plans to add flowers to the mix of her specialty crops far m. However, she is still
exploring marketing options: “Is this the right place for us?” she wondered. Kankakee County far mer Duane Oosterhoff said details supplied by the buyers were infor mative, and he appreciated the opportunity to meet with them. “My thanks to IFB, the Specialty Growers, and the U of I Extension for setting these (meetings) up,” Oosterhoff said. “A lot of good connections were made today.” — Kay Shipman
An impressive breadth of markets is interested in buying from local farmers. The buyers’ customers range from university residence halls to restaurants and from food pantries to large grocery stores. They participated in a meetthe-buyer event last week at the Champaign County Farm Bureau, Champaign. “Homegrown produce has become more popular in our retail stores,” Dan Fechte, a merchandiser-merchant with Schnucks, told FarmWeek. “It’s an important part of our entire chain.” Large markets with representatives attending the meeting included Schnucks, the University of Illinois foodser-
vice, and Central Illinois Produce, a food service distributor. Some buyers reported they are able to take deliveries of smaller quantities. Strawberry Fields, an Urbana natural food store, offers produce from five to six farms at one time. Some markets have specific product requirements, but Feeding Illinois, a network of food banks, will buy less-thanperfect produce, according to Stacy Smith, Feeding Illinois state director. Buyers for Hendrick House, a private U of I residence hall, said their menu planning is flexible and can reflect the seasonal produce available in Central Illinois. — Kay Shipman
FSA announces milk income loss contract payment rates The February payment rate for the Milk Income Loss Contract (MILC) is 38.95 cents per hundredweight, USDA Farm Service Agency Administrator Bruce Nelson announced last week. This is the first time there has been a payment for MILC since April 2010. “Dairy producers are affected by the market price for milk and the price of feed to sustain their herds,” Nelson said. “While milk prices have remained above the $16.94 base used in the MILC calculation, the increase in feed prices has triggered payments because of the feed ration component.” MILC payments are triggered when the Boston Class I milk price falls below $16.94 per hundredweight, after adjustment for the cost of dairy feed rations. MILC payments are calculated each month using the latest milk price and feed cost.
FarmWeek Page 4 Monday, April 2, 2012
government
Lawmakers revive attempts to rein in EPA reach BY MARTIN ROSS FarmWeek
U.S. House and Senate lawmakers have regrouped in an attempt to rein in U.S. Environmental Protection Agency (EPA) water regulation and potential control over ag activities. Last week, 30 senators unveiled the Preserve the Waters of the U.S. Act, which would prevent EPA and the U.S. Army Corp of Engineers from using agency “guidance” to increase landowner regulation under the federal Clean Water Act (CWA). Recent EPA guidance documents have raised fears about a federal takeover of all “U.S. waters,” potentially including farm waterways, ditches, and other non-navigable waters. “We’re going to continue to confront the EPA on its
aggressive overreach in trying to manage the health and environment of our nation to the exclusion of job growth and economic opportunity, especially when its rules and regulations are questionable under scientific scrutiny,” Rep. John Shimkus, a Collinsville Republican, told FarmWeek. Meanwhile, the House’s Preserving Rural Resources Act would clarify ag exemptions granted by Congress under the CWA’s Section 404. American Farm Bureau Federation (AFBF) President Bob Stallman sees “a concerted effort by regulators to narrow the scope and usefulness of the CWA exemption Congress explicitly intended for agriculture.” Without exemptions, farmers face high regulatory costs and “constraints on land used for the production of food,
House holding out for five-year highway plan ‘certainty’ Faced with weekend expiration of federal highway provisions and continued roadblocks to a House-Senate compromise, Congress Thursday approved one more stopgap extension of existing transportation legislation. Two Illinois congressmen nonetheless see work toward a long-term highway bill resuming this summer. The House rejected a bipartisan Senate proposal for a two-year, $109 billion surface transportation bill, voting instead for a temporary 90-day extension. House Energy and Commerce Committee member John Shimkus, a Collinsville Republican, said he hopes colleagues can regroup after Congress’ Memorial Day break and “make one more run” at including key oil and natural gas development provisions in the measure. House Speaker John Boehner (R-Ohio) questioned what he termed the Senate’s “gimmicks” for funding its bill. He argued the plan at least temporarily would reduce the highway trust fund (a repository for infrastructure improvement funds fueled by fuel tax revenues) “to virtually zero.” Sen. Dick Durbin, a Springfield Democrat, called the House bill a “wasted opportunity.” But Rep. Bobby Schilling, a Rock Island Republican, emphasized the need for a fiveyear transportation package that promotes nationwide road and bridge upgrades and assures ag regulatory relief. Noting infrastructure improvement is a “long-term investment,” Schilling likened the benefits of locking in long-range highway project costs to savings for farmers who buy seed and inputs early to beat rising prices. “Those folks who are building roads and bridges need that five-year certainty — at least five years — just so they can go out and buy equipment and know that they are going to be able to hire people,” Schilling told FarmWeek. “This is really about helping to get the country moving forward. You can’t do that when you’re doing all these temporary extensions. It’s all about certainty.” The Senate rejected House-backed efforts to include domestic energy development provisions in the highway bill. Shimkus supports House proposals that would tap oil and gas lease royalties “to pay for better roads and bridges.” Both the Senate plan and House proposals include provisions that would exempt farmers hauling goods to market or supplies to the farm from costly and laborious commercial drivers license requirements, American Farm Bureau Federation policy specialist Andrew Walmsley noted. — Martin Ross
fiber, and fuel,” Stallman said. AFBF regulatory specialist Don Parrish deemed House proposals “very straightfor-
ponds or irrigation ditches and maintenance of drainage ditches. • Construction of temporary sediment basins.
not previously subject to.” By tweaking criteria for regulated waters, it could block pond construction in a drainage area
‘ We’re going to continue to confront the EPA on its aggressive overreach.’ — U.S. Rep. John Shimkus Collinsville Republican
ward,” exempting producers from EPA permits for or restrictions on: • Practices common to “normal farming” and ag forestry. • Routine maintenance or emergency construction of dams, levees, breakwaters, causeways, and other structures. • Construction of farm
• Construction or maintenance of farm or forest roads. • Activities under state Section 208 water quality programs. EPA has mulled exercising control over “any discharge, dredge, or fill material incidental to any activity having the purpose of bringing area navigable water into a use it was
classified as “a water of the U.S.,” Parrish said. “EPA’s saying that farming isn’t necessarily farming — that suddenly, if you want to put crops where that pasture was or an orchard where those crops were, if (EPA thinks) there’s a farmed wetland there, you can’t do it,” he told FarmWeek.
Growing the policy: Input from the farm The U.S. House Ag Committee recently solicited grassroots input on ways to stretch federal dollars and maximize producer efforts through the 2012 farm bill. Here are some Illinois producer thoughts: Security. Knox County cash grain farmer David Erickson seeks a “reasonable” safety net to help growers ”withstand inevitable variability in prices and production.” Warren County’s Deb Moore said new programs must be “more efficient, effective, and defensible.” That means a focus on risk management and planting flexibility and compliance with U.S. trade obligations, she said. Restructuring federal crop insurance would hurt farmers, Moore advised. At the same time, Henry County hog producer Gary Asay urged nationwide availability of a pilot Livestock Gross Margin insurance program and removal of a $3 million cap on “swine insurance” funding that serves to “severely restrict” the number of animals a producer can protect. Moore also stressed need for credit for new farmers and availability of Farm Service Agency-Commodity Credit Corp. loans. “Our farm usually takes loans out every year for corn and soybean production to help with cash flow,” she said. Asay, meanwhile, noted economic challenges ahead for livestock producers coping with high feed grain prices. He noted proposals to reactivate a federal interdepartmental Livestock Task Force to review policies aimed at averting “a feed-related crisis,” and urged efforts to tap animal fat, manure, and non-
feed biomass crops as energy sources. Today, Asay said, pork represents 44 percent of global meat protein intake, “and world pork trade has grown significantly in the past several years.” “The extent of this increase in the future will hinge heavily on continued efforts to increase agricultural trade liberalization,” Asay maintained. Simplification. Erickson urged lawmakers to streamline farm program paperwork “and the near endless amount of information that must be provided.” Absentee landowners “are reaching the end of their desire to comply with all of the requirements for farm program participation,” he said. That could increase the likelihood of future cash-only rental arrangements, “which only compounds the risk farmers must bear,” Erickson warned. Stewardship. He argued some existing conservation programs as well are “overburdened with rules and procedures” and thus “use up limited (federal) budget allocations.” He encouraged Congress to consolidate and simplify programs “to allow for the most effective use of those funds.” Moore said he favors an emphasis on programs that foster conservation on “working lands.” She recommends a reduced cap on Conservation Reserve Program (CRP) enrollment. Asay said she supports moving more CRP land into active production and allowing penalty-free release of less-sensitive CRP acres in the event of a “feed crisis.” — Martin Ross
Schilling Continued from page 1 fraud, and abuse” in food stamp and related programs “without taking one piece of nutrient away from the tr uly needy peo-
ple in this countr y.” He said he was encouraged that Illinois was included on Chairman Lucas’ field hearing schedule. “Illinois is definitely an
agricultural powerhouse,” he maintained. “I think this shows we are very important when it comes to putting this next (far m) bill together.”
Page 5 Monday, April 2, 2012 FarmWeek
EnvironmEnt
Reports, plans good news for Central Illinois water supply BY KAY SHIPMAN FarmWeek
East-Central Illinois continues to learn more about the Mahomet aquifer as the region looks to update its water supply plans. Last week, county and industry sector representatives, water supply professionals, and scientists heard reports before dividing into groups to discuss future action and programs. The regional water conference in Urbana was the latest effort of an east-central regional water supply plan that started in 2007. A regional water supply planning committee released its report in June 2009 and plans to revisit the plan that projects water supplies and needs to 2050. The goal is to release an updated report by 2014. Mason County farmer and planning committee Vice Chairman Jeff Smith of Easton represents agriculture on the committee. He reported one of the committee’s goals was for voluntary adoption of its recommendations in the 18 East-Central Illinois counties. The Mahomet Aquifer flows under most of the counties. The committee also wanted its plan to reflect the region’s specific geology, typography, and needs,
Smith emphasized. “We don’t want a state (water supply) plan because every region is different,” Smith said. As researchers with the state’s geological and water surveys have continued to study the Mahomet Aquifer, they have learned how the aquifer operates and that more water is available than once thought. “We don’t see a long-term impact of irrigation (primarily in Mason County’s Havana lowlands) on aquifer levels. We have additional recharges from local flooding and the Illinois River,” said George Roadcap, an Illinois State Water Survey (ISWS) scientist and technical adviser to the Mahomet Aquifer Consortium. The aquifer acts differently on the eastern side of the state and there is interaction between it and nearby streams. Recharge from rivers is causing less of a drop in aquifer levels relative to the amount of g roundwater being pumped out, Roadcap noted. Within the 18-county region, some surface water supplies are a larger concer n, especially if a worstcase scenario drought occurs, said Ver n Knapp, a
Climatologist: Record warm March leaves upper soil dry Farmers won’t soon forget March 2012 and its record warm temperatures but less than average precipitation. “The top two- to three-inch soil layer is drying out,” Jim Angel, state climatologist, said last week. “Normally you’re facing muddy fields” this time of year. Angel spoke at an east-central regional water conference in Urbana. “This is the warmest March on record. It’s been unbelievably warm as far as March goes; and it’s one to two inches below (normal) March precipitation,” Angel added. These conditions have some farmers speculating about the 2012 growing season and available soil moisture. The previous months did not set the Jim Angel stage for plentiful soil moisture, according to Angel. November was a wet month, but January, February, and March had below normal precipitation, he said. From July 2011 through March 28, 2012, we “still see the dryness of last summer lingering,” Angel said. Precipitation in Western Illinois was two to six inches below normal during the period, he noted. The impact can be seen in streams and rivers that “normally are bank full this time of year but are running low,” Angel said. He pointed out the Illinois State Water Survey monitors soil moisture levels at 18 sites around Illinois. As of last week, Illinois “still has plenty of soil moisture at lower levels, but the top inches are getting dry,” Angel said. — Kay Shipman
Mason County farmers Jeff Smith, left, and Bob Betzelberger, right, talk with Dave Larson, a hydrologist with the Illinois State Geological Survey, during a regional water conference in Urbana last week. Smith and Betzelberger are members of an East-Central Illinois regional water supply planning committee. (Photo by Kay Shipman)
retired ISWS scientist. Knapp pointed out Bloomington, Decatur, and Springfield face concer ns about adequate water supplies during a severe drought. “It’s pretty clear these
three (communities) need to be looking in the direction of additional water supplies,” Knapp said. His point was echoed by the regional water planning committee, which recommended the three communi-
ties improve their water supplies to prepare for drought. The regional water supply plan, information about the planning committee, and related reports are available online at {www.rwspc.org}.
FarmWeek Page 6 Monday, April 2, 2012
energy
Biodiesel plant seeks regional materials, markets BY MARTIN ROSS FarmWeek
A fledgling Illinois biodiesel producer not only sees a promising market niche. It believes it’s found its “hole.” Chicago-based Blue Northern Energy hopes by August to launch commercial biodiesel production at a 50million-gallon-per year plant at Newton. The Jasper County facility is an offshoot of efforts by the National Trails Biodiesel Group (NTBG), a former Southern Illinois ag coalition that explored biofuels opportunities roughly a decade ago. In 2009, NTBG sold its development work to Blue Northern, which had identified strong biodiesel market potential in Central/Southeastern Illinois. Illinois is relatively virgin territory and thus fertile ground for biodiesel production. Renewable Energy Group operates plants in Danville and Seneca, while
Stepan, a chemical/biofuels manufacturer, is based in Joliet. Terrence Quandt, Blue Northern vice president of risk management and fuel marketing, cited his company’s hopes of capturing both regional on-road fleet and farm fuel markets. “To our pleasant surprise, we found there was a sort of a hole in production in that part of Illinois,” Quandt told FarmWeek. “A lot of fuel jobbers (petroleum marketers) and co-ops have had to drag fuel down from Danville or Seneca. Within the fuel industry, transportation costs can eat into margins real quick. “We feel we’re in a great position to capitalize on the demand within that sector down in the Effingham/I57/I-70 corridor, to capitalize on our location and offer fuel on a more cost-competitive basis.” Newton plant construction is 65-70 percent complete. The plant will produce various
Pennycress, an overwintering oilseed crop seen as offering key potential for biofuels/bioproduct production, was on display at a recent field day in Lexington sponsored by Illinois-based Pennycress Partners Inc. (PPI). Seen here, from left, are Western Illinois University alternative crop specialist Win Phippen; Blue Northern Energy Vice President Terrence Quandt; Peter Johnsen, chief technology officer with Arvens Technology Inc. and consultant with PPI; Lexington-area farmer Bruce Klein; and Blue Northern’s Michael O’Meara. Blue Northern representatives dropped in to explore the potential of new biodiesel feedstocks beyond soy oil: “You always have to keep your eye out for emerging feedstocks,” Quandt told FarmWeek. (Photo by Cyndi Cook)
fuel formulations, from a standard biodiesel that meets industry specifications to fuels with greater oxidation stability, reduced water content, and
other storage or performance traits. That flexibility is possible through Blue Energy’s “continuous flow” production technology — in Quandt’s view, a refinement over older individual batch-by-batch technology. Blue Northern’s process should allow the company to convert soy oil into biodiesel in 20 minutes, vs. a nearly two-day conversion process under traditional “batch technology.” The key co-product of biodiesel production is glycerine, a compound with diverse industrial uses. Glycerine also can provide energy in livestock rations, and Quandt has explored the possibility of marketing the product to cattle producers. Blue Northern is thinking locally in terms not only of
market development but also in sourcing ag feedstocks for biodiesel conversion. The Newton plant is located “right in the heart of soybean country,” within 100 miles of Archer Daniels Midland Co. and another Indiana crushing facility. Quandt is optimistic about biodiesel’s future in Illinois, applauding state renewal of the sales tax exemption on B11 (11 percent biodiesel fuel). Quandt cited one 2,000vehicle Chicago-area school bus fleet that runs B11 both for the reduced emissions associated with biodiesel use and tax savings. “I have a friend who’s an over-the-road trucker,” he related. “His company now says, ‘You fill up in Illinois — you don’t fill up in Iowa or Indiana.”
Ethanol production key to fueling African homes? A pair of biofuels tech providers hopes to fuel Africa’s farmers while adding value to a traditional staple crop and saving trees, to boot. Novozymes Executive Vice President Peder Holk Nielsen said “there is definitely a market in the emerging countries” for biofuels, especially in China and Southeast Asia. But in regions in which economic emergence is a far greater challenge, he believes ethanol can play a role in helping raise low-income producers from a subsistence existence. In Africa and other poorer nations, ag income is stymied by “very expensive oil,” Nielsen told FarmWeek. Novozymes, a Denmark-based global biotech company thus is partnering with ICM, a Kansas firm that specializes in ethanol production systems, to help African farmers tap the potential of cassava, a major starch crop. Cassava-based ethanol could be used as a home cooking fuel “rather than cutting down the forest” and further endangering already sensitive ecosystems, Nielsen said. “This is not something that’s going to be big business for us,” he admitted. “It’s not all about flex-fuel cars in North America or China.” -– Martin Ross
Page 7 Monday, April 2, 2012 FarmWeek
global issues
China playing a mean, green game of catch-up BY MARTIN ROSS FarmWeek
While Chinese agriculture overall may remain “way behind” that of the U.S., Doug Yoder is astonished by “how much China’s caught up already.” Yoder, Illinois Farm
Bureau’s market education specialist, eyed Chinese and Indian development as part of a March Illinois Agricultural Leadership Program study tour. Members visited a Chinese “farm of the future”: Beijing DQY Agricultural Technology Co. Ltd.’s state-of-the-art, 500
Planting seeds of productivity: China’s seed/biotech concerns China may be on the cutting edge of ag technology, but marketing crop technology and partnering in Chinese biotech development can be a double-edged sword. Asia Pacific Research Center Department of Law and Politics consultant Han Ke believes it will be “quite some time” before genetically modified crops are approved for food consumption in China. Han cites what he deemed a misguided consumer “fear of GMOs.” And while companies including Monsanto and DuPont have established a presence in China, the country continues to grapple with patent and related intellectual property issues that could impede future release of protected crop traits. China’s conventional seed industry already faces key challenges. It has more than 8,000 licensed seed companies, but only about 200 have capital over $4.6 million and a mere 100 have research capabilities. Prior to enactment of Chinese seed law in 2000, all growers bought seed through one state-owned company. After that, “many foreign varieties flooded in, gradually exerting a stranglehold on the market,” argues Zhang Xue, director of the Yushu Agriculture Bureau in China’s Jilin Province. Production of Pioneer’s top corn variety in Jilin Province rose from some 346,000 acres in 2008 to nearly 3.46 million acres in 2010. Meanwhile, a local brand that once accounted for 50 percent of the Jilin market has seen its share shrink to 10 percent. The city of Yushu boasts more than 320 different seed companies, most operating on what is known locally as “Seed Street.” Beyond differences in management and product quality among companies, Chinese officials report misuse of commercial trademarks and misrepresentation in seed advertising particularly across Northeast China. Further, Illinois Farm Bureau market education specialist Doug Yoder noted widespread use of “knockoff ” corn seed sold in Monsanto or DuPont bags. “Fake” seed may account for 70-80 percent of Chinese plantings, he said. “If they get that fixed, if they can get people planting better hybrids and not the knockoff cheap seed, obviously, their production would go up rapidly,” Yoder maintained. — Martin Ross
Hog herd increases slightly The nation’s hog herd on March 1 was up 2 percent from a year ago, but down 2 percent from last December. In its quarterly report, USDA said both the breeding herd and market hog inventories were higher than last year. The December-February pig crop totaled 28.7 million head, up 3 percent from 2011 levels. For Illinois, the number of hogs and pigs on March 1 was 4.65 million, 6 percent more than on March 1, 2011, and comparable to what was on hand Dec. 1, 2011. Breeding hogs on hand March 1 were estimated at 510,000, up 9 percent from a year earlier, and market hogs, at 4.14 million head, were up 5 percent.
Pork analyst Len Steiner of Steiner Consulting in Manchester, N.H., said the lack of consumer pork buying has been puzzling in light of higher beef prices at retail meat counters. “We’ve been surprised that there hasn’t been as much demand for both pork and chicken,” he said. Given Friday’s grain stocks and acreage reports, analyst Jon Nalivka of Sterling Marketing in Vale, Ore., said the potential for higher feed costs remains an obstacle for farrow-to-finish operators. In the short-term, analysts said hog prices may remain steady to weaker as packers reduce slaughter for the upcoming Easter holiday.
million-egg-per-year joint layer venture. According to Yoder, the enterprise could meet 71 percent of annual consumer demand in Beijing. China continues to invest heavily in African agriculture to feed its own growing megacities. Chinese officials also have signed with U.S. food giant Smithfield to launch a pilot 82,000 hog operation in North Carolina. DQY Eggs represents a key trend in Chinese agriculture. Amid industry consolidation, the number of Chinese layer operations has dropped from 1.1 million to 700,000 over the past decade. “(DQY Eggs) is the wave of the future,” Yoder said. “Numerous facilities like this are being built around the country. We did not visit a small, typical Chinese ‘momand-pop’ operation. They wanted to show this baby off.” Today, China is the world’s largest egg producer, supplying roughly 40 percent of the global market. At the same time, China’s leaders recognize concerns about the boom in development and productivity that
has resulted in the thick brown smog that blankets Beijing and widespread water contamination across the subcontinent. DQY Eggs generates 212 tons of manure and 300 tons of wastewater per day but uses anaerobic digestion to convert
waste into 4 million kilowatts of electricity annually. Accompanying greenhouses tap “waste” heat from layer houses to generate marketable produce. DQY’s self-contained “green cycle” has been recognized by the United Nations, and Yoder reported “we didn’t smell a thing” while touring the operation. China prohibits foreign investment in domestic farm ground but allows operation of regional “corporate farms” by companies such as Pepsico, which has achieved U.S.-level crop yields over tens of thousands of acres.
Deere and Co. has launched five equipment plants across China and is building five more in anticipation of an ag boom, Yoder said. The Chinese government subsidizes 20 percent of domestic farm equipment purchases. The IFB market expert emphasizes the “primal fear” of food shortages that drives China, where each new generation is moving farther from the farm and stoking growth within China’s rapidly growing “megacities.” China just released its 12th economic “five-year plan,” stressing ag technology development (see accompanying story) and need for land market policy and charting subsidization of more ag school students and assignment of some 700,000 “extension” agents nationwide to help boost ag productivity. “I think they’ll continue to make strides in technology and advancements in agricultural production techniques rapidly,” Yoder predicted.
FarmWeek Page 8 Monday, April 2, 2012
global issues
India faces natural, human resource issues BY MARTIN ROSS FarmWeek
India is expected to surpass China in population by 2025: “They’re making a new Illinois every year,” Illinois Farm Bureau’s Doug Yoder noted. Yoder visited India recently as part of an Illinois Agricultural Leadership Program study tour. However, India will need far more to feed its exploding, increasingly affluent population than the fast food chicken and pizza joints that have sprouted throughout its cities. As China looks to sustain-
able technology to feed its people, Yoder noted India faces basic ag challenges: severe water shortages, a younger generation disen-
chanted with farm life, and a producer base “running out of land.” A rapidly growing middle class is driving Indian demand for higher-quality foods. Glob-
al fast-food chains have seized upon largely urban demand: KFC hopes to expand from a current 45 Indian chicken outlets to 502 by 2016, while Pizza Hut plans a move from 143 restaurants to 1,597, and McDonald’s, challenged as it is with reaching a huge nonbeef-eating Hindu populace, plans to add 200 new outlets this year alone. In rural India, the story’s far different. Youthful outmigration and aversion to fieldwork threatens small farm succession. Average farm size has dropped from 6 acres in the
WIU bull test marks 40th anniversary, record sale The 40th annual Western Illinois University performance tested bull sale posted records for both sale average and gross sales. Forty-four buyers from Illinois and Iowa took home 58 high-quality, high-performance bulls at a record average price of $3,220, said Ken Nimrick, WIU agriculture professor. The top 20 bulls averaged $4,200. “The sale was strong all the way through, with the final bull bringing nearly as much as the first bull through the ring,” Nimrick said. A high
percentage of the buyers were repeat buyers. “Breeders are encouraged to enter their top bull prospects next year, as we hope to continue building upon the reputation of the WIU performance tested bull sale as a source of topquality, performance-tested genetics,” Nimrick said. For more information, contact the WIU School of Agriculture at 309-298-1080. Information about next year’s test also will be available in June online {www.wiu.edu/bulltest}.
1970s to less than 3 acres amid division of family holdings among successive generations. Because of religious/cultural practices, India is home to nearly 300 million head of cattle (the world’s largest inventory), but only 77 million currently are in dairy production. Per-cow milk production is low, and Indian analysts estimate an added 650,000 cows per year will be needed to meet anticipated dairy demand by 2020. That raises serious concerns about domestic feed availability. Indian water tables have dropped roughly 32 feet
over 10 years due predominantly to ag use, and the government provides farmers free electricity to pump water. “If they miss one monsoon (rainy season), they’re in big trouble,” Yoder said. India is the world’s secondlargest wheat producer, but Yoder notes its highest-quality wheat often “is equivalent to our worst.” Biotechnology, a boon to India’s cotton sector, could boost crop yields on a shrinking land base, but Yoder reported GMO-friendly Indian officials are fighting “an extremely large media push” to oppose biotech adoption.
IALF CEO retiring
Joyce Watson, founding CEO and president of the Illinois Agricultural Leadership Foundation (IALF), has announced her retirement effective Aug. 10, after 30 years in the position. IALF was formed following an exploratory conference in Spokane, Wash., sponsored by the W.K. Kellogg Foundation. Watson was appointed its first CEO and president in Joyce Watson 1982. The program develops leaders to become policy and decision-makers for the global agriculture industry. During Watson’s tenure, more than 400 participants graduated from the program, many moving on to ownership of farming operations and senior management positions in major corporations, government agencies, and other industry groups. Working with the IALF Board of Directors, Watson has raised nearly $11.5 million and continues to operate the leadership program without state or federal funding. As part of leadership training, classes have visited 36 different countries to cultivate trade relationships. “Joyce has set a high standard for agricultural leadership programs,” said Dan Kelley, chairman of GROWMARK and the IALF board and a 1984 graduate of the leadership program. Watson, a graduate of Western Illinois University, has been cited as a Kellogg Executive Scholar by the Kellogg School of Management at Northwestern University. She served on the Illinois Governor’s Commission on the Status of Women and was given the International Association of Professionals in Agricultural Leadership Outstanding Leader Award. She recently received the 2011 “Service to Agriculture Award” from the Illinois Society of Professional Farm Managers and Rural Appraisers.
WIU farm selling organic bird seed The Western Illinois University (WIU) School of Agriculture’s Organic Research Program is selling locally grown organic seed as feed for birds and wildlife. The nine-pound bags of black oilseed sunflower seeds sell for $10. The seeds were grown on the WIU Allison Organic Research and Demonstration Farm, which is located in Warren County. The School of Ag’s sale of the organic sunflower seeds offers an opportunity to feed local wildlife while also supporting the WIU Organic Research Program, according to Joel Gruver, assistant professor and manager of WIU’s Allison Farm. Those who buy seeds also will be eligible to win a prize. Buyers may visit the WIU Organic Program website at {www.wiu.edu/ag/organicfarm/}, and enter the number on the label of each bag. Five bags have winning numbers that will entitle the buyer or buyers to a prize. To place an order, contact the School of Agriculture office from 8 a.m. to 4:30 p.m. Monday through Friday at 309-2981080 or send an e-mail to WIU School of Agriculture Research Technician Andy Clayton at AW-Clayton@wiu.edu.
Page 9 Monday, April 2, 2012 FarmWeek
from the counties
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ARROLL — The 4C’s Prime Timers will sponsor a bus trip Friday, May 4, to the Putnam Museum to see The Last Reef. Call the Farm Bureau office at 815-244-3001 for more information. • Farm Bureau will sponsor a bus trip Friday, July 13, to see a Chicago Cubs game at Wrigley Field. Cost is $70. Call the Farm Bureau office at 815-2443001 or visit the website {www.carrollfb.org} for more information. OOK — The Illinois Agricultural Auditing Association will provide income tax return services for members. Call the Farm Bureau office at 708-354-3276 for an appointment or more information. • Farm Bureau will sponsor a workshop “Your Personal Financial Plan, Preparing Wills and Trusts, and Transferring Non-titled Property” at 7 p.m. Wednesday, April 18, at the Chicago Loop Country Financial office, 55 West Monroe St., Suite 3150, Chicago. Call the Farm Bureau office at 708-3543276 by Friday for reservations or more information. • Farm Bureau will sponsor a Shred Day from 10 a.m. to noon Saturday, April 28, at the Rolling Meadows Country Financial Building, 4190 W. Euclid Ave., Rolling Meadows. Up to three bankers’ boxes may be shredded. Electronics, including computers, speakers, and laptops may be recycled, however, there will be a $10 charge per monitor. Call the Farm Bureau office at 708-3543276 for a reservation or more information.
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ASALLE — Farm Bureau has BBQ pork salt for sale. Cost is $5.50 for members and $6 for non-members. Call the Farm Bureau office for more information. ONROE — A public forum will be from 7 to 8:30 p.m. Thursday at the Monroe County Courthouse west meeting room. Call the zoning office at 939-8681, ext. 260, for a copy of the proposed ordinance contract. EORIA — Farm Bureau will sponsor a two-day trip Thursday and Friday, May 3-4, to the Tulip Festival, Pella, Iowa. Cost is $80, which includes hotel, transportation, and a grandstand show and parade. Call the Farm Bureau office at 6867070 for reservations or more information. TEPHENSON — Deadline for high school senior scholarship applications is April 13. Five $500 ag studies scholarships will be awarded to dependents of Stephenson County Farm Bureau members. Applications are available at the Farm Bureau office or at the website {www.stephensoncfb.org}. • A few spots remain for the April 17-18 Defensive Driving course taught by Doug Sommer. Call the Farm Bureau office at 815-232-3186 for reservations or more information.
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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.
Number of certified organic farms grows An updated list of certified organic far ms and processors that meet USDA certification standards published by the National Organic Program indicates the number of organic far ms is growing. As of December 2011, about 17,600 organic far ms and processing facilities in the U.S. were certified to USDA’s organic standards, nearly 480 more operators than at the same time in 2010. It was a 240 percent increase since 2002 when the National Organic Program began its oversight role. Currently, the list of certified operations is updated annually. The National Organic Program is working to design a system that easily can be updated more often. The most recently updated list of certified opera-
tions features one change as a result of a U.S. and Canadian organic equivalency arrangement. Because products certified by one country may be sold as organic in the other, Canadian operations no longer need to maintain certification to the USDA organic standards to sell organic products in the U.S. and Canadian operations are no longer included in the list. The National Organic Program is responsible for overseeing accrediting certifying agents and their certification of organic pro-
duction and handling operations. Certification allows a far m or processing facility to sell, label, and represent their products as USDA organic. Any organic operation in violation of the USDA organic regulations is subject to financial penalties or suspension or revocation of their organic certificate. For more infor mation about certification under the National Organic Program, go online to {www.ams.usda.gov/NOPA ccreditationandCertification}.
Illinois teacher awarded AITC scholarship Carl Erbsen, a first grade teacher at Eastland Elementary at Lanark in Carroll County, will receive a $1,500 scholarship to attend the National Agriculture in the Classroom (AITC) Conference in Loveland, Colo., in June. Erbsen was the 2011 runner up for the Illinois Agriculture Teacher of the Year award from the Illinois AITC. He uses his agriculture background to engage students in yearly far m projects in which they “operate” their far ms. His scholarship was sponsored by the American Far m Bureau Foundation through the White-Reinhardt Fund for teacher education program.
FarmWeek Page 10 Monday, April 2, 2012
profitability
European crisis affects U.S. agriculture prices BY KEL KELLY
The main factor affecting agriculture prices over the last six months is concern about the European debt crisis. It may be difficult to understand why Greece’s government debt affects American agriculture prices, but the answer is Kel Kelly simple: Problems in the European banking system can affect the U.S. banking system, which affects U.S. financial markets. First, market prices can rise
(continually) only when more money flows into them. Commodity prices as well as all other financial assets rose over recent years because greater net inflows of money entered those markets. Most of the inflows consisted of new money created (printed) by the banking system out of thin air — money that never existed previously. If northern European banks suffer losses as a result of payment default by southern European governments, U.S. banks will, due to insurance contracts, be liable for much of the losses. Additionally, U.S. banks hold some of the same government debt
European banks hold — debt issued by southern European nations unable to repay those loans. According to a September 2011 Congressional Research Services report, American banks have exposure of $641 billion to Eurozone economies. How do U.S. bank losses affect U.S. financial markets? If banks go bust, money will evaporate. Since banks are (unfortunately) always highly leveraged, small losses wipe out bank capital, causing banks to go bust. When banks go bust, their checking deposits become worthless, and thus the supply
of existing money collapses. Just as money was created out of thin air, it also can disappear into thin air. With less money existing, prices fall. This is particularly true for financial asset prices, since most newly created money flows into the financial markets, not into the real economy. Importantly, mere fear of bank troubles causes investors to sell off assets en masse, driving down prices. So, without any change in yield, production, supply or stocks-to-use ratios, amounts of money spent to buy grains and energy can suddenly decline rapidly. This necessarily results in falling market
prices — without any change in the “fundamentals.” Thus, bank-created money flows are a huge part of the fundamentals. This monetary spending is what constitutes true demand. The good news in this story is that the European Central Bank has decided to print money and bail out and recapitalize European banks, reducing fear and concern in the financial markets, precipitating a rise in market prices of most assets. Kel Kelly is GROWMARK’s manager of economic and market research. His e-mail address is kkelly@growmark.com.
Farmland provides solid returns for farmers, investors BY DANIEL GRANT FarmWeek
Farmers bought the majority of farmland sold in Illinois last year, according to a recent report issued by the Illinois Society of Professional Farm Managers and Rural Appraisers (ISPFMRA). But non-farm investors have been a force at many sales, and that trend likely will
continue because farmland is an attractive investment, particularly in today’s volatile marketplace. Adrian Fay, who works with investors through the Midwest AgriBusiness Innovation Network, said at the recent Illinois Land Values Conference in Bloomington that Midwest farmland has provided an impressive 14 percent annual return the past three years. In 2011, U.S. farmland generated a 15 percent return, the National Council
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 $33.08-51.30 $66.21 no longer reported This Week 128,793 *Eastern Corn Belt prices picked up at seller’s farm
Weighted Ave. Price $42.00 $66.21 by USDA Last Week 130,995
Eastern Corn Belt direct hogs (plant delivered) Carcass Live
(Prices $ per hundredweight) This week Prev. week $76.36 $78.97 $56.51 $58.44
Change -2.61 -1.93
USDA five-state area slaughter cattle price Steers Heifers
(Thursday’s price) (Thursday’s price) This week Prev. week Change 125.08 126.82 -1.74 125.16 126.85 -1.69
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 This week 153.93 154.05 - 0.12
Lamb prices Slaughter Prices - Negotiated, Live, wooled and shorn 100-165 lbs. for 144-180 $/cwt. (wtd. ave. 151.01); dressed, no sales reported.
Export inspections (Million bushels) Week ending Soybeans Wheat Corn 03-22-12 24.9 15.4 22.2 03-15-12 24.0 21.2 23.3 Last year 31.1 29.7 44.1 Season total 983.6 811.2 919.7 Previous season total 1275.9 968.5 964.7 USDA projected total 1275 1000 1700 Crop marketing year began June 1 for wheat and Sept. 1 for corn and soybeans.
of Real Estate Investment Fiduciaries reported. “There is rising demand (for food) and not a lot of new land,” said Fay, who noted the global population is projected to reach 9 billion people by 2044. “We’re really pressing the land to produce high yields.” And that is helping drive up commodity and land prices in Illinois and around the world. “The situation is not unique to the Midwest,” said Fay, whose family operates a farm in South America. “The price of land in Brazil has doubled since 2006.” Fay takes investors to other parts of the world to consider land acquisitions. But the Midwest has the most appeal because of its highly productive soil, infrastructure, and farmers’ ability to adapt quickly to new technology. “We’re here (to invest) in the Midwest because we want to reduce the variables,” he said. ISPFMRA reported 66 percent of the farmland sold last year in the state was purchased by farmers. Investors, meanwhile, purchased more than onequarter (26 percent) of farmland sold in Illinois last year. “There has been an increase in interest in farmland investing from outside the agricultural sector,” according to ISPFMRA’s 2012 Illinois Farmland Values and Lease Trends report. Farmland, unlike some other investment options, generates regular income, capital appreciation, and can be used as a hedge against inflation.
Milk price slips; supply high The Class III price for milk adjusted to 3.5 percent butterfat for the month of March was $15.72 per hundredweight. This is a 34-cent drop from the previous month. The early onset of spring has hastened the “spring flush” with milk supplies running well ahead of last year, thus pressuring prices. Alfalfa and hay fields are greening up quickly, and hay-cutting will begin soon in the southern areas of the state.
Page 11 Monday, April 2, 2012 FarmWeek
PROFITABILITY Corn Strategy
CASH STRATEGIST
Planting report a shocker! Universally, the intended planting numbers were a shock. Corn plantings were a lot higher than expected, while soybean and spring wheat plantings came in well under expectations. Amid this, the total intended plantings for all crops came in more than 2 million acres under 2008, the most recent “high water mark” from U.S. crop plantings. If one looks at primary corn areas, the planting of all crops is likely even farther under 2008 (USDA didn’t provide data), enhancing the odds the actual planting numbers could shift dramatically. When you look at details even closer, one notices that plantings of the primary crops in North Dakota were still 1.3 million acres less than they were in 2008. In South Dakota, that number is nearly 800,000 acres less. Those two states had 5.8 million acres categorized as prevented plant last year alone. Since that survey was taken, price ratios among the various crops have changed as well. The new-crop soybean/corn price ration jumped from 2.25.1 to 2.55. The soybean/spring wheat ratio moved from 1.6:1 to 1.7:1. And
the spring wheat/corn ratio moved from 1.4:1 to 1.5:1. Actual plantings can, and often do, shift dramatically, many times even when planting progress is quite good. One reason is that the survey for the June acreage report is a more comprehensive survey than the one for the March Intentions. Also, the change in fundamental and price structure during spring has an impact on the mix. That may be even more true now that seed costs have overtaken fertilizer costs for corn in some places. In 1977, 1979, and 1984, June soybean plantings were generally 3 million acres larger by the time the June survey was taken than when the March survey was done. Corn plantings lost less than 2 million acres in the span in 1977 and 1984, while 1979 plantings actually rose slightly. When one looks at soil moisture maps, this looks like the best spring for planting since 2004. Early planting reports support that contention. Given that, and the good insurance guarantees for crops, there’s reason to think total planted acreage will exceed the estimate in the March report, along with changes in the mix. All of this makes for a very volatile, uncertain situation going forward as the next benchmark the industry gets isn’t until the June 29 USDA acreage report..
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Cents per bu.
ü2011 crop: Smaller than expected March 1 corn stocks fueled the surge in old-crop futures. Use rallies to $6.65 on May futures to make catch-up sales. Under the right circumstances, we might even recommend wrapping up sales. Check the Hotline frequently. ü2012 crop: Use rallies to $5.49 on December futures to make catch-up sales. At this time, we still prefer hedge-toarrive (HTA) contracts for making sales but plan to tie up the basis no later than mid-summer. We could add another sale at any time. Check the Hotline daily. vFundamentals: The surprising 6.01-billion bushel March 1 corn stocks will fuel the talk of extreme tightness by the end of the marketing year. The huge surge in newcrop plantings has potential to shift end user buying into covering only very short-term needs. The potentially abundant supply of wheat and larger southern corn plantings may keep supplies from getting as tight as traders will perceive the next few weeks. Weather conditions remain very good for fast new-crop plantings.
Soybean Strategy
ü2011 crop: The smaller new-crop plantings, ongoing talk about reductions in South American output, and Chinese buying carried soybean prices upward. But much uncertainty with fundamentals persists. If they soften a little, allowing prices to ease, there’s risk for a liquidation break. Use strength for catch-up sales. ü2012 crop: Make sure sales are at recommended levels. We could add another sale at any time, especially if November closes below $13. Check the Hotline if that occurs. vFundamentals: The 1.1million-acre decline in intended soybean plantings from last year was a shock. It’s going to leave the industry grappling with the question of whether soybean supplies will be plentiful enough next year. For a lot of reasons, we think the final plantings will be significantly larger, but that won’t be known until June. But by early/middle May, the industry should have a better idea of actual South
American supplies. ûFail-safe: If May futures fall below $13.50, wrap-up old-crop sales.
Wheat Strategy
ü2011 crop: The minor trend for wheat prices turned positive, but it may be difficult to sustain momentum as seasonal pressure will soon become an increasing drag on prices. Use rallies to wrap-up old-crop sales. With the end of the marketing year approaching, use the cash market to make sales. Don’t carry inventories beyond April. ü2012 crop: Use rallies above $6.60 on Chicago July futures to
make catch-up sales. Producers selling 100 percent off the combine need to be aggressive in making sales on rallies. We recommend making another 10 percent new-crop sale if July trades to $6.69, bringing the total to 45 percent complete. vFundamentals: The March 1 planting intentions for wheat were a surprise at 55.9 million acres. Primarily, the 12million-acre forecast for spring wheat other than durum was 1.3 million below expectations and below last year. Given last year’s huge prevent planting claims in the Dakotas, many in the trade are puzzled.
FarmWeek Page 12 Monday, April 2, 2012
perspectives
OBESITY
Organic farming cannot feed the world
Let’s use common sense to fight childhood obesity OK, I think we have to accept the fact that we have an obesity problem here in this country. So what should we do? The simple answer is, exercise more, and consume fewer calories. A good place to start is with the kids. Schools are bringing back gym classes. Secretary Tom Vilsack and the USDA are pushing new school lunch standards to fight obesity and improve nutrition. That is a good idea for two reasons. First, fighting obesity is a worthwhile objective. Second, if my tax dollars are being spent to feed children, then the food should not be contributing to a national obesity problem. At the same time, if the kids go down the street and gorge themselves on cup cakes, cookies, pizza, and sugar snacks, and they pay for it with their own money, that’s not my business. The distinction that I draw here is that taxpayer money should not be spent on food that makes you fat. However, we have to be careful we don’t go too far. In a North Carolina elementary school, officials inspected the homemade lunches brought to school by the children and found that one girl just didn’t have a healthy enough lunch. That lunch didn’t comply with USDA guidelines. JOHN BLOCK So what! The government didn’t pay for that lunch. The government has no business telling people what they have to eat. Another example of where a school went a little too far is in Los Angeles. A school changed the menu in the cafeteria to be more healthy. That included black bean burgers, tostada salad, etc. The students wouldn’t eat it. The school principal reported massive waste. Uneaten entrees were being thrown away. The whole exercise has created a new underground market for chips, candy, and fast food. Don’t be surprised, but hamburgers have returned to that school menu. The transition to a less fattening menu is not going to be easy. Whether it will help solve our obesity problem is another question. Many schools have banned the sale of sugar drinks, candy, and salty snacks in their vending machines. A recent comprehensive study concludes that that doesn’t work, either. Here is where I am on this subject: If the government is paying for the food and drink, then the government can decide what to serve. John Block, a Gilson native and former U.S. agriculture secretary, 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.
Upscale cow tipping
Woody Allen won an Oscar for the screenplay to his film “Midnight in Paris,” but he didn’t collect his golden statue in person. He’s semi-famous for not attending the Academy Awards, which is odd because he also once said that 80 percent of success is just showing up. There’s a lot of wisdom in that statement, but let’s face it: 80 percent usually isn’t good enough. The rest of your success depends on more than showing up. After you show up, you have to perform. That’s why a new study in a scientific journal has so much to teach about food security. If we’re going to succeed in feeding a global population of billions in the 21st century — one of the CAROL greatest challenges of KAISER our time — we’re going to need every tool and technology available so farmers around the world can choose what will work best on their farm. This must include new farming technologies. Farmers cannot be limited to the methods that were used in the past. The researchers discovered an important truth: Organic agriculture can’t feed the world. “Our results show that organic yields of individual crops are on average 80 percent of conventional yields,” wrote Tomek de Ponti, Bert Rijk, and Matin K. van Ittersum of Wageningen University in the Netherlands, in the latest issue of “Agricultural Systems,” a peer-reviewed academic publication. They examined 362 studies that compared organic and conventional crop yields, creating what they call a “meta-dataset.” That’s a fancy way of saying their work was comprehensive. Organic foods make up only a small percentage of overall food production, but sales have boomed in the last 15 years. Although organic foods can be pricey, many consumers have expressed a preference for them, and so farmers have met the demand. Opportunities are about to increase following the announcement in February that the United States and European Union will accept each other’s organic standards. So organic farming will remain a healthy sub-sector of the agricultural industry. But it won’t ever be more than this. It can’t ever be more than this if we’re serious about feeding the world.
Most analysts believe we must double our food production by 2050 to meet the needs of a growing population as well as the desires of people in developing countries who simply want to eat better. Unfortunately, we don’t have an unlimited supply of farmland. We have to get more from the land we already cultivate. That means improving not only conventional farming practices but using every technology available, including biotechnology, and making the most of its promise so that yields will rise. Farmers are doing this right now: Almost 17 million of them plant GM crops, 90 percent of those are resource-poor farmers in developing countries, according to the International Service for the Acquisition of AgriBiotech Applications. In 2011, biotech crops took up nearly 400 million acres of farmland, up 8 percent from a year earlier. If we’re to meet the food objectives of 2050, we’ll need to see growth like this for years to come. Organic crops may continue to find a market among choosy buyers in wealthy countries, but their yields won’t meet the needs of the world: 80 percent just won’t cut it. In a basketball game, if you score 80 percent as many points as your opponent, you get blown off the court, 100 to 80. That’s not March Madness; it’s March Badness. If you show up for work 80 percent of the time, your boss will fire you. If your boss pays you 80 percent of your wages, you’ll quit your job because it just isn’t good enough. Yields of 80 percent fall too short as well. That means skipping one meal out of every five, or one out of every five people in the world not receiving the food they need to survive. Any volunteers? I didn’t think so. Organic food is a choice. Those with the means to choose it have every right to do so. Farmers have every right to supply what these consumers want. But let’s also recognize that it’s a luxury, and our needs are urgent: more food, better technology, and widespread awareness of what must be done. Showing up isn’t good enough. Carol Keiser owns and operates cattle feeding operations in Illinois, Kansas, and Nebraska. She is a board member of Truth About Trade & Technology, whose website is (www.truthabouttrade.org).