FarmWeek December 19 2011

Fa r m e r s a N d ot h e r interstate truck drivers as of Jan. 3 no longer will be able to use hand-held cell phones while driving. ...................3

the IFB board this week will review applications for 16 spots on the Market Study Tour to Cuba scheduled for March. .....................5

Farm INcome this year is projected to set new records in Illinois and nationwide, but a decline appears in the cards for 2012. .....10

Monday, December 19, 2011

Two sections Volume 39, No. 50

New tax package raises estate tax exemptions

Renewable fuels tax incentives extended

BY KAY SHIPMAN FarmWeek

Periodicals: Time Valued

Three special sessions and months of negotiations later, the General Assembly is send-

ing a tax package to Gov. Pat Quinn.

“I feel a real weight is off my back,” Rep. John Bradley (D-Marion), one of the sponsors, told FarmWeek. “I was proud and honored to work with Farm Bureau in crafting and passing this significant tax relief for family farmers.

This legislation is a victory for the Illinois Farm Bureau.”

The legislation passed last week increases the estate tax exemption for individuals from $2 million to $3.5 million in 2012 and to $4 million the next year.

The increase in the estate tax exemption “is a

benefit to any farmers who want to pass their farms along to their children,” said Rep. David Harris (R-Arlington Heights).

The bill also extends the state sales tax incentives for ethanol and biodiesel for five more years to 2018, avoiding a 2013 expiration.

“This is great news for Illinois soybean farmers and the biodiesel industry,” said Matt Hughes, Illinois Soybean Association chairman and a Shirley farmer. “The extension will help maintain Illinois as the nation’s leading biodiesel producer. The state tax credit is truly vital to our industry and our farmers.”

IFB had asked its members to contact their legislators in support of the tax package proposals, and Farm Bureau members responded,

FarmWeek on the web: FarmWeekNow.com

according to Kevin Semlow, IFB director of state legislation.

FarmWeekNow.com Go to Far mWeekNow.com. t o v i e w G o v e r n o r Q u i n n ’s comments about the tax package.

“Their contacts were instrumental in getting the estate tax exemption increased and the sales tax incentives for ethanol and biodiesel extended,” Semlow said.

As important as what was included in the legislation were the proposals that weren’t in the final version, Bradley pointed out.

“We got the decoupling of depreciation out, which would have devastated some ag businesses (if it had passed),” said Bradley, House Revenue Committee chairman. The General Assembly considered, but didn’t include, decoupling from the 2011 federal bonus depreciation

schedule and making it retroactive to Jan. 1, 2011.

Beyond the immediate tax policy, the legislature’s action sends a message about the future of the state’s business climate, Bradley and Harris said.

“It sends a significant message that the State of Illinois is serious about a climate where businesses can function and thrive, including ag businesses,” Bradley said.

Harris added: “People understand this bill alone will not solve the state’s problems ... This is a way to take steps (toward) a good business climate and provide relief to individuals and some businesses..”

No FarmWeek next week There will be no FarmWeek published next week.

FarmWeek is published 50 times a year, with no issues on the Mondays following Thanksgiving and Christmas.

The next issue you receive will be dated Jan. 2.

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

FarmWeek Page 2 Monday, December 19, 2011

STATE

Quick Takes JUDGES REJECT MAP CHALLENGE — A panel of federal judges last week upheld the Democrat’s redrawn map of Illinois congressional districts and rejected a Republican challenge, according to the Associated Press.

Republican leaders indicated they were reviewing the decision and options for future action. Gov. Pat Quinn signed the map into law in June.

ETHANOL READY FOR CHANGE? — Expiration of the 45-cent-per-gallon federal ethanol tax credit Dec. 31 could affect ethanol industry corn consumption, according to USDA chief economist Joe Glauber.

Renewable Fuels Association President Bob Dinneen nonetheless remained confident about the industry’s momentum, noting “the marketplace has changed.”

Average U.S. ethanol production was 938,000 barrels per day the first week in December, down 1.7 percent from the previous week’s record output, the U.S. Department of Energy reported.

Domestic supplies declined by 4.9 percent to 17.1 million barrels, the biggest drop since Aug. 20, 2010, and production of ethanol-blended gasoline fell 0.7 of a percent. Ethanol industry demand for corn in the 2011-2012 marketing year is projected to be 5 billion bushels, down slightly from the previous year, according to USDA’s latest supply-demand report. But Dinneen anticipates sustained growth despite shifts in federal ethanol policy.

“We’re now looking at $85-100-a-barrel oil on a sustained basis, so it’s difficult to go to the taxpayer and ask them to provide an incentive when the marketplace is already providing the incentive,” he said. “We’re the lowest-cost liquid transportation fuel in the world today.”

ASA LIKES TPP — The American Soybean Association (ASA) is pushing Congress to support U.S. engagement in ongoing Trans-Pacific Partnership (TPP) trade negotiations. The House Committee on Ways and Means trade subcommittee held a hearing last week to assess TPP status and the agreement’s potential benefits for farmers, workers, and U.S. companies.

TPP talks include nine countries — Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, the U.S., and Vietnam.

Others countries such as Japan, Mexico, and Canada have expressed interest in joining the negotiations, and the Office of the U.S. Trade Representative is accepting public comments through Jan. 13 on their acceptance.

“Especially in these challenging economic times, achieving a comprehensive agreement that provides full reciprocal market access and does not exclude any sector, sub-sector, product, or service from the market-access provisions or core trade and investment rules of the final TPP is vital,” ASA told Ways and Means members.

TIGER FUNDS FOR 3 ILLINOIS PROJECTS — U.S. Transportation Secretary Ray LaHood, Gov. Pat Quinn, and Chicago Mayor Rahm Emanuel last week announced the state will receive more than $44 million in TIGER (Transportation Investment Generating Economic Recovery) grants for three projects in the Chicago area and Alton.

The grants will fund: $20 million for the Chicago Transit Authority’s Blue Line/Chicago Bike Share Program that will repair 3.6 miles of track and jumpstart the city’s bike-sharing program; $10.4 million for the Illinois Department of Transportation’s reconstruction of two miles of Ill. Route 83 in Chicago; and $13.85 million for a multimodal transportation center in conjunction with the new High-Speed Intercity Passenger Rail station in Alton.

(ISSN0197-6680) Vol. 39 No. 50 December 19, 2011 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. © 2011 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 (bstandard@ilfb.org) Advertising Sales Manager

Richard Verdery (rverdery@ilfb.org) Classified sales coordinator

Nan Fannin (nfannin@ilfb.org) Director of News and Communications

Dennis Vercler Advertising Sales Representatives

Hurst and Associates, Inc. P.O. Box 6011, Vernon Hills, IL 60061 1-800-397-8908 (advertising inquiries only) Gary White - Northern Illinois Doug McDaniel - Southern Illinois Editorial phone number: 309-557-2239 Classified advertising: 309-557-3155 Display advertising: 1-800-676-2353

Jim Hankes, left, owner of Thrushwood Farms Quality Meats, Galesburg, shows a smoked beef round to customer Brian Davison of Galesburg last week. Thrushwood Farms is part of the Illinois Department of Agriculture’s marketing campaign to promote the purchase of local foods for the holidays. The Illinois Beef Association is contributing a $75 Thrushwood Farms gift certificate as a prize for participants in the marketing campaign. (Photo by Ken Kashian)

IDOA launches market promotion for 12 days of buying local foods The Illinois Department of Agriculture (IDOA) is having its first 12 Days of Christmas contest to raise awareness and purchases of Illinois food products and businesses.

Acting Illinois Agriculture Director Jim Larkin said the goal is to raise awareness of Illinois food products.

“I want to encourage consumers, whenever possible, to buy locally and support IlliJim Larkin nois businesses this holiday season,” Larkin said.

Through Dec. 25, a daily winner will be selected at random from IDOA’s Facebook and Twitter fans. Winners will receive an Illi-

nois product donated by several Illinois companies and organizations and assorted cooking supplies donated by the American Egg Board.

To be eligible, individuals must join the IDOA’s Facebook page or follow the agency on Twitter. Individuals must be at least 21 years old to win gifts donated by Illinois wine companies.

To sign up, visit and “like” IDOA’s Facebook page at {www.facebook.com/IllinoisDepartmentofAgriculture} or sign up to follow IDOA on Twitter at {https://twitter.com/#!/ILAgMarkets}.

For more information, call Jennifer Tirey, IDOA head of marketing and promotion, at 217-782-8146.

Illinois farms receiving grants for energy-efficient grain dryers Eighteen Illinois farm operations are among the recipients of USDA Rural Development’s Rural Energy for America Program (REAP) grants announced last week by Agriculture Secretary Tom Vilsack.

Vilsack announced loans and grants for agricultural producers and rural small businesses to implement renewable energy and energy efficiency measures in their operations.

The Illinois farms will receive a total of $616,744 in

grants to upgrade to more energy efficient grain dryer systems.

On average, the improvements will cut energy consumption by 40 percent.

With the announcement of the latest recipients, Illinois has received 59 REAP grant awards in 2011.

“This investment will have a considerable impact on the environment and profitability for agriculture and small business,” said Colleen Callahan,

state director for Rural Development in Illinois.

REAP, authorized through the 2008 farm bill, provides loans and grants for farmers, ranchers, and rural small business owners to buy and install renewable energy systems and make energy-efficiency improvements. Grants can finance up to 25 percent of a project’s cost, not to exceed $500,000 for renewable energy or $250,000 for energy efficiency.

Page 3 Monday, December 19, 2011 FarmWeek

StAte

Bus, large truck drivers face ban on hand-held cellular phones

BY KAY SHIPMAN FarmWeek U.S. Transportation Secretary Ray LaHood recently announced a final rule prohibiting interstate truck and bus drivers from using hand-held cell phones while driving. The rule, published Dec. 2, takes effect Jan. 3.

The Federal Motor Carrier Safety Administration (FMCSA) and the Pipeline and Hazardous Materials Safety Administration issued the rule.

“When drivers of large trucks, buses, and hazardous materials take their eyes off the road for even a few seconds, the

outcome can be deadly,” LaHood said.

As a rule of thumb, the ban applies to farmers who have a U.S. Department of Transportation number, or should have such a number, according to Kevin Rund, Illinois Farm Bureau senior director of local government.

Rund noted it also applies directly to drivers involved in intrastate commerce if the vehicle they drive is required to be placarded. Because Illinois generally incorporates federal trucking regulations, this means the ban also will be applied to all

other intrastate drivers.

The rule prohibits those commercial drivers from using a

hand-held mobile telephone while driving a commercial truck or bus.

They may use a hands-free device, such as one equipped with Bluetooth technology.

Rund reminded farmers that generally any farm truck or truck-trailer combination of 10,001 pounds or more is considered to be a commercial vehicle, and most farmers are considered to be interstate carriers.

Drivers face federal civil penalties of up to $2,750 for each violation and disqualification from operating a commer-

cial motor vehicle for multiple offenses.

Additionally, states will suspend a driver’s commercial driver’s license (CDL) after two or more serious traffic violations.

Commercial truck and bus companies that allow their drivers to use hand-held cell phones while driving will face a maximum penalty of $11,000.

“It’s just too dangerous for drivers to use a hand-held cell phone while operating a commercial vehicle,” said FMCSA Administrator Anne Ferro.

It would provide a limited exemption for a cemetery that has had 25 or fewer burials for each of the preceding two years, operates as a public cemetery, or operates as a

religious cemetery.

The changes also would remove the license requirement for volunteer cemetery managers and customer service employees.

Cemeteries with partial exemptions would continue to have to comply with rules for reasonable maintenance, record keeping, and other actions. — Kay Shipman

State Senate passes cemetery rule changes; measure sent to governor Nearly two years after a controversial law authorizing new cemetery regulations was passed, the Illinois Senate last week concurred with the House and provided some regulatory relief for smaller cemeteries.

The measure, supported by Illinois Farm Bureau, will be sent to Gov. Pat Quinn for his consideration.

It relieves many of the state’s smaller, rural cemeteries from higher fees and tougher regulations.

The changes stemmed from continued discussions among the Illinois Department of Financial and Professional Regulation, which oversees the rules, and the cemetery industry.

The newly passed legislation would fully exempt from new regulations cemeteries that are family or religious burial grounds; have not had an internment, inurnment, or entombment in 10 years; or are less than three acres in size.

NRCS announces CSP signup date The Natural Resources Conservation Service (NRCS) last week announced Jan. 13 will be the cutoff date for conservation stewardship program (CSP) applicants to be considered for the first funding period.

Interested farmers should submit applications to their local NRCS office by that date.

CSP offers many conservation benefits including improvement of water and soil quality, and wildlife habit enhancements. Eligible lands include cropland, pastureland, rangeland, and non-industrial private forest land.

A self-screening checklist is

available on the NRCS website and from local NRCS offices to help farmers determine if CSP suits their operations.

The checklist covers basic information about eligibility requirements, contract obligations, and potential payments.

As part of the application process, farmers will work with NRCS staff to complete a resource inventory using a conservation measurement tool.

That will determine the conservation performance of existing and new conservation activities.

Applicants’ conservation performances are used to determine eligibility, ranking, and payments.

Ag Scholarship Digest First Farm Credit Services Agricultural Scholarship — Twenty four $1,000 scholarships are available for graduating high school seniors who’ve been accepted at a university, college, or community college into an ag curriculum or a career area that contributes to the quality of rural life.

Recipients must either live in or attend high school in the 1st Farm Credit Services’ service territory of 42 counties in the northern half of the state.

Applications are due by Feb. 15 and are available from the 16 local offices or online at {www.1stfarmcredit.com}.

Completed applications including high school transcripts, a typed essay, and a recent photo for publication may be sent to a local 1st Farm Credit Services office or mailed to: 1st Farm Credit Services Scholarship Program, Attn: Karen Blatter, 2000 Jacobssen Drive, Normal, Ill., 61761.

Recipients will be chosen based on their academic achievement, community and ag youth organization involvement, and the essay. Applications will be judged by a panel of independent agribusiness, education, youth, and farm group leaders.

Central Illinois man pleads guilty in elevator case A Clinton County man whose company operated four elevators in Clinton and Marion counties pleaded guilty to two counts of mail fraud and faces up to 20 years for each offense, according to the Associated Press (AP).

Last week, John Kniepmann, 47, Breese, entered his plea in U.S. District Court in East St. Louis for defrauding and withholding information from the Illinois Department of Agricul-

ture (IDOA) and the First State Bank of Eldorado, according to the AP. Kniepmann was the former owner and president of Grain Exchange LLC and Consolidated Exchange Inc. that operated elevators in Carlyle, Bartelso, Germantown, and Sandoval.

He admitted that in December 2006 he falsely increased a fire insurance claim by $34,400 and also defrauded the bank by selling

grain valued at $87,161.76 that was collateral for a business loan and then hiding the sale from the bank.

The Grain Exchange closed in February 2008. IDOA liquidated its grain assets of nearly $1.2 million and used an additional $900,000 from the state Grain Insurance Fund to compensate farmers who were owed money.

Sentencing is scheduled for late March.

FarmWeek Page 4 Monday, December 19, 2011

government

Johnson hopes for ‘expeditious, Lawmakers direct sights balanced’ 2012 farm bill debate at MF Global debacle

BY MARTIN ROSS FarmWeek

U.S. Rep. Tim Johnson sees his House Ag Committee moving in an “expeditious but balanced manner” toward a 2012 farm bill that allows for a downturn in the ag sector.

In an RFD Radio-FarmWeek interview last week, the Urbana Republican anticipated a series of committee farm bill hearings early next session. Meanwhile, Illinois Farm Bureau will argue for a focus on a strong crop insurance program and revision of the ag revenue safety net during American Farm Bureau Federation debate in Hawaii next month.

Johnson is encouraged by “the stewardship of House Ag Committee Chairman Frank Lucas” (D-Okla.) and the ability of House and Senate ag committee leaders to cooperate on an ag spending blueprint for the now-defunct deficit “super committee.”

However, Johnson, who chairs the committee’s rural development, research, and foreign ag subcommittee, has reservations about some proposals put forward by Senate Ag Committee Chairman Deb Stabenow (D-Mich.) as part of that plan. He suggests farm lawmakers will move “a little further back to the drawing board” in refining ag program specifics.

“Crop insurance is absolutely critical, and some

form of a safety net, realizing that we all have to engage in shared sacrifice,” Johnson stressed.

“And then, obviously, there are the components — rural development, research, and others — that don’t make the headlines right now but that are extraordinarily important in the process.

“What affects the farmer indirectly affects America. These are good grain prices right now; times are good. But they ain’t gonna be that way always. The things that we build in now, including Environmental Protection Agency (EPA) restrictions, excessive USDA oversight, and elimination of essential programs are likely to be permanent. High grain prices may not be.”

While farm direct payments have amply “provided a safety net for bad times,” Johnson warned that given budget pressures, they “perhaps are at a terminal state.”

Meanwhile, despite growing congressional scrutiny of and efforts to rein in the EPA and other federal agencies, Johnson argued “we’re not winning the battle.” The House has approved measures aimed at blocking potential farm dust rules and holding EPA accountable for regulatory costs, and lawmakers continue to push to block duplicative federal pesticide application permits.

But Johnson insists “those bills aren’t going anywhere in the Senate, and the president wouldn’t sign them if they did.”

End of ban could boost equine market The fact that Congress recently lifted a 5-yearold ban on funding for horse meat inspections eventually could help strengthen the equine market — if slaughterhouses begin operations in the U.S. But removal of the ban may not lower the shipping costs of animals from Illinois as there still is a statewide ban on slaughter of horses here.

“In the two states where horse processing took place prior to the congressional ban, Illinois and Texas, there are laws in place prohibiting the slaughter of horses,” Phil Derfler, deputy administrator for Food Safety and Inspection Service, stated on a USDA blog.

So Cavel International will not be reopening its horse slaughter facility in DeKalb. In fact, as of last week, there had been no requests for USDA to initiate the authorization process for any horse processing facility in the U.S. since the ban was lifted Nov. 18.

“While Congress technically lifted the ban, horse processing will not resume any time in the near term,” Derfler said.

Under the Federal Meat Inspection Act, horses are an amenable species, which means horse meat can’t be shipped or sold for human consumption without inspection.

Brenda Matherly, assistant director of local government for the Illinois Farm Bureau, believes the most likely locations for a possible opening of

a horse slaughter facility are the western U.S., possibly the Dakotas.

“I would anticipate the western states to consider opening a facility before anybody else,” Matherly said.

“According to reports, they’re dealing with a lot of issues of (equine) abandonment” in the western U.S. There are an estimated 9 million horses in the U.S. About 138,000 horses were transported last year to Canada and Mexico for slaughter.

If a facility is opened in the U.S., Matherly believes it would boost an otherwise stagnant market for unwanted horses.

The end of the nationwide ban “doesn’t open the door for us in Illinois (to slaughter horses for human consumption),” Matherly said. “But, overall, an improvement in the market nationwide would benefit Illinois.”

Many animal sanctuaries in recent years have reached capacity for horses.

“I’ve heard of people putting padlocks on their trailers (at auction barns), pastures, and barns, because they don’t want people dropping off (unwanted) horses,” said Matherly, who this week will update the IFB board on the current situation.

If a horse slaughter facility is opened in the U.S., it is believed most of the meat would be shipped to countries in Europe and Asia, where horse meat is a common source of protein. — Daniel Grant

BY DANIEL GRANT AND MARTIN ROSS FarmWeek

Congress wants answers, and “we may want prosecution” in the MF Global case to protect the interests of “a co-op in Gifford or a farmer in Taylorville,” according to House Ag Committee member Rep. Tim Johnson, an Urbana Republican.

Last week, some farmers affected by MF Global’s collapse called on lawmakers to tighten futures industry regulations to better ensure protection of their funds.

Possibly $1.2 billion in client funds disappeared when the derivatives broker filed for bankruptcy on Oct. 31; former MF Global CEO Jon Corzine stepped down from his position last month.

Appearing before House lawmakers ThursRep. Tim Johnson day, the former Democrat senator and New Jersey governor insisted he did not authorize lending customer funds to MF Global or its affiliates or otherwise misusing them.

Customer assets in the futures industry are protected by a regime known as “segregation,” in which customers’ money is held in an account separate from a clearing firm’s own funds.

CME Group Executive Chairman Terrence Duffy told a Senate panel Corzine may have known about a $175 million loan of client funds to a European affiliate.

Corzine says he learned of a shortfall in customer accounts on Oct. 30. But given evidence MF Global may have “invaded” segregated funds, Johnson sees “potential certainly for civil liability and potential for criminal liability on top of that.”

The congressman cited accounts from Central Illinois constituents whose income or land, equipment, or seed purchases have been impacted by the MF Global episode and related losses in margin accounts.

“It’s unacceptable that an individual entrusted with funds from ordinary individuals who try to live their lives and make their plans takes those funds and converts them to investments on the European market,” Johnson said in an RFD Radio-FarmWeek interview.

“At the end of the day, it’s going to cause dramatic ramifications and repercussions for individuals in terms of making plans next year.”

According to Jeff Hainline, chairman of Advance Trading in Bloomington, a key issue in sorting out the MF Global debacle is whether customers with segregation funds will receive 100 percent of their money. He spoke about the issue at a recent DTN/The Progressive Farmer Ag Summit in Chicago.

Hainline believes customers with segregation funds should receive their money before creditors. “If full restitution happens, I expect credibility and trust to come back to the CME Group,” he said. “If there’s not full restitution, I expect fallout.”

Hainline suggested banks in the future may be leery of making loans to farmers and elevators if funds tied up in the markets are viewed as unsafe.

“It could have a chilling impact on the availability of credit to anyone using risk-management products,” he added.

Page 5 Monday, December 19, 2011 FarmWeek

Markets

Ag economist: Commodity markets in state of transition

BY DANIEL GRANT FarmWeek

The commodity price outlook provided last week at the Illinois Farm Economics Summit by Darrel Good, University of Illinois ag economist, offered both good and bad news for farmers.

Most of the good news was for livestock producers. Good predicted hogs prices in 2012 should hold steady at profitable levels around the mid-$60 range while fed cattle prices could increase from this year’s average of about $114 per hundredweight.

Crop farmers, on the other hand, were dealt some bad news: Good predicted corn prices in 2012 could decline by

$1 per bushel, compared to 2011, to around $5 or less while soybean prices (which declined about $2 per bushel in recent months) should be able to hold steady next year at current levels in the high $10 to $11 range.

“We’re transitioning from peak prices to lower prices for grain (and oilseeds), and conversely I see continued higher prices for livestock in 2012,” Good said.

Good predicted strong livestock prices next year due in part to thin herd numbers, particularly of beef cattle, and increased meat exports.

“Unless the economy collapses, consumers next year could face a tighter beef supply

Darrel Good, University of Illinois ag economist, center, discusses his outlook for commodity prices and the farm economy with Joe Higgs, left, and Kevin Sprecher, both of the Bank of Farmington, last week during the Illinois Farm Economics Summit in Galesburg. (Photo by Daniel Grant)

and higher prices,” he said.

Crop prices could decline next year due to the possibility of

steady-to-increased production and waning demand prospects.

Good predicted U.S. farmers

Board to pick Cuba tour participants

Groups combat ‘counterproductive’ policies

BY MARTIN ROSS FarmWeek

The U.S.’ longstanding Cuban policy has left it the “isolated player” in numerous areas and Cuba’s regime virtually untouched.

So says Mavis Anderson, senior associate with the Latin American Working Group (LAWG), who sees a potential reversal in recent strides toward productive U.S.-Cuban relations.

The Illinois Farm Bureau Board of Directors this week will review applications for 16 spots on IFB’s Market Study Tour to Cuba scheduled for mid- to late March. The tour will include cultural, farm, business, and government visits, with a focus on products Illinois farmers hope someday to sell to the island nation.

Last week, LAWG fought successfully to defeat a spending amendment from Cuban-American U.S. Rep. Mario Diaz-Balart (R-Fla.) that would have tightened Cuban travel restrictions and financial “remittances” between Cubans and their relatives in the U.S. LAWG also seeks Cuba’s removal from a U.S. list of “state sponsors of terrorism,” citing a recent U.S. State Department report that noted “the government of Cuba maintained a public stance against terrorism and terrorist financing in 2010.”

Meanwhile, Anderson was uncertain about the fate of Senate proposals designed to “fix” existing restrictions on Cuban payment for U.S. goods and direct U.S.-Cuban “bank-to-bank” transactions.

“The evidence that all this is counterproductive is that we’ve been doing it for 50 years with no result,” Anderson told FarmWeek.

“The goal of our (existing) policy and the goal of the Cuban-American legislators is regime change, and that hasn’t happened.

“It’s time to try something different if we want to have any kind of presence in Cuba. As Cuba has changed tremendously in the last couple of years, the United States has been out of it. We are missing in action — we are the isolated player in this game.

That needs to change.”

A decline in U.S. sales to Cuba has accelerated since 2004, when the Bush administration imposed “cash-in-advance” requirements for Cuban import purchases, Anderson said.

The U.S. Grains Council reports U.S. market share in the Caribbean Basin continues to suffer as South America’s advantage in the Colombian corn market has spilled over into other regional markets including Venezuela, Panama, and Cuba.

Today, Cuban payment is required prior to export shipment, and under U.S. regulations, buyers often must wire payments through European or other banks. U.S. producers hope to regain market share in Colombia and Panama through newly approved trade agreements, but current financing provisions leave the U.S. at an export disadvantage and Cuban buyers exposed to seizure of goods in U.S. ports.

Current Senate measures would allow transfer of title for U.S. exports once they arrive in Havana, to prevent seizure by parties with a legal claim against Cuba.

President Obama has made some recent regulatory strides, particularly in the travel arena, easing channels for family, religious, educa-

tion, and cultural “people-to-people” travel.

However, the imprisonment of U.S. government contractor Alan Gross “has put a freeze on any new initiatives either by the Congress — which isn’t inclined to do anything, anyway — or the administration,” Anderson said.

Gross is serving a 15-year sentence for supplying a satellite telephone to members of Cuba’s Jewish community seeking improved Internet access.

And Anderson questions prospects for Cuban reforms in what promises to be a heated 2012 election year.

“The Cuban-Americans in south Florida who are in Congress (such as Diaz-Balart) will never let up, election year or non-election year,” she warned. “They are like bulldogs on this issue.”

next year could plant 2 million added acres of corn while a return of trend-line yields would increase production by 13 bushels per acre compared to 2011.

Elsewhere, South American farmers are on pace to produce their third-straight record soybean crop.

“I think we’ll see a significant increase in production,” Good said.

Meanwhile, feed use of U.S. corn is at its lowest level since 1995, Good predicted the amount of corn used for ethanol will flatten out as the ethanol blenders’ credit expires at month’s end, and soy exports have slipped from 1.5 billion bushels last year to 1.3 billion bushels this year.

“We’re not looking for a lot of demand growth,” Good said.

“That suggests we’ll be looking at lower prices (in 2012).”

On the bright side, Good believes crop prices will remain at profitable levels, and he sees no signs that prices will drop to those of a previous era.

Crop prices from 1947 to 1968 averaged $1.28 per bushel for corn and $2.63 for beans before increasing to averages in the next era (1973 to 2003) of $2.42 for corn and $6.15 for beans.

The U of I calculated longterm crop prices for the current era to average $4.60 per bushel for corn and $10.58 for beans.

FarmWeek Page 6 Monday, December 19, 2011

NATIONAL AFFAIRS

USGC chairman: Export picture looks bright long-term

BY DANIEL GRANT FarmWeek

The crop markets received bearish news earlier this month when USDA raised its estimates for world corn production and ending stocks of corn and beans in the U.S. World corn production in particular received a major boost from projections of a record harvest in China, where production was proWendell Shauman jected to grow 8.2 percent from last year to 191.8 million tons (nearly 7.5 billion bushels).

“China is the No. 2 corn producer in the world (behind the U.S.),” said Wendell Shauman, chairman of the U.S. Grains Council (USGC), a farmer from Western Illinois, and former Illinois Farm Bureau board member.

However, even with record corn production this year, China still is unlikely to produce enough grain to keep up with surging domestic demand.

“The last three years China has used more corn than it produced,” Shauman said dur-

ing a recent presentation at the Illinois Farm Bureau annual meeting in Chicago. “(Chinese) demand is exceeding their ability to produce it.”

Tom Mueller, director of the Illinois Corn Marketing Board, recently heard a similar message during a USGC leadership mission to Guangzhou, China.

“The (Chinese) government wants to keep farmland producing food,” Jorge Sanchez, director of USDA’s ag trade office in Guangzhou, told participants of the USGC mission.

“But the government also knows there never will be nearly enough land to meet demand, and I don’t see yields growing or more farmers going into production.”

Shauman and Sanchez predicted China over the long haul will import more U.S. corn and eventually could become one of the top markets, which would be a major shift as China until recently was a major exporter of corn.

China this year is expected to import nearly 120 million bushels of U.S. corn. Sanchez predicted Chinese corn imports could grow annually by 157 million to 394 million bushels.

The demand growth is expected to be fueled by a boom-

ing Chinese population with more spending power.

About 234 million people are projected to move into the middle class in China by 2020, the USGC chairman noted.

“It’s a significant market and it’s only going to expand,” Shauman said. “We need to capitalize on that.”

China also is expanding its production of livestock, which is expected to increase Chinese demand for corn, soybeans, distillers grains, and other feedstuffs.

The portion of hogs in commercial facilities in China increased from 35 percent in 2004 to 65 percent in 2010. That number is projected to reach 80 percent by 2014, according to Shauman.

“There’s been tremendous

movement (in China) away from backyard (livestock) operations to commercial production facilities,” said Shauman, who noted Chi-

nese imports of U.S. distillers grains increased from minimal sales four years ago to 3 million metric tons this year.

advocates and interests seeking key “guest worker” reforms aimed at ensuring an adequate ag labor force.

American Farm Bureau Federation (AFBF) policy team director Paul Schlegel noted immigration already has become a hot-button topic in campaign primary debates.

At Illinois Farm Bureau’s annual meeting, U.S. Sen. Mark Kirk, a Highland Republican, argued a valid guest worker program is “doable.” But he sees “a common sense solution” coming only after border security measures are passed and conservative lawmakers “see there is no political agenda.”

House leaders recognize any serious immigration debate will include proposals for mandatory electronic verification of worker documentation (E-Verify), potentially alienating voters in heavily ag districts, Schlegel told FarmWeek.

At the same time, Democrat candidates may wish to keep the issue “alive” to court Latino and other voters who support some form of “normalization” for undocumented workers, but realize Congress at this juncture would reject any legislation that does not “couple” worker reforms with heightened security.

Thus, “I don’t think anything significant is going to happen — not before the presidential election,” Schlegel said. That doesn’t mean producers can’t make inroads.

“These will be the first major elections in states like Georgia and Alabama where they’ve adopted state-based E-Verify programs that are detrimental for ag,” Schlegel said. “In Alabama, they’re starting to make noises that maybe they need to look at (requirements) again.

“In Georgia, if acreage is

down, if people aren’t planting because they don’t think they’ll have workers, that’s going to play out in fall elections.”

The sponsor of Georgia’s new law recently toured south Georgia with state Ag Commissioner Gary Black to field farmer immigration concerns.

A Georgia Agribusiness Council survey indicated 46 percent of respondents were experiencing a labor shortage, with 24 percent of those employers reporting fewer workers applying for available jobs.

Thirty-seven percent of survey participants cited worker concerns with the new law.

Alabama’s E-Verify mandate goes into effect April 1. Alabama Farmers Federation horticulture program director Mac Higginbotham noted “a lot of unknowns” about both worker verification requirements and “the availability of a labor pool” next season, especially among the state’s tomato growers.

As a result, fruit and vegetable acreages and consumer supplies could drop significantly, Higginbotham said. New requirements place Alabama producers at a competitive disadvantage relative to neighboring states, he argued.

While the prospect of a national E-Verify debate isn’t appetizing, AFBF’s Schlegel hopes it might at least drive home “the need to give us a (worker) program that works.” Mandatory E-Verify imposes an added burden on a sector already hard-put to find local laborers willing to accept work of a “seasonal and temporary nature,” Higginbotham said.

“Those farmers who do not have a reliable labor force going into 2012 are going to be the farmers who just aren’t going to plant next year,” Higginbotham told FarmWeek.

Elections offer producers immigration reform platform

BY MARTIN ROSS FarmWeek

The 2012 elections could offer producers a crucial forum on the need for federal immigration reform.

This year has seen little progress toward an accord between fervent border security

Page 7 Monday, December 19, 2011 FarmWeek

livEsTOcK

Traders surprised

Modest break in cattle market expected to continue

BY DANIEL GRANT FarmWeek

USDA surprised the trade in its December cattle on feed report Friday with estimates showing a larger-than-expected supply of market-ready cattle.

Placements in feedlots during November (2.04 million head) were up 4 percent compared to last year. The average trade guess predicted a halfpercent decline in placements.

Meanwhile, marketings of fed cattle during November totaled 1.77 million head, down slightly from a year ago.

Traders expected a 1.5 percent decline.

“Marketings were a little better than expected,” said Rich Nelson, director of

research for Allendale Inc. in McHenry. “(The report) will not stop the cash cattle market from breaking.”

The cash cattle market has experienced a modest downtrend since it peaked in November at $127 per hundredweight. Cash cattle prices on Friday were around $118.

Nelson viewed the recent price action as a normal, seasonal decline. The industry often experiences slaughter disruptions in December which temporarily reduce cattle demand.

“This is a normal decline in December,” he said. “(Cattle inventory) numbers will start to decline and prices will start rallying” in 2012.

Farmland values set record in Iowa Farmers and landowners in awe of booming land prices in Illinois should take a look at what’s happening across the Mississippi River in Iowa.

The annual Iowa Land Value Survey released last week by Iowa State University estimated the average cost of farmland in the Hawkeye state this year shot up 32.5 percent compared to 2010.

“This is the highest percentage increase recorded by the survey (which dates back to 1941),” said Mike Duffy, Iowa State economist. “And the average land value of $6,708 per acre, when adjusted for inflation, is at an all-time high.”

The previous inflation-adjusted high occurred in 1979.

An increase in gross farm income has been a major factor behind the jump in farmland values, according to Duffy. Crop prices in Iowa in 2005 averaged $1.94 per bushel for corn and $5.54 for beans compared to estimates this year of $6.05 for corn and $11.40 for beans.

The Federal Reserve Bank of Chicago recently reported third quarter farmland values in its district (which includes parts of Illinois, Indiana, Iowa, Michigan, and Wisconsin) were up 25 percent from a year ago, which was the largest jump since 1977.

Farmland values in Illinois in the third quarter were up 23 percent from a year ago.

For more information about the Iowa Land Value Survey, including video footage, visit the website {www.farmweeknow.com}.

DATEBOOK Jan. 10 University of Illinois corn and soybean classic, Mt. Vernon Holiday Inn. Jan. 11 U of I corn and soybean classic, Crowne Plaza, Springfield.

Jan. 12 U of I corn and soybean classic, I Hotel and Conference Center, Champaign.

Jan. 16 U of I corn and soybean classic, Double Tree Hotel, Bloomington.

Jan. 17 U of I corn and soybean classic, Kishwaukee College, Malta.

Jan. 18 U of I corn and soybean classic, I Wireless Center, Moline.

Jan. 19 U of I corn and soybean classic, Holiday Inn, Quincy.

Jan. 24-25 University of Illinois crop management conference, Gibby’s on the Green Conference Center, Whittington.

“This report simply pushes back by another couple months when the (supply)

FarmWeekNow.com Go to FarmWeekNow.com to view complete details of the cattle on feed report.

deficits will start.”

USDA on Friday estimated cattle and calves on feed in the U.S. as of Dec. 1 totaled 12.08 million head, up 4 percent from last year.

“We’re still seeing liquidation in numbers off the South-

ern Plains,” Nelson noted.

He said he still foresees a major meat deficit next year despite the surprisingly higher inventory numbers in the latest cattle report. He predicted beef production next year could decline 3 percent while chicken production could slip by 2 to 3 percent.

The possibility of tighter meat supplies combined with increased exports is expected to drive beef prices higher next year. The U.S. currently is on track to be a net exporter of beef for the first time in

more than 40 years, according authors of the CME Group Daily Livestock Report .

“Cattle prices may have a chance or two to hit $136 (per hundredweight) next year,” Nelson said.

Retail beef prices the first 11 months of this year were up 10 percent, according to the Daily Livestock Report. It was the largest increase since beef prices jumped 11.5 percent in 2004.

Applicants sought for state equine promotion board The Illinois Equine Industry Research & Promotion Board (EPB) is seeking Illinois horsemen to apply for two seats on its board of directors.

The EPB is charged with selecting recipients for grants funded by the Illinois equine checkoff program.

The application deadline is Jan. 31. The board is seeking applicants from Southern Illinois in particular, according to Karen Freese, board chairman.

The board is comprised of Illinois horsemen who represent a cross section of the

industry by geography and segment.

Application forms are available online at {www.HorsemensCouncil.org}. Clink on the EPB logo, then find “Board Applications” under the index for Directors & Committees.

Applications also are available from the board’s Springfield office. A resume or brief biography should accompany an application.

Send applications to: Illinois Equine Industry Research and Promotion Board, 3085 Stevenson Drive, Suite 200, Springfield, IL 62703. The phone number is 217-529-6503 and the fax number is 217-529-9120.

FarmWeek Page 8 Monday, December 19, 2011

Markets

More farmers exploring, entering new commercial markets

BY KAY SHIPMAN FarmWeek

Farmers — from those with commercial market experience to those investigating the idea — last week heard increased demand for locally produced foods is expanding their opportunities.

There is “not a size that fits all situations. There’s opportunities for all types of operations,” said John Pike, a University of Illinois local foods specialist, who taught a marketing workshop last week in Galesburg.

MarketReady is a curriculum-based program designed to help farmers understand best marketing practices and assess whether they are ready to sell to wholesalers, groceries, restaurants, and other commercial markets. The information is geared toward small and mid-sized farms.

Each participant received a binder of information that covered various factors and checklists to ensure farmers would meet any market requirements. The material was

‘You need to be able to evaluate your personality and what you’re suited for.’

— John Pike University of Illinois local foods specialist

developed based on survey responses from 70 buyers representing a variety of food sectors.

Pike outlined several points farmers need to consider before they attempt to sell to commercial markets. His points included: • Meet commercial buyers’ requirements. The MarketReady training information covered specific needs of restaurants as well as grocers, wholesale buyers, and food service providers.

• Cover liability insurance needs. “Anytime you’re involved in a business operation there are risks,” Pike said.

He advised farmers to let their insurance provider know about any commercial marketing they

are considering and “make sure you have enough insurance to protect your assets.”

• Develop a good marketing strategy. The strategy will differ, depending on the area, demographics, potential market outlets, the food product, and the farmer’s personality and ability to develop and maintain relationships with buyers. “You need to be able to evaluate your personality and what you’re suited for,” Pike noted.

• Assess all related costs and understand the market’s pricing structure. Typically, a grocery price margin ranges between 33 and 50 percent, according to Pike. Likewise, a farmer needs to consider all

costs to his operation, including extra equipment or time needed to meet the market’s requirements.

• Develop and maintain proper business forms, preferably electronic ones. Those include invoices, bills of lading, and sales receipts.

• Practice good agricultural practices to minimize food safety problems. Pike advised farmers to learn a buyer’s specific requirements for food safety. Some buyers want third-party audits of safety practices; others want a copy of a farm’s food safety practices. Some buyers want a letter denoting the farmer’s attendance at a food safety workshop.

“Food safety is rising to the top as a big issue,” Pike said.

“It’s just as important for a

farmer selling at a farmers’ market as it is for a commercial lettuce farm to use food safety procedures.”

Presentations and exhibits about commercial marketing and related programs, including the MarketMaker database, will be offered Jan. 1113 at the Illinois Specialty Crops, Agritourism, and Organic Conference in the Crowne Plaza, Springfield.

Last week’s MarketReady workshop and an earlier one in Benton were sponsored by the North Central Sustainable Agriculture Research and Education Program and the U of I Extension. First Farm Credit sponsored the Galesburg workshop, and Farm Credit Services of Illinois sponsored the one in Benton.

IFB, partners collaborating on farmer-buyer meetings Illinois Farm Bureau and several entities are collaborating on several farmer-buyer meetings next year.

“The main focus is to assist farmers and help them become market ready, link them with buyers, and to help them form relationships or strengthen existing relationships. The groups are collaborating to maximize our resources,” said Cynthia Haskins, IFB manager of business development and compliance.

A two-day meeting is being planned for early April in Southern Illinois, according to Haskins. The program will include presentations on food hubs and Market-Ready, a curriculumbased program dealing with best marketing practices.

In breakout sessions, a wide variety of buyers will discuss their procurement requirements. There will be opportunities for farmers to chat with buyers one on one.

“There will be opportunities for farmers to meet buyers as well as learn how to be market ready,” Haskins said.

In late March, a one-day meeting is being planned with the Champaign County Farm Bureau and county Extension. It will be geared to those growers interested in doing business in Central and West-Central Illinois.

Haskins said other meetings are being planned for Southeastern Illinois, West-Central Illinois, and two meetings in Northern Illinois. Each meeting will include presentations by University of Illinois Extension local foods educators.

Additional information and details will be published in FarmWeek when they become available. — Kay Shipman

IFF answering consumers’ questions The Illinois Farm Families (IFF) is a coalition of commodity groups for beef, corn, soybeans, pork, and the Illinois Farm Bureau. It is accepting consumers’ questions and posting answers to those questions on its website {www.watchusgrow.org}.

FarmWeek is publishing the questions and answers to share information and better prepare farmers the next time they are asked a probing question.

Question: Do cows continue to produce milk after their

calf has been taken away? At what age are cows first bred?

Dale Drendel, Hampshire: Dairy cows are amazing animals. They can turn grass and grains into milk. Heifers are female dairy cattle and after two years they usually give birth to their own calves.

All female dairy cows must have a calf to produce milk.

The cow will continue to produce milk for about 305 days.

The gestation (pregnancy) period for cows is nine months. Newborn calves weigh 80 to 100 pounds.

Page 9 Monday, December 19, 2011 FarmWeek

from tHE couNtIEs

E

DGAR — The Young Leaders committees from Champaign, Douglas, Edgar, and Vermilion County Farm Bureaus will sponsor their annual Illini Farm Toy Show Jan. 6-8 at the Urbana Holiday Inn. Show hours are 5 to 9 p.m. Friday; 9 a.m. to 5 p.m. Saturday; and from 9 a.m. to 2 p.m. Sunday. Special events at 9 a.m. Saturday include a farm toy consignment live auction and a pedal tractor pull at noon. Contact Kurt Wolken at 217-202-2730 for exhibitor or auction information and Zack Witvoet at 217-304-7395 to enter a toy in the auction.

ONTGOMERY — Montgomery County Farm Bureau Foundation will award six $1,500 scholarships.

Deadline for applications is noon Monday, March 12. To qualify, the student’s parents or the student must be a Farm Bureau member and the student must be pursuing an agricultural field of study. Visit the website {www.montgomerycountyfb.com} or call the Farm Bureau office at 217-532-6171 for more information.

OULTRIE — Farm Bureau will sponsor an on-the-road seminar at 3 p.m.

Wednesday at the Farm Bureau

M

M

office. Kevin Rund, Illinois Farm Bureau senior director of local government, will be the speaker. Trucking laws will be discussed. Call the Farm Bureau office at 217-728-4214 for reservations or more information.

EORIA — The county plat books are available at the Farm Bureau office. Township aerial maps are included in the book. Farm Bureau members will receive a 40 percent discount. Call the Farm Bureau office for more information.

TEPHENSON — Task force meetings will be Wednesday, Jan. 4, at the Farm Bureau office. Those will include 7 p.m., Farm Business; 7:30 p.m., Government and Local Affairs; 8 p.m., Members Services and Outreach; and 8:30 p.m., Education. Call the Farm Bureau office for more information.

• Applications are available for the assistant position for a college student for the summer program from June 1 through mid-August. Visit the website {www.stephensoncfb.org} or call the Farm Bureau office at 815232-3186 for more information.

• The Northern Illinois Farm Bureau bowling tournament will be at 2 p.m. Saturday, Jan. 21, at Forest Hills Lanes, Loves Park.

Registration information is avail-

P

able at the website {www.stephensoncfb.org} or at the Farm Bureau office. Deadline to register is Friday, Jan. 13.

• Farm Bureau night at the Rockford Ice Hogs hockey game is at 7:05 p.m. Saturday, Feb. 11. A block of tickets has been reserved for $12 each. Call the Farm Bureau office at 815-232-3186 or go

to the website {www.stephensoncfb.org} for more information.

ERMILION — The Young Leaders committees from Champaign, Douglas, Edgar, and Vermilion County Farm Bureaus will sponsor their annual Illini Farm Toy Show Jan. 6-8 at the Urbana Holiday Inn. Show hours are 5 to 9 p.m. Fri-

V

day; 9 a.m. to 5 p.m. Saturday; and from 9 a.m. to 2 p.m. Sunday. Special events at 9 a.m. Saturday include a farm toy consignment live auction and a pedal tractor pull at noon. Contact Kurt Wolken at 217-202-2730 for exhibitor or auction information and Zack Witvoet at 217304-7395 to enter a toy in the auction.

LENDING A HAND

S

Neil Fearn, Edwards County Farm Bureau vice president, helps a student in Gina Salinas’ second grade class at Portage Park School in Chicago complete his “Field to Table” activity. The Edwards County Board of Directors had adopted Salinas’ class as part of the Adopt a Classroom program, and three board members and their spouses visited with the students in early December. Miss Salinas gave the board members the entire day with her students. During the day, students heard about livestock and grain farming, made pumpkin pie in a plastic bag, discovered the process that corn takes “From Field to Table,” and played food bingo. (Photo courtesy of Edwards County Farm Bureau)

Emergency tube key to lifesaving data access

BY MARTIN ROSS FarmWeek

A Farm Bureau-supported campaign hopes to put potentially lifesaving farm resources literally at the fingertips of rural emergency responders.

The Emergency Action Tube, a waterproof thermoplastic pipe mounted on a farm’s primary power pole, contains diagrams and information that can prove crucial in the event of a fire or producer injury.

Carle’s Center for Rural Health and Farm Safety provides tubes at no cost to EastCentral Illinois farm residents, in partnership with county Farm Bureaus and other local groups. Carle safety specialist Amy Rademaker anticipates a sharp upswing in program signup in 2012 and hopes the effort eventually will expand well beyond the region.

The Urbana-based center has worked with the nearby Thomasboro Fire Department to develop a practical system aimed at ensuring a speedy, safe emergency response in the field, at the bin, or in the confinement building. On-farm maps and data also are being supplied to local fire/rescue agencies for pre-planning purposes.

Global positioning system (GPS) technology has helped

take the guesswork — guesswork that can steal crucial minutes from a farm accident victim — out of a project that’s been in the works for nearly a decade.

“When the project started in 2002, the whole concept involved having to hand-draw maps,” Rademaker told FarmWeek. “We knew at that point that it would be next to impossible to sit down, take the time, get it done, get it accurate.

“Things kind of sat in limbo until 2009. I was at a conference where a group said they were doing these tubes using GPS and computer software. Since then, our project’s evolved: We are using aerial shots, having (farmers) label buildings and what’s in those buildings. Then I’m digitizing them. It’s a lot easier; it’s a lot more accurate.”

To be eligible for a tube, applicants must live in EastCentral Illinois, own or rent farm property, be willing to provide basic information for an emergency response plan and farmstead map, and allow on-farm installation.

The farmer interview itself takes an average five to 10

minutes, Rademaker said. Carle recently collected producer data during a local fire department pancake breakfast, and Rademaker used Illinois Farm Bureau’s recent annual meeting in Chicago to update Champaign County maps.

Beyond providing a general layout and a guide to onsite chemical or fire hazards and emergency resources, realworld mapping identifies fence lines, trees, power lines, and other features that may affect emergency access, efficiency, and safety. For example, Rademaker notes activation of an auto-start generator could endanger responders who assumed they’ve successfully cut power to a piece of equipment.

Carle and Thomasboro firefighters have charted distances from rural roads to central points within each property, enabling responders to calculate how much hose they may need to fight a blaze in the event farm lanes are inaccessible.

Rademaker urges local departments to collect farm tube information for on-board use en route to a fire or accident. “They’ll be able to pull the farm map out and say, ‘OK, we’re 300 feet from the road. We have five fuel tanks in a row next to the building

that may be on fire,’” she said.

Carle has fielded calls from across the U.S. and even from Canada regarding the Emergency Action Tube. Rademaker and company are developing a general “toolkit” that would enable emergency

departments to establish their own program.

For program information, call 217-383-4606, or e-mail farmsafety@carle.com. Carle is accepting donations to offset the cost of tubes and accompanying reflective labels.

FarmWeek Page 10 Monday, December 19, 2011

profitability

Looking ahead to the new year

BY JOHN CRIPE

The year 2011 will go down as one of record volatility in commodity prices. They nearly doubled, and record daily price moves were breathtaking.

It also was the year the Cardinals defied all odds and won the World Series.

But enough about that.

As a Cubs fan, John Cripe I don’t live in the past. It’s always on to a new year.

Ending stocks for grains are

still tight, but we have learned to live with the numbers.

Ethanol’s effect on corn prices has been swift and powerful, and the usage a real boost for the rally.

However, the RFS (renewable fuel standard) which mandates the ethanol sector to produce 15 billion gallons by 2015, is a target now nearly reached at 13.5 to 14 billion gallons.

That should help to calm the markets for 2012, as well as increase wheat feeding and corn acres next spring.

The story for next year will be the growing economic crisis

in Europe. While it probably will take a Christmas break, expect it to return full force to the headlines in 2012.

Volatility in credit, banking, and who ultimately gets tangled in the debt crisis in Europe will be the real story.

Markets don’t like uncertainty and the whole situation in Europe acts like a wet blanket on them. Even if European leaders could agree on fiscal union and joint debt issuance, which they cannot, such long-range changes cannot solve the immediate crisis at hand.

They owe $2 trillion they do

not have, and spending cuts have been unpopular, causing riots in some countries. Sound familiar?

With the Christmas holidays coming up, I don’t want to sound like a complete scrooge, so let’s leave the dark side and go to the light.

One needs to remember that there are trillions of dollars sitting on the sidelines in near 0 percent short-term government paper waiting for the “all clear” to expand back into commodity risk assets.

Let’s assume the European debt crisis is solved or a least the can gets kicked down the

road. World demand for food and feed is still humming along. It’s estimated that China would consume at least 169 million metric tons of feed, up 4 to 9 percent from last year’s record.

Surging animal numbers are behind the sharp rise in consumption. Therefore, world demand led by Asia and India continues to point to a bullish agriculture picture despite what might be a quiet winter price-wise.

John Cripe is director of MIDCO Commodities Inc. His e-mail address is jcripe@mid-co.com.

Decline coming in 2012?

Farm income projected to set record in 2011

BY DANIEL GRANT FarmWeek

Farm income this year is projected to set new records in Illinois and nationwide as many farmers reaped the benefit of record-high commodity prices.

USDA last week projected U.S. farm income this year will total $100.9 billion, up 28 percent from 2010.

If realized, U.S. farm income this year would be 50 percent higher than the 10-

year average of $67.4 billion from 2001-10.

“A period beginning in 2006 and ending sometime in the future likely will be viewed as a ‘golden age’ for crop farm incomes,” said Gary Schnitkey, University of Illinois Extension farm management specialist.

In Illinois, Schnitkey said farm income this year could average as much as $200,000plus, a record-high, although incomes will be quite variable across the state due to wide

M A R K E T FA C T S Feeder pig prices reported to USDA* Weight 10 lbs.

40 lbs.

50 lbs.

Receipts

Range Per Head Weighted Ave. Price $35.00-$60.40 $44.90 $57.00-$62.90 $60.84 n/a n/a This Week Last Week 31,614 29,597 *Eastern Corn Belt prices picked up at seller’s farm

Eastern Corn Belt direct hogs (plant delivered) Carcass Live

(Prices $ per hundredweight) This week Prev. week $83.17 $80.75 $61.55 $59.76

Change 2.42 1.79

USDA five-state area slaughter cattle price Steers Heifers

(Thursday’s price) (Thursday’s price) Prev. week Change This week 122.26 122.28 -0.02 122.00 121.46 .54

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 $144.24 144.86 -0.62

Lamb prices n/a

Export inspections (Million bushels) Week ending Soybeans Wheat Corn 12-08-11 29.7 16.5 35.7 12-01-11 32.0 14.6 38.9 Last year 47.8 19.4 35.0 Season total 458.9 550.1 436.7 Previous season total 686.8 594.8 480.8 USDA projected total 1300 925 1600 Crop marketing year began June 1 for wheat and Sept. 1 for corn and soybeans.

yield swings caused by tremendous variability in growing conditions.

Many of the highest farm incomes in the state this year will be in Northern Illinois, where heat and dryness generally weren’t as severe as what occurred in much of Southern and Central Illinois in July and August.

“Farm income will vary a lot around the state depending on yields,” Schnitkey said last week at the Illinois Farm Economics Summit in Galesburg.

“Timing of grain sales also will impact incomes.”

USDA predicted crop prices for 2011 will average $6.04 per bushel for corn, $12.89 per bushel for soybeans, and $7.43 per bushel for wheat, all of which would be well above previous averages.

This year’s farm income, though, was projected to be the peak and not the norm for future years.

Long-term, the U of I projected crop prices will average closer to $4.50 for corn and $10.50 for beans and, combined with higher input prices, farm incomes would drop back to levels recorded from 200106 (an average of about $66,000.

Near-term, the decline in farm income won’t be as sharp.

Schnitkey predicted farm income in the state next year could average $153,000.

“We see incomes going down (in 2012), but it still is projected to be a good income year,” he said.

Problems could surface, though, if crop insurance prices are adjusted downward and if farmers continue to pay higher cash rents.

“If crop prices are lower next year, crop insurance prices set in February 2013

will be much lower, which would reduce the safety net for farmers,” Schnitkey said.

Meanwhile, the average cash rent in the state from 2010 to 2011 jumped from $169 to $183 per acre.

“Cash rent farms are

more at risk of (commodity) price declines,” Schnitkey said.

He encouraged farmers to stress-test their operations now to prepare for possible pressure to returns in the future.

Auction Calendar

Bureau Co. Farmland. Marion Meyers Trust, BRADFORD, IL. John Leezer, Broker. 222.illinoisfarms4sale.com Thurs., Jan. 12. 10 a.m. 93.58 Ac. Knox Co. Sylvia A. Thompson Trust, GALESBURG, IL. Van Adkisson Auction Service, LLC. www.biddersandbuyers.com Sat., Jan. 14. 10 a.m. 67 Ac. Will Co. WILMINGTON, IL. Richard A. Olson & Assoc. Inc. richardaolson.com Sat,. Jan. 14. 10 a.m. 204.4 Ac. Warren Co. Anna Ruth Oaks Trust, MONMOUTH, IL. Van Adkission Auction Service, LLC. www.biddersandbuyers.com Sat., Jan. 14. 1 p.m. 146 Ac. Will Co. WILMINGTON, IL. Richard A. Olson & Assoc. Inc. richardaolson.com Tues., Jan. 17. 10 a.m. Productive Farmland & Rolling Woodlands. LA PORTE, IN. Colliers Auction Services. www.IN.gov/idoa/surplus Thurs., Jan. 19. 10 a.m. Productive Farmland & Rolling Woodlands.

ANDERSON, IN. Colliers Auction Services. www.IN.gov/idoa/surplus Thurs., Feb. 2. 158 Ac. Kankakee. Soy Capital Ag Services. www.soycapitalag.com Tues., Feb. 21. 160.87 Ac. McLean Co. Soy Capital Ag Services. www.soycapitalag.com Wed., Feb. 22. 207 Ac. McLean Co. Soy Capital Ag Services. www.soycapitalag.com

Mon., Dec. 19. 10 a.m. Land Auction.

Diane G. Atkinson, RANTOUL, IL. Gordon Hannagan Auction Co. www.gordyvilleusa.com Mon., Dec. 19. 10 a.m. Marshall Co. Farmland. Donald Hattan, Dianna Kolb, Duane Cremer and Diane Cremer, TOLUCA, IL. Terry Wilkey Auction Service. www.terrywilkey.com Wed., Dec. 21. 10 a.m. Farm machinery and eq. David and Sharon Sager, SPEER, IL. Rediger Auction Service. www.rickrediger.com Thurs., Dec. 22. 10 a.m. 40 Ac. Cumberland Co. Marilyn Brown, CASEY, IL. Stanfield Auction Co. www.stanfieldauction.com Thurs., Dec. 29. 10 a.m. Farm machinery. Zielke Farms, OQUAWKA, IL. Van Adkisson Auction Service, LLC. www.biddersandbuyers.com Fri., Dec. 30. 10 a.m. Will Co. Land Auction. Myers Family, MANHATTAN, IL. Richard A. Olson & Assoc., Inc. richardaolson.com Wed., Jan. 4. 10 a.m. Land Auction.

Martha Arnold Estate, DANVILLE, IL. Jim Clingan Auction & Realty. www.jimclingan.com Wed., Jan. 11. 10:30 a.m. Winnebago Co. Land Auction. Homer F. Green Trust, PECATONICA, IL. Lenny Bryson, Auctioneer. www.lennybrysonauctioneer.com Thurs., Jan. 12. 9 a.m. 115 Ac.

Page 11 Monday, December 19, 2011 FarmWeek

PROFITABILITY Corn Strategy

C AS H ST RAT E GI S T

Soybean supplies more balanced As we indicated last week, the world oilseed/soybean situation is a little more balanced than it is for grains. The soybean market’s response last week to the drying pattern across Argentina and southern Brazil illustrated the sensitivity buyers and sellers have to the fundamental structure.

The chart accompanying this week’s article goes a long way toward illustrating the delicateness of the current balance. The supply shortfall of oilseeds outside of the U.S. is just above 30 million metric tons (mm). That is equivalent to 1.123 billion bushels, implying the U.S. needs to at least export that amount for the world to have adequate supplies to meet its needs.

The estimated shortfall is built upon Brazil producing a 75 mm crop and Argentina a 52 mm crop. Recent private estimates out of those countries already have started to scale back their potential because of the recent drying trend, especially the one in Argentina.

Over the past week, we’ve seen some private estimates that are 3-4 mm below those

levels. That’s 220 million to 290 million bushels below the official forecasts. If those levels prove to be realistic, they would shift demand to the U.S. to fill the shortfall, lifting our soybean exports.

Because the current 1.123billion-bushel world shortfall is below USDA’s current 1.3-billion-bushel export forecast, it doesn’t necessarily imply a decline in South American production would lift our exports a like amount. But we would expect to see exports increase 100 million to 150 million bushels above the current forecast.

However, if these occasional bouts of dry weather only prove to be “weather scares,” there could be negative repercussions as well. If production comes close to the current 75 mm for Brazil and 52 mm for Argentina, demand to fill the world shortfall will remain below USDA’s current U.S. export forecast. That fits with the current trajectory of export sales and shipments that lag the pace needed to reach the 1.3-billion-bushel export estimate.

As we implied at the start, the situation is “balanced” at present. But, it easily could slip into one that justifies higher prices, or lower ones.

Traders will continue to watch this situation closely.

Cents per bu.

ü2011 crop: The March contract is positioned to test $5.50-$5.60. Don’t sell weakness, but wait for a rebound to price corn again. Still, prices may not get to an acceptable sales level until sometime in the new year. Hedge-to-arrive (HTA) sales for spring/early summer delivery are the best marketing strategy for farmstored grain, especially with futures spreads widening.

Commercial storage is a closer call, depending on your storage rate. Compare your options with those inventories. ü2012 crop: Hold sales at 20 percent. Depending on how deep prices decline in the short term, we could recommend a call option buying strategy against sales on the books.

HTA contracts are still the best tool for making sales at this time, but we’d use forward contracts if the basis is good. vFundamentals: Corn is lacking fresh fundamentals.

The persistent decline in wheat prices is the key factor dragging prices lower. There’s little hope for export business to pick up anytime soon.

Soybean Strategy

ü2011 crop: March needs to close above $11.60 to end the short-term trend lower. If you need to make sales, use a bounce to $11.50 on March.

But even though prices might drop lower in the short term, there should be better selling opportunities later this winter.

A HTA sale for spring delivery for farm-stored soybeans has become more attractive with the spread widening. Compare your alternatives for commercial storage. ü2012 crop: Even though new-crop prices might drop lower in the short term, we think there will be better selling opportunities this winter. For new-crop sales, we prefer HTA contracts, but would use a cash contract if the basis level is good. vFundamentals: Export interest continues to undermine the soybean complex, along with the persistence of poor crush margins. Soybean export sales and shipments lack the needed pace to reach the cur-

rent USDA forecast. And the November crush estimate came in below forecast. But the drier pattern that has emerged across Argentina and southern Brazil should be watched.

Wheat Strategy

ü2011 crop: The short-term trend remains down, especially after the Chicago March contract dropped to a new low.

Still, we don’t want to sell weakness, seeing a better opportunity for making sales sometime after the first of the year. The carry in futures still pays for commercial storage, making spring HTA contracts the best tool.

ü2012 crop: Use a rebound to $6.40 on Chicago July futures to make catch-up sales. vFundamentals: The trade remains focused on lackluster demand for U.S. wheat, as international competitors continue to undercut our prices. Weekly export sales, 318,300 metric tons, were within trade expectations. But they continue to fall short of the pace needed to even reach the lower forecast on the recent USDA supply/demand estimates. At the same time, the Southern Plains continues to pick up beneficial moisture.

Cash Strategist sales recommendations AgriVisor endorses crop insurance by

Beans '11 '12 9/13/10 10% 10.27 8/29/11 10% 13.50 10/11/10 10% 11.54 11/15/11 10% 11.99

AgriVisor LLC is not liable for any damages which anyone may sustain by reason of inaccuracy or inadequacy of information provided herein, any error of judgment involving any projections, recommendations, or advice or any other act of omission.

Policies issued by COUNTRY Mutual Insurance Company®, Bloomington, Illinois AgriVisor Hotline Number

309-557-2274

4/25/11 10% 13.76

9/13/10 10% 4.61

8/29/11 10% 6.65

10/11/10 10% 5.28 11/15/11 10% 5.671/2 1/24/11 10% 5.87

1/31/11 10% 13.31

AgriVisor LLC 1701 N. Towanda Avenue PO Box 2500 Bloomington IL 61702-2901 309-557-3147

Corn '11 '12

80% unsold

4/25/11 10% 6.76 80% unsold

Wheat '11 '12 7/13/10 10% 6.00

7/30/10 10% 6.98

5/31/11 10% 6.79

8/6/10 15% 7.35

8/1/11 10% 13.71 11/15/11 10% 11.99

8/1/11 10% 6.77 11/15/11 10% 6.45

8/8/11 10% 6.68

30% unsold

30% unsold

Prices are new crop or nearby futures

Prices are new crop or nearby futures

5/26/11 10% 13.75

1/2

11/17/11 20% 6.343/4

7/21/10 15% 6.60

11/17/11 20% 6.30 20% unsold Prices are new crop or nearby futures

80% unsold

FarmWeek Page 12 Monday, December 19, 2011

pERSpEcTIvES

State’s 4 consecutive severe winters a record Illinois residents who remember the winters of 2006 through 2010 can state they experienced winters of record — and there is proof.

The winters of those four years caused high losses and were the only sequence of four severe winters since economic loss records began to be STANLEY kept in 1949. The CHANGNON winters of 2006 through 2010 were climate anomalies, potentially reflecting a shift in climate.

Property losses for the four winters totaled more than $702 million.

The causes of loss varied from major storms to extreme cold to heavy winter snowfall.

The winter loss data came from the insurance industry and included all the insured property losses to homes, vehicles, and buildings.

All four winters had above normal numbers of storms, above normal snowfall amounts, and below normal temperatures. Two winters had extensive ice storms and two had none.

The severity of each is illustrated through closer examination.

The winter of 2006-2007 was severe largely because of major snowstorms and ice storms that caused $118 million property losses.

However, Illinois wasn’t alone. That winter brought several major winter storms across the United States.

In Illinois, an early damaging winter storm on Nov. 30-Dec. 1 caused $54 million in losses. Over the three winter months, more major storms occurred. The nation’s 29th largest snowstorm on record hit Feb. 12-15.

This storm brought heavy snowfall, thick ice, and extremely high winds across Central Illinois. Power outages and damage to telephone systems caused sizable losses and repair costs of $175 million. Property damage totaled $350 million.

The state’s third bad storm of the winter came on Feb. 22-26. In the northern third of the state, the resulting total winter snowfall was more than 10 inches. A major ice storm also hit Northern Illinois and produced property losses of $29 million.

The winter caused power outages over several days for thousands of homes. The insurance industry classified the losses of $118 million as catastrophic.

Illinois received no respite in the winter of 2007-2008. From December 2007 through February 2008, Illinois was pummeled by a nearrecord number of 14 winter storms, plus a record number of rainstorms, several tornadoes, and every other form of severe weather that occurs in the state.

As a result, the state experienced 26 weather-related deaths — double the normal number — and excessive damage to vehicles, homes, and

businesses. Communities and governments faced costly repair efforts, and people lost their homes to major flooding from melting show.

The unique array of numerous storms, plus the extremes of temperature and frequent fogs, resulted in losses and costs in Illinois totaling $1.66 billion.

The following winter of 20082009 brought nine severe winter storms and many extremely low daily temperatures. Normally, the state has four severe winter storms in a winter. December through February was the fifth coldest since 1890.

Snowfall totals for 2008-2009 ranged from 50 inches in the extreme north to less than 5 inches in the extreme south, revealing a large contrast across the state.

Northern sections had snow amounts from 10 to 25 inches above normal, while Central Illinois snowfall totals were near normal. Southern sections recorded below normal snowfall amounts.

The winter of 2008-2009 created myriad impacts in eight sectors from agriculture to retail business. The bad weather led to 16 deaths and injuries to 1,800 people.

Local and state governments suffered high costs to remove snow and repair damaged roadways. The insured property losses totaled $172 million, and the winter’s total losses and costs were an estimated $1.4 billion.

The winter of 2009-2010 brought six severe snowstorms, but no ice storms. The winter’s total snowfall ranged from 8 inches at Cairo to more than 50 inches in Chicago. All parts of Illinois had snowfall totals well above normal.

Amounts in Northern Illinois ranked as the eighth largest in the past 125 years.

Due to continuous low temperatures, the snowcover in Central and Northern Illinois lasted for more than two months. Monthly temperatures were below normal all three winter months.

The impacts of storms, cold, and snowcover led to $159 million in losses to houses, vehicles, and businesses. The heavy snow, numerous storms, low temperatures statewide, and long-lasting snowcover in Central and Northern Illinois resulted in many impacts; some serious. These included power outages, transportation problems, and costly efforts to deal with weather problems. Another problem was flooding from the melted snow.

In ranking the winters of 20062010 based on loss, three of those four winters had extremely high losses and rank among the top eight.

In fact, the winter of 2007-2008 ranks first with losses of $253 million. Clearly the winters of 20062010 were unique in timing and in the magnitude of their damages.

Stanley Changnon, Mahomet, is chief emeritus of the Illinois State Water Survey and a geography professor at the University of Illinois.

LETTERS TO THE EDITOR Time to glean chaff from IFB policy book

Editor: After attending the Illinois Farm Bureau annual meeting Dec. 5, I have to write to express my great concern that issues having nothing to do with agricultural business are muddying our written policy and risk alienating our elected officials.

There are very few IFB policy goals that will be accomplished without legislative or agency action. Therefore, IFB invests heavily in very accomplished legislative directors at all levels of government.

As a member who frequently meets with elected officials on behalf of Farm Bureau, I appreciate how much we need access to elected officials in whose districts we have few, if any, constituents.

The more controversial policy positions we have that have nothing to do with agricultural profitability or stability, the greater risk we take that these elected officials will use those policies as a wedge and limit, if not eliminate, our access and influence.

How many members of the Illinois General Assembly really need IFB support?

About one-third. If we offend the northeastern legislators with these policies, we have done serious damage to our ability to protect our farm businesses and investments.

I urge the policymakers to spend time before next year’s annual meeting trying to glean the policy book of any policies that do not meet the following test: Does this issue have the potential to impact a farmer’s balance sheet or income statement?

In Dr. Tom Berger’s agronomy class, I learned that the definition of a weed is a plant out of place. Some of these policies should be addressed in our churches and not by IFB. In our policy book, they threaten to choke out what’s really important to our bottom line.

KIM A. MORTON, Chicago

Choice beef produced in less than 20 months

Editor: The Illinois Beef Association would like to correct some misstatements printed on the Perspectives page of the Dec. 5 FarmWeek.

Misstatement: “Choice cattle are 3.5 to 4 year old.”

Fact: Almost all (80 to 90 percent) cattle harvested for steaks and roasts in the U.S. fall within the “A” maturity range (cattle less than 30 months of age), with the majority under 20 months of age. In reality, steers and heifers harvested for Select and Choice beef range in age from 14 to 18 months.

Misstatement: “Select cuts come from animals as young as 30 months.” Fact: Cattle that are 30 months or older cannot have a quality grade of Select. In 1997, USDA restricted Select to “A” maturity to ensure a satisfactory eating experience. Consequently, beef labeled Select should always be younger than 30 months of age.

Misstatement: “While certainly acceptable, it ‘Select’ is considered less juicy and less tender than Choice because it is leaner.” Fact: Generally it is true that cattle with more subcutaneous rib fat tend to have carcasses with more marbling. Marbling, known as the “taste fat,” accounts for only about 3 to 7 percent of the total carcass fat percentage.

Consumers can confidently choose lower-priced Select beef or higher-priced Choice beef knowing that both cuts come from cattle harvested young enough to provide tender, flavorful beef with minimal fat.

The great variety of beef cuts and quality grades available to consumers satisfies a variety of tastes. Cattle producers have made great progress using genetics and improved nutrition to produce great tasting, nutritious beef from cattle that are younger, resulting in a smaller environmental footprint.

To learn more about quality grades and maturity, check out the website {http://meat.tamu.edu/beef grading.html}.

Cooking tip: Be careful not to overcook Select steaks as they will cook more quickly than Choice.

MARALEE JOHNSON, Executive vice president Illinois Beef Association

Letter policy

Letters are limited to 300 words and must include a name and address.

FarmWeek reserves the right to reject any letter and will not publish political endorsements.

All letters are subject to editing, and only an original with a written signature and complete address will

Europe, U.S. have much in common

Editor: Europe and the USA have many things in common, one of which noted currently is the massive debt crisis both are experiencing because of politicians who fail to learn from history.

George Santayana noted that those who fail to learn from the mistakes of the past are doomed to repeat them.

In both Europe and the U.S., power-hungry politicians have been trying to buy votes with money we don’t have, taxing not only this generation but every generation in the future, guaranteeing a lower standard of living for our children, grandchildren, and great-grandchildren.

These short-sighted politicos, thinking only of the present, seem to think they can go on forever, steadily increasing the public debt, by just printing more and more money without an equal increase in goods and services, hoping to find someone to buy our less and less valuable bonds.

As history has repeatedly shown us, this does not work.

Every society that has tried this has collapsed. A prime example is the Soviet Union.

If socialism were a better system, we would all be speaking Russian.

Previously democratic civilizations and nations that have tried this have collapsed into dictatorship. Some noteworthy examples are the Greeks, the Romans, and the post-World War I Weimar Republic of Germany. The latter printed so much money that its currency became virtually worthless, bankrupting the country, and resulting in the establishment of Hitler’s Nazi (National Socialist) party dictatorship that brought on the horrors of World War II. It is time to rid ourselves of such history-ignoring, out-of-touch-with-reality, power-mad politicians, ousting them from power, and never letting them in office again.

HAROLD ‘BOB’ JONES, Blair, Okla. be accepted.

A daytime telephone number is required for verification, but will not be published.

Only one letter per writer will be accepted in a 60-day period. Typed letters are preferred.

Send letters to: FarmWeek Letters 1701 Towanda Ave. Bloomington, Ill., 61701