FarmWeek Dec. 17 2012 by Illinois Farm Bureau

The BioFuels seCToR offers potential to launch “another boom in agriculture,” a university of Illinois economist told farmers last week. ........................................5

The sloW paCe of U.S. corn exports is not the result of quality issues with the drought-stressed crop, according to a recent U.S. Grains Council report. .....................................8

FaRm ReTuRns are expected to remain strong in 2013 as far mers generally should have more bushels to sell, barring a repeat of this year’s weather. ......10

Monday, December 17, 2012

Two sections Volume 40, No. 50

Rock blasting imminent, seen as partial solution BY MARTIN ROSS FarmWeek

Periodicals: Time Valued

As contractors ready to pull rock out of the Upper Mississippi River, Illinois Farm Bureau pledges to “pull out all stops” to ensure grain and farm inputs continue to flow on the river. IFB President Philip Nelson hailed U.S. Army Corps of Engineers indications that rock blasting in the Thebes reach of the Upper Mississippi could begin this week. Removal of high rock pinnacles in the Thebes-Grand Tower area is seen as crucial to ensuring an adequate nine-foot navigation channel in the St. Louis to Cairo region. The Corps originally suggested work might not begin until February under the agency’s normal contractor bidding process, but U.S. Sen. Dick Durbin, Illinois Gov. Pat Quinn, and others, pushed to expedite rock blasting and removal. A pair of contractors has been selected to remove rock in a two-step process over the next 60 days, national Waterways Council Inc. (WCI) Vice President Paul Rohde told FarmWeek last week in St. Louis. IFB continues to seek expe-

dited pinnacle removal at a second Grand Tower site. WCI and the American Waterway Operators jointly argue rock blasting is “only a part of the solution to sustain shipping on the Mississippi River.” The Corps release of “sufficient water” from Missouri River reservoirs, in conjunction with pinnacle removal, is crucial to head off closure of the Mississippi possibly by Dec. 24, the groups maintained. Corps officials maintain they lack authority to deviate from winter water withdrawal guidelines for the Missouri River (see page 4). “We maintain they do, indeed, have the authority; they’ve done it before,” Rohde countered. IFB supports a presidential emergency declaration that would enable agencies to take needed steps to ensure an open navigation channel and White House authorization to “deviate” from the Corps’ Missouri River Master Water Control Manual. In Washington discussions

In Washington last week, Illinois Farm Bureau President Philip Nelson, left, discusses concerns about navigation on the Upper Mississippi River with U.S. Sen. Dick Durbin, a Springfield Democrat, who has intervened with the U.S. Army Corps of Engineers in the matter. Durbin is expected to provide an update on the situation today (Monday) in St. Louis. (Photo courtesy of Durbin staff)

with Durbin last week, Nelson prioritized the need to keep the Mississippi channel open for winter delivery of fertilizer supplies to ensure farmers are “prepared for the spring season.”

“We complimented the senator for pulling out the stops to try to make sure river traffic is not shut down on the Mississippi,” Nelson said. “We pointed out to him the tremendous amount of com-

merce that takes place on the river. This is a huge commerce issue, and he knows it. “Durbin hasn’t given up on (possible Missouri releases). He See Blasting, page 4

‘Fiscal cliff ’ uncertainties hinder farm planning Nearly two years after Congress pulled family farms and businesses from the brink of potentially staggering estate tax liability, producers are staring into the murky depths beyond the “fiscal cliff.” During last week’s Farm Economics Summit in Champaign, University of Illinois Extension ag tax specialist Gary Hoff noted the “fine mess” currently confronting Illinois farmers “because Congress hasn’t acted.” Hoff cited uncertainty about the future of bonus depreciation or Section 179 expensing, which he deemed “the taxpayerbusinessman’s best friend” in terms of enabling producers to reduce tax liability via investment in equipment. He noted one Illinois operation that was able to substantially offset 2011 income tax liability through a $3 million-plus bonus depreciation deduction. He said he is unsure where Section 179 proposals may fall (the maximum deduction is set to drop from a current $139,000 to $25,000 in 2013), and has heard no real indication whether bonus depreciation will

be extended. “That gives the (Internal Revenue Service) fits, it gives tax preparers fits, and it gives you fits, because you don’t know how to tax-plan,” Hoff told farmers. Of particular concern is Dec. 31 expiration of the $5 million estate tax exemption and 35 percent “death tax” rate. If Congress neither extends that exemption nor establishes a new one, the estate tax would fall back to a $1 million exemption and a 55 percent rate. According to Rick Morgan, Country Financial senior financial security consultant, that would result in “a significant increase” in the number of Illinois families exposed to tax liability in 2013. While Illinois’ estate tax is set to rise from a current $3.5 million exemption to a $4 million threshold on Jan. 1, many families would face dual liability given rising statewide farmland values, Morgan warned. He recommends farmers explore basic estate planning strategies that reduce exposure “regardless of what the exemption is.” In the event a family can’t avoid hitting tax

FarmWeek on the web: FarmWeekNow.com

thresholds, it should plan to ensure the death tax hits “the smallest percentage of the estate possible,” Morgan told FarmWeek. Each spouse receives the federal exemption, and estate planning often focuses on dividing property between spouses and distributing assets at the first spouse’s death to maximize use of exemptions. Producers also may use current “specialuse valuation” provisions that factor in the existing (and prospectively lower) production value of farm real estate rather than merely its conventional fair market value. Other strategies for discounting estate value include use of family limited partnerships or restructuring the percentage of interest various family members hold in a farm. Further, a farm owner currently can give up to $13,000 per year to as many people as he or she chooses without those gifts counting against a $5 million lifetime gift See Cliff, page 3

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

FarmWeek Page 2 Monday, December 17, 2012

Quick Takes U OF I UNVEILS RUST TEST — University of Illinois researchers recently developed a method to determine the viability of soybean rust spores. Soy rust, which first appeared in the U.S. in 2004, is mostly concentrated in the Southern U.S., where it overwinters on kudzu. But spores from the fungus often blow north into Corn Belt states. A problem for farmers, until now, was the inability to determine if the spores were dead or alive. Soybean plants infected with living rust spores may need to be treated with fungicide to avoid potential yield loss. “Finding spores is different from finding spores that are living and able to infect plants,” said Glen Hartman, U of I crop sciences professor and USDA Ag Research Service scientist. The U of I test uses two different staining techniques to determine spore viability. The techniques are rapid and reliable, according to Hartman. MEAT ON THE MENU — Ag Secretary Tom Vilsack told senators his department would do away with daily and weekly limits of meats and grains in school lunch menus. Several lawmakers wrote the department after new dietary guidelines went into effect in September, arguing children aren’t getting enough to eat. School administrators also complained, saying set maximums on grains and meats are too limiting as they tried to plan daily meals. “This flexibility is being provided to allow more time for the development of products that fit within the new standards while granting schools additional weekly menu planning options to help ensure that children receive a wholesome, nutritious meal every day of the week,” Vilsack said in a letter to Sen. John Hoeven (R-N.D.). The new guidelines were intended to address increasing childhood obesity. They set limits on calories and salt, and phase in more whole grains. Schools must offer at least one vegetable or fruit per meal. The department also dictated how much of certain food groups could be served. BIODIESEL CERTIFICATION — Fifty-four diesel tech and ag business students at Spoon River College in Canton earned biodiesel certifications Dec. 5 through a training course funded by the Illinois soybean checkoff and the National Biodiesel Board. The workshop offered applied instruction on the reliability, performance and other benefits of biodiesel and biodiesel blends in a variety of diesel engine technologies to give students the background they need to understand and work with biodiesel in the future. Students at five of the seven Illinois junior colleges with diesel tech programs now have completed the program. Planning is under way to offer the course at the remaining schools this spring.

(ISSN0197-6680) Vol. 40 No. 50

December 17, 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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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 Michael L. Orso 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

SPECIALTY CROPS

Meetings help farmers explore markets, connect with buyers BY KAY SHIPMAN FarmWeek

Seneca farmer George Schweneker reeled off many benefits he has gained by attending “Meet the Buyer” events. He said he met wholesale buyers and chefs and learned about potential markets for his organic specialty crop. “It’s very worthwhile,” Schweneker told FarmWeek. “I am growing an elderberry plantation. I wanted to know more about the specialty crop (markets).” Schweneker’s views were shared by Benton farmer Brian Carollo and Shelbyville farmer Brad Halbrook. Each has participated in a couple of buyer meetings. As a vegetable grower with a smaller operation, Carollo said he appreciated learning what buyers require and learning about the regulations with growers must comply. “Even if you don’t think you are to that point (of selling to larger markets), it is all part of the learning process,” Carollo said. “You don’t know where you’ll be in three or four years.” Halbrook viewed the meetings as an opportunity to explore potential markets for different crops. “There’s a lot of demand,” he added. Farmers wanting to meet regional fresh produce buyers may attend a Meet the Buyers event from 9 a.m. to 5 p.m. Jan. 29 at the Kankakee Community College, Kankakee. The registration deadline is Jan. 25. Participating buyers will provide an overview of their respective organizations and procurement needs, and farmers will have a chance to meet

one-on-one with those buyers. “The Meet the Buyer events have proven to be popular venues for farmers who want to make contact with the decision-makers of grocery stores, foodservice distributors, restaurants, and other types of market channels,” said Cynthia Haskins, Illinois Farm Bureau manager of business development and compliance. The program will start with an introduction of MarketReady and Good Agriculture Practices (GAPs) by James Theuri with the University of Illinois Extension. The Market Ready program teaches best commercial business practices used by growers and various retail markets. GAPs are a set of recommendations that can help improve the quality and safety of the produce grown. Event hosts include the Kankakee County Farm Bureau and surrounding county Farm Bureaus, U of I Extension, IFB, the Illinois Department of Agriculture (IDOA),

and Illinois Specialty Growers Association. Planned participants will include grocery retailers, foodservice distributors, a restaurant chef, and an organization that prepares school menu items. “In this industry the difficulty for producers often lies in making the right connections,” said Kendra Buchanan, IDOA local foods liaison. “The expansion and interest in local food continues to grow,” said Chad Miller, Kankakee County Farm Bureau manager. “We are pleased to make this event available in Northern Illinois so farmers can have a direct interaction with buyers.” He said the event would benefit farmers who want to expand or diversify their operations. The event is open at no cost to farmers throughout Illinois; however, farmers need by register by Jan. 25 by calling the Kankakee County Farm Bureau at 815-932-7471.

Tuesday: • Ag weather with Chesapeake Meteorology • Lori Laughlin, director of issue management for Illinois Farm Bureau • Carol Portman, president-elect of Taxpayers Federation of Illinois • Rick Weinzierl, University of Illinois Extension specialist Wednesday: • Brad Schwab, director of the National Agricultural Statistics Service Illinois field office • Jim Bower, Bower Trading • Gary Hudson, vice president of the llinois Corn Growers Association Thursday: • Paul Rohde, vice president of Waterways Council Inc. • Rodney Davis, newly elected congressman • Illinois Farm Bureau Young Leader Friday: • Sara Wyant, AgriPulse publisher • Philip Nelson, Illinois Farm Bureau president • Alan Jarand, RFD radio director To find a radio station near you that carries the RFD Radio Network, go to FarmWeeknow.com, click on “Radio,” then click on “Affiliates.”

Page 3 Monday, December 17, 2012 FarmWeek

government

New farm bill poised Farm bill delays at edge of fiscal cliff ? may threaten risk floor debate and get the fiscal cliff addressed at the same time,” Nelson admitted Thursday. “Congress is looking at the budget savings University of Illinois ag economist Nick Paulson told farmers the next farm bill hinges that have been proposed for the farm bill. As a part of trying to get tax policy done and tryon “what’s shaping the debate for all things going on in Washington right now — the need ing to come up with enough cuts as they relate to deficit reduction, as well as possibly new to come up with savings and deficit reducfederal revenue enhancements, there is a keen tion.” eye looking at the dollars potentially being Paulson maintained “there probably just saved by the farm bill.” isn’t time” either for the House to vote on Nelson, in Washington last week for Amerthe farm bill or even to simply ship the ican Farm Bureau Federation (AFBF) discusHouse Ag Committee’s proposal straight to sion of 2013 policy resolutions, also emphaconference and reconciliation with the Sensized IFB’s push for extension of estate tax ate. relief and other soon-to-expire tax proviPaulson instead sees the likelihood of a sions. three-month to one-year extension of 2008 But he said he was uncertain when and how policymakers could break the continued fiscal stalemate between the president and House leaders. ‘It doesn’t take a rocket sciLast week, the administration sought $1.4 entist to look at the calendar trillion in new tax revenues — a drop from and see that there are very President Obama’s earlier $1.6 trillion target — but Nelson said he sees “no appetite” for f e w d a y s i n w h i c h ( t h e offering spending cuts in entitlement or other House) could have a farm programs. Meanwhile, House Speaker John Boehner bill floor debate and get the (R-Ohio) has indicated he could consider fiscal cliff addressed at the higher revenue targets but has demanded same time.’ “meaningful cuts” in exchange. “There needs to be some compromise on both sides to get that done,” Nelson said. In the absence of congressional progress, — Philip Nelson President, Illinois Farm Bureau AFBF delegates who will gather next month in Nashville, Tenn., may address farm policy and “fiscal responsibility” as well as such farm bill provisions, with ag savings targets — a issues as regulatory overreach and the aims of and purported biases in the federal school proposed $23 billion in the Senate and $35 billion in the House — “rolled into whatever fiscal lunch program, Nelson reported. Farm bill extension poses a number of concliff legislation we wind up with.” cerns. Fiscally conservative House leaders Illinois Farm Bureau President Philip Nelson noted concerns about fiscal and tax issues could arrive at “pretty prescriptive” spending cuts “that could write the farm bill pretty and the need for a new farm bill during a Washington meeting last week with Springfield quickly next year,” Paulson warned. IFB National Legislative Director Adam Democrat Sen. Dick Durbin. Nielsen questioned whether a year’s delay in “It doesn’t take a rocket scientist to look at farm bill approval might mean “another $33 the calendar and see that there are very few days billion out of the farm bill baseline.” in which (the House) could have a farm bill While Paulson sees strong legislative support for crop insurance (“Risk management is in”), he noted “the slant against commodity The University of Illinois Department of programs seems more and more clear.” Animal Sciences will offer two 10-week online “Short-term, the dairy producers are probadairy classes beginning Jan. 28. bly the most concerned about any kind of Advanced dairy nutrition will cover nutrient classes, phase feeding, dry-cow feeding and short-term extension,” he told FarmWeek. health, and forages. The course will be coordi“They were looking at some fairly major nated by Mike Hutjens and team-taught by three changes in the next farm bill. other instructors. “The House Ag Committee’s version of the Milk secretion and mastitis will be coordinat- bill had a margin-based dairy protection proed by Dick Wallace and taught by two other instructors. The class will cover all phases of milk gram available. I think (dairy interests) felt that quality, secretion, nutrition, and mastitis control was a real success. “They’ve experienced some pretty tight and prevention. margins, and in the press, they’re talking about To review the class schedule, topics, and enthe bankruptcies that could occur if we don’t rollment details, visit the website {http://online.ansci.illinois.edu}. get something for the dairy producers.” BY MARTIN ROSS FarmWeek

Dairy classes available

Pork producers serve military families Pork producers from across the country this month served pork meals to hundreds of U.S. military families. The effort was part of the 2012 Snowball Express, a charity for the children of America’s fallen military heroes.

Forty-three pork producers from Illinois, Iowa, Massachusetts, Minnesota, Oklahoma, Oregon, and Texas greeted more than 1,200 children and 700 adults from military families at a Snowball Express event this month in Texas.

The pork industry volunteers distributed pork checkoff gift bags filled with coloring books, pork recipes, and more. The volunteers served more than 1,000 pork burgers, 1,000 hot dogs, and 750 pork chops during the event.

improvements

Farm risk management and risk “innovation” could suffer if Congress can’t come to terms on a new farm bill. Federal crop insurance itself is funded outside the farm bill. But with 2008 farm bill expiration and stalled efforts to move a new farm bill, insurers and producers are concerned about near-term funding for USDA Risk Management Agency (RMA) administration of and coordination with private companies. Among other things, RMA is moving into the final phase of its premium re-rating process for corn, soybeans, grain sorghum, spring wheat, rice, and cotton aimed at ensuring insurance costs more accurately reflect real regional risks. In addition, RMA works with insurers to develop and approve new crop policies, products, and pilot programs. University of Illinois risk management specialist Bruce Sherrick reports RMA currently is “utterly swamped” with proposals for new policy “innovations,” and anticipates introduction of many more new products. The farm bill crop insurance title “now eclipses conservation,” Sherrick told farmers at last week’s Illinois Farm Economics Summit in Champaign. Only the farm bill’s nutrition title has a greater budget impact, he noted. “Crop insurance is the big federal program — it’s the cornerstone of risk management for the government,” Sherrick said. “It’s important to get this particular program right. We really have to get the premium structure built correctly for corn and soybeans. “There are 150 current crop policies. Corn and soybeans represent a vast majority of them. In Champaign County, we have 37 different crop and coverage elections for corn alone. But there are eight different pumpkin programs. You can insure near-shore oysters.” Retired Lake County specialty grower Eric Nielsen emphasized RMA’s continued role in expanding protections for weather- or price-sensitive crops and enterprises. Nielsen is a proponent of revenue-based, whole-farm adjusted gross revenue (AGR) insurance, which “works for everybody” regardless of crop, livestock species, or farm scale. Currently, Illinois growers are eligible for modified “AGR-Lite” coverage under an RMA-approved national pilot program. Nielsen acknowledges the complexity of developing policies for a variety of crops and enterprises with varying revenues and regional and individual risks. “Private industry has to have a backing to get started,” he told FarmWeek. “Once they get it all figured out, they can do it on their own. But there has to be the initial set-up — they need the help, and that’s where the government has to step in.” — Martin Ross

Cliff tax exemption. Thus, in the event a producer “gifts” $12,000 to one individual and $20,000 to another, $7,000 of the $20,000 gift would count toward the lifetime exemption and the $12,000 gift effectively would be ignored. Hoff suspects Congress ultimately may lean toward a $3.5 million individual estate tax exemption, with “something in between” the current 35 percent tax rate and the 55 percent rate that many lawmakers deem excessive. A drop to $1 million or even $3.5 million “very possibly” could spur more widespread land sales to cover estate tax liability, Hoff advised. “Estate planning wasn’t a big issue for about 10 years,” he noted. “All at once, it’s become a huge issue. When you can sell Illinois farmland for $15,000 an acre that used to be $8,000, and you have a few hundred acres, that certainly adds to the net worth.” — Martin Ross

FarmWeek Page 4 Monday, December 17, 2012

the rivers

Time for new plan to guide river uses? BY MARTIN ROSS FarmWeek

Amid growing concerns about federal guidelines for the Missouri River that impact Mississippi River commerce, Pike County Farm Bureau President David Gay suggests a new river plan may be in order. In a letter to Springfield Democrat U.S. Sen. Dick Durbin, Assistant Secretary of the Army Jo-Ellen Darcy argued the U.S. Army Corps of

‘We need to have a long-term plan.’ — David Gay Pike County Farm Bureau

Engineers “lacks authority to alter the authorized purposes of the Missouri River Mainstem Reservoir System or to modify operation of the system.” Under its guiding manual, the Corps cannot release additional Missouri River reservoir waters “for the express purpose of benefiting Mississippi River navigation,” Darcy told the senator. She warned a winter release could boost regional irrigation and hydropower electrical costs, a “reduction in the quality of (wildlife) habitat,” and impede “recreation and resulting local economic benefits.”

Gay sees potential for perennial navigation concerns under a master manual that’s been revised to grant “more weight to other users of the river,” including recreational interests. By effectively “shutting the gates” on upstream Missouri River reservoirs, he believes the Corps has subverted a past “top priority” of flow management — maintenance of the navigation channel on the Mississippi. Gay thus sees the need for a “national transportation plan” that recognizes the economic importance of barge traffic, possibly in conjunction with an anticipated new congressional Water Resources Development Act (WRDA). “If we divert grain and commodities off the river and try to put them onto rail or trucks, that’s going to be expensive,” he told FarmWeek. “These kinds of issues need to be talked about. We need to have a longterm plan for transportation in this country.” In a Dec. 5 letter urging the Corps and the U.S. Coast Guard to expedite removal of rock pinnacles on the Mississippi, Illinois Gov. Pat Quinn said he would encourage Congress “to enact the (WRDA) reauthorization as soon as possible.” In November, the Senate Environment and Public Works Committee resumed hearings on the next water projects bill.

Blasting is monitoring the situation, and we’re making sure we have all the procedures in place to keep the river open,” said Nelson. Dennis Wilmsmeyer, executive director of St. Louis’ America’s Central Port, noted barge operators has been coping for the past four months with low-water challenges. Barge operators favor a 10foot draft for towboats, a foot above Corps channel depth requirements. The 2012 drought already “has cost them (operators) a lot of money,” and in the absence of an emergency Missouri release or near-term precipitation or upstream “snow melt,” losses could continue to accumulate, Wilmsmeyer said. Because channel depth and width are affected by drought, “you’re seeing one-way traffic in parts of the river where you normally have two-way traffic with ease,” Rohde noted. Northbound barge tows are being loaded lighter at the Gulf amid uncertainty about “what the situation’s going to be on that 180-mile stretch between St. Louis and Cairo,” he said. “Light-loading barges has been the common theme throughout the middle Mississippi region from Cairo up to St. Louis,” Wilmsmeyer told FarmWeek. “Light-loading barges will continue here. “Obviously, with the lessening of the reservoir flows out of the Missouri River, the next two to three weeks is really when the river level in St. Louis and southward is going to start dropping quickly. That’s going to be the tough issue for many of our operators.” Wilmsmeyer warned limitations on the Upper Miss could impact freight rates and regional grain prices potentially “until that next harvest comes in.” Nelson reported river grain bids “have somewhat dried up” at some locations, noting rail and other alternative shipping bids “are far out-pricing anything on the water system,” further eroding profits.

These seven rock formations near Thebes, south of Cape Girardeau, have been identified as potential challenges in maintaining authorized navigation channel dimensions on the Upper Mississippi River. The Thebes “pinnacles” reportedly represent 90 percent of the issues related to rock formation on the Thebes-Grand Tower reach south of St. Louis. (U.S. Army Corps of Engineers aerial map)

Hog producers take advantage of lower river commodity bids BY DANIEL GRANT FarmWeek

A difficult situation for some farmers in recent weeks created an opportunity for others. Low water levels on the Mississippi River reduced barge movements and subsequently reduced crop bids at numerous river terminals. Crop farmers, shippers, and others could take a financial hit until crop shipments return to normal. But some livestock producers seized the opportunity and purchased feed for the winter. “It’s actually benefitted us,” Steve Ring, general manager of Hog Inc. in Greenfield, told the RFD Radio Network. “The low river levels forced prices lower at terminals due to higher barge freight, the (lack of) availability of barges, and the inability to move barges up and down the Mississippi River.” Hog Inc. is an alliance of family farms. Ring said pork producers involved with Hog Inc. avoided a feed emergency this year when crops turned out a little better than expected, but high feed prices continue to be a challenge. “With the cost of inputs, including corn

and soy meal, the diets (for hogs) are running upwards of $300 a ton,” Ring said. “But in a year like this, we feel very fortunate,” he continued. “We didn’t know going into August if we’d even have a crop. We had slightly better yields (close to a 100-bushelper-acre average for corn) than most feared.” The drought’s impact on the crop will continue to affect feed use all winter, though. Corn in storage is at risk for developing elevated levels of aflatoxin. “We recommend that if people are feeding corn to livestock, they add some type of binder, which is effective at blocking the toxins,” Ring said. Hog producers can feed corn with aflatoxin levels up to 200 parts per billion (ppb) to finished swine, 100 ppb to sows, but only up to 20 ppb to nursery pigs due to their less developed immune systems, according to Ring. Overall, strong hog prices should help producers manage high feed prices. “We had a counter-seasonal rally in hog futures and the cash hogs are hanging in there, which will help support the high feed costs,” Ring added. “But it really gets back to how well producers did with risk management.”

Page 5 Monday, December 17, 2012 FarmWeek

energy

â&#x20AC;&#x2DC;Advancedâ&#x20AC;&#x2122; RFS2 needs may drive new biodiesel boom BY MARTIN ROSS FarmWeek

The biofuels sector offers potential to launch â&#x20AC;&#x153;another boom in agriculture,â&#x20AC;? University of Illinois ag economist Scott Irwin suggests. This time, however, biodiesel likely will power the boom, that is, if federal Renewable Fuel Standard (RFS2) mandates remain in force, Irwin suggested at last weekâ&#x20AC;&#x2122;s Illinois Farm Economics Summit. However, corn growers as well as oilseed producers should benefit from the new boom, he argued. Irwin doesnâ&#x20AC;&#x2122;t see the ethanol â&#x20AC;&#x153;blend wallâ&#x20AC;? â&#x20AC;&#x201D; cur-

rent near-saturation of the market for standard 10 percent ethanol (E10) fuels â&#x20AC;&#x201D; moving â&#x20AC;&#x153;substantiallyâ&#x20AC;? over the next three years as a result of E15 adoption or expanded E85 demand. Use of higher-level blends could contribute another few hundred million gallons of demand, â&#x20AC;&#x153;when what we need is to move the wall out by several billion gallons,â&#x20AC;? he said. Plus, the RFS2 sets a 15-billion-gallon cap on annual corn ethanol blend requirements beginning in 2015. The balance of 2022â&#x20AC;&#x2122;s ultimate 36-billion-gallon RFS2 target would be met by

New blends, trends, and innovations offer â&#x20AC;&#x2DC;diligentâ&#x20AC;&#x2122; growth The term â&#x20AC;&#x153;boomâ&#x20AC;? has a dual connotation for the biofuels sector, as evidenced by the past ethanol investment boom, subsequent bust, and industry restructuring. Thus, National Biodiesel Board Chairman Gary Haer is cautious in characterizing long-term biodiesel prospects. Haer, vice president for sales and marketing with Renewable Energy Group (REG), sees promising opportunities for biodiesel â&#x20AC;&#x153;spilloverâ&#x20AC;? into the burgeoning market for greener â&#x20AC;&#x153;advanced biofuels.â&#x20AC;? REG operates biodiesel plants in Danville and Seneca. But Haer stressed the need for sustainable, reasoned industry growth. â&#x20AC;&#x153;Biodiesel has always had the opportunity to fulfill needs in the undifferentiated advanced biofuels category (see accompanying story),â&#x20AC;? he said. â&#x20AC;&#x153;We think we can grow the industry in a diligent way. â&#x20AC;&#x153;Presently, more than 2 billion gallons of (biodiesel production) capacity is registered with (the U.S. Environmental Protection Agency). This year, weâ&#x20AC;&#x2122;ll probably produce in excess of 1.1 billion gallons. Next year, the (RFS2â&#x20AC;&#x2122;s) renewable volume obligation for biomass-based diesel is 1.28 billion gallons. â&#x20AC;&#x153;We have an opportunity in the advance biofuels category. But the market will decide just how much we participate in that category. â&#x20AC;&#x153;I donâ&#x20AC;&#x2122;t think Iâ&#x20AC;&#x2122;d characterize this as a â&#x20AC;&#x2DC;boomâ&#x20AC;&#x2122; opportunity. This is just a nice potential upside for our industry, to utilize more of our capacity.â&#x20AC;? Biodiesel market expansion will depend in large part on the supply of and demand for renewable identification numbers (RINS) â&#x20AC;&#x201D; essentially, the tradable currency of biofuels use under RFS2 mandates. But 20 percent biodiesel blends (B20) have become more common in on-road and farm diesel applications as engine manufacturers approve their use, and Haer notes a variety of â&#x20AC;&#x153;nicheâ&#x20AC;? applications where higher blends are being used. For example, the mining industry uses blends above B20 to protect workers exposed to higher diesel exhaust concentrations. At the same time, he sees biodiesel-fueled diesel cars and light-duty trucks as â&#x20AC;&#x153;a logical transitionâ&#x20AC;? toward improved U.S. vehicle fuel efficiency. Haer also notes regional market expansion: REG in November announced new biodiesel blending capabilities at four New York metropolitan fuel terminals, to provide improved access for on-road use and growing Northeast use of so-called â&#x20AC;&#x153;bioheat.â&#x20AC;? While some in the trucking industry may be eyeing conversion from diesel to cheaper natural gas, Haer notes the significant cost not only of â&#x20AC;&#x153;retooling the engine platformâ&#x20AC;? but also of building a new fuel distribution infrastructure. â&#x20AC;&#x153;We basically are seamlessly integrated into the current distribution pipeline for diesel fuel,â&#x20AC;? Haer told FarmWeek. â&#x20AC;&#x153;Fleets that are using biodiesel have a good diversity of blends and blend levels to fit the season, to fit applications, to fit overall economics.â&#x20AC;? â&#x20AC;&#x201D; Martin Ross

â&#x20AC;&#x153;advancedâ&#x20AC;? biofuels that offer greater greenhouse gas reductions than corn ethanol. Biodiesel is one of three federally classified groups of advanced biofuels, and the only one currently marketed on a widespread basis. The U.S. Environmental Protection Agency has set a 1.28-billion-gallon target for RFS2 biodiesel use in 2013 â&#x20AC;&#x201D; a 280-million-gallon increase over 2012. While several companies are set to launch cellulosic ethanol ventures over the next two years, Irwin said he is uncertain how quickly biomass-based production â&#x20AC;&#x201D; the second category of advanced biofuels â&#x20AC;&#x201D; will grow. That leaves a third, catch-all category: â&#x20AC;&#x153;undifferentiatedâ&#x20AC;? biofuels such as Brazilian sugarcane-based ethanol or, according to Irwin, additional biodiesel. â&#x20AC;&#x153;Right now, the U.S. consumes about 50 billion gallons of diesel fuel,â&#x20AC;? he told FarmWeek. â&#x20AC;&#x153;A 20 percent mixture takes you up to about 10 billion gallons of biodiesel in our existing fleet use. Thereâ&#x20AC;&#x2122;s plenty of room to grow biodiesel on the use side. â&#x20AC;&#x153;The biggest component of diesel usage is the over-theroad trucking industry. Thereâ&#x20AC;&#x2122;s some move there to take advantage of the decline in natural gas prices â&#x20AC;&#x201D; to retool

the fleet to use natural gas. â&#x20AC;&#x153;The total size of that diesel market thus is up in the air. But regardless of those kinds of events, thereâ&#x20AC;&#x2122;s plenty of room for biodiesel, if itâ&#x20AC;&#x2122;s required by the RFS2 over the next two or three years.â&#x20AC;? Irwin said he sees â&#x20AC;&#x153;really no upper capâ&#x20AC;? on the amount of Brazilian ethanol that could be imported to meet advance biofuels targets. However, under â&#x20AC;&#x153;the arithmetic of meeting the RFS2â&#x20AC;? and the limitations of the existing blend wall, imported ethanol must displace U.S. production, he said. Given the current cost of

biodiesel production relative to Brazilian ethanol, restoration of the $1-per-gallon federal biodiesel tax credit would offer biodiesel an advantage over Brazilian imports in the overall advanced fuel blending market, Irwin said. The credit expired last January. While Irwin said he believes â&#x20AC;&#x153;the long ethanol boom is over,â&#x20AC;? corn growers would benefit from the biodiesel boom through use of corn oil extracted from ethanol-derived distillers dried grains. Roughly a half-pound of oil is available from each bushel of corn, and â&#x20AC;&#x153;thatâ&#x20AC;&#x2122;s expected to grow,â&#x20AC;? he noted.

This chart from Iowa-based Renewable Energy Group, which operates two Illinois biodiesel plants, shows renewable diesel keeping pace with growth in advanced biofuels. Feedstock diversification and a variety of favorable market trends continue to drive biodieselâ&#x20AC;&#x2122;s success.

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FarmWeek Page 6 Monday, December 17, 2012

production

USDA tweaks ending stocks, trims price forecast BY DANIEL GRANT FarmWeek

USDA’s projections for ending stocks last week went in a variety of directions. The Ag Department in its December crop report raised wheat ending stocks by 50 million bushels, lowered ending stocks of beans by 10 million bushels, and left ending stocks of corn unchanged. Grain and oilseed supplies remain tight as ending stocks currently are projected at 647 million bushels (21 days of supply) for corn and 130 million bushels (about a 16-day supply) for soybeans. Overall, the report is not expected to have a major impact on the markets, though, as the fundamentals generally continue to support prices heading into next month’s highly anticipated final crop production report. “Early in the year (next year) prices very much will be dictated by old-crop fundamentals,” said Darrel Good, University of Illinois ag econo-

mist. “We have historically low inventories, rivaling those of 1995/96.” Louise Gartner, analyst with Spectrum Commodities, said wheat was the “big loser” in last week’s report as USDA lowered exports of the cereal crop by 50 million bushels due in part to increased competition. “USDA took (wheat exports) down pretty hard,” Gartner said during a teleconference hosted by the Minneapolis Grain Exchange. “That translated to increased ending stocks.”

Worldwide production and competition could cap prices for all three crops. USDA boosted Chinese corn production by 8 million metric tons (312 million bushels). Meanwhile, the trade expects record soybean production in South America. “Once again, all eyes turn to the Southern Hemisphere, as large corn and soybean crops there could ease the tight stock situation in the U.S.,” said Todd Davis, senior economist with the American Farm Bureau Federation. “Soybean

production in Argentina and Brazil is forecast 26 percent higher compared to the prior crop.” USDA last week raised domestic soy crush by 10 million bushels due to strong foreign demand. “We’re using the (soybean) crop very quickly. It’s a pace that cannot be sustained,” Good said. “The market is not more concerned due to its anticipation of a (record) large South American crop this spring.” The 2012/13 season-average farm price forecast last week was lowered for all three crops. The price range esti-

mates were $6.80 to $8 per bushel for corn (down 20 cents), $13.55 to $15.55 for beans (down 35 cents), and $7.70 to $8.30 for wheat (down 10 cents). Corn prices have declined by more than $1 per bushel since the late-summer peak and bean prices have declined by more than $3, Good noted. Dry conditions in the Plains could keep pressure on wheat prices, though. “There’s very dry conditions in the hard red winter wheat area,” Good added. “That crop is under a lot of stress.”

Crop production rebound seen in ’13 It’s probably difficult for many farmers right now to envision a bin-buster harvest next year. This year corn yields nationwide averaged about 40 bushels below trend due to the drought. And conditions still are extremely dry: As of Dec. 4, about 62 percent of the continental U.S. remained in some form of drought. But historical data show crop production usually bounces back after a major shortfall, according to Darrel Good, University of Illinois ag economist. He said he believes that could be the case next year. “I think we’re in the process of transitioning from a year with very short (grain and oilseed) supplies to a year (in 2013) in which supplies likely will be more abundant,” Good said last week at the Illinois Farm Economics Summit in Galesburg. He predicted corn yields (nationwide) next year could spring back to an average of about 160 bushels per acre. He also predicted U.S. farmers in 2013 could harvest an additional 2 million to 2.5 million corn acres that were abandoned or chopped for silage this year. Darrel Good If harvested acres and yields increase next year, Good said it is possible farmers could harvest a record corn crop of 14-plus billion bushels. USDA last spring prior to the drought projected a crop of that size. “I’m putting that (possibility of a record corn crop) back on the table,” Good said. “I think the potential is there. “A lot of folks probably take exception to that right now due to the continued dryness,” he continued. “But it will be spring and summer rainfall that will make or break the (2013) crop.” A return to trend-line yields for soybean growers next year could translate to a 3.3-billion-bushel bean crop that will compete with what could be a record crop in South America. “Everything right now is pointing to a recovery in supplies in the year ahead,” Good said. “(If realized), consumption likely will return to pre-drought levels.” If crop production bounces back next year, Good said he believes crop prices will decline by the second half of the year. Average farm prices for corn were projected to slip from an average of $7 per bushel for the 2012/13 marketing year to $4.75 to $5.50 for the 2013/14 marketing year. Bean prices were projected to decline from an average of $14.50 per bushel in the 2012/13 marketing year to $11 to $12 in the 2013/14 marketing year. In the meantime, crop prices are expected to remain strong due to tight supplies. “Tight supplies and concerns of dry soil will keep corn (and bean) prices well supported the first quarter of 2013,” Good said. “But as we move through the year (next year), prices could give way to lower, pre-drought levels.” Farmers who believe crop prices could decline next year don’t have to rush to forward-price bushels now, though. Good predicted crop prices will remain high enough through February that farmers can lock in high-level revenue protection through crop insurance. — Daniel Grant

Page 7 Monday, December 17, 2012 FarmWeek

industry

Syngenta to expand at historic site in DeWitt County BY DANIEL GRANT FarmWeek

Illinois next year will be home to Syngenta’s largest corn and soybean trial site in North America. The firm last week unveiled plans for a major expansion at its corn/soybean research, development, and production facility at Wapella near Clinton in DeWitt County. The facility is located on the former Thorp Seed Co. property. Thorp Seed was founded on the site in 1936. The company was an associate of Funk’s Seed until 1973, when it became part of the newly formed Golden Harvest brand. It remained part of Golden Harvest until Syngenta acquired the Thorp family business in 2004. “This site has been known for corn and soybean research and development since 1936,” said Nelson Thorp, Syngenta site manager at the Clinton facility. He is the third generation of the Thorp family member to manage the facility. “This expansion represents more than a $12 million investment, which will help our local economy.” Thorp plans to retire at the end of the year. But new opportunities at the site are just beginning as Syngenta plans to triple the size of soybean growth rooms, increase the existing site capacity, and build grain/seed cold storage, a new equipment maintenance shop, and a machinery storage building. “Our goal is to provide solutions to help growers achieve at least a 70 percent increase in food production by 2050,” said Jerry Johnson,

Syngenta spokesman. Overall, Syngenta invests about $1.4 billion worldwide each year on research and development. Tom Hieronymous, president of the DeWitt County Farm Bureau, believes the expansion will help the local economy in his area and provide research that is necessary to help farmers boost food production around the world. “We’ve got a growing world to feed, and we need all the technology we can get,” he said. “I think Syngenta and others are investing heavily in this part of the country because it has some of the best dirt in the world.” Hieronymous said this past growing season is a prime example of what technological improvements can do to help farmers boost crop production. “As we saw this past season, we can grow crops with hardly any rain at all (due in part to technological advancements in hybrids),” he said. “If we had the same hybrids (in 2012) that we had in 1988, we probably would’ve had half of what we got.” The 700-acre Clinton site each year supports 144,000 soybean and 235,000 corn trials. Since 2004, the number of full-time jobs at the facility has increased from 15 to 55. The expansion of the site will lead to a 20 percent increase in jobs plus Syngenta plans to hire about 150 workers each summer to work in the nursery, according to Thorp. A grand re-opening of the Clinton facility is in the works for next summer.

National Soy Checkoff restructures The United Soybean Board (USB) this month elected new leadership as the organization, which oversees the national soy checkoff program, moves toward a new structure. Sharon Covert, a farmer from Tiskilwa (Bureau County), was elected to serve on USB’s executive committee while Dwain Ford, a farmer from Kinmundy (Marion County), was elected to serve on its Strategic Management Committee. Congress established the national soy checkoff in 1990. USB plans to scrap its existing structure made up of committees in favor of action teams that will focus on building demand for U.S. soy, address issues involving the freedom for U.S. soy growers to operate, and address demands of domestic and international customers. “We’ve been in this structure for 20 years since the soy checkoff was established,” Jim Stillman, a farmer from Iowa who recently was elected chairman of USB, told the RFD Radio Network. “It’s time to change. The world doesn’t stand still, and we don’t need to stand still, either. USB also authorized the formation of a checkoff-industry partnership to speed up the development of new U.S. soy varieties that produce more soy oil to meet demand from food companies and industrial users. USB aims to have high-oleic soybeans available in maturity groups that cover 80 percent of U.S. bean acres by 2020. In other soy industry news, three Illinois farmers recently were elected to leadership positions with the American Soybean Association (ASA). Dean Campbell, Coulterville, will serve on ASA’s Membership and Corporate Relations Committee while Mike Cunningham, Bismarck, and Ron Kindred, Atlanta, will serve on ASA’s Trade Policy and International Affairs Committee.

Ernest Thorp, left, one of the founding members of Thorp Seed Co. in DeWitt County, chats with his son, Nelson, front right, Syngenta site manager, at the seed facility near Clinton. Syngenta, which acquired the Thorp family seed company in 2004, last week announced a major expansion that will make the facility Syngenta’s largest corn and soybean trial site in North America. Chatting in the background is Jerry Johnson, back left, Syngenta, and Tom Hieronymous, president of the DeWitt County Farm Bureau. (Photo by Daniel Grant)

FarmWeek Page 8 Monday, December 17, 2012

production

Corn quality good, but exports still remain soft BY DANIEL GRANT FarmWeek

The slow pace of U.S. corn exports is not the result of quality issues with the drought-stressed crop, according to a recent report. The U.S. Grains Council (USGC) this month released a corn harvest quality report which found an improvement in average test weight, protein levels, and density this year compared to the 2011 crop. The average test weight of this year’s crop, based on samples collected in 12 states, averaged 58.8 pounds per bushel (up from a year ago),

the average moisture (15.3 percent) was lower than a year ago, and findings of foreign material and damaged kernels declined this year compared to last year. “The samples tested demonstrate that this year’s U.S. corn crop, while smaller due to the drought, is of outstanding quality overall,” said Erick Erickson, USGC director of global strategies. But the pace of corn exports this year declined to a 38-year low due in part to tight supplies and record-high prices, according to Darrel Good, University of Illinois ag economist.

“High prices are pricing us out of the market,” he said. “And wheat is providing competition for corn.”

east Asia have expressed concerns about aflatoxin levels in U.S. corn, according to Louise Gartner, analyst with Spec-

‘High prices are pricing us out of the market.’ — Darrel Good University of Illinois

The corn harvest quality report hopefully will ease endusers’ concerns about quality issues related to the drought. Some corn buyers in South-

trum Commodities. Low water levels on the Mississippi River, which reduced barge load capacities and could increase shipping

prices, could exacerbate troubles with corn exports nearterm. “Corn exports have been terrible,” Gartner said. “Getting corn to the Gulf has been a big problem due to slower river traffic.” U.S. corn export inspections the last week of November totaled just 9.6 million bushels, down from 38.9 million bushels at the same time last year. Good predicted a return of average corn yields in 2013 will rebuild supplies, reduce prices, and boost corn demand and consumption, including exports.

Vilsack pushes for farm bill

USDA efforts freed 2.8 million acres, $200 million in forage

USDA measures to open conservation land to emergency haying and grazing during the 2012 drought freed up a record 2.8 million acres and provided as much as $200 million in forage for producers facing critical feed shortages, Ag Secretary

Tom Vilsack announced last week. Vilsack made the announcement at the national drought forum in Washington co-sponsored by numerous federal agencies, governors’ associations, and academic partners.

“The Obama administration remains committed to doing everything it can to help farmers, ranchers, businesses, and local and county governments meet droughtrelated challenges,” Vilsack said. “Now we know that the

actions taken by USDA and other federal agencies at the height of the drought provided much-needed flexibility during a difficult time. “We also know that drought recovery is a longterm proposition, and we will continue to partner with producers to see it through.” At the height of the 2012 drought, the secretary announced expanded use of Conservation Reserve Program (CRP) acres for haying and grazing including a twomonth extension for emergency grazing on CRP acres without incurring an additional CRP rental payment reduction. USDA also lowered the interest rate for emergency loans and worked with crop insurance companies to provide flexibility to farmers. USDA’s Far m Ser vice Agency reported roughly 2.8 million acres, under 57,000 CRP contracts, used the emergency haying and grazing option, compared with just more than 1 million acres in 2011. In 2005, producers used roughly 1.7 million CRP acres for emergency haying and grazing, the previous record. USDA estimates of the gross value of forage provided in 2012 run from $140 million to $200 million. For the current fiscal year, NRCS has made available more than $16 million through the Environmental Quality Incentives Program to far mers and ranchers for water conser vation, practices, and wildlife habitat that

have been affected by the drought. Those funds are in addition to the more than $27 million provided to farmers ranchers in 22 states for drought mitigation during fiscal year 2012. Vilsack nonetheless noted USDA is hampered in its efforts by lack of a farm bill, and he urged Congress to take action to implement further program efforts. In recent months, USDA also has: • Purchased approximately $170 million of pork, lamb, chicken, and catfish for federal food nutrition assistance programs, including food banks, to help relieve pressure on livestock producers and bring the nation’s meat supply into line with demand. • Authorized up to $5 million in grants to evaluate and demonstrate ag practices that help farmers adapt to drought. • Transferred $14 million in unobligated program funds into the Emergency Conservation Program (ECP) to help farmers and ranchers rehabilitate farmland damaged by natural disasters and for carrying out emergency water conservation measures in periods of severe drought. • Authorized haying and grazing of Wetlands Reserve Program easement areas in drought-affected areas where haying and grazing is consistent with conservation of wildlife habitat and wetlands. • Simplified the secretarial disaster designation process and reduced the time it takes to designate counties affected by disasters by 40 percent.

Page 9 Monday, December 17, 2012 FarmWeek

from the counties

‘Bushels for Hunger’ yields record donation Western Illinois farmers last week donated a record amount to the River Bend Foodbank. Geneseo farmer and Illinois Farm Bureau Director Wayne Anderson presented the donation of $38,845.18 to Tom Laughlin of River Bend Foodbank last

week at the food bank in Moline. It is the third year the farmers have made a donation. “Thanks to the generous donations of over 4,376.93 bushels of grain to the ‘Bushels for Hunger’ campaign, local farmers worked together to fight hunger in the

Quad Cities community with these funds,” Anderson said. Fellow farmer and Illinois Farm Bureau State Young Leader Committee member Todd Verheecke added, “Local neighbors and farmers in the five-county area of Illinois were anxious to pitch in and help fight hunger in their community — this money will help provide over 40,000 meals in the River Bend Foodbank area.” The program is jointly coordinated by the Rock Island, Henry, Stark, Whiteside and Mercer county Farm Bureaus in conjunction with the following 12 area grain elevators and ethanol plants: ADM, Atkinson Grain, Big River Resources, Cargill, CGB, GoldStar FS, Hillsdale Elevator, Michlig Grain, Patriot Renewables, River Gulf Grain, River Valley Cooperative, and Rumbold and Kuhn.

GROWMARK essay contest announced The theme for the 2013 GROWMARK essay contest is “Fighting Domestic and Global Hunger.” The contest is open to all high school FFA members. This is the 20th year for the program, sponsored by the GROWMARK System and FS member cooperatives, in conjunction with state FFA leaders, to help young people develop their writing skills, learn about current issues affecting agriculture, and understand the unique role of cooperatives. This year, students will focus on four questions: • What agricultural technologies and practices will increase food production? • How do local agricultural cooperatives help far mers combat domestic

and world hunger? • What kind of partnerships can help fight hunger worldwide? • What can you personally do to impact world hunger? Essays should be approximately 500 words, typed, and double-spaced. The postmarked entry deadline is March 15. Additional program details have been sent to agriculture teachers and are online at www.growmark.com (click on Our Commitments/Youth & Young Farmers/Essay Contest). “Students who write essays will learn how agricultural cooperatives help combat domestic and world hunger,” said Jane Castellano, GROWMARK corporate communications and cooperative education specialist.

Auction Calendar

Farms, PITTSFIELD, IL. Curless Auction. www.curlessauction.com Thurs., Jan. 10. 10 a.m. McLean Co. Land Auc. BELLFLOWER, IL. Hertz Farm Mgmt. www.hertz.ag Fri., Jan. 11. 10 a.m. Closing Out Farm Auction. Kent and Norm Elliott, LAKE CITY, IL. Bauer Auction Service. Mon., Jan. 14. 10 a.m. Adams Co. Land Auc. Genevieve M. Reuschel Estate, CAMP POINT, IL. Sullivan Auctioneers, LLC. www.sullivanauctioneers.com Mon., Jan. 14. 1 p.m. Adams Co. Land Auction. The Albert H. Bastert Trust, CAMP POINT, IL. Sullivan Auctioneers, LLC. www.sullivanauctioneers.com Mon., Jan. 14. 4 p.m. Adams Co. Land Auc. Agnes E. Voss Trust Farm, c/o Frank Voss Jr., LORAINE, IL. Sullivan Auctioneers, LLC. www.sullivanauctioneers.com Wed., Jan. 16. 10 a.m. Bureau Co. Farmland Auc. Cluskey Family Trust, WYANET, IL. Rediger Auction Serv. and Brummel Realty LLC. www.rickrediger.com or www.brummelrealty.com Sat., Jan. 19. 10 a.m. Franklin Co. Land Auc. ST. CLAIR, MO. Buy A Farm. buyafarm.com Sat., Jan. 19. 10 a.m. Grundy Co. Farmland Auc. Family Trust, MAZON, IL. Richard A. Olson & Assoc. richardaolson.com Fri., Jan. 25. 10 a.m. Bureau Co. Farmland Auc. Lucille Pinter Est., CHERRY, IL. Rediger Auction Service and Brummel Realty, LLC. www.rickrediger.com or www.brummelrealty.com

Mon., Dec. 17. 9 a.m. Farm & Construction Eq. Con. Auc. TREMONT, IL. Cal Kaufman and Brent Schmidgall, Auctioneers. calkaufmanauction.com, brentschmidgallauction.com or www.auctionzip.com id #28362 or #25285 Tues., Dec. 18. 10 a.m. Farm, Hay and Livestock Auc. Ron Friend, KILBOURNE, IL. Sanert Auction Service. www.sanertauctions.com Tues., Dec. 18. 6:30 p.m. Marshall Co. Real Estate Auc. Donald Hatten Estate, WASHBURN, IL. Kaufman Auction Service. www.calkaufmanauction.com Wed. Dec. 19. Online Unreserved Auc. www.bigiron.com Wed., Dec. 19. 9 a.m. Absolute Dealer Closeout. Faivre Imp., STEVENS POINT, WI. Gehling Auction Inc. www.gehlingauction.com Sat., Dec. 22. 9:30 a.m. Farm machinery and misc. Donald Hatten Est., WASHBURN, IL. Kaufman Auction Service. www.calkaufmanauction.com Wed., Dec. 26. Online Unreserved Auc. www.bigiron.com Fri., Dec. 28. 11 a.m. Estate Auc. John Wood, PETERSBURG, IL. Sanert Auction Serv. www.sanertauctions.com Fri., Dec. 28. 10 a.m. McDonough Co. Land Auc. Wendell Wisslead Farm, COLCHESTER, IL. Sullivan Auctioneers, LLC. www.sullivanauctioneers.com Sat., Dec. 29. 11 a.m. Absolute Machinery Auc. Ryan Springer

The winner will receive $500 and his or her FFA chapter will receive $300. Four runners-up each will win $125. Many agriculture teachers use the essay contest as part of their class curriculum. Past topics have included renewable fuels, biotechnology, and the cooperative principles.

OUGLAS — The District 12 Young Leaders Committee will sponsor its annual Illini Farm Toy Show Jan. 4-6 at the Holiday Inn and Convention Center, Urbana. Dates and times are Friday, 5 to 9 p.m.; Saturday 9 a.m. to 5 p.m.; and Sunday, 9 a.m. to 2 p.m. Cost is $3 for adults, $2 for children ages 6-12; and under 6, free. A live auction will be at 10:30 a.m. Saturday. Admission on Sunday is free with a free-will donation to the local Ag in the Classroom programs. ULTON — The Women’s Committee will sponsor an American Red Cross blood drive from 1 to 6 p.m. Thursday, Dec. 27, at the Farm Bureau office. Call the Farm Bureau office at 5473011 to make an appointment. EE — The Young Leaders will play Walley Ball at 5 p.m. Sunday, Dec. 30, at Plum Hollow, Dixon. Dinner will follow. Members between the ages of 18 and 35 may attend. Call the Farm Bureau office at 857-3531 or email leecfbcomcast.net by Thursday, Dec. 27, for reservations or more information.

• Applications for the Lee County Far m Bureau Foundation scholarships may be obtained from the website {leecfb.org}, by calling the Far m Bureau office at 815-857-3531, or by emailing leecfb@comcast.net. Scholarships are available to high school seniors and undergraduate students who are in an agriculture-related field of study. Deadline to return applications to the Far m Bureau office is Feb. 1. • Applications for the Lee County Farm Bureau’s Foundation’s “Books by the Bushel” program are available on the website (leecfb.org}, by calling the Farm Bureau office at 815857-3531, or by emailing leecfb@comcast.net. Lee County organizations are invited to apply to receive a free bushel basket of agriculturerelated children children’s books. Application deadline is Feb. 1. “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.

FarmWeek Page 10 Monday, December 17, 2012

profitability

The ‘fiscal cliff ’ and its effect on agriculture BY KEL KELLY

The so-called “fiscal cliff ” poses different problems for different people. For politicians, the problem is how to fund the government. For economists, it is how to “keep Kel Kelly the economy going.” For most of us common citizens, is is a possible reduction of our standards of living. The fiscal cliff consists of expected higher tax rates combined with expected lower government spending. Most economists see both of these as bad because they reduce the rate of consumer spending and consumption, which they believe grows the economy. However, it is not spending and consumption of goods and services that grow an economy but, instead, the production of new and additional goods and services. Production results not from spending on consumer goods, but from investing in capital goods (tools, machines, technology, etc.) and labor, which create both more capital goods as well as more consumer goods. These investments are made with money saved; from mon-

ey not spent on consumption. Businesses access saved funds when lenders/savers buy stocks, bonds, insurance policies, bank deposits, or CDs. Therefore, higher taxes are indeed harmful because they reduce spending on capital goods, not because they reduce spending on consumer goods. But reduced government spending is helpful because it leaves more capital in the private sector for production.

The University of Illinois expects crop prices, which raced to record levels during this year’s drought, to level off next year. But farm returns are expected to remain strong in 2013 as farmers generally should have more bushels to sell, barring a repeat of this year’s weather disaster. “The outlook continues to be good in 2013,” Gary Schnitkey, U of I farm management specialist, said last week at the Illinois Farm Economics Summit in Galesburg. “We’re looking at above-average income in 2012 and 2013.” The U of I projected farm returns on high-productivity soils in Central Illinois next year could average $621 per

Weighted Ave. Price $44.35 $62.50

This Week Last Week 124,968 104,354 *Eastern Corn Belt prices picked up at seller’s farm

Receipts

Eastern Corn Belt direct hogs (plant delivered) Carcass Live

(Prices $ per hundredweight) This week Prev. week $75.88. $82.00 $56.15 $60.68

Change -6.12 -4.53

USDA five-state area slaughter cattle price Steers Heifers

But producing less than would otherwise be the case is difficult to observe, and reductions will be offset by higher selling prices. For these reasons, I believe the ag industry will continue to benefit at the expense of a bad real economy, just as it has in recent years. Kel Kelly is GROWMARK’s manager of economic and market research. His email address is kkelly@growmark.com.

BY DANIEL GRANT FarmWeek

Feeder pig prices reported to USDA* Range Per Head $32.25-$60.79 $62.50

However, due to the current constructs of the financial system, most newly printed money — and thus inflation — will continue to go into the financial markets, including commodities, in the form of rising asset prices. Ag prices and profits, therefore, will be ever higher. Crop production, due to a reduced capital stock, will be lower than it would be without the higher taxes and continued government spending.

U of I projects above-average farm returns next year

M A R K E T FA C T S Weight 10 lbs. 40 lbs.

Regardless, we likely will see both higher taxes and continued government spending because voters continue to demand unsustainable government benefits. The eventual result — aside from lower living standards — will be a funding shortfall. The government will “remedy” this shortfall by printing its own money, which in turn will result in price inflation (i.e., stealing purchasing power from us citizens).

(Thursday’s price) (Thursday’s price) Prev. week Change This week 124.32 123.86 0.46 124.46 123.86 0.60

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 147.22 146.53 0.69

Lamb prices Slaughter Prices - Negotiated, Live, wooled and shorn 120-160 lbs. for 91.30-115 $/cwt. (wtd. ave. 105.61)

Export inspections (Million bushels) Week ending Soybeans Wheat Corn 12-06-12 46.6 13.9 7.9 11-29-12 51.9 14.6 10.5 Last year 29.9 16.8 37.0 Season total 647.9 475.4 217.1 Previous season total 459.1 550.4 438.1 USDA projected total 1055 1200 1250 Crop marketing year began June 1 for wheat and Sept. 1 for corn and soybeans.

‘Farmers can use crop insurance to lock in some pretty good revenue guarantees.’ — Gary Schnitkey U of I farm management specialist

acre for corn and $422 per acre for beans. This year average returns on the same ground were forecast to be $585 per acre for corn and $452 for beans. Those projections would be above the five-year averages. “Lower yields obviously resulted in higher prices (this year) and crop insurance is making payments,” Schnitkey said. “Without crop insurance, we would’ve had a lot more farmers in financial stress this year.” About 20 percent of Illinois farms weren’t covered by crop insurance this year, Schnitkey reported. Next year, the U of I projected average crop prices would decline from this year’s record levels but remain above the five-year averages. The

drop in prices is expected to be made up, though, by increased bushels, assuming production returns to normal. Schnitkey said the chances of another major drought next year are between 1-in-25 and 1-in-50. The outlook for next year is positive at this point due to the fact that crop prices still are well above $6 per bushel for corn and $12 per bushel for beans. “If we keep (corn) prices in the $6 range through February, farmers can use crop insurance to lock in some pretty good revenue guarantees,” Schnitkey said. The farm management specialist is not concerned about the so-called farmland bubble crashing next year because the land market is being driven by

fundamentals and most of the land is being purchased without much debt. However, a steep drop in crop prices next year could put farmers with high cash rents or fewer assets into financial stress. “The next (non-weatherrelated) difficulty likely will focus on farms where there’s high growth, a high percentage of cash rents, and high rent levels,” Schnitkey said. “If we see prices back to $4.50 (for corn) and $10.50 (for beans), $400 cash rents don’t work.” The average statewide cash rent increased from $169 per acre in 2010, to $183 in 2011, and $212 this year. Schnitkey predicted cash rents in 2013 could increase by an average of $15 per acre.

U.S. farmers reach 50 million-acre mark in voluntary conservation In just four years, U.S. ag conservationists have enrolled 50 million acres in the Conservation Stewardship Program (CSP), a program that helps farmers, ranchers, and forest owners take conservation to the next level. CSP is aimed at producers who already are established conservation stewards, helping them to deliver multiple conservation benefits on working lands, including improved water and soil quality and enhanced wildlife habitat. “Farmers and ranchers throughout the country are making USDA’s voluntary Conservation Stewardship Program a major force for conservation,” Ag Secretary Tom Vilsack said last week. “The protection of natural resources through conservation programs such as CSP creates outdoor and wildlife recreation opportunities that provide crucial jobs and bolster economic growth in rural American communities.” The land enrolled in CSP totals more than

78,000 square miles — an area larger than Pennsylvania and South Carolina combined, making the program one of the largest voluntary conservation programs for private lands offered by USDA’s Natural Resources Conservation Service (NRCS). Nearly 12.2 million acres, or 18,750 square miles, was added to the program’s rolls this year. Eligible landowners and operators in all states and U.S. territories may enroll in CSP. NRCS local offices accept CSP applications year-round and evaluate applications during announced ranking periods. A CSP self-screening checklist is available to help producers determine if the program is suitable for their operation. The checklist highlights basic information about CSP eligibility requirements, stewardship threshold requirements, and payment types. The checklist is available from local NRCS offices and on the CSP website at {go.usa.gov/g9dx}.

Page 11 Monday, December 17, 2012

PROFITABILITY Corn Strategy

CASH STRATEGIST

Will soybean demand remain strong? If South America has a good soybean crop this spring, there are parallels to be drawn with the experience the industry had in 2010/2011 marketing year. Having said that, though, there are two big differences. Spring 2011 was the second consecutive year of a recordlarge Brazilian soybean crop, while the Argentine crop was the second largest on record, trailing only the prior year’s record. The last serious problem with the South American crops in spring of 2009, problems that lifted the market out of the late-2008 lows. The point in looking at 2010/2011 is that demand for U.S. soybeans will need to fall off just as fast as it did in the spring of 2011, if not even faster. But unless weather impacts South American output again this spring, BrazilArgentina-Paraguay soybean output will be 30 percent larger than it was last year. It was only 2 percent larger in spring 2011 than the year before. The surge in supply should put more of a drag on demand for U.S. soybeans and products than it did in 2011. In addi-

tion, especially in Brazil, an unusually large portion of the new crop has been presold because of high prices. This should allow more of the new crop to move into the world pipeline quicker than it did in 2011. There has been some talk as to whether South American infrastructure can handle the potential volume, but we see some signs of preparation for a big spring campaign, especially in Brazil. The second factor that will come into play is Chinese demand. Over the last couple of months, Chinese crush margins have dropped to moderately negative levels. Negative margins were a problem in early 2011 as well, sparking a slowdown in Chinese imports in the early part of that year. If the market lines up in a similar fashion this year, demand for our soybeans and products could fall even faster than what occurred in 2011. Going forward, the keys to watch are South American weather and Chinese crush margins, as well as soybean imports. The situation continues to suggest the best marketing opportunities looking forward could lie just ahead, maybe even before the Jan. 11 USDA report. And at this point, the timing of price cycles tends to agree with that.

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ü2012 crop: March corn futures broke to the downside of the consolidation pattern, setting up the possibility of a short-term rebound. Make catch-up sales with March futures at $7.45. Plan to add an increment on a move to $7.60. ü2013 crop: $6.40-$6.50 is proving to be tough resistance on December 2013 futures. Use a bounce to $6.35 to make catch-up sales. Plan to add another increment if futures reach $6.40 again. Check the Hotline frequently. vFundamentals: Slow export demand has been a plague for the corn market this year. But South Korea stepped up purchases on the most recent break and sourced some of it out of the U.S. for the first time in a long time. The slide in wheat prices has been a depressant as well, but prices appear set to rebound. The South American outlook is OK, but not great. During the holidays, the looming Jan. 11 USDA reports may start to get more discussion.

Soybean Strategy

ü2012 crop: Soybean prices appear poised to move moderately higher, but unless significant problems develop with the South American crops, there’s little reason to expect a major move up. Target a rally to $15.20 on January 2013 futures to make catch-up sales. We could add a sale at that level. Check the Hotline. ü2013 crop: Use prices above $13.30 on November 2013 futures for catch-up sales. We are considering adding another increment on strength, but continue to exercise short term patience while the picture develops. Check the Hotline occasionally for an update. vFundamentals: Shortterm demand for soybeans supports potential for more short term price strength. But there is the risk that Mississippi River problems are undermining our ability to ship soybeans, a feature that could cause exports to fall short of expectations. Crush demand will remain good another one to two months. But if problems don’t develop for South

American crops, upside potential may be limited.

Wheat Strategy

ü2012 crop: The most telling situation is the one playing out in the Kansas City July 2013 contract. Prices penetrated the $8.84 support, despite a friendly fundamental picture. However, the downside should be nearly exhausted for now. Wait for a recovery bounce before making any catch-up sales. ü2013 crop: Make catchup sales when Chicago July futures are trading above $8.50. Check the Hotline frequently;

we could add a sale at any time. vFundamentals: The latest decline in wheat prices can be linked to the negative USDA supply/demand report. Domestic wheat ending stocks were raised 50 million bushels from the November forecast and now are expected to reach 754 million bushels. The increase in stocks was tied to ongoing weak export demand for U.S. wheat. However, short-term downside risk should be limited by concern about the hard red winter wheat crop in the Great Plains, where it remains extremely dry.

FarmWeek Page 12 Monday, December 17, 2012

perspectives

Ugly is as ugly does in insect world The word ugly is a negative term that can be used to describe appearance, behavior, or even morals. Hans Christian Anderson used the word in his tale, “The Ugly Duckling.” In this story, the ugly duckling ultimately becomes a beautiful swan. To many people, the term is an apt expression of their feelings regarding the appearance of insects. I haven’t done a formal survey on the subject, but in my experience, people often express their feelings about insects using the words “ugly” and “gross” — especially if the encounter is up close and personal. TOM Both “ugly” and the TURPIN direct opposite “beautiful” are subjective terms. What one person might consider beautiful is ugly to another and vice versa. The saying, “Ugly is as ugly does,” is said to express the idea that true beauty is found in the actions of people, not in the way they look. So is ugly an appropriate descriptive term for the way insects appear? I suspect that we two-legged, soft-skinned humans think the six-legged, exoskeleton-skeleton-covered insects are ugly

mainly because they look much different from us. The physical structure of insects is an important reason these creatures are some of the most successful animals on earth. As it turns out, ugly can be beautiful in the world of insects. Here’s why. Large, bulging, eyes are dominant features of some insects. Each of such eyes can have up to 3,000 lenses, allowing an insect to see in many directions at the same time. Such peepers might not be considered beautiful by fashion-conscious humans who squint at the world through a pair of single-lens eyes. But excellent vision is not only important to insects, it is essential. That’s because insects must constantly be on the alert for predators and their eyes are a first line of defense. Insects also possess a pair of protrusions on their head. These are called antennae, which make insects look somewhat otherworldly. Whether these structures resemble beads on a string, a feather duster or a saw blade, insect antennae might not be considered pretty by most people. But pretty or not, insect antennae function to pick up odors that are useful in locating food or mates. Once

again, function trumps form. Insect bodies also are often adorned with a variety of spines and pegs. These devices are sometimes associated with the sense of touch. Sharp spines also can function to provide defense against predators. For example, the spines on the legs of grasshoppers are powerful weapons and, in association with kicking behavior, can be used to effectively discourage an animal intent on having an insect meal. Then there are the mouths of insects. Insect mouthparts can vary from the chewing type that are most like human mouths because of the presence of mandibles. Cockroaches and grasshoppers have mouths of this type that are good for eating solid food such as the leaves of plants. Other insects including mosquitoes and plant bugs have piercing and sucking mouths. These insects feed on liquid food that must be extracted from the source, such as blood from a mam-

mal or sap from a plant. Butterflies have a coiled tube mouth good for sipping nectar from a flower. All told, the combination of eyes, antennae, mouths and spines make insects look like insects. That is a look that some humans find downright ugly. But remember that ugly is as ugly does. In this case, that ugly is associated with functions that allow insects to be successful organisms. Besides, I don’t think insects really care about whether we humans think they are ugly. Tom Turpin is an entomology professor at Purdue University, West Lafayette, Ind. His email address is turpin@purdue.edu.

India must start listening to its farmers

Are anti-biotech activists trying to keep India poor? Farming in India has reached a very crucial phase. In a scenario of rising consumption needs and aspirations, and dwindling or varying natural resources, it has become imperative for India to innovate or access appropriate technologies that will enhance our agricultural productivity efficiently. Since the Green Revolution in the 1960s, researchers, government, and the private sector have been working relentlessly to improve the efficiency and productivity of agriculture in our country, blending science with traditional knowledge so the farming system will be more responsive to the needs of its farmers. Today, the progress we have made is in jeopardy. We V. RAVICHANDRAN are under attack from several guest columnist anti-technology activists. They have gone so far as to request that our Supreme Court place a 10-year ban on biotech crop field trials in India. That is an ignorant proposal at a time when farmers must grow more food just to keep up with a population that recently boomed past 1.2 billion people. Thankfully, the Supreme Court rejected this idea. The worst may be yet to come, however: The court appointed a Technical Expert Committee (TEC) to assess the benefits of biotechnology, but the TEC lacks a single member who is an

expert on how biotechnology can improve farm productivity. So the “expert” committee lacks expertise. Early next year, the TEC will issue a new, more detailed report that will receive full consideration. Enough is enough. Why must India’s farmers always be held back? We should enjoy the right to grow the food our country desperately needs. India must transform its attitude toward biotechnology and embrace the science that is helping farmers in the U.S. and other countries achieve record food production. Around the globe, farmers have harvested more than 3 billion acres of biotech crops that are part of conventional diets. Both farmers and consumers benefit. Yet India’s government has failed to keep up with the times. A decade ago, it permitted the commercial cultivation of transgenic cotton and ever since, yields have soared, both on my 60-acre farm in Tamil Nadu and across the nation. The proof can be seen in our fields, where cotton production went up by 154 percent. Instead of trying to repeat this success by allowing farmers to grow other biotech plants, however, the government has permitted political protestors to dictate agricultural policy. More than 6 million of us now grow transgenic cotton, but we’re still forbid-

den from growing the kinds of crops that farmers in Argentina, Canada, the Philippines, and elsewhere take for granted. Nearly three years ago, we were about to take a big step forward with transgenic brinjal, a vegetable known elsewhere as eggplant. Scientists recommended it and farmers wanted it. But the government said no, simply because of a few loud voices. As I write this, I am battling on my farm to salvage my rice crop. This year, I’ve had to contend with a drought, followed by a monsoon, and then another dry spell. Modern technology holds out the promise of seeds that can endure the worst that weather can throw at us. In addition to the challenges of climate, farmers also must beat their traditional foes: weeds, pests, and disease. I am convinced biotechnology can help with that, too. But only if we enjoy access to

the best ag ricultural tools that science can deliver. India is a poor country, and sometimes I’m forced to wonder if anti-GM activists want to keep it that way. The choice is clear: We can remain poor, and always be reaching for the begging bowl, or we can work together to come up with 21st-century solutions to our most pressing problems. Up until now, we have for the most part chosen foolishly. To reverse course, our Supreme Court must continue to treat the advice of its own TEC with the skepticism it so richly deserves. The next step is to choose wisely. That means listening, at long last, to the people who appreciate the true potential of biotechnology — India’s farmers. V. Ravichandran grows rice, sugar cane, cotton, and small grains on his farm in Tamil Nadu. He is a member of the Truth About Trade & Technology Global Farmer Network (truthabouttrade.org}.

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