Farmweek march 23, 2015 by Illinois Farm Bureau

Farmer interest outstripped funding and acreage allocations for two conservation programs. page 3

Carthage farm native T.J. Menn took 20 Harvard University classmates on an Illinois Farm Trek. page 4

Members simply applying for grants earned ag education funds for two county Farm Bureaus. page 7

State farmland values soften; recreational land rebounds

Monday, March 23, 2015

Two sections Volume 43, No. 12

ALL ABOUT MEAT

BY DANIEL GRANT FarmWeek

Above, Chris Gould leads Illinois Farm Families City Moms from a hog barn following a tour. The moms learned about biosecurity and conversed with Tri-Oak Foods and Hormel, who buy Gould’s hogs. The moms also chatted with caterer Tom Ulrich about cooking and choosing pork cuts. Left, Eldon Gould of Maple Park, center, answers questions about pork production from City Moms, Amy Wagliardo of Lake Bluff and Angie Runyan of Brookfield. Twenty-five City Moms recently visited the farm operated by Gould, his wife, Sandy, and son, Chris. (Photos by Jill Johnson, Illinois Beef Association communications director)

The weight of lower crop prices and high input costs in 2014 simply proved too much for the land market to sustain its impressive upward trajectory. After posting an eye-popping 80 percent increase from 2008 to 2012, Illinois land values leveled off the past two years and actually decreased 1 to 3 percent last year, according to a report released last week. The Illinois Society of Professional Farm Managers and Rural Appraisers (ISPFMRA) noted in its Illinois Land Values and Lease Trends Report the value of good quality farmland declined 3 percent last year, while the value of average and fair ground slipped 2 percent. Excellent quality farmland held up best under the weight of tighter farm margins, posting just a 1 percent decline. “Our best soils in Illinois are flatlining. We’re seeing sideways activity,” said Dale Aupperle Dale Aupperle, president of Heartland Ag

Group in Forsyth and chairman of ISPFMRA’s land value project. “Our sideways 2014 land value trend is actually a surprisingly strong performance in the face of declining commodity prices and shrinking net farm income.” ISPFMRA members believe strong farm returns in previous years, low interest rates and a tight inventory of farmland helped maintain land prices in 2014. “Farmland generally is tightly held,” said Randal S. Fransen, First National Bank of Dwight and ISPFMRA president. “So, the value may spike up Randal Fransen if a farmer finally has an opportunity to buy land adjacent to him. There’s just not that much that comes up on the market every year.” Local farmers continue to scoop up most farmland sales (66 percent) followed by local investors (13 percent), according to ISPFMRA’s 20th report. Average land values last year ranged from $6,500 for fair ground up to $12,800 for

Natural resource SWAT dives into water testing Periodicals: Time Valued

BY KAY SHIPMAN FarmWeek

Water quality tests surfaced new thoughts from the Illinois Farm Bureau Conservation and Natural Resources (CNR) Strength with Advisory Team (SWAT). Team members not only discussed programs and research related to water quality, but they also saw firsthand the value of quick tests of water samples. Some team members brought samples from their farms for testing during the team’s recent

meeting in Bloomington. “One of the goals is to show that we as a committee are not afraid to get our water tested,” said CNR SWAT Vice Chairman Ken Schafer of Jersey County. About nine samples from drainage tiles and surface water were tested, and all water samples tested well below the industry standard for nitrate levels in treated drinking water, according to Lauren Lurkins, IFB director of natural and environmental resources. “I see these tests as an edu-

cational tool. It’s one piece of information farmers can use to make decisions about nutrient management,” Lurkins said. Caroline Wade, nutrient watershed manager with the Illinois Corn Growers Association, conducted the water tests. Wade noted the Zea Mays Foundation sponsors the tests. “The idea is to take the tests to meetings as a tool to get farmers engaged” in water quality, Wade said. She plans to offer water tests Thursday during the Peoria County Soil and Water Conservation District field day on the Kent Hudson farm near

See Farmland, page 2

Hanna City from noon to 2 p.m. Participants may bring water samples. Schafer said he was curious about the nutrient levels in his samples from tile lines and a field surface. “I was very surprised, in a good way,” by the low nitrate levels, he added. CNR SWAT Chairman Dick Steiner of Tazewell County brought samples from a creek, a drainage tile and field snow melt. He agreed the tests provide “an excellent educational tool” for farmers. “I think this is an extremely See Water, page 2

Quick Takes

FarmWeek • Page 2 • Monday, March 23, 2015

HEAR LATEST ON NUTRIENT LOSS REDUCTION STRATEGY — Miss the recent Illinois Farm Bureau webinar update on the Illinois Nutrient Loss Reduction Strategy? No problem. You can listen to the webinar at {www.ilfb.org/NLRS}. Lauren Lurkins, IFB director of natural and environmental resources, noted the webinar serves as a supplement to in-person meetings and presentations provided to county Farm Bureaus. NRLS offers a suite of practices and programs to reduce nutrient losses in urban and rural areas from point sources that include specific sources, such as sewage treatment plants, and nonpoint sources that are diffuse, such as runoff from farm fields, and residential and urban areas.

FAMILY FARMS DOMINATE AGRICULTURE — Families own 97 percent of all U.S. farms, according to the latest USDA report based on the 2012 Census of Agriculture. What defines a family farm? One in which the majority of business is owned by the operator and individuals related to the operator, including through blood, marriage or adoption. Other key family farm facts in the report included: • Small family farms (gross cash farm income of less than $350,000) comprise 88 percent of all U.S. farms. • Fifty-eight percent of all direct farm sales to consumers come from small family farms. • Three percent of farms defined as large or very large family farms (gross cash farm income of $1 million or more) account for 64 percent of all vegetable sales and 66 percent of all dairy sales. • Eighteen percent of principal operators on family farms in the U.S. started within the last 10 years.

SORGHUM REFERENDUM SET — Sorghum growers can vote to continue the Sorghum Checkoff Program beginning Monday through April 21 at local Farm Service Agency offices. For the program to continue, a majority of those voting must approve the order. Ballots may be obtained in person, by mail or via the Internet. For more information, visit {ams.usda.gov/SorghumReferendum}. Anyone growing sorghum from Jan. 1, 2011, through Dec. 31, 2014, can vote. Individuals are required to provide documentation, such as a sales receipt or remittance form, showing they grew sorghum.

SENATE CONFIRMS NELSON — The Illinois Senate last week confirmed Philip Nelson as Illinois Department of Agriculture director. Gov. Bruce Rauner appointed the fourth-generation grain and livestock farmer to the position Jan. 16.

(ISSN0197-6680) Vol. 43 No. 12 March 23, 2015 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 goes toward the production of FarmWeek. “Farm, Family, Food” is used under license of the Minnesota Farm Bureau Federation.

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. © 2015 Illinois Agricultural Association

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Cash rents trending lower; industry struggles to set rates BY DANIEL GRANT FarmWeek

Cash rental rates generally followed the trend of commodity and land prices this year as most edged lower. A survey of Illinois Society of Professional Farm Managers and Rural Appraisers (ISPFMRA) members indicated cash rents this year in the state slipped about $20 to $25 per acre on professionally managed ground. This continues a trend as cash rental rates from 2013 to 2014 declined by a range of $8 to $21 per acre after a massive run-up in rates from 2007 to 2012. “Professionally managed rents have come down,” Gary Schnitkey, University of Illinois farm management specialist and ISPFMRA secretary/treasurer, said last week at the Illinois Land Values Conference in Bloomington. “There’s a reasonably good chance they’ll continue to come down in 2016.” About 80 percent of ISPFMRA members predict a modest decrease in cash rental rates next year, while almost 10 percent believe a sharp decrease in rents could be in the cards. Ray Brownfield of LandPro in Oswego believes many farmers simply can’t continue to pay high-end cash rents at a time when crop prices crumbled compared to previous years. “With grain prices not near where some thought they would be, and the cost of production has not gone down a penny, it’s very difficult (to maintain high cash rents),” he said.

Farmland

Continued from page 1 excellent ground, down from the 2013 price range of $7,100 to $13,100 per acre. Most ISPFMRA members believe the downtrend in land values will continue through this year into 2016. “We’re kind of in a sideways pattern and the expectation is it might soften,” Fransen said. “It (the value of farmland) is what it earns. Commodity prices are down.” The current sideways pattern marks just the fourth time in the past 45 years the uptrend of Illinois farmland values was interrupted, according to Aupperle. Other interruptions to the uptrend occurred in 2008-09 during a sideways pattern, a 15 percent correction from 1998-2001

Water

Brownfield, who manages about 10,000 acres on 75 farms, reported some farmers in his area simply walked away from farms with high cash rents this year. “I think some (farmers) got overly aggressive for what they would pay for leases and they got bigger than maybe they could handle,” Brownfield said. “As times got rougher, they were pretty (financially) stretched.” Farmers, farm managers and landowners now face the difficult task of trying to establish rental rates that are fair to all parties in the new economic environment. Average cash rental rates this year vary greatly from $150 per acre on the low end for fair ground to $378 per acre on the high end for excellent ground. “There’s always a range,” Schnitkey said of cash rental rates. “You can get a $100 difference for similar ground in the same county.” More farmers and landowners are switching to variable cash leases to establish a floor price to protect farmers, while offering some upside for landowners. “Risk is a four-letter word and farmers are starting to understand that,” said Dale Aupperle, president of Heartland Ag Group in Forsyth and chairman of the ISPFMRA’s 20th land values project. “I think we’ll see a shift to more risk share agreements.” Brownfield believes communication with landowners will be critical this year as many are not aware of the shift to tighter farm margins that could require renegotiations of rental rates. For more information, visit {ispfmra.org}.

and the infamous 50 percent correction from 1980 to 1987. Aupperle believes the 1980s crash, unlike the current market, was a bubble. The farmland experts are concerned strengthening of the U.S. dollar and the possibility of higher interest rates could put more pressure on farmland values this year and

Continued from page 1 beneficial exercise and offers useful information,” Steiner said. In addition to gaining a snapshot of water conditions on their farms, the tests may help farmers connect their fields to larger water quality issues, according to Lurkins. Steiner stressed the importance of voluntary cooperation in nutrient management. Schafer added the tests may provide farmers with a water nutrient “benchmark” that would allow them to realize improvement. “We made great strides with T by 2000,” Schafer said of the state target to reach tolerable soil loss by 2000. “Maybe that needs to be a motto with the (Nutrient Loss Reduction) Strategy so we can make improvements.”

Visit FarmWeekNow. com for more details on the Illinois farmland value survey.

in 2016. Any cutbacks or repeal of the Renewable Fuels Standard also could send negative vibrations through the market. However, while the general trend in values declined last year, some land values increased, particularly for recreational and transitional land. “Our state isn’t the same all the way through. We’ve got pockets of activity,” Aupperle said. “The (improved) economy is driving recreational and transitional land (values).” Livestock farmers, in the midst of record meat and dairy prices last year, also competed vigorously for additional land in the state, Aupperle added.

Illinois NRCS, farmers mark conservation milestones

BY KAY SHIPMAN FarmWeek

The state conservationist considers Illinois’ conservation glass half full after farmer interest outstripped available funding and acreage allocations for two programs in fiscal year 2014. Ivan Dozier, state conservationist with the Natural Resources Conservation Service (NRCS), explained future state fund allocations hinge partly on Ivan Dozier demand. “The really bright spot is the Conservation Stewardship Program (CSP),” Dozier said. “Last year was our most successful. The acres enrolled were the highest we’ve ever had.” Illinois landowners enrolled 399,024 acres in CSP in fiscal year 2014. Illinois NRCS not only used its allocated CSP acres and funds, but was able to enroll even more acres and obtained more money because other states didn’t use their entire allotments, he noted. High farmer demand for

Environmental Quality Incentives Program (EQIP) also exceeded the state’s allocated funds — both for general EQIP and for livestock only practices. Illinois NRCS enrolled 41,457 acres in a variety of EQIP options. Some individuals may take a negative view that interested landowners weren’t able to enroll, but Dozier looked on the positive side. Interest “had been down the last three years, but that (interest) trend is up. It’s a good thing,” he said, adding future EQIP allocations are based on farmers’ and landowners’ interest within a state. “The appropriators need to know the demand is there,” he added. Actually, EQIP demand more than doubled the available funding, according to Dozier. That’s quite a turnaround compared to three or four years ago when EQIP demand reached its lowest point. Farmers and landowners will find “opportunities” in the Agricultural Conservation Easement Program because Illinois hasn’t used its allocated funding, Dozier said. As for this year, NRCS staff are ranking EQIP applications,

SHARING LEADERSHIP IDEAS

Illinois Farm Bureau President Richard Guebert Jr., left, discusses the Agricultural Leaders of Tomorrow (ALOT) experience with participants Jenny Litteken of Aviston and Daniel Hiestand of Salem. The two joined 21 other ALOT participants at the IFB building in Bloomington last week to complete the 12-day program aimed at enhancing leadership abilities and agriculture’s voice. (Photo by Ken Kashian)

Farm Bureaus schedule nutrient meeting

The Illinois Nutrient Loss Reduction Strategy will be the focus of Thursday’s 7 p.m. meeting at the Community of Christ Church in Flora. Lauren Lurkins, Illinois Farm Bureau director of natural and environmental resources, will speak. Eleven county Farm Bureaus — Clay, Coles, Cumberland, Edwards, Effingham, Hamilton, Jasper, Richland, Shelby, Wayne and White — along with the Council on Best Management Practices will sponsor the meeting. For reservations, call 618-665-3300, or email ccfbmanager @gmail.com.

and applicants will be notified in the near future whether they will receive funding, Dozier said. Because EQIP is more competitive in Illinois, he advised farmers to “be patient.” “It’s a good time to review your (conservation) plan. Some practices are quite costly. Make sure they fit your operation,” Dozier said. Likewise, farmers are finding more competition for CSP. Dozier described the state’s acreage allocation “as more than we started last year, but less than we requested.” “Could we get more (CSP) acres? It depends on what goes on in other states,” he said. In addition to general conservation programs, Illinois NRCS and farmers actively participated in special programs. The National Water Quality Initiative targets five Illinois watersheds with identified nitrate, sediment and/or pathogen impairments. “Our goal is to do enough work and enough practices to get those off the (impairment) list,” Dozier said. He encouraged farmers in the five watersheds to use the program’s funding.

Page 3 • Monday, March 23, 2015 • FarmWeek

The initiative dovetails with the new state Nutrient Loss Reduction Strategy because NRCS offers water quality monitoring, voluntary conservation practices and “can get improvements,” he said.

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NRCS’ focus on soil health and farmers’ interest in that, along with cover crops, continues to grow, according to Dozier. “Cover crops, under the umbrella of soil health, I see that (interest) continuing,” he concluded.

Ag education supporters seek answers BY KAY SHIPMAN FarmWeek

Illinois agriculture education faces a critical shortage of ag education graduates, licensing hurdles and funding cuts, the Illinois Committee for Agricultural Education (ICAE) told Illinois State Board of Education (ISBE) leaders last week in Springfield. State Superintendent of Education Chris Koch praised Illinois ag education’s programs, structure and student leaders in FFA. He noted the national education trend matches ag teachers’ traditional method of hands-on learning and having students apply knowledge. Earlier in the week, two Illinois FFA officers and ICAE leaders sought the ISBE’s support for state funding of ag education during a presentation to board members. Gov. Bruce Rauner’s proposed budget eliminated the $1.8 million ag education line item. Another hurdle involves increased requirements for future high school ag teachers to teach

middle school students an exploratory class in 2018. The change will impact teachers of other subjects along with agriculture. ICAE members discussed with an assistant state superintendent the possibility of changing ag teaching licenses to cover more grade levels. Currently, the state offers such licenses for teaching physical education, art and music. ICAE members again raised the potential of ag education being designated as a high-need field in Illinois, which would provide federal financial incentives for college students studying ag education. ISBE and ICAE leaders said they will explore a couple of options, including federal designation of individual school buildings in the state that serve high populations of lowincome students. ICAE members also learned state educators currently are discussing curriculum to meet new Next Generation Science Standards for kindergarten through high school students. Ag educators were encouraged to be part of that process.

CBMP elects Hausman president, plans soil health meetings The Illinois Council on Best Management Practices (CBMP) recently elected Illinois Farm Bureau Director Chris Hausman of Pesotum president during its annual meeting. Hausman represents IFB on CBMP and has served on the IFB board since 2006. Macomb farmer Andy Bartlow, representing the Illinois Corn Growers Association, was elected vice president. Nashville farmer David Droste, representing the Illi-

nois Soybean Association, was elected treasurer, while Erie farmer Todd Dail, representing Illinois Pork Producers Association, was elected secretary. CBMP also offers two April events on soil health and cover crops. A cover crop informational meeting will be 10 a.m. to noon April 1 at the Fulton County Farm Bureau building, Lewistown. For reservations, contact Elaine Stone, county

Farm Bureau manager, at ful tonfb@att.net or 309-5473011, or Kim Smail, district conservationist with the Natural Resources Conservation Service at kim.smail@il.usda.gov. A cover crop informational meeting will be from 10 a.m. to noon April 2 in the Pike County Farm Bureau building, Pittsfield. For reservations, contact Richard Lyons, CBMP cover crop specialist, at rlyons @speednet.com or 217-8256697.

Farm Trek dispels myths, showcases America’s heartland FarmWeek • Page 4 • Monday, March 23, 2015

BY JOANIE STIERS FarmWeek

Within the first 24 hours of their Illinois agricultural tour, Harvard University graduate students rode four-wheelers, drove a tractor, split wood, held chicks and even fired guns at a family farm near Carthage. The university’s first-ever Farm Trek included more than 20 domestic and international students studying policy-related fields at the Harvard Kennedy School. The campus’ generally distorted view of farm policy prompted T.J. Menn, a Harvard graduate student and Carthage farm boy, to organize the trip for these future policymakers and global leaders. The weeklong Farm Trek connected Harvard graduate students with the origins of food, the challenges that agricultural communities face and the intricacies of the farm bill. “At Harvard, some of the professors that I have had classes with and others I have heard stories from will simplify a complex piece of legislation like the farm bill down to a few sentences, such as the United States government pays farmers to do nothing,” Menn said. “To have a policy be blanketed in a statement like that is very upsetting.” More than 100 students applied for the trip, which included 15 site tours and 18 host families near Menn’s hometown in west-central Illinois. Participants toured low- to high-tech production agriculture on Amish, dairy, grain and hog farms. They visited factories making John Deere and Kinze equipment, as well as facilities for Monsanto and DuPont Pioneer. They shared meals with local legislators, watched cattle sell at an auction barn, and enjoyed a winery and farm bonfire. Menn also hoped the trip would clear misconceptions regarding genetic engineering and food. All the while, the trip improved awareness of agriculture’s significance to the economy. “I didn’t realize how much agriculture impacts the Illinois economy,” said Danny Stoian, an American diplomat enrolled in the midcareer program at the Harvard Kennedy School of Government. “I didn’t realize it dwarfs everything that comes out of Chicago.” The trip aligned with the university’s spring break from March 15-21, coincidentally National Agriculture Week. Menn thanked God for the week blessed with favorable weather, a new calf born upon their arrival, and a $25,000 trip funded by individual, foundation and business donations. In addition, Carthage-area families and businesses donated their services. “I really hope they take away an appreciation for the land, an appreciation for the people that are here and this way of life,” Menn said.

Harvard students learn farm policy in farm country In their words BY JOANIE STIERS FarmWeek

After nearly an hour of farm policy discussion, a Harvard graduate student raised her hand and suggested the farm bill’s nickname should change to alleviate its misguided perception. “I’m really fascinated by the fact that 80 percent of the funds in the farm bill are not for farms and the fact that a lot of people are critical of the farm bill because of its subsidies for certain crops and pays farmers not to produce. This is not necessarily the case,” said Ashley Zlatinov, a second-year Master of Public Policy student at the Harvard Kennedy School. “How can that be mitigated? Is there a way to better market this or change the name, if you will?” Illinois Farm Bureau’s agri-

culture policy experts Adam Nielsen and Doug Yoder answered questions from Harvard’s policy graduate students last week. A goal of Farm Trek, an educational spring break trip these students took to west-central Illinois, aimed to help them understand the intricacies of the farm bill. “It was definitely a very inquisitive group as we expected,” said Nielsen, Adam Nielsen national legislative director for IFB. “I commend them for their willingness to get out into the countryside and get hands-on with agriculture policy. No matter what they end up doing, it will be beneficial

March 31 farm bill deadline looms

It’s almost here! Landowners have until March 31 to update farm yield history and/or reallocate crop base acres. Farmers face the same deadline to make a one-time election of Agricultural Risk Coverage (ARC) or Price Loss Coverage (PLC) for the 2014-18 crop years. What happens if you miss the deadline? • Your farm will not be eligible for 2014 crop year ARC or PLC payments. • Your only option will be to enroll your farm in PLC for the 2015-18 crop years. • Your farm’s current counter-cyclical yield and base acres will be used for PLC. Call your local Farm Service Agency office for an appointment. Revisions can be made until March 31.

for us to have had the opportunity to spend some time with them.” Half the participating students in attendance were from the United States and likely will set future policy as they seek careers in Washington, trip organizer T.J. Menn predicted. Half were from foreign countries, such as Singapore, England and China. Among them was a Harvard program fellow who helped coordinate the purchase of Smithfield Foods. Students asked specific questions from their seats in the farm shop at the Hunt Farm. Ahead of that, Colby Hunt, McDonough County Farm Bureau president, talked about the family’s Blandinsville-based farm. The students asked about crop insurance, estate taxes, trade agreements and Trade Promotion Authority. Nielsen and Yoder also fielded questions about the Renewable Fuels Standard, Conservation Reserve Program and biosecurity. Harvard graduate student and island of Jersey native Leena Scaria expected the trip to improve her understanding of farming and the value of agriculture to the United States. Scaria works with Menn on a thesis about the genetic engineered food debate. “I hope it makes a difference for all of us going forward in how we perceive the world,” she said.

Above, T.J. Menn, a Harvard University graduate student and Carthage farm native, left, shows fellow Harvard grad student C.M. Chan of Hong Kong the latest equipment technology. Menn brought about 20 Harvard students to west-central Illinois last week on a Farm Trek to learn firsthand about agriculture and how federal policy affects farms. Left, Kevin Hunt, right, a Blandinsville farmer, demonstrates planter technology to Harvard grad students, who are training to become policymakers and global leaders. McDonough and Hancock Farm Bureaus provided lunch for the group and gave them National Ag Day Tshirts. (Photos by Cyndi Cook)

Harvard graduate students share impressions of farm tours

“Coming in, I had very little idea what the new farm bill was, and I was under the impression that the farm bill was for farm subsidies. I didn’t realize it had food stamps and WIC (Women, Infants and Children nutrition program) and all of that funding in it. I also believed that it directly subsidized farmers not to produce. I had no idea that it was subsidizing insurance specifically, which seems to really even out many of the issues that I was debating before.” — Ashley Zlatinov, California native and second-year Master of Public Policy student, Harvard Kennedy School

“As a diplomat, I represent our country and I’m speaking about a lot of issues that affect our whole country. Agriculture policy gets brought up a lot, regardless of whether we talk about security issues or any kind of trade issues. It’s good to know more about it. “It’s also good for my kids. During our year back in the states, we want the kids to feel American and know what that means. There’s nothing like coming out here to really know what that means.” — Danny Stoian, California native and an American diplomat enrolled in the midDanny Stoian career program at the Harvard Kennedy School of Government. His children, ages 6 and 4, attended Farm Trek and loved the four-wheelers, chicks and ducks. They have lived most of their lives in the Middle East.

Leena Scaria

“Coming from the East Coast, I thought I had very strong positions on guns, but I think I had overgeneralized them. We learned about the different types of guns, and we shot all of them and learned what they are used for. It’s far more nuanced than I had previously acknowledged.” — Leena Scaria, island of Jersey native and second-year Master in Public Policy candidate, Harvard Kennedy School

Currency swings troublesome for ag industry, exporters

Page 5 • Monday, March 23, 2015 • FarmWeek

Fluctuating currency values continue to drive up the cost of American products overseas and could put a crimp on U.S. exports in the months ahead. The value of the dollar increased about 18 percent since last fall and reached a 12-year high against the euro in recent weeks. Meanwhile, the Mexican peso plummeted 15 percent during the same time, while Brazil’s real recently sank to a 10-year low. “It looks like we might have to live with a strong dollar for a while,” said Ron Plain, ag economist at the University of Missouri. The Federal Reserve last week hinted it intends to raise interest rates this year if other economic indicators remain in line. It expects core inflation could be modest this year, around 1.4 percent com-

BY DANIEL GRANT

pared to a previous forecast of 1.8 percent, while the unemployment rate could moderate to about 5 percent. “If we have higher interest rates, it will make the dollar stronger,” Plain said. See FarmWeekNow.com for more information on how the strong dollar impacts agriculture.

“A stronger dollar makes it more expensive for foreign customers to buy U.S. beef, pork (and other commodities and nonag-related products).” The combination of a stronger dollar and slowdown in U.S. shipments from the West Coast due to last month’s labor issue there comprise two key factors behind weaker ag exports in recent months, Plain noted. U.S. exports of beef and

pork in January were down 20 percent compared to the same time a year ago. “It is clear the disruptions in West Coast ports negatively impacted U.S. pork shipments in January,” authors of the CME Group’s Daily Livestock Report noted. “The strong U.S. dollar as well as lower pork prices in competing markets also have been a significant factor.” EU pork prices essentially are on sale as the value of the dollar and euro nearly pulled even. The euro previously maintained a 40 to 50-cent premium to the dollar. The currency situation also spilled over into the grain sector in recent months. Paul Georgy of Allendale, Inc., last week reported China bought 600,000 tons of corn from Ukraine and South Korea

purchased 200,000 tons from South America at a discount. “The recent strength in the U.S. dollar is taking its toll on grain exports,” Georg y noted. How has the stronger dollar affected crop prices for end users? While spot prices in the U.S. declined this year, the cost to for-

eign buyers actually increased about $1 per bushel for U.S. corn and $2 per bushel for beans in recent months due to changes of currency values. U.S. far mers, as a result, face the possibility of a buildup of stocks and lower crop prices this year.

Trade vital to pork producers amid changing economics

Pork producers knew record prices last year wouldn’t last. But many probably didn’t expect the economic tide would shift so quickly within the industry. A recent estimate suggests hog returns could drop from an average of $53 per head last year to near break-even this year, according to Chris Hurt, Purdue University economist. “The industry currently is kind of licking its wounds,” said Ken Maschhoff, chairman and co-owner of Maschhoff Family Foods in Carlyle. “We’ve taken the markets down hard the last couple months.” Maschhoff, who recently was elected vice president of the National Pork Producers Council (NPPC), believes pork producers may proceed with caution in terms of herd expansion. The Maschhoffs are the thirdlargest pork producer nationwide, according to NPPC. He plans to make trade a top priority in his new leadership role as pork producers attempt to expand their demand base. “Trade is front and center as a top priority,” Maschhoff said. “Within our industry, up to 25 percent of our product is exported. We need to keep those lines open.” The new NPPC vice president believes the finalization of the Trans-Pacific Partnership, a 12-nation free trade agreement, could provide a big boost to U.S. ag exports. But the U.S. first must pass Trade Promotion Authority (TPA) to finalize the deal, according to Maschhoff. BY DANIEL GRANT

‘Within our industry, up to 25 percent of our product is exported. We need to keep those lines open.’ — Ken Maschhoff National Pork Producers Council vice president, Carlyle hog producer

NPPC continues to lobby Congress to pass TPA. “It (TPA) puts our negotiators in a better spot,” he said. “(With TPA in place), our partners know that whatever (free trade agreement) they agree to, Congress won’t go back and make changes.” In the near term, Maschhoff believes U.S. pork exports could be squeezed by the backlog of products shipped from West Coast ports and by competition from other countries. “West Coast port (labor) issues hurt us short term and there’s also the possibility we lost customers as South America and the European Union were able to backfill orders,” he said. “So, it could have a long tail.” U.S. producers currently have more pork to sell due to herd expansion and a significant reduction in death losses from porcine epidemic diarrhea virus (PEDV). “(PEDV) hasn’t reared its head as much as feared,” Maschhoff said. “I believe (the containment of PEDV) has to do with immunity (in the herd). But we’re certainly not out of the woods.” Maschhoff believes some pork producers may have increased breeding in their

herds to offset expectations of PEDV losses. But with

fewer PEDV cases, hog numbers made quick gains.

He therefore believes many producers will be cautious about herd expansion in the months ahead as the larger herd and reduced exports contributed to much lower hog prices. “The (March 27) hogs and pigs report may be the first indication of whether producers are responding to market signals,” Maschhoff added. “I’m sensing they may curtail expansion.”

Lending Support to Generations of Farm Families

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FarmWeek • Page 6 • Monday, March 23, 2015

EXPLORING U OF I AG STUDIES

University of Illinois Extension crop science educator Dennis Bowman, center, pilots a DJI Phantom 2 Vision Plus Drone for students in Newton High School’s biological science applications in agriculture class. The class participated in the recent, two-day ExploreACES event to give prospective students a glimpse into the College of Agricultural Consumer and Sciences on the Champaign-Urbana campus. (Photo by David Riecks, UIUC-ACES-ITCS)

Q&A:

House Ag and Conservation Committee minority spokesman

FarmWeek: As minority spokesman, what tone do you hope pervades the Agriculture and Conservation Committee this session? Rep. Don Moffitt: I truly believe it will be a tone of working together in a bipartisan manner. I have the greatest respect for our Committee Chair Rep. Jerry Costello II, an outstanding public official in his own right. He comes from a family with a distinguished record of public service as the son of a former congressman from Illinois, Jerry Costello. I consider him a friend and a true public servant wanting to do what is best for the citizens of Illinois as we address problems that come before us. I also believe all of the committee members on the House Ag Committee are there because they want to work for the best interests of agriculture in Illinois. FarmWeek: How do you plan to apply your knowledge of agriculture and conservation to your work as minority spokesman? Moffitt: Based on my actual experience as a farmer and my degree in agriculture from the University of Illinois, I will work for practical and common sense policies for agriculture. I will view issues from the perspective of a farmer with a desire to strengthen and expand agriculture, our No. 1 industry in Illinois. I want to work to expand markets for all of our commodities, including biofuels. Production of biofuels gives added value to our existing crops of corn and soybeans. In addition, biofuel production creates additional jobs in Illinois, produces a cleaner fuel that is better for our environment, reduces our dependence on foreign oil and keeps more money in our domestic economy.

FarmWeek: What are some issues that may come before the committee? Moffitt: There could be issues that come to the Illinois House Ag Committee from the federal government, such as soil conservation issues, water issues and even livestock facility regulation issues. We must not overregulate agriculture. We need to be sure that any regulations are practical, common sense and will help agriculture thrive in Illinois. I also will be working to protect the rights of our sportsmen and work to expand hunting, fishing, trapping and all of our outdoor recreational opportunities in Illinois. Conservation activities contribute to the economic development in our state. FarmWeek: What are some issues that may impact agriculture this session? Moffitt: Illinois agriculture must be allowed to be on an equal basis with other Midwest states. I oppose any changes in our tax structure and regulations that would put Illinois agriculture at any disadvantage with other states in the Midwest. FarmWeek: What message do you have for Illinois farmers and the state’s agriculture industry? How should farmers work with the General Assembly? Moffitt: Your Illinois House Agriculture Committee is there to work with and for the agriculture industry in Illinois. Together, we can keep it the No. 1 industry in Illinois. If they don’t already, I would urge all Illinois farmers to get to know their legislators and even be on a firstname basis.

FarmWeek has profiled the Democrat and Republican leadership of the Illinois House and Senate Agriculture and Conservation Committees. This is the final profile with questions submitted by Kay Shipman, legislative affairs editor.

Get to know Don Moffitt Job: Republican serving the 74th district Age: 68 Years served: 1993 to the present Background: Full-time legislator and family farmer in Gilson, University of Illinois graduate in agriculture ed and economics Don Moffitt Historic hobby: Collects and restores all makes of antique tractors, especially John Deere, and owns three classic pickups

Grant money fosters Farm Bureau ag education efforts

Page 7 • Monday, March 23, 2015 • FarmWeek

When it comes to bolstering agricultural education efforts, Ann Wiese and Lloyd Striggow earn an A+. And it all started by simply applying for available grant money. Wiese and her husband, Loren, nabbed a $2,500 Monsanto Fund America’s Farmers Grow Communities grant for the newly established Brown County Farm Bureau Foundation, while Striggow followed suit in Will County. Striggow of Monee and Wiese of Versailles learned about the grants because they use Monsanto seed and weed control products. They BY CHRIS ANDERSON

encourage Farm Bureau members to be aware of and take advantage of such grant programs. Wiese’s grant money marks an inaugural contribution to the Brown County Farm Bureau Foundation — in the making for several years. “It was great news that we had been named the recipient,” said Kathy Knight, Brown County Farm Bureau manager. “We plan to use the money for our Ag in the Classroom (AITC) programs and be able to offer some scholarships.” Wiese said choosing Farm Bureau as the grant recipient

COOK COUNTY BLOOMS AT FLOWER SHOW

Above, Janet McCabe, Cook County Farm Bureau Board member, in yellow blouse, discusses plants and a rooftop garden with members of the Oak Lawn Garden Club. More than 40 volunteers, including members and COUNTRY Financial representatives, staged activities during last week’s Chicago Flower and Garden Show at Navy Pier. Cook County farmers and Illinois Farm Families Chicago mom alums served on a Farmers Opening Our Doors panel. Panel members discussed modern farm and food production practices. Below, volunteer Greg Stack plants bushes in the Farm Bureau/Ronald McDonald House (RMH) Healing Garden, replicating an RMH rooftop garden. Show organizers asked Farm Bureau to re-create the garden — one of about 20 featured at the show. Volunteers also hosted a booth and organized children’s activities. (Photos by Bona Heinsohn, Cook County Farm Bureau director of governmental affairs and public relations)

proved easy. Her husband and their son, Lane, served as Pike County Farm Bureau Board members, and the Wieses’ youngest son, Len, currently serves on the Brown County Farm Bureau Board. “We’re taking care of what’s important,” said Wiese, a longtime donor to the county AITC program. “Ag in the Classroom is so important in city schools. Children need to know where their food comes from.” Striggow, who operates Striggow Family Farm, echoed the opinion. He chose Farm Bureau as the grant recipient because he supports AITC, Farm Bureau Young Farmer programs and solid benefits of the organization. “We have to get kids educated about agriculture,” said Striggow, whose oldest son, Matthew, serves as an active Young Farmer member. “If we need to know about drainage law or any other issue, Farm Bureau has the answer. We also have the political connections.” Striggow’s contribution

means the Will County Farm Bureau Foundation can bolster the number of annual, $1,000 scholarships it provided from 40 to 44. “The grant will pay for 2 1/2 scholarships. An increase in the amount of money we earned at our January auction

will pay for the additional scholarships,” said Mark Schneidewind, Will County Farm Bureau manager. “The Striggows could have selected many other organizations for the money to go towards, but they selected us. We are grateful.”

A $2,500 Monsanto Fund America’s Farmers Grow Communities grant marked the first contribution to the newly formed Brown County Farm Bureau Foundation. A recent check presentation included, from left, Tony Crowder, Crowder Seed Sales, Channel local seedsman; Adam Henninger, Monsanto district sales manager; Matt Hughes, Monsanto district sales manager; Loren, Ann and Len Wiese, Brown County Farm Bureau members; Tom Luthy, Foundation president; and Kathy Knight, Brown County Farm Bureau manager. (Photo by Dan Long, The Democrat Message managing editor)

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Want a better breakfast? Include milk FarmWeek • Page 8 • Monday, March 23, 2015

It’s been called the most important meal of the day — and for good reason. The documented benefits of eating breakfast include boosting brain power, improving nutrient intakes and revving up metabolism. And while 93 percent of Americans believe fueling an empty tank every morning is important, less than half jump start the day this way, according to the USDA. March happens to be National Nutrition Month, and the St. Louis District Dairy Council aims to help make the morning meal a reality with its new effort “Build a Better Breakfast with Milk.” “Breakfast is the first nutrition opportunity of the day — a chance to get in some important foods that may be lacking in our diets, like dairy foods, fruits and whole grains. Research shows that breakfast skippers may not make up these nutrients later in the day,” said Monica Nyman, St. Louis District Dairy Council registered dietitian/nutrition educator. While USDA statistics sug-

gest Americans understand the nutritional need for breakfast, they may lack time. Morning schedules can make for hectic households with families rushing out the door for work, school and errands. “One cup of milk has 8 grams of high-quality protein,

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which is as much as an egg. Whether on its own as an instant fuel or paired with whole wheat toast and peanut butter, milk can help keep you feeling satisfied until lunchtime,” offers Nyman. So, what are some quick ways to incorporate milk into breakfast? Team milk with your favorite cereal. Prepare hot cereal with milk instead of water. Whip milk, yogurt, your favorite fruit and ice together in a blender. Grab a single-serve bottle of chocolate milk on your way out. Or build a bone-boosting latte with warm milk and a shot of espresso. “Adding one serving of milk during breakfast provides nine essential nutrients in an easy and affordable way,” said Nyman. “When it comes to delivering great taste and nutrition in a pinch, milk is a great multi-tasker. It’s the real deal.”

Southwest region hosting first local food conference

The Alton Area Business Development Association and Lewis & Clark Community College will host the region’s first local food conference from 7:30 a.m. to 12:30 p.m. March 31 on the college’s Godfrey campus. The event will feature presenters from Illinois Farm Bureau, USDA Rural Development, University of Illinois Extension, Southern Illinois University-Edwardsville and Madison County Community Development. Speakers from the Alton-Godfrey area will discuss their local food projects. Participants will hear about existing local and regional food activities, potential future development and information sources about the local food economy. “This is the first event featuring local and regional foods for this side of the state,” said Cynthia Haskins, IFB manager of business development and compliance. IFB, the Illinois Department of Agriculture and Rural Development collaborated on the conference. The registration fee costs $15 through online registration at {MarketFreshNetwork.org} or $20 at the door. The event organizer and host, Alton Area Business Development Association, seeks to support the local economy through small business incubation, a local food hub, commercial kitchen rental and the arts. It uses the brand The Great Rivers Market Fresh Network available online.

WIU, ISU offering renewable energy teacher workshops

The Center for Renewable Energy at Illinois State University (ISU) and the Illinois Institute for Rural Affairs at Western Illinois University (WIU) are offering a new teacher workshop on renewable ener-

gy. Applications are due April 1. The workshop, intended for teachers of kindergarten through 12th grade students, will be offered as free, identical one-day events on June 16 at ISU, Normal, and Aug. 5 at Argonne National Laboratory, Argonne. Each workshop is limited to 25 participants.

Participants will receive a free renewable energy kit, lesson plans and resource materials, Continuing Professional Development Units and information about renewable energy technologies most relevant for Illinois. For information or to apply, visit {http://bit.ly/ 1Ax8vlU}.

CELEBRATING AG DAY

Illinois Gov. Bruce Rauner, center in suit jacket, celebrated National Ag Day last week with Sangamon County Farm Bureau members and staff. Rauner called the National Ag Day theme, “Sustaining Future Generations,” a fitting one. He told Farm Bureau members he aims to reduce burdensome regulations, so family farms and agribusinesses can thrive and stimulate the state’s economy. (Photo by Kristi Jones, Illinois Department of Agriculture communications manager)

Tuesday: • FarmWeek: “The Early Word” • Alan Morgan, National Rural Health Association: rural hospital survival • Jim Angel, Illinois State Water Survey: weather Wednesday: • Colleen Callahan, USDA Rural Development: Rural Development facts • Dr. Dale Webb, Galesburg Animal Disease Laboratory; Dr. Mark Ernst, Bureau of Animal Health and Welfare: avian

influenza in the Midwest Thursday: • Ralph Martire, Center for Tax and Budget Accountability: statewide impact of pension reform • Harry Cooney, GROWMARK: energy update • Andy Bartlow, Illinois Corn Growers Association: new role as Illinois Council on Best Management Practices vice president Friday: • T.J. Menn, Harvard University Farm Trek: introducing future leaders to agriculture • Joe Armstrong, Dow AgroSciences: weeds to watch for this season

OND — Dakota Access Pipeline and Syngenta lawsuit informational meeting, 6:30 p.m. Wednesday at the Fayette County Farm Bureau office in Vandalia. Chris Byron, Edwardsville attorney, will speak. Call 664-3100 for more information. ROWN — Fuel day, 9 a.m. to noon Saturday at Mount Sterling Fuel 24 Fast Stop. Refreshments, prizes and children’s activities will be included. Bring a nonperishable food item to help “Fill A Ford.” Donations will benefit local food pantries. ASS-MORGAN — Hunter safety course for certification, 5:30 to 9 p.m. Tuesday through Thursday at the Winchester-Funk Building. Call 245-6833 to register. • Foundation scholarships are available to high school seniors or current college students majoring in agriculture. Must be a Farm Bureau member or a dependent of a member. Previous applicants are eligible to apply. Applications are available at the Farm Bureau office and by email at cmfb1@frontier. com. Applications are due March 31. Call 245-6833 for more information. • Tree giveaway in April at the Farm Bureau office. Five Oak (White/Red/Burr variety) saplings will be given to members. Limited quantities available. Call 245-6833 to order. OOK — Creating compost workshop, 6:30 to 8:30 p.m. April 7 at the Farm Bureau office. Cost is $5 for members and $10 for nonmembers. Call 708354-3276 or email member shipdebbie@cook cfb.org to register by April 6. UMBERLAND — Two Foundation scholarships are available to graduating seniors and/or current college students majoring in an ag-related field of study. Call 849-3031 for an application. Application deadline is Wednesday. • Bus trip to Gasthof Amish Village, Montgomery, Ind., leaving at 7 a.m. April 7. Cost is $50 for members. Call 8493031 for reservations and more information. • Women’s Committee National Agriculture Week coloring contest for children 3 to 11. Coloring contest sheets available at the Farm Bureau office. Entry deadline is March 31. • Women’s Committee National Agriculture Week photo contest for children 13 and older. Call the Farm Bureau office for contest details. Entry deadline is March 31.

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OUGLAS — Women’s committee Easter brunch, Farm Service Agency (FSA) and farm bill meeting, 10 a.m. Wednesday at Farm Bureau office. Peggy Dundas, FSA, will speak. Call 253-4442 for reservations. AYETTE — Dakota Access Pipeline and Syngenta lawsuit informational meeting, 6:30 p.m. Wednesday at the Farm Bureau office. Chris Byron, Edwardsville attorney, will speak. Call 283-3276 for more information. ORD-IROQUOIS — Foundation scholarship applications for the 2015-16 academic year are available at the Farm Bureau office, and from school guidance counselors and ag teachers. Application deadline is April 1. ULTON — Cover crop luncheon workshop, 10 a.m. April 1 at the Farm Bureau office. Natural Resources Conservation Service (NRCS) staff and a panel of farmers who have implemented cover crops will speak. Call 547-3011 for reservations by Friday. RUNDY — On-theroad seminar, 7 p.m. March 30 at the American Legion in Mazon. Kevin Rund, Illinois Farm Bureau senior director of local government, will speak. ANE — Illinois Nutrient Loss Reduction Strategy and cover crop luncheon seminar, 9:30 a.m. Tuesday at the Farm Bureau office. Lauren Lurkins, IFB director of natural and environmental resources; Russel Higgins, University of Illinois Extension; and a panel of local farmers will speak. A cover crop plot tour will be included. Call 584-8660 for reservations. EORIA — Weather outlook/NRCS update luncheon, 10 a.m. April 1 at the Farm Bureau office. Mike McClellan, Mobile Weather Team, and Ivan Dozier, NRCS, will speak. Cost is free for members and $10 for nonmembers. Call 686-7070 for reservations by March 30. ERRY — Foundation scholarship applications are available at the Farm Bureau office, by emailing perryfarmbureau@frontier. com, and from school guidance counselors and ag teachers. Applicants must be high school seniors who are members or a dependent of a member and pursuing an agricultural degree. Application deadline is March 31. ASHINGTON — Defensive driving class, 9 a.m. to 1 p.m. Thursday and Friday at the Farm Bureau office. Cost is $15 for members and $20 for non-

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Page 9 • Monday, March 23, 2015 • FarmWeek

AG WEEK BABY WELCOMED Uriah Kruzan of Br yant received a welcome basket from the Fulton County Farm Bureau Women’s Committee as the first baby born during National Ag Week. His parents, Katelyn and Larry, and big sister, Olivia, 6, joined the celebration March 16 at Graham Hospital in Canton. The basket contained more than 20 items representing agricultural commodities ranging from corn and soybeans to cotton and grapes. A tag accompanying each item included an agriculture statistic. Uriah’s other siblings include Loree and H u n t e r, 1 4 , a n d J a c o b , 1 7 . (Photo by Elaine Stone, Fulton County Farm Bureau manager)

members. Call 327-3081 for reservations by Tuesday. • Legislative breakfast, 8:30 a.m. Saturday at Little Nashville Restaurant. U.S. Rep. John Shimkus, R-Collinsville; Sen. Kyle McCarter, R-Lebanon; Sen. David Luechtefeld, ROkawville; Rep. Charlie Meier, R-Okawville; and Rep. Terri Bryant, R-Murphysboro, will provide comments from their respective offices and answer questions. Call 327-3081 for reservations by Tuesday.

• Foundation scholarship applications are available at the Farm Bureau office. Call the Farm Bureau office at 3273081 for scholarship details and eligibility requirements. Application deadline is March 31. HITE — Concealed carry certification class for members, 8 a.m. to 6 p.m. Friday and Saturday at the Farm Bureau office. Cost is $200 plus ammunition. Mike and Valinda Rowe will

instruct. Call 382-8512 to register by Thursday. ILLIAMSON — Nutrient management workshop, 6 p.m. March 31 at Southern FS. Call 993-2609 for reservations by Friday. OODFORD — Young Leader meeting, 6:30 p.m. Thursday at the Farm Bureau building. Ryan Whitehouse, IFB associate director of national legislation and policy development, will speak.

FarmWeek • Page 10 • Monday, March 23, 2015

Meteorologist foresees favorable planting weather What’s up with oil prices? BY DANIEL GRANT FarmWeek

Farmers itching to get back in their fields could get that chance sooner rather than later. Bryce Anderson, DTN senior ag meteorologist, anticipates weather conditions this spring favor a good start to the growing season in much of the Midwest. Spring officially began Friday. “We’re looking at a mostly favorable scenario for spring planting,” Anderson said last week during a DTN webinar. “We’re just on the edge of a lot of fieldwork that will be going on.” The cold and active weather pattern that enveloped the Midwest during much of the final month of winter gave way to a high pressure ridge over Canada and the northern U.S. Anderson believes the current weather pattern points to normal to above-normal temperatures in much of the central and eastern Midwest and drier than normal conditions this spring. Accuweather.com predicts

high temperatures in Illinois will range from the mid-40s to the 60s through the end of this month into April. Go to FarmWeekNow. com for the latest planting weather outlook maps for Illinois.

“We’re looking at a pretty mild pattern,” Anderson said. “Precipitation has been less than normal since Oct. 1 (except in the eastern Corn Belt/Tennessee Valley). It will allow soils to warm up a little faster, particularly in the northern Corn Belt.” Precipitation in Illinois from December through February averaged 4.97 inches, 1.85 inches below normal, according to the Illinois State Water Survey. “I think the ground will be able to absorb moisture (this spring),” said Anderson, who noted conditions are abnormally dry in northern Iowa, Wis-

M A R K E T FA C T S

Market Facts no longer appear in FarmWeek. For up-to-theminute livestock market prices, visit FarmWeekNow.com.

consin and Minnesota. “I don’t think we’re looking at longterm delays with wet ground.” The best chance of planting delays due to wet conditions this spring could occur in the southern U.S., according to Anderson. The forecast also appears favorable for the growing season this summer in much of the Midwest. U.S. and Australian weather models currently favor the development of a weak El Nino pattern this spring and summer. If realized, an El Nino pattern typically favors a mild summer with less chance of drought conditions in the Midwest. “That (an El Nino weather pattern) would be a beneficial scenario to yields in the Midwest,” Anderson said. “We don’t look for a real hot summer over much of the Midwest. We’re looking for normal to a little bit below-normal temperatures.” A downside of the forecast includes concerns about a potential lack of precipitation in the northern Corn Belt this growing season. Anderson also doesn’t foresee much relief for drought-ravaged areas in Arizona, California and Nevada possibly until fall.

Not what you think. The sudden collapse of crude oil prices caught virtually all observers by surprise, including GROWMARK Research. But now, seemingly every analyst clamors to give the “obvious” reasons for the fall. Since they didn’t actually know the answer, the analysts initially just pointed to the current headlines: very minor reductions in global gross domestic product (GDP) growth. However, as the months passed and prices continued their steep decline, it became obvious the economic growth argument didn’t make sense and was dropped. Since then, experts have pointed mainly to a supposed reduction in increased crude oil demand expected in 2015. Though usage had been expected to increase by about 1.3 percent, it was then revised to increase by about .5 percent. Thus, a .7 of a percent decrease in expected increased oil usage was held to be responsible for a 50 percent fall in oil prices — even though expected increases and decreases fluctuate by that Kel Kelly much every year. (Keep in mind that supply and demand estimates incorporate impacts from the shale revolution.) Next, falling prices led to a reduction in oil production. This result was simultaneously held to be the cause of oil prices periodically rallying for a day or two within their overall decline. Many observers also tacked on very slight changes in expected crude oil inventories, whose magnitude of both overall size and annual fluctuations is so small that it’s negligible. Clearly, most observers are grasping at straws. What’s really driving crude oil prices is a reduction in the supply of money within the commodity markets. While most economists believe demand is represented by a product’s usage, demand, instead, is the quantity of money spent on the product. The price is the amount spent. The supply of money in the oil market has been reduced by the actions of large Wall Street players, who comprise the vast majority of the crude oil futures market. Wall Street, which also dominates all exchange-traded commodities, and is thus responsible for the fact that exchange-traded commodity prices all move together in unison over time, has been reducing its asset allocation to commodities as a whole since early 2011. But for whatever reason, Wall Street remained invested in oil prices while shedding other commodities. In July 2014, this herd mentality group suddenly began unloading its oil investments. In doing so, the group took its money and reduced demand — and prices — in the oil market by more than half. BY KEL KELLY

Kel Kelly serves as GROWMARK’s economic and market research manager. His email address is kkelly@growmark.com.

Tight cattle supply could ease

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Cattle supplies remain tight so far this year. But that could change in the months ahead, according to Rich Nelson, director of research at Allendale, Inc. “On a seasonal basis, we’re in a transition period from tight supplies into a larger supply,” Nelson told FarmWeek. “The days of the market being bullish on the cash side may not last much longer.” USDA, in its March cattle on feed report last week, pegged the inventory of cattle and calves at 10.658 million head, down 1 percent from a year ago. Meanwhile, placements in feedlots in February (1.523 million head) were down 8 percent and are the fourth-smallest on record since 1996, while marketings of fed cattle last month (1.516 million head) declined 2 percent and are the smallest on record for the month. “The number of placements are a little under the average trade guess, so that does give a slightly positive spin longer term

(for the July-October slaughter period),” Nelson said. “Supplies are still generally tight and will remain so through summer.” The tightness in supplies likely will ease, though. Last week’s slaughter, 518,000, was artificially low due to packers reducing kills and feedlots holding back numbers, Nelson noted. Cattle weights also increased in recent months. — Daniel Grant

USDA in the crosshairs

Even though the hard break in the dollar, and possible shift in its short-term trend, may command a lot of attention the next few weeks, looming USDA reports will be key to direction of grain prices this spring. There has been, and will continue to be, a lot of discussion about the size of plantings this spring. But the grain stocks numbers should not be ignored either. Even though USDA surprised most in the trade with its planting forecasts at the February Outlook Forum, many are still expecting soybean plantings to be significantly higher in 2015. Farm Futures surveyed 1,300 farmers in 41 states regarding their intentions. The results implied 88.34 million acres would be planted to corn, 87.25 million to soybeans and 55.6 million to all classes of wheat. Informa Economics expects 88.54 million acres to be seeded to corn, 87.48 million to soybeans and 55.93 million to wheat. By comparison, USDA analysts projected 89 million acres of corn, 83.5 million soybeans and 55.5 million wheat. Both Farm Futures and Informa numbers fit with trade expectations that have persisted through the winter — less corn and more soybeans. We don’t deny there will be less corn, but we aren’t certain there will be significantly more soybeans. Low prices and low crop insurance guarantees could lead to more of the lower quality land shifted to other uses, if

not abandoned altogether. The combination of low prices and low crop insurance guarantees led to a 5.3 million acre drop in land planted to all crops, declared prevent plant and enrolled as Conservation Reserve Program acreage in 2009. Acreage dropped an additional 2.2 million in 2010. It was little noticed, but the total dropped 2.9 million last year. We wouldn’t be shocked to see it drop another 4 million this year. But it may not all show on this report. Grain stocks are not to be ignored either. March 1 wheat stocks may be the least of a surprise with residual use during the last quarter the biggest unknown. For corn, March 1 stocks offer an insight into how large the unexplained disappearance might be, disappearance embodied by the feed and residual category. Some believe USDA’s 5.3 billion bushel feed and residual forecast might be too large. That’s a 260 million bushel increase from last year’s level. But historically, feed and residual use tends to be high with big crops, and small with small crops, the residual use being the most volatile. With soybeans, demand is known with crush and exports well documented. But the Dec. 1 stocks hinted last year’s crop may have been overestimated. If March 1 stocks validate them, that belief will become more widespread with any expected discrepancy taken off ending stocks forecasts. Ending stocks forecasts have already been eroding since October, last estimated at 385 million bushels. Further reductions would continue to undermine the bearish oversupply argument.

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Corn Strategy

ü2014 crop: Last week’s turn in the dollar, and turn in the corn market, suggest prices might be starting a turn up out of a winter low. We continue to expect better selling opportunities this spring/summer; make only needed sales at this time. If you need to sell, we’d recommend a basis contract to secure cash, leaving pricing open into late spring. Continue to hold 2013 crop for expected long-term improvement. ü2015 crop: Like old crop, the technical picture brightened a little this week, although it may take a while to get an uptrend entrenched. We see no reason to price new crop now. Buy some out-of-the money, new-crop call options to make sales against this spring/summer. vFundamentals: Fundamentally, there wasn’t much to affect the corn market last week. Traders are waiting for the March 31 USDA grain stocks and planting numbers. The hard break in the dollar, in the wake of the Federal Reserve meeting, was the biggest change — one that could represent a change in attitude.

Page 11 • Monday, March 23, 2015 • FarmWeek Cents per bu.

Soybean Strategy

ü2014 crop: The shift in attitude regarding the dollar was the key change that occurred last week. And it may have been enough to secure a late winter low in soybean prices. We still see at least moderate strength into spring/summer with weather and planting guiding the extent of any rebound. Hold off making sales. ü2015 crop: New-crop prices are still taking their lead from old-crop prices. Economics and insurance guarantees should keep acreage from growing. We have no interest in pricing 2015 crop at these levels. vFundamentals: Brazilian harvest is poised to start winding down. It’s thought they are more than 60 percent complete. Producer selling has picked up, but is still behind. Argentine harvest is starting with some now thinking high yields will offset the flood losses. The government raised its forecast to 58 million metric tons. Still, producer sales are being slowed by political/eco-

nomic issues. Our exports are still on pace to meet or exceed the current USDA forecast.

Wheat Strategy

ü2014 crop: New-crop futures may be starting to take the lead and allow for better opportunities to market the remainder of the 2014 crop. ü2015 crop: Hold off making sales while prices appear to be turning up out of a bottom. vFundamentals: Wheat futures are holding up relatively well against the selling pressure that has recently taken hold of corn and soybeans. Fund traders are covering some of their massive short

position now that weather worries are intensifying. The Great Plains continues to suffer from extreme drought, and winter wheat is breaking dormancy under conditions that threaten yield potential. There are also signs that the Southern Plains crop has some damage from winter freezes. Winterkill loss is a concern for Russia where up to 20 percent of the wheat crop could have been affected. Dollar strength may be starting to wane, while exports are still on pace to meet the USDA target. All things considered, buyers are finding value in a Chicago market near $5.

FarmWeek • Page 12 • Monday, March 23, 2015

Health coverage considerations under Affordable Care Act

Many people feel a sense of security and peace of mind knowing health insurance coverage can offset the costs of an unexpected event. Implementation of the Affordable Care Act (ACA) has brought additional considerations into the discussion. Those may include what you need to do about health coverage as an indiDAVID BULL vidual guest columnist and as an employer, and what regulatory reporting requirements you have as an employer. For those who consider farming their primary occupation, the size and scope of the operation matters greatly. Under the Employer Shared Responsibility provisions, if an employer does not offer affordable health coverage that provides a minimum level of coverage to their full-time employees (and their dependents), the employer may be subject to an Employer Shared Responsibility payment (a penalty tax). In general, the Employer Shared Responsibility provision applies to employers who employed an average of at least 50 full-time employees (including full-time equivalent employees) the preceding calendar year. How do you know if your operation is subject to the Employer Shared Responsibility provision? The best answer is to seek professional advice specific to your situation. For the purposes of this article, we will address certain aspects applicable to 2015 that are useful in helping you determine the proper action. One decision you need to

make is where to purchase coverage. If your operation does not include full- or part-time employees, you should determine whether you will purchase individual coverage on or off the Exchange. Whether or not you qualify for cost sharing or subsidies will aid you in this decision. If you do qualify for cost sharing or subsidies, an Exchange purchase is the only way to secure this. With a family of four being able to make $95,400 and still qualify, it is worth your time to explore this option. If you do have employees, the first determination that must take place is how many Full-Time Equivalent Employees (FTEs) you have. Note that it is Full-Time Equivalent Employees and not Full-Time Employees. This is because part-time employees factor into the calculation. An accurate calculation of this will determine if you have any obligation, if you can use the Small Business Health Options Program (SHOP) Marketplace, or must purchase an ACA compliant group health insurance plan. The total number of FTEs will determine your obligations as an employer. For businesses

with fewer than 50 FTEs, there is no current employer mandate and penalties do not apply. One practice used in the past that will no longer provide benefit is direct payment of an

employee’s individual health plan. Businesses no longer are able to deduct this expense. Those employers looking to provide health coverage as a benefit have two choices to consider, which are off the Exchange or the SHOP Exchange. Once again, the size of the business is relevant in which way your business might proceed. The main difference between the two is that one is a direct sale through a carrier (off Exchange) and the other has potential for a tax credit (SHOP) through the federal government. In order to be eligible for the tax credit the following must apply: You have fewer than 25 (FTEs). Your average employee

year in which the Individual Shared Responsibility Mandate will arise. People will be asked for some basic information regarding their insurance when they file their 2014 taxes. The individual shared responsibility provision requires you and each member of your family to do one of the following: Have qualifying health coverage called minimum essential coverage; qualify for a health coverage exemption; or make a shared responsibility payment when you file your 2014 federal income tax return in 2015. For any month (Photo illustration by Cyndi Cook) during the year that you or any of your You offer coverage to your dependents do not have minifull-time employees through mum essential coverage and do the SHOP Exchange. not qualify for a coverage If your operation includes exemption, you will need to 50 to 99 FTEs, 2015 is the make an individual shared final year in which there are responsibility payment with no employer tax penalties for your tax return. For the 2014 not meeting the Employer tax year, this payment is the Shared Responsibility provigreater of a flat amount — $95 sions under the law. — or percentage of household Employers looking to income — 1 percent. extend this benefit to their As you can see, there is employees must choose a group health insurance plan as much to consider this year. The the SHOP Exchange is not an cost of being uninformed can be significant. As changes option at this size. Employers occur this year that will continin this bracket should seek ue to impact you, now is the advice and consider options time to seek information and now. Beginning in 2016, employers with 50 to 99 FTEs have a plan to stay ahead. will have to insure their fullDavid Bull serves as supervisor of time work force or face tax life-health brokerage at COUNpenalties. TRY Financial. This year marks the first

annual wages for 2015 do not exceed $51,600. You pay a uniform percentage (at least 50 percent) of your full-time employees’ premium costs.

California writing chicken and egg story

The state of California has a reputation for leading in many ways — especially in the area of government regulations. Now, it’s bitten off almost more than it can chew. Certainly, the poor will not be chewing on many eggs since the state has more than doubled the price of eggs. A dozen eggs now costs more than $3. One year ago, you could get a dozen for a little more than $1. All of this happens just at the time nutritionists are JOHN raving about how healthy BLOCK eggs are for the diet. California voters did this to themselves. In 2008, they passed a law that required cages housing their laying hens to be much larger. Then, it dawned on the politicians that that kind of costly requirement imposed upon their egg farmers would put

them out of business. Less expensive eggs would be streaming into the state. So in 2010, they passed legislation that would not allow eggs coming into California from other states unless their cages were as big as the California cage standards. The cages have to be twice the size of the industry norm. The cost of new cages can cost $1 million for 25,000 chickens. As you might imagine, some California farmers are giving up on the egg business. California egg production has taken a 25 percent dive since the law passed. Other states are not willing to pay the extra cost to expand their cages. So, California is short on eggs. The poorest consumers pay the price. Here we are talking about free trade agreements with other countries. Do we need to negotiate a free trade agreement between states? Perhaps the California crate law violates the Commerce Clause. States

are not supposed to interfere with interstate trade. All of this costly burden has been pushed upon California consumers by animal rights organizations. They are never satisfied. Editor’s note: The American Farm Bureau Federation recently filed a friend-ofthe-court brief urging the U.S. Court of Appeals for the Ninth Circuit to find six states have standing to challenge California’s egg law. A lower court ruling in October dismissed a lawsuit filed by the states of Alabama, Iowa, Kentucky, Missouri, Nebraska and Oklahoma challenging the new hen cage size restrictions for shell eggs sold in California. John Block, former U.S. agriculture secretary from Gilson in Knox County, serves as a senior policy adviser with Olsson, Frank, Weeda and Terman of Washington, D.C.

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