FarmWeek November 21 2011

ExtEnSiOn facES good and bad times following budget cuts and mergers, the Illinois Farm Bureau board was told last week. .....................2

thE gEnEral aSSEmbly left several issues unresolved, but legislators will be returning to Springfield on Nov. 29 for one day, at least. .........................3

cuba will bE the focus of Illinois Farm Bureau’s 2012 Market Study Tour, which will run either March 12-17 or March 26-31. .....10

Monday, November 21, 2011

Two sections Volume 39, No. 47

Super committee previews farm bill proposals

BY MARTIN ROSS FarmWeek

Periodicals: Time Valued

The congressional “super committee” moved closer last week to pre-Thanksgiving release of a long-term federal deficit reduction plan, agreeing to $23 billion in ag cuts over 10 years and an end to producer direct payments.

The 12-member bipartisan committee previewed an ag spending blueprint which would maintain crop insurance funding and provide a new “shallow loss” revenue safety net designed to improve on the existing Average Crop Revenue Election (ACRE) program by triggering payments at the individual farm level based on actual production history.

The committee’s formal recommendations, expected this week, are to be voted on without amendments by Christmas. Members supported direct payment elimination — a move that by some estimates could offer $4.9 billion in annual savings — as well as the Supplemental Revenue (SURE) standing disaster assistance program created in the 2008 farm bill.

The plan proposes to take

$6 billion from conservation funding, largely by rolling the Conservation Reserve Program back from a current 32 million acres to a possible 25 million acres.

A separate program would offer southern cotton producers currently reliant on direct payments the option of either target price, countercyclical, or new revenue program payments. Dairy producers would be offered the option of margin protection against rising feed costs and voluntary supply management measures.

Senate Ag Committee Chairman Debbie Stabenow (D-Mich.) called the plan, based on House-Senate ag committee input, “something that is very fair for all regions.” Illinois Farm Bureau

President Philip Nelson expressed concern about the consequences of efforts outside the super committee process to devise “a farm bill that’s going to touch all aspects of agriculture.”

That raises concerns about possible new programs that “really don’t work” for southern cotton and rice growers, he said. Differences among regional and commodity interests could spur political discord in a conventional farm bill debate next session, Nelson warned.

“My concern is that if we miss this window of getting this proposal from the super committee, we’re going to deal with the farm bill in an election year, which could spell some troubles in the months

ahead,” he said.

The super committee supported a new revenue safety net program for corn, soybeans, and wheat that purportedly would provide loss coverage starting at 85 to 87 percent of a producer’s five-year Olympic average revenue.

Nelson said he was pleased by proposals to take production triggers “all the way back to the farm.” Ag groups propose moving from state ACRE triggers to a county or crop reporting district level to accurately reflect losses by farmers nationwide.

Meanwhile, Ag Secretary Tom Vilsack rejected suggestions that farm policy is moving away from World Trade Organization (WTO) guidelines for non-“trade-distort-

ing” ag supports.

Direct payments have been viewed as the U.S.’ most WTOfriendly supports, but he noted current revenue protection proposals more heavily emphasize farm use of “risk management tools” over price support.

Ag Committee leaders reported they would attempt to address WTO questions, and Vilsack said U.S. policymakers “fully expect to be in compliance” with WTO rules.

“We need to make sure we have an adequate safety net in place that’s consistent with international responsibilities but that reflects the fact that we have disasters through no fault of producers and that that puts them in a very difficult situation,” he told reporters last week.

Nelson testifies: Regulatory overreach bad business Overregulation is simply bad business, Illinois Farm Bureau President Philip Nelson warned lawmakers last week, citing fears of potential federal intervention from the Mississippi River bottoms to Illinois roads and rooftops.

As lawmakers continued efforts to block expansion of U.S. Environmental Protection Agency (EPA) National Pollutant Discharge Elimination System (NPDES) pesticide general permit requirements and possible “farm dust” controls, Nelson testified before a House Small Business Committee panel on the growing “potential for regulatory creep.”

EPA nutrient regulations for the eastern Chesapeake Bay raise concerns about potential Midwest restrictions under the federal Clean Water Act — the basis for NPDES permits.

Future ag activities hinge on interpretation of federally regulated “discharges,” a term that broadly interpreted could encompass “a rain event coming off the roof of a livestock facility that ends up in a ditch,” Nelson advised.

“Onerous regulations are impacting the business community today,” he stressed prior to testifying. “We have every reason to believe the Environmental Protection Agency has

the Mississippi River watershed on its radar. If they don’t get what they are doing in the Chesapeake Bay right, we’re going to be fighting the same battles as it relates to the Mis-

sissippi River Basin.”

Nelson told the legislators the new NPDES pesticide permit “should have never gone into effect.” The Federal Insecticide, Fungicide, and Rodenticide Act has covered pesticide use “very effectively since 1947,” he said.

New requirements nationwide will cost $50 million and 1 million-plus hours per year to implement, EPA estimates.

Given Illinois’ limited funds, “spending precious resources for this purpose represents neither good public policy nor a wise use of taxpayer dollars,” Nelson argued.

Sen. Pat Roberts (R-Kan.) is See Overreach, page 5

Illinois Farm Bureau President Philip Nelson testifies on regulatory issues before the U.S. House Small Business Subcommittee on Agriculture, Energy, and Trade. Looking on is Leonard Felix, president of Oklahomabased Olathe Spray Service Inc., who testified on behalf of the National Agricultural Aviation Association. Felix told lawmakers “agriculture doesn’t need the added burden, states don’t want the added expense ... and a majority in Congress have voiced their opposition” to the new National Pollutant Discharge Elimination System (NPDES) pesticide general permit. (Photo courtesy of American Farm Bureau Federation)

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FarmWeek Page 2 Monday, November 21, 2011

Quick Takes TAX REBOOT? — Farm families could face a renewed battle against turning back the clock with new proposals to reverse recent federal estate tax reforms. The group United for a Fair Economy and Responsible Wealth last week applauded the introduction of the Sensible Estate Tax Act

by U.S. Jim McDermott (D-Wash.), a House Ways and Means Committee member.

The proposal would return estate tax rates back to pre2002 levels, with a maximum 55 percent rate and a $1 million individual exemption, both indexed to inflation beginning in 2000. Illinois Farm Bureau helped lead a successful fight for a $5 million exemption and a 35 percent rate through 2012.

Meanwhile, the American Family Business Institute (AFBI), a trade group representing family business owners and farmers, led 29 organizations in a letter to members of the congressional deficit super committee urging them to leave any estate tax increases “completely off the table.”

“We urge you to seek ways to reduce or eliminate estate and gift taxes, and to reject measures that will further burden family businesses and farms when considering how to reduce the nation’s deficit,” they said.

TAX REPEAL — Meanwhile, the House last week passed legislation to repeal a 3 percent federal withholding tax that would have been withheld from many USDA commodity and conservation payments, such as dairy support and conservation programs. The bill already had cleared the Senate, and it now goes to President Obama, who is expected to sign it into law.

“The resounding House vote of 422-0 demonstrates that Americans have had enough of extraneous taxes,” American Farm Bureau President Bob Stallman said. “Without passage of this important legislation, the new 3 percent withholding tax, which was scheduled to begin in 2013, would have unnecessarily hit farmers hard in the pocketbook.

“The tax would also have applied to Medicare payments.

Because rural medical facilities and doctors see a higher percentage of Medicare patients, it would have been harder to maintain rural health facilities and attract doctors to rural areas,” he said.

LABOR COMMENT EXTENSION — American Farm Bureau Federation (AFBF) is seeking a second extension of public comments on new U.S. Department of Labor (DOL) ag “child labor” proposals. The current comment period, extended to allow farmers to complete harvest before offering input, ends Dec. 1.

AFBF is concerned about “severely limit the ability of children under the age of 16 to work on the nation’s farms and ranches.” The plan could prohibit any youth under 16 from operating “power-driven equipment.” “The way they define power-driven is anything other than hand or foot power,” AFBF regulatory specialist Paul Schlegel said.

As of last week, the DOL had fielded more than 1,500 comments. According to Schlegel, the majority of the comments support Farm Bureau’s position. “So far, it looks like we’re having some impact on the (comment) docket,” he told FarmWeek. “We’re trying to encourage people to get their stories in there.”

Comments may be directed electronically via the website {www.regulations.gov}.

(ISSN0197-6680) Vol. 39 No. 47 November 21, 2011 Dedicated to improving the profitability of farming, and a higher quality of life for Illinois farmers.

FarmWeek is produced by the Illinois Farm Bureau.

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STATE

Extension faces good, bad times following budget cuts, mergers

BY KAY SHIPMAN FarmWeek

A leaner University of Illinois Extension continues to teach the public using research-based information, but does so with fewer people and a smaller budget, the head of Extension told the Illinois Farm Bureau board last week.

Bob Hoeft, the U of I’s interim associate dean for Extension and outreach, reported Extension received a 22 percent reduction in state funding, but only a 2 percent loss in county Bob Hoeft government funding. “We know we’re going to experience more cuts this year from counties,” Hoeft added.

Today Extension has 27 multi-county units, down from 76, and 108 local offices, down from 116.

However, the consolidations have had some positive impacts, according to Hoeft.

“This merger has saved some units. We had seven counties in financial stress and they were close to not being able to stay open,” Hoeft said. “Now it’s down to two (units) and they have fairly minor debt loads.”

The consolidations, along with some renegotiated office rents, have reduced overall rent costs by 25 percent, Hoeft said.

Most of the savings came from the clos-

ing of Extension center offices around the state.

Another positive outcome from the mergers is the distribution of youth development/4-H staff to each unit.

“For the first time ever, we have a youth development person in every unit, and before not every unit had a 4-H person,” Hoeft explained.

However the county-office mergers also increased workloads for staff, and Hoeft admitted some youth educators scrambled “to keep more than one fair running —some at the same time.”

One major problem is the loss of state Extension specialists based on the Urbana campus. In 1986, Extension had “92 people on campus putting together programs that go out to the counties. Today we’re down to 15, and all of them are in crop science and animal science,” Hoeft said.

In comparison, a North Carolina colleague told Hoeft his university has 27 campus specialists in crop and soil sciences alone.

“We have to have it (campus specialists).

We can’t continue to exist without a base on campus,” Hoeft told the IFB board. He questioned the value of research reports that are published and shelved instead of being distributed and applied.

“The only value is if the information is put behind the tractor or put into that animal,” Hoeft said.

FARMERS FEED US

STAFF Editor Dave McClelland (dmcclelland@ilfb.org) Legislative Affairs Editor Kay Shipman (kayship@ilfb.org) Agricultural Affairs Editor Martin Ross (mross@ilfb.org) Senior Commodities Editor Daniel Grant (dgrant@ilfb.org) Editorial Assistant Linda Goltz (Lgoltz@ilfb.org) Business Production Manager Bob Standard (bstandard@ilfb.org) Advertising Sales Manager

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

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

Dennis Vercler Advertising Sales Representatives

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

Mary Dean of Jacksonville, right, receives one of her prizes as a runner-up in the Farmers Feed US Sweepstakes, sponsored by Illinois Farm Families, of which Illinois Farm Bureau is a member. Diane Handley, left, manager of the Illinois Specialty Growers, presents a basket of Illinois products donated by the specialty growers. Carla Mudd, IFB consumer communications manager, center, looks on. Dean also received a stay at the Peace of Earth Lodge in Rushville, sponsored by IFB. She was one of 135,000 Illinois consumers who registered online for prizes including two grand prizes of free groceries for a year, each valued at $5,000. Dean was awarded her prize Friday at Jefferies Orchard, Springfield. The two grand prize winners live in Chicago and Peoria Heights.

(Photo by Ken Kashian)

Page 3 Monday, November 21, 2011 FarmWeek

STATE

Implement dealer: Tax proposal ‘detrimental’ to ag

BY KAY SHIPMAN FarmWeek

A Central Illinois implement dealer last week outlined the potential harm that would occur to his and other businesses if the General Assembly passes a tax package that includes decoupling from the 2011 federal bonus depreciation schedule and makes it retroactive to Jan. 1, 2011.

The Illinois House Revenue Committee heard testimony from several small business owners, including Derek Stevens, co-owner of Stevens Imple-

ment Co. in Petersburg.

“To change tax laws retroactively at this time would be detrimental to businesses that have made these investments in good faith,” Stevens told legislators.

The House is considering a tax package that includes reducing the tax burden for the CME Group Inc., the parent company of the Chicago Mercantile Exchange and the Chicago Board of Trade. There have been veiled threats that the CME might leave Illinois unless it receives tax relief.

Stevens said the federal bonus depreciation is a major reason his business increased 10 percent this year.

Farmers consider the tax implications of major purchases, such as a $300,000 piece of equipment, and plan seven to 12 months in advance before buying equipment or buildings, he explained.

Making the decoupling retroactive to Jan. 1, 2011, would hurt farmers who made the purchases this year, Stevens said. He speculated future sales would decrease if decoupling occurs.

Illinois Farm Bureau opposes the

House task force grappling with rural emergency issues Rural emergency medical services (EMS) are struggling to provide care while facing funding, staffing, and regulatory challenges, members of a state House task force heard last week.

“The EMS providers we rely on to handle life-or-death situations are finding themselves on life support,” Lt. Gov. Sheila Simon said during a hearing last week in Galesburg.

The 25-member Illinois House Task Force on Emergency Medical Services is co-chaired by Reps. Don Moffitt (R-Gilson) and Lisa Dugan (D-Bradley). Members are gathering information at hearings through Dec. 6 and will report their recommendations to the governor and General Assembly by the end of the year.

“Consider the importance of a timely response as well as skill level. Time is critical when responding to emergency situations. If too much time passes, it doesn’t matter how highly trained the personnel are, you ... could die,” Doug Wilson, farmer and president of the Gridley Fire Protection District Board, said during a Bloomington hearing last week.

One major challenge may be required increases in training for EMS providers and more stringent requirements for services.

“Illinois Farm Bureau supports quality training, but many of our members feel the current level of training is sufficient,” said Brenda Matherly, IFB assistant director of local government. A Farm Bureau representative will testify at upcoming hearings, she said.

“The state is following a national scope of changes that forces a lot of regulations on Illinois and tries to squeeze the state into a box. That box doesn’t fit our rural providers, many of whom rely on volunteers with full-time jobs,” Matherly noted.

Wilson agreed: “The state doesn’t have to follow the federal one-size-fits-all focus.”

As one possible solution, Simon encouraged expansion of online training for EMS providers to help communities recruit and retain paid and volunteer staff.

Seven of 11 EMS regions identified by the Illinois Department of Public Health are entirely or partially in rural areas, Simon noted.

Matherly said the state should consider an Ohio law that allows an ambulance to respond with one EMS provider on board while a second EMS provider meets the ambulance at the scene. Currently, Illinois requires two emergency medical technicians to be in a rural ambulance before they respond to an emergency.

At the Bloomington hearing, representatives of fire districts, ambulance services, and hospitals shared similar concerns, according to Wilson.

“There is a lot more unity no matter (the medical) unit or size of community. We face similar challenges with bureaucracy,” he said.

On a related front, Simon is forming an EMS subcommittee of the Governor’s Rural Affairs Council. Her goal is to improve emergency services for rural residents.

The co-chairs are Dottie Miles, executive director of Jackson County Ambulance Service, and Greg Scott, EMS coordinator for the Mclean County Area EMS System.

The subcommittee “will bring together a diverse group of volunteers from across rural Illinois with a variety of EMS experience,” Simon said. — Kay Shipman

tax package because of the hardship that would result from the decoupling of the bonus depreciation.

“People made sound investments based on what the law was,” said Kevin Semlow, IFB director of state legislation. “Without the bonus depreciation, they likely would have had to pay higher taxes.”

The House committee did not take any action last week. The General Assembly is scheduled to discuss the House and Senate tax packages when lawmakers return Nov. 29.

IRRIGATION INFORMATION

Mason County farmer Jeff Smith explains how he operates a diesel-powered center pivot irrigation system. Smith, chairman of the Imperial Valley Water Authority, last week explained the area’s sandy soils allow for quick recharge of the Mahomet Aquifer, which extends through the county.

(Photo by Kay Shipman)

Lawmakers leave several issues unresolved Chambers plan Nov. 29 return State legislators discussed — but left unresolved — several major issues during the second part of the fall veto session.

The House and Senate are scheduled to return Nov. 29 to discuss their proposed tax packages and other possible issues.

“The question remains: What will transpire in the extended session?” asked Kevin Semlow, Illinois Farm Bureau director of state legislation. “Some of the issues are known; the outcomes are not.

Leading up to Nov. 29, we have seen a host of hearings on issues.”

The veto session issues including the following: Tenaska energy plant in Christian County: The project, known as the Taylorville Energy Center (TEC), is backed by Tenaska Energy of Nebraska. Proposed legislation

would authorize construction of the plant and would require higher electric rates for both residential and business customers to subsidize the plant construction and operation.

IFB has opposed the legislation as it would directly increase farmers’ costs through higher electric rates and indirectly increase their other expenses because farm suppliers and agribusinesses would pass along higher energy costs.

Although the legislation was defeated in a veto session vote, a procedure was used to allow the bill to be recalled.

Unemployment insurance bailout: The state’s Unemployment Insurance Fund was expected to end 2011 with $2.4 billion in outstanding federal loans to cover the state’s unemployment insurance benefits.

The state would have to pay

4 percent interest on those loans and also faced $1.2 billion in penalties if changes were not made.

Business and organized labor groups met with lawmakers to develop solutions and agreed on proposed legislation.

The resulting amendment to SB 72 passed overwhelmingly in both the House and the Senate.

The legislation will reduce significantly the state’s interest liability by authorizing the state to issue bonds and allow the state to avoid the federal interest and penalties.

The action will save employers more than $400 million in unemployment taxes through 2019.

Employers with no history of layoffs will have reduced unemployment taxes. Employees will experience no benefit reductions through 2019. — Kay Shipman

FarmWeek Page 4 Monday, November 21, 2011

government

Vehicle fuel standards challenge for ethanol?

BY MARTIN ROSS FarmWeek

Proposed fuel “economy” standards may challenge the ethanol industry, but expanded choice at the pump and adherence to biofuels mandates should pave the way for higherefficiency blends and improved consumer economy.

So says Stephanie Dreyer, a spokesman with biofuels advocacy group Growth Energy.

Dreyer told FarmWeek a new plan to improve fuel efficiency and curb greenhouse gas (GHG) emissions in model year 2017-2025 cars and light trucks “does little to encourage future production of flex-fuel vehicles.”

The proposal, unveiled by Transportation Secretary Ray LaHood and U.S. Environmental Protection Agency Administrator Lisa Jackson, aims to boost fuel efficiency to 54.5 miles per gallon, reduce annual GHG emissions by 2 billion metric tons, and reduce oil consumption by nearly 4 mil-

lion barrels a day.

Dreyer sees expanded ethanol use as key to achieving the latter two goals. And although standard ethanol blends have exhibited a slip in mileage, she believes biofuels market expansion also will help address fuel economy factors.

Beyond those considerations, diversified fuel choice offers greater domestic jobs potential and is crucial to meeting biofuels targets under the federal Renewable Fuels Standard (RFS2).

“We’ll continue to work with the administration and other vested parties to give consumers the ability to choose their fuel to reduce our nation’s fossil fuel dependence and help reach (RFS2) goals,” she said.

“The United States can and should remain committed to the goal of achieving 36 billion gallons of renewable fuel by 2022, and the best way to ensure the use of this fuel, reduce our dependence on foreign oil, and improve our air

Ag energy cuts a ‘step back’?

“Green” jobs and next-generation biofuels development will suffer under federal ag energy spending cuts, renewable energy advocates warned last week.

Working to beat expiration of a continuing budget resolution last Friday, U.S. House and Senate conferees agreed to cut energy spending by more than 60 percent in fiscal 2012.

The Biomass Crop Assistance Program (BCAP) sustained an 85 percent reduction from the administration’s fiscal 2011 spending cap under the conference package. Also targeted is the Rural Energy for America Program (REAP), slated for a 64 percent cut to a $25.4 million spending cap in 2012.

That means a loss of 750 new jobs, “based on established job creation rates for REAP,” according to the Chicago-based Environmental Law and Policy Center. Center legislative director Allen Grosboll argued “this is the wrong time to slash funding for programs that create jobs and rural economic development.”

During a Peoria visit earlier this month, Ag Secretary Tom Vilsack said he is seeking congressional commitment to development of renewable energy. Bioenergy development is “about jobs, but it’s also about reducing the cost of gas,” he said.

“These (fiscal 2012) cuts are a step back from solving America’s jobs and energy challenges,” said Grosboll, who noted the role of ag energy incentives in helping farmers reduce energy costs and spurring renewable investment.

Conferees also agreed to a 62 percent cut in fiscal 2012 spending for the Bioenergy Program for Advanced Biofuels, which provides payments for producers of “advanced biofuels,” excluding corn ethanol. Program authorization drops from a current $105 million to $65 million.

REAP provides grants and loan guarantees for producers and rural businesses to improve energy efficiency and install renewable energy systems. Over the past 2 1/2 years, USDA has “invested” in 5,500 REAP projects tapping wind and solar energy, biofuels, and other sources, Vilsack reported.

BCAP offers cost-share funding to establish and buy new energy crops. It was funded in the 2008 farm bill with “such sums as are necessary.” The administration capped fiscal 2011 spending at $112 million.

Energy cuts come as USDA prepares to partner with the Department of Energy and the Navy to create tank-ready military “drop-in” fuels from non-food feedstocks of the type BCAP was designed to promote. Vilsack said the venture eventually could help airlines reduce greenhouse gas emissions and “create new economic opportunity.”

“That’s why it’s important that the farm bill contain a rural development and an energy title,” the secretary said. — Martin Ross

quality, is to continue to produce flex-fuel vehicles.”

E85 blends used in flex-fuel vehicles have offered a continued pump savings over conventional gas: The average E85 price nationwide was $3.07 last Thursday, vs. $3.40 for gasoline. “Even if you’re losing miles, you’re gaining dollars,” Dreyer stressed.

Beyond promoting flex-fuel vehicle production, Growth Energy has urged continued federal support for retail “blender pumps” that accommodate a variety of vehicles and make “cheap fuel” more available to flex-fuel drivers.

While Congress has slated major cuts in key bioenergy programs (see accompanying story), Growth Energy helped defeat a proposal to cap Rural Energy for America Program (REAP) aimed at placing 10,000 blender pumps over the next five years.

Blender pumps also set the stage for future standard automotive blend changes. Ongoing research indicates “mid-level” ethanol blends — E20 to E40 — deliver significantly improved per-gallon mileage, and E30 has been identified as a “sweet spot” where price and mileage converge, Dreyer said.

Growth Energy thus has continued to push E15 adoption at the pump as a step toward bringing higher blends into the mix, despite resistance from some petroleum and auto

As federal agencies look to improve U.S. vehicle fuel economy and reduce greenhouse gas (GHG) emissions, here’s how ethanol shapes up environmentally against conventional gasoline, according to the U.S. Department of Energy.

interests. Dreyer is hopeful E15 will be introduced to retail pumps by the end of the year, “if not in early 2012.”

Growth Energy is pushing to change the official U.S. industry fuel standard from E10 to blends up to E15 — a step that will help speed adoption by individual states.

The NASCAR racing circuit has played a high-profile role in promoting E15 use and performance in partnership with

Growth Energy. NASCAR officials reportedly are mulling the possibility of moving to E20 blends similar to those used widely and successfully in Brazil.

“That would only help our case,” Dreyer said. “Already, we’ve proven that if Jimmy Johnson can run E15, you and I can run E15. Moving to 20 percent would help us even more in educating consumers on higher-level blends.”

Plan would fund highway work, boost energy reserves A proposal by U.S. House Republicans would attempt to address both pressing nationwide infrastructure needs while strengthening domestic energy security and, ideally, fueling long-delayed federal highway debate.

Last week, key Republicans suggested expanding offshore oil and natural gas drilling and shale oil extraction and opening part of the Arctic National Wildlife Refuge for exploratory drilling.

Resulting federal royalties would be used to fund bridge and highway repairs and construction.

The measure, supported by House Speaker John Boehner (R-Ohio), comes as lawmakers mull ways to replenish inadequate reserves in the federal Highway Trust Fund. A lack of trust fund revenues needed to match federal project funds has delayed consideration of surface transportation measures deemed crucial to expanded ag freight/export movement.

But President Obama now touts infrastructure improvement as a job stimulator, and in a Springfield news conference with Illinois union leaders, Peoria Republican Rep. Aaron Schock stressed the need for added highway “revenue streams.” Schock doubts lawmakers will raise fuel taxes “in an economic downturn,” but he suggested offshore leasing rights could generate enough revenue “to do a significant highway bill.”

“We’re very heartened by all this talk,” Trans-

portation for Illinois Coalition consultant Linda Wheeler told FarmWeek last week. Reportedly, even at current federal funding levels, one in four miles of Illinois interstates could fall into “unacceptable condition” within six years, she related.

She warns extensive repairs at that point could cost three or four times more than the funding necessary for “timely” short-term repairs — and likely not last as long.

That’s in addition to increased vehicle maintenance and repair costs for motorists traveling rough roads, not to mention exponentially higher costs for commercial freight haulers that likely would be passed on to the consumer.

Meanwhile, the 18.4-cent-per-gallon federal gasoline tax hasn’t been raised since 1993, even with a steady rise in gas prices and inflation.

Wheeler noted the “purchasing power” of that 18.4 cents relative to highway construction and maintenance has dropped significantly.

Meanwhile, higher gas prices have led to reduced motorist travel and use of more fuel-efficient vehicles and thus lower trust fund revenues, she said.

“If we had to go on with the current revenue in the highway trust fund, and we couldn’t enhance it, we would be looking at cuts of more than 30 percent of today’s federal funding level for the highway and transit programs in this country,” she said. — Martin Ross

Page 5 Monday, November 21, 2011 FarmWeek

risk management

Bracing for the blitz: When to pull the trigger

BY MARTIN ROSS FarmWeek

Economist David Kohl believes the best time to plan for hungrier times is on a full stomach.

Kohl’s key counsel for farmers facing potentially uncertain times: “While you’re profitable, have a profit plan.” The Virginia Tech professor emeritus has devised a “60-30-10 rule” for putting farm profits to work.

Kohl recommends farmers apply 60 percent of their profits toward operational efficiencies; 30 percent toward a “working capital reserve” — a “financial shock absorber” that allows expansion or land purchases during lean times; and 10 percent as the producer sees fit to ensure a “sustainable life.”

He also stressed the need for a “balanced” risk management strategy including

“offense, defense, and special teams” — respectively, revenue risk management aimed at ensuring solid operational margins, input cost management, and analysis of potential interest rate vulnerability.

Wells Fargo Bank ag economist and Senior Vice President Michael Swanson echoes Kohl’s gridiron analogy.

“We used to think $3.75 corn would be a good deal, but when you have $550 rents in addition to input costs, maybe that won’t cover it any more,” Swanson told FarmWeek. “We’re in a new situation. If $3.75 corn is possible again, what are you doing to take care of that possibility?

A lot of good planning is about what you do when you get blitzed.

“As you stack those $20 bills on that acre, what other action are you taking to balance off that risk? You committed to

Ag credit picture sunny; storm clouds gathering?

Farming continues to reign as the “bright spot” for U.S. bankers, but given an uncertain global economic forecast, a rural banking specialist suggests producers may want to carefully “make hay while the sun shines.”

John Blanchfield, senior vice president with the American Bankers Association’s Center for Agricultural and Rural Banking, sees a current “golden era in agriculture.” Farm net cash income generally has risen 25 percent over 2010, and bankers across the U.S. are reporting ag conditions that are “some of the best they’ve seen in their entire careers,” Blanchfield told FarmWeek.

Right now, “banks are looking for farm loans,” given abundant producer working capital and cash, he related.

“I’ve never seen ag bankers more optimistic and excited about what they do,” he said. “In the banking structure, ag bankers are usually somewhere in the middle. Now they’re king of the hill, because they’re financing one of the best-performing asset classes in the whole U.S. economy.”

That optimism is reflected throughout the ag finance community. CoBank, one of the nation’s major Farm Credit lenders, reported third quarter net income was up 29 percent over the third quarter of 2010. Net interest income for the quarter was $252 million, compared with $226.3 million a year ago, with average loan volume at $47.6 billion vs. $44.5 billion for the same period in 2010.

CoBank officials credit growth in its agribusiness portfolio as a primary driver of stronger performance throughout 2011. High corn, wheat, and soybean prices have resulted in increased borrowing from co-ops, they reported.

But amid high ag prosperity, a massive federal deficit, and lingering pain in the non-ag economy, Blanchfield sees a recipe for “very volatile times.” The farm bill could become a casualty of deficit-driven policy development: A revised farm program that fails to anticipate an eventual ag downturn “could increase lending risk,” hampering credit availability or boosting the price of credit, he warned.

That’s not to mention the impact of “the performance of the world economy” on U.S. markets and thus farm economics, Blanchfield said.

“It appears the Europeans cannot get their (economic) act together, and so there’s a great deal of concern not just in Washington but in Main Street America,” he said.

“If you’re financing agriculture, you’re part of a global industry. If there is a crackup in Europe, that’s going to be very bad for U.S. agriculture.

“It’s a confusing world, and you’re out there driving your tractor in Central Illinois, trying to figure out what to do. I think it’s the basics: Hedge your price risk, hedge your interest rate risk, don’t go crazy buying land.” — Martin Ross

$500 cash rents in an environment with $6 opportunity.

“Take it, but don’t wait for that $3.75 corn to materialize in the same (cost) environment. It’s about that balancing of risk and opportunity and being willing to pull that trigger whenever you commit to a major expense.”

Kohl thus urges farmers to schedule a pre-season huddle with their lender, arguing “it’s important in this global environment that you have another set of eyes on the books.”

At the same time, he cites the “50 percent rule” for grain and other row-crop producers.

If a farm’s debt-to-asset ratio rises above 50 percent, “you’re at a level of debt that’s going to require superior management,” he warned.

Finally, Kohl sees “scenario testing” as key to the game plan. Where in simpler times he advised farmers to anticipate best-case, average-case, and worst-case production/economic probabilities, he suggests five wider-ranging scenarios may be necessary today to cover all the bases.

“It’s not average risks that get you into trouble — it’s the tail risk, the deviation,” Kohl noted. “Go back to the ’70s — the Russian wheat embargo, (then-Fed Chairman) Paul

Overreach

Volker raising interest rates because he wanted to curb inflation. That was out on the tail, and it threw us into a farm recession that lasted five to seven years.”

Continued from page 1 pushing legislation to stay EPA’s hand, but Senate Environment Committee Chairman Barbara Boxer (D-Calif.) “will not let it go,” American Farm Bureau Federation regulatory specialist Paul Schlegel reported. A proposed two-year regulatory delay stalled after Boxer insisted on attaching a study addressing the permit issue.

“I don’t think Roberts has given up, but at the moment, I don’t know if we see a pathway to getting this thing done,” Schlegel told FarmWeek. “Boxer is pretty intractable.”

Nelson sees “good reason to believe” NPDES pesticide regulations could be expanded to include “routine” crop applications, “if we look at the history of similar rules that begin innocuously and later expand exponentially.”

Environmentalist lawsuits have spurred more stringent regulatory proposals. Noting suits against Illinois farmers for “discharges” at livestock facilities still being built, he suggested the NPDES permit “opens the door to new legal challenges that are financially and emotionally draining.”

Meanwhile, a bill in the House Energy and Commerce Committee would block possible EPA dust rules that could impact crop/livestock activity or even rural transportation.

EPA Administrator Lisa Jackson dismissed the idea of new “coarse particulate” rules. “The administrator’s words don’t instill tremendous confidence in farmers,” Nelson nonetheless told lawmakers. — Martin Ross

FarmWeek Page 6 Monday, November 21, 2011

livestock

Revised GIPSA rules may ease swine, cattle sector burdens Little impact seen for Illinois

BY DANIEL GRANT FarmWeek

USDA this month sent a revised version of new Grain Inspection, Packers, and Stockyard Administration (GIPSA) rules to the White House Office of Management and Budget (OMB) that is expected to have a minimal impact on most livestock producers in Illinois.

The new rules — as currently written — would have little impact on the marketing of cattle and hogs compared to previous proposals. OMB has 45 days to review the rules after which time they would be published in the Federal

Register and implemented following 60 days.

Most of the rules USDA forwarded to OMB are focused on the production and marketing of poultry. Those provisions relate to the delivery of birds, additional capital investment criteria, and breach of contract and arbitration.

The final rule submitted to OMB also would require the submission of sample swine and poultry contracts.

However, USDA removed from the new GIPSA rules previous proposals to ban packerto-packer sales, restrict multiple packer buyer affiliations, and require additional records to justify prices paid. Those rules, if left intact, would have changed business practices throughout the livestock sector.

The new GIPSA rules originally were designed to reduce packers’ influence in the market.

rather than forward,” said Jeff Beasley, a beef producer from Creal Springs and president of the Illinois Beef Association.

tive injury reportedly remain a concern for the beef industry.

“We’re cautiously optimistic

‘ I was concerned (proposed rules) would take the industry backward rather than forward.’

— Jeff Beasley Illinois Beef Association president

But many meatpackers and some producer groups believed the rule proposals went too far. Some producers suggested the rules would have eliminated quality premiums from the market.

“I was concerned it would take the industry backward

“I also was concerned about the vagueness of the rules and not knowing for certain what would happen.”

The 2008 farm bill requires USDA to define “undue preference” and “unfair practices.” These definitions and language related to competi-

the (new GIPSA rule) is going to have a minimal, if any, impact on beef producers,” Beasley said. “I prefer the government just provide oversight but stay out of the marketplace.”

For information, visit the website {www.gipsa.usda.gov}.

Cattle market may have peaked for 2011 — analyst

BY DANIEL GRANT FarmWeek

The beef market received quite a jolt recently when Walmart announced it will stock all 3,800 of its U.S. stores with Choice grade beef.

The largest retail grocer in the country traditionally sold only Select grade beef but decided to upgrade its meat department in response to customer demand.

The Choice-Select price spread quickly jumped to more than $17.

“A company the size of Walmart going from Select to Choice really creates a big shift in the market,” said Dale Durchholz, AgriVisor senior market analyst. “It really drove Choice prices upward” to a new yearly high.

Overall, cash fed cattle prices last week topped out at a record-high $127 per hundredweight. Feeder cattle and calf prices this fall also posted yearly highs.

But higher prices could soften demand at a time when

there’s no shortage of cattle on than what people expected to quarters were 27 percent highfeed. USDA on Friday project- see,” Durchholz said of the er compared to the same time ed cattle on feed in a year ago. the U.S. as of Nov. However, a World ‘Now the question dogging the Trade Organization 1 totaled 11.9 million head, up 4 per- market is will exports hold up (WTO) ruling last week cent from last year. with higher prices and a stronger added some negativity Marketings of to the market. dollar.’ fed cattle also were The WTO deter— Dale Durchholz up (3 percent) and mined U.S. labeling AgriVisor analyst totaled 1.79 million rules that require the head while placedisclosure of the counlatest cattle on feed report. ments in feedlots in October try of origin are discriminatoThe analyst at one time this ry. dipped 1 percent to 2.49 milfall projected the cattle market lion head.

Canada and Mexico initiated could reach as high as $130 but the dispute in December 2008.

“It wasn’t a lot different now believes the recent peak “With this (cattle on feed) of $127 could be the high for report and with the WTO rulthe year. ing, we may have put in at least “We’ve seen quite a drive a temporary peak (for cattle upward (in beef and cattle prices), Durchholz said. “I see prices),” he said. “Now the cattle getting somewhat overquestion dogging the market is priced relative to pork and will exports hold up with high- broilers.” er prices and a stronger dolCattle prices typically soften lar.” before Thanksgiving, when the Beef exports have been a recent high was made, and key supportive factor of cattle strengthen in December. This prices all year. U.S. beef year it could be just the oppoexports through the first three site.

Page 7 Monday, November 21, 2011 FarmWeek

commodities

Co-products catching up to corn in price

BY DANIEL GRANT FarmWeek

The price of many co-products, such as distillers dried grains (DDGs), has gone up in recent months.

But livestock feeders who aren’t in a position to own grain still should search for products to replace corn in feed rations,

according to Chris Hurt, Purdue University ag economist.

The corn supply likely will remain tight through the first

FarmWeekNow.com Go to FarmWeekNow.com to check out the latest prices on corn co-products across Illinois.

Soybean planting in Brazil off to fast start

BY PHIL CORZINE

The major production areas in Brazil are already well into the planting of the 2011-2012 soybean crop. Reports out of the leading state of Mato Grosso indicate planting there is moving along at an above average pace.

On my way to our Tocantins farms last week, I road-surveyed northern Goias and confirmed that this region also is ahead of normal. I saw lots of fields with soybeans already 3 to 6 inches in height.

The fast start indicates that yield potential on soybeans will not be reduced by planting date and that both area and expected productivity for second-crop corn will be significantly higher this year.

The earlier planting, combined with above-norPhil Corzine mal rainfall in November, also is setting the crop up for some significant infestations of rust. Time will tell on that.

At the north end of the production belt, Tocantins always starts planting later, but excessive rains have slowed progress there, and we just got going two weeks ago. We are planting 250 acres of corn and 1,235 acres of soybeans on our company’s farms near Araguacu.

We rented 1,730 acres at a farm 80 miles to our north for seven years for $70 per acre. In the past 45 days we applied 900 pounds of lime per acre and tilled it three times.

Now that farm, which was a cattle pasture on Sept. 1, is nearly ready for soybeans. We also have crop-share leases with two other farmers on an additional 1,900 acres, so in total, we are growing just more than 5,000 acres of soybeans this year in Tocantins.

The bottom line for this first report is that while the northern regions are having some delays, the soybean crop is off to an early and fast start in the major production areas, with no major problems as of yet.

Phil Corzine is general manager of South American Soy, a global production management and investment company. His e-mail address is pcorzine@agpage.com.

half of 2012, and corn prices are expected to remain volatile and possibly rise again.

“Corn is really high-priced relative to other feed ingredients,” Hurt told FarmWeek.

“And between now and next summer, there probably will be more bullish surprises.”

The season-average price for corn as of this month was at a record high compared to soybeans, based on records dating back to 1960.

“We have to remember we’re terribly short on corn” particularly in the eastern Corn Belt where late planting was more of a problem, Hurt said. “That’s why we have high basis levels.

There is a shortage of corn in the eastern Corn Belt relative to demand.”

The high price of corn has fueled demand for DDGs and other co-products. But a surge in demand has driven up the cost of the once-cheap feed alternatives.

DDGs prices last week ranged from $205 to $250 per ton while soy hulls were as high as $276 per ton. Ton for ton, DDGs last week averaged 96

percent of the price of corn compared to the four-year aver-

hasn’t been milled for human food uses could wind up in

‘We have to remember we’re terribly short on corn.’

— Chris Hurt Purdue University ag economist

age of 87 percent.

“The price of distillers grains is high right now relative to corn prices,” said Hurt, who noted China reportedly has a preference for buying DDGs instead of corn to avoid issues with genetically enhanced grain.

“But hog producers still are looking for any alternative possible to corn.”

A list of co-products providers around the state and contact information is available at the Illinois Beef Association’s website {www.illinoisbeef.com}.

Scroll to “updates” and click on “market information.”

Hurt believes soft red winter wheat grown in states such as Illinois and Indiana that

more feed rations.

The average price for soft red winter wheat a week ago was $5.91 per bushel compared to $6.30 for corn. The discount for soft red wheat was due in part to a surplus of ending stocks.

The soybean market in coming months also could have more breathing room than the corn market as soy exports so far this year are down 36 percent compared to last year. A large South American crop also could take pressure off bean prices.

“We could have lower (crop) prices next year,” Hurt added.

“But it’s way too early to say it’s all over for the corn market.”

FarmWeek Page 8 Monday, November 21, 2011

production

GROWING WITH THE GRAIN Grain co-op expands to meet current, future demand

BY DANIEL GRANT FarmWeek

The late, wet har vest of 2009 was a challenge for far mers and elevator personnel, but it also generated some valuable infor mation for at least one grain cooperative.

for the project due to its location and information gleaned from Topflight’s grain flow study.

“Our goal was to focus on one facility and not have to duplicate assets or capital at four or five locations,” Docherty said. “(The Milmine facility) is in the center of

‘Our goal was to focus on one facility and not have to duplicate assets or capital at four or five locations.’

Topflight not only increased its storage capacity. It also improved its grain-handling efficiencies. The Milmine facility features variablespeed fans, high-speed capacity receiving legs and pits, and new bulk weighing and load-out components.

“We added a lot of automation and technology” and received energy rebates through Ameren, Docherty noted.

The Milmine facility also is located on a Norfolk Southern main rail line and updates were made to railloading capabilities so Topflight now can ship grain from Milmine to Decatur, the Illinois River, the East

Coast, the Southeast, or the export market.

“It expanded our market ability,” Docherty said.

He believes grain-handling ability and marketing will be key to the future as U.S. farmers attempt to boost crop yields to meet growing demand for grain and oilseeds around the world.

This season, however, soybean yields were down about 15 to 17 percent and corn yields were down about 10 to 12 percent, compared to the five-year averages, in Topflight’s territory, Docherty added.

— Scott Docherty Topflight Co-op

Monticello-based Topflight Grain Co-op, which has 10 locations in East-Central Illinois, that year confirmed the need for more storage availability/unloading capacity in its territory.

“We were short on storage vs. average receipts in our territory, so we did a study of grain flows,” Scott Docherty, general manager of Topflight Co-op, told FarmWeek.

“In 2009, the late, wet harvest proved to us if you have openings (to unload grain), farmers would travel another five to seven miles to dump so they could get back to the field.”

Topflight chose GROWMARK Grain Systems to design, build, and update its facility in Milmine (Piatt County).

The Milmine facility was selected

five facilities in Topflight’s territory.

If we expanded there, we could take pressure off four or five other facilities.”

Topflight and GROWMARK in the past year added 875,000 bushels of storage capacity to the Milmine facility. Total capacity at the location, including temporary storage, now is 3.2 million bushels.

Total storage capacity for Topflight’s entire co-op currently totals about 24.5 million bushels.

Most of the grain is produced in Piatt County, but Topflight also draws grain from Champaign, DeWitt, Douglas, Macon, and Moultrie counties.

“We now have a base footprint,” Docherty said. “Our longer-ter m plan is to continue to expand.”

Rick Chestnut, superintendent of Topflight Grain Cooperative’s elevator in Milmine, demonstrates a new gate and fan motor control center at the facility, which allows operators to adjust fan speed and gate openings. Topflight received an energy incentive from Ameren IP for installing the energy-saving equipment.

TopFlight Grain Cooperative recently added about 875,000 bushels of storage to its Milmine facility in Piatt County to handle more grain during harvest and take pressure off neighboring facilities. It also updated its rail line to expand the marketability of grain from the location. (Photo by Ken Kashian)

Page 9 Monday, November 21, 2011 FarmWeek

FarmWeek Page 10 Monday, November 21, 2011

trade

Better deals, export $$ ahead for U.S. farmer?

South Korea FTA faces opposition

BY MARTIN ROSS FarmWeek

Ag Secretary Tom Vilsack reports Asia is a major target for U.S. trade efforts — and export promotion dollars, providing Congress continues its support.

During a tour of Vietnam last week, Vilsack stressed the importance of the Trans-Pacific Partnership (TPP), a proposed trade pact between key Asian and western nations.

He and Vietnamese officials discussed access for U.S. beef and beef, pork, and poultry “offal” (cuts and “waste” products popular in Asia) and “the important role biotechnology will play as we deal with food security issues.”

Vilsack also met with private market “cooperators” who help expand U.S. opportunities within the region, often with federal Market Assistance Program (MAP) and Foreign Market Development (FMD) support.

USDA has announced $213 million in fiscal 2011 MAP/FMD grants aimed at helping 70 ag groups promote U.S. brands or trade policy reforms overseas.

USDA will allocate $29.7 million in FMD cost-share funds to 24 groups involved in activities that protect or improve U.S. markets. The Farm Service Agency will provide $183 million in MAP money to 67 non-profit groups and coops for generic marketing-promotion activities and promotion of branded U.S. products.

Noting population and income growth in Vietnam and neighboring countries, Vilsack told reporters the Asian-Pacific region is “one of U.S. agriculture’s fastest-growing markets.”

American Farm Bureau Federation trade specialist David Salmonsen argues for the U.S.’ “overall engagement” in the TPP on a variety of grounds.

“In some areas, it’s about trying to set up better deals for the future,” Salmonsen told FarmWeek. “We’re working on sanitary-phytosanitary (non-tariff health and safety) issues to try to go beyond what we have in the WTO (World Trade Organization agreement) — to try to make better standards.

“It’s about bringing that region together. But the TPP’s also about growth: Japan’s made

noises about getting in, and now you have Canada and Mexico expressing interest. If this thing goes and grows, trade potential grows in addition to potential to make a good template for future agreements.”

Beyond trade negotiations, funding of market promotion programs will impact ag export potential. Congress has preserved current $200 million MAP and $34.5 million FMD authorizations for fiscal 2012, but prospects for long-term farm bill funding are uncertain as lawmakers await congressional deficit “super committee” proposals.

Vilsack cited a recent study that indicates every dollar of investment leveraged by market development programs yields $35 in added exports. Those programs have been crucial in boosting soybean/soy meal sales in Vietnam, he said.

The U.S. ag trade surplus stands at a record $42.9 billion.

USDA predicts new free trade agreements (FTA) with South Korea, Colombia, and Panama alone will add $2.3 billion more to the farm economy and support 20,000 U.S. jobs.

Ag Secretary Tom Vilsack notes concerns about South Korean ratification of the U.S.-approved Korea FTA, but was confident South Korean President Lee Myung-bak was “working diligently to get his parliament to approve it.”

South Korean critics say the pact could threaten South Korea’s national interests, and opposition party members are attempting to block a vote in the parliament. Opposition is coming from South Korea’s auto industry and farmers, the latter of whom fear a flood of U.S. farm exports.

During a Wednesday teleconference with reporters from Vietnam, Vilsack insisted “we are going to have a free trade arrangement with Korea, and it’s going to be one that’s beneficial for U.S. agriculture.”

And it likely will set the stage for progress with other Asian trade partners. Vilsack said the Vietnamese offal market offers millions in added U.S. trade, but punched home the need for Vietnamese officials to observe “a science- and rules-based system” for meat imports.

“The Korean agreement provides us a roadmap that can be used in encouraging other countries that have had questions or concerns in the past,” Vilsack said. “It’s a roadmap that says we can do this in stages, but the ultimate goal is to have an open market without conditions or restrictions.”

Lee said he will seek to renegotiate a provision that gives foreign investors the right to have international arbitrators hear a dispute in South Korea. He made a rare trip to parliament this week to argue for a vote.

Cuba IFB destination for Market Study Tour Cuba’s growing ag market potential will be the focus of Illinois Farm Bureau’s 2012 Market Study Tour in March.

Tour arrangements have yet to be finalized, but it tentatively will run either March 12-17 or March 26-31.

A maximum of 16 at-large producers will participate in the tour, in addition to selected IFB board members. The tour will include cultural, farm, and business visits, including stops at U.S. and Cuban government agencies in Cuba.

Application materials and background information on Cuba may be found on IFB’s website {www.ilfb.org/getinvolved/know-marketing-and-trade.aspx} or via a link on the site’s home page {www.ilfb.org}. Applications are due to IFB no later than 5 p.m. Dec. 16 (County Farm Bureaus may have an earlier deadline).

Preference will be given applicants from counties that have never sent an individual on a Market Study Tour, and past participants will not be eligible.

Traveling to Cuba is still regulated by the U.S. and Cuban governments. In addition, IFB needs 65 days of lead time after participants are selected for the State Department to process the commercial license under which they will be allowed into the country.

The specific focus of the tour will be on farmers representing products from their business that they or their producer association would like to sell to Cuba, including corn, soybeans, wheat, pork, beef, eggs, dairy, or specialty crops.

All participants must have a passport valid through December 2012 in hand or in process at the date of application. In addition to the tour, participants must attend a mandatory briefing in Bloomington in February, on a date to be determined.

IFB policy supports resumption of normal trading relations with Cuba, including simplification of licensing and shipping requirements for sales to Cuba.

Over the past decade, IFB has lobbied Congress for U.S.-Cuba trade reforms, participated in seminars and working groups on improved ag trade with Cuba in the U.S. and Mexico, and sponsored Illinois farmers in exchanges with Cuba organized by the governor’s office, key agribusinesses, and other ag groups.

IFB Vice President Rich Guebert Jr. participated in a U.S. farm delegation trip to Cuba in 2009.

Page 11 Monday, November 21, 2011 FarmWeek

THE INDUSTRY RECORD-SETTING CAN COMBINE?

In picture at left, John Deere employees and retirees assist personnel from the Chicago architectural firm RTKL in building rows of “corn” in front of the sculpture of a John Deere S-690 combine at Deere’s pavilion in downtown Moline. The sculpture, unveiled to the public last week, is an attempt at a world record and contains 300,000 cans and several bags of food donated by John Deere and delivered by Hy-Vee Food Stores. The combine sculpture is to recognize the role American farmers play in feeding the world this harvest season. The picture at right shows the auger unloading “crop” from the combine’s hopper. The sculpture, which is 60 feet wide, 80 feet long, and 16 feet tall and weighing about 170 tons, will be on display until Dec. 11 when it is dismantled and the food donated to the River Bend Foodbank. (Photos by Cyndi Cook)

Group begins CO2 sequestration demo at Decatur location The Midwest Geological Sequestration Consortium (MGSC) has begun injecting carbon dioxide (CO2) underground in the the nation’s large-scale demonstration of carbon sequestration.

The gas will be stored permanently in Decatur’s Mt. Simon Sandstone more than a mile underground.

MGSC is led by the Illinois State Geological Survey (ISGS) at the University of Illinois. MGSC is one of seven regional partnerships created by the U.S. Department of Energy (DOE) to advance technology for capture and permanent storage of greenhouse gases.

“Establishing long-term, environmentally safe and secure underground CO2 storage is a critical component in achieving successful commercial deployment of carbon capture, utilization, and storage technology,” said Chuck McConnell, chief operating officer for DOE’s office of fossil energy.

Robert Finley, leader of ISGS’s sequestration team, said the analysis of data collected since 2003 indicates the lower Mt. Simon Sandstone has the necessary geological characteristics to be an excellent injection target for safe and effective storage of CO2.

The $96-million Illinois Basin-Decatur Project was funded in 2007. Last week marked the start of the injection of 1 million metric tons of CO2 over the next three years.

The CO2 is being captured from the fermentation process used to produce ethanol at the Archer Daniels Midland Co.’s corn processing complex.

It is compressed into a dense liquid for injection and permanent storage at a depth of 7,000 feet, according to Finley.

The Mt. Simon Sandstone is the thickest and most widespread saline reservoir in the Illinois Basin, which covers twothirds of the state and reaches into western Indiana and western Kentucky.

The estimated CO2 storage capacity of the Mt. Simon is 11 billion to 151 billion metric tons. It is below several layers of shale that are an impermeable cap rock to hold the CO2 in place, Finley noted.

ISGS manages the MGSC project and analyzed the regional geology that led to selection of the Decatur site.

ISGS is conducting one of the most extensive environmental monitoring programs of any sequestration site in the world.

The project is permitted under requirements of both the state and the U.S. Environmental Protection Agencies as the first large demonstration-scale injection of CO2 from a biofuel production facility in the U.S.

FarmWeek Page 12 Monday, November 21, 2011

hAppEnings

U of I sets dates for crop management conferences The latest information on crop production and management issues will be presented at four regional University of Illinois Crop Management Conferences this winter.

The two-day conferences are designed to address an array of topics pertinent to crop production, pest management, and natural resources issues. In addition, they provide a forum for discussion and interaction between participants and university researchers.

A $130 conference registration fee is due one week before each conference. The fee is $150 for late and on-site registration.

Conference agendas and online registration will be available in mid-December.

Dates and locations are:

• Jan. 24-25, Whittington, Gibby’s on the Green Conference Center. For more information, contact Robert Bellm at 618-427-5239 or rcbellm@illinois.edu.

• Jan. 31-Feb. 1, Springfield, Northfield Inn Conference Center. For more information, contact Bellm at 618-427-5239 or rcbellm@illinois.edu.

• Feb. 7-8, Champaign, I-Hotel and Conference Center. For more information, contact Dennis Bowman at 217-244-0851 or ndbowman@illinois.edu.

• Feb. 21-22, Malta, Kishwaukee College Conference Center. For more information, contact Russ Higgins at 815-274-1343 or rahiggin@illinois.edu.

DATEBOOK Nov. 29 Market Ready workshop, Franklin County Extension office, Benton.

Dec. 3-6 Illinois Farm Bureau annual meeting, Palmer House, Chicago.

Dec. 5-6 University of Illinois Ag Masters Conference, Urbana.

Dec. 7-8 Cover crop conference, Decatur Conference Center, Decatur.

Dec. 12 Farm Economic Summit, I Hotel and Conference Center, Champaign.

Dec. 13 Farm Economic Summit, Center for Agriculture, Sycamore.

MarketReady workshop, Knox County Extension office, Galesburg.

Dec. 14 Farm Economic Summit, Best Western Prairie Inn, Galesburg.

Dec. 15 Farm Economic Summit, Holiday Inn, Mt. Vernon.

Dec. 16 Farm Economic Summit, Doubletree Hotel, Bloomington.

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

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

Page 13 Monday, November 21, 2011 FarmWeek

IFB IN ACTION ARROLL — The Children’s author to sign ag be C annual meeting will at 10 a.m. Thursday, Dec. at the Far m books at IFB annual meeting Bureau15,office.

Call the

Houts told FarmWeek. She remembered watching her Michelle Houts, an Ohio daughter when the show anieducator and farm wife, saw a mals were auctioned at the fair. need to share the reality of “It’s such a public way to raising livestock with young say goodbye to an animal that’s readers. Her vehicle was “The basically become a pet,” Houts Beef Princess of Practical added.

County.”

Houts and her husband During the raise corn, soybeans, and Illinois Farm wheat on 1,800 acres near CeliBureau annual na, Ohio. They also have hogs meeting in and the children’s 4-H steers.

Chicago, One daughter also raises and Houts will shows boer goats. sign her book “I wanted to write somefrom 4 to 5 thing that was true to agriculp.m. Saturday, ture and not the view of someMichelle Houts Dec. 3, in the one looking in. It’s a true famiIAA Foundation area at the ly farm story,” Houts said of Palmer House. Paperback “Beef Princess.” copies will be available at the Houts described her book Country Store. as providing “a The author positive image FarmWeekNow.com also will confor animal duct a special agriculture.”

Check out online reviews of “The workshop for She noted the Beef Princess of Practical CounChicago book was pubty” at FarmWeekNow.com. teachers Dec. lished around 4. Teachers who the time Ohio attend the workshop will voters were debating animal receive Agriculture in the care and welfare issues.

Classroom (AITC) materials After Houts’ book was pubrelated to her book. lished, teachers frequently The “Beef Princess” tells a would ask her for study guides story from the perspective of a or other related materials, she girl in seventh grade who lives said. The author was pleased on a central Indiana farm and when Illinois AITC developed touches on several issues, a study guide related to her including BSE. Houts, an elebook. Houts said she is lookmentary speech therapist, ing forward to meeting Farm didn’t grow up showing liveBureau members and working stock at local fairs, but she has with Chicago teachers. lived through those experi“I’m proud the book shows ences with her daughter. the positive side of agriculture “Nobody really had written at a time when agriculture is about the reality of raising under the gun,” Houts conlivestock for market purposes,” cluded.

BY KAY SHIPMAN FarmWeek

FARM-CITY DONATION

In recognition of National Farm-City Week, the Bureau County Farm Bureau Women’s Committee last week donated enough food to provide Thanksgiving dinner for 155 people, the number of people fed annually by one farmer. The donation consisted of 22 turkeys, 30 cans of sweet potatoes, 26 cans of cranberry sauce, 20 boxes of instant potatoes, 26 packages of stuffing, 44 cans of green beans, 12 packages of rolls, 30 jars of apple sauce, 15 boxes of cake mix, and 15 cans of frosting. Pictured with some of the donated food are, from left, Rita Dabler, Bev Read, and Rheta Schallhorn. (Photo courtesy Bureau County Farm Bureau)

office at 815-244-3001 for more infor mation.

LAY — Far m Bureau will sponsor an infor mational road meeting and dinner at 6:30 p.m. Tuesday at the Far m Bureau office. Call the office at 618-664-3300 for reser vations or more information.

ENRY — A market outlook seminar will be at 6:15 p.m.

Wednesday, Nov. 30, at the Moline Viking Club, Moline. Richard Brock, Brock Associates, will be the speaker. Cost is $20 or $30 for walk-ins. Call the

C

H

Far m Bureau office at 309937-2411 or the Rock Island County Far m Bureau at 309-736-7432 for reservations or more infor mation.

ACKSON — The Women’s Committee is collecting recipes for its cookbook. Please send or mail a recipe to the Far m Bureau office. Deadline to submit recipes is Jan. 2.

ONROE — Plat books are available to purchase at the Far m Bureau office.

EORIA — The Peoria Far m Show will be Tuesday, Nov. 29, through Thursday, Dec. 1, at the Civic Center, Peoria.

ERMILION — The annual meeting will be at 6 p.m. (Illinois time)

J

M P

V

Tuesday, Nov. 29, at the Beef House Banquet Center, Covington, Ind. Tickets are $10 for “M” members and $20 for non-members. Entertainment will be provided by the Wabash College Glee Club. Tickets are available at the Far m Bureau office or from a member of the board of directors and must be purchased by Wednesday. The Ver milion County Far m Bureau Foundation will sponsor its annual silent auction.

“From the counties” items are submitted by county Farm Bureau managers. If you have an event or activity available to all Farm Bureau members, contact your county Farm Bureau office.

FarmWeek Page 14 Monday, November 21, 2011

profitability

Contracting energy: Have a plan, not a crisis

BY HARRY COONEY

The traditions of the holiday season are very important in many families. Along with Thanksgiving, hunters are out looking for “the big one” as the hunting season is in full swing.

There also is a great traHarry Cooney dition in contracting energy products.

Seasonal studies suggest that the diesel fuel and gasoline markets tend to bottom in the Thanksgiving to Valentine’s Day time period. Following that seasonal price slump, prices tend to rally into spring and summer of the next year.

Research suggests those patterns work in about seven

or eight out of 10 years. Past performance does not guarantee future results, but the seasonals are a good road map to follow.

For farmers and other end users, now is the time to get a plan in place for contracting product for next year. The old saying is “Winners have a plan while others have a crisis.”

End users need a plan for 2012 as the fundamental situation in the diesel fuel market has changed recently.

Diesel fuel stocks in the U.S. have been above average levels for many months.

There was almost a glut of product as the U.S. economy was weak for the past several years. That situation began to change in late summer/early fall. Since early October, stocks have fallen well below the average level for this time of year.

Since summer, diesel fuel demand has been strong and well above average levels.

Some segments of the U.S. economy seem to be improving. The over-the-road trucking industry accounts for more than half of the total diesel

demand in the this country.

Exports of diesel have been strong. The weak U.S. dollar has helped increase exports along with strong overall demand from other areas of the world.

Export destinations include

many Central and South American countries. Diesel fuel export demand was not much of an issue until 2008. Since then, as the dollar weakened, exports have increased.

In summary, now is the time for holiday traditions as well as contracting traditions. End users may want to begin hunting for bargains in the energy markets.

The fundamental supply/demand situation in diesel fuel has changed in 2011.

What is your plan for contracting your 2012 fuel needs?

Talk to your local FS member cooperative about the contracts offered and have a great Thanksgiving holiday.

Harry Cooney is GROWMARK’s manager of energy customer risk management. His e-mail address is hcooney@growmark.com.

MF Global bankruptcy could linger over ag markets

BY DANIEL GRANT Far mWeek

CME Group, ag clearing fir ms, and others last week made significant prog ress releasing accounts and covering losses that were created after MF Global filed for bankr uptcy Oct. 31.

But effects of the

bankr uptcy could hang over the industr y for months and potentially change the way some do business in the ag futures markets.

The collapse of New York-based MF Global, which was the eighthlargest futures commission merchant in the U.S.,

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

40 lbs.

50 lbs.

Receipts

Range Per Head Weighted Ave. Price $32.00-$43.51 $39.22 $52.00-$60.00 $57.57 n/a n/a This Week Last Week 28,729 25,307 *Eastern Corn Belt prices picked up at seller’s farm

Eastern Corn Belt direct hogs (plant delivered) Carcass Live

(Prices $ per hundredweight) This week Prev. week $79.29 $83.17 $58.67 $61.55

Change -3.88 -2.87

USDA five-state area slaughter cattle price Steers Heifers

(Thursday’s price) (Thursday’s price) Prev. week Change This week 122.29 124.93 -2.64 122.14 125.10 -2.96

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 $143.26 142.18 1.08

Lamb prices Slaughter Prices - Negotiated, Live, wooled and shorn 85-150 lbs. for 160.50-205 $/cwt. (wtd. ave. 175.39); dressed, no sales reported.

Export inspections (Million bushels) Week ending Soybeans Wheat Corn 11-10-11 53.5 10.4 27.7 11-03-11 51.7 13.7 23.8 Last year 76.2 16.9 31.1 Season total 313.3 486.3 277.7 Previous season total 469.2 508.8 354.0 USDA projected total 1375 975 1600 Crop marketing year began June 1 for wheat and Sept. 1 for corn and soybeans.

effectively froze $2.5 billion of customer collateral for open positions at CME Group.

About 87 percent of the collateral and positions were transfer red to solvent fir ms as of last week, according to Dale Michaels, managing director for credit and market risk management at the CME Group.

CME Group also made available a $250 million financial guarantee to tr ustees to make an interim distribution of cash to its customers.

“We wanted no customer left behind,” Michaels said last week during a webinar hosted by the National Grain and Feed Association and Grain Jour nal.

CME Group established a $50 million tr ust to restore other CME Group customer accounts that suffered a shor tfall in customer-seg regated funds held at MF Global.

The recent industr y moves to alleviate financial burdens and a downtrend in the g rain markets this fall helped g rain elevators so far sur vive what could have been major exposure in the markets.

The bankr uptcy occur red during fall harvest just as many elevators were handling the largest amount of g rain for the year.

“We feel a lot better about elevators’ positions

now that (CME g roup) has transfer red the accounts, the CBOT (Chicag o Board of Trade) lowered margin require-

Regulators investigating the situation initially repor ted MF Global may have misappropriated about $600 million. That

‘We feel a lot better about elevators’ positions now that (CME group) has transferred the accounts, the CBOT (Chicago Board of Trade) lowered margin requirements, and the market has gone down.’

— Doug Yoder IFB senior director of affiliate and risk management

ments, and the market has g one down,” said Doug Yoder, Illinois Far m Bureau senior director of affiliate and risk management.

However, the bankr uptcy is expected to generate numerous other complications for the ag industr y.

MF Global earlier this month ter minated 1,066 employees.

U.S. Sen. Pat Rober ts (R-K an.) last week called on the Senate Ag Committee Chairwoman Debbie Stabenow (D-Mich.) to hold a hearing on the collapse and bankr uptcy of MF Global.

Rober ts also called on the Commodities Futures Trading Commission, the exchanges, and others to immediately release frozen MF Global margin account funds to customers.

investigation continues.

Long-ter m, Yoder said there is concer n in the industr y that fallout from the bankr uptcy could affect elevators’ ability to offer far mers forward contracts and exchanges’ ability to offer customers a wide range of risk management tools.

“One of the big ger concer ns, after all the dust settles, is if all the market par ticipants discover a risk we didn’t know we had before,” Yoder said.

The risk management specialist also believes the bankr uptcy will generate renewed interest in increased market regulations.

Page 15 Monday, November 21, 2011 FarmWeek

PROFITABILITY Corn Strategy

C AS H ST RAT E GI S T

Export sales sagging This past week’s export sales of 8 million bushels said about all that needs to be said about demand for U.S. grain. The corn sales number may be the “poster child” of the problems we face in world trade.

It’s not a phenomenon that emerged just last week, either, as the previous week’s sales were less than 10 million bushels.

Those two consecutive weekly light sales may be depicting the trend that lies ahead. Clearly corn is priced out of the picture in the world markets.

At present, corn out of the U.S. Gulf is offered about 60 cents per bushel over corn coming out of the Ukraine. A couple of cargoes that were traded last week were priced about 50 to 60 cents under the U.S. That goes a long way toward explaining the difficulty we are having in moving grain into the world pipeline.

Total corn export sales have slipped back to the same level they were at this time last year.

Still, sales are about 100 million bushels ahead of the pace needed to achieve the current USDA forecast. But at this rate, it may only take five to seven weeks for sales to drop back to the pace based on that forecast, with a risk they could fall below it.

This past week, Argentina offered another 500,000 metric tons (18.4 million bushels) of corn for export. Industry officials would like to see the Argentine government eventually offer export permits on another 2 million or 3 million metric tons, all of which is coming from last spring’s crop.

And there is word out of China that that country may temporarily halt buying to rebuild government reserves of corn and sugar. In the wake of another

record corn harvest, the government is expected to turn to domestic supplies to build inventories, thereby supporting prices and safeguarding farmer interests.

That wouldn’t necessarily preclude purchases for inventory in the world market if prices were to drop to a level China considered attractive. But because that is a political decision, not necessarily an economic one, that is a difficult decision to anticipate.

Adding to the mix is the slow pace of wheat export sales. They are only increasing at a 10-million to 12-million bushel rate, when we need to be seeing something closer to a 20-million-bushel pace to get sales back on track with forecasts.

The slow pace of that business is pushing more wheat, especially soft red wheat, into the feed pipeline in the U.S. Just this past week, we were told that a Southern Illinois co-op sold wheat to a major pork producer. And we consistently hear reports of feed wheat being brought into the U.S. Soybean business is somewhat more robust, but as we noted on the graphics in last week’s commentary, sales had fallen below the pace to reach the current USDA forecast. And news surfaced this past week that China had bought a cargo of soybeans out of Brazil for January shipment at a price under what the Chinese could buy soybeans out of the U.S. We had thought they were basically out of the market until new-crop supplies became available.

The downside of the slow business for the three grains is that they are implying the ending stocks could be larger than currently projected. If that evidence continues to mount through the winter, it will add to the negative implications of potentially larger 2012 crop plantings. If the spring weather is good, and we are certainly due for a good spring, total plantings could jump significantly this coming year.

Cents per bu.

ü2011 crop: The short-term trend turned down, pointing prices lower into the 40-week low expected at year’s end.

Sales should have been increased 10 percent when December 2011 hit $6.45, or when prices fell through $6.30.

Hedge-to-arrive (HTA) sales for late winter/spring delivery are still the best way to sell farm-stored grain. Changing spread relationships have diminished returns for commercial storage. If so, plan sales around tax considerations. ü2012 crop: Sales should have been increased to 20 percent when the fail-safe was triggered. Hold off on making catch-up sales on weakness. At this time, we’d rather use HTA contracts, unless you are offered a cash contract with a good basis. vFundamentals: The biggest drag on corn price remains lower-priced corn or wheat from other countries, sharply curtailing our export demand. There have been numerous countries substituting feed wheat for corn because of the discount. That is true in the U.S. as well, with wheat being substituted for corn in Southern Illinois and Indiana.

Soybean Strategy

ü2011 crop: Prices rebounded enough this past week to hit our $11.99 target on January futures to price another 10 percent. The decline to a new low off the move has turned the trend down into the next shortterm low due in early February.

Still, the market is in a window for a mid-cycle low which could carry prices back to the $11.99 target for making catch-up sales.

A HTA for winter/spring delivery may pay if you store soybean on the farm. Commercial storage is a closer call. ü2012 crop: The small rebound hit our $11.99 target on November 2012 futures to increase sales to 20 percent.

We prefer HTA contracts, but would use a cash contract if the basis level is good. vFundamentals: Chinese export business finally emerged with the lower prices.

Unlike last year, the pace of buying is not unusually large,

limiting its impact. At the same time, prospects for this year’s South American crop continue to improve, implying longer-term supplies should be big enough to meet demand.

Wheat Strategy

ü2011 crop: The trend in wheat turned lower. Another sale was made when prices dropped through our fail-safe at $6.30 on Chicago March futures. Sales should now be 80 percent complete. Wait for a rebound to $6.30 before making catch-up sales. The carry in futures still pays for commercial storage, making winter/spring

HTA contracts the best tool. ü2012 crop: A 20 percent sale should have been made at $6.64 3/4 when prices fell through our fail-safe. Wait for a rebound to $6.65 to make a catch-up sale. vFundamentals: The wheat market continues to contend with abundant world supplies, making it difficult for the U.S. to be competitive in the world trade. This has been persistently reflected in weekly export sales. Recent rain/snow has improved the conditions in the Southern Plains, with more anticipated in northeast Texas and eastern Oklahoma.

Cash Strategist sales recommendations AgriVisor endorses crop insurance by

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

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

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

309-557-2274

4/25/11 10% 13.76

9/13/10 10% 4.61

8/29/11 10% 6.65

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

1/31/11 10% 13.31

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

Corn '11 '12

80% unsold

4/25/11 10% 6.76 80% unsold

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

7/30/10 10% 6.98

5/31/11 10% 6.79

8/6/10 15% 7.35

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

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

8/8/11 10% 6.68

30% unsold

30% unsold

Prices are new crop or nearby futures

Prices are new crop or nearby futures

5/26/11 10% 13.75

1/2

11/17/11 20% 6.343/4

7/21/10 15% 6.60

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

80% unsold

FarmWeek Page 16 Monday, November 21, 2011

perspectives

We’ll miss the Department of Ag when it’s gone I’m horrified. I’m experiencing what happens when a once proactive and nationally esteemed state agency is eviscerated by budget cuts.

I know what used to be, and what is left today. I work more with the Illinois Department of Agriculture (IDOA) than most, because the members I represent are highly regulated.

We support IDOA’s JEAN regulations to ensure PAYNE stewardship, quality, safety, and equity in our industry. Illinois is a major ag state, but you wouldn’t know it by looking at what’s left of our Department of Agriculture.

I’ve tried to tell anyone who will listen what IDOA means to the State of Illinois. People aren’t listening. Too many think IDOA just oversees fairs and horseracing. They do, BUT THEY DO SO MUCH MORE. If you’ll listen, I’ll tell you what IDOA does for us all: When you weigh grain at the elevator, buy fuel at the gas station, or weigh your vegetables at the store, who ensures the scales and meters are accurate? IDOA. When you apply pesticides to protect

the growth and health of crops or to kill insects or bacteria in your home, who ensures these products are U.S. Environmental Protection Agency approved? IDOA. When pipelines, electric transmission lines, or wind turbines cross rural Illinois, who ensures these companies agree to and follow farmland impact mitigation agreements? IDOA. When there’s an insect or disease outbreak, who steps in to ensure that the industry has immediate access to products and tools to protect millions of dollars of crop value and animal health? IDOA. When you buy trees and plants from a nursery, who ensures that they are free from diseases that could spread?

IDOA. When you deliver grain to an elevator, who ensures that the elevator is storing, managing, and accounting for the bushels correctly and assuring the grain is free from toxins that may be harmful to animals or people? IDOA. When you hire someone to apply pesticides on your farm, orchard, yard, the golf course, the park, etc., who ensures that these applicators are properly trained, licensed, and insured?

IDOA. If someone misuses a pesticide, who

investigates and issues penalties for violations? IDOA. When you see an anhydrous ammonia nurse tank in the field, who is inspecting the 25,000-plus nurse tanks in Illinois to ensure that the tanks are in compliance with safety regulations?

Who inspects the 850 ammonia storage facilities to ensure they are properly

constructed and maintained to prevent a catastrophic release of ammonia?

IDOA. When you buy dry fertilizer, who ensures that it does not contain heavy metals or harmful materials, and that you are getting what you pay for when you order a custom blend? IDOA. When you purchase food for your livestock or pets, who ensures that it was properly manufactured and contains what the label says? IDOA. Who assures that the seed you buy meets the claim on the label for count and germination guarantees? IDOA. Who responds to cases of animal abuse and takes action to protect neg-

lected animals? IDOA. Who is working to contain the emerald ash borer from killing millions of trees? IDOA. I could continue, but I have a word limit.

IDOA is a victim of its own success and a victim of our failure to make a bigger deal about its importance to agriculture and consumers.

And yet here we are: An industry that is stable in an unstable economy. An industry that has great potential to expand and diversify — to add facilities, jobs, value, and tax revenue to the state.

An industry that is watching the agency we need to help us grow being gutted before our very eyes.

Many of us in agriculture have proposed, supported, and are now paying higher regulatory fees to keep IDOA strong.

The return? Constant sweeping of these fees to fund other state priorities — priorities that do not include agriculture.

I’m horrified. Are you?

Jean Payne is president of the Illinois Fertilizer and Chemical Association. Her e-mail address is jeanp@ifca.com.

Americans may learn from Europe’s economic woes No easy answers on immigration Yields on Italian bonds, as of Nov. 9, surged through 7 percent, which means they are yielding about the same as junk bonds.

Why, you ask, should we care? Because Italy is in almost as much financial BRUCE FINKS trouble guest columnist as Greece, and there isn’t nearly enough money in the coffers of solvent European governments to bail Italy out.

Margin requirements on Italian bonds were raised on Nov. 9, which along with the decline in prices of Italian bonds, has sent investors worldwide scrambling to sell assets and cut their losses.

Meanwhile, U.S. Treasury yields have declined because investors are seeking safety. In a world of investors jumping from risk-on to risk-off trading, the risk-on traders are running for cover.

Meanwhile, economic numbers from the U.S. — while not robust — at least aren’t collapsing.

Retail sales have held up reasonably well in spite of slow job growth.

Various Institute of Supply Management (ISM) surveys — the ones in which a number larger than 50 indicates growth, whereas a number less than 50 indicates contraction

— are holding up reasonably well.

The ISM Manufacturing PMI Composite is still above 50, and the rate of descent has slowed considerably over the past two months. These numbers are nothing to write home about, but neither are they cause for alarm.

The unemployment rate, although down from the highs of late 2009, still is elevated by historical standards. With jobs hard to get, consumers are being more cautious with their spending, which is why retail sales are just OK. Jobs are the key to any economic recovery and they have been difficult to create in the current environment.

The U.S. economy needs about 150,000 new jobs per month just to handle the population growth. Any number greater than that will lower the unemployment rate.

Lately, employment gains have been below 100,000, which although still positive, do not reduce unemployment.

Until we see real gains on the employment front, the economy is not going to get any real traction.

The lack of jobs and income growth have taken a toll on consumer sentiment.

Not even the positive trend of the stock market during October could turn this indicator upward.

Once again, until the U.S. economy can achieve employment gains, consumer sentiment is unlikely to rise.

As you can see, things are not nearly as bad here as they are in Europe. Economic growth, while hardly robust, is not collapsing, either.

It truly is a muddlethrough economy, as described by John Mauldin (a financial expert and best-selling author).

However, if we ignore our current overspending problems to the extent that the Europeans have ignored theirs, we could be in a similar position in a few years.

There is hope among some the congressional Super Committee, which is charged with extracting $1.5 trillion in budget cuts and tax increases, will find some way to cure America’s current budget woes.

Based on what we’ve learned from watching the Europeans — as well as our own politicians — wrestle with these budget problems, we have very low expectations of a resolution.

Bruce Finks is the vice president of investments for Country Financial.

For more information, go online to {http://www.countryfinancial.com /SiteController?url=/insuranceInvestments/resources/economicOutlook}.

This subject is very controversial. Gov. Rick Perry tried to put Mitt Romney on the defensive in the Republican presidential campaign by accusing him of hiring an illegal immigrant to mow his yard.

And Perry has been criticized because in Texas he signed a law JOHN allowing chilBLOCK dren that were brought here illegally by their parents to go to college at the same in-state rate as other resident children.

Alabama passed a law that requires schools to determine if enrolled students who were born outside the U.S. are the children of illegal immigrants.

And now, all across the state, students — out of fear of deportation — are not showing up for school.

My first reaction is — with our country deep in debt, with the world economy at risk of collapse, with unrest in the Middle East threatening our oil supply — why is this illegal immigration issue in the headlines?

I guess it is because in an economy with high unemployment a lot of people feel that illegals are stealing the jobs.

A lot of our citizens think illegals should be shipped back where they came from

because they broke the law.

They didn’t come here legally.

However, a fact that often is not appreciated is that without the illegals, who would pick the strawberries?

Who would butcher the hogs? Who would milk the cows? Who would roof the houses?

Don’t even suggest we have our own citizens standing in line to do it. They won’t. It is estimated that two-thirds of the 1.8 million hired farm workers in the U.S. are not authorized to be here.

We may not like the choice, but we desperately need to deal with this problem.

Do we want our food production to go offshore and then import the food? No. We need legislation to fix our problem. That legislation should make it possible for families who have been here for decades to become legal.

And we need guest worker programs to supplement our workforce.

We may not like this choice, but that’s what we must do. We’re not going to deport 12 million people.

John Block of Gilson, a former U.S. agriculture secretary in the Reagan administration, is a senior policy adviser with the Washington, D.C., firm of Olsson, Frank, Weeda, and Terman, which specializes in ag issues. His email address is jblock@ofwlaw.com.