StatE oFFicialS are asking the public to report any feral hogs they may observe. The wild hogs pose a threat to livestock and wildlife. ............................................2
an amEndmEnt to reduce regulatory burdens on small cemeteries passed in the House Executive Committee but was not called for a vote on the House floor last week. ....................................3
USda laSt WEEk trimmed its corn and soybean production estimates due to weather-induced yield losses. The Illinois corn yield also was lowered. ............................6
Monday, November 14, 2011
Two sections Volume 39, No. 46
Economists question basing policy on ‘new normal’ BY MARTIN ROSS FarmWeek
In an economic/policy environment where “the norm” is a moving target, farm bill veteran Barry Flinchbaugh warns lawmakers not to assume current high-profit, high-income ag production is “the new normal.” The need for consensus on ag policy/spending proposals
for consideration by the 12member congressional deficit “super committee” is “getting down to the nittygritty,” the Barry Kansas State Flinchbaugh University ag economist stressed during a
gathering of ag bankers in Indianapolis last week. But whatever else, congressional leaders must recognize the importance of maintaining some form of safety net despite perceptions of agriculture’s current prosperity, Flinchbaugh said. He acknowledged high grain prices and recent farm program savings, but maintained
VETERAN TO VETERAN
Lt. Col. Kelly Kilhoffer, left, a database administration specialist with Country Financial, Friday chatted with U. S. Rep. Adam Kinzinger at a brief Veterans Day gathering of Illinois Farm Bureau and Country employees outside the IFB Building in Bloomington. Kinzinger, a Republican representative from Manteno and a Normal native, is a captain in the Air National Guard. Kilhoffer returned from Afghanistan about two months ago following a 15-month deployment with the U.S. Army Reserve. The sling he is wearing is a result of surgery that has nothing to do with his military service. (Photo by Cyndi Cook)
that although “agriculture’s had some good years, it is not the new ‘normal.’ ” “There’s nothing less true than that,” he told FarmWeek. Flinchbaugh cited the potential ramifications of a 2010 “bumper crop,” cost volatility, waning federal ethanol support, the European economic “meltdown,” and China “growing its own crops” for an already “cycle-based industry” (see page 5). Virginia Tech economist David Kohl concurred, warning lawmakers are looking at dramatic program changes “at a time when in two to three years, we may need them.” Flinchbaugh is concerned about the political dynamics driving farm bill debate. While House-Senate ag committees have put forward a $23-billion blueprint for the super committee to assure crop insurance-safety net funding (if not future direct payments), he maintained ag spending decisions remain in the hands of “freshmen in the House who don’t know where little babies come from” and a super committee that includes only one real “aggie” — Sen. Max Baucus (D-Mont.). “I’m very comfortable with
the ag committees,” he said. “I’m very uncomfortable with letting a farm bill get on the House floor. (Long-time program critic Rep. Ron) Kind from Wisconsin’s already taken after it, and you have these freshmen there who vote no on everything. You go over to the Senate, and you have to have 60 votes. “If the Ag Committee leaders can get an agreement with Max Baucus, take the $23 billion and a broad outline of the farm bill, I certainly think I’d take it, rather than running the chance of putting it on the House floor. But I’m not convinced the super committee is going to get anything done. We better have a backup plan.” The super committee is charged with identifying up to $1.2 trillion in cuts. But it has authority to direct $600 billion in specific reductions and order another $600 billion in mandatory “sequestered” cuts to be determined by lawmakers following 2012 elections. According to Flinchbaugh, that shows “a lack of responsibility in Washington, on both sides of the aisle.”
If the bonus depreciation is decoupled retroactively, an individual who made a large purchase earlier this year, such as a grain leg system, and thought it would qualify for bonus depreciation would learn otherwise. “People made sound investments based on what the law was. They thought they would be able to fully depreciate those purchases on their tax returns. Without the bonus depreciation, they likely would have had to pay higher taxes. That’s not fair,” Semlow said. The motivation behind both tax proposals is the tax
burden of the CME Group Inc., the parent company of the Chicago Mercantile Exchange and the Chicago Board of Trade. CME pays 6 percent of all state corporate income taxes. There have been veiled threats that the CME might move to a state with a more favorable income tax structure. The House will return to the Capitol Nov. 29 to discuss the tax issues. In the interim, the House Revenue Committee will hold hearings and IFB will participate in those, Semlow said.
See Economists, page 4
House, Senate serve up tax proposal stews Periodicals: Time Valued
BY KAY SHIPMAN FarmWeek
The House and Senate offered separate tax proposals last week during the veto session, and both included provisions that would benefit and harm agriculture. In the end, the harm outweighed the benefits to agriculture and resulted in Illinois Farm Bureau opposing both proposals, according to Kevin Semlow, IFB director of state legislation. Neither tax package was brought up for a vote last week. A beneficial proposal would raise the $2 million individual
state estate tax exemption to $5 million over two years. However, a harmful proposal would decouple the state from the 2011 federal bonus depreciation schedule — and make that action retroactive to Jan. 1, 2011. “In omnibus bills, there are good and bad components sometimes. But IFB determined the immediate impact of the loss of the bonus depreciation was a greater hardship and opposed both proposals,” Semlow said. “IFB is working to have these provisions taken out of the tax packages.”
FarmWeek on the web: FarmWeekNow.com
Illinois Farm Bureau®on the web: www.ilfb.org
FarmWeek Page 2 Monday, November 14, 2011
Quick Takes OFF-YEAR MAKES PRICEY PECANS — Expect more expensive pecans this holiday season. It’s an off-year for pecan production in Clinton County, said Karen Voss, who grows pecans with her husband, Ralph, near Carlyle. Drought also reduced pecan production in many southern states where most of the U.S. crop is grown. The U.S. pecan crop is expected to be 14 percent smaller than last year, according to USDA. The average retail price for a pound of pecans is expected to be about $11, compared to $9 in 2010, according to the South Georgia Pecan Co. Another reason for higher prices — Chinese demand. The U.S. produces 80 percent of the world’s pecans, and China typically buys a fifth of U.S. production. Pecans are valued during New Years festivities. ACREAGE REPORTING DATES STREAMLINED — USDA last week announced it established 15 common Acreage Reporting Dates (ARDs) for farmers and ranchers who participate in its programs. The common reporting dates will reduce the reporting burden for producers and reduce USDA operating costs by sharing similar data across participating agencies. The Risk Management Agency (RMA) and Farm Service Agency (FSA) will implement the new ARDs for certain commodities July 15 and Aug. 15, 2012. The remaining ARDs will be implemented during the 2013 crop/program year, USDA said. RMA previously had 54 ARDs for 122 crops while FSA had 17 ARDs for 273 crops. The reporting dates were consolidated into 15 common ARDs through the Acreage Crop Reporting Streamlining Initiative. MIS-GUIDANCE? — U.S. Sens. John Barrasso (RWyo.) and Dean Heller (R-Nev.) last week were preparing to introduce an amendment to the Senate Energy and Water Appropriations “Minibus” to prevent the U.S. Army Corps of Engineers from finalizing its Draft Guidance on Identifying Waters Protected by the Clean Water Act or from fast-tracking a regulation based on the draft guidance. The measure is seen as crucial as regulators and some lawmakers continue efforts to redefine federal jurisdiction of “U.S. waters.” Earlier this year, the U.S. Environmental Protection Agency and the Corps published draft guidance “that would significantly expand the regulatory footprint of the Clean Water Act,” said American Farm Bureau Federation regulatory specialist Don Parrish. “The draft guidance is inconsistent with current regulations and the Supreme Court decisions because it expands jurisdiction to include isolated intrastate waters as well as ditches and other ephemeral features/streams; ephemeral streams flow only during, and for a short duration after, precipitation events in a typical year,” Parrish said.
(ISSN0197-6680) Vol. 39 No. 46 November 14, 2011 Dedicated to improving the profitability of farming, and a higher quality of life for Illinois farmers. FarmWeek is produced by the Illinois Farm Bureau. FarmWeek is published each week, except the Mondays following Thanksgiving and Christmas, by the Illinois Agricultural Association, 1701 Towanda Avenue, P.O. Box 2901, Bloomington, IL 61701. Illinois Agricultural Association assumes no responsibility for statements by advertisers or for products or services advertised in FarmWeek. FarmWeek is published by the Illinois Agricultural Association for farm operator members. $3 from the individual membership fee of each of those members go toward the production of FarmWeek.
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STAFF Editor Dave McClelland (dmcclelland@ilfb.org) Legislative Affairs Editor Kay Shipman (kayship@ilfb.org) Agricultural Affairs Editor Martin Ross (mross@ilfb.org) Senior Commodities Editor Daniel Grant (dgrant@ilfb.org) Editorial Assistant Linda Goltz (Lgoltz@ilfb.org) Business Production Manager Bob Standard (bstandard@ilfb.org) Advertising Sales Manager
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RuRAL ISSuES Pseudorabies threat
Landowners, hunters asked to report feral hog sightings
BY KAY SHIPMAN FarmWeek
State officials are asking the public to report any feral hogs they obser ve because of the threat the wild hogs pose to livestock and wildlife. “The big gest concern is pseudorabies. They do carry it; it’s in their population,” State Veterinarian Mark Ernst told Far mWeek. He noted swine brucellosis is another disease carried by feral swine. Jim Kaitschuk, executive director of the Illinois Pork Producers Association, encouraged individuals to report any feral swine they may obser ve. “We have worked hard to eradicate those diseases,” Kaitschuk said. The state considers feral hogs to be swine that are not domestic livestock. An invasive species, they are known to carry at least 30 diseases that are serious threats to livestock, pets, wildlife, and humans. Their rooting and feeding also increases soil erosion and damages crops and habitat. Ernst said feral hog sightings have been
reported in Southeastern and Southern Illinois as well as in Fulton and Knox counties. However, scattered sighting have been report “all over,” he added. The best way to protect livestock health is to have good biosecurity measures in place, Ernst said. He encouraged landowners and far mers to cooperate if they are asked by Illinois Department Natural Resources (IDNR) staff to allow the hogs to be trapped on their property. “The goal is to whittle their numbers down so they don’t get to be a problem,” Ernst said. IDNR Director Marc Miller urged hunters, especially deer hunters over the coming weeks, to watch for feral hogs and report any seen. Anyone who sees feral swine should contact IDNR’s wildlife resources division at 217-785-2511. Hunters in the field who see feral hogs and have a valid Illinois firear m owner’s identification card may — with the landowner’s per mission — legally shoot the wild pigs, according to IDNR.
Eight face charges for poaching 55 deer Eight individuals face multiple charges for two separate deer poaching cases of 55 deer in Cook and Grundy counties, according to the Illinois Department of Natural Resources (IDNR). “As far as poaching (cases), these were pretty significant for the department. The sheer size and volume were significant,” Stacey Solano, IDNR spokesman, told FarmWeek. Solano declined to specify how either case came to IDNR’s attention and said both investigations are ongoing. The Cook County case involves five individuals who were arrested after a fivemonth investigation that involved the Michigan and Indiana conservation departments and the U.S. Fish and Wildlife Service (USFWS). The hunters shot several trophy-quality deer, including one buck valued at $25,000, and 31 animals in all. The five are: Louis Bergsma, Galena; Jonathan Bergs-
ma and Daniel Bergsma, both of Ada, Mich.; Douglas Bergsma, Rockford, Mich.; and Tom Hedke, Caledonia, Mich. The Grundy County case involves three individuals who were charged with illegally shooting 24 deer in Illinois and Canada over 10
investigation involved the New York, Missouri, and Minnesota conservation and natural resource departments; Wyoming Game and Fish Department; Montana Fish, Wildlife, and Parks; the Ontario Ministry of Natural Resources; the Alberta Sustainable Resources Depart-
‘The sheer size and volume were significant.’ — Stacey Solano Illinois Department of Natural Resources spokesman
years. The deer included a potential state-record-quality buck valued at $35,000. Charges were filed against, Christopher Kiernan, Minooka; Garret Armstrong, Avon, N.Y.; and Larry Smith, Williamsburg, Ontario, Canada. In addition to IDNR, the
ment, and USFWS. This year, IDNR has received 170 tips about illegal activities to the poacher hotline at 877-236-7529. Those tips either were investigated or currently are under investigation, Solano said. — Kay Shipman
ALOT application deadline Wednesday Farm Bureau members are reminded Wednesday is the deadline to apply for the Agricultural Leader of Tomorrow (ALOT) class of 2012. The 2012 class activities and training will take place in Southern Illinois, primarily at the Rend Lake Resort. ALOT is open to any Farm Bureau member who is actively engaged in agriculture and committed to serving as a leader and spokesman.
The program involves an orientation and 12 days of training during January, February, and March. Participants learn communication skills, the political process, agricultural economics, and global issues. The total program fee is $600. An application is available online at {www.ilfb.org} or from your county Farm Bureau. For more information, contact your county Farm Bureau manager.
Page 3 Monday, November 14, 2011 FarmWeek
GOVERNMENT
General Assembly addresses controversial cemetery rules BY KAY SHIPMAN FarmWeek
An amendment to reduce regulatory burdens on small cemeteries passed in the Illinois House Executive Committee but was not called for a vote on the House floor last week during the veto session. A controversial state law set up new licensing and insurance requirements and fees for small cemeteries. SB1830, sponsored by state Rep. Barbara Flynn Currie (D-Chicago), and supported by Illinois Farm Bureau, would reduce some of the regulatory burden placed on the cemeteries. “While regulatory changes may have been necessary to address such problems as those that occurred at the Burr Oak Cemetery in the Chicago area, the new rules were especially burdensome for small cemeteries,” said Bill Bodine, IFB associate director of state legislation. The proposed legislative changes came about after continued discussions between the Illinois Department of Financial and Professional Reg-
ulation, which administered the rules, and the cemetery industry. The proposed changes include a full exemption from the law for cemeteries that are family or religious burial grounds; have not had an internment, inurnment, or entombment in 10 years; or are less than three acres in size. The bill requires exempt cemeteries to apply for an exemption every four years but proposes no fee for application and renewal. The bill also provides a limited exemption for a cemetery that has had 25 or fewer interments, inurnments, or entombments of human remains for each of the preceding two calendar years and operates as a public or a religious cemetery. Cemeteries that qualify for a limited exemption also would need to apply for a partial exemption every four years and pay a $150 application or renewal fee. The law would continue to require cemeteries with limited exemptions to comply with rules for reasonable maintenance, record keeping, and other actions.
Lawmakers OK temporary funding for the regional superintendents Regional superintendents of education are poised to receive their first paychecks in more than five months following action last week by the General Assembly. In a line-item veto, Gov. Pat Quinn eliminated $11.3 million in general revenue funds (GRF) for the superintendents. “We’ve found a solution to get us through the year, but our work is far from over,” said state Sen. John Sullivan (DRushville). “Many questions remain about the role of ROEs (regional superintendents) in Illinois, not to mention
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.
how they should be funded, and I’m committed to finding a permanent resolution to this issue.” Sullivan and state Rep. Frank Mautino (D-Spring Valley) sponsored SB2147 that would use the Personal Property Tax Replacement Fund to pay for regional superintendents for 2012 only. Starting in 2013, those positions would again be funded through the GRF. The veto override passed in the House with a 74-36 vote and in the Senate with a 38-161 vote and will be sent to Gov. Pat Quinn.
The bill also creates a 14member commission to study the regional superintendents’ duties and funding and to explore streamlining ideas for efficiency. The commission is to report to the governor and legislature by Aug. 1. “This is a temporary solution, but something had to be done until a more permanent solution is found,” Sullivan said. “Not paying the regional superintendents for the work we require them to do, and they were elected to do, would be setting a dangerous precedent.” — Kay Shipman
IEPA explains implementation of NPDES pesticide permits New regulations that took effect Oct. 31 will impact pesticide applications “to or over water or at water’s edge” in Illinois, according to the Illinois Environmental Protection Agency (IEPA). IEPA officials are working to explain how they will implement the National Pollutant Discharge Elimination System (NPDES) pesticide general permit. Illinois Farm Bureau strongly opposed U.S. EPA’s proposal and continues to work toward passage of federal legislation to eliminate the new requirement, said Nancy Erickson, IFB director of natural and environmental resources. Darin LaCrone with IEPA’s water pollution control division said IEPA is working to share information about the permit and the responsibilities of permit holders with agricultural and other trade groups and entities that would be impacted. “The typical process of spraying in an agricultural field would not be required to be covered under this permit unless they are spraying over water or at (the) water’s edge. Spraying of ditches or algaecides to most water bodies” would require a permit, LaCrone said. In general, an NPDES permit may be needed by anyone who uses a pesticide that is licensed for water and applies that product to or over water or at water’s edge to control one or more of the following: mosquitoes and other insects, weeds and algae, animal pests, forests, and other types of pests. If a pesticide applicator is going to apply the pesticide to an area larger than specific thresholds, that person also may need to develop and submit a pesticide discharge management plan to IEPA and comply with other requirements. However, some applicators who obtain permits may be exempt from the plan requirement, according to Erickson. Those exemptions include: applicators who respond to declared pest emergencies, entities defined as small businesses, and applications funded by the Illinois Department of Public Health under the state Vector Control Act. IEPA is developing a fact sheet and a list of frequently asked questions and answers about the permit and plans to post that information online in the near future, according to LaCrone. “We want to make ourselves available to answer questions, and we are willing to work with anybody in this first part of outreach effort,” LaCrone said. IFB plans to provide members with more information through county Farm Bureaus, FarmWeek, RFD radio, and upcoming workshops and meetings, Erickson said. — Kay Shipman
Dec. 7 first session
Farmers urged to plan ahead to renew LMFA certification
Farmers who must renew their manure management certifications to comply with state law are encouraged to plan ahead because a higher number of renewals is anticipated in 2012. “Those whose certification is lapsing should have or shortly will receive a letter from the Illinois Department of Agriculture (IDOA),” said Warren Goetsch, head of IDOA’s environmental programs. Goetsch encouraged farmers to plan ahead “because a limited number of sessions are out there.” Dale Baird, University of Illinois Extension coordinator, estimated about 800 farmers may need to renew their certifications. By comparison, 180-some renewed certifications this year. The state Livestock Management Facilities Act (LMFA) requires farmers
with operations designed for more than 300 animal units to have manure management certification and to renew the certification every three years. Farmers with more than 300 animal units must attend an approved training session or pass a written IDOA exam. Those with more than 1,000 animal units must attend an approved training session and pass a test. Goetsch advised farmers to take into account the size of their existing facility and to adjust their certification needs accordingly. Certified livestock manager training workshops will be held in 12 locations around Illinois beginning Dec. 7. The majority are planned for January and February. A workshop schedule is online at {www.aces.uiuc.edu/news/stories/news5957.html}.
A general curriculum is offered; however, several workshops are tailored specifically for either swine or beef and dairy production. To register for a workshop, call the U of I Extension at 800-3456087. The cost is $30. If more than one employee from the same far m registers, the first registration will cost $30 and each subsequent registration will cost $20. The instructional manual may be bought at the time of registration for $62.50, including shipping and handling. The manual also is available on compact disc for $32.50. More information is available from Baird by calling 815-978-2844 or by emailing him at dlbaird@illinois.edu. — Kay Shipman
FarmWeek Page 4 Monday, November 14, 2011
policy
Ethanol sector ‘ready to stand on its own’? BY MARTIN ROSS FarmWeek
The ethanol industry “is ready to stand on its own,” a major biofuels producer proclaimed last week. During last week’s American Bankers Association Ag Bankers Conference in Indianapolis, Green Plains Renewable Energy CEO Todd Becker touted “great opportunities” for the ethanol sector and its corn suppliers despite anticipated elimination of the 45cent-per-gallon volumetric ethanol excise tax credit (VEETC) at year’s end. The fuel blender’s credit has helped generate today’s 12.5 billion gallons in annual production capacity, and eliminated $10 billion to $15 billion in direct farm subsidies through higher corn prices, Becker said. But amid sustained attacks on ethanol from “Big Oil, Big Food, and Big Environment,” Becker argued “there is no way we can maintain credibility until that credit is gone and forgotten.” “We think it’s a big bull’s eye on our back — people can say, ‘Look at the ethanol industry — it’s highly subsidized,’ ” Becker told FarmWeek. He sees five “fundamentals” fueling a positive outlook for “ethanol after VEETC,” including biofuels mandates under the federal Renewable Fuels Standard (RFS2). The
U.S. Environmental Protection Agency (EPA) has set a target of 13.2 billion gallons of conventional ethanol use in 2012, on track toward an eventual 15 billion gallons RFS2 cap on mandated annual corn ethanol use through 2022. From a price standpoint, Becker sees ethanol remaining competitive with gasoline. Wholesale ethanol prices have exceeded wholesale gas prices over a total of only six months of the past three years, “without the tax credit,” he noted. “We’re still very profitable to blend,” Becker said. “No. 3, U.S. refiners have switched to an 84 octane (fuel oxygen) level for about 80 percent of their capacity. To get 84 percent octane, you have to blend with ethanol. “No. 4, we’re the cheapest fuel in the world today. We’re exporting a lot of our fuel to places like Brazil, Europe, the Middle East, Africa, and Asia. And ultimately we’ll see an E15 renaissance — we’ll see 15 percent ethanol get into consumers’ cars. NASCAR runs it every day in the highest-performing motor vehicles in the world.” E15 adoption “will take us to 22.5 billion gallons” in nationwide demand, Becker said. Currently, exports are helping absorb surplus production (the U.S. sold 641 million gallons to Brazil during the JanuaryAugust period), but he deemed
it “disgraceful we’re exporting our motor fuel while we’re importing foreign oil.” He nonetheless recognizes the “continued battle” in delivering E15 to gas pumps. Major petroleum producer-marketers see each new gallon of ethanol as “a gallon of oil they don’t sell,” and “Big Oil and Big Auto are together” in their resistance to conventional blends beyond 10 percent, despite a lack of auto industry blend testing, he said. However, Becker sees NASCAR’s partnership with the ethanol industry building E15 support among 90 million “NASCAR Nation fans.” And the industry has seen ethanol buy-in by such influential petroleum players as Valero Energy, Koch Industries, Murphy Oil, Marathon, and Sunoco. E15 penetration will be crucial to future market growth, Becker said. E85 offers the greatest consumer savings even with a potential 15-20 percent lag in per-gallon mileage, but sustaining auto industry momentum to expand flex-fuel vehicle offerings will be a ongoing challenge, he warned. “E15 to E30 is going to be our best blend — that’s what we need to fight for,” Becker held. “At E30, there’s a very, very limited slip in miles, yet you get better performance with your vehicle.”
RC draft deems crop insurance ‘top priority’ Because Washington lawmakers could put a bow on the next farm bill by Christmas, it’s tough to package policy proposals that won’t be finalized until January. Illinois Farm Bureau’s Resolutions Committee (RC) has tried. IFB delegates will debate ag policy priorities at IFB’s Dec. 3-6 annual meeting in Chicago. National policy proposals will be submitted for possible review at the American Farm Bureau Federation’s Jan. 8-11 annual meeting. IFB Vice President and RC Chairman Rich Guebert Jr. noted Congress’ deficit “super committee” could endorse a “2012” farm bill plan by Christmas or even Thanksgiving. The RC “bundled” elements of IFB Farm Policy Task Force/Grassroots Issue Team recommendations, using “what we’re seeing happening now” as a guide, he said. The RC deemed crop insurance “the top priority in future farm bill negotiations,” urging increased federal premium support and USDA authority to develop new programs such as farmer savings accounts. “This is the first time we’re seeing a farm bill written this way, without input from the farming community, per se,” Guebert related. “This (IFB) policy will get nailed down in delegate debate, but a lot depends on what happens if Congress writes the bill before we get there.
“Members looked at crop insurance knowing we’re probably going to lose a greater portion if not all of our direct payments. We see insurance as the leading edge. And we want revenue assurance as we go down the road.” The RC proposal argues for farm program changes that reflect current trend-line yields “and provide loss ratio fairness across crops.” The program revenue safety net should provide “timely payments” based on regional or county rather than state revenue benchmarks and loss triggers and protect farmers from multi-year price volatility, the RC held. It supports a continued commodity loan program with rates above 2008 farm bill levels, and “payments or programs that compensate farmers for activities deemed socially or environmentally beneficial.” “We’d like to see conservation programs kept intact, though we know we’re going to lose some dollars,” Guebert said. Meanwhile, RC policy supports eliminating the Illinois estate tax while in the interim adopting a current $5 million federal individual estate tax exemption with a maximum 16 percent state tax rate. It supports reverting ownership rights for utility, pipeline, and underground gas storage easements or leases to the surface landowner if they are unused or abandoned for 20 years.
Ethanol mythbusters prepared to ‘retool’ After years of trial and error, boom and bust, bankruptcy and consolidation, and slings and arrows, the ethanol industry is ready to regroup and recapture consumer support. That’s according to Todd Becker, CEO of Nebraska-based Green Plains Renewable Energy. Becker argues the ethanol industry “is probably in the best shape it’s been in since FarmWeekNow.com Listen to Todd Becker’s com2006,” even if it’s no longer ments about the positive “the darling of agriculture.” The industry is armed with o u t l o o k f o r e t h a n o l a t a new, more diversified, more FarmWeekNow.com. sustainable business model and a growing body of evidence to refute “myths” regarding ethanol’s impact on food supplies and prices and the environment. “We’re retooling the message, we’re defending ourselves,” Becker said. “When they came after ethanol a couple years ago, we did a horrible job defending ourselves. ‘Food vs. fuel? That’ll never stick.’ Until it stuck. ‘Big Oil? Of course they want ethanol.’ Until they don’t. “We were very disjointed as an industry, because we were making so much money that it was all going to last forever. Until it didn’t. By that time, it was too late. (Ethanol critics) changed the message; they changed public perception. Now, we’re battling back with great opportunities, great companies, great support, and a great fuel.” Becker sees 2008 as a turning point in ethanol perceptions and fortunes. But he rejects the notion that high corn prices were behind major plant closings, instead blaming poor market risk management in a sector then plagued by “entrepreneurs, developers, and promoters” who failed to understand the dynamics of “a commodity-processing business.” More stable, knowledgeable interests, including major energy companies, came in in the wake of “high profile agricultural bankruptcies” to reboot plants, Becker said. Thus, 40 percent of the industry is now in the hands of “bigger, better, more capital-capable players,” he said. The former ConAgra executive embraces an “ABC” model for the industry, emulating the diversification and scope of an Archer Daniels Midland, Bunge, or Cargill. “We needed to look like a global agribusiness conglomerate, rather than just a single ethanol plant in the middle of Iowa,” he insisted. Green Plains operates nine dry mill ethanol plants in six key corn states, currently generating an annual 740 million gallons per year. Recent installation of corn oil extraction technology at all nine plants has allowed the company to produce 32.7 million pounds of oil in addition to distillers dried grains for livestock and export markets. The company also maintains 14 grain elevators, with a cumulative 37 million bushels of storage, and nine fuel blending terminals across the southeast U.S. and Gulf region. Thanks to the latter, “we’ve single-handedly opened new ethanol markets,” Becker noted. — Martin Ross
Economists Continued from page 1 He is concerned about some components of the $23 billion super committee plan, including major conservation program reductions. “I never thought I’d see the day when we’d cut conservation,” said Flinchbaugh, who offered the possibility that a pared-back Conservation Reserve Program could drop from 32 million acres to perhaps 27 million. And he is wary of so-called “shallow loss” revenue proposals (“The direction I hear we’re headed”) that in his view would protect against relatively minor losses, influence planting decisions, and potentially cause market distortion, “especially if it’s based on planted acres.” Flinchbaugh insists “you have to look at some kind of history” when building an effective, wide-ranging revenue program, noting “wheat loses” under a program based on planted rather than base acres. “A base adjusted for what you plant” might be a viable program compromise, he said.
Page 5 Monday, November 14, 2011 FarmWeek
ag ecoNomics 101
GaMe on?
Global ‘convergence’ could affect ag fortunes
BY MARTIN ROSS FarmWeek
The evolving and uncertain China scenario, biofuels policy and economics, a return to higher (i.e., normal) interest rates and a stronger dollar, and an ag “asset bubble” could mean bumps ahead for U.S. farmers.
So advised economists at last week’s American Bankers Association Agricultural Bankers Conference. Virginia Tech University emeritus economist David Kohl argued the nearterm fortunes of the ag economy are “all about convergence and interconnection.” Kohl said a number of eco-
David Kohl
nomic, policy, and global forces have converged to “provide the best of times in these islands of prosperity.” many farmers have graduated
GAmE-CHAnGERS? Beyond the BRICs — Brazil, Russia, India, and China —economists at the National Agricultural Bankers Conference charted four other key issues that could impact ag fortunes in the years ahead. • Biofuels. Michael Swanson, ag economist with Wells Fargo Bank North America, dismisses the idea elimination of the ethanol tax credit will throw a flag on the play. He noted the ethanol spot market has fluctuated significantly just over the six months, even with the credit. “Would it have been 40 percent worse in all those situations without the credit?” Swanson posed. “My answer is no. (Fuel suppliers regulatorily) have to buy it to blend it, and they do so whether they make money or not.” Despite faith in continued ethanol mandates through the federal Renewable Fuels Standard (RFS2), Swanson noted some blenders earlier this year found it cheaper to pay federal penalties rather than buy scarce biodiesel supplies. “If we ever saw that in ethanol, it would be a huge liability,” possibly affecting political support for the RFS2, he told FarmWeek. • The U.S. dollar. The relatively low value of the dollar has helped spur U.S. exports even as it has raised some import costs, Virginia Tech economist David Kohl noted. • Interest rates. The long-term dip in inter-
est rates has been a positive game changer for producers, but at this economic juncture, Kohl warned a mere return to previously normal rates would constitute a “spike.” “That could be a major, major game changer,” he said. Federal Reserve Chairman Ben Bernanke has pledged to hold the line on rates into 2013 if economically necessary, but Kohl suggests rates long-term are “out of Ben Bernanke’s hands.” Currency shifts and wavering international “confidence” in the U.S. could spur higher interest rates. “With long-term rates, we have to be very concerned in the sense that 40 percent of our U.S. federal debt is financed by foreign countries,” he said. • Mother Nature. According to Kohl, roughly 25 U.S. regions generate about 80 percent of domestic ag production, with 100-125 total regions worldwide producing nearly 80 percent of world output. “Have a major weather event hit those areas, and it’ll throw supply off,” he said. “And then, of course, we have $4-$7 trillion in ‘hot’ money worldwide playing in the markets. They’ll play in gold, in the stock markets, in the commodity markets. That’s one of the elements that would really kick off volatility.” — Martin Ross
Regulatory anxiety growing; new questions for ag borrowers? When farm clients complain about Washington’s regulatory reach, rural lenders not only are sympathetic, they have a few cents of their own to throw in. During an Indianapolis ag bankers conference, American Bankers Association (ABA) Chairman Albert Kelly decried “the ream of regulatory overkill we’ve seen.” Overregulation threatens “what is necessary for this economy to grow,” the Oklahoma bank CEO warned. Community banks fear a raft of new requirements as the administration interprets 2,700 pages of 2010 financial reform measures. Those rules could extend into “the tens of thousands of pages,” said ABA’s Center for Agricultural and Rural Banking Senior Vice President John Blanchfield. The regulatory threat nonetheless extends “across the board,” from U.S. Environmental Protection Agency (EPA) proposals that affect farm borrowers to more stringent U.S. Department of Labor/Occupational Safety and Health Administration (OSHA) regulations that limit small business development, Kelly told FarmWeek. “All these folks believe they’re kings over kingdoms,” he charged. “They’re running unmitigated by the administration. Congress has become so gridlocked it’s unable to affect what’s going on, and so the administration’s running its agenda
through the regulators. “We have a small left-leaning administration that’s absolutely wiping business out. People are going to quit — they’re uncertain; they don’t know where they are tax-wise; they sure as hell don’t know where they are health-wise. They’re being hit harder in EPA audits, in OSHA audits.” The Dodd-Frank bill imposes new “burdens” on rural bankers, and ag borrowers “may be asked questions by their banker they’ve never been asked before,” Blanchfield said. A new Consumer Financial Protection Bureau could require ag customers to supply age, race, sex, and other personal data and bankers more detailed loan/loan application information. Expanded reporting requirements likely will increase loan costs “that get passed on to the customer,” Blanchfield told FarmWeek. “Be prepared for the banker to ask you more in-depth questions about your marketing plan, your maintenance plan on your equipment or machinery, how you’ll replace items that are depreciated,” he advised farmers. “The regulators are scrutinizing agricultural loans very closely for safety and soundness purposes. The best way to get the credit you need is to prepare — answer in your head as many questions as you can before you actually sit down with the banker. The worst answer is, ‘I don’t know.’” — Martin Ross
from an “asset-rich, cash flowpoor” to an “asset-rich, cash flow-rich” position, he said. That tempts producers toward “the undisciplined pursuit of more” — accumulation of a “fixed asset structure” that could prove problematic when a nearly inevitable economic “correction” occurs over the next decade, he told FarmWeek. “This ‘super cycle’ — when all the markets line up, the weather lines up, people make tons of money — has lasted eight years,” Kohl said. “Your typical super cycle — we’ve had four since 1910 — has lasted 2.8 to 3.4 years. What’s caused this one? It’s a megatrend that’s occurring. There are five ‘game changers.’” One of the key game-changers is the “BRIC” — the semideveloped nations of Brazil, Russia, India, and China. Along with South Africa, the BRICs constitute 20 percent of the world economy and 50 percent of the world’s incremental growth since 2000, Kohl noted. Wells Fargo Bank ag economist michael Swanson sees grain exports to China alone booming over the next decade
FarmWeekNow.com Go to FarmWeekNow.com to hear David Kohl’s comments about what farmers should expect economically.
because of rising protein demand. The pork-focused culture likely “is going to diversify,” Swanson told FarmWeek, anticipating expanded Chinese poultry production. However, he sees a Chinese growth “hiccup” having a greater impact on U.S. farmland prices than any U.S. economic or policy shift. While Europe is witnessing widespread economic turmoil, Kohl noted the Chinese have “yet to go through their economic adversity.” “It’s like an athletic team trying to win the national championship — you’re going to go through a rough patch, and (China hasn’t) gone through its rough patch,” Kohl said. “What could cause a rough patch? Political change, which is going to occur in China. Social unrest: There’ve been 180,000 uprisings in China this year. Or it could be military. Any one of those could change the game pretty quickly.”
FarmWeek Page 6 Monday, November 14, 2011
production
USDA lowers crop yield estimates, demand projections BY DANIEL GRANT FarmWeek
USDA last week trimmed its corn and soybean production estimates due to weatherinduced yield losses. But the cuts are not expected to spark any major market rallies near-term as USDA also slashed demand projections for both crops. USDA in its November crop report projected U.S. corn production this season will total 12.3 billion bushels (down 123 million bushels from last month’s estimate). Soybean production was pegged at 3.05 billion bushels (down 14 million bushels from last month). Yields nationwide were pro-
jected to average 146.7 bushels per acre for corn (down 1.4 bushels from last month) and 41.3 bushels for beans (down 0.2 of a bushel from last month). If realized, the U.S. corn crop would be the fourthlargest on record, but the average yield would be the lowest since 2003. The projected average yield for beans would be the second-lowest on record since 2003. “At first you think (the cut in crop production) is a bullish development,” Clayton Pope, AgriVisor manager/market analyst, told the RFD Radio Network. “But USDA countered the effect of that by lowering demand as well.”
USDA surprised many traders when it cut feed demand for corn by 100 million bushels. So far this year, USDA has reduced feed demand for corn by a total of 400 million bushels. “How can (USDA) cut feed demand by 400 million bushels when we’re not seeing an increase in something else (particularly feed wheat, which was left unchanged),” Randy Martinson, analyst with Progressive Ag, said during a teleconference hosted by the Minneapolis Grain Exchange. “I don’t know what we’re feeding those animals out there.” The analysts believe distillers grains may be displacing more from feed rations than expected. USDA last week also
GROWMARK challenging FFA’ers to think globally The theme for the 2012 GROWMARK essay contest is “Cooperatives in a global environment.” Open to all Illinois FFA members, the contest is sponsored by GROWMARK and FS member cooperatives in conjunction with Illinois FFA leaders. This year students are to focus on three questions: What benefits do co-ops provide their member-owners? How do co-ops improve the quality of life in their communities? How do co-ops contribute to economic growth
throughout the world? Essays should be about 500 words in length, typed, and double-spaced. The postmarked entry deadline is March 15. Additional details were sent to agriculture teachers and are available online at {www.growmark.com}. Click on “Our Commitments/Youth & Young Farmers/Essay Contest” icon. The state winner will receive a $500 scholarship, and the winner’s FFA chapter will receive a $300 award. Four runners-up each will win a $125 scholarship.
trimmed ending stocks of corn by 23 million bushels. But it raised ending stocks of beans by 35 million bushels (to a total of 195 million bushels) due in part to a 50-million-bushel cut in exports. “It (the soybean stocks estimate) is not a burdensome number, but it’s more breathing
room than we’ve had for quite awhile,” Pope said. Season-average prices were projected to range from $11.60 to $13.60 per bushel for beans (down 55 cents from last month), $6.20 to $7.20 for corn (unchanged), and $7.05 to $7.75 for wheat (down 15 cents on the high side).
Harvest nearly complete; yield estimates shrink Illinois farmers have discovered their corn crop was not as good as previously indicated, based on last week’s USDA crop report. The latest report, which included field data in the estimates, projected an average statewide corn yield of 156 bushels per acre. The statewide corn yield estimate was down 3 bushels from the October forecast. If realized, that estimate would represent a 1bushel decline from last year’s yield average (157 bushels) and an 18-bushel drop from the 2009 state average yield of 174 bushels. “The final numbers are yet to be seen,” said Jim Reed, a farmer from Monticello and president of the Illinois Corn Growers Association (ICGA). “I wouldn’t be surprised if it (the average yield) drops a little more” when the final harvest numbers are released in January. This year’s crop endured heavy rains early in the season, which delayed planting in many areas, followed by extreme heat and drought during pollination. Wind damage, hail damage, and nitrogen deficiency also were fairly common issues. “The yields are much better than we anticipated, yet they’re not as good as 2009,” Reed said. “The (yield) variability throughout the state is as severe as I’ve seen in years. Within a 10-mile radius, there could be a 100-bushel difference in corn.” USDA last week did not change its soybean yield estimate of 46 bushels per acre for Illinois. Total soybean production in the state, however, was projected to plummet 13 percent this year compared to 2010 due to fewer acres and smaller yields. Illinois soybeans last year averaged a record-high 51.5 bushels per acre. Harvest in Illinois as of the first of last week was 94 percent complete for corn (16 percent ahead of the five-year average) and 97 percent complete for soybeans (8 percent ahead of average), the National Agricultural Statistics Service Illinois field office reported. Farmers as of the first of last week also had seeded 95 percent of the winter wheat crop in Illinois compared to the average of 89 percent. Some analysts last week projected U.S. farmers will boost corn plantings in 2012. But Reed believes that decision is far from being a slam dunk for many farmers. “Given the existing high costs of inputs — fertilizer is up substantially — it will be difficult to plant more corn acres based on the current price of the crop,” he said. The average price of corn since its summer peak has declined about $1.50 per bushel, according to the ICGA president. — Daniel Grant
Page 7 Monday, November 14, 2011 FarmWeek
EmErging iSSUES
Market access evolving rapidly for small, mid-size farms Workshops’ focus commercial buyers Consumers and costs are causing more commercial buyers to seek sources for locally grown foods and opening new markets for small and mid-size farm operations, said a University of Illinois Extension economic development specialist.
“The markets are evolving rapidly. In commercial markets, there is market access for small to mid-sized producers that wasn’t there five years ago,” said John Pike, a local food systems and small farm educator based in Murphysboro. Preparing farmers to work with commercial markets will be the focus of two free MarketReady workshops Nov. 29 and Dec. 13. MarketReady is a
curriculum-based program designed to help farmers understand best marketing practices. Today’s breadth of interested commercial buyers is impressive. They range from restaurants and grocery stores to schools and other institutions. “They’re looking to source food locally when it makes sense,” Pike said. “I think there are opportu-
An Iowa soil scientist’s idea to reconnect riparian buffers with field tiles produced promising results in removing nitrate during its initial year. Dan Jaynes with USDA’s National Laboratory for Agriculture and the Environment developed a saturated buffer practice that uses a shallow subsurface drain line along a buffer. The buffer tile was connected to a traditional sixinch drainage tile that drained a 50-acre field along Bear Creek in Iowa. “It worked better than I thought it would,” Jaynes said of his first-of-its-kind project. The buffer tile and 1,000 feet of buffer took about 60 percent of the tile flow and removed 100 percent of nitrate from that water, according to Jaynes. Despite his initial success, Jaynes warned against jumping to conclusions based a year’s worth of data (February through July 2011) at one site. “It’s been one site, one year. We need to wait and see if we can replicate it,” he added. Harold Reetz, an Illinoisbased agronomist who is
familiar with Jaynes’ project, described saturated buffers as “a new approach to filter off nitrate before it gets into the water.” Actually the term “saturated” is somewhat misleading. “I don’t want any water on the surface (of the buffer) and keep the water six to 12 inches below the surface,” Jaynes said. Likewise, the buffer practice does not cause the water table to rise in the adjoining field. One unanswered question is: Where will saturated buffers work? Jaynes said the ideal location would be a buffer that is down-slope from the adjoining field. He speculated some areas in Illinois may be too flat with heavy soils, such as Drummer soil, for the system to work. Also sandy soils and buffers located along a deep ditch probably would not work, he added. With funding from a national Conservation Innovation Grant, researchers plan to test different applications for saturated buffers by installing them in nine sites in Illinois, Indiana, and Iowa. Specific
locations have not yet been determined, Jaynes said. While the saturated buffer practice holds promise in reducing nitrate levels in tile runoff, it will not provide the total solution, Jaynes cautioned. “We estimated it would maybe reduce nitrogen loading in streams by 10 percent if widely adopted,” Jaynes said. — Kay Shipman
BY KAY SHIPMAN FarmWeek
New buffer idea a promising nutrient conservation practice
Phone ‘app’ calculates Illinois N rates Illinois farmers now may access a new “app” that calculates optimum nitrogen fertilizer application rates on their Android phones, according to Dennis Bowman, University of Illinois crops Extension educator. A few years ago, U of I Extension specialists started recommending the maximum return to nitrogen (MRTN) model, which helps calculate the economic optimum nitrogen rate. A website related to the model was developed for farmers at {http://extension.agron.iastate.edu/soilfertility/Help.aspx}. This system uses information supplied by a farmer on
current fertilizer and corn prices as well as the farm’s location and crop rotation. Using that information, the system creates a customized recommendation. Recently, the U of I’s Bowman created an application for Android smartphones or tablets. The application is not yet available for the Iphone. Although the application is still being tested, Bowman said he will share it with Illinois farmers who have Android smartphones or tablets. For more information, email Bowman at ndbowman @illinois.edu and enter “Send MRTN” in the subject line.
nities available to anybody who is willing to step up and meet the needs of commercial buyers,” he added. Both MarketReady workshops will run from 9 a.m. to 3:30 p.m. The workshops will be in the Franklin County Extension office, Benton on Nov. 29 and in the Knox County Extension office, Galesburg, on Dec. 13. Each workshop is limited to 50 participants and advance registration is required. Pike described the workshops “as a way of opening the eyes of producers to these opportunities with commercial buyers.” But those needs are different from selling directly to consumers through farmers’ markets, he pointed out. Workshop topics will include: food safety issues, product liability insurance, certification and audits, pricing and invoices, packaging and labeling, supply and delivery, marketing, and quality assurance. Participants also will have
an opportunity to register on MarketMaker, a web-based marketing site, or to update their current listing on the site. The workshops are sponsored by the North Central Sustainable Agriculture
‘I think there are opportunities availa bl e t o a ny b o d y who is willing to step up and meet the needs of commercial buyers.’ — John Pike U of I Extension economic development specialist
Research and Education Program, Farm Credit Services of Illinois, and the U of I Extension. To register, call Mary Hosier at 217-333-7512 or email her at mhosier@illinois.edu.
FarmWeek Page 8 Monday, November 14, 2011
State
IFB Young Leaders share stories on new blog Young Leader manager. IFB Young Leaders are 18 Do you know why farmers to 35 year olds who either vaccinate calves, what planning farm or have a vested interalready is going on for next est in the industry. Eighteen year’s crops, or how many Young Leaders serve on the Dairy Queen blizzards can be State Committee, which is made from the chaired by Sean daily milk proArians of FarmWeekNow.com duction from Normal. an average Visit the latest posts on the new “Along with I F B Yo u n g L e a d e r b l o g a t building reladairy cow? Answers to FarmWeekNow.com. tionships, it is these quesimportant that tions and othwe continue to ers can be found on a new look to our consumers and blog recently launched by build their trust in our prodthe Illinois Farm Bureau uct,” Arians stated in his State Young Leader Commit- blog posting. tee. The target audience for the The “Generation Agriculblog is Young Leaders and ture” blog made its debut in young farmers who can use the late August and is available at medium as a networking vehi{http://ilfbyl.wordpress.com/}. cle. It features postings from State But the blog also is written Young Leader Committee to help educate consumers members from around Illinois. about farming practices, sea“It provides a little insight sonal concerns in agriculture, into who we are, what’s and other information about going on in each district, and food production. what’s going on at each “It (the blog) is for any(State Committee member’s) body, but the target audience is farm or in their daily lives,” other Young Leaders to help said Jennifer Smith, IFB grow interest in the program,” BY DANIEL GRANT FarmWeek
‘It is important that we continue to look to our consumers and build their trust in our product.’ — Sean Arians IFB Young Leader State Committee chairman
Smith said. “It’s been neat to see their personalities come out (via blog postings) and to learn about what’s going on around the state.” Those interested in the blog also can follow it on Facebook and Twitter. The Young Leader blog as of last week had accumulated more than 1,200 Facebook “likes” in about two months. “The use of social media is becoming increasingly important to agriculture,” said Monica Stevens, Young Leader State Committee member from Altona. “Social media is a valuable tool we need to utilize to educate our non-farm friends about our industry.” Young Leader state award winners are featured on the
blog. It also will be a valuable tool to help introduce six new members of the State Committee in January, Smith noted. For those still wondering, a dairy cow produces enough milk to make about 27 blizzards each day, according to a
blog posting by Brent Pollard, a committee member and dairy producer from Rockford.
Cover crops gaining ground, providing variety of benefits Midwest seminar targeting farmers
ence,” Towery added. Conservation projects using cover crops are helping to spread the word and the techBY KAY SHIPMAN nology — even on relatively FarmWeek flat fields. Farmer interest is growing For example, two Central in the use of cover crops due Illinois cover crop projects are to the variety of benefits they testing technology and pracprovide, according to consertices as well as collecting data vation experts. on the outcomes. “The benefits are well In Ford, LaSalle, Livknown ... build (soil) organic ingston, Macon, and McLean matter, control weeds, and counties, a cover crop project manage nutriprovided parents and soil ticipating farmhealth,” said ers with techniKent Bohn‘ We e n c o u r a g e cal expertise, hoff, district far mers to star t cost-share conservationist funding, and for the McLean o u t s m a l l a n d other assistance County Natural gain experience’ through the Resources local Soil and Conservation Water ConserService — Dan Towery vation Dis(NRCS). Ag Conservation Solutions tricts. Practical, A second farmer-orientcover crop ed information project in about cover crops and sucMcLean County is assessing cessful practices with them the influence of cover crops will be offered Dec. 7-8 in the on nutrient levels in field tile Decatur Conference Center, runoff. Decatur. It will be the first Cover crop “cocktail” is Midwest farmer-oriented cov- one of the hottest topics and er crop conference sponsored refers to the mixes of cover by the Soil and Water Consercrops that are planted simultavation Society (SWCS). neously in fields, Towery said. Over two days, the conferThose mixes, along with equipence will offer panels of farm- ment innovations, will be disers who will discuss their cussed at the December conexperiences, researchers who ference. will share the latest studies, The registration fee is $75 and agronomists who will and includes meals and materifocus on production practices. als. Hotel accommodations are “Farmers need to come in separate and may be arranged with an open mind and recog- by calling the conference cennize the principles (of using ter and hotel at 877-352-8800 cover crops) are the same, but and referencing the “cover what they hear works for a crops meeting.” particular farmer they will The conference will start at have to tweak the system for 9:30 a.m. Dec. 7 and conclude their farms,” said Dan Towery at 4 p.m. Dec. 8. A detailed with Ag Conservation Soluagenda and online registration tions and a SWCS board mem- are available at ber. {www.swcs.org/covercrops} “We encourage farmers to or by calling Towery at 765start out small and gain experi- 490-0197.
Page 9 Monday, November 14, 2011 FarmWeek
FRoM ThE coUNTIES
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ROWN — Farm Bureau and Brown County FFA are taking orders for Florida oranges, tangelos, grapefruit, and shelled pecans. Call the Farm Bureau office at 217-773-2634 by Thursday to order or for more information. UREAU — Farm Bureau will sponsor an educational meeting on ag kits at 4 p.m. Wednesday, Nov. 30, at the Farm Bureau office. Sara Hildebrand will present the program. Teachers who attend will receive continuing education credits. Call the Farm Bureau office at 815-875-6468 for reservations or more information. ENRY — County Farm Bureaus, University of Illinois Extension, and Black Hawk East (BHE) College will sponsor a fall equine seminar from 6:30 to 8:30 p.m. Thursday in the BHE Ag Arena. There is no charge for 4-H and FFA members. Cost for public is $5. Call the Farm Bureau office to register. • 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 Farm Bureau office at 309-937-2411 or the Rock Island County Farm Bureau at 309-736-7432 for reservations or more information. • “Bushels for Hunger” continues through Nov. 30 at participating grain elevators in Henry, Mercer, Rock Island, Stark, and Whiteside counties. All proceeds from donated grain will be distributed to the River Bend Foodbank. Contact your county Farm Bureau office for more information. ASALLE — Amish country cheese and Florida fruit may be ordered from the Farm Bureau. Stop by the office or download an order form from {www.lasallecfb.org}. • The annual meeting will be at 6 p.m. Tuesday, Nov. 29, at Pitstick’s Pavilion. Tickets are $10 and are available at the Farm Bureau office or from a member of the board of directors. • Boat storage space is available at the LaSalle County 4-H Fairgrounds. Cost is $10 a foot. Call the Farm Bureau office at 815-433-0371 to reserve a space. EE — The Lee County Farm Bureau Foundation is sponsoring a raffle with five $100 prizes and one grand prize of $1,000. Tickets are $10. The winner will be selected at the annual meeting at 10 a.m. Thursday, Jan. 19. Proceeds will benefit the foundation to fund ag literacy programs. Purchase a ticket from the Farm Bureau office or a member of the board of directors. Call the Farm Bureau office at 815-857-3531 or e-
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mail leecfb@comcast.net for more information. CDONOUGH — Farm Bureau, Haley Risk Protection and Agronomy Services, Heartland Insurance Agency, and 1st Farm Credit Services will sponsor a marketing seminar “Crop Market Outlook, Strategies and Tools” at 11:30 a.m. Monday, Nov. 21, at the SRC Community Outreach Center, Macomb. Lunch will be served. There is no charge for members, but there is a $10 charge for non-members. Call the Farm Bureau office at 309837-3350 by Thursday for reservations or more information. EORIA — Florida citrus and Terri Lynn nut orders are due by Monday, Nov. 21. Members may order oranges, grapefruit, and tangelos in 20- or 40-pound containers. Nuts are available in one-pound bags. Delivery to the Farm Bureau office will be Wednesday, Dec. 14. Call the Farm Bureau office or go to the website for an order form or more information. IATT — A raffle benefiting the Piatt County food pantries and Piatt County Farm Bureau Foundation will be at 5 p.m. Saturday, Nov. 19, at Trailblazers, Monticello. Tickets are $50 and include the raffle, steak or chicken dinner, and drinks. A silent auction will be held. Call the Farm Bureau office at 217-762-2128 for more information. • The Prime Timers will have a Thanksgiving dinner at noon Thursday, Nov. 17, at the Farm Bureau office. The Stringtown Lane Band will provide the entertainment. Cost is $9. Call the Farm Bureau office at 271762-2128 by Monday (today) for reservations. ERMILION — Florida citrus, nuts, snacks, and cheese from Ludwig Farmstead Creamery orders and payment are due by Wednesday, Nov. 23, to the Farm Bureau office. Delivery to the Farm Bureau office will be Wednesday, Nov. 23. Call the Farm Bureau office at 217-442-8713 for more information or download an order form from the website {www.vcfb.info}. • The annual meeting will be at 6 p.m. (Illinois time) 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 Farm Bureau office or from a member of the board of directors and must be purchased by Wednesday, Nov. 23. The Vermilion County Farm Bureau Foundation will sponsor its annual silent auction. • The 2012 county plat books are available at the Farm Bureau office.
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TALKING FARMLAND ISSUES
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Newly “adopted” state Rep. Rita Mayfield (D-Waukegan) discusses mine subsidence of farmland with Macoupin County Farm Bureau Treasurer Fred Emery, center, and county Farm Bureau President Ed Marburger. On her first meeting with county Farm Bureau members, Mayfield learned about pork production and petted her first pig at Dave and Mary Klaus’ hog operation. She drove a combine in Mike and Laurie Driscoll’s soybean field and saw an example of coal mine subsidence in a field. Mayfield said she would like to return during planting and plans to host Macoupin County farmers for a tour of her district next year. (Photo by Christina Nourie, Illinois Farm Bureau northeast legislative coordinator)
FarmWeek Page 10 Monday, November 14, 2011
profitability
Make sure you end up with all the grain you harvest BY RANDY HOLTHAUS
As harvest 2011 winds down, I hope this year of surprises resulted in mostly pleasant ones. A roller coaster year of cool, wet spring, excessive heat and humidity, drought, wind damage, and gloom and doom estimates has suddenly brought reports of better-than-preRandy Holthaus dicted yields, good-quality grain, and the need for very little drying. The most critical phase of the crop year is now upon us — maintaining the stored crop. Improper aeration probably accounts for more lost bushels and profitability than anything else. We are not talking about spoiled grain. We’re talking about lost saleable weight due to untimely or over aeration, causing over drying of the crop. A rule of thumb states “If you have never spoiled any grain in storage, then you are probably spending about twice what you would need to on aeration electricity.” Electrical costs aside, how many bushels have you “blown away?” Let’s say you end up with 13 percent moisture corn in storage either intentionally to be safe or by accident via your aeration practices. You have effectively
given up 3 percent of your grain as a result of shrink loss. Corn at 15 percent moisture contains 8.5 pounds of water per bushel. Corn at 13 percent moisture contains 7 pounds of water. That’s 1.5 pounds lost from every bushel. On a 25,000-bushel bin of
BY DANIEL GRANT FarmWeek
Many farmers probably aren’t thinking about a possible economic downturn given the fact that USDA projected recordhigh farm income this year. But now is the time for farmers to stress-test their operations so they are prepared for future economic challenges. That is a key message that will be directed to farmers and agribusiness professionals next month during the 2011 Illinois
Weight 10 lbs. 40 lbs. 50 lbs. Receipts
Range Per Head Weighted Ave. Price $32.37-$51.54 $40.17 $50.50-$51.50 $51.30 n/a n/a This Week Last Week 25,307 24,466 *Eastern Corn Belt prices picked up at seller’s farm
Eastern Corn Belt direct hogs (plant delivered) (Prices $ per hundredweight) This week Prev. week $83.17 $86.54 $61.55 $64.04
Change -3.37 -2.49
USDA five-state area slaughter cattle price Steers Heifers
Randy Holthaus is GROWMARK’s grain systems operations manager. His e-mail address is rholthaus@growmark.com.
Economists urge farmers to ‘stress test’ their operations
Feeder pig prices reported to USDA*
(Thursday’s price) Prev. week This week 124.93 122.00 125.10 124.00
ing effects of improper aeration, you have to be aware of the temperature and humidity of the air you are blowing through the grain. The chart above shows the moisture equilibrium of corn. The equilibrium means the resulting moisture that corn will
Farm Economics Summit set
M A R K E T FA C T S
Carcass Live
corn, that’s 37,500 pounds or 4,491 gallons of water or 670 bushels of corn you could have sold. At a market price of $6.50 per bushel, that’s $4,355 of lost revenue plus the approximately 250 KWH of electricity you’ve wasted. In order to avoid the overdry-
be when exposed to air at a given temperature and relative humidity (RH). As complicated as that may sound, if the only air that your corn is exposed to is 40 degrees and 65 percent RH, then the only moisture that it can be is 15.21 percent. Of course, everything is variable, but you also can see the effect of 60-degree air at 55 percent RH equals 12.56 percent. Being diligent, aware, and keeping the process in an acceptable range is the real key to success in winning the aeration game.
Change 2.93 1.10
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 141.67 0.51
This week $142.18
Lamb prices Slaughter Prices - Negotiated, Live, wooled and shorn 115-165 lbs. for 165-205 $/cwt. (wtd. ave. 174.11); dressed, no sales reported.
Export inspections (Million bushels) Week ending Soybeans Wheat Corn 11-03-11 49.2 10.2 22.2 10-27-11 49.6 20.8 31.1 Last year 62.6 19.4 32.7 Season total 257.2 472.2 248.3 Previous season total 393.0 491.9 322.9 USDA projected total 1375 975 1600 Crop marketing year began June 1 for wheat and Sept. 1 for corn and soybeans.
Farm Economics Summit meetings. Sponsored in part by the University of Illinois Extension, the meetings will be held Dec. 12 at the I Hotel and Conference Center in Champaign; Dec. 13 at the Center for Agriculture in Sycamore; Dec. 14 at the Best Western Prairie Inn in Galesburg; Dec. 15 at the Holiday Inn in Mt. Vernon; and Dec. 16 at the Doubletree Hotel in Bloomington. Registration for the event can be completed online at {www.farmdoc.illinois.edu}. Those with questions may call Sue Esposito at 217-333-5506. “One of the key presentations will focus on stress testing your returns for next year,” said Darrel Good, U of I Extension ag economist. “The ag economy has been pretty strong, but you need to say, OK, where are the vulnerabilities moving forward,” he continued. “Input prices are going up, and there is quite a bit of (commodity) price uncertainty.” Gary Schnitkey, U of I Extension farm management specialist, will make the stresstest presentation. Good will offer crop and livestock price prospects for 2012. “Right now, we’re looking at high-$5 corn prices and close to $13 soybean prices, so you’d say 2012 is looking like a fairly good year,” Schnitkey said. But farm input prices this year are up 11.4 percent, and for the first time could surpass $300 billion nationwide, according to USDA. And higher cash rents are expected to drive up break-even prices. “It has a large impact,” Schnitkey said. Many farmers at this point are in good shape due in large part to high commodity prices
driven by strong demand. USDA projected U.S. farm sector debt will decrease from $246.9 billion in 2010 to $242.1 billion this year. Meanwhile, farm sector assets this year were projected to rise by 6.6 percent. But the situation is different on every farm, which is why the economists believe farmers
should stress-test their own operations. “People need to push the numbers and see where their break-evens are at,” Good said. The series of meetings also will feature presentations about USDA crop reporting procedures, estate planning in uncertain times, crop insurance, and an overview of farm policy.
Page 11 Monday, November 14, 2011 FarmWeek
PROFITABILITY Corn Strategy
C AS H ST RAT E GI S T
Cents per bu.
ü2011 crop: Leave an order to sell another 10 percent if December reaches $6.45. Hedge-to-arrive (HTA) sales for late winter/spring delivery are still the best for farmstored grain. Changing spread relationships may have diminished returns for commercial storage. If so, plan sales around tax considerations. ü2012 crop: Price another 10 percent of your new crop if December 2012 futures hits $5.87. At this date, we’d rather use HTA contracts, unless you are offered a cash contract with a good basis. vFundamentals: The November USDA report confirmed ending stocks are going to be relatively tight next year, but not as tight as some hoped. The European situation has become a negative drag on all markets. But the biggest drag on corn prices remains low world wheat prices, and the impact they are having on export demand. ûFail-safe: Make sure both sales are completed if December 2011 corn falls below $6.30.
Soybean Strategy
U.S. grain exports dragging The corn trade tries to talk up this year’s pace of export sales relative to last year and the projected pace based on the USDA forecast. And sales are good, with 53 percent of the forecast of 1.6 billion bushels already sold. Soybeans may offer a useful insight. Last year at this time, we already had sold 73 percent of the export forecast, 1.57 billion bushels. That forecast was raised again in December, but by the
end of the marketing year, only 1.5 billion bushels were exported. A year ago, soybean demand from this time forward was undermined by the large South American crops. This year, corn export demand is being undermined by the ample supply of feedgrains and wheat outside the U.S, both selling at a discount to U.S. corn. Wheat exports continue to struggle because of large world supplies. Outside of the U.S. and China, production was up 8 percent, with total supplies increasing 5 percent. And expectations for another large South American crop are inhibiting soybean export demand.
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ü2011 crop: European financial uncertainty and good South American prospects continue to drag soybean prices lower. Last week’s new low closes wore our patience thin. Odds have turned against seeing prices getting much above $12 again. Use a move to $11.99 on January futures to sell another 10 percent. A HTA for winter/spring delivery may pay if you store soybeans on the farm. Commercial storage is a closer call. ü2012 crop: Wait for a rally to $11.99 on November 2012 futures to price another 10 percent. We prefer HTA contracts, but would use a cash contract if the basis level is good. vFundamentals: Export business finally picked up a little last week, but the pace of sales is still lagging last year, and our total commitments are already 370 million bushels behind last year. Planting is still going well in South America, with current moisture supplies providing good early conditions. ûFail-safe: Make sure sales
are completed if January soybeans drop below $11.60.
Wheat Strategy
ü2011 crop: The trend in wheat remains choppy due to financial market influences. Make catch-up sales if Chicago March futures trade to $6.50. Make another 20 percent if March rebounds to $6.55. Stay close to the Hotline as we could adjust targets at anytime. The carry in futures still pays for commercial storage, making winter/spring HTA contracts the best tool. ü2012 crop: Plan on making an initial 20 percent sale if
Chicago July 2012 hits $6.88. vFundamentals: The November USDA report was neutral/friendly regarding U.S. fundamentals. But world numbers continue to paint a comfortable to burdensome picture. And it’s the supplies outside of the U.S. that are keeping world business away. Recent rain and snow has improved the conditions in the Southern Plains. If anything, the world is more worried about next year’s Black Sea area crops. ûFail-safe: Make sure sales are completed if March wheat closes below $6.30.
FarmWeek Page 12 Monday, November 14, 2011
pERSpEcTIvES
Farm bill priorities should move nation, economy forward U.S. Agriculture Secretary Tom Vilsack recently laid out his priorities for the upcoming farm bill. Now this bill is about a whole lot more than farming — it’s about supporting the jobs of the future; it’s about keeping pace with the changing needs of agriculture and rural America; and it’s about providing a food supply for the nation. As Congress works to write this bill, it will have to look for ways to SCHERRIE do more with GIAMANCO less. It must simplify programs and find innovative solutions to future challenges while still making targeted investments to keep agriculture productive and rural communities vibrant. It’s our responsibility to strengthen agriculture, which today is a bright spot in the American economy. As Congress writes the bill, it should build on that record by focusing on three core principles that have shaped the success of the American farmer: maintaining a strong safety net, supporting sustainable productivity, and promoting vibrant markets. In businesses as risky as agriculture, a strong safety net can keep natural disasters from putting farm families out of
business. Our safety net should quickly provide assistance to producers of all types and sizes when they need it — and only when they need it. It is important to support beginning farmers, who are particularly vulnerable to disasters and other unpredictable events. At the same time farmers and ranchers must be able to produce an affordable, quality product year after year. That means continuing investments in research to maintain our farmers’ leadership as the most productive in the world and investing in conservation to support healthy, productive soil and a plentiful water supply. Finally, the farm bill should continue to promote vibrant, fair, and diverse markets — at home and abroad — for farmers and ranchers of all types and sizes. We should continue efforts to expanded markets for “grown-inAmerica” goods abroad, which will help support record agricultural exports and more than 1 million American jobs this year. At the same time, we should look to expand opportunities here at home for producers interested in local and regional markets. And the farm bill legislation must address the needs of rural America. It needs to continue to support our efforts to develop a renewable industry that will improve incomes for farmers,
create jobs in rural America, and increase our national security. In the past two years, USDA has helped create or save more than 250,000 rural jobs. The farm bill should improve rural development programs to make the federal government the best partner possible for people and businesses in rural communities. That means making it easier for people to access USDA support, ensuring that emerging rural businesses have the capital they need to grow and create jobs, and investing in communities pursuing regional growth. Today, the future for American agriculture is bright — as is the future of our rural communities. We must build on this positive outlook and prepare for the challenges and opportunities ahead. This farm bill should help move our nation and our economy forward, creating jobs, providing a safety net for millions of Americans, supporting rural communities, and building on the incredible success, productivity, and strength of American agriculture. Scherrie Giamanco is the state executive director of the USDA Farm Service Agency in Illinois.
LETTERS TO THE EDITOR Government robbing Americans of freedom
Editor: The farming community’s subjected to draconian regulations to control every aspect of farming and ranching, based on the debunked premise that man caused global warming. Legitimate, unbiased scientists conclude the sun as being the overwhelming influence, with man’s impact being mathematically negligible. The Environmental Protection Agency categorizes methane gas, dust, and hay as pollutants. Putting chips in livestock, sterilized seed, attempts to outlaw gardening, highly restrictive zoning, mandatory commercial drivers licenses, rural councils, windmills, etc., contradict necessity. Ethanol makes little sense, given the abundance of natural gas, coal, and oil and given the disastrous ramifications of soaring food prices. Spread the wealth, open borders, blanket amnesty, nationalized health care, carbon taxation, choking regulations, egregious insurmountable debts and deficits — they’re setting us up for catastrophic failure.
What happens when subsidies cease because there’s no money? Foreclosure! The government owns the farms, similar to fannie and freddie’s (government programs) achievement. The government will fully control the means of production of food, the major tenet to a communist society. Only the largest corporate farms will exist. Some say one world government, others say one world corporation. It’s about money and power, intentionally stripped from the people, simultaneously creating dependency on government for basic necessities. Expect a worldwide super depression followed by World War III, starting in the Middle East, enabled by our government. Corrupted politicians will provide for our safety, stripping more freedoms and retaining continuity of government; to rebuild a world society in their controlling Communist/Fascist framework. In case of the likely worstcase scenario, prudence suggests you stock heavily with the logical provisions, food and precious metals, especially lead and copper. Meanwhile, understanding
Americans must unite, educate, and fight the tyranny, those who promote such obvious debilitating bunk; rising above short-sighted, short-term individual profits. Freedom is costly, yet priceless! MARK THOMPSON, Dewey
Keep post offices open in rural areas
Editor: Recently, our community and others throughout rural Illinois and the nation were notified of possible closures of their post offices. Level 11 offices were primarily targeted for now. Level 11 and 13 offices are the most prevalent in rural America serving communities of 200 to 600 population and adjacent areas. Our post office services people on two adjacent post office rural routes, but we are the closest actual office at nine miles. The PMG (postmaster general) has a goal of reducing post offices from 32,000 to 16,000 nationwide in 10 years. This means closure of virtually all Level 11 and 13 offices and perhaps reaching higher, making post offices 10-20 miles apart. Postal officials both
blame and encourage Internet usage. They encourage Click ‘n Ship, but are not counting that revenue in office revenue parameters on which they are basing closure studies. Rural patrons tend to be older, slower in embracing new technology, have fewer computers or use them in limited ways, lack good access to highspeed service, and do not have access to alternative options of retail operations in drug/grocery/office supply stores, currency exchanges, etc. Some patrons no longer drive and are hesitant to impose on others. Retail packages weighing 13 ounces or more, unless paid for online, MUST be handled over a retail postal counter. Post offices are the heart of small rural communities that can never be replaced — they provide multiple postal services, a social component, the only face of government we see daily, and the most viable places for posting governmental notices and other area activities. I urge not only members of any community facing possible closures but all rural constituents, the Illinois Farm
Bureau, and the American Farm Bureau Federation to contact our U.S. senators and congressmen and let them know loud and clear that rural post offices are a priority. Remember, your community could be next. JOANN BUTZOW, Wellington
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