Iowa Soybean Review, November 2014 by Iowa Soybean Association

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November 2014

Where Will the Soybeans Go? BUILDING GLOBAL DEMAND

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Iowa Soybean Association

November 2014 | Vol. 27, No. 2

Record Soybean Crop: Now What? Soybean farmers did it. A projected record crop was harvested. Where will all the soybeans go?

Milk Money: ISA Explores New Market for Soybeans Dairy herds in China could be a new cash cow for Iowa soybean farmers and processors.

Maintaining Our Competitiveness

The viability of the U.S. soybean industry, and the profitability of the American soybean farmer, is not only a function of abundant supply and increasing demand, it also is dependent upon having connectivity between supply and demand.

16 ABOUT THE COVER: Grant Kimberley, director of market development at the Iowa Soybean Association, stresses the importance of soybean exports as the key to boosting prices.

Grays Harbor: Soybean Meal Ticket

After a record-setting year shipping soybean meal, Port of Grays Harbor officials say bring on more.

Bringing stories to life. There has never been a more exciting time to be involved in the agricultural industry and we look forward to showing you why with IOWA SOYBEAN ASSOCIATION LIVE — an app that brings stories to life in the Iowa Soybean Review. In three easy steps, you’ll get a more in-depth look at Iowa soybean farmers and stories that affect our lives.

Get the ISA LIVE app. Download it to your Apple or Android device by searching for IOWA SOYBEAN ASSOCIATION LIVE from your app store. Its free!

Once downloaded, start the app and hover over any photo that includes the ISA LIVE icon with your mobile device and the movie will begin to play.

Watch as exclusive stories come to life.

Iowa Soybean Association

EXECUTIVE review Kirk Leeds Chief Executive Officer Iowa Soybean Association kleeds@iasoybeans.com Twitter@kirkleeds

Now More Than Ever After a slow start in many parts of the state, Iowa farmers are wrapping up a very large harvest, with some reporting record yields. With lower prices, higher end-of-year carryover and challenges in transporting such a large crop, this looks to be a stressful year for Iowa’s soybean farmers. Certainly the old adage, “the best cure for low prices is low prices,” still has value. We do anticipate these lower prices will, over time, help to build global demand in places such as China. Other areas, such as Southeast Asia and Africa, have struggled to purchase enough soy for protein and vegetable oil to feed their growing livestock and human populations. We also know lower corn and soybean prices are good for our No. 1 customer — the livestock farmer. Additionally, tighter profit margins likely will slow the expansion of new acres being brought into production in South America. But sitting back and just waiting for lower prices to work their magic is certainly not an option for the Iowa Soybean

Association (ISA) or the farmers we serve. Now more than ever, we need to ramp up our efforts to expand soybean exports. This issue of the Iowa Soybean Review is focused on ISA’s and the soybean checkoff’s efforts to do just that. Funded by the soybean checkoff and the U.S. government, the United States Soybean Export Council (USSEC) is working in more than 70 countries around the world, constantly looking for new and larger markets for US soybeans. In September, I completed my fourth year on the USSEC executive committee, seeing first-hand the impact these strategic investments were having. Although China remains the biggest export market, we also see promising growth in countries much less often in the news. I hope you enjoy this issue of the Review, and as always, please drop me a note or give me a call if you have questions or concerns about your ISA and any of our programs or investments.

ISA ANNUAL MEETING

DECEMBER 18, 2014

EMBASSY SUITES

Official Notice

1 pm - 4 pm

101 East Locust Street | Des Moines, Iowa YOUTUBE LOGO SPECS

American Soybean Association Directors Ray Gaesser, Corning Dennis Bogaards, Pella Wayne Fredericks, Osage John Heisdorffer, Keota Mark Jackson, Rose Hill United Soybean Board Directors Laura Foell, Schaller Delbert Christensen, Audubon Larry Marek, Riverside Jim Stillman, Emmetsburg

For advertising information in the Iowa Soybean Review, please contact Larson Enterprises, (515)440-2810 or larson6@mchsi.com. Comments and statewide news articles should be sent to the above address. Advertising space reservations must be made by the first day of the month preceding publication. In consideration of the acceptance of the advertisement, the agency and the advertiser must, in respect of the contents of the advertisement, indemnify and save the publisher harmless against any expense arising from claims or actions against the publisher because of the publication of the content of the advertisement.

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Farmers adopt technology

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BLACK Reviewnoisgradients WHITE The Iowa Soybean published eight times a year by:

Iowa Soybean Association 1255 SW Prairie Trail Parkway, Ankeny, Iowa 50023 Phone: (515) 251-8640 watermark Web address: www.soybeanreview.com E-mail: aclinton@iasoybeans.com Iowa Soybean Association can also be found on these sites:stacked logo (for sharing only)

ISA Contract Lobbyist Jill Altringer and ISA Policy Director Carol Balvanz invite farmers to join them at the Iowa State Capitol in Des Moines during the 2014 Legislative session.

Roads and Bridges Still Top Soybean Farmers’ Priority List By Carol Balvanz, Policy Director

For the past six years, the condition of roads, bridges, locks and dams topped the list of priorities surfaced by the Iowa Soybean Association’s (ISA) Policy Survey. Even in a year when the Waters of the U.S. Rule and the Renewable Fuels Standard loom large, Iowa farmers again chose transportation issues as their main concern. Farmers dealing with load posted and embargoed bridges continued to tell their stories during ISA’s nine District Policy Conferences, held in August and September. Farmers cited the statistics — every year Iowa comes up more than $200 million short on funding for roads and bridges and the fuel tax has not increased since 1989. They know only about 20 percent of a fuel tax increase will actually reach rural roads, but they still see this priority as crucial to their businesses. It’s unusual for farmers to request a tax increase, yet it has been a high priority for not only ISA, but also several other farm groups during the last three legislative sessions. Legislators attending our District Policy Conferences also talked about the possibility of increasing the fuel tax during this legislative session. While many said this non-election year represented the best opportunity to do “something” to get more funding to rural roads and bridges, they disagreed about what the “something” should be. Few legislators agree that simply tacking 10 cents on to the current fuel tax will solve the backlog and create a sustainable future for Iowa’s roads. They challenged farmers to find a more creative solution to fund the

needed fix. Most agreed connecting the fuel tax to an inflation index would keep them from having to revisit the issue every few years. However, some were opposed to the automatic increases of an “auto-pilot” fuel tax. ISA has worked over the years with a broad coalition of groups interested in generating more funding for our transportation infrastructure. In the past year, some very creative solutions were proposed, even including temporary fuel tax reductions in order to connect to an index. As with most legislation, the devil is in the details. ISA members also recognize the need to help create a price differential for biodiesel at the pump, and we continue to work within our group to keep that option in the mix. ISA also has worked with the Soy Transportation Coalition to generate discussions with legislative leaders on the best way to approach the state’s infrastructure needs. In recent weeks, we’ve talked to several legislative leaders about the feasibility of conducting a rural bridge assessment to determine whether load postings are accurate and embargoes are actually needed. This type of study, conducted with load sensors attached to the bridge rather than through visual inspection, has been successful in reducing the number of embargoed bridges in other states. ISA staff are beginning pre-session meetings with other groups to determine the “creative” direction we should take in trying to find a solution to this perennial priority. Stay tuned.

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ISA to hold 50th Anniversary Symposium December 17-18, 2014 in Des Moines More than 350 soybean farmers, industry stakeholders and agricultural leaders will gather Dec. 17-18 in Des Moines to reflect and to celebrate the Iowa Soybean Association’s 50 years of serving soybean farmers and discuss priority issues facing the industry in the next 50. The program and banquet, to be held at the Embassy Suites Des Moines Downtown, will focus on the past, present and future of the soybean industry, Iowa Soybean Association and Iowa and U.S. agriculture. While there’s certainly plenty to celebrate, experts will devote considerable time to the critical issues of the day and explore future opportunities and challenges. Issues will be addressed in conversational style with audience engagement encouraged. Guest speakers (as of publication date) include: Dr. Robb Fraley, executive vice president and chief technology officer and World Food Prize laureate, Monsanto; Paul Schickler, President, DuPont Pioneer; Harry Stine, plant breeder and entrepreneur; Ken Root, farm broadcaster; Jim Knuth, Sr. Vice President, Farm Credit Services of America and market analyst Al Kluis. Support from our Sponsors:

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Pioneer Premium Seed Treatment for soybeans is applied at a DuPont Pioneer production facility or by an independent sales representative of Pioneer. Not all sales representatives offer treatment services, and costs and other charges may vary. See your Pioneer sales representative for details. Seed treatment offering is exclusive to DuPont Pioneer and its affiliates. The DuPont Oval Logo is a registered trademark of DuPont. PIONEER® brand products are provided subject to the terms and conditions of purchase which are part of the labeling and purchase documents. ® TM SM , , Trademarks and service marks of Pioneer. © 2014 PHII. DUPPSY14017VAR1_120114_ISR

USSEC Takes Moms to China to Talk GMOs By Linda Funk, Flavorful Insight

USSEC Develops Innovative GMO Program in China with U.S. Agriculture Moms Various media outlets in China have recently been increasing the public’s fear level regarding GMOs by publishing unverified and often untrue information. Because China is the number one market for U.S. soybeans, after the United States, USSEC is concerned about the myths and misinformation appearing in the popular press and wanted to find a way to reach out directly to Chinese consumers. Aware that mothers around the world are concerned for the health and wellbeing of their families, USSEC invited four moms to travel to China in September to speak about the safety of GMO soybeans. These four women are steeped in agriculture and have a deep knowledge of GMO soy. Nancy Kavazanjian of Wisconsin, Sara Ross of Iowa, LaVell Winsor of Kansas and Kristin Reese of Ohio were selected for this mission to talk with Chinese moms about the safety of GMO soybeans. USSEC set up three meetings between working moms. Two meetings were with women from public relations agencies in China and the third included Chinese women at the U.S. Embassy. During these meetings, the U.S. moms talked about their families, their farms and the importance of technology, connecting with their Chinese

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counterparts personally and professionally through pictures and sharing their stories. The meetings created a dialogue about food and families. Because social media is such an important communications tool in China, the U.S. moms met with two personality partners or bloggers who have hundreds of thousands of followers. A conversation about day-to-day activities, feeding their children and GMOs ensued. Following this meeting, both bloggers indicated their interest in approaching GMO discussions through their blogs. Many questions were asked and lots of misinformation was dispelled during all the meetings. Preand post-meeting surveys were distributed to participants, excluding the embassy participants and bloggers. “The results are positive and encouraging; over 80 percent of the participants shifted their views positively toward GMOs with one-third of those indicating they have gained a whole new perspective,” states Jane Hu, session moderator and interpreter. USSEC is working on next steps for this innovative program to continue the conversation in China to assure consumers about the safety and benefits of GMO soybeans.

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S T IN E S E E D C O MPA N Y

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SOY TALK

Early Season Insurance Policy Farmers know the importance of getting their crops off to a good start. A healthy, robust soybean seedling is vital for reaching maximum yield potential. It starts in the fall with selecting the right soybean varieties and seed treatments. “The initial stand really sets the stage for optimal yield,” says Craig Solomon, agronomist for Mycogen Seeds. “Uneven emergence will limit yield potential. Seed treatments serve as a valuable insurance policy.” Treatments offer protection for emerging seeds in many circumstances, and they really shine when farmers plant early. Planting in cold soils and in elds receiving reduced tillage are ideal circumstances for using seed treatments. “Since germination is reduced in cold soils, the seedling is exposed to diseases longer,” Solomon adds. Not all seed treatments are created equal. Farmers can consider many options based on unique circumstances. Treatments typically fall in one of ve categories: o Fungicides: Protect seeds against soil-borne fungi that attack seeds after planting o Insecticides: Protect seeds against seed-attacking insects o Nematicides: Protect against soybean cyst nematodes that restrict nutrient uptake o Plant growth regulators: Support growth and vigor of soybean seedlings o Inoculants: Ensure proper nodulation and can reduce need for nitrogen fertilizer applications Seed treatments may be especially necessary when replanting in hail-damaged elds. The presence of damaged tissue in the soil can be ideal for pathogens and pests, so extra protection could be well worth it. When deciding if seed treatments are the best option, farmers to consider planting date, pest pressure, disease history, tillage practices and cost. “The way prices are today, inputs should and will be questioned,” Solomon adds. “In most cases, I believe seed treatments are worth the expense.”

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Invest An Acre Makes Positive Impact for Food Insecure in Rural Communities Iowa soybean farmers can help the food insecure in their own communities through Invest An Acre. Invest An Acre, a project of Feeding America, the Howard G. Buffett Foundation and the Iowa Food Bank Association (IFBA), launched last month with the support of Iowa’s soybean farmers. Invest An Acre provides farmers a convenient way to donate an acre or more of crops to help fight hunger. Proceeds from the program go directly to the food banks serving the area where the contribution was made. It has distributed $1.7 million to food banks across rural America. Farmers can participate in the program with the goal of generating $50,000 in contributions for Iowa food banks. Funds donated by farmers are matched by Monsanto and Farm Credit Services of America. By gifting grain, farmers can make an immediate and positive impact in rural communities — places where food insecurity is often overlooked, says IFBA director Cory Berkenes.

The donation process is simple: 1. When you bring your crops to your local elevator, tell the operator that you’d like to donate a portion of your proceeds to Invest An Acre. To help expedite the gifting, download a donation form and provide it to the first purchaser; forms can be accessed at: http://www.investanacre.com/wp-content/ uploads/2014/01/IAA-Donation-Form.pdf. Please note: affiliated cooperatives ADM, Cargill and MFA do not require a donation form.

2. Your local elevator will make your donation to Invest An Acre and deduct the amount from your total crop proceeds. 3. Monsanto and Farm Credit will match your donation. 4. Feeding America will distribute 100 percent of your donation — plus the matching gift — to your local food bank. 5. Feeding America will send you a receipt for your donation. Feeding America is a 501(c)(3) non-profit recognized by the IRS and your donation to the Invest An Acre program. 6. Visit www.investanacre.com for more information. If you have questions or need assistance, contact Feeding America at 877-267-6547.

YOU WERE MEANT FOR THIS. When all the planting, feeding and protecting grow into more than just your yield. More than a job well done — it’s a realization. That this is what you were meant to do. We’re with you. It’s what Mycogen Seeds is all about. A shared passion for the life of your land. For the life that you love. Visit

to maximize the potential of your corn and soybeans.

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WORKING TOGETHER FOR OUR COMMON CAUSE. Thank you to these sponsors for their strong support of the Iowa Soybean Association on behalf of Iowa’s 48,000 soybean farmers.

OUR MISSION is to effectively invest our resources to enhance the lives of soybean farmers, our communities and our customers.

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Record Soybean Crop: Now what? By Matthew Wilde

Soybean farmers did it. A projected record crop was harvested. The world clamored for more soybeans after a couple years of tight supplies and high prices. U.S. farmers delivered — an estimated 3.91 billion bushels, according to the U.S. Department of Agriculture (USDA) — in a big way. Prices tumbled as a result. Now what? Two words: international marketing. Though the USDA projects a modest increase in domestic crush this marketing year, Iowa Soybean Association (ISA) leaders and economists say exports are the key to boosting demand and prices. That makes trade missions, both here and abroad, more important than ever. “Soybean buyers in Asia and other parts of the world like to do business with people they know and trust,” says Kirk Leeds, ISA CEO. “Through soybean checkoff-funded trade missions and projects, strengthening relationships and building new ones have been an emphasis for more than 30 years. “At the end of the day, importers will buy the best quality soybeans at the cheapest price,” he continues. “We want

the U.S. to be seen as a reliable, safe and consistent supplier.”

Money talks

Soybean prices dropped more than $3 per bushel from the end of June to the beginning of harvest due to speculation of a monster crop. Now that it’s reality, some analysts, like David Hightower of the Hightower Report, predict prices could bottom out at $8 to 8.50 per bushel early next year. The good news, according to the Chicago-based commodity expert, is low prices breed demand. That will cause prices to stabilize and eventually increase. In September, the USDA projected an average farm price of $9 to $11 per bushel during the 2014/15 marketing year. Hightower says cheap soybeans compared to the previous two years — farm prices averaged $14.40 and $13 per bushel, respectively, according to the USDA — will ignite a buying frenzy. He expects China, which has the world’s largest population and swine herd, and other nations with growing economies to increase purchases.

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As incomes rise, people eat better. Global meat and seafood consumption is growing, Hightower says. Soybeans are a prominent feed ingredient in swine, poultry and fish rations. “I’m confident the markets will do their job. You may see $8.50 soy, but you will see demand come out of the woodwork,” Hightower contends. China purchased an estimated record 68 million metric tons during the 2013/14 marketing year, which ended Aug. 31. About half came from the United States, or about one out of every four rows. During an ISA trade mission to China in July, leaders reconnected with longtime customers and met potential new ones. Prominent Chinese government and agribusiness officials predicted soybean imports could reach 75 million metric tons this year, which is 1 million more than USDA projections. In five years, officials estimated imports could hit 80 to 85 million metric tons. Sales for the current marketing year, which started Sept. 1, got off to a good start at the 2014 U.S. Soy Global Exchange and Midwest Specialty

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Grains Conference and Trade Show in Milwaukee in mid-September. Ten Chinese companies inked 21 soybean purchase agreements with eight U.S. exporters. The crushers committed to buy 4.8 million metric tons, or 176 million bushels, valued at $2.3 billion. Taiwanese buyers also purchased $28 million of U.S. soy. Renault Quach, vice-general manager of Dongling Grain and Oil Co. Ltd. in China, expects purchases to ramp up, which will whittle away the record crop. His company agreed to buy 400,000 metric tons during the conference. “Lower prices will encourage more purchases from the U.S.,” Quach says. Last year, his company imported 2 million metric tons, about half from the U.S. “We like U.S. soy very much. Price and quality wise, it’s very good,” he adds.

It’s all about relationships

Tom Oswald, ISA president who farms near Cleghorn, says establishing and maintaining relationships with customers has long-term value. ISA has toured Dongling Grain and Oil in the past and Quach has visited ISA and Iowa farms several times as well. He even spoke during an association function nearly two years ago. Oswald and other ISA leaders have spent countless hours talking with new and longtime customers about the size, quality, economics and logistics moving the bin-busting crop. ISA members traveled overseas, and hosted more than a dozen trade groups and trade conferences. “These are opportunities to understand what buyers are looking for to satisfy needs to move extra bushels,” says Oswald. “The relationships and contacts made all help chip away at the large production number.”

Tight soybean supplies are a distant memory. During the 2012/13 and 2013/14 marketing years, U.S. soybean ending stocks were 141 million and 130 million bushels, respectively, according to government data. This year, ending stocks are projected at 475 million bushels. The USDA raised export projections in September by 25 million bushels for the current marketing year to 1.7 billion due to increased supplies. U.S. Soybean Export Council (USSEC) CEO Jim Sutter says the organization will diligently work to increase sales even more. USSEC has a global network of offices with a sole mission of building preference for U.S. soybeans and soybean products. When interacting with buyers, Sutter says USSEC officials will emphasize, among other things: • The record crop means the U.S. is now a competitive, year-round supplier. • There’s increased participation in the U.S. Soybean Sustainability Assurance Protocol. • The intrinsic value of U.S. soybeans like high amino acid content and digestibility. “We’ve heard from customers this is a buying opportunity because of supply and price,” Sutter says. “From Egypt to China to Europe, (customers are) trying to feed a little more livestock and grow their businesses.” USSEC held a Southeast Asia Buyers Conference in August. The region has huge growth potential, according the USSEC regional director Tim Loh. During the 2013/14 marketing year, Southeast Asian nations led by Indonesia and the Philippines, imported an estimated 3.6 million metric tons of soybeans and nearly 2 million metric tons of soybean meal from the U.S.

“With such a large crop, consumption is increasing and by happenstance purchases increase,” Loh says. USSEC considers Mexico a stable market for soybeans and growing for soybean meal and oil. Ricardo Moreno Leeper, purchasing director for Proteinas Yoleicos in Mexico, buys mostly U.S. soybeans to keep two crushing plants running at full capacity. They process 3,000 tons per day. The company is expanding, using savings from lower raw material costs and the best crush margins in a decade to increase capacity by 500 tons per day. “We’ll be buying more soybeans in the future,” Leeper says.

Delivery plays a role

Economical and timely delivery of soybeans and soybean products is concern for Leeper and other buyers around the world. Mike Steenhoek, executive director of the Soy Transportation Coalition (STC) based at the ISA, recently informed buyers the United States is the most reliable, cost effective soybean supplier. He released results of a soybean checkoff-funded U.S. vs. South American Transportation Study at the U.S. Soy Global Exchange Conference. When comparing transportation costs, transit times and predictability of soybean delivery between the U.S., Brazil and Argentina to nine major destinations worldwide, the U.S. typically comes out on top in each category. For example, data shows U.S. soybeans are delivered within three days of expected arrival compared to seven from Argentina and 15 from Brazil. “It’s not only important to grow soybeans, but we need to get them to our customers in a cost-effective and reliable manner,” Steenhoek says.

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Investing Checkoff Dollars

WHERE IN THE World TOTAL VALUE OF THE U.S. SOYBEAN CROP WAS NEARLY $42 BILLION IN 2013 -SoyStats

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The International Marketing initiative enables the Iowa Soybean Association (ISA) to build markets for soybeans and soybean meal in foreign countries. ISA develops relationships with buyers around the world, often bringing in Iowa farmers for cultivating essential personal relationships.

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Strategies include: • Building customer preference for U.S. products • Differentiating U.S. soy exports • Targeted demand building • Addressing market access and trade policy issues

ISA partners with and leverages funds and strengths with aligned entities. These include the United States Soybean Export Council (USSEC), Qualified State Soybean Boards (QSSBs), the Iowa Economic Development Authority and exporters.

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THE U.S. EXPORTED 1.58 BILLION BUSHELS OF SOYBEANS, OR 48 PERCENT OF TOTAL PRODUCTION IN 2013 -SoyStats

Investing Checkoff Dollars

DO YOUR SOYBEANS GO? ONE OUT OF EVERY FOUR ROWS OF SOYBEANS PRODUCED IN IOWA IS EXPORTED TO CHINA 2 7. 6 0 2 million met ric t ons

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SOYBEANS REPRESENTED 56 PERCENT OF THE WORLD’S OILSEED PRODUCTION IN 2013 -SoyStats

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1 CHINA 2 MEXICO 3 INDONESIA 4 JAPAN 5 TAIWAN

1 MEXICO 2 PHILIPPINES 3 CANADA 4 VENEZUELA 5 THAILAND

1 CHINA 2 MEXICO 3 DOMINICAN REP. 4 CANADA 5 PERU

-Information Source: United States Soybean Export Council

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Investing Checkoff Dollars

Navigating the Turbulence

in China’s Agriculture Biotechnology By Jane Li

Continued Iowa soybean exports to the Middle Kingdom still hold strong promise, as long as: • Biotech events are commercialized after they are approved in China. • Continued open dialogue with Chinese stakeholders and outreach to Chinese consumers and media is pursued. China’s priority over the past two decades has been to develop its domestic biotechnology industry. To that end, policy makers have shown strong commitment to biotechnology research. The nation’s Medium and Long-Term Plan (MLP) for the Development of Science and Technology (2006-2020) identifies biotechnology as one of the eight areas of “frontier technologies” where China is expected to make a significant global contribution. In 2008, the State Council, the country’s cabinet, pledged to invest a total of $3.27 billion in the development of new biotechnology innovations by 2020. According to China’s twelfth Five-Year Plan on National Economic and Social Development for 2011–2015, Chinese leaders sought to pick up the pace in terms of innovation and application of biotechnology breeding in agriculture and developing new biological varieties. In 2012, China became the sixth largest producer of agricultural

biotechnology crops in the world by area with a total of four million hectares. By the end of 2013, China approved several domestically developed biotech crops including varieties of tomato, cotton, rice and corn. Approved cotton varieties have been widely cultivated across China, while commercial cultivations of GMO rice and corn have been on hold for five years by the Chinese government. The delay in approval of GMO rice and corn cultivation is a result of competing interests in the value of biotechnology in Chinese society. China’s Ministry of Agriculture (MOA) is the major authority responsible for agricultural biotechnology research and also the primary institution in charge of formulating and enforcing biosafety regulations on agricultural biotechnology and its commercialization. MOA has delayed approval for GMO rice and corn commercial cultivation, despite the fact in 2013 a group of top scientists and researchers submitted a petition to the nation’s leaders advocating commercial cultivation of GMO rice as being in the best interest of China. MOA’s cautious approach to the commercialization of domestically developed GMO crops comes from public criticism and from

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concerns expressed by counterpart organizations like the Ministry of Environmental Protection (MEP). MEP argues there may be insufficient attention paid to the potential environmental risks of GMOs due to the fact MOA research system is focused more on agricultural production than on detailed calculation of environmental impact. Scientists and researchers from the Nanjing Institutes of Environmental Science (NIES), under the auspices of MEP, have published articles on the potential environmental risks of GMO rice cultivation. MEP also continuously supports Greenpeace in raising public awareness about the biosafety of GMOs. Greenpeace has actively campaigned against GMO rice research and commercialization in China for years and its efforts have had an impact. China also has seen an increase in anti-GMO campaigns through traditional media outlets and emerging social media over the last 12 months. The arguments against biotechnology include supposed risks to the environment, concerns about government transparency, food safety

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and illegal cultivation. Public skepticism about the benefits of GMO crops in China has grown. GMO corn has faced less public opposition compared to GMO rice, in part because corn is primarily a feedstock. Most recently, the MOA announced the initiation of a pro-GMO campaign to educate the public on GMOs via TV, newspaper and the Internet. This came shortly after a speech by President Xi Jinping, urging the industry to be bold in competing with foreign GMO developers. It is too early to evaluate the public reaction to the newly launched pro-GMO campaign and its potential impact on trade, but its very presence suggests China may move towards commercialization of locally produced biotech events. While China is focusing on becoming a major domestic supplier of biotechnology, its willingness to embrace foreign biotechnology has been intermittent. Current biosafety regulations on imported biotech products create market access impediments, including asynchronous approval, no clear policy on stacked events and a restrictive low-level presence threshold of zero percent. The approval process has a reputation for being cumbersome, nontransparent and time-consuming. Over the past

year, the process has gotten slower and sometimes unpredictable. Looking forward, China will continue to improve its biotechnology research capability. Commercialization for cultivation is likely to be slow. This will result in an even more cautious approach to imported GMO varieties. On the other hand, China will continue to produce fewer soybeans over the long term, leaving it no choice but to import from international markets to support its ballooning domestic meat consumption. Iowa soybean growers and exporters will continue to see promising export opportunities to China despite occasional bumps and frustrations related to GMOs. Some steps can be taken to mitigate risks and potential losses under current circumstances: • It is critical Iowa growers understand the political environment of agriculture biotechnology development in China and not plant unapproved seed varieties that could create potential trade disruptions. It is unlikely China’s imported seed variety approval process will be streamlined in the near future. Seed companies will continue to suffer through the prolonged process and

face challenges in getting the variety approved in a reasonable timeline. • It is in the best interests of growers and farm leaders to engage with multiple levels of the industry and establish open dialogues with the target audience in China. The process can involve Chinese policy makers, scientists and researchers, farmers, industry organizations and NGOs to cover dialogue topics on the latest GMO developments in the U.S. how biotechnology impacts U.S. farmers, and other relevant topics. • ISA leadership in outreach to media and Chinese consumers is critical to help them understand the well-established facts about biotechnology and address misconceptions that cause consumer concerns. Misinformation has taken a strong hold in China’s current anti-GMO campaign and strongly affects the public perception of biotechnology.

Xueqing (Jane) Li Li is a Principal at Ag Food Consulting (AFC), located in Washington D.C. and has nearly 15 years experience in agriculture including extensive knowledge of industry, association and government network in China.

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Milk Money: ISA Explores New Market for Soybeans By Matthew Wilde

Dairy herds in China could be a new cash cow for Iowa soybean farmers and processors. Iowa Soybean Association (ISA) leaders visited the province of Inner Mongolia for the first time in late July to learn more about the nation’s growing dairy industry and inform officials how bypass soybean meal produced in Iowa can boost production. ISA and soybean industry officials toured the Fuyuan Shihan dairy farm and Yili milk processing facility near Hohhot, the province’s capital and cultural center, during a nine-day trade mission to China. ISA CEO Kirk Leeds says finding new markets for this year’s record crop is a must. That’s why the association ventured outside of the first-tier cities on China’s East Coast to second-tier

urban centers and provinces to drum up demand. “We want to make sure we continue to build relationships with customers deep into China,” Leeds says. “Inner Mongolia, home to a growing dairy industry, is poised for future growth. We wanted to demonstrate the quality of Iowa soybeans and soybean products.” China’s dairy industry was virtually nonexistent 20 years ago. Milk, yogurt and other dairy products weren’t a staple in people’s diets. Now, ultra-modern dairy operations can be found across the northern and central parts of China. Each houses several thousand to 10,000 cows. All to satisfy 1.3 billion people and a growing middle class wanting better diets, including more dairy.

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Ten years ago China had mostly small dairy herds — 5 to 10 cows per farm — totaling about two to three million cows. Today, there’s an estimated 14 million, according to industry officials, and dairies are looking to expand. Soybean meal typically makes up about 10 percent of a cow’s daily feed ration, or about two kilo grams, in China. “As far as soybeans, there’s lots of potential. There’s nothing to block China dairy producers from using them to feed their dairy herds, whether it’s meal or whole soybeans,” says Peter Mishek, president of Mishek Inc. & Associates, part of the trade mission staff. As a way to possibly increase soybean meal sales to China — whole soybeans are currently imported — Mishek and others told Chinese dairy producers

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“

We want to make sure we continue to build relationships with customers deep into China.

”

- KIRK LEEDS, Iowa Soybean Association CEO

about all natural, high bypass soybean meal made in Iowa by AGP Inc. and West Central Cooperative. It’s popular with dairies in the U.S., Europe and the Middle East. The specially processed meal allows cows to eat it and pass the majority of the protein through the rumen, which is called rumen indigestible protein. It’s then absorbed into the small intestine. Soy has essential amino acids to help increase milk production. Tests show cows with good genetics fed bypass meal can increase milk production 6 to 10 percent in two weeks, according to Mishek. It can replace some of the existing meal or other components of the feed ration. It costs about 5 to 15 percent more than conventional meal, but higher milk production typically pays for it and then some, officials say. Eric Liu, senior nutritionist at the Fuyuan Shihan Farm, part of the China Mengniu Dairy Company Ltd., one of the country’s largest dairy companies, was intrigued with the product. As was Jenny Zhao, technical support supervisor.

Both left the door open to testing and possibly purchasing bypass meal. “We plan on expanding,” Zhao says. “(Dairy) is profitable.” Built in 2013, Fuyuan dairy is as modern, if not more so, than any milking operation in the Midwest. It’s home to 4,000 cows — almost all Holsteins imported from Australia and New Zealand, though some Jerseys are present to boost butter fat content. About 2,000 are milking at any one time. Cows are milked three times a day using a 60-head carousel system. Strict biosecurity measures are followed. Upon entering the carousel, workers clean and disinfect the cow’s udder and teats and attach the milking machine. Cups automatically disengage when finished, usually before the rotation is complete. The company has nine farms ranging from 2,000 to 10,000 head. “China needs to feed 25 percent of the people on earth. You have to be big,” Mishek says. ISA officials also pitched bypass meal to Yili Industrial Group Co. Ltd.,

China’s largest dairy producer and processor. Yili owns or sources milk from 1.2 million cows. The company owns 32 farms, ranging from 3,000 to 10,000 head. Yili sales of milk, yogurt, ice cream and milk powder reached nearly $48 billion RMB Yuan, or $7.7 billion dollars last year. Sales are 24 times higher than 11 years ago, showing tremendous growth. Its Hohhot processing facility is state-of-the-art and consumer safety is a top priority. Liu Chun Hai, Yili executive director, deputy president, says there’s good growth potential for China’s dairy industry. “(Dairy demand) had really only hit the major cities, not the small to medium cities,” Liu Chun Hai says through an interpreter. Chinese officials consider cities of several million people small to medium in size. “Sounds like the sky is the limit for sales,” says Grant Kimberley, ISA market development director.

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China’s Focus on Meat Production Benefits Iowa By Matthew Wilde

Feeding 21 percent of the world’s population with only 9 percent of the earth’s arable land and six percent of water resources takes a lot of planning and help. Chinese leaders earlier this year made a strategic decision on how to best keep 1.3 billion people, with a growing appetite for meat, happy and fed. Iowa farmers will benefit as a result. The government decided to abandon its decades’ old attempt to be self-sufficient in grain production and focus on livestock and high value crops such as fruit and vegetables. That means China will rely more and more on imported soybeans, corn and dried distiller’s grains to feed hogs, poultry, fish and other animals. During a nine-day Iowa Soybean Association (ISA) China Trade Mission in July, government and agribusiness officials told ISA leaders grain imports, especially soybeans, will continue to increase. “Demand is inevitable due to feed industry growth,” says Li Xirong, secretary general of the China Feed Industry Association and director general of the National Animal Husbandry Service. “The growth is out of everyone’s expectations, including the government. U.S. soybean growers probably didn’t expected China would import so many soybeans.” Prior to 1990, China was a soybean exporter. Today, the nation is by far the largest importer. During the 2013/14 marketing year, China purchased an estimated record 68 million metric tons of soybeans, about half came from the U.S. Chinese officials predict imports could hit 80 to 85 million metric tons in five years. China’s growing middle class is craving more meat protein and better diets. Iowa farmers will benefit, says

Brian Kemp, immediate past ISA president who farms near Sibley. He participated in the latest trade mission. “Either more soybeans, soybean meal or meat from animals fed soybeans will be sold to China. Either way it’s a win-win situation,” Kemp says. Currently, China imports whole soybeans that are crushed to feed the world’s largest swine herd totaling 730 million head. The U.S. is a distant second with 80 million hogs. Chickens are the second largest consumer of meal. China is the world’s No. 1 egg producer. Soybean oil is used for cooking. Meat consumption in China has grown ten-fold to 71 million metric tons since 1975. Lui Ren, director general of the foreign affairs department for China’s State Association of Grain, says that presents huge opportunities for Iowa farmers. “The reason for soybean import growth is our large population and we use more oil than other countries,” he says. “As the living standard has increased, we eat more meat.” China’s meat consumption is far from peaking. Reports show per capita consumption has doubled since 1993 to 52.5 kilograms. The average American still eats twice as much meat each year, which indicates room to grow as incomes rise. According to the U.S. Soybean Export Council, per capita income — $9,100 — increased by eight percent per year the last two years. ISA CEO Kirk Leeds says China’s government recognizes they need help feeding their people. “Our message is we are a partner with China,” he adds. “We’re here to help supply a very affordable, safe, consistent supply of food.”

Either more soybeans, soybean meal or meat from animals fed soybeans will be sold to China. Either way it’s a win-win situation. — BRIAN KEMP, immediate past ISA president

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Maintaining Our

COMPETITIVENESS By Mike Steenhoek, Soy Transportation Coalition

The viability of the U.S. soybean industry is a result of an abundant supply and increasing demand, but also connectivity between supply and demand. America’s system of roads, bridges, highways, railroads, navigable waterways and ports allows the abundant production of soybean farmers to reach customers around the world. This has resulted in the reputation of the most cost effective and reliable supplier of soybeans and soy products on the international marketplace. Given approximately half

of U.S. soybean production is exported, farmers need to emphasize the importance of a transportation system that can deliver soybeans and soy products to customers in an economical and timely manner. Accommodating the increased productivity of the American farmer and the escalating demand from our international customers. There is growing concern the nation’s transportation system is illequipped. The U.S. economy, in general, and our agricultural industry, in particular, have long

benefitted from a transportation infrastructure established decades ago. Unfortunately, the U.S. has become a spending nation, not an investing nation. To maintain and enhance our economy, including our agricultural sector, will require a return to the investment mentality more commonplace years ago. In particular, for the U.S. soybean industry to remain the most cost effective, reliable supplier to the international marketplace, a number of key investments and decisions must be instituted. [Continued on page 26.]

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Safe, Responsible Increase in Truck Weights

A Well Maintained Lock and Dam System

Adequate Rail Service for Growing Production

Demand for trucking throughout the overall economy, including agriculture, continues to escalate, yet the miles of roadways has not kept pace. Moreover, the persistent shortage of truck drivers contributes to the supply of trucking transportation not meeting demand. As a result, the Soy Transportation Coalition (STC) and other freight stakeholders have promoted the adoption of six axle, 97,000 pounds semis on federal interstates and highways. Research documents the addition of the sixth axle will displace the increased weight of the vehicle so the impact on the road will be slightly less than a typical five axle, 80,000 pounds semi. More importantly, the increased braking friction produced by the sixth axle will result in stopping distances being slightly less than a typical five axle, 80,000 pounds semi.

Despite the the importance of our inland waterway system to the viability of the soybean industry, the condition of our lock and dam inventory continues to degrade. Significant time, energy, and resources have been devoted by agriculture and other stakeholders to promote increased investment in the system, yet progress remains elusive. The STC has been active in promoting an approach to our lock and dam system that emphasizes preservation and maintenance and more efficient financing of the system. If we continue to allow our locks and dams to degrade, the predictability of the inland waterway system will be reduced. Grain handlers, as a result, will be discouraged to invest in barge loading capacity. A critical link in the agriculture logistics chain will be diminished.

The potentially historic 2014 harvest may be accurately described as “attaching a garden hose to a fire hydrant.” Over the past year, rail service in many areas of the country suffered as a result of a sizable harvest, an extreme winter, and competition from other commodities, such as crude oil. In 2009, U.S. railroads transported 11,000 carloads of crude oil. By 2013, that number had escalated to 400,000 carloads. Agricultural customers, have experienced hardship due to this decline in rail service. It is anticipated these challenges will continue throughout the remainder of 2014 and well into next year. It is essential to have a rail system capable of meeting the needs of all customers, including agriculture. Encouraging efforts that will result in increased investment in rural America should be promoted and adopted.

Unfortunately, the U.S. has become a spending nation, not an investing nation.

Mike Steenhoek is executive

director of the Soy Transportation Coalition (STC), an initiative established in 2007 and comprised of the United Soybean Board, the American Soybean Association, and eleven state soybean boards. The Soy Transportation Coalition exists to promote a cost effective, reliable, and competitive transportation system that serves the agriculture industry.

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A Sustainable Method of Financing Roads and Bridges

Better Stewardship of Rural Bridges

While some soybeans are transported by rail and others via barge on the inland waterway system, every single bushel of soybeans at some moment will be transported over a road and bridge. The inherent problem with our nation’s approach to financing our roads and bridges is we have a fixed source of revenue (a 21 cent per gallon tax on gasoline in Iowa, for example) attempting to meet the needs of an escalating cost. All will concede the costs of steel, concrete, labor and machinery will increase over time. The inevitable result of such an approach over time will be a funding shortfall. The STC recently completed research that examined an approach designed to introduce sustainability to our financing, while having a more realistic chance of being embraced by decision makers. Failing to address this critical issue will further encumber the journey from farm to the original delivery location and beyond.

According to the U.S. Department of Transportation, Iowa ranks second out of 50 states in having the most bridges rated as structurally deficient. Soybean farmers depend upon bridges to efficiently deliver to the local elevator or processor. Many bridges across the state and country are load limited, requiring vehicles transporting soybeans and other commodities to detour. This results in additional costs being inserted in our nation’s food delivery system and diminished profitability for America’s farmers. Research has documented the reliance on visual inspection of our bridge inventory has resulted in a percentage of bridges being unnecessarily load posted or identified for rehabilitation or replacement. This not only results in unwarranted detours, but also prevents state and local governments from most efficiently allocating scarce resources to those bridges truly in urgent need of modernization and repair. The STC, Iowa State University and the Iowa Department of Transportation completed an initiative in 2013 that promoted the use of structural health monitoring technology for rural Iowa bridges in the effort to better determine their true condition.

THE POTENTIALLY HISTORIC 2014 HARVEST MAY BE ACCURATELY DESCRIBED AS “ATTACHING A GARDEN HOSE TO A FIRE HYDRANT.”

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Grays Harbor:

SOYBEAN MEAL TICKET By Matthew Wilde

After a record-setting year shipping soybean meal, Port of Grays Harbor officials say bring on more. That’s music to the ears of soybean farmers with a record crop to sell. Not to mention Southeast Asian buyers looking to increase imports. Iowa soybean farmers and industry officials joined about 25 customers from Vietnam, Sri Lanka, Malaysia, Indonesia, Thailand and Japan at the port near Aberdeen, Washington on Aug. 11 to get a first-hand look at how soybean meal is shipped to the Pacific Rim. It was part of a two-week trade mission to the Pacific Northwest and Midwest, sponsored by the Iowa 2 8 | N O V E M B E R 2 0 1 4 | S O Y B E A N R E V I E W. C O M

Soybean Association (ISA) and other state soybean associations, to help buyers better understand how soybeans are raised, processed and shipped. The U.S. Soybean Export Council says Southeast Asia is a growing market for U.S. soy and soy products, totaling more than 5.5 million metric tons or more than 220 million bushels during the 2014 marketing year. “With a record crop (an estimated 3.91 billion bushels), we need to grow international demand more than ever,” says Dennis Lindsay, an ISA director from Masonville. He was joined on the trip by fellow director Rolland Schnell, who farms near Newton.

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With a record crop, we need to grow international demand more than ever. — DENNIS LINDSAY, ISA director from Masonville

Port of Grays Harbor Executive Director Gary Nelson says the facility can certainly handle a heavier workload. Ag Processing Inc. (AGP), an Omaha, Nebraska-based cooperative with several Iowa crushing plants, started exporting mostly soybean meal and some grain out of the underutilized facility more than a decade ago. About 200,000 metric tons of meal was shipped. Meal shipments grew to about 1.35 million metric tons last year, records show. Nelson says the port is still only operating at 25 percent capacity. “We have lots of room to grow,” he adds. AGP invested about $100 million in the port. State-of-theart loading and storage facilities and rail improvements were completed in 2012. Another expansion is in the works. The co-op recently built four 80,000-bushel shipping bins and eight 350,000-bushel storage silos to speed loading. It can house 64,800 metric tons of soybean meal, more than enough to fill a Panamax ship. Grain handling capacity is 1,500 metric tons or 60,000 bushels per hour. Ships can be loaded in a matter of days and in inclement weather since the loading spout has a rain guard, which sets the facility apart. Docking fees are reasonable, officials say. Port Commissioner Jack Thompson says workers and AGP take great pride in delivering high quality products on time. It takes a ship from Grays a little more than two weeks to make it to Southeast Asia, about half the time from South America. “You can raise the best crop in the world, but if we’re

PETER MISHEK, President of the Mishek IWC. & Associates, part of the trade mission staff, talks with Southeast Asian explaining how soybean meal is shipped from the Port of Gray’s Harbor to buyers.

not holding up our end in the supply chain it doesn’t mean anything,” Thompson says. Though price is a major factor, Southeast Asian buyers — representing feed and flour mills, livestock and aquaculture operations and others businesses — say protein content, meal condition, storage longevity, transportation costs and timely shipments all play a role in purchasing decisions. The U.S. is a preferred source, many buyers say. According to participants, the checkoff-funded trade mission along with a drop in soybean prices will likely boost imports. “I can see the supply chain and how soybean meal is treated so we get exactly what we want,” says Chua Kiat Hwa, general manager of purchasing for Malayan Flour Mills Berhad. The company imported 80,000 metric tons of soybean meal last year and recently ordered a few thousand tons of whole beans from the U.S. for the first time. It’s looking to increase shipments. “I certainly like what I see,” he adds. The group represents about 2 million metric tons of soybean meal purchases. Argentina, Brazil and the U.S. account for more than 80 percent of soybean meal sales worldwide. Records show the U.S. exported 8.88 million metric tons of soybean meal during the past marketing year. The vast majority came from Iowa. The nation has exported 9.4 million metric tons this year as of July 31. Hideki Ohya, director and controller of procurement and sales of Premier Grain Sdn Bhd, based in Kuala Lumpur, Malaysia, says his company imports about 300,000 metric tons of soybean meal and 400,000 metric tons of corn a year. The majority came from Argentina in the past, but shipping delays have Ohya looking to the U.S. and AGP, which he prefers. “We can’t stop running our feed mills. We need a reliable supplier, and that’s what happens here,” Ohya says. “The (soybean meal) quality is good and it keeps longer in storage.” Schnell believes the trade mission made a positive impact that will generate sales. “This trip strengthened relationships, but it did more than that,” Schnell says. “It built trust.”

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GIS Specialists Streamline On-Farm Network® Research By Pat Reeg, On-Farm Network director

The Iowa Soybean Association (ISA) recently hosted international groups from Brazil, Ukraine, the European Feed Industry and more than 30 visitors from 18 countries associated with the International Fertilizer Development Center. Staff members from the On-Farm Network had an opportunity to present and talk with all of these groups who wanted to learn more about the issues facing Iowa soybean farmers. The challenges associated with managing crops, nutrients, pests, soil and water are commonalities shared with farmers across the globe. Thanks to the vision of directors serving on the farmer Iowa Soybean Promotion Board, Iowa soybean producers have a head start on collecting valuable data to make informed management decisions. Over the last 15 years, farmers from across Iowa have participated in On-Farm Network research projects. Participants have enrolled more than 1,000 fields in nutrient benchmark surveys, over 3,000 fields in annual stalk nitrate surveys guided by aerial imagery and conducted more than 4,000 replicated strip trials focused on advancing agriculture performance.

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Summarizing all of this spatial data would not be possible without a geographic information system (GIS). Utilizing a GIS, data can be transformed into decisions that impact productivity, profitability and environmental stewardship. Agronomic models and big data built on GIS platforms are capable of continuous improvement, but success requires performance validation of the products and practices used under a variety of environments and growing conditions. This past year, the On-Farm Network added Nathan Paul, operations manager-cropping systems and two GIS specialists, Jensen Connor and Nick Wieland. The three new staff members support the rest of the On-Farm Network team with the collection, processing, aggregation and organization of precision agriculture data. This data includes planting, application and harvesting records from a variety of precision agriculture equipment sources including: AgLeader, Case IH Advanced Farming Systems, John Deere Greenstar, Precision Planting, Raven, Satloc, Trimble and others. The GIS specialists also acquire remote sensed imagery and create targeted points used with GPS to collect scouting and sampling data from replicated strip trials.

From left: Nick Wieland, Jensen Connor and Nathan Paul

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2014 ISA On-Farm Network Cover Crop Trial

Dover Mix (17.9 ac) Untreated Check (18.3 ac)

Field: Home Product: TillageMax DOVER Mix TillageMax DoverMix rate is 30 lbs\ac

Headlands (12.62 ac)

Seed needed: 537 lbs

Non-Trial (23.25 ac)

Treatment width is 60 feet. 120 ft buffer on East and West ends of field.

An example of the On-Farm Network’s plot planner tool - Iowa Geographic Map Server Imagery

Participants in On-Farm Network replicated strip trials have seen firsthand the benefits of comparing products and management practices in fields across Iowa. These trials use scientific methodologies that are farmer-friendly and require minimal time, effort and resources. Recently, the GIS specialists have contributed to the development and testing of a new plot planner tool to make the implementation of replicated strip trials even simpler. The plot planner tool is being used by On-Farm Network staff to design trials for participants in minutes. Users of the tool create the plan by selecting a field and entering the angle, width(s) and number of treatments. The tool was extremely valuable this fall in communicating cover crop trial plans with aerial applicators as shown in the example above. The plans provided applicators with important details including field location, where to apply cover crop strips, seeding rate and total pounds of seed needed for the trials. When imported into precision

agriculture planting and application controllers, the plans are capable of changing rates automatically for operators; adding a new level of simplicity to trial implementation. In addition to streamlining data collection and creating plans, the GIS specialists also are simplifying the availability of research results through the Replicated Strip Trial Online Database, located on the On-Farm Network’s website. Users can search the database spatially by crop district, landform region, watershed and county. Filters also are available to search by crop, trial type and detail. Queried results can be sorted and return on investment can be calculated by inputting the current market and product or practice prices. The On-Farm Network continues to grow and expand to meet the needs of Iowa soybean farmers. As agriculture continues to develop across the globe, GIS will help to continuously improve efficiency and profitability of environmentally sound cropping systems. N O V E M B E R 2 0 1 4 | S OY B E A N R E V I E W. C O M | 3 1

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