Wednesday October 26 Ag News

Panel Forecasts Record Income for Nebraska Farmers

Nebraska will see all-time record farm incomes this year along with steady employment and income growth in most industries over the next two years, according to the Nebraska Business Forecast Council.

In its latest report, the council projected solid employment and income growth in the state for 2011 as a whole. While job growth will slow in late 2011 and early 2012, it should accelerate again in the second half of 2012 and in 2013.

Farm income this year is forecast at a record $5.4 billion, up 35 percent from 2010. It is expected to remain strong in 2012 and 2013.

"As has often been the case when comparing the national economy with Nebraska's in recent years, (the state) will be better off," said Eric Thompson, University of Nebraska-Lincoln economist and director of UNL's Bureau of Business Research, which publishes the report. "Even a mediocre U.S. economy usually meant a decent economy in Nebraska. As long as the nation stays out of a recession, the state should be all right."

Nebraska's total income growth, which includes both farm and non-farm income, will be strong in 2011, with moderate growth in 2012 and 2013, the report projects.

It forecasts overall non-farm employment in Nebraska growing 1.2 percent in 2012 and 1.8 percent in 2013. Meanwhile, the council is projecting jumps of 5.4 percent in non-farm personal incomes for 2011, and 3.9 percent increases for both 2012 and 2013.

The record in farm income is the result of good crop and livestock seasons, as well as long-term economic changes in Nebraska's ag production sector, the report says. Nebraska farms have gained from rising commodity prices, increasing cooperation of key crop and livestock sectors and producers' state-of-the-art management skills.

High commodity prices reflect a long-term trend of growing incomes in the developing world, shifting the "terms of trade" in favor of U.S. agriculture, according to the report. Another reason is the preference for distiller's grain in feedlots, which has made Nebraska an attractive location for feeder cattle operations. Also, Nebraska's large farms and flat landscapes have made it an ideal location for precision agriculture equipment and techniques.

While the state's farm incomes will likely dip below 2011's expected record levels in 2012 ($4.8 billion) and 2013 ($4.7 billion), the council projects Nebraska farm incomes to remain consistently higher than a decade ago.

Other segment-specific forecasts in the report
-- The services sector, which makes up 38 percent of Nebraska employment and includes large industries such as health care, professional and scientific jobs, and arts, recreation and entertainment businesses, will see 2.3 percent employment growth in 2011, 1.8 percent in 2012 and 2.4 percent in 2013. Those growth rates amount to between 6,000 and 9,000 new jobs per year in Nebraska.

-- Nebraska's manufacturing industry should be especially solid, given its links to agriculture, and its employment growth should outperform the nation in 2012 and 2013 as the demand for food, food products and ag machinery around the world continues to grow. Durable goods employment should rise 4.1 percent in 2011, and 2.1 percent in both 2012 and 2013.

-- Financial services -- including finance, insurance and real estate -- will continue to recover more slowly. Housing-sector losses outweighed other improving sectors of the industry in 2010 and 2011, but in 2012 incremental improvements in housing should help spur new employment growth. The council forecasts that financial services employment will dip 0.5 percent in 2011, but grow 0.5 percent in 2012 and 1.5 percent in 2013.

Members of the Nebraska Business Forecast Council are John Austin, Department of Economics, UNL; Chris Decker, Department of Economics, University of Nebraska at Omaha; Tom Doering, Nebraska Department of Economic Development; Ernie Goss, Department of Economics, Creighton University; Bruce Johnson, Department of Agricultural Economics, UNL; Ken Lemke, Nebraska Public Power District; Phil Baker, Nebraska Department of Labor; Franz Schwarz, Nebraska Department of Revenue; Scott Strain, Greater Omaha Chamber of Commerce; and Thompson.



Nebraska Soybean Board November Board of Directors Meeting

The Nebraska Soybean Board will meet November 21 & 22, at the New World Inn & Conference Center, 265  33rd Ave., Columbus, Nebraska for their November Board of Director’s meeting.  The meeting will begin Monday, November 21 at 12:15 p.m.  The meeting will recess at 5:30 p.m. and reconvene at 7:30 a.m., Tuesday November 22 for other Board business concluding around 11:30 a.m.  Business items to be considered: committee reports and motions, old and new business, information reports, Board member Orientation, officer elections and committee assignments.  A complete agenda for the public meeting is available for inspection on the Nebraska Soybean Board website at www.nebraskasoybeans.org



Ten UNL Students Win Engler Scholarships

Ten College of Agricultural Sciences and Natural Resources students recently were awarded scholarships from the Engler Agribusiness Entrepreneurship Scholarship Program at the University of Nebraska-Lincoln's Institute of Agriculture and Natural Resources.

"The Engler Program began in 2010 with a generous gift of $20 million over 10 years by the Paul F. and Virginia J. Engler Foundation," said Mark Gustafson, the founding director and Paul Engler Chair of the Engler Agribusiness Entrepreneurship Program.

The purpose of the program is to identify students with the entrepreneurial drive and then teach them the skills necessary to succeed. "It has been extremely exciting to see the program develop and grow rather quickly, which indicates that students are interested in learning how to start and run their own businesses," said Gustafson.

Enrollment has more than doubled in just its second year. "Last year there were 19 students in the EAEP working towards a minor in entrepreneurship. This year an additional 40 students joined the program," said Gustafson.

Four of the students were designated Engler Scholars and received scholarships of up to $10,000 based on their need and existing scholarships and grants. These scholarships are renewable for up to three years based on student performance.

Students designated as four-year Engler Scholars are:
-- Joseph Duba, a freshman majoring in agronomy, is from Wilber, where he attended Wilber-Clatonia High School. Duba served as FFA and class president. He also was a State FFA winner with his Grain Entrepreneurship Proficiency award. Joseph's parents are Doug and Angie Duba.
-- Doug Grotrian, a freshman majoring in mechanized systems management, is from Johnson, and attended Johnson-Brock Public Schools. Grotrian graduated first in his class and was involved in 4-H, FBLA and Quiz Bowl, and served as president of his FFA Chapter and National Honor Society. Doug also received first place in the State FFA Ag Mechanics competition and was a National Top 10 Finalist in the Chevron Delo Tractor Restoration contest. His parents are Ron and Deb Grotrian.
-- Matthew Rozic is a freshman majoring in animal science. He is from Mead and attended Mead Public High School. Rozic served as an FFA officer, was awarded the Star Agribusiness Award, and placed at District and State FFA in Vegetable Production and Outdoor Recreation Proficiency awards. Rozic is the son of Bryan and Sharon Rozic.
-- Rachel Stevens is a freshman majoring in horticulture and is from Falls City. She attended Falls City High School and graduated Summa Cum Laude and ranked first in the class. In addition to serving as a class officer, Stevens also held officer roles in 4-H, FFA and youth group. She received second place at the District Land Judging Contest and also earned a Congressional Youth Leadership nomination. Rachel's parents are Dean and Deb Stevens.

In addition, five students were awarded one-year Engler Scholarships of up to $5,000. The scholarship amount students actually received is based on student need and their existing scholarships and grants.

Students receiving one-year Engler Scholarships are:
-- Haylie Lechtenberg , a sophomore agricultural business major from Butte, where she attended West Boyd High School. At UNL, Lechtenberg is a member of the Agricultural Economics Agbusiness Club and also a Teammates Mentor. Her parents are Russell and Susan Lechtenberg.
-- Matraca Meyer is a sophomore agricultural business major from Edgar, where she attended Sandy Creek High School. At UNL, Meyer is first vice president of National Agri-Marketing Association and a member of the Agricultural Economics Agbusiness Club. She is also a member of the Nebraska Ag Youth Council. Meyer is the daughter of Chris and Teresa Meyer.
-- Jessie Nielsen, a freshman majoring in horticulture is from Deshler and attended Trinity Christian Home School. Nielsen was involved with Thayer County Entrepreneurship Investigation and Community Connections as well as numerous leadership and community service projects. Jessie's parents are Phil and DeAnn Nielsen.
-- Paul Rezac is a freshman agricultural business major from Valparaiso, where he attended East Butler High School. Rezac was a member of FBLA and also served as FFA and class officer. He was awarded the FFA Star Greenhand Award and the Chapter and Greenhand degrees. Paul is the son of David and Barbra Rezac.
-- Emila Woeppel, a freshman food science and technology major is from Firth and attended Norris High School. Woeppel was a member of 4-H, 4-H Teen Council, National Honor Society, and was an FFA chapter officer. Currently, she is serving as the Nebraska State FFA vice president. Woeppel is the daughter of Ed and Lisa Woeppel.



Large Banks Cut Rates and Boost Farm Lending
Jason Henderson, Omaha Federal Reserve Branch Executive

Despite softer national farm loan activity, larger banks cut interest rates on non-real estate loans to boost farm lending in the third quarter. Large banks, those with farm loan portfolios greater than $25 million, dropped the average effective interest rate on non-real estate farm loans to 3.6 percent during the quarter, well below the rate charged at small or mid-sized banks. These lower interest rates spurred sharp annual gains in non-real estate loan volumes at large banks, compared to declines at small or mid-sized banks. Large banks originated most of their loans with foating interest rates, whereas small and mid-sized banks extended variable rates on less than half of their loans. Despite a recent decline, the risk ratings and delinquency rates on farm loans at large banks remained well above levels at other small and mid-sized banks.

Still, overall farm lending was fat in the third quarter as strong agricultural profts limited non-real estate loan demand. Operating loan volumes held steady with higher input costs, but equipment and livestock loan volumes fell below year-ago levels. Loans for farm machinery plummeted as many producers already upgraded equipment following last year’s harvest. Bankers indicated ample funds were available for qualifed borrowers, and some bankers eased collateral requirements on non-real estate loans.

In contrast, farm real estate loans accounted for a larger share of farm lending during the third quarter. National farmland values climbed higher in the second quarter, with anecdotal evidence of further gains during the third quarter. Annual farmland value gains reached record levels in many states, most notably in the Corn Belt and Northern Plains where land prices rose more than 25 percent above year-ago levels.

Agricultural banks posted solid profts in the second quarter as improved repayment rates trimmed farm loan delinquencies. Lower delinquency rates on non-real estate loans and steady delinquency rates on real estate loans helped strengthen bank profts. Moreover, a decline in the volume of farm loans 30 to 90 days past due suggests that additional declines in farm loan delinquency rates may be forthcoming.

Click this link to read more..... http://www.kansascityfed.org/publicat/research/indicatorsdata/agfinance/2011-10-ag-fin-db.pdf.  



Food Price Outlook Foresees Higher Costs Next Year

In 2011, the Consumer Price Index for all food is projected to increase 3.5 to 4.5 percent. Food-at-home prices are forecast to rise 4 to 5 percent, while food-away-from-home (restaurant) prices are forecast to increase 3 to 4 percent. Although food price inflation was relatively weak for most of 2009 and 2010, cost pressures on wholesale and retail food prices due to higher food commodity and energy prices, along with strengthening global food demand, have pushed inflation projections upward for 2011.

The all-food CPI increased 0.8 percent between 2009 and 2010, the lowest food inflation rate since 1962. Food-at-home prices increased by 0.3 percent--the lowest annual increase since 1967--with cereal and bakery product prices declining 0.8 percent and processed fruit and vegetable prices dropping 1.3 percent. Food-away-from-home prices rose 1.3 percent in 2010, the lowest annual increase for restaurant prices since 1955.

For 2012, food price inflation is expected to abate from 2011 levels but is projected to be slightly above the historical average for the past two decades. The all-food CPI is projected to increase 2.5 to 3.5 percent over 2011 levels, with food-at-home prices increasing 3 to 4 percent and food-away-from-home prices increasing 2 to 3 percent. While many inflationary pressures that drove prices up in 2011 are not expected to intensify and may even decrease in 2012, retailers have been slow to pass on cost increases to date.

Price levels in 2012 will hinge significantly on several macroeconomic factors such as weather conditions, fuel prices, and the value of the U.S. dollar.




 
Consumers say U.S. Farmers Not Responsible for Feeding the World
Research seeks to find what will be required for consumers to support today’s farming practices

A new study indicates that a large segment of consumers do not believe U.S. farmers should be responsible for addressing global hunger. In its latest analysis of consumer trust in the food system, the Center for Food Integrity (CFI) found that 40 percent of those surveyed strongly disagreed that, “the United States has a responsibility to provide food for the rest of the world.”

The study also shows that more than half the survey participants strongly agreed with the statement, “It is more important for the U.S. to teach developing nations how to feed themselves than to export food to them.” 

“These results clearly indicate that consumers do not believe U.S. farmers should be responsible for feeding the world.  Agriculture needs to find messages that deliver a direct benefit to consumers or society to build support for today’s farming practices,” said Charlie Arnot, CEO of CFI. “If consumers don’t believe U.S agriculture has a responsibility to feed the world then we can’t build consumer support for today’s farming simply by claiming we need to feed more people, unless we can build public support that feeding the world should be a priority.”

Dr. Stephen Sapp, professor of sociology at Iowa State University, says to his knowledge this is the first large-scale, nationwide survey asking Americans their opinions about U.S. agricultural policies to help feed the world. 

“Some might argue that in times of economic recession Americans are less likely to support food assistance programs,” said Sapp. “However, history shows that the opposite tends to be true.  Our nation feels obligations to engage in humanitarian efforts.  Also, it must be recognized that food exports represent an important source of income for our nation.  So, although public opinion about providing food to help feed the world is an important influence on U.S. food production policy, it is not the only factor that guides it.”

CFI’s annual Consumer Trust in the Food System research benchmarks consumer attitudes and beliefs about today’s food system. A detailed report on the findings will be a highlight of the organization’s upcoming Food System Summit. Co-sponsored by the International Food Information Council (IFIC) and the National Restaurant Association (NRA), the 6th annual Summit is scheduled for October 25-26 at the InterContinental Rosemont Hotel in Chicago. 



Agriculture Secretary Vilsack Announces Travel to Asia to Strengthen Markets for U.S. Agriculture

Agriculture Secretary Tom Vilsack announced today plans to travel to Vietnam and China in mid-November to help strengthen bilateral trade relations and support the American brand throughout the Asia Pacific region. Vilsack is the first sitting American Secretary of Agriculture to visit Vietnam.

In comments at the National Journal's Healthy Food, Healthy Planet Policy Summit in Washington, D.C., Vilsack highlighted the strong performance of the U.S. farm economy, pointing to record exports, a record trade surplus, near-record farm income, and low farm debt as signs that America's farm sector is making major contributions to the nation's overall economy.

"Thanks to the productivity of America's farmers, ranchers and producers, our trading partners in the Asia Pacific region recognize the United States as a reliable supplier of the highest-quality food and agricultural products," said Vilsack. "Under the Obama Administration, USDA has continued to expand markets for American goods abroad, worked aggressively to break down trade barriers to trade, and assisted U.S. businesses with the resources needed to reach consumers around the world. In terms of exports, we are experiencing the best years in America's history. Partnerships with growing markets like those in China and Vietnam are integral to the strength of the U.S. economy in the decades ahead."

In 2011, China moved ahead of Mexico and Canada as the United States' number one market for U.S. agricultural goods. Vietnam is one of the world's fastest growing economies and an important market for U.S. agricultural products, now valued at $1.3 billion. In the past decade, Vietnam jumped from the fiftieth (50) to fifteenth (15) position as a market for U.S. farm exports.

Agricultural exports help support more than 1 million American jobs. This year and next, U.S. agricultural exports are on track to reach new highs of $137 billion, leading to a trade surplus of over $42 billion, eight times greater than five years ago. Last week, President Obama signed new trade agreements with South Korea, Colombia and Panama. When implemented, these three agreements will increase farm exports by an additional $2.3 billion—supporting nearly 20,000 American jobs—by eliminating tariffs, removing barriers to trade and leveling the playing field for U.S. producers.

In Vietnam, Vilsack will meet with Vietnamese officials, talk with agricultural students, and thank U.S. food and agricultural businesses for bolstering the U.S. economy. Vilsack will travel to China as part of the Obama Administration's delegation attending meetings for the 22nd Joint Commission on Commerce and Trade (JCCT).



Export Exchange 2012 Set for Minneapolis Oct. 22-24

The U.S. Grains Council and the Renewable Fuels Association are pleased to announce dates for the Export Exchange 2012, an international trade conference focused on the export of U.S. coarse grains and co-products, including distiller’s dried grains with solubles (DDGS) and corn gluten. The conference and exhibition will be held Oct. 22-24, 2012, at the Minneapolis Marriott City Center. The Export Exchange is uniquely focused on connecting international buyers of U.S. coarse grains and DDGS with U.S. producers, suppliers and exporters. This event will bring together international buyers and end-users of U.S. DDGS and coarse grains with U.S. producers and agribusinesses.

“Export Exchange 2010 was a huge success,” said Wendell Shauman, USGC chairman. “People from all around the world gathered in one central location to make deals and get information regarding these vital commodities. Business contacts made during the conference are still being used today. Direct access for buyers and sellers doesn’t get much easier than meetings like the Export Exchange.”

U.S. grain farmers and ethanol producers continue to reap benefits from last year’s highly successful meeting in Chicago. Sales negotiations were conducted at the conference and confidentiality was respected, yet one Taiwanese team announced a purchase of $2.6 million in DDGS at the conference. Further discussions and contacts also led to one of Morocco’s largest feed milling operations buying U.S. DDGS directly from a Midwestern ethanol plant. The plant representative ensured specific transportation for his buyer and since the initial transaction in October, the Moroccan company has purchased three additional vessels, each carrying 12,000-15,000 metric tons of U.S. DDGS. Purchases like these are a direct result of U.S. farmer-funded programs and events.

“The Export Exchange series is an invaluable opportunity to foster greater understanding and establish new market opportunities for ethanol feed products,” said RFA President and CEO Bob Dinneen.

Additional information regarding the Export Exchange 2012 will be posted at www.exportexchange.org as it develops. Contact USGC membership coordinator Lyndsey Erb-Sharkey at lerbsharkey@grains.org to be added to a mailing list to automatically receive conference updates.

More than 500 buyers and sellers of U.S. coarse grains and co-products are expected to attend.



Rising Price of Anhydrous Ammonia Only Natural

As the price of natural gas goes up, the cost of producing anhydrous ammonia rises as well, according to a recent report from the University of Illinois.

"The two are related because natural gas is a major input into the production of anhydrous ammonia," said agricultural economist Gary Schnitkey. "It is the major variable cost item in the production of anhydrous ammonia."

Schnitkey's team looked back at the ratio of anhydrous ammonia divided by natural gas prices (anhydrous per ton and natural gas per 1,000 cubic feet). From 2001 through 2006, anhydrous ammonia prices were 49 times higher than natural gas prices.

"Since that point in time, that ratio has been much more variable and in general much higher," Schnitkey said. "In recent months, the prices have been over 100 times higher. Since 2006, we've seen commodity price increases. As the price of corn goes up, production of corn and wheat also go up. There is more demand for nitrogen fertilizers, and fertilizer companies also have to take profits," he said.

Schnitkey said before 2006 the price of anhydrous ammonia was more cost driven, and now other factors are impacting that price.

"If you're watching the price of anhydrous and want to predict increases, look at what's happening with corn prices. Keeping a close eye on that relationship could help corn growers hedge their prices," he said. "If you look at the price of anhydrous ammonia and at corn prices, you'll see that the anhydrous price follows the corn market."

The Illinois Production Cost Report by the Agricultural Marketing Service from Oct. 13 placed the average Illinois price of anhydrous ammonia at $853 per ton, up $52 per ton from the July 7 price of $801 per ton.

"Since 2007, the ratio has been spiky," Schnitkey said. "The ratio reached a high of 123 in October 2008. This high was followed by a decline, corresponding to declines in prices of many assets as the financial crisis became evident in 2008. The ratio has been high again since late 2010 through the first half of 2011, averaging close to 130."

Both of the spikes have been associated with high corn prices.

Schnitkey said high corn prices could signal shifts in crop production that could change the demand for nitrogen fertilizers. It could also signal profit taking on the part of fertilizer manufacturers.

"In any case, ammonia-to-gas price relationships have become much more variable since 2007. This suggests that ammonia price variability is not being caused by input cost factors but is more likely due to demand factors," he said.



DuPont and Plant Sensory Systems Collaborate to Increase Nitrogen Use Efficiency in Corn

DuPont and Plant Sensory Systems have entered into a collaboration to evaluate proprietary genes for increasing nitrogen use efficiency (NUE) in corn.  Under the agreement, DuPont business Pioneer Hi-Bred receives an exclusive, worldwide research and commercial license to nitrogen use efficiency genes for corn.  This agreement complements Pioneer’s ongoing research related to NUE.  Corn products developed using these genes could help growers protect yield while reducing inputs, such as nitrogen fertilizer, and decrease the energy required to apply fertilizers.

Plants use nitrogen for growth and development.  Early-season nitrogen stress can create irreversible yield loss, and nitrogen stress at any time in the plant’s life can reduce yield.  To prevent yield loss from reduced nitrogen levels, nitrogen is applied to stabilize and maximize the yield potential inherent in commercially available genetics.  Application of nitrogen represents significant cost for farmers around the world.

“Corn plants that are more efficient at using nitrogen can improve farmer profitability and productivity, while improving sustainability of agriculture worldwide,” said John Bedbrook, vice president, DuPont Agricultural Biotechnology.  “We are pleased to collaborate with Plant Sensory Systems in this important area of agricultural research to help farmers continue to improve their ability to feed their family and their communities.”

“Plant Sensory Systems is looking forward to working with Pioneer, a global leader in producing high-quality, high-yielding seeds, in developing a product to help meet the needs of a growing population in a sustainable manner,” said Kathleen Turano, president, Plant Sensory Systems.