Monday November 14 Ag News

CHS Posts Record 2011 Earnings of $961.4 Million

CHS Inc., the nation's leading cooperative, today reported earnings of $961.4 million for its 2011 fiscal year, the highest in the farmer-owned energy, grains and foods company's 80-year history.

Earnings attributed to CHS operations for fiscal 2011 (Sept. 1, 2010 – Aug. 31, 2011) increased 91 percent over the $502.2 million for fiscal 2010, representing profitability and, in some cases, record performance for CHS business operations. The earnings figure surpasses a previous record of $803.0 million set in fiscal 2008.

"While we celebrate record results for fiscal 2011, our greatest achievement this past year continued to be adding value for our producer and member cooperative owners who count on CHS as a source of energy and crop production inputs, a connection to domestic and global grain markets, and access to risk management tools," said Carl Casale, CHS president and chief executive officer.

Revenues for fiscal 2011 reached $36.9 billion, compared with $25.3 billion for fiscal 2010, reflecting continued higher values for the energy, grain and crop nutrients products that comprise the majority of CHS business. The previous record, also set in fiscal 2008, was $32.2 billion.

For the fourth quarter (June 1 – Aug. 31, 2011) CHS posted income of $206.5 million, compared with $154.1 million for the fourth quarter of fiscal 2010. Revenues for the quarter were $10.6 billion, up from $6.6 billion a year ago.

Earnings were led by the Energy segment, consisting of refined fuels, propane, renewable fuels marketing and lubricants. This was due primarily to improved margins from the refined fuels manufactured at the CHS Refinery at Laurel, Mont., and the National Cooperative Refinery Association of McPherson, Kan., in which CHS owns nearly 75 percent. CHS renewable fuels marketing and distribution business also generated record earnings. The company's lubricants and propane businesses, while profitable, were down from fiscal 2010 performance.

CHS Country Operations, with its locally controlled retail locations, generated record earnings within the company's Ag Business segment, the result of higher grain volumes and increased margins. Other Ag Business components – grain marketing, crop nutrients and oilseed processing – also contributed income ahead of fiscal 2010.  Ag Business earnings also reflect a pre-tax gain of $119.7 million on the CHS sale of its investment in Multigrain AG, a Brazil-based joint venture.

CHS reports results for its business services operations, as well as two food processing-related joint ventures, under the Corporate and Other category. CHS-owned insurance, risk management and financing businesses reported increased earnings for fiscal 2011, much of which was due to increased market volatility. The company recorded strong contributions from its 50 percent ownership of Ventura Foods, LLC, a vegetable oil-based food manufacturing business. The 24 percent CHS share of Horizon Milling, LLC, the nation's leading wheat miller, generated record returns primarily due to improved margins.

During fiscal 2011, CHS again provided a strong financial return to its owners – based on fiscal 2010 results -- in the form of $227.3 million in cash patronage, equity redemptions and preferred stock dividends. In fiscal 2012, based on 2011 earnings, the company expects to return a record $421.0 million to its owners.



Branstad to Extend Overweight Loads for Harvest

On Monday, Iowa Gov. Terry Branstad extended a proclamation to allow the transportation of overweight loads of soybeans, corn, hay, straw and stover. The proclamation takes effect today and expires after 14 days.

"Many Iowans' livelihoods depend on a smooth, efficient harvest season," said Branstad. "I am pleased to extend this proclamation, which will continue to allow the movement of Iowa's commodities and help Iowa farmers during harvest."

This proclamation applies to loads transported on all highways within Iowa, excluding the interstate system, and which do not exceed a maximum of 90,000 pounds gross weight, do not exceed the maximum axle weight limit determined under the non-primary highway maximum gross weight table in Iowa Code section 321.463 paragraph "5.b", by more than twelve and one-half percent (12.5%), do not exceed the legal maximum axle weight limit of 20,000 pounds, and comply with posted limits on roads and bridges.

This action is intended to allow vehicles transporting soybeans, corn, hay, straw, and stover to be overweight, not exceeding 90,000 pounds gross weight, without a permit, but only for the duration of this proclamation.

The Iowa Department of Transportation is directed to monitor the operation of this proclamation to assure the public's safety and facilitate the movement of the trucks involved.



USTR Applauds $1 Million Pledged At APEC For Innovative Global Food Safety Public-Private Partnership

On the sidelines of the Asia-Pacific Economic Cooperation (APEC) meetings being held this week in Honolulu, Hawaii, U.S. Trade Representative Ron Kirk welcomed the news that an innovative public private partnership has pledged $1 million for the creation of the world’s first Global Food Safety Fund for capacity building.  To be managed by the World Bank, the proposed fund will leverage the tripartite approach pioneered in APEC that enlists a wide range of stakeholders in training programs designed to enhance food safety and to facilitate trade.  These programs will enable more growers, more producers, and more food safety officials to understand and utilize preventive controls – resulting in safer food for consumers, and fewer safety incidents in food trade.

“I am pleased that such a wide range of stakeholders has come together in APEC to advance this ground-breaking approach to strengthening global food supply chains.  The creation of a Global Food Safety Fund will help prevent food safety incidents, protect public health, and lead to greater confidence in trade, thereby creating a more prosperous region,” said Ambassador Kirk.  “I expect that this powerful collaboration among food safety officials, industry experts, academics and other stakeholders can have an enduring impact on food trade, as well as on public health and food security, and I encourage continued efforts by these stakeholders to mobilize additional resources towards these goals. “

The creation of a Global Food Safety Fund has been made possible by generous seed money from the private sector, including Mars Incorporated and Waters Corporation, as well as the U.S. Agency for International Development.  Once implemented, it will take forward the strong collaboration between APEC Food Safety Cooperation Forum and the World Bank, which was formalized through a Memorandum of Understanding signed at the APEC meetings in Big Sky, Montana in May 2011.  This collaboration seeks to improve food safety competencies, laboratory proficiency, and risk-based management systems in APEC economies and then, globally.  These goals support “Feed the Future,” the U.S. global hunger and food security initiative, which supports countries in developing their agriculture sectors as a catalyst to generate broad-based economic growth that increases incomes and reduces hunger.  USTR is a Feed the Future partners.  The goals also support the Obama Administration’s food safety regulatory objectives:

“It is truly gratifying to see the great progress that has been made since Big Sky,” said Dr. Margaret Hamburg, Commissioner of the U.S. Food and Drug Administration.  “The food supply is global.  Even a single food safety incident can have a significant worldwide impact. This calls for a new strategy, one being pursued by the FDA.  We must help build strong food safety systems around the world, and create global coalitions of regulators and information networks that promote prevention-focused, risk- based assignment of resources and leverage the efforts of public and private partners.  This partnership is a step in that direction.”

The APEC Food Safety Cooperation Forum and its Partnership Training Institute Network have been working to develop reproducible training modules that address high priority food safety issues since 2008.  The Partnership Training Institute Network was a U.S.-led initiative endorsed by APEC Leaders in 2008.  Additional information is available at http://fscf-ptin.apec.org. 

Ambassador Kirk also noted that advancing regulatory cooperation and convergence are key priorities for the United States during its APEC host year, and called the work of the Food Safety Cooperation Forum and its Partnership Training Institute Network an example of the regulatory cooperation that the United States would like to see across APEC.



Canada Officially Enters Pacific Trade Talks

Prime Minister Stephen Harper said that Canada will enter talks on creating a vast trans-Pacific free trade deal, the latest boost for the U.S.-led pact after Japan joined negotiations.

Harper, who is attending an Asia-Pacific summit in Hawaii, on Sunday told reporters that Canada would formally indicate its interest in joining the negotiations on the Trans-Pacific Partnership, or TPP.

"We are indicating today our formal intention," Harper told reporters in Honolulu. "We are expressing our formal intention to join the Trans-Pacific Partnership."

Harper later met with US President Barack Obama, who welcomed Canada's interest in the TPP and discussed how to meet the future pact's "high standard for trade liberalization," according to a White House statement.

The TPP was launched in 2005 as an obscure agreement linking Brunei, Chile, New Zealand and Singapore, but Obama after taking office suddenly turned the agreement into the cornerstone of his trade policy.

The Obama administration has cast the TPP as a new 21st-century brand of trade agreement that ensures strict labor and environmental standards and lays down the rules for trade in the fast-growing Asia-Pacific region.

Harper said that Obama, in his talks ahead of Sunday's full Asia-Pacific Economic Cooperation (APEC) summit, "was very strongly indicating that he would like to see Canada join the Trans-Pacific Partnership."

Canada considered "the criteria actually set by the partnership and they're all criteria that Canada can easily meet, so it is something that we're interested in moving forward on," Harper said.

Canada already has a free trade agreement with the United States, along with Mexico, under the landmark North American Free Trade Agreement that took effect in 1994. Mexico also said it will enter the TPP talks.



Extension Sets Three-State Drainage Research Forum

Those interested in agricultural drainage research issues and projects are invited to the 12th Annual Drainage Research Forum to be held Nov. 22 at the Arrowwood Conference Center in Okoboji, Iowa. Registration is at 8 a.m.; the program runs from 9 a.m.- 4:15 p.m. The forum is sponsored by Iowa State University, University of Minnesota and South Dakota State University.

The program features results and updates on drainage research and implementation projects by university and agency research leaders. A selected list of presentation topics at the forum includes biomass production strategies and potential drainage impacts, two-stage ditch design, pumped outlets and farmer perspectives on emerging drainage practices.

The Drainage Research Forum is intended for all drainage stakeholders, including state and federal agency staff, county supervisors, crop consultants, academics, contractors, producers and others interested in drainage research issues in the upper Midwest.The registration fee, which includes lunch and refreshments, is $60 for those registered by midnight, Nov. 16. Late registration is $75. Registrations will be accepted the day of the program. Additional information, a detailed agenda and online registration are available at www.aep.iastate.edu/drf.



New Dairy Economist Begins Work on Behalf of Dairy Producers

In the two months since he officially began his work as a dairy economist with the Midwest Dairy Foods Research Center, Marin Bozic (MAH rin BO zic) has traveled more than 5,000 miles getting to know the Midwest dairy industry.  The people and companies he’s met during those travels are providing the input he needs for his new job identifying and quantifying opportunities for dairy producers to capture economic benefits from the consumer market.

Bozic is an assistant professor of dairy foods marketing economics in the Department of Applied Economics at the University of Minnesota, a position funded by dairy producers through Midwest Dairy Association.  He completed his doctorate at the University of Wisconsin in Madison just before he started work in August. A native of Croatia, Bozic was selected by a committee of Midwest dairy industry leaders last spring.  They had identified a void in the economic research available to the industry – one that could provide the economic analysis for developing and delivering dairy foods and ingredients to meet consumer needs, and drive dairy demand and consumption.

“The position is unique,” says Bozic.  “Dairy economists usually work on policy or milk production issues.  To my knowledge, this position is the only one actively working to find the right match between dairy products and ingredients, and the market.”

“We have many resources to help producers with the economics at home on the farm,” explains Ken Herbranson, chairman of Midwest Dairy Association’s Minnesota Division board and a dairy producer from Clitherall who served on the selection committee.  “What we didn’t have was a good model to help us know if we’re producing the right products and dairy ingredients.  We hope this new focus will help us to provide the economic analysis of these important market dynamics.”

Bozic is charged with capturing synergies between the work of the Midwest Dairy Foods Research Center, various departments at the three universities connected to it (South Dakota State, Iowa State and the University of Minnesota), the industry and producers.  He’ll rely on an Economic Advisory Board to identify and prioritize issues, obtain research support and access, and evaluate results.

“I will also have the opportunity to work across disciplines,” Bozic adds.  “My job is to be objective, and to figure out what dairy products the Midwest can be most competitive in.”  He explains his role as understanding prices, markets and consumers. More specifically, he hopes to evaluate the economic value of new product development, consumer preference and willingness to pay, market penetration and markets, and feasibility of processing investments.

While he gets to know the Midwest dairy industry, Bozic is also preparing two breakout sessions for producers attending the Midwest Dairy Expo in St. Cloud Nov. 29-30.  His topics, “Don’t Bet the Farm: Surviving and Thriving in Volatile Markets” and “Dairy Exports and Your Milk Check,” capitalize on his knowledge of dairy marketing.

“It’s clear the expectations for my work are high, but I chose this position because of the wholehearted support I felt from the industry,” Bozic says.  “It feels like family already.”



Fresh Rains Ahead for Brazil Soy Belt

Rains were forecast to return to Brazil's southern grain belt and push into the center-west region, as producers rush to plant the remaining half of the soy crop, weather forecaster Somar said Monday.  A slow moving cold front should begin to break up over the main grain producing areas after Tuesday and move into Brazil's northeastern farms and then, finally, out to sea.  "Next weekend, the cold front weakens along the coast of Bahia and rains return to the center-south of Brazil," Somar projected in a 10-day extended outlook for the grain crop.

The center-west is well advanced in planting. According to state farm economics institute Imea, Brazil's No. 1 soybean-producing state of Mato Grosso was more than 75 percent seeded.  No. 2 soy state Parana was likewise well advanced in planting after regular, and not heavy, rainfall since late September allowed growers to plant earlier than average this year. The state was due to get 27 millimeters over the next two days, Somar data showed.



Australia Wheat Faces Quality Risks
Protein Content Big Issue for World's No. 3 Wheat Exporter

Australia's 2011/12 wheat harvest, now gathering pace, runs the risk of quality downgrades following wet weather although overall quality is expected to be an improvement on last year, according to Cargill Inc's Australian grain marketing chief.

"We've still got a fair way to go so at this stage there doesn't seem to be too many problems in eastern Australia although in Western Australia there's been a few issues," Mitch Morison, commercial general manager of Cargill's Australian grain trading arm. Independent forecasters are predicting that Australia, which this year over took Russia, to become the world's third-largest wheat exporter, could reap a crop approaching the record 26.3 million tonnes harvested in 2010/11.

Global commodities giant, Cargill, is one of Australia's largest grain exporters, having this year acquired the grain trading arm of AWB Ltd, the former Australian Wheat Board, which was taken over by Canada's Agrium Inc in a $1.2 billion deal.

Morison estimated around 10 percent of Australia's 2011/12 harvest had been completed but protein levels had been lower-than-normal following a wet spring which promoted plant growth at the expense of quality.

"Protein levels will be lower but overall quality will hopefully not be as bad as last year," he said.

In 2010/11, around one-third of eastern and southern Australian crops were downgraded to feed quality because of damage caused by rain during the harvest

In Western Australia, drought cut production to 4.4 million tonnes in 2010/11 compared to a 9 million tonnes harvest expected this season.

Morison said Australia's top-grade high protein wheat crop would again fall short of a normal year's harvest of at least one million tonnes.

Most of Australia's high protein Australian Prime Hard wheat is grown in Queensland and northern New South Wales states in the continent's east where harvesting is well advanced.

"The biggest concern is probably protein...the protein in the wheat in Queensland is lower than historically we would have suggested so that adds to a global shortage of high protein wheat," said Morison.



11th Annual Iowa Organic Conference Nov. 21

The 11th Annual Iowa Organic Conference, to be held Nov. 21 at the Scheman Building on the Iowa State campus, will offer many educational opportunities for those interested in organic agriculture research and practical applications for farming systems. It will cover topics of interest to organic and conventional farmers, extension staff, industry representatives and students who want to learn more about science-based research and how farmers involved in organic production apply the research.

Organic and transitioning farmers benefit from educational and certification services provided by Iowa State University (ISU) organic agriculture program and Iowa Department of Agriculture and Land Stewardship (IDALS) organic division; services rated among the top in the country. The Iowa organic conference hosted by Iowa State University is one such educational event.

Conference keynote speaker is Joe Bennett, organic agriculture manager at Cascadian Farms/Small Planet Foods, of Rockport, Wash. Bennett has a M.S. in plant pathology and a B.S. in horticulture from Oregon State University. He is currently involved in extensive on-farm research trials with Oregon State University. Cascadian Farms represents a prime example of how the demand for organic foods in the U.S. propelled a company from a small, backyard operation to a well-recognized food processor and national distributor, while remaining true to their original organic principles of growing and sourcing crops free of pesticides and synthetic fertilizers. Organic farmers who produce crops for the Cascadian Farms brand consist of small and large operations, all united by the same goal of supplying healthy, fresh food to the increasing number of organic consumers.

Conference speakers include a variety of university researchers:

-- Erin Silva, University of Wisconsin, Dale Mutch, Michigan State University, and Jim Riddle, University of Minnesota, will present research results from their organic grain crops, cover crops, vegetable and organic food research.

-- Jeff Moyer and Christine Ziegler of the Rodale Institute will address the potential for organic no-till, what some are calling the "Holy Grail" of organic production.

-- Area organic farmers will be offering tips for best practices during transition to organic farming, including weed management strategies.

-- New research from Iowa State will include robotic weeders for organic vegetable crops.

-- Kathleen Delate, Iowa State professor of agronomy and horticulture, and Craig Chase, ISU Extension program specialist, will discuss crop, soils and economic data from the 14-year LTAR (Long-Term Agroecological Research) comparison of organic and conventional rotations at the ISU Neely-Kinyon Farm in Greenfield, Iowa. In 2010, organic corn and soybean yields were equal to conventional yields, at 147 and 57 bushels per acre, respectively.

-- Cynthia Cambardella, USDA National Laboratory for Ag and the Environment, Ames, has quantified carbon sequestration benefits of the LTAR organic rotations, which can help offset harmful global CO2 emissions.

"Farmers, both conventional and organic, have had many challenges this year," Kathleen Delate said. "The cold, wet spring delayed growth and the dry periods in the middle of the season affected corn pollination and overall crop production; but prices are high and organic promises an excellent return to management, with organic corn selling for $12 a bushel and food-grade organic soybeans reaching $22 a bushel. The demand for organic foods has not ceased, even during the recession."

Craig Chase said that the time to transition into organic is as good as ever. With conventional commodity prices so high, even with a lower yield during the two-year transition to organic, farmers will have the buffer of high conventional prices; and can apply for Environmental Quality Incentives Program (EQIP) and certification cost-share programs, according to Chase. Iowa currently ranks tenth in the nation in the number of organic farmers.

An all-organic lunch, featuring local organic chicken, squash, broccoli, onions, tomatoes and apples transformed into a gourmet meal by the ISU Dining Services (DS) will be served at the conference. According to Nancy Levandowki, DS director, Iowa State students see the value of eating more sustainable foods, and are willing to pay a small premium to support family farms and the environment. One of the examples of food sourced for ISU Dining Services is the Wills Family Farm of Adel. Organic 'Liberty' and 'Redfree' apples produced by Maury Wills, head of the IDALS organic division, will be used in apple tarts topped with organic cinnamon ice cream for conference-goers.

In addition to 12 workshop sessions, 25 educational and industry exhibits will be on display at the conference. Vendor set-up and reception begins Nov. 20, from 5 to 7 p.m.; the full conference starts with a 7:30 a.m. registration on Nov. 21, at the Scheman Building in Ames. The complete agenda is available on the conference website: www.ucs.iastate.edu/mnet/organic11/home.html.

Registration and additional conference information also is available on the conference website. For information about the program content contact conference coordinator, Kathleen Delate, at 515-294-7069 or kdelate@iastate.edu. For information about registration, contact registration services at registration-info@iastate.edu.



ConAgra to Acquire Private Label Pretzel Maker

ConAgra Foods, Inc., Omaha, Neb., announced that it has agreed to acquire National Pretzel Company, based in Lancaster, Pa., from Brookstone Holdings. National Pretzel makes private label pretzels in a variety of forms, including rods, sticks, braids and twists for a variety of customers, including many of the top grocery retailers in America. Financial terms of the transaction, expected to close within 30 days and subject to customary closing conditions, were not disclosed.

"Acquiring National Pretzel Company is consistent with our strategies for growth, which include expanding our private label footprint and growing in strategic adjacencies"

National Pretzel has posted net sales growth of 7 percent annually over the last three years, with total net sales approaching $200 million. The company has a leading position in the supply of private label pretzel items, and also posts sales under the HK Anderson and Shultz labels, both of which were included in the agreement. Also included in the agreement are three bakeries located in Lancaster, Pa., Hanover, Pa. and Visalia, Calif. More than 700 National Pretzel employees are expected to join ConAgra Foods when the transaction closes.

"Acquiring National Pretzel Company is consistent with our strategies for growth, which include expanding our private label footprint and growing in strategic adjacencies," said Gary Rodkin, chief executive officer of ConAgra Foods. "National Pretzel is a leading private label manufacturer with a strong team in an attractive category. We are excited about its future growth potential and are confident we can profitably leverage our innovation and supply chain capabilities as we integrate our businesses after close of the transaction."