Thursday December 8 Ag News

McDonald's to Feature Producers in Ad Campaign

McDonald's Midwest Regional Manager Debbie Roberts says it's going to be important for agricultural producers to continue educating people about their processes so consumers become more and more comfortable about the food they're eating. Speaking at the Nebraska Farm Bureau Federation's annual convention, Roberts also told attendees that McDonald's will present an ad campaign in 2012 that will feature farmers and growers that supply the products.

"We will bring to the consumer, the folks who are actually producing the product," Roberts says. "They will have the opportunity to meet those folks, see them on TV... put the face with the product."

According to Pork Magazine, Roberts says consumers have become increasingly savvy, and they want to know more about the source of their food.

"For us to be relevant as a brand, we constantly talk with consumers, and we listen," Roberts adds. "That's been the success of McDonald's; to make sure we have a brand that responds to consumers."

She says consumers are telling McDonald’s that their palates are varied and the growing diversity within the United States require continuous change. Another trend that she sees for the long haul is the demand for high-quality products. Along those lines, she says consumers will demand high standards associated with the sourcing of their foods.

"We rely heavily on the quality products of our farmers and growers to provide the best quality product to our consumers," Roberts says.

In terms of relying on U.S. agriculture, she says both Roberts and McDonald's see it as a key link to feeding the world.



ASA Announces 2012 Officers and Committee Assignments

The Board of Directors of the American Soybean Association (ASA) has confirmed Steve Wellman from Syracuse, Nebraska, as President and Alan Kemper from Lafayette, Indiana, as Chairman. Board members also elected Danny Murphy from Canton, Mississippi, to serve as First Vice President, an office that places Murphy in line to be ASA President in 2013.

Also elected were Randy Mann from Auburn, Kentucky, as Secretary, and Bob Henry from Robinson, Kansas, as Treasurer. Four Vice Presidents were also elected: Ray Gaesser from Corning, Iowa; Bob Worth from Lake Benton, Minnesota; Richard Wilkins from Greenwood, Delaware; and Wade Cowan from Brownfield, Texas. These soybean farmer-leaders form the nine-member ASA Executive Committee. Elections were held on Wednesday, Dec. 7, during ASA’s winter Board of Director’s meeting in Saint Louis.

“My goals include increasing demand for soybeans and soybean products, addressing regulatory issues to keep farmers competitive globally, seeking fair farm bill provisions for growers, promoting more ag trade and continuing ASA’s leadership development programs,” Wellman said. “Global demand for soy has increased 145 percent since 1990 and it is anticipated demand will continue to increase. Policy including a sound crop insurance program complemented by a revenue program that does not distort planting decisions is needed to help ensure the U.S. soybean farmer can manage production and price risk while producing soybeans to meet the needs of our consumers domestically and internationally.”

Following the elections, committee assignments were announced. Public Affairs Committee Chairman Danny Murphy is joined by committee members Jim Andrew (IA), Charles Cannatella (LA), Ray Gaesser (IA), Ted Glaub (AR), Bruce Hall (VA), Kevin Hoyer (WI), Rob Joslin (OH), Ron Kindred (IL), Kevin Marriott (Canada), Eric Maupin (TN), Matt McCrate (MO), Lance Peterson (MN), Robert Ross (OK), Andy Welden (MI), Wyatt Whitford (NC) and Richard Wilkins (M-A).

The Membership & Corporate Relations Committee Chairman is Bob Worth, with committee members Dennis Bogaards (IA), Ron Bunjer (MN), Sam Butler (AL), Dean Campbell (IA), Todd DuMond (NY), Ed Erickson (ND), Walter Godwin (GA/FL), Tim Goodenough (WI), Dave Poppens (SD), Tom Raffety (MO) and Jeff Sollars (OH).

Bob Henry was appointed Chairman of the Trade Policy & International Affairs Committee. Committee members are Wade Cowan (TX), Mike Cunningham (IL), Dan Feige (SD), M.D. Floyd (SC), Scott Fritz (IN), John Heisdorffer (IA), Mark Jackson (IA), Randy Mann (KY), Jim Miller (NE), Barb Overlie (MN), Joe Steiner (OH), Lawrence Sukalski (MN) and Jack Trumbo (KY).

Bob Henry was appointed Chairman of the Finance Committee, with Dennis Bogaards (IA), Ron Bunjer (MN), Sam Butler (AL), John Heisdorffer (IA), Ron Kindred (IL) and Jeff Sollars (OH) serving as committee members.

The Board welcomed five new members who are John Heisdorffer (IA), Matthew McCrate (MO), Thomas Raffety (MO), Ed Erickson (ND) and Dean Campbell (IL). ASA also recognized retiring directors Dan Beenken (IA), Curt Sindergard (IA), Kelly Forck (MO), Warren Stemme (MO), Jason Nelson (ND), Ron Moore (IL), and John Freeman (AR).

ASA represents all U.S. soybean farmers on domestic and international issues of importance to the soybean industry. ASA’s advocacy efforts are made possible through the voluntary membership in ASA by over 21,000 farmers in 31 states where soybeans are grown.



Aurora Cooperative Position Regarding MF Global

The Aurora Cooperative, a leading grain marketer and agricultural supplier in Nebraska and surrounding states, today communicated its current position regarding the MF Global bankruptcy proceedings with the company’s Farmer-Owners.

Though the Aurora Cooperative had used MF Global as one of its Futures Clearing Merchants (FCM) through the first half of 2011, today the Aurora Cooperative reported it has virtually no financial exposure left in the wake of MF Global’s bankruptcy.

“With the continued reporting of MF Global’s problems and the negative impact surfacing in agri-businesses and farmers across the U.S., we want our Farmer-Owners to know their company is not involved in the current and future fallout of the MF Global collapse,” said George Hohwieler, President and CEO of the Aurora Cooperative.

“This summer, our company made a strategic decision to exit its legacy credit model and move to a 14-bank, commercial lending syndication. In addition to the class-leading banking services provided, the new banking group offered the Aurora Cooperative contemporary solutions to grain hedging and risk-mitigation not previously provided by the legacy model. With this move, we combined the expertise of the Aurora Cooperative’s management team and brokerage agents, quickly installing these risk management tools. The results are very positive. It appears the banking decision has had an immediate impact, as the Aurora Cooperative is now positioned away from the MF Global debacle,” Hohwieler said.

The Aurora Cooperative will continue to update its Farmer-Owners on MF Global matters as the need arises.



CHS Committed To Help Its Owners Grow

CHS Inc., the nation's leading cooperative, is strategically and financially prepared to invest in helping its farmer, rancher and local co-op owners grow and succeed in a dynamic global agricultural marketplace.

"Our strategic aspirations are in place.  We have clearly defined strategies. And, we have the financial foundation for investing in our energy, grains and foods businesses," CHS President and Chief Executive Officer Carl Casale told the cooperative's 2,000 owners and others gathered for its annual meeting Dec. 7-8 at the Minneapolis Convention Center.

Casale said during the past year the company has made or announced plans to make investments in its businesses totaling more than $1.3 billion.

"In many cases, these investments have been directly with our owners and, in all cases, for our owners," he said. "There's no question that when cooperatives do business with cooperatives, the entire enterprise grows stronger. Our job in 2012 and beyond will be to offer choices that will help you grow in your local marketplace, and then to execute these choices well."

In November, CHS announced record earnings for fiscal 2011 (Sept. 1, 2010 – Aug. 31, 2011) of $961.4 million of which an estimated $421 million will be returned to CHS owners as cash patronage, equity redemptions and preferred stock dividends during fiscal 2012.

David Kastelic, CHS executive vice president and chief financial officer, said delivering consistently strong financial performance supports cooperative growth by maintaining a sound balance sheet, allowing investments in current businesses and in new opportunities, and supporting cash returns that support growth on the farm and at the local cooperative level.

CHS Board Chairman Michael Toelle, a Browns Valley, Minn., farmer, told members that "while we're certainly proud of that performance, what's more important is what it represents – our ability to help you grow, by providing a return on your business with CHS and your ongoing ownership in this company."

Among recent CHS highlights reported at the annual meeting were:
-    Plans for acquiring minority owners' interests in the National Cooperative Refinery Association, making CHS the sole owner by Sept. 1, 2015, and enhancing supplies of diesel and other refined fuels to its customers.
-    Purchase of a soybean crushing plant at Creston, Iowa, and planned acquisition of Solbar, an Israeli soy protein company with operations in that country, the U.S. and China.
-    Acquisition of Agri Point Limited including a western Black Sea grain terminal and access to grain origination via the Danube River in Romania, Bulgaria, Hungary and Serbia.
-    Establishment of a Seoul, South Korea, grain marketing office to better access growing Asian demand.
-    Announcements of nearly $50 million in investments to enhance refined fuels distribution infrastructure in the northern tier region including Montana and North Dakota.
-    Partnerships with member cooperatives on grain shuttle loader projects with member cooperatives in Montana, Nebraska and North Dakota.
-    Commitment to strengthening its Pacific Northwest export position through terminal investments at Kalama, Wash., and potential growth of its Temco export terminal joint venture at Tacoma, Wash.



Fortenberry Supports Bill to Prevent EPA Regulation of ‘Farm Dust’

Congressman Jeff Fortenberry, a cosponsor of the Farm Dust Regulation Prevention Act (H.R. 1633), today voted for the legislation, which passed the U.S. House of Representatives on a vote of 268-150.

"American farmers welcome the responsibility of being good stewards of our resources,” Fortenberry said.  “A potential EPA regulation trying to contain the dust kicked up by livestock, a combine in the field, or a truck on a gravel road is an unfair and needless burden on those who grow our food and live in rural America.”

H.R. 1633, which does not change existing regulations, would bar the Environmental Protection Agency from proposing or implementing regulations that would revise current rules regarding the emission of coarse particulate matter.  The bill also exempts "nuisance dust" from any future regulatory proposal regarding emissions.  It defines "nuisance dust" as particulates generated from natural sources, unpaved roads, agricultural activities and earth moving.



Smith Votes To Block EPA Over-Regulation Of Farm Dust

Congressman Adrian Smith (R-NE), co-chairman of the Congressional Rural Caucus, today issued the following statement after passage of the Farm Dust Regulation Prevention Act (H.R. 1633) in the U.S. House of Representatives:

“During a time of economic hardship, additional regulatory overreach is not the answer,” said Smith. “Farmers and ranchers already are subject to strict federal and state regulations to control dust. It makes no sense for the EPA to impose costlier requirements on top of existing standards.  This commonsense piece of legislation would provide certainty for Nebraskans and shield them from excessive federal red-tape.”

Smith is a cosponsor of H.R. 1633, which passed the House of Representatives with bipartisan support: 268-150. The EPA recently announced it would not regulate farm dust, but instead retain the current standard for coarse particulate matter which adequately protects the public health and welfare. Without legislation, however, nothing prohibits the EPA from regulating farm dust in the future.



Cattlemen Score Victory on Dust Vote

The Environmental Protection Agency (EPA) received a clear signal today, Dec. 8, 2011, from the U.S. House of Representatives that placing burdensome and scientifically unfounded regulations on U.S. farmers and ranchers is unacceptable. In a bipartisan showing, the House voted 268-150 in favor of Congresswoman Kristi Noem’s (R-S.D) Farm Dust Regulation Prevention Act of 2011(H.R. 1633). National Cattlemen’s Beef Association (NCBA) President Bill Donald calls today’s vote a win for regulatory certainty for cattlemen and women.

“Unfortunately, taking EPA’s word that farm dust will not be further regulated provides absolutely no relief to those cattle producers already faced with dust regulations. We saw legislation as the only option to give all ranchers across the country any sort of peace of mind,” said Donald, who is a rancher from Melville, Mont. “Cattlemen and women worried about being fined for moving cattle, tilling a field or even driving down a dirt road should rest assured knowing that will not be allowed to happen on our watch. The bill provides much-needed certainty for cattlemen.”

Donald said the fact EPA was even considering regulating dust at levels that would push much of the country into non-compliance was reason enough to move forward with H.R. 1633. NCBA Deputy Environmental Counsel Ashley Lyon said the legislation recognizes that dust from agricultural activities has never been shown to have an adverse health impact at ambient levels. H.R. 1633 first gives states and localities the authority in regulating dust by preventing the federal standard from applying where states or localities already have dust measures in place. In places where there is no state or local control, the bill also would exempt farm dust from the Clean Air Act unless the EPA administrator can prove it is a significant health problem and that applying the standard is worth the costs.

Donald said it is because of commonsense policymakers like Congresswoman Noem and the original cosponsors Leonard Boswell (D-Iowa), Larry Kissell (D-N.C.) and Robert Hurt (R-Va.). He said agriculture rallied behind this bipartisan legislation. Specifically, NCBA orchestrated a letter signed by 194 agricultural organizations that was sent to every member of the U.S. House of Representatives. Donald said NCBA wanted to be clear that this legislation was supported across the board by all of agriculture.

“What we have found is when we need a solution to a problem; we simply find a bigger hammer. Rallying together and working directly with members of Congress allowed us to swing a bigger hammer and score a victory for the entire industry today but our efforts cannot stop now,” said Donald. “The Senate will be a challenge. However, we are confident if agriculture continues to work together, we can expect this legislation to end up on the president’s desk.”

The legislation now moves to the Senate, where it was introduced by Senators Mike Johanns (R-Neb.) and Charles Grassley (R-Iowa) and has support from 26 bipartisan senators.  



AFTER HOUSE FARM DUST VOTE, JOHANNS CALLS FOR SENATE ACTION ON HIS FARM DUST LEGISLATION

U.S. Sen. Mike Johanns (R-Neb.) today applauded the U.S. House of Representatives for their bipartisan action prohibiting the Environmental Protection Agency (EPA) from regulating farm dust and called on the Senate to pass similar legislation he introduced in September. The bill, H.R. 1633, which passed the House today, was sponsored by Rep. Kristi Noem (R-S.D.).

"The House action today would provide legal certainty to farmers and ranchers," said Johanns. "EPA's pledge to not regulate farm dust was important, but a valid argument has been made that it does not prevent future Administrations from doing so. The House bill puts this issue to rest for good. I hope we can build on the House's bipartisan support and pass my legislation in the Senate to ensure we avoid this dust-up in the future."

Senator Johanns' legislation would enable EPA to consider the source of particulate matter while prohibiting the agency from regulating farm dust, but Senate Majority Leader Harry Reid (R-Nev.) changed the rules of the Senate in October to prevent the legislation from being offered as an amendment to a bill the Senate was considering. For more information on Senator Johanns' legislation, click here.

After Senator Johanns introduced his legislation, EPA announced it would not be revising its regulation on coarse particulate matter. Senator Johanns applauded the short-term reprieve. However, he also indicated that the flaw in the current law allowing EPA to consider onerous regulations of farm dust must be addressed to give farmers and ranchers long-term certainty. 



IA Farmland Sells for $20,000 an Acre

A 74-acre tract of Iowa farmland sold for a record $20,000 an acre Wednesday.  The previous record was $16,750 an acre, in early October.  According to the Federal Reserve Bank of Chicago, Iowa farmland increased 34% in value in the 12 months through October.  Iowa land prices have been tied to corn prices, which have doubled since June 2010, though they have softened recently.  Iowa State University will release its annual land price survey on December 14th, 2011.



USDA Implements Provisions from 2008 Farm Bill to Protect Livestock and Poultry Producers

Agriculture Secretary Tom Vilsack today announced USDA has published the Final Rule implementing the 2008 Farm Bill provisions to better protect livestock producers and poultry growers under the Grain Inspection, Packers and Stockyards Administration (GIPSA).

"As I travel throughout the countryside, I often hear from farmers and ranchers about their concerns with the marketplace becoming more concentrated," Secretary Vilsack said. "While concentration certainly comes with some efficiencies, Congress recognized in the 2008 Farm Bill that additional protections for producers are warranted. Today's rule will implement these targeted protections and help provide more fairness and transparency in the marketplace."

The provisions being finalized by the Department today were required by the 2008 Farm Bill and have been modified from the June 22, 2010 proposed rule. These sections include criteria the Secretary may consider when determining whether a live poultry dealer has provided reasonable notice to poultry growers of any suspension of the delivery of birds, when determining whether a requirement of additional capital investments over the life of a poultry growing arrangement or swine production contract constitutes a violation of the Packers and Stockyards Act and when determining if a packer, swine contractor, or live poultry dealer has provided a reasonable period of time for a grower to remedy a breach of contract that could lead to termination of a production contract.

The rule also includes a section requiring contracts that require the use of arbitration to include language on the signature page that allows the producer or grower to decline arbitration and provides criteria the Secretary may consider when determining if the arbitration process provided in a contract provides a meaningful opportunity for growers and producers to participate fully in the arbitration process.

The Department also planned to seek additional public comment on several other revised provisions from the June 22, 2010 proposed rule including changes to the tournament system of payment for poultry growers, requirements to collect and post sample contracts and to address the issue of need for producers to show harm to competition prior to asserting a violation of the Packer and Stockyards Act. However, the FY2012 Agriculture Appropriations bill passed by Congress included language prohibiting the Department from moving forward on these important provisions. Despite this setback, USDA and the Obama Administration remain committed to promoting a fair and transparent marketplace.



Brazil Soy Crop Down 5.4%

The world's No. 2 soy producer, Brazil, will see output of soybeans tumble more than 5% in the 2011/12 harvest as the more lucrative corn crop sprawls out, the government crop supply agency Conab said on Thursday.  Production is expected to fall 5.4% to 71.29 million metric tons from last year's record output of 75.32 mmt, despite a small 0.7% increase in the total soy-planted area.

On the other hand, corn output will surge 5% to 60.32 mmt from 57.51 mmt last year, Conab said in its third forecast of the 2011/12 grain crop. Planted area would rise 11% to a record 8.77 million hectares.

Conab said rains had been lighter than usual in soy areas in November, but soil moisture remained adequate for the crop's development, except in some specific parts of top soy state Mato Grosso where plants suffered from the dryness.



RFA Challenges U.S./Brazil Council on Fair Trade Commitment

The Renewable Fuels Association (RFA) today wrote to the leadership of the U.S./Brazil Council and the U.S. Chamber of Commerce calling on them to denounce ethanol trade distorting policies in Brazil.  In late November, the groups urged Congress to allow the U.S. secondary tariff on imported ethanol to expire as it is scheduled.  In addition to the inaccurate information about the U.S. and global ethanol market contained within, the letter also failed to address a number of policies in Brazil that are impeding U.S. ethanol exports to that nation.

“Please know that while we share your desire for the removal of trade distorting practices between the U.S. and Brazil, we are very concerned about the Council’s singular and biased focus on U.S. ethanol policy, and its failure to address more timely recent trade distorting practices engaged in by Brazil,” wrote RFA President and CEO Bob Dinneen.

Specifically, the RFA pointed out that the U.S. is now a major exporter of ethanol, sending nearly one billion of gallons to overseas markets including Brazil.  The reason for this growth has been U.S.-produced ethanol’s average $0.58 discount to Brazilian ethanol since July 2009 and the poor ethanol productivity of Brazilian sugar mills in recent months.  As such, the RFA expressed disappointment in the letter’s failure to address distorting trade policies in Brazil while inconsistently calling for fair trade.

In its letter, the RFA pointed out two very specific actions taken by Brazil that limit U.S. access to that market.

“First, Brazil has recently taken an action that has no other reasonable justification than to reduce the volume of U.S. exports of ethanol to Brazil.  Recently, the Brazil government reduced the volume of ethanol that can be blended in fuel from 25% to 20%.  As a result of this mandated reduction in blend volumes, U.S. exports of ethanol to Brazil are being dramatically reduced from levels that would have otherwise occurred had Brazil left the mandate at 25%,” the RFA pointed out.  The result has been an increase in Brazilian imports of dirtier, more expensive petroleum-based fuels.

“Second, while your letter to Congress is correct to state that Brazil’s 20% import tariff has been suspended, you fail to further explain that this suspension was only on a temporary basis.  While Brazil’s Chamber of Foreign Trade (CAMEX) did indeed reduce its tariff in April of 2010, the temporary suspension is scheduled to expire one day after the U.S. tariff is set to expire,” the RFA pointed out.  The RFA encourages these groups to urge the Brazilians to make their intentions known on this distorting practice.

The U.S. secondary tariff on imported ethanol is set to expire at the end of this year.  So, too, is the tax incentive for which the tariff was implemented to offset.  The RFA is not advocating for the extension of either one.  However, the RFA believes it would be smart trade policy for Congress to allow the U.S. Trade Representative the authority to negotiate away the U.S. secondary tariff in exchange for the removal of ethanol trade barriers in other nations, like those described above.

In conclusion, the RFA wrote, “If the U.S. Chamber’s Brazil U.S Council is truly concerned about removing barriers to trade between the two countries, it would certainly be better served by addressing barriers that exist on both sides of the trade relationship.  We would also expect the Council to issue the same missive to decision makers in Brazil, and support the U.S. ethanol industry’s efforts to remove barriers to our exports.  Trade with Brazil must be free and fair.”




Smithfield 2Q Net Falls 16%

Smithfield Foods Inc.'s fiscal second-quarter earnings fell 16% as the country's top pork producer saw a significant jump in input costs.

Smithfield -- whose brands also include John Morrell, Armour and Farmland -- has seen its revenue grow in recent quarters on strong demand from foreign markets. But like other livestock producers, the company's bottom line faces challenges from persistently high feed costs.

Smithfield has warned that its hog-production business could face losses in the fiscal third and fourth quarters as corn costs jump and prices for animals fall on a seasonal basis. But Standard & Poor's Ratings Services said in October it expects higher pricing for hogs and pork to help Smithfield sustain its current level of adjusted earnings for the rest of the fiscal year, despite possible pressure from slower economic growth and sustained higher feed costs. On that opinion, S&P also raised its rating on Smithfield a notch to double-B-minus, which is still three steps below investment-grade status.

For the quarter ended Oct. 30, Smithfield reported a profit of $120.7 million, or 74 cents a share, down from $143.7 million, or 86 cents, a year earlier. Excluding early debt-extinguishment charges and other items, earnings fell to 76 cents from 80 cents. Sales jumped 10% to $3.31 billion.

Gross margin fell to 12.7% from 14.4% as input costs jumped 13%.

Total pork sales -- the biggest contributor to Smithfield's revenue -- rose 12%, reflecting an increase of 18% for fresh pork and 6.9% for packaged meats. Packaged foods is a key area of expansion for many meat companies, including Smithfield, as branded and packaged meat products are typically more profitable than sales of commoditized products like live animals and fresh meat. Smithfield backed its full-year forecast of 3% sales volume growth for packaged meats.

The hog-production segment's sales jumped 11%, while its international business saw 19% growth.



Smithfield to Nix Hog Gestation Crates

Smithfield Foods Inc., the world's largest pork producer, said Thursday it plans to end the practice of keeping pregnant hogs at the company's farms in small metal crates.  The Smithfield, Va.-based company, which has been criticized for continuing to breed sows in gestation crates that severely restrict the animals' movement, said it will phase out the use of gestation crates at its facilities by 2017. By the end of this year, the company said that 30 percent of the sows at its farms will be in group housing rather than the crates.

"(Our customers) want us to do that, and we've heard them loud and clear," CEO Larry Pope said in a conference call with investors regarding its second-quarter financial results. "This company is going to do what's in the best interest of the business and the best interest of our customers."

The company previously had been in the process of converting a number of its sow farms from individual gestation stalls to group housing for pregnant sows by 2017, but Pope said it "took a two-year holiday" from that conversion in order to deal with the economic downturn the last few years.