Thursday January 5 Ag News

Nebraska Soybean Board January Meeting

The Nebraska Soybean Board will meet January 18 & 19, at the Embassy Suites, 1040 P Street, Lincoln, Nebraska.  The meeting will begin Wednesday, January 18 at 8:00 a.m. and recess at 5:00 p.m. to meet with UNL Researchers in the evening. The meeting will reconvene on Thursday, 7:30 a.m. for other Board business concluding around 11:30 a.m.  Business items to be considered: discussion for FY12 opportunities, and committee reports and actions.  A complete agenda for the public meeting is available for inspection on the Nebraska Soybean Board website at www.nebraskasoybeans.org. 



New Year is Right Time for Dairy Producers to Find Farm Energy Opportunities

With the national energy inflation rate at 10 percent and business costs continuing to climb, the New Year is a good time to maximize farm energy efficiency and minimize monthly utility bills.

The Innovation Center for U.S. Dairy® — established by dairy producers in 2008 to foster industrywide innovation and efficiencies — urges dairy producers interested in cutting on-farm energy costs to contact their local Natural Resources Conservation Service (NRCS) office. Funding is available right now to help producers address on-farm energy use and increase efficiency. The Innovation Center and U.S. Department of Agriculture NRCS are focused on helping dairy producers learn about those opportunities.

“One of the goals of the Innovation Center Sustainability team is to work with state and local organizations to connect dairy producers with the energy and cost-saving opportunities that are immediately available,” said Barbara O’Brien, president of the Innovation Center for U.S. Dairy and senior executive vice president of Dairy Management Inc.™, which manages the dairy checkoff on behalf of the nation’s farmers. “While initiatives vary across the country, all regions offer assistance to offset the cost of farm energy audits as well as incentive and rebate programs to make equipment upgrades and retrofits more affordable.

January 2012 is the right time to take action.

Environmental Quality Incentives Program (EQIP) funding is available through NRCS for farm energy audits and equipment upgrades (available to those with qualifying audits). Producers should act now.

The first national application cutoff is Feb. 3. More details can be found through local NRCS field offices. An on-farm energy audit, also known as an Agricultural Energy Management Plan (AgEMP), is a vital decision-making tool. An energy audit can identify improvements that could reduce energy use by
10 to 35 percent — most often in areas such as lighting, milk cooling, ventilation, vacuum pumps and electric water heating.

“I think an energy audit is an excellent tool and another step in the farm plan,” said Ryan Anglin, a dairy producer from Bentonville, Ark., and chairman of the National Dairy Promotion and Research Board. Anglin recently completed an AgEMP. “It helps to have the results of the farm energy assessment in black and white. As a business man, seeing the potential for energy savings and payback period is important in making good investment decisions.”

Saving energy directly translates to cost savings and improved profitability for dairy operations. On average dairy producers spend $40 per cow per year on electricity. Improved energy efficiency can mean $4 to $14 savings per cow. This can translate into thousands of dollars per year.

“I urge producers to learn about their options to get an energy audit,” said Dan Rice of Firth, Neb., dairy producer and member of the Innovation Center’s Sustainability Council. “The energy audit just takes a few hours and is in no way intrusive; and the return on investment for the short time spent makes getting an energy audit a wise choice.” Rice said that small changes can make a difference. Recently, the lighting at Prairieland Farms was upgraded to LED incandescent fixtures. “We expect to save the farm 131,000 KwH, which could result in more than $9,000 per year.”

Producers can learn about financial assistance opportunities in one of three ways: 1) call an energy expert at 800-732-1399; 2) contact a local NRCS field office; or 3) use the Innovation Center’s easy-to-use, SaveEnergy web tool at www.USDairy.com/SaveEnergy.

The Innovation Center is supported by NRCS and is focused on accelerating energy conservation and building awareness for on-farm energy audits. The farm energy efficiency project is an effort established by U.S. dairy producers to reduce their environmental footprint while creating business value across the supply chain that benefits everyone.



Livestock, Poultry Groups Urge Congress to Reject Egg Production Mandate

A coalition of livestock and poultry organizations including the National Cattlemen’s Beef Association (NCBA); the National Pork Producers Council; the Egg Producers of America; the American Farm Bureau Federation; the American Sheep Industry Association; the National Farmers Union; the National Turkey Federation; and the National Milk Producers Federation, sent a letter urging Congress to “reject additional costly and unnecessary animal rights mandates proposed by the Humane Society of the United States (HSUS).” NCBA Executive Director of Legislative Affairs Kristina Butts said legislation to mandate on-farm production practices, like the HSUS agreement with the United Egg Producers (UEP) would do, sets a dangerous precedent to allow the federal government to set prescriptive production practices.

“While the HSUS-UEP agreement currently only applies to egg production by amending the Egg Inspection Act, this legislation could create a very slippery slope to allow bureaucrats in Washington, D.C., to tell farmers and ranchers how to raise their animals. Cattlemen take their responsibility to care for their animals very seriously and for more than two decades have voluntarily participated in industry-led, science-based production practice programs and initiatives,” Butts said. “Beef industry programs, like the Beef Quality Assurance program, are based on practical experience and the most up-to-date science. They are updated regularly to ensure the use of the newest scientifically sound information and provide flexibility to meet the diversity of the industry. They should never be misconstrued as the basis for regulatory or government mandated production practices.”

The coalition pointed to the World Organization for Animal Health (OIE) as evidence that mandated prescriptive production practices are not in the best interest for promoting animal care. According to the letter, “OIE has recognized that prescriptive standards, such as those proposed, are not in the best interest of promoting true animal welfare because they cannot be adapted for different farming models and they hinder efficient modifications as new science becomes available.”

The letter also pointed to European egg production mandates that have resulted in increased production costs for producers and higher costs for consumers. In Germany, a 2010 enriched cage regulation has resulted in 20 percent less production. Meanwhile, in Britain, hen housing conversion has increased operating costs by as much as 8 percent.

“Ultimately, European animal housing requirements have cost consumers and farmers like. We respectfully contend that the European experience is not one American livestock farmers or consumers should want to replicate,” the coalition penned. “While our organizations continue to make considerable animal care investments with an eye toward continued animal welfare improvements, this proposal would stifle the industry for years to come.”



Retail Food Prices Moderate Slightly in Fourth Quarter

Retail food prices at the supermarket declined slightly during the fourth quarter of 2011, according to the latest American Farm Bureau Federation Marketbasket Survey.

The informal survey shows the total cost of 16 food items that can be used to prepare one or more meals was $49.23, down $3.89 or about 7 percent compared to the third quarter of 2011. Of the 16 items surveyed, 14 decreased and two increased in average price compared to the prior quarter. The overall basket of foods was up about 5 percent compared to one year ago.

“Since about the last quarter of 2010, we have seen consistently higher prices quarter-to-quarter on a broad range of marketbasket items,” said AFBF Senior Economist John Anderson. “With this survey, that trend appears to have reversed. While the marketbasket price was still higher year-over-year, the pull-back from recent highs on most of the items in the basket suggests that food price inflation is slowing down substantially.”

Meat and dairy products accounted for about half of the quarter-to-quarter retail price decrease. Sliced deli ham decreased 74 cents to $4.69 per pound, shredded cheddar decreased 38 cents to $4.32 per pound, bacon decreased 36 cents to $4.05 per pound, sirloin tip roast dropped 13 cents to $4.15 per pound, ground chuck dropped 10 cents to $3.17 per pound, boneless chicken breasts decreased 9 cents to $3.24 per pound and eggs dropped 6 cents to $1.72 for one dozen.

Other items that decreased in price compared to the third quarter were Russet potatoes, down 68 cents to $2.75 for a 5-pound bag; Red Delicious apples, down 43 cents to $1.40 per pound; flour, down 34 cents to $2.38 for a 5-pound bag; vegetable oil, down 25 cents to $2.96 for a 32-ounce bottle; bagged salad, down 25 cents to $2.48 for a 1-pound bag; orange juice, down 11 cents to $3.17 for a half-gallon; and toasted oat cereal, down 10 cents to $3.07 for a 9-ounce box.

Items that increased in price compared to the third quarter were: whole milk, up 10 cents to $3.76 per gallon; and bread, up 4 cents to $1.92 for a 20-ounce loaf.

“With consumer confidence still a little shaky closing out the year, it appears that retailers are holding the line on food prices as much as possible,” Anderson explained. “Stabilizing energy prices this past quarter also may have helped take some of the pressure off of processor and retailer margins.”

Several items showing a decrease in retail price from quarter-to-quarter also showed year-to-year decreases. Compared to one year ago, bagged salad decreased 8 percent; bacon decreased 6 percent, and sliced deli ham and apples each declined 3 percent.

The year-to-year direction of the Marketbasket Survey tracks with the federal government’s Consumer Price Index (http://www.bls.gov/cpi/) report for food at home. As retail grocery prices have increased gradually over time, the share of the average food dollar that America’s farm and ranch families receive has dropped.

“In the mid-1970s, farmers received about one-third of consumer retail food expenditures for food eaten at home and away from home, on average. Since then, that figure has decreased steadily and is now about 16 percent, according to the Agriculture Department’s revised Food Dollar Series,” Anderson said. USDA’s new Food Dollar Series may be found online at http://www.ers.usda.gov/Data/FoodDollar/app/.

Using the “food at home and away from home” percentage across-the-board, the farmer’s share of this quarter’s $49.23 marketbasket would be $7.88.

AFBF, the nation’s largest general farm organization, has been conducting the informal quarterly Marketbasket Survey of retail food price trends since 1989. The mix of foods in the marketbasket was updated during the first quarter of 2008.

According to USDA, Americans spend just under 10 percent of their disposable annual income on food, the lowest average of any country in the world. A total of 53 shoppers in 18 states participated in the latest survey, conducted at the end of October/early November.

Tracking Milk and Egg Trends
For the fourth quarter of 2011, shoppers reported the average price for a half-gallon of regular whole milk was $2.37, down 9 cents from the prior quarter. The average price for one gallon of regular whole milk was $3.76, up 10 cents. Comparing per-quart prices, the retail price for whole milk sold in gallon containers was about 25 percent lower compared to half-gallon containers, a typical volume discount long employed by retailers.

The average price for a half-gallon of rBST-free milk was $3.34, down 6 cents from the last quarter, about 40 percent higher than the reported retail price for a half-gallon of regular milk ($2.37).

The average price for a half-gallon of organic milk was $3.91, up 20 cents compared to the prior quarter, about 51 percent higher than the reported retail price for a half-gallon of regular milk ($2.37).

Compared to a year ago (fourth quarter of 2010), the retail price for regular milk in gallon containers was up about 11 percent, while regular milk in half-gallon containers rose 19 percent. The average retail price for rBST-free milk increased 12 percent compared to the prior year, while organic milk was up 9 percent.

For the fourth quarter of 2011, the average price for one dozen regular eggs was $1.72, down 6 cents compared to the prior quarter. The average price for a dozen “cage-free” eggs was $2.97, down 13 cents compared to the prior quarter but 75 percent higher than regular eggs. Compared to a year ago (fourth quarter of 2010), regular eggs increased 8 percent while “cage-free” eggs decreased 2 percent.



Weekly Ethanol Stocks, Plant Output Up

 Domestic ethanol inventories posted a build of 271,000 barrels (bbl), or 1.5%, to 17.945 million bbl for the week-ended Dec. 30, putting total supply 6.4% higher than the level seen a year ago, according to data released Thursday by the Energy Information Administration.

The supply build came as implied demand, measured by refiner and blender net inputs, tumbled 79,000, or 9.7%, to 757,000 barrels per day (bpd) from the prior week, although that level of demand was still 2.9% higher than a year ago.

Meanwhile, ethanol production from domestic plants edged up 1,000 bpd to 963,000 bpd last week while up 6.6% from a year ago.

Elsewhere, the EIA reported that implied demand for motor gasoline fell 367,000 bpd to 8.556 million bpd for the week while four-week average demand at 8.8 million bpd was down 7.2% from the level seen a year ago.



RFA Reacts to CARB Appeal in LCFS Case

The California Air Resources Board (CARB) today filed a notice of appeal in the U.S. Court of Appeals for the 9th Circuit to challenge the ruling by U.S District Court for the Eastern District of California Judge Lawrence D. O’Neill that the California Low Carbon Fuel Standard (LCFS) violates the commerce clause of the U.S. Constitution. 

Responding to CARB’s filing, the Renewable Fuels Association (RFA) issued the following statement:
“RFA spearheaded the efforts at the District Court level in advocating the constitutional challenge under the commerce clause and fully believes the LCFS stands in clear violation.  Judge O’Neill agreed, basing his ruling on strong evidence and sound constitutional law.  In the Court of Appeals, RFA will vigorously defend the result obtained at the District Court level.”



EPA OKs Camelina as Feedstock Under RFS2 for Biodiesel

The Environmental Protection Agency has approved the use of camelina oil as a feedstock for biodiesel under the new Renewable Fuel Standard.  The EPA had previously allowed such feedstocks as animal fats, recycled cooking oil, soybean oil and canola oil.

"The EPA's proposal shows that biodiesel produced from camelina oil reduces greenhouse gas emissions by at least 50% compared with diesel fuel," said Anne Steckel, vice president of federal affairs at the National Biodiesel Board, an industry trade organization.  She added that this is one more tool in the toolbox for biodiesel producers to produce a commercially produced fuel that the RFS considers an advanced biofuel.

Palm oil, for example, is not approved. In March 2010, EPA assessed the lifecycle greenhouse gas emissions of multiple renewable fuel pathways, or feedstocks.

The RFS2 mandates 1 billion gallons of biomass-based diesel be blended into petroleum-based fuel in 2012, up from 800 million gallons in 2011.



La Nina to Last Into Spring of 2012

La Nina, the weather phenomenon widely blamed for withering drought in the southwestern United States and South America, will last into the Northern Hemisphere spring of 2012, the U.S. Climate Prediction Center said on Thursday.

"The latest observations ... suggest that La Nina will be of weak-to-moderate strength this winter, and will continue thereafter as a weak event until it likely dissipates sometime between March and May," the CPC said in its monthly update.

The CPC is an office under the National Oceanic Atmospheric Administration (NOAA).

La Nina, which can last for several years, is the opposite number of the more infamous El Nino anomaly.

La Nina is caused by an abnormal cooling of waters in the equatorial Pacific Ocean. El Nino leads to warming of those waters. Both wreak havoc in weather patterns from South and North America to India and possibly even Africa.



Drought Dents Hope for Brazil Soy, Corn

Two important Brazilian corn and soy producers Parana and Rio Grande do Sul made sharp cuts to crop forecasts on Thursday after weeks of harsh, dry weather dented prospects for a soy crop that as recently as this week some still expected to be a record.

Brazil's biggest soy state Mato Grosso which grows nearly a third of the crop has been spared weather havoc this year but traders are closely watching losses in other states and in Argentina. Markets grow more tense with each dry day.

Just three weeks since its last forecast, Parana's Rural Economy Department, Deral, lopped 1.4 million tonnes off its outlook for soy and 1 million off corn, equating to nearly 2 percent and 1.6 percent of national output respectively.

Parana, a southern state, has borne the brunt of a prolonged dry spell in what is usually a wet summer season due to the influence of the La Nina weather anomaly, which the U.S. Climate Prediction Center said could last until May.

"Since November, due to the effect of La Nina, the state has been receiving below-average rain, which has compromised the harvest," said Margorete Demarchi, agronomist at Deral. She said the worst-hit areas saw a third of average December rainfall.

La Nina, which can last for several years, is the opposite number of the more infamous El Nino anomaly and is caused by an abnormal cooling of waters in the equatorial Pacific Ocean.

Its effects are being felt keenly across Latin America, where estimates for the 2011/12 corn crop from Argentina have been slashed by as much as a fifth, while Brazil's soybean crop is also withering due to a prolonged dry spell.

Rio Grande do Sul State, ranking third for soy nationally and fifth for corn, slashed its own corn forecast by 25 percent to 3.96 million tonnes and its soy estimate by 4 percent to 9.8 million tonnes, having seen barely any rain for weeks.



Confinement Manure Applicators Should Train by March 1

Required annual training starts Jan. 17 and concludes on Feb. 29 for confinement site manure applicators at many county Iowa State University Extension offices. Seven dry manure classes will also be held.

"Confinement site applicators are required to attend annual training, even though their certificates are good for three years," said Jeff Prier, DNR coordinator of the program. "It's also a good reminder of new and existing rules and other information pertinent to applicators and producers."

Certificates expire on Dec. 31. To avoid late fees, certification renewal must be submitted to DNR no later than March 1. Applicators whose certificates are expiring must complete the training, and submit forms and fees. Confinement site applicators must attend two hours of training each year of the three year certification. A $25 continuing education fee is charged and pre-registration is required.

Prier said even those who received initial certification the fall of 2011 must complete training in 2012. Applicators can find contacts for registration and a list of counties where the training is available at www.agronext.iastate.edu/immag/certification/confdates.html.

Those applicators who cannot attend a training session should contact their local Extension office to schedule time to watch a video. Extension offices may charge a $10 fee to show the video outside of a scheduled showing.

Applicators may also take a 50-question exam. Contact the DNR field office most convenient to you to make an appointment, by calling:
-- Northeast Iowa, Manchester, 563-927?2640
-- North central Iowa, Mason City, 641-424?4073
-- Northwest Iowa, Spencer, 712-262?4177
-- Southwest Iowa, Atlantic, 712-243?1934
-- South central Iowa, Des Moines, 515-725?0268
-- Southeast Iowa, Washington, 319-653?2135

More information about the manure applicators certification program is available at www.iowadnr.gov/ or www.agronext.iastate.edu/immag/maccsa.html.



Why Was ACRE a No-Go with Iowa Farmers?
William M. Edwards, Iowa State University

In 2009, crop farmers in Iowa and other states faced the decision of whether to continue with the existing Direct and Counter-cyclical Program (DCP) offered by the Farm Service Agency (FSA) of the United States Department of Agriculture (USDA) or to enroll in a new program called Average Crop Revenue Election (ACRE). The counter-cyclical payments and marketing loans--or loan deficiency payments--available under DCP helped mitigate commodity price risk, while ACRE offered producers a chance to protect against falling crop revenue. However, producers were required to give up some of the benefits of the old program, including a 20% reduction in the direct payments, a 30% reduction in marketing loan rates, and 100% of counter-cyclical payments if they enrolled in ACRE. Prices for the two primary crops grown in Iowa, corn and soybeans, were at high enough levels that counter-cyclical payments and loan deficiency payments were unlikely to be available, so producers had to choose between retaining a small, but certain, cash benefit--80% of the direct payments--each year, and possibly receiving a larger revenue deficiency payment if certain unfavorable combinations of prices and yields occurred in one or more of the next four crop years.

The vast majority of DCP participants elected to continue with the existing program. Final USDA data show that nationally only 7.8% of the FSA farm units previously enrolled in DCP were enrolled in ACRE for the 2009 crop year. However, 13.0% of the eligible base acres were enrolled, which indicates that on the average the farm units that were enrolled were larger than the ones that were not. In 2010, the enrollment numbers increased only slightly, to 8.1% of farm units and 13.6% of eligible base acres.

To many university economists in the Corn Belt the choice seemed clear--the reduced direct payment was a small price to pay for establishing a new safety net at a much higher level than DCP offered. The tepid response from farmers was puzzling. In March 2010, a mail survey was sent to 3,384 Iowa farmers to find out what factors most influenced their choice to enroll in ACRE or not, and to determine if any characteristics of their farming operations were significantly related to their decisions.

Recipients were randomly selected from all Iowa producers who were enrolled in FSA commodity payment programs in 2008. The enrollment decision on whether to go with ACRE or DCP was made separately for each FSA defined farm unit. Generally, each farm unit is associated with a different owner or operating entity. Names on the FSA list were sorted by the county in which the farm units were registered, so the sample was proportional to the geographic distribution of farms across the state. Usable replies were received from 356 producers, a response rate of just over 10%.

The producers who responded to the survey were operating an average of 5.0 FSA farm units each, but the range was from one unit to 57 units. A large majority (72%) of the respondents reported that they enrolled none of the farm units either owned or rented that they operated in 2009 in ACRE. Overall, respondents enrolled 20% of their FSA farm units in ACRE, whereas FSA reported that only 12% of the units in Iowa were enrolled. Apparently farmers who enrolled some units in ACRE were more likely to return the questionnaire than those who did not. Only 13% of the respondents enrolled all their farm units, while 15% enrolled just some of their farm units in ACRE. They were more likely to enroll farms that they owned themselves--25% of the owned units were enrolled--than farms they were renting from another owner--16% of the rented units were enrolled.

Respondents were asked to indicate their sources of information about ACRE and rank the importance of each one to their enrollment decisions on a scale of one to five. Not surprisingly, FSA newsletters and FSA personnel were the most common information source, mentioned by 87% of the respondents. The next most common source cited was the farm press, followed by Extension websites and articles, advice from lenders, farm managers or friends, and Extension meetings. The average ranking of the importance of each information source by farmers who enrolled all or some of their farm units in ACRE was compared to the corresponding ranking by farmers who enrolled none of their farms. Farmers who enrolled at least some farms ranked Extension presentations as significantly more important than those who enrolled no farms, indicating that Extension specialists may have had a positive influence on the enrollment decision.

Fifty percent of the respondents who enrolled at least some farms in ACRE used an electronic spreadsheet to analyze their decision, versus only 16% of those who enrolled no farms. Likewise, farmers who used an electronic spreadsheet program enrolled an average of 38% of their farm units, compared to a 16% enrollment rate for those who did not. This indicates that a quantitative analysis of the ACRE decision tended to influence operators to enroll. The most common sources of the spreadsheets used were those developed by Extension and FSA.

Respondents who enrolled one or more farm units in ACRE were asked to rate the importance of their reasons for doing so. The percentage of the respondents who cited each reason and the average score given to it are summarized. Two reasons stood out from the rest: a desire for more risk protection against possible decreases in revenue, and a belief that the payments received under ACRE would exceed the value of the FSA direct payments given up over the four years of enrollment. High yield variability, advice from a farm lender or manager, and encouragement from a landlord were also cited by at least 80% of the respondents as reasons for enrolling; however they were ranked as less important.

On the other side of the coin, respondents who enrolled none or only part of their farms in ACRE were asked to rate the importance of various reasons for not enrolling. The factor that was most cited and clearly given the most importance was that the details of the program were too complex. The second most important reason for not enrolling was to avoid giving up 20% of the FSA Direct Payment. Several other reasons were cited by at least 75% of the respondents, but were given less importance. Interestingly, a lack of farm level yield information was the fourth most cited negative reason, but was rated the least important.

Respondents who enrolled no farm units in ACRE placed more importance on the complexity of the program, the partial loss of direct payments and possible loan deficiency payments, the low likelihood of receiving an ACRE payment, and a low perceived need for more risk protection. On the other hand, for those who enrolled at least some--but not all--of their farms, the difficulty of explaining the program to their landlords was by far the most important reason cited for not enrolling more units. The difference of opinion between some operators and their landlords is further illustrated by the fact that respondents who enrolled only some of their farms enrolled 77% of the farms they owned, but only 32% of the farms they rented. In fact, a third of the respondents who enrolled only some of their farms enrolled all of the farms they owned, but none of the farms they rented.

Some information was gathered about both the characteristics of the farmers who answered the survey and some of the risk management tools that they were using. The farm operators who enrolled all or some of their FSA farm units--those who were at least somewhat favorable toward ACRE--operated more FSA units, farmed significantly more crop acres, and derived a higher percent of their gross farm income from the production of crops than those who enrolled no farm units. Presumably they had more dollars at risk if prices or yields decreased substantially. They also insured a higher percentage of their crop acres, and chose a higher level of crop insurance coverage. Likewise, they priced a higher percentage of their crop prior to harvest than the group that did not enroll in ACRE, either with forward contracts or through the futures market. The average farm debt-to-asset level and average age of the two groups of operators did not differ significantly. The survey results showed that Iowa farmers who were making more use of other common crop risk management tools were also more likely to participate in the ACRE program.

Respondents were given the chance to make suggestions about how ACRE could better serve the needs of crop producers. About one-fourth of them included a comment, and half of the comments said to make the program simpler. Another 18% recommended discontinuing the ACRE program altogether or scrapping all government farm programs.

Programs for mitigating financial risk for crop farmers will be an important part of the next farm bill debate. The ACRE program will likely be modified or replaced with a new revenue safety net. The results of this survey show that in order to attract a high level of participation in ACRE or its successor, the mechanics of the program need to be simple and transparent, and it should offer an expected benefit that clearly exceeds the value of any payments foregone. Program benefits need to be well articulated to landowners as well as tenants. Iowa producers who received information from Extension programs and utilized electronic spreadsheet decision tools were more likely to enroll in ACRE, implying that providing adequate resources for educational programs about new commodity programs may be important to facilitate a well-reasoned enrollment decision.



MONSANTO’S RESEARCH ENGINE DELIVERS RECORD PROGRESS ACROSS MULTIPLE PLATFORMS

A diverse group of projects across research and development (R&D) platforms aimed at making agriculture more productive and profitable for farmers, and more sustainable, were highlighted during Monsanto Company’s (NYSE: MON) annual pipeline update.

Using a combination of the latest breeding, biotechnology, and agronomic tools and solutions, Monsanto remains committed to developing and delivering products that can create the next wave of yield opportunity for farmers.

“We’re excited about the record progress we’ve made this year across all of our R&D platforms, as the projects in our pipeline today will help us provide an even stronger toolkit of solutions to meet the needs of farmers in the future,” said Robb Fraley, Monsanto chief technology officer. “Through the convergence of innovations in our breeding, biotechnology and agronomic solutions platforms, we’re focused on providing farmers the total package that can maximize their yields sustainably.”

Breeding Platform
Monsanto draws from a collection of germplasm that is unparalleled in the industry. Increasingly, the company is using tools like molecular markers to more efficiently and effectively mine the diversity in this genetic library to develop elite seeds faster than ever before. In addition to annual germplasm improvements, three targeted breeding traits advanced phases this year, Phytophthora Resistant Peppers, Downy Mildew-Resistant Cucumbers and Beneforté® Broccoli.

Biotechnology Platform
Monsanto also highlighted a number of projects in both its agronomic traits pipeline and its yield and stress collaboration with BASF Plant Science.  Yield and stress projects advancing phases this year are Drought-Tolerant Cotton and Higher-Yielding Corn. Six advancements designed to provide improved pest and weed management solutions were announced in the agronomic traits pipeline. Highlights include Corn Rootworm III and Second-Generation Insect-Protected Genuity® Roundup Ready 2 Yield® soybeans, which would both offer multiple modes of action for enhanced insect control and durability. Monsanto’s Cotton Lygus Control project, the first to target piercing-sucking insects in cotton, also advanced phases.

 Agronomic Solutions Platform
Monsanto spotlighted three advancements in its agronomic solutions platform, including a new premix formulation of Roundup® and low volatility dicamba that would provide farmers with an additional tool for weed management and a novel nematicide chemistry designed to improve plant health.  The company’s Integrated Farming Systems℠ I project, which would tie hybrid recommendations to variable-rate planting to help drive yields further, advanced to the final phase before commercialization.

 The following is a complete list of projects advancing phases in 2012.

Biotechnology Agronomic Traits
Corn Rootworm III (Advanced to Phase 3)
Corn Rootworm III would offer increased control and durability against the corn rootworm by providing two distinct modes of action. The project incorporates RNAi technology as its second mode of action. RNAi is a natural process that occurs in cells to help protect their health.

Second-Generation Insect-Protected Genuity® Roundup Ready 2 Yield® Soybeans (Advanced to Phase 3)
Second-Generation Insect-Protected Genuity® Roundup Ready 2 Yield® soybeans would offer multiple modes of action for improved durability, a wider spectrum of insect protection, including armyworms, and the opportunity to reduce the size of the structured refuge, thereby enabling greater yield potential and value to the grower.

Genuity® Bollgard® III Cotton (Advanced to Phase 3)
Genuity® Bollgard® III cotton is a third-generation insect control product that would build on the success of previous Bollgard® products by providing enhanced insect protection, including improved control of beet and fall armyworms, through the use of multiple modes of action. The product would also provide enhanced, season-long protection to targeted insects.

Cotton Lygus Control (Advanced to Phase 2)
The Cotton Lygus Control product would be the first to extend the spectrum of insect control to piercing-sucking lygus bugs, which damage bolls and reduce lint yield and quality.

Next-Generation Genuity® Roundup Ready® Canola (Advanced to Phase 4)
Next-Generation Genuity® Roundup Ready® canola is a second-generation weed control product that would offer farmers greater flexibility through an extended application window up to the first flower and opportunity to apply Roundup® herbicide at higher rates for enhanced weed control.

Next-Generation Genuity® Roundup Ready® + LibertyLink® Canola (Advanced to Phase 3)
Next-Generation Genuity® Roundup Ready® + LibertyLink® canola would deliver a second mode of action of herbicide tolerance, offering flexibility to have multiple herbicide choices for farmers planting the DEKALB® brand.

Biotechnology Yield & Stress Traits

Higher-Yielding Corn (Advanced to Phase 3) – In Collaboration with BASF
The higher-yielding corn trait is designed to be stacked on top of Genuity® corn products and other corn pipeline traits to provide additional yield opportunity. This additional yield opportunity would be additive to the total system offered to farmers, creating a package with the highest yield potential.

Drought-Tolerant Cotton (Advanced to Phase 2) – In Collaboration with BASF
The drought-tolerant cotton trait is designed to deliver improved water use in cotton by providing yield stability in environments experiencing occasional or consistent water stress. The trait also has the potential to reduce water needs on irrigated acres.  This is the first generation project in a family of drought-tolerant traits for cotton.

Breeding Traits

Phytophthora-Resistant Peppers (Advanced to Phase 3)
Field evaluations are demonstrating significant increase in Phytophthora blight resistance. Elite commercial pepper hybrids with high resistance to Phytophthora blight would enable farmers to increase productivity, simplify management and potentially reduce fungicide applications.

Downy Mildew-Resistant Cucumbers (Launching)
New downy mildew-resistant lines have shown potential for a distinct yield advantage while greatly reducing both the number and cost associated with the fungicidal sprays growers currently use to control the disease.

Beneforté® Broccoli (Launching)
Beneforté® naturally contains two to three times the phytonutrient glucoraphanin compared with other leading broccoli varieties produced under similar growing conditions, boosting the body’s antioxidant enzyme levels at least two times more than other broccoli.

Chemistry and Agronomic Systems

Dicamba+Roundup® Premix Formulation (Advanced to Phase 3)
Monsanto collaborates with BASF’s Crop Protection division to develop improved dicamba formulations. The dicamba+Roundup® premix formulation has advanced to phase three, with expanded field trials to begin in 2012 pending EPA approval. Dicamba is an economical and effective herbicide that provides excellent control for a wide range of broadleaf weeds.

Nematicide Chemistry (Advanced to Phase 2)
Monsanto’s new nematicide chemistry would provide farmers with an additional tool to control pressure against multiple nematode species, one of the largest unsolved pest problems in agriculture.

Integrated Farming Systems℠ I (Advanced to Phase 4)
Monsanto’s Integrated Farming Systems℠ on-farm systems recommendations would unlock proven yield benefits and help farmers recognize maximum potential economic yield from their crops. Recommendations would be delivered through tools that complement and integrate with other precision agriculture technology to help farmers easily manage Monsanto’s products and recommendations across their operations. The Integrated Farming Systems℠ I project, which would tie hybrid recommendations to soil and environment based yield potential enabling variable-rate planting to help drive potential yields further, advanced to the final phase before commercialization.