Wednesday February 15 Ag News

Plains Farmland Values Up 25%
Record-Setting Gains Extended in 4th Quarter

Farmland prices in the U.S. Plains states extended record-setting gains in the fourth quarter of 2011, rising 25% from a year earlier as cash-rich farmers competed for land, the Federal Reserve Bank of Kansas City said on Wednesday.

In a quarterly survey that provides an important gauge of the U.S. agricultural economy, the Fed also said credit conditions improved as farmers paid down debt at the year-end, comments that may help temper concerns of a land-price bubble.

"Strong farm incomes were fueling the robust farmland value gains," the Fed said in the survey of 253 bankers in its district.

Non-irrigated cropland values jumped almost 9% in the last three months of 2011 and were 25% higher than year-earlier levels, matching the record pace in the third quarter. A separate survey on Midwest states is due from the Chicago Fed on Thursday.

"District bankers noted an increasing number of absentee landowners were putting their farms up for sale and attributed much of the auction activity to landowners seeking top-dollar prices. Farmers were the main buyers," the Fed report said. It said the share of non-farmers who purchased land had diminished over the past six years to about one-quarter of all buyers.

The corn state of Nebraska saw the biggest jump -- a 37.8% year-on-year price gain for non-irrigated cropland.

Farmland values are closely monitored by economists at the Federal Reserve and by commercial banks, as a barometer of U.S. banking assets and as a benchmark for agricultural balance sheets. Farmland is basic collateral for farm loans.

Skyrocketing land values have caused worries among bankers about the possibility of a ruinous farmland bubble like the one seen in the 1980s U.S. farm crisis, when over-leveraged farmers lost their land as interest rates jumped.

But farmers carry much less debt now, thanks to record farm income. Grain prices and production have also been strong, a rare double for farmers used to seeing prices fall as production rises. Booming farm exports and domestic ethanol have changed that traditional equation, market analysts say.

The Fed's 10th district stretches across the major wheat, corn and cattle states of Colorado, Kansas, Nebraska and Oklahoma, along with Wyoming and parts of New Mexico and Missouri. The area has seen a jump in corn prices in recent years with the rapid expansion of corn-based ethanol output.

"Strong farm incomes were fueling the robust farmland value gains. During the fourth quarter, crop prices remained historically high but volatile, while livestock prices were well above year-ago levels," the report said.

"Half of survey respondents reported higher farm income in the fourth quarter compared to last year, and almost a third expected further income gains in 2012. With bullish farm income prospects, many landowners negotiated steep increases in cash rental rates for farmland," the bank said.

But farm income varied in the district, with some hurt by flooding and others by drought. The strong grain and livestock prices helped buoy Oklahoma and Kansas ranchers where drought forced them to reduce herd sizes to historical lows.

FARMER DEMAND ROBUST
A third of the district bankers surveyed expected the price and amount of farmland offered for sale to continue to rise in 2012, as well as farm income.

One banker from eastern Nebraska said that "with current price levels, many older landowners are cashing out".

Such farm sales were met by robust farmer demand, pushing land prices higher. The Fed said farmers bought 73% of the farmland sold in 2011, up from 60% in 2005.

"Land sales have exploded in number and price due to record farm profits. Many farmers have also prepaid for nearly all of next year's crop inputs," a banker in northeastern Nebraska told the Fed.

Of non-farmer purchases, more bankers reported farmland being bought for investment purposes such as rental income and earning capital gains. Farmland purchases for recreational use or residential/development projects continued to fall.

"Two reasons given for buying farmland are alternative investments are limited and land will always be there," one banker in northeastern Colorado told the Fed.

Cash rents for farmland jumped last year, up 18% compared to a 6% gain in 2010 as "landowners factored in high farm income expectations when renegotiating lease terms", the Fed said. Ranchland rent values rose but at a slower rate, about 10%, vs. a 4% average annual gain in 2010.

Interest rates averaged 6.3% on farm operating loans in the quarter and for farm real estate loans fell below 6% for the first time in survey history, dipping to 5.9%, the Kansas City Fed said.



UNL Extension Offers Beef Cow Herd Profitability Workshops on March 8

Calving, breeding and summer pasture grazing are key production times for cow calf producers. To help producers manage these important aspects of their cow herd enterprise, UNL Extension will offer two beef profitability workshops on March 8.

The workshops will be at the Washington County Extension Office, 597 Grant St., Blair, beginning at 1 p.m. and at the Agricultural Research and Development Center, 1071 County Road G, Ithaca at 7 p.m. Registration begins 30 minutes prior to the start of the meetings.

Featured speakers are Dave Boxler, UNL Extension educator in entomology, discussing fly and parasite control for cow/calf operations; Rick Rasby, UNL Extension beef specialist, speaking on preparing bulls for the breeding season; Steve Tonn, UNL Extension educator in Washington County, sharing tips on using a calving distribution table; and Monte Stauffer and Sara Ellicott, UNL Extension educators, discussing the Husker Beef Lab Experience.

Pre-registration is encouraged by phone, fax, email or mail one week in advance -- discounts apply. Cost is $10 for registrations received by March 1 or $15 after. Walk-ins are welcome.

Pre-registrations will be accepted at the Douglas/Sarpy Counties Extension Office, 8015 W. Center Rd., Omaha 68124-3175 or call 402-444-7804; the Washington County Extension Office, 597 Grant St., Ste 200, Blair 68008-2550 or call 402-426-9455 or the Saunders County Extension Office, 1071 County Road G, Ithaca 68033-2234 or call 402-624-8030.

Fees include reference materials and refreshments. Make checks payable to: UNL Extension in Saunders County and mail or bring it to the Douglas/Sarpy Counties Extension Office, Washington County Extension Office or the Saunders County Extension Office.

For more information or to register, contact UNL Extension Educators: Sara Ellicott at (402) 624-8030, (800) 529-8030, e-mail sellicott2@unl.edu or fax (402)624-8010; Monte Stauffer at (402) 444-7804, email mstauffer1@unl.edu or fax (402) 444-6430; or Steve Tonn at (402) 426-9455, email stonn2@unl.edu or fax( 402) 426-3577. Information also is available online at http://ardc.unl.edu/; http://washington.unl.edu and http://douglas-sarpy.unl.edu.

The workshop is sponsored by UNL Extension in Washington, Douglas/Sarpy and Saunders counties. UNL Extension is in the Institute of Agriculture and Natural Resources.



Ogallala Aquifer Initiative Targets Local Resource Concerns
NRCS seeks ag producer applications for financial, technical assistance.

The U.S. Department of Agriculture’s (USDA) Natural Resources Conservation Service (NRCS) in Nebraska announced that $3.6 million is available to help farmers and ranchers implement conservation practices, as part of the Ogallala Aquifer Initiative. The funding through this initiative will provide technical and financial assistance to producers to install conservation practices that help conserve water and protect water quality within priority areas located in the Ogallala Aquifer.  A map of the Ogallala Aquifer Initiative Nebraska priority areas is located here...  ftp://ftp-fc.sc.egov.usda.gov/NE/Outgoing/News/OAImapNebraska.pdf. 

The Ogallala Aquifer Initiative is one of 15 Landscape Conservation Initiatives that address resource concerns of national importance by helping America’s landowners implement voluntary conservation practices to protect water quality, improve wildlife habitat and enhance the long-term sustainability of producers’ operations.

“Through landscape initiative partnerships we’re maximizing conservation efforts to address some of our most pressing natural resource challenges,” NRCS Chief Dave White said. “The result is far-reaching and long-lasting environmental benefits for the Nation.”

In coordination with local, state and federal agencies and organizations, NRCS’ Landscape Conservation Initiatives use a systems approach that focuses technical and financial assistance to implement a suite of conservation practices to address specific resource concerns. Through the Ogallala Aquifer Initiative, farmers and ranchers are incorporating conservation practices that improve water quality and quantity into their agricultural operations.

Nebraska NRCS State Conservationist Craig Derickson said, “The Ogallala Aquifer is one Nebraska’s most precious natural resources.  This initiative will help farmers and ranchers apply conservation practices that will help to protect this resource for future generations while making farming and ranching operations more efficient today.”

Producers interested in participating in the Ogallala Aquifer Initiative, or any other NRCS programs and services, should contact their local USDA Service Center, or visit www.nrcs.usda.gov for more information.



Sign-Up Available for 2012 DCP/ACRE

Producers can now enroll into the 2012 Direct and Counter-Cyclical Program (DCP) or Average Crop Revenue Election (ACRE) according to Josie Waterbury of the Thurston County Farm Service Agency (FSA).  Sign-up began January 23 and ends June 1, 2012.  Producers are encouraged to contact their FSA office now for an appointment to complete the enrollment process prior to the busy planting season.  Waterbury noted that Thurston County typically has around 1,300 farms participate in DCP/ACRE annually.

This is the final year that DCP and ACRE are authorized under the provisions of the Food, Conservation, and Energy Act of 2008.  Since 2009, producers have had the option to participate in either DCP or ACRE.  A producer who chose to enroll in DCP in previous years has the option to switch to ACRE for 2012; however, producers who previously chose to enroll in ACRE cannot switch back to DCP. 

Both DCP and ACRE participants receive a direct payment calculated using historical base acres and payment yields established for each farm, at crop-specific rates established by statute, regardless of market price.  A farm’s direct payment for ACRE participants is reduced by 20 percent and marketing assistance loan rates are reduced by 30 percent.  The Farm Bill stipulated that advance direct payments will not be available in 2012.

Participants in DCP may earn a counter-cyclical payment if a commodity’s effective price falls below a targeted level (price decline), while ACRE participants may earn additional payments when there is a loss to total revenue (price or yield decline).  ACRE revenue payments are calculated using actual planted acres on the farm and are earned when both the state and farm have incurred a revenue loss.  Producers who participated in ACRE in prior years are reminded that they must report actual 2011 production to FSA by July 15, 2012.

For additional information on the DCP or ACRE programs, contact your local FSA office. 



Chinese delegation agrees to purchase soybeans

Chinese leaders made commitments to purchase $4.31 billion worth of U.S. soybeans during signing ceremonies that took place February 15 at the World Food Prize Center in Des Moines. The commitments signed in Des Moines total more than 8.62 million metric tons or 317 million bushels, with more soybean commitments expected to be signed in Los Angeles in the next few days.

“Iowa’s soybeans farmers are pleased to welcome our friends from China back to Iowa,” says Iowa Soybean Association (ISA) CEO Kirk Leeds. “We want to say ‘thank you for the business’ and to continue to build upon these strong relationships. We have led many delegations of farmer leaders to China and host multiple groups from China every year. Today’s signing ceremony is another indication of the value and importance of these relationships. With the additional signings later this week in Los Angeles, we are hopeful the total numbers will set a new record for U.S. soybean commitments made in one signing trip.”

The Chinese delegation, led by Bian Zhenhu, president of the China Chamber of Commerce for Import & Export of Foodstuffs, Native Produce and Animal By-products (CFNA), indicated its intentions to purchase U.S. soybeans by signing 15 contracts with U.S. companies, including ADM, AGP, Bunge, Cargill and CHS, among others. Iowa Secretary of Agriculture Bill Northey participated as witness to the signing ceremony.

“China has been a great trade partner and a key customer of Iowa soybeans, and this agreement shows a commitment on both sides to continuing that relationship,” says Northey. “Iowa farmers are tremendously productive and exports are vital to the economic health of our state with more than $7 billion in agricultural exports.  China is a rapidly increasing portion of that total, and it is important we continue to build on that strong partnership.”

The Sino-U.S. Agricultural Trade Cooperation Conference and Soybean Contract Signing Ceremony was hosted by the Iowa Soybean Association (ISA), the U.S. Soybean Export Council (USSEC), United Soybean Board (USB) and  the American Soybean Association (ASA), and attended by U.S. soybean industry representatives, USDA officials and Iowa state leaders and dignitaries, in addition to Chinese guests who included the Ministry of Commerce, People’s Republic of China (MOFCOM) delegation headed by Assistant Minister Mr. Yu Jianhua and the Hebei Provincial Commercial Delegation.

“Iowa’s soybeans farmers are pleased to welcome our friends from China back to Iowa,” says ISA CEO Kirk Leeds. “We want to say ‘thank you for the business’ and to continue to build upon these strong relationships. We have led many delegations of farmer leaders to China and host multiple groups from China every year. Today’s signing ceremony is another indication of the value and importance of these relationships. With the additional signings later this week in Los Angeles, we are hopeful the total numbers will set a new record for U.S. soybean commitments made in one signing trip.”

Other leaders participating in the ceremony also made remarks about the significance of the ceremony and the mutually beneficial relationship between U.S. soybean farmers and China.

“China consumes around 25 percent of the U.S. production of soybeans,” said Roy Bardole, USSEC chairman and a soybean farmer from Rippey, Iowa.  “As the soy family continues to work to position U.S. soybeans as the best value in the world, my fellow farmers look forward to providing China and other global markets with a quality product. We look forward to many more years of working together.”

Xiaoping Zhang, who accompanied the visiting delegation as the China country director for American Soybean Association - International Marketing (ASA-IM),  said, “Chinese government and soybean buyers attach great importance to trade relations with the U.S. for a reliable supply of soybeans to feed the world’s largest population, whose living standard continues to improve. The 30-member delegation represents 45 percent of total U.S. soybean exports in FY10/11, and they have actively participated in the U.S. soybean industry’s promotional activities both in China and in the U.S. to sustain and increase the demand for soy products. In addition to this signing ceremony, they have looked forward to meeting with the U.S. soy industry to develop a closer relationship with and better understanding of the efficiency of the U.S. industry.”

The U.S. produces approximately 35 percent of the world’s soybeans. Since 1991, global soybean demand has increased 151 percent. Soy is the No. 1 U.S. ag export with roughly 55 percent of the U.S. soybean crop exported. In 2011, 40.859 million metric tons of U.S. soybeans was exported. Of that, 24.368 million metric tons, or approximately 60 percent of U.S. soybean exports, went to China in 2011.

The signing ceremony was part of a three-day visit by a large and influential Chinese delegation of trade and commerce dignitaries. The visit was initiated at the request of Chinese Vice President Xi Jingping, who visited Iowa in 1985 and wished to return to the state where he had experienced Midwest hospitality.

The Chinese delegation’s trip has also included a stop in Chicago, where they visited the Chicago Board of Trade and met with some market analysts, a visit to an Iowa farm, and a meeting with Governor Branstad and Lt. Governor Reynolds at the Iowa Capitol. On departure from Iowa, they will make stops in Los Angeles for another signing ceremony, before going to Hawaii and home.     



ASA Welcomes FCC Block of LightSquared Proposed Network

The Federal Communications Commission (FCC) announced Tuesday its decision to block the planned development of a nationwide wireless network by communications company LightSquared over concerns that it cannot be fixed to coexist with global positioning systems (GPS). The American Soybean Association (ASA) has been at the forefront of the discussion of this planned network’s significant and adverse effects on farmers. ASA President and Syracuse, Neb.-based soybean farmer Steve Wellman issues the following statement on the FCC’s decision:

“Tuesday’s decision by the FCC is certainly a great relief for more than 600,000 soybean farmers across the country who use GPS technology to precision-apply seed and fertilizer; to test fields for fertility and to monitor yields; to reduce chemical and fuel use; and to map field boundaries, roads, irrigation systems. In short, GPS technology has enabled farmers to produce more food for a growing world population with fewer inputs.

“Farmers invest thousands of dollars in high-precision GPS equipment and applications to run more efficient, sustainable, cost-effective and productive farms. The LightSquared network would have rendered that investment—not to mention the consumer GPS market projected to reach almost $29 billion in the U.S. by 2015—all but useless. The FCC’s decision this week is one that is in the best interests of both the American farmer and the American consumer.

“LightSquared’s efforts do, however, underscore the pressing need for better broadband service, especially in rural America. ASA supports the pursuit of a commercial solution that will better connect the rural communities in which agriculture thrives, while protecting the value of precision agricultural GPS systems.”



Protecting and Improving Beef Taste

Bridget Wasser, senior director of meat science technology for the National Cattlemen’s Beef Association, contractor to the Beef Checkoff Program, says the industry has been tracking beef tenderness for 20 years. Why is this important? Wasser says consumers may be willing to pay a premium for guaranteed-tender meat products.  Wasser says, "The product enhancement committee is totally focused on beef quality and using checkoff funds to support research that will improve beef quality which in turn, is meaningful to the performance of the beef product in terms of taste, tenderness and consistency. And the better quality product we can deliver to our consumers, the better their eating experience is going to be and the better beef demand’s going to be overall.”

Wasser says the committee was able to experience firsthand the results of their checkoff dollars that are invested in research programs through a sensory taste test during this year’s Cattle Industry Convention. She says,  “In fact, we’ll be including a beef-tasting exercise or sensory exercise in the program because it’s kind of a nice break in the program and a nice opportunity for committee members to see the results of the research that they’re involved in but really to see it come to life. To be able to taste something and then understand the research behind sensory and beef flavor and be able to see it come to life versus just seeing a research study on paper.”

Beef checkoff research shows the elements that matter to consumers about beef have not changed for several years with ‘great tasting’, ‘a good value for the money’ and ‘extremely safe to eat’ being the most important to consumers. Wasser says product enhancement research continues to improve beef’s performance with consumers.  She goes on, “When we look at the market research that the checkoff does and evaluations with consumers on what their preferences are and their demands are, every time we look at that data coming back, taste is the Number One driver of consumer demand for beef. And so this is the one checkoff program and joint committee that is focused on protecting and improving beef taste. And that’s where it finds its place in this whole checkoff realm.”



U.S. Farm Income Projected to Drop in 2012

Farm income will drop sharply from 2011's record high as production costs rise by more than $10 billion for the second year in a row, the U.S. Agriculture Department said this week in its first income forecast for this year.

USDA estimated net cash farm income, a measure of solvency, at $96.3 billion, down 11.5 percent from 2011, when it topped $100 billion for the first time. USDA said it was the smallest decline since 2000 for the volatile income figure and that net cash farm income would be far above the 10-year average, reports Reuters.

Production costs are forecast to rise by 3.9 percent, or $12.5 billion this year, to a record $333.8 billion. USDA said receipts for crop sales would be on par with 2011.

Drought constrained crop production last year so there will be less volume to sell this year. Costs rose by 12 percent in 2011.

Crop receipts are expected to increase slightly with wheat prices trending downward but corn prices remaining strong. Higher prices will boost livestock receipts.

"In terms of their effect on crop versus livestock farms, the major 2012 crop-related expenses (seeds, fertilizer, pesticides) are expected to rise around 1.0 percent ($560 million) while the major livestock-related expenses (feed, livestock and poultry purchases) are forecast to rise 2.4 percent ($1.9 billion)," USDA said.

Crop, conservation and other government payments to farmers were estimated at $11 billion this year, up slightly from $10.6 billion last year.



North American Potash Inventories Jump in January

North American potash inventories rose around 20% in January from the previous month, signaling a possible drop in prices even as top producers scramble to cut output following a sharp decline in global farm demand for the crop nutrient.

Stockpiles at the producer level rose by 510,106 tonnes to about 3 million tonnes as of Jan. 31, according to the latest monthly data released by Potash Corp, the world's top producer of the fertilizer. After the news, shares of the region's big producers slipped.

Inventories in North America now stand 32% above the five-year average as large buyers such as China, India and Brazil have stayed out of the market.

Late in January, Potash Corp said it was extending a shutdown at its Rocanville mine in the Canadian province of Saskatchewan by four weeks. This followed a six-week shutdown at the site from Dec. 25 through Feb. 4.  Saskatoon, Saskatchewan-based Potash Corp has also cut output from two other mines in the province. It wants to offset the impact of a seasonal but significant weakening in potash demand and keep prices from declining.

Earlier this month, smaller U.S. rival Mosaic Co. outlined plans to cut potash production by 20% over the next four months as distributors have been drawing down existing inventories and delaying big purchases.

The price of the nutrient, which typically lags a sharp move in inventory levels, is little changed at about the $500 a tonne level, according to data posted on Potash Corp's website.



Ethanol Stocks Hit Another Record High

Domestic ethanol inventories posted a build of 430,000 barrels (bbl), or 2%, to a fresh record high of 21.493 million bbl for the week-ended Feb. 10, putting total supply 9.8% higher than the level seen a year ago, according to data released Wednesday by the Energy Information Administration.

Total U.S. ethanol stocks have now posted a build for nine straight weeks. They have increased by 4.442 million bbl, or 26%, since Dec. 9, 2011, when the string of builds began.

Meantime, the EIA data showed ethanol production from domestic plants rose 5,000 barrels per day (bpd), or 0.5%, to 928,000 bpd last week while up 3.8% from a year ago.

On the co-products side, ethanol producers were using 14.071 million bushels of corn to produce ethanol and 104,445 metric tons of livestock feed, 94,231 metric tons of which were distillers grains.  The rest is comprised of corn gluten feed and corn gluten meal.  Additionally, ethanol producers were providing 4.27 million pounds of corn oil daily.

Implied demand, measured by refiner and blender net inputs, surged 15,000 bpd, or 1.9%, to 797,000 bpd from the prior week, which is 3% higher than a year ago.

Elsewhere, the EIA reported that implied demand for motor gasoline rose 128,000 bpd to 8.167 million bpd for the week while four-week average demand at 8.1 million bpd was down 6.4% from the level seen a year ago.



Broiler-Type Eggs Set Down 4 Percent

Commercial hatcheries in the 19 State weekly program set 196 million eggs in incubators during the week ending February 11, 2012. This was down 4 percent from the eggs set the corresponding week a year earlier. Average hatchability for chicks hatched during the week was 85 percent. Average hatchability is calculated by dividing chicks hatched during the week by eggs set three weeks earlier. 

Broiler-Type Chicks Placed Down 3 Percent
Broiler growers in the 19 State weekly program placed 162 million chicks for meat production during the week ending February 11, 2012. Placements were down 3 percent from the comparable week a year earlier. Cumulative placements from January 1, 2012 through February 11, 2012 were 970 million, down 4 percent from the same period a year earlier.



Vilsack before the U.S. Senate Committee on Agriculture, Nutrition and Forestry

Agriculture Secretary Tom Vilsack today testified before the U.S. Senate Committee on Agriculture, Nutrition and Forestry.  Testimony as follows: 

"Madam Chairwoman and Members of the Committee, I am pleased to have this opportunity to discuss economic development and the impact of renewable energy in America's rural communities.

"I want to start by emphasizing that a vibrant American economy depends on a prosperous rural America. Rural America supplies food for our country and the world. Agriculture is also a critical driver of our economy, helping support 1 in 12 American jobs. Last year, exports of American agricultural goods reached a new record, helping drive record farm income and supporting more than one million jobs.

"Moreover, in recent years, rural communities have experienced strong job growth, particularly in the manufacturing and clean energy sectors, so that rural unemployment rates are dropping faster than in other parts of the country. Despite this job growth, rural communities are still facing significant challenges, including outmigration, lower incomes, higher poverty rates, and access to capital.

"President Obama and I care deeply about rural communities. Over the last three years, we've made historic investments in rural America designed to drive job growth, improve housing and infrastructure, and form the foundation of a rural economy that is built to last.

"We want to build a better future for the men and women who live, work and raise their families in rural communities. Together, we can help rural America build upon the successes of the last few years by realizing the significant economic opportunities, not only in agriculture, but in other sectors such as manufacturing, services, and clean energy.

"In the last Farm Bill, this Committee wisely focused on energy policy. Renewable energy – including biofuels, biomass, wind and solar – are an important source of jobs and economic growth in rural communities across the country. Biofuels and biomass in particular offer exciting new opportunities for entrepreneurs, farmers, ranchers and growers.

"The President has shared his vision for a new era in American energy, with an economy built to last fueled by homegrown and alternative energy sources designed and produced by American workers. This is why clean and renewable energy has been a high priority for the Obama Administration, as well as for Congress on a bipartisan basis, for many years.

"USDA has an important role to play in helping to build a cleaner, more secure, more sustainable domestic energy sector for future generations. We help agricultural producers and rural small businesses build renewable energy systems and make energy efficiency improvements. At the same time, we are encouraging a nationwide, advanced biofuels economy.

"USDA supports growers and landowners producing energy feedstocks; work with scientists on research and development; help the entrepreneurs in the private sector advance production of advanced biofuels; and even support infrastructure like flex fuel pumps to help consumers purchase biofuels.

"We have also established a partnership with the U.S. Navy and Department of Energy to boost the domestic production of aviation biofuels for use by the military.

"In addition to renewable energy, the production of bioproducts – using agricultural materials to create polymers, chemicals and consumer products – is a growing opportunity for rural economies. A bioproducts sector marries two of the most important economic engines for rural America: agriculture and manufacturing. Today, there are more than 3,100 companies across the country producing more than 25,000 biobased products.

"USDA has made good progress in stimulating the growth of biobased product markets through our 'BioPreferred' program and research investments, but I urge the Committee to consider how our current programs could better align with this important opportunity for agriculture and rural manufacturing.

"Continued efforts to support sustainable economic growth in rural America should also recognize that successful rural economic development often occurs on a regional basis. In addition to providing direct economic benefits, regional collaboration allows rural communities to capitalize on economies of scale in infrastructure and public services, to encourage the development of specialization in industrial sectors to make them more competitive, and to locate facilities and services where they provide the greatest benefit at the lowest cost.

"As you consider the next Farm Bill, I would like to suggest you consider two key themes: streamlining and flexibility. Over the course of many years, this Committee and Congress have provided USDA with more than 40 programs in Rural Development, many of which have overlapping authorities and goals. Together, I hope we can look at streamlining USDA's grant and loan authority to reduce the number of programs, while maintaining the flexibility to continue to serve rural communities and businesses in an effective and comprehensive way.

"In particular, I would like to suggest more flexibility to support regional development. While we have looked to our current authorities for every opportunity to partner with communities that are working regionally, more could be done. In the budget released this week, we repeated our call to target resources for projects or communities that are part of a regional strategy. I urge the Committee to consider efforts to encourage communities to take on a little more organizational work on the front end to yield better and more lasting results.



European Union and United States Agree to Historic New Partnership on Organic Trade

The European Union and the United States announced today that beginning June 1, 2012, organic products certified in Europe or in the United States may be sold as organic in either region. This partnership between the two largest organic-producers in the world will establish a strong foundation from which to promote organic agriculture, benefiting the growing organic industry and supporting jobs and businesses on a global scale.

The organics sector in the United States and European Union is valued at more than $50 billion combined, and rising every year.

Formal letters creating this partnership were signed on 15 February 2012 in Nuremberg, Germany, by Dacian Ciolos, European Commissioner for Agriculture and Rural Development; Kathleen Merrigan, U.S. Agriculture Deputy Secretary; and Ambassador Isi Siddiqui, U.S. Trade Representative Chief Agricultural Negotiator. The signing took place at the BioFach World Organic Fair, the largest trade show for organic products in the world.

"This partnership connects organic farmers and companies on both sides of the Atlantic with a wide range of new market opportunities," said U.S Deputy Agriculture Secretary Merrigan. "It is a win for the American economy and President Obama's jobs strategy. This partnership will open new markets for American farmers and ranchers, create more opportunities for small businesses, and result in good jobs for Americans who package, ship, and market organic products."

"This agreement comes with a double added value. On the one hand, organic farmers and food producers will benefit from easier access, with less bureaucracy and less costs, to both the U.S. and the EU markets, strengthening the competitiveness of this sector. In addition, it improves transparency on organic standards, and enhances consumers' confidence and recognition of our organic food and products," stated the EU Commissioner responsible for agriculture and rural development, Dacian Ciolos. "This partnership marks an important step, taking EU-U.S. agricultural trade relations to a new level of cooperation".

"This is a significant step in strengthening our bilateral trade relations," added Ambassador Isi Siddiqui. "I am confident that this arrangement will facilitate and boost agriculture trade between the European Union and the United States - and lead to more jobs in this important sector for both America and Europe."

Previously, growers and companies wanting to trade products on both sides of the Atlantic had to obtain separate certifications to two standards, which meant a double set of fees, inspections, and paperwork. This partnership eliminates significant barriers, especially for small and medium-sized organic producers. All products meeting the terms of the partnership can be traded and labeled as certified organic produce, meat, cereal, or wine.

Leading up to today's historic announcement, both parties conducted thorough on-site audits to ensure that their programs' regulations, quality control measures, certification requirements, and labeling practices were compatible.

Although there are small differences between the U.S. and European Union organic standards, both parties individually determined that their programs were equivalent except for the prohibition on the use of antibiotics. The USDA organic regulations prohibit the use of antibiotics except to control invasive bacterial infections (fire blight) in organic apple and pear orchards. The European Union organic regulations allow antibiotics only to treat infected animals. For all products traded under this partnership, certifying agents must verify that antibiotics were not used for any reason.

In addition, all products traded under the partnership must be shipped with an organic export certificate. This document will show the production location, identify the organisation that certified the organic product, verify that prohibited substances and methods weren't used, certify that the terms of the partnership were met, and allow traded products to be tracked.

Both parties are committed to ensuring that all traded organic products meet the terms of the partnership, retaining their organic integrity from farm to market. The European Commission's Directorate General for Agriculture and Rural Development and the U.S. Department of Agriculture's (USDA) National Organic Program—which oversees all U.S. organic products—will both take on key oversight roles.

The United States and the European Union will continue to have regular discussions and will review each other's programs periodically to verify that the terms of the partnership are being met. The EU and U.S. will also begin to work on a series of cooperation initiatives to promote organic production and tackle important topics such as animal welfare and other issues. Both programs will share technical information and best practices on an ongoing basis to further enhance the integrity of organic crops and livestock production systems.

Currently, this agreement only covers products exported from and certified in the United States or the European Union.



Dean Foods 4Q Loss Narrows Amid Rebound At Milk Unit

Fourth-quarter earnings improved at Dean Foods Co. (DF) as the dairy company passed through higher costs for milk and other raw food products.

The biggest U.S. dairy processor and distributor by revenue reported earnings of 27 cents a share, after accounting for a flurry of one-time charges. The company essentially earned more money while selling a similar volume of products as compared to a year ago.

Dean Foods' sales volumes of commodity products like generic milk and dairy products were generally flat. Volumes of other products, like International Delights coffee creamers and Silk non-dairy beverages, were higher. Revenue increased 4.5% to $3.3 billion, while operating profit was up 11%.

The higher revenues helped the company cover surging costs for commodity products, especially raw milk. Dean Foods said prices for raw milk were up 10% compared to the same quarter a year ago.

Shares surged 9% to $11.87 a share in pre-market trading. Investors have been hoping that Dean Foods, saddled for quarters with high commodity costs and challenges to its corporate structure, will harness its dominant position in the dairy business and return to profitability.

The biggest U.S. dairy processor and distributor by revenue has struggled in recent quarters as a weak U.S. economy and higher prices contributed to soft sales, even as costs for raw products from dairy farmers jumped. The company has sold or closed facilities, due in part to legal anti-trust challenges by regulators. Dean Foods has also faced heavy competition from private-label brands as grocers discounted milk to lure consumers into their stores.

The company's quarterly results continued to reflect its underlying challenges. One-time charges, including goodwill impairments and corporate costs, were about $200 million, translating to an actual loss of 5 cents a share. For the full year, Dean recorded $2.1 billion in goodwill write-downs, which basically matches its current market capitalization of around $2 billion.

The company issued brighter forecasts for results in 2012, when it expects to turn in full-year earnings of 87 cents to 95 cents a share, which would mark an increase of 13% to 24% compared to 2011. Dean said it expects first-quarter earnings this year to be 18 cents to 23 cents a share.

Dean Foods' gross margin fell to 23.3% from 24%. The Fresh Dairy Direct segment, the company's largest business, posted 4% sales growth as the company passed through higher commodities costs. Sales volume was flat after excluding a September divestiture.

At the WhiteWave-Alpro segment, which includes ice cream, yogurt and organic products, sales were up 6%, due to growth in creamers and plant-based beverages. At its Morningstar business, sales improved 7%.



Deere Announces Record First-Quarter Earnings of $533 Million

Net income attributable to Deere & Company was $532.9 million, or $1.30 per share, for the first quarter ended January 31, compared with $513.7 million, or $1.20 per share, for the same period last year.

Worldwide net sales and revenues for the first quarter increased 11 percent, to $6.767 billion, compared with $6.119 billion last year. Net sales of the equipment operations were $6.119 billion for the quarter compared with $5.514 billion a year ago.

"By completing another quarter of record performance, John Deere has started 2012 on a strong note," said Samuel R. Allen, chairman and chief executive officer. "These results are evidence of the skillful execution of our operating and marketing plans. They also reflect an enthusiastic response by customers worldwide to our advanced lines of equipment. Maintaining such a high level of execution is especially noteworthy as we move ahead with major new-product launches and significantly expand our global market presence." Over the last year, Allen pointed out, Deere introduced a record number of products and announced plans to build seven new factories throughout the world. The company also expanded or modernized additional locations in the U.S. and other countries.

Summary of Operations
Net sales of the worldwide equipment operations rose 11 percent for the quarter. Sales included price increases of 4 percent and an unfavorable currency-translation effect of 1 percent. Equipment net sales in the United States and Canada increased 5 percent for the quarter. Outside the U.S. and Canada, net sales were up 21 percent for the quarter, including an unfavorable currency-translation effect of 2 percent.

Deere's equipment operations reported operating profit of $698 million for the quarter, compared with $646 million last year. Results benefited from price realization and higher shipment volumes, partially offset by increased production costs related to new products and more stringent engine-emission requirements, as well as higher raw-material costs.

Trade receivables and inventories ended the quarter at $9.011 billion compared with $7.416 billion last year. Both figures are equal to 30 percent of trailing 12-month sales.

Financial services reported net income attributable to Deere & Company of $119.1 million for the quarter compared with $118.2 million last year. Results benefited from growth in the credit portfolio, revenue from wind energy credits and a lower provision for credit losses. These factors were largely offset by higher crop insurance claims and increased selling, administrative and general expenses.

Company Outlook & Summary
Company equipment sales are projected to be up about 15 percent for fiscal 2012 and for the second quarter compared with the same periods of the previous year. Included is an unfavorable currency-translation impact of about 3 percent for the year and the second quarter. For the full year, net income attributable to Deere & Company is anticipated to be approximately $3.275 billion.

According to Allen, Deere's strong performance and positive outlook build momentum for the company's plans to increase growth and profitability. "Our substantial investment in new products and additional capacity puts Deere on a sound footing to respond to further improvement in key markets that are in the early stages of recovery," Allen said. "Such investment will help Deere more fully capitalize on the world's growing need for food, shelter, and infrastructure in the years ahead. In our view, powerful trends of this nature have staying power and represent an exceptional opportunity for the company and its investors."

Equipment Division Performance
-    Agriculture & Turf. Sales increased 8 percent for the quarter largely due to higher shipment volumes and price realization. Operating profit was $574 million compared with $558 million for the quarter last year. The improvement was primarily due to price realization and higher shipment volumes, partially offset by increased production costs related to new products and engine-emission requirements, as well as higher raw-material costs.
-   Construction & Forestry. Construction and forestry sales climbed 22 percent. Operating profit for the quarter was $124 million compared with $88 million a year ago. Contributing to the increase were higher shipment volumes as well as price realization, partially offset by higher raw-material costs.

Market Conditions & Outlook
-    Agriculture & Turf. Worldwide sales of agriculture and turf equipment are forecast to increase by about 15 percent for full-year 2012, including an unfavorable currency-translation effect of about 3 percent. Farmers in the world's major markets are expected to experience favorable incomes due to strong demand for agricultural commodities. In addition, John Deere's sales are projected to benefit from advanced new products being launched throughout the world and from major expansions.
-   Industry farm-machinery sales in the U.S. and Canada are forecast to increase by about 10 percent in 2012. Overall conditions remain positive and demand continues to be strong, especially for high-horsepower equipment.
-   Full-year industry sales in the EU 27 nations of Western and Central Europe are forecast to be flat to up 5 percent as favorable conditions in the grain, livestock and dairy sectors outweigh general economic concerns. Sales in the Commonwealth of Independent States are expected to be considerably higher in 2012, while sales in Asia are forecast to increase moderately. In South America, industry sales for the year are projected to be flat to down 5 percent, versus attractive levels of 2011, due to drought conditions in Argentina and southern Brazil.
-   U.S. and Canada industry sales of turf and utility equipment are expected to increase slightly in 2012.