Tuesday May 1 Ag News

NDA ISSUES IMPORTATION ORDER FOR LIVESTOCK ENTERING NEBRASKA FROM STATE WITH CONFIRMED CASE OF VESICULAR STOMATITIS

A recent confirmed case of Vesicular Stomatitis in a horse in New Mexico has prompted the Nebraska Department of Agriculture (NDA) to today issue an importation order for livestock entering Nebraska from New Mexico.

“Protecting the health and safety of Nebraska’s livestock herd is of utmost importance,” said State Veterinarian Dr. Dennis Hughes.  “Producers should follow importation requirements and remain vigilant in looking for signs and symptoms of Vesicular Stomatitis in their own herds.”

According to Hughes the disease resembles Foot-and-Mouth disease.  Vesicular Stomatitis is a viral disease that is characterized by fever and the formation of vesicles (blisters) in the mouth, nostrils, hooves and teats.  When blisters break, there is usually salivation, nasal discharge and anorexia.  In three to four days, the animal will recover.  The disease primarily affects horses, cattle, swine and occasionally sheep and goats.

Producers who are considering moving livestock from another state into Nebraska need to contact the NDA State Veterinarian’s office to learn about specific import requirements.  Staff can be reached by calling (402) 471-2351.  Import regulations and orders also can be reviewed on-line at www.agr.ne.gov.  It also is advised that producers moving livestock from Nebraska into another state contact the destination state to learn its latest import requirements.



Support for Proposed Amendments to the Beef Checkoff

Today, Nebraska Cattlemen (NC) submitted comments supporting a proposed amendment to the Beef Promotion and Research Order, commonly known as the Beef Check-off. The proposed rule would expand contracting authority by eliminating the requirement that allows only organizations active and ongoing since 1985 to contract with the check-off. The proposed amendment would allow national non-profit, industry-governed organizations that have been representing the cattle industry for at least two years to be eligible to contract for the implementation of checkoff programs.

While NC policy calls for elimination of any charter date requirement, NC agrees the minimum requirement of two years is practical and complies with NC members’ desire for the checkoff to be more inclusive.

“The members of Nebraska Cattlemen established policy at our 2007 convention asking for several changes to the Order. One of the changes was eliminating the reference of a charter date of an established national non-profit industry organization.” states Nebraska Cattlemen President, Jim Ramm. “This policy was carried forward to NCBA where it was also adopted.  Today, we are carrying out member wishes by submitting supporting comments on a rule which will provide the cattlemen the best return on their check-off investment.”

Industry partner, National Cattlemen Beef Association (NCBA) also commented positively on the proposal.

“The end-game is to make absolute certain that the very best initiatives to increase and solidify demand for U.S. beef are pursued. The proposed rule would allow more ideas to be brought to the table for consideration. It is cut and dry,” said JD Alexander, NCBA President and Nebraska native.



Waste at EPA
Senator Mike Johanns

One of the first things I’ll be doing when the Senate reconvenes next week is sponsoring legislation introduced by Sen. Rand Paul (R-Ky.). This legislation, S. 2226, would prohibit the Environmental Protection Agency (EPA) from sending your tax dollars to other countries for environmental projects under Section 103 of the Clean Air Act.

With our national debt rapidly approaching $16 trillion, this type of grant program hardly seems like a responsible stewardship of your tax dollars. Since the President’s so-called stimulus program was signed into law in 2009, the House Energy and Commerce Committee estimates that approximately $27 million has been handed out for overseas air pollution projects – as you know, every penny of that money comes from your taxes or is borrowed from other countries.

Examples of these EPA grants include more than $700,000 to China for emissions reductions and $1.2 million for the United Nations to help developing countries increase their use of alternative vehicles and fuels. Thailand received $700,000 to install equipment at a swine farm to recover methane gas. These are just a few examples, and unfortunately, they all smell about as bad as that pig farm.

This bill is currently before one of the committees I sit on. I’m going to work to make sure it comes up for a vote and hopefully becomes law. It’s the kind of common-sense legislation that we need more of in Washington.



NATION'S LARGEST 100 AGRICULTURE CO-OPS POST NEAR-RECORD SALES, MARGINS

The nation's 100 largest agriculture cooperatives reported near-record revenue of $118 billion in 2010, USDA Rural Development Under Secretary Dallas Tonsager announced today. This was an increase of 4 percent over 2009 figures. Net income for the 100 top agriculture co-ops was also up more than 10 percent in 2010, reaching $2.39 billion, up from $2.16 billion in 2009.

"Farmer and rancher-owned cooperatives are a mainstay in the American economy, not only helping members market and process their crops, milk and livestock and creating jobs, but also helping producers keep more of the earnings derived from their products at home, in rural counties and communities," Tonsager said. "The end result is a huge net benefit for producers, their communities and the overall rural economy. Farmer co-ops also account for significant numbers of jobs and economic activity in many cities."

CHS Inc., a farm supply, grain and foods cooperative based in Saint Paul, MN, topped the list with 2010 revenue of $25.3 billion. Land O' Lakes, a dairy foods and farm supply co-op, also based in Saint Paul, ranked second, with revenue of $11.1 billion; Dairy Farmers of America, based in Kansas City, Mo., was third with $9.8 billion in 2010 revenue.

9 NE Co-ops Made the Top 100 List
Nine Nebraska Cooperatives made the Top 100 list.  Ag Processing, Inc. in Omaha ranked fifth with $3.3 billion. Producers Livestock Marketing Association also of Omaha, had revenue of $908 million; Cooperative Producers Inc. of Hastings, $643 million; Aurora Cooperative Elevator Company of Aurora, $614 million; Farmers Cooperative of Dorchester, $602 million; Central Valley Ag Cooperative in O’Neill, $506 million; United Farmers Cooperative of York, $450 million; Frenchman Valley Farmers Cooperative, Inc. of Imperial, $419 million; and Ag Valley Cooperative Non-Stock of Edison $289 million.

National Summary
USDA's top 100 ag co-op list shows that 23 co-ops had 2010 revenue of more than $1 billion. Another 47 co-ops had revenue between $506 million and $1 billion. The 100th ranked co-op had sales of $276 million.

Leading the revenue increase from 2009 to 2010 were dairy cooperatives, which saw 2010 revenue climb more than 14.5 percent from the previous year, to $29.5 billion. Dairy cooperatives accounted for more than half of the revenue increase recorded by the top 100 ag co-ops in 2010.

Gross margins, as a percent of total sales, were up slightly, from 9 percent to 9.2 percent. The increase in gross margins partially covered higher expenses. Gross margins plus service revenue climbed to $684 million.

Total expenses for the top 100 ag co-ops were up $575 million in 2010. The largest cost increase was for labor, where expenses climbed by 7 percent, to $4.6 billion. On the other hand, lower interest rates and less debt caused interest expense to drop 11 percent.

"While it is encouraging to see the nation's largest farmer-owned cooperatives reporting strong revenue and income, it is also noteworthy that the nation is seeing a surge in the formation of small-farmer cooperatives and quasi-cooperatives that have been created to meet the growing demand for locally produced foods," Tonsager said.

The asset base for the top 100 ag co-ops grew by $2.3 billion between 2009 and 2010. Current assets accounted for nearly two-thirds of that increase. Fixed assets also showed an increase of $600 million.

For a complete list of the top 100 cooperatives, go to http://www.rurdev.usda.gov/SupportDocuments/rdTop100AgCoopList04-27-2012.pdf. For a more detailed look at the top 100 Ag Co-ops, see page 16 of the March-April issue of USDA's "Rural Cooperatives" magazine: http://www.rurdev.usda.gov/rbs/pub/openmag.htm.



Nebraska State Fair Releases 2012 Theme

The Nebraska State Fair has announced the theme of "High Flying Fun" for the 2012 event.

Shaun Schleif, marketing and sponsorship director for the fair says, "The addition of the new Sky Tram was the impetus in selecting this year's theme. While it describes the 40-foot high Sky Tram, it also represents the fun the Nebraska State Fair provides for every member of the family."

Traditionally, the theme has been used throughout the fair by the livestock and domestic superintendents as well as individual exhibitors who implement the theme as part of their displays.

The theme artwork was designed by Barry Keller of Infuze Creative Marketing in Hastings. Keller says, "Having been involved with the State Fair since it's move to Grand Island has been very rewarding. To be a part of something that has been so positive for all Nebraskans is something any artist would be proud to be a part of."

According to Schleif, "The Nebraska State Fair theme is as old as the fair itself highlighting everything from livestock to the midway and from food to entertainment. In 2011 the theme was 'The Good Life on a Stick,' and in 2010 it was 'A Grand Affair' celebrating the first year of the state fair in Grand Island." The Nebraska State Fair runs from August 24 through September 3rd at Fonner Park in Grand Island.



Small Open Feedlot Producer Guide Looks at Improvements

As beef producers work to produce meat for a hungry world, they also must be stewards of animals, land and water. Small open feedlots are used across Iowa to grow and finish beef animals. Operators of these feedlots manage manure and runoff better when they have affordable control and containment solutions, and workable management practices.

Small feedlots don't come under all the regulations of large feedlots, but they can still have a significant impact on water quality, according to Shawn Shouse, Iowa State University Extension and Outreach agricultural engineer. Educational materials developed by ISU Extension and Outreach with industry and agency partners are assisting operators in their effort to decrease potential manure impacts on water quality.

"Management systems that work for the big feedlots are too expensive for the small operators," said Shouse. "But there are a variety of affordable practices they can put in place to keep nutrients and pollutants from reaching Iowa streams."

Shouse outlines those practices in a recently released publication, "Small Open Beef Feedlots in Iowa -- a producer guide." The guide, available from the Extension Online Store at https://store.extension.iastate.edu/, is one of many resources available to producers on a dedicated Web page for small feedlot and dairy operations, http://www.agronext.iastate.edu/immag/smallfeedlotsdairy.html. A similar publication for small open dairy lots is currently under review and will be available later this spring.

Shouse said fact sheets with more detail on practices mentioned in the producer guides are also being created. Demonstration sites around the state with the practices in place are being identified. "Operators will see that there are simple things they can do to get nutrients where they want them," said Shouse. "We want them to understand what is in feedlot runoff, how it impacts streams and how simple it is to make environmental improvements to their operation that will limit environmental risks."

Self assessment tools to identify feedlot runoff risk, videos and fact sheets are available on the small feedlot and dairy operations Web page. These educational resources are part of the Water Quality Initiatives for Small Iowa Beef and Dairy Feedlot Operations project supported by the Iowa DNR, Iowa Cattlemen's Association, Iowa Department of Agriculture and Land Stewardship, Iowa State Dairy Association, USDA-NRCS, EPA Region 7 and Iowa State University Extension and Outreach.



Branstad, Reynolds Highlight Soil and Water Conservation Week

Gov. Terry Branstad and Lt. Gov. Kim Reynolds Monday during their weekly media conference highlighted Iowa Soil and Water Conservation Week, which runs from April 29 to May 6. They were joined by Iowa Secretary of Agriculture Bill Northey as they discussed the important conservation work being done in the state and encouraging all residents to continue to work to protect the state's soil and water resources.

"Iowans have a culture of conservation due to our close connection to the land and a long history of recognizing the importance of being environmental stewards," Branstad said. "Agriculture has been a key driver of the state's economy and farmers understand better than anyone that we need to protect our natural resources for future generations."

Branstad previously signed a proclamation recognizing Soil and Water Conservation Week in Iowa that highlighted the abundance of our state's agricultural production and the high quality of life we enjoy are dependent upon the proper use and management of our soil and water resources.

"This week we will be participating in a number of events to highlight the good work going in our rural and urban communities to protect our air, soil and water," said Reynolds. "We wanted to highlight a few of the new and exciting conservation projects that are taking place across the state."

Today, Branstad and Reynolds participated in a Rathbun Lake Watershed Field Day on a farm near Chariton and then on May 4 they'll attend a Scott County Urban Conservation Showcase in the Quad Cities area.

The Iowa Department of Agriculture and Land Stewardship's Division of Soil Conservation and Polk Soil and Water Conservation District will co-host an urban conservation tour in downtown Des Moines on May 3 at 1 p.m. The tour will start at the Iowa Utilities Board, 1375 E Court Ave., at 1 p.m. and then visit two other sites in downtown Des Moines to showcase bioretention cells, native landscaping, permeable paving, rain gardens and a green roof.

"We need rural and urban to work together to help manage the rain that falls in our cities and on our farms," Northey said. "We are in the process of developing a statewide nutrient reduction strategy to identify the conservation practices that are most effective and give farmers and landowners even better tools to ensure Iowa's continued place in successful crop farming, while improving the sustainability of Iowa's fertile soils and the quality of Iowa's waters."

The Iowa Department of Agriculture and Land Stewardship's Division of Soil Conservation partner with the 100 Soil and Water Conservations Districts located in each county to fulfill Iowa's conservation mission. The Department's conservation partners include USDA's Natural Resources Conservation Service (NRCS), the Iowa Department of Natural Resources (DNR), and Iowa State University, among many others.



CME Group to Expand CBOT Grain and Oilseed Trading Hours on CME Globex

CME Group, the world's leading and most diverse derivatives marketplace, today announced it will expand electronic trading hours in its CBOT grain and oilseed futures and options beginning Monday, May 14, 2012. This will expand market access to CBOT Corn, Soybeans, Wheat, Soybean Meal, Soybean Oil, Oats and Rough Rice futures and options on CME Globex to 22 hours per day.

"As we've grown our customer base in agricultural commodities around the globe, we've received increased interest in expanding market access by providing longer trading hours," said Tim Andriesen, Managing Director, Agricultural Commodities and Alternative Investments, CME Group. "In particular, customers are looking to manage their price risk in our deep, liquid markets during market-moving events like USDA crop reports. In response to customer feedback, we're expanding trading hours for our grain and oilseed products to ensure customers have even greater access to these effective price discovery tools." 

Beginning, May 13 for trade date May 14, customers will have expanded access to CBOT corn, soybeans, wheat, soybean meal and soybean oil futures and options on CME Globex as follows:
-    Sunday to Monday, 5:00 p.m. to 4:00 p.m. CT
-    Monday to Friday, 6:00 p.m. to 4:00 p.m. CT.

Open-outcry trading hours will continue to operate from 9:30 a.m. to 1:15 p.m. CT Monday to Friday.



USDA Announces Commodity Credit Corporation Lending Rates for May 2012

The U.S. Department of Agriculture's Commodity Credit Corporation (CCC) today announced interest rates for May 2012. The CCC borrowing rate-based charge for May 2012 is 0.125 percent, unchanged from 0.125 in April 2012. For 1996 and subsequent crop year commodity and marketing assistance loans, the interest rate for loans disbursed during May 2012 is 1.125 percent, unchanged from 1.125 in April 2012.

In accordance with the 2008 Farm Bill, interest rates for Farm Storage Facility Loans approved for May 2012 are as follows, 1.500 percent with seven-year loan terms, unchanged from 1.500 in April 2012; 2.125 percent with 10-year loan terms, unchanged from 2.125 in April 2012 and; 2.375 percent with 12-year loan terms, unchanged from 2.375 percent in April 2012.



New Proposed BioPreferred Regulation to Expand Biobased Products for Federal Purchase

Agriculture Secretary Tom Vilsack today announced the publication in the Federal Register of new proposed guidelines for the USDA BioPreferred program that could expand the ability of USDA to designate biobased products for Federal purchase. USDA is proposing to allow for the designation of intermediate ingredients such as fibers, resins, and chemicals so that the products made from them could more easily be designated for preferred Federal procurement.

"USDA and the Obama administration are working with private industry to pursue an 'all of the above' energy strategy," Vilsack said. "These proposed guidelines are another example of the way the BioPreferred program is being tailored to supplement production of products from new farm-based sources, supporting economic expansion, and creating jobs from the farm to the finished product. Today, the development of both biofuels and bioproducts, using not just corn, but corn stover, soybeans, switchgrass, wood, camelina, energy cane, municipal solid waste, yellow oils, algae, and a host of other non-food feedstocks growing across the country are reducing our reliance on foreign oil."

The new regulation also allows for the designation of complex assemblies that contain one or more components made from biobased ingredients. These provisions are necessary because such finished products cannot be tested for biobased content using the procedures spelled out in the existing guidelines.

USDA is also proposing to revise some of the definitions and terminology used in the existing guidelines to clarify the operating procedures. Vilsack said these actions will incorporate statutory changes to the 2008 Farm Bill and will make improvements to the existing guidelines based on ten years of operating experience.

Vilsack also noted USDA has just celebrated the anniversary of one year of voluntary USDA biobased product certification and labeling. As of March, 2012, USDA has certified over 670 biobased products from more than 200 companies. Biobased industries have submitted more than 1,100 applications to USDA. Vilsack pointed out those USDA Certified Biobased Products are available to consumers and are now appearing on the shelves of supermarkets and other businesses across the country.



2012 HRW Wheat Tour -- Day 1
Good Moisture, Yield Outlook Seen Near Nebraska Border

Crop scouts on one northern leg on an annual Kansas wheat tour saw adequate moisture and good yield potential Tuesday.

The scouts, travelling west across northern Kansas near the Nebraska border, reported an average estimated yield of 55 bushels per acre after stops in nine wheat fields by midday Tuesday, the first day of the tour. Crop-tour scouts on a similar route last year estimated an average yield of 41.6 bushels an acre after a full day of inspections.

In the five Kansas counties where the group had inspected fields by midday, the average actual yield was 40.6 bushels an acre in 2011, according to the USDA.

Many of the fields the group visited Tuesday were affected by stripe-rust fungus, barley yellow dwarf mosaic virus carried by aphids, or both, and one showed signs of light hail damage.

Government officials, farmers, reporters, and representatives of grain and other food companies this week are driving across Kansas to count kernels and wheat stalks on an annual inspection tour sponsored by the Wheat Quality Council. The council will put out an estimate late Thursday for the average yield of the Kansas wheat crop ahead of its harvest in a few weeks. The projection can influence commodity price forecasts and the grain-purchasing strategies of companies.

A warm winter and early spring advanced development of the wheat crop, but those conditions also favor early occurrence of crop diseases, and the central corridor of Kansas running north to south has been particularly affected, said Jim Shroyer, an extension agronomist at Kansas State University.

Yield losses for some of the affected areas could approach 30%-40% unless they are treated with fungicide at an appropriate time, Shroyer said.

Tour participants are known as "crop scouts." About 100 people are on the tour this year, a record number including representatives from companies like Archer Daniels Midland Co., Cargill Inc., Gavilon, ConAgra Foods Inc., General Mills Inc., Wal-Mart Stores Inc., and Mexican bakeries company Grupo Bimbo SAB.



Is Cattle Market Too Cautious?

The beef industry was stung by two negative events in the past two months that have left market traders uncertain about their longer term impacts. For now, market participants are taking a cautious approach until consumers more clearly define if they will reduce beef consumption.

"The issue over lean finely textured beef, or LFTB, played badly for cattle producers in early March, and the fourth BSE cow found in the United States was announced on April 24," said Purdue University Extension agricultural economist Chris Hurt. "Finished cattle prices were about $129 per live hundredweight in early March before these news events but have since declined to about $120."

Hurt said the decline in cash cattle prices has not been as severe as the drop in live cattle futures. At the start of March, June 2012 live cattle futures settled near $128 but declined about $15 to $113 as of April 27. In a similar manner, the December 2012 live cattle futures have declined by about $12 per hundredweight since the first of March.

"The much larger decease in futures prices as compared to cash prices could be signaling that futures participants have over-responded to the fears of the negative impacts on beef demand of these two negative events," Hurt said. "There of course can be other explanations, such as the possibility that futures markets were just too bullish on cattle prices in early March. This argument would suggest that the excess optimism had to be taken out of the futures with prices forced to drop more than cash."

Regardless, Hurt said, the recent declines are coming off record-high cattle prices, a situation that often results in a large price correction when the upward momentum is broken.

"Most in the cattle market are cautious," Hurt said. "They are watching cash cattle prices closely for any indications of demand losses. Since LFTB was primarily taken out of hamburger, this should have reduced the supply of beef, specifically hamburger. That impact by itself would have increased overall beef prices, assuming demand stayed constant. Of course, demand may have also decreased, and that would have been a price-dampening factor."

Hurt said that many market analysts believe that the discovery of another BSE cow should not have any lasting impact on domestic beef demand because it was atypical (naturally occurring), was only the fourth discovered in the United States, and posed no health risk to humans.

But, Hurt said, it's not what analysts think that counts, but how consumers react that determines prices.

"The April 2012 BSE cow should not affect beef trade because tolerance levels have been established," Hurt said. "However, we'll watch the reactions of South Korean beef consumers closely for any protest or pushback against U.S. beef. Consumers there have been the most difficult to convince of the safety of U.S. beef, so they may be the most discriminating this time as well," he said.

Hurt continued that market participants are cautious because these two negative demand impacts occurred close together in time. The combined impact may be bigger than the impact of each event if separated by more time.

"Some consumers may not have changed beef consumption if just the LFTB event had occurred, but when they hear two negatives against beef in a short time, they might change consumption behavior," Hurt said. "Probably a final reason to be cautious is the worry that the other shoe is going to fall. This simply means that a third negative event could have even larger effects. That might include something like finding another BSE cow in the U.S. herd that increased concerns of a larger problem," he said.

On the positive side of these two negative events for the cattle industry, Hurt said that beef supplies will continue to be very small this year, with U.S. beef production down 4 percent. So far this year, the number of heads slaughtered has been down 5 percent with total production down somewhat over 3 percent. The recent decline in cattle prices may also discourage some cattle producers from expanding their herds at this time. Cow and heifer slaughter has remained high in 2012, adding credibility to the argument that expansion has not begun, at least not in any major way.

Hurt reported that finished cattle prices averaged about $125 in the first quarter. Current live futures prices suggest that the second quarter will only average about $117, followed by $114 in the third quarter and $119 in the final quarter this year. Those prices seem excessively low, and futures traders seem to be extra cautious to the tune of $3 to $5 per hundredweight.

"If no new negative events arise for the cattle industry, one can at least make the argument that forward prices are too depressed right now," Hurt said. "However, the market is cautious for legitimate reasons. Time will tell if price recovery is in the future or if the cautious marketplace turns out to be the correct opinion."



RFA answers anti-ethanol speculation from Joint Economic Committee hearing

In testimony before the Joint Economic Committee on April 26th, Mr. Thomas O’Malley, chairman of PBF Energy, attempted to tar and feather ethanol and the Renewable Fuel Standard (RFS) as the root cause of refinery closures in the Northeast.  Mr. O’Malley went as far as to say, “The reason for the closure of the refineries in Pennsylvania is that they didn’t make money, and the reason they didn’t make money is that you took away their market.  You delivered the market to the farm industry.”

Responding to this gross mischaracterization, Renewable Fuels Association President and CEO Bob Dinneen wrote to JEC Chairman Senator Bob Casey (D-PA) and Rep. Kevin Brady (R-TX) to set the record straight.

“While the testimony of Mr. Thomas O’Malley, chairman of PBF Energy, attempted to tar and feather ethanol and the Renewable Fuel Standard (RFS) as the root cause of refinery closures in the Northeast, any reasonable and honest analysis of the situation reveals that a host of economic factors completely unrelated to the RFS led to the shuttering of the refineries,” Dinneen wrote. “A fair examination of the factors affecting gas prices in the Northeast not only would have shown that ethanol and the RFS have nothing to do with the recent refinery closures, but it also would have revealed that ethanol is actually helping to reduce prices at the pump for drivers in the region.”

Specifically, Dinneen noted two driving factors that have led to refinery shutterings on the East Coast:

First, most East Coast refineries cannot process the lower-cost types of crude oil that are increasing in supply in North America. As a result, oil acquisition costs for East Coast refineries are substantially higher than for refineries in other regions.

Second, due to record high crude oil prices in recent years, demand for gasoline and other finished refinery products has fallen precipitously. Consumers have responded to record high oil and gasoline prices by driving less and purchasing more fuel efficient vehicles. Lower demand for refined products has led to significant refinery overcapacity in the East Coast region.

As reported recently by CNN Money, refineries in the Northeast “…are losing money because they are old and cannot process the cheaper, heavier types of oil that are increasingly in supply from Canada's oil sands, Saudi Arabia, Venezuela and elsewhere.”

Dinneen also pointed to the fact the companies closing the refineries did not mention ethanol or the RFS.  “It is telling that the owners of the shuttered refineries themselves—Sunoco and ConocoPhillips—didn’t mention ethanol or the RFS as precipitating causes of their economic difficulties when they announced the closures,” wrote Dinneen.

Most troublingly, a hearing purportedly called to address gas prices turned into witch hunt against ethanol and ignored the very real economics and damage done by sustained record or near-record high gasoline prices.

“Had the Committee focused on the advertised subject of the hearing, members would have quickly learned that the object of Mr. O’Malley’s ire—ethanol—is actually the best tool available today for exerting downward pressure on oil and gasoline prices,” Dinneen wrote.  “Despite Mr. O’Malley’s false assertion that ethanol is ‘more expensive than the product coming from refineries,’ data from the Chicago Mercantile Exchange clearly show that ethanol is selling for $1 per gallon less than gasoline at the wholesale level today.” 

Dinneen noted that the facts directly refute Mr. O’Malley’s testimony and should be disregarded.  “It is completely illogical and misleading to suggest that ethanol expansion and the RFS contributed in any way to the shuttering of the refineries. As such, Mr. O’Malley’s testimony should be seen for what it truly is—yet another underhanded and deceiving shot across the bow from the oil industry at America’s farmers and ethanol producers.”



Our View:  "Would" versus "Could:" The Pitfalls of Academic Models and Public Perception
Rick Tolman, Chief Executive Officer - National Corn Growers Association

As an alumnus of Purdue University, I love the school and think it is an outstanding institution.  Overall, the School of Agriculture has a stellar staff, a tradition of excellence and a dean who is outstanding.  I received a master's degree from Purdue in Agricultural Economics, and the time I spent there and the training I received has been, and continues to be, one of the key defining experiences of my life.

But alas, even Purdue from time to time, like many of our Land Grant institutions, suffers from what I consider to be two serious weaknesses.  The first is an over-reliance on academic modeling and academic-only institutional experience. This often results in an undervaluing of reality and real-world experience.  The second is the way the results of some of their academic modeling exercises are promoted and played up to the public - as if they are real-world results.

There are many recent instances where this has occurred across our Land Grant system.  It is not only a disservice to U.S. agriculture, which the Land Grant system was put in place specifically to serve, but also the general public, who are misled and given misperceptions that are unfortunately long lasting and very difficult to overcome. Models are designed to take a limited number of variables to try and explain past occurrences. Once it adequately explains the past, modelers then try to make future predictions.  However, depending on the variables or constraints selected-purposely or not on purpose, or things change in the future, the accuracy of the models predictions can vary wildly from reality.

A release this past week from the Purdue Department of Agricultural Communications is a case in point.  The bold headline on the release says:  "Climate change, biofuels mandatewould cause corn price spikes."  (My emphasis on the word "would.")  The first sentence in the release goes on to say: "A study from Purdue and Stanford university researchers predicts that future climate scenarios may cause significantly greater volatility in corn prices, which would be intensified by the federal biofuels mandate."  (My emphasis on the word "may.")  The word "could" is then used three times in the next two paragraphs, appropriately indicating that the results of the study are based on certain assumptions and scenarios and indicate a "what if" scenario.  The headline of the release is the single most likely sentence to be picked up by the media and repeated as "Purdue says..."  The word "would"  in the headline is clearly inappropriate and irresponsible.