Tuesday November 27 Ag News

Feeding Light Test Grain to Cattle
Larry Howard, UNL Extension Educator, Cuming County

Corn harvested this fall may have lower test weights than commonly observed by crop producers. Light test weight corn is often discounted in price leading both cattle feeders and farmers to wonder about its feed value. Research results have shown the feed value of light test weight corn when it is used in various cattle rations.  The following has been shared by Matt Luebbe, Feedlot Nutrition and Management Specialist at the UNL Panhandle Research and Extension Center.

Test weight (TW) in corn is a measure of density (weight per unit volume) with the current standard at 56 lb/bu. Many stress factors can contribute to lower test weight corn: hybrid, temperature, solar radiation, hail, early freeze, disease, and drought. The result of a reduced growing season is grain with higher protein, fiber, and mineral concentrations. The greater concentrations of these nutrients come at the expense of reduced starch content, the primary fraction used for energy when grain is fed to livestock. Some areas have experience feeding light test corn because of drought or a shorter growing season (cool temperatures) in the past. The current drought situation has made this a concern for a large portion of the Corn Belt.

Anecdotal evidence from previous closeouts of cattle suggests that when light TW corn is fed, cattle performance (feed efficiency) becomes poorer. However, data based on more than 50 years of research suggests there may not be a large reduction in feed efficiency when light TW corn is used. When compared on a dry weight basis, the feeding value is often similar for light and normal TW corn. The majority of feeding studies conducted agree with these observations.

Several feeding experiments have evaluated the feeding value of light test weight corn. Beef cattle research conducted at UNL and NDSU in growing diets or forage based diets have slightly different outcomes but both show no negative impact on performance. At UNL, two years of performance data suggests that there is no difference in performance between light (46.8 lb/bu) and normal (56.2 lb/bu) TW corn. At NDSU, data suggests that when light TW (39.1 lb/bu) corn replaced 0, 33, 67 or 100% of the normal (56.0 lb/bu) corn there was an improvement in feed efficiency. The authors noted that as grain with a lighter TW was included in the diet, the negative associative effects of ruminal starch digestion on fiber utilization was reduced. In either study, the feeding value of light TW corn is similar to slightly improved compared with normal corn. Corn producers that grow calves on a high forage diet may be able to capture the value of the corn if feed mills or ethanol plants discount low test grain.

Finishing research conducted at UNL and NDSU with low TW corn shows a slightly different response. At UNL, the same corn TW that were fed in the growing study was fed to finishing steers. The combined data from two years suggested a slight improvement in feeding value for light TW corn. However, when light (39.1 lbs/bu), medium (46.9 lbs/bu), and normal (53.7 lbs/bu) corn were fed at NDSU there was a decrease in performance as TW decreased. It appears that when corn grain has a TW lower that 45 lbs/bu, finishing performance may be reduced. This suggests that the grain may be discounted using a similar structure that local elevators or ethanol plants are using when purchasing grain.



Powerful Lineup of Seminars Announced for 2012 Nebraska Power Farming Show

If knowledge is power, the 2012 Nebraska Power Farming Show promises to be one high-powered farm show. There are 21 seminars scheduled to take place over three days, with experts slated to cover a bevy of topics that farmers should know about heading into 2013.

“This year’s slate of seminars will help educate growers about industry and market trends, emerging opportunities and technologies, and rising challenges that farmers will face in the coming years,” said Show Co-Director, Tom Junge. “There will be powerful insights from some of the top minds in agriculture, and we encourage show attendees to take advantage of the many educational opportunities.”

It all starts Tuesday, December 4, with seminars like “Saving the Family Farm,” “Why Market Analysts Are Always Wrong!” and “Successful Farm Transitions – What It Takes!”

Wednesday’s sessions include “Farm Programs and Crop Insurance for 2013” and a panel discussion about “The Future of Energy in Farm & Agricultural Production.”

Things round out on Thursday with “Energy Myths and Facts,” “What’s Happening in the Commodity Markets” and “Conducting On-Farm Research Using Your Own Machinery.”

The Nebraska Power Farming Show, the second largest indoor farm show in the United States, runs from December 4-6, 2012, at the Lancaster Event Center in Lincoln. For more details and a complete list of the high-powered seminars and panel discussions scheduled to take place at the 2012 Nebraska Power Farming Show, please visit www.nebraskapowershow.com.



Northeast Nebraska RC&D Celebrates the Year

The Northeast Nebraska RC&D Council’s annual meeting was held November 26 at Grand Central Restaurant & Bookstore in Creighton.  After touring several local businesses the group continued the evening with dinner and awards program.

Virginia Buerman, Vice-President, of Creighton presented the 2012 awards.  Stan Baier of Wayne received the Outstanding Council Member award.  He’s represented the Lower Elkhorn Natural Resources District and has been active on numerous committees and projects.  Carol Peters was named Outstanding Program Support Assistant.  Her tenacity, willing spirit, and sound business practices have been invaluable to the continuation of the RC&D program.  Outstanding Youth Involvement award went to the Plainview FFA for their assistance on the E-Waste Recycling project and that same project was selected as “Top Project” for the year.  Council members were reminded of their Nebraska award as Outstanding Council of 2012.

The Annual Report was given by Janet Gill, Secretary, from Bloomfield.  Many things were accomplished this year with the support of generous financial donors, sponsors, and the good work of the volunteer Council members.  She complimented everyone on their contributions.

President Dennis Wacker thanked outgoing board members Virginia Buerman, Dick Haskin, and Stan Baier for their service.  New officers elected for 2013 were Dennis Wacker, President, Osmond; Glen Anderson, Vice-President, Coleridge; Susan Fields, Secretary, Tilden; and Janet Gill, Treasurer, Bloomfield.              

The next RC&D Council meeting will be Monday, January 28th with the location yet to be determined.  Everyone is welcome to attend.  



Water, Taxes, Farm Bill, Key Issues at Nebraska Farm Bureau’s 95th Annual Meeting
Delegates to the Nebraska Farm Bureau Federation’s annual meeting will discuss and form policy positions on a number of key issues that affect the well-being of Nebraska farm and ranch families.  Delegates will gather Dec. 3-4 at Kearney’s Younes Convention Center to establish policy for the organization on state issues and recommend policy on national issues to the American Farm Bureau, which holds its national meeting in January. 

This year’s convention theme is “Managing the Winds of Change,” a reflection of the challenges and opportunities that exist in agriculture today.  “Our annual meeting and policy development process is critical to bringing together the collective voice of our members to help shape the public policies that directly affect their livelihood and ability to raise food for a growing population,” said Steve Nelson, Nebraska Farm Bureau president. 

Among the key issues for discussion at the convention are management of Nebraska’s water resources, tax reform and the farm bill.  “Water is the lifeblood of agriculture in Nebraska and our delegates will consider a number of resolutions that examine the way in which we manage both ground and surface water and the integrated management of both,” said Nelson. 

Delegates will also consider resolutions targeting tax issues.  The Nebraska Legislature will likely have several tax reform proposals before it in January, including measures that examine both income and inheritance taxes.  “We have long believed that property tax relief and reform should be part of any major changes in our state’s tax structure and our delegates will further discuss what they would like to see done in that area,” said Nelson.  “We also have some major tax issues pending in D.C. such as changes in the estate tax and capital gains that will likely be a topic of discussion.”

Passage of a new, five-year farm bill will also be a major topic among delegates.  With the elections now in the rear-view mirror, farmers and ranchers are hopeful Congress can move forward in crafting a farm bill that provides some certainty to farmers and ranchers on farm and conservation programs. 

Other issues for deliberation by delegates include topics such as the establishment of a state beef checkoff program, agriculture transportation regulations, EPA flyovers of agriculture operations, electrical inspections on farms and ranches and oversight of the use of antibiotics in livestock, among others. 

Outside of discussions on agriculture policy, attendees to the annual meeting will have the opportunity to attend a handful of breakout sessions designed to help farm and ranch families address operational needs.  Sessions will be held to help attendees with issues surrounding the passage of the farm or ranch from one generation to the next, identifying how farmers and ranchers can tell the story of agriculture to a non-farm audience and gain insight on the impact of the next farm bill on the agriculture economy.  “The Nebraska Farm Bureau Federation was established many years ago to help Nebraska’s farm and ranch families deal with challenging issues, while the times and issues may have changed, our mission has not,” said Nelson.



Weldon Sleight Honored With Silver Eagle Award

Nebraska Farm Bureau has selected Weldon Sleight of Curtis as the 2012 recipient of its highest honor, the Silver Eagle Award. The award will be presented to Sleight on Dec. 4 at the 2012 Nebraska Farm Bureau Convention in Kearney.

Weldon Sleight is widely respected for his commitment to the students who attend the University of Nebraska College of Technical Agriculture (NCTA) at Curtis and the agriculture industry and has been a good friend to Farm Bureau, Nebraska Farm Bureau President Steve Nelson said Nov. 8. Sleight is retiring in December.

“When Weldon Sleight arrived in Curtis in 2006, he saw a struggling rural Nebraska with many youth leaving hometowns and never returning. He set out to help reverse that trend by transforming NCTA into a vehicle that drives rural entrepreneurship,” Nelson said.

Sleight has been a member of the Frontier County Farm Bureau since 2008. During much of his tenure at Utah State University (1998-2006), he was a member of the Utah Farm Bureau. In Nebraska he is known for being instrumental in the infusion of entrepreneurship across the entire NCTA curriculum. This theme has been the catalyst in the development of the 100 Beef Cow Ownership Advantage Program, 100 Acre Farm Program and the NCTA Business Builder Program. Each of the programs is designed to provide NCTA students with an early entry into an agriculture or business enterprise as a partner/owner that will lead to eventual ranch, farm or rural business ownership.

To the casual observer, NCTA's most obvious success is a construction boom that produced a new Education Center, an addition to the Veterinary Teaching Hospital, a new residence hall and a biomass project to use wood chips from red cedar trees rather than natural gas for the school's heating system.

Most recently under Sleight’s leadership, the college began a year-long outreach program called "Own the Farm or Ranch," aimed at producers and farm and ranch employees who want to one day own their own agricultural enterprise. The 100 Beef Cow program currently has 25 students enrolled, with more interested.

Support from Nebraska's agricultural industry, including major commodity groups, has been key to NCTA's progress. The school's enrollment has grown from 262 the year before Sleight arrived to 333 in 2011-12.

“NCTA is stronger than it has ever been. It's better positioned than it ever has been. And a lot of that is due to his vision and his persistence in getting it done,” Nelson added. “We're extremely fortunate to have had him and congratulate Weldon on winning the Silver Eagle Award.”



Upper Big Blue NRD is Hosting the 9th Annual CROP-TIP Field Day

Cornerstone Bank and the Upper Big Blue Natural Resources District will be sponsoring the “9th Annual CROP-TIP Field Day” on December 13, 2012, from 9:00 a.m. to 3:00 p.m. at the York City Auditorium.  The public is invited to attend this free event.  (Registration will be from 9:00-9:30 a.m.).

The “Cornerstone Resources Observation Plot—Test Irrigation Project” (CROP-TIP) was an idea formulated in January 2004 by Cornerstone Bank and the Upper Big Blue NRD.  Similar to an outdoor classroom, the water conservation project is used as a research plot for producers and youth throughout the area.  We will share the harvest data and irrigation scheduling information at CROP-TIP this year.  We are providing a meal, so a RSVP is necessary by calling Dee at the Upper Big Blue NRD at (402) 362-6601.

The following speakers are featured and will cover these topics:
-  Sue Martin, Ag Analyst for the television show “Market to Market”:
-  “2013 — A Year of Variables?”
-  Dr. Al Dutcher, State of Nebraska Climatologist:
-  “What Atmospheric Conditions Will Be Necessary to Significantly Reduce the Current Drought
-  Signature Across the Corn Belt?”
-  Dan Leininger, Upper Big Blue NRD:  “CROP-TIP & KROP-TIP Harvest Results”.
-  Rod DeBuhr, Upper Big Blue NRD:  “Groundwater Quality in the Upper Big Blue NRD”.

The public is welcome and encouraged to attend.  There will be a Free Meal and plenty of Door Prizes…everyone is invited, but please RSVP your spot by calling DeeDee Novotny, Upper Big Blue NRD at (402) 362-6601.

Attendance at this field day will fulfill the requirements for Zones 5 & 6 water quality management training.



ConAgra Foods to Acquire Ralcorp, the Largest Private Label Food Manufacturer in the U.S.

ConAgra Foods, Inc. (NYSE: CAG) and Ralcorp Holdings, Inc. (NYSE: RAH) today announced that the boards of directors of both companies have unanimously approved a definitive agreement under which ConAgra Foods will acquire Ralcorp, the largest manufacturer of private label food in the U.S. Under the terms of the agreement, Ralcorp shareholders will receive $90.00 per share in cash for each outstanding share of common stock held, representing a 28.2% premium to the closing price of Ralcorp’s common stock on November 26, 2012, and a 24.9% premium to the average closing price of Ralcorp’s common stock for the 30 trading days ending November 26, 2012. The transaction is valued at approximately $6.8 billion, including the assumption of debt.

This transaction creates one of the largest packaged food companies in North America, with sales of approximately $18 billion annually and more than 36,000 employees. It will also position ConAgra Foods as the largest private label packaged food business in North America, with combined private label sales of approximately $4.5 billion.

Gary Rodkin, chief executive officer of ConAgra Foods said, “We are very pleased to have reached an agreement with Ralcorp after a period of collaborative dialogue between the two companies. Ralcorp is already the largest private label food company in the U.S. and is well positioned for future growth. The acquisition of Ralcorp is a logical and exciting step for ConAgra Foods. Adding Ralcorp provides us with a much larger presence in the attractive and growing private label segment and accelerates our Recipe for Growth strategy. The transaction will allow us to apply our scale and combined operational expertise to this important growth area, and will strengthen our position as one of the leading food companies in North America. We believe the balanced combination of our very significant branded food business, the largest private label food business in North America, and our important commercial food businesses, will enable ConAgra Foods to deliver even greater value and innovation to our customers and consumers, and sustainable profitable growth to our shareholders. We look forward to working with Ralcorp’s experienced and talented team to capitalize on opportunities and create value for shareholders, and to welcoming Ralcorp’s employees to the ConAgra Foods family.”

Kevin J. Hunt, chief executive officer and president of Ralcorp, said, “We are proud of Ralcorp’s track record of shareholder value creation and view this transaction as the culmination of those efforts. This combination delivers immediate and compelling cash value to our shareholders and benefits to our customers and employees. We believe the two companies are a great fit, and our employees will benefit as part of a larger diversified organization with the necessary scale and resources to be a leader in today’s rapidly evolving marketplace. On behalf of the Ralcorp Board and management team, we thank our dedicated employees for their continued hard work, which has enabled us to grow Ralcorp to a position of strength with our many private label offerings across both retail and commercial channels. We look forward to joining with ConAgra Foods to complete this exciting transaction and capitalize on our future growth opportunities.”



IFB Offers Grants to Bring Ag to the Classroom

Agriculture is much more than a farmer driving a tractor across a field. It's the scientist at the seed company, the sales person at the local implement store and even the veterinarian who cares for pets and livestock alike. Modern agriculture reaches people every day from the jobs they hold, the food they eat, the fuel in their cars and the clothes in their closets.

Farming is a diverse and dynamic industry and the Iowa Farm Bureau Federation (IFBF) and the state's county Farm Bureau offices continue to help teachers take that information to their students with an annual Teacher Supplement Grant program.

The program, established in 2003, awards $200 for use in classroom programs that promote agricultural literacy. With Iowans two to three generations removed from the family farm, IFBF's program works to help today's students learn about the diverse and dynamic nature of agriculture. The 2013 subject areas are health or wellness with an emphasis on nutrition, art, music, physical education or fitness.

"We've awarded nearly $120,000 to teachers in the last three years of the grant program and we've been so impressed with the creative ways teachers have devised to bring agriculture to their students," said Barb Lykins, IFBF director of community resources. "It's not just buying some books about farming. We've seen music teachers creating songs and nutrition classes incorporating information about raising food into their classes. With one of six Iowa jobs related, indirectly or directly, to agriculture, it's a great opportunity to bring creative ag education to Iowa's elementary schools and help them understand how farming is part of those students' lives."

The program is accepting applications until Feb. 8. To apply, go to www.iowafarmbureau.com/ and fill out the online form. Grants will be awarded in March 2013. For more information, contact Lykins at 515-225-5460.



Reynolds to Lead Trade Mission to Vietnam, Philippines

Lieutenant Governor Kim Reynolds will lead a trade mission to Vietnam and the Philippines from Feb.22--March 2. This trade mission will focus on two main components; increasing exports of Iowa pork to Southeast Asia and fostering export opportunities for Iowa manufacturers who are considering development or expansion in the region. The Iowa Economic Development Authority's (IEDA) International Trade Office will assist in coordinating the trip, and interested Iowans are invited to participate in this mission.

"This mission will generate new trading relationships with Vietnam and the Philippines," said Lt. Gov. Reynolds. "Both countries have shown tremendous economic growth and continue to be open to new business opportunities -- it makes sense for us to have a presence there and I am pleased to be leading this effort."

"Vietnam and the Philippines are burgeoning markets for Iowa businesses, especially when it comes to pork products and manufacturing," said Gov. Branstad. "Trade missions like this one open Iowa companies up to new growth opportunities in expanding markets outside of the United States."

Visits to Hanoi, Ho Chi Minh City and Manila are part of the Iowa delegation's itinerary. The trade mission's agenda will include meetings with senior government officials, prospective industry association leaders and events promoting Iowa to potential economic partners. Iowa companies will participate in meetings specific to their market entry or expansion needs.

Additional information on this trade mission can be found at: www.iowaeconomicdevelopment.com/. The deadline for application is Dec. 15.



Net Farm Income Forecasted To Decline in 2012

U.S. net farm income is forecast to decline almost $4 billion from its all-time high in 2011. Net cash income is expected to decline almost $2 billion. 

Value of agricultural sector production is expected to increase with gains anticipated for crops, livestock, and especially revenues from services and forestry sales. Larger gains are predicted for oil crops and other farm income.

Solid gains in the projected annual value of U.S. agricultural production will be more than offset by increases in purchased inputs and payments to stakeholders. In particular, feed expenses are forecast to increase almost $10 billion in 2012.

Farm equity is projected to achieve a new record high in 2012 as expected growth in farm assets exceeds the expected increase in farm debt. Debt repayment capacity utilization (DRCU)--a measure of farm exposure to financial risk--is forecast to tick upward while remaining at a near-historic low level.



Increases in Farm Expenditures Outpace Increases in Receipts in 2012

Net farm income is forecast to be $114 billion in 2012, down 3.3 percent from 2011. Net cash income PDF icon (16x16)is forecast at $132.8 billion, down 1.4 percent from 2011.  Despite gains in almost all sources of farm income, large increases in farm expenditures, especially for purchased feed, have more than wiped out those price-led gains to farm income. Nevertheless, after adjusting for inflation, both income measures are high by historical standards.



Value of Crop Production, Led By Oil Crops, Expected To Increase in 2012
An increase in the value of crop production is expected in 2012, reflecting increases in receipts from food grains, feed crops, and especially oil crops.

The increase in corn receipts reflects USDA expectations that the 2012 calendar-year price will increase almost $1 per bushel from 2011, despite a projected decline in the quantity of corn sold.  Total food, seed, and industrial use of corn projected for crop marketing year 2012 (September 2012 - August 2013) is expected to decline almost 9 percent from last year, with alcohol for fuel use expected to decline over 10 percent.  A predicted decline in the quantity of hay sold will be more than offset by an increase of more than $40 per ton in the annual average price for hay.

While the quantity of soybeans sold in 2012 is forecast to decline, a forecast price increase of  $2 per bushel will push soybean receipts up.  Soybean use is expected to decline in marketing year 2012 (September 2012 - August 2013), reflecting anticipated declines in soybean exports and crush.  A large increase in planted acreage combined with a record yield and only a small price decline is expected to result in a large increase in peanut receipts in 2012.

Farm operations producing wheat are expected to benefit as more output is expected to be sold at higher annual prices.  Increased domestic use and exports are expected for marketing year 2012 (June 2012 - May 2013).

Prices for most vegetables are expected to remain below last year.  Adverse weather has reduced production for apples, cranberries, pears, and tart cherries.  However, the 2012 cranberry crop is forecast to be the third largest on record.  Increased quantities sold are predicted for tree nuts, with a record-breaking almond crop expected. California's navel orange crop is forecast up from 2011.  The value of crop inventories is predicted to decline in 2012, reflecting inventory losses for feed grains and oil crops.



Value of Livestock Production Forecast Up in 2012

The value of livestock production is projected to rise in 2012.  Gains are predicted in all livestock categories except hogs and milk.  Gains and losses in receipts predicted for this year depend on the direction of predicted price changes rather than shifts in quantities marketed.

Receipts for cattle and calves are predicted to increase in 2012 reflecting large anticipated price increases for cattle and veal in 2012.  The slight decline predicted in hog receipts reflects a forecast decline in the hog annual price.

Cash receipts for milk are expected to decline despite USDA expectations of more milk cows producing more milk per cow in 2012. The average annual price of milk, despite recent gains, is expected to remain lower than in 2011.  A slight increase in commercial exports of skim solids will offset a slight decline in exports of milkfat.

Increased broiler cash receipts reflect USDA expectations of price increases. Turkey receipts are also expected to benefit from higher prices in 2012.  Chicken egg receipts are forecast to increase reflecting more eggs sold at a higher annual average price.  The value of livestock and poultry inventory is forecast to decline in 2012, thereby lowering livestock value of production.



Production Expenses Post Another Large Increase in 2012

Total production expenses in 2012 are forecast to rise $23.5 billion (7.6 percent); this follows a $25.3-billion (8.9-percent) increase in 2011.  Total expenses in 2012 fall into a string of large year-to-year movements that have taken place since 2002, and would reach another record-high level in nominal dollars.  Since 2002, nominal total production expenses have risen $143 billion (74.5 percent).  In inflation-adjusted dollars, 2012 production expenses will eclipse the previous peak reached in 1979.

The biggest factor in the rise in expenses since 2002 has higher input prices.  The prices-paid index for Production Items, Interest, Taxes, and Wage Rates (PITW), calculated by the National Agricultural Statistics Service (NASS), has risen 85 percent since 2002.  By comparison, the Producer Price Index for Finished Goods has gone up 39 percent during this period.  In 2012, the PITW prices-paid index had risen 5.0 percent through October.

Forecasting expenses in 2012 is complicated by the widespread drought.  Most crops were already planted before the severity of the drought was established, so a normal volume of crop-related inputs had already been purchased and applied.  However, purchases in the latter part of the year will likely be affected. The ERS short-run forecast model shows total agricultural output falling  2.4 percent in 2012 as the result of a 4.3-percent decrease in crop output coupled with a  0.6-percent increase in livestock output.

Among livestock-related expenses, following a $9.2-billion (20-percent) jump in 2011, feed expenses in 2012 are expected to rise another $9.7 billion (18 percent).  The forecast is a product of a 17-percent rise in the feed prices-paid index and the slight rise in livestock output.   Even though the prices of feed and oil crops have moderated since July, the other four components of the NASS prices paid index-particularly complete feeds, which comprises nearly half of the index-continue to rise. 

Livestock and poultry purchases in 2012 are forecast to be $360 million (1.7 percent) above the 2011 estimate.  The drought has had a paradoxical effect on the cattle market, which comprises 75 percent of livestock and poultry purchases.  Prices for feeder steers have increased or remained steady, despite the increases in feed costs and negative returns for cattle feeders and beef producers.  This price behavior is being driven by the continuing shrinkage in the cattle and calf inventory.

Major crop-related expenses are predicted to rise $4.8 billion (8.7 percent), significantly less than in 2011.  The principal reason for the slowdown is a smaller increase in fertilizer expenses, as its prices-paid index is expected to rise only 2.5 percent this year, compared to a 30.2-percent jump in 2011.  Fertilizer expenses are slated to rise $1.6 billion (6.3 percent) as opposed to $4.1 billion (19.5 percent) in 2011.  Seed expenses should finish $2.1 billion (11.9 percent) higher, a greater increase than in 2011, as prices are expected to rise 7.8 percent and planted acreage was up 3.4 percent.  Pesticide expenses are also expected to increase more than $1 billion.

Between 2003 and 2011, the annual average prices-paid index for fuels and oils registered 8 double-digit percentage increases, rising 223 percent, while expenses increased $9.0 billion (137 percent).  In 2012, the prices-paid index is projected to be nearly the same as in 2011, as Refiner Acquisition Cost falls around 2 percent.  As a result, fuels/oil expenses are expected to be only $575 million (3.7 percent) higher.



Payments to Stakeholders Rise

Although a claimant of net value added, payments to stakeholders-hired labor, net rent to nonoperators, and interest-do not generally track movements in it.  They even move in opposite directions, as occurred in 2011 and 2012. The year-to-year consistency in payments to stakeholders follows from the fact that stakeholders do not share the risk of equity holders. In 2012, payments to stakeholders are forecast to rise $2.0 billion (4.1 percent) and constitute around 31 percent of net value added, more than in 2011.

Total labor expenses are forecast to rise around $200 million (0.7 percent) as a result of a nearly offsetting increase in wage rates and an expected 2.4-percent decrease in total output.  Employee compensation for hired labor accounts for most of the projected increase. Output of the commodities that employ the most labor is mixed.  Vegetable, greenhouse and nursery, and dairy output are slated to increase in 2012, but fruit and nut output is expected to fall more than 3 percent.

Total interest expenses in 2012 are forecast to rise less than 0.5 percent as the result of a 1.1-percent decrease in real estate interest expenses and an increase of 3.0 percent in nonreal estate interest expenses. Debt and interest rates are discussed in the Assets, Debt, and Wealth section.



Government Payments Forecast Up in 2012

Government payments paid directly to producers are expected to total $10.9 billion in 2012, a 4-percent increase over 2011.  Direct payments under the Direct and Countercyclical Program (DCP) and the Average Crop Revenue Election Program (ACRE) are forecast at $4.98 billion for 2012.  This 5.7-percent increase in direct payments over 2011 is largely due to the fact that the percentage of base acres on which direct payments are made increased from 83.3 percent for the 2011 crop year to 85.0 percent for the 2012 crop year.

Strong crop prices are expected to limit payments by market-based commodity programs to only $52 million in 2012.

The Milk Income Loss Contract Program (MILC) compensates dairy producers when domestic milk prices fall below a specified benchmark price. For 2012, dairy producers are expected to receive $460 million in MILC payments.  Primarily based on the high prices of the feed components in the dairy feed ration, the National Average Dairy Feed Ration Adjustment in 2012 has raised the benchmark MILC program price and triggered payments to dairy producers.

Tobacco farmers and quota holders are expected to receive $651 million from the Tobacco Transition Payment Program in 2012, down from 2011.  Payments reported here include both CCC payments and lump-sum payments. Begun in 2005, this program provides annual payments over a 10-year period to eligible quota holders and producers of tobacco. 

Conservation programs include all conservation programs operated by the Farm Service Agency and the Natural Resources Conservation Service that provide direct payments to producers. Estimated conservation payments of $3.7 billion in 2012 are largely unchanged from 2011.

Supplemental and Ad Hoc Disaster Assistance payments are forecast to be $1.0 billion in 2012, a 23-percent decrease from 2011 levels.  Most of the Supplemental Revenue Assistance Payments (SURE) of $565 million expected to be paid out in 2012 cover producer losses in the 2010 crop year.  Noninsured Assistance Program payments of $255 million are expected to be made to livestock and specialty crop producers for which no commodity insurance program is available.  Under the 2008 Farm Act, the Livestock Forage Program, Livestock Indemnity Program, Emergency Loss Assistance Program, and the Tree Assistance Program are expected to pay out $67 million in 2012.

Under the SURE program, the bulk of commodity losses for the 2011 crop year will be made in calendar year 2013.  This is primarily due to the fact that the crop year is defined by a commodity's harvest cycle, such that a crop year often overlaps two calendar years and SURE payments are made after a current crop year ends.  Disaster relief programs under the now expired 2008 Farm Act only covered losses incurred prior to October 1, 2011.  Thus, drought-related commodity and livestock losses for the 2012 crop year are not covered.



Median Farm Household Income Up in 2011 and Forecast Higher in 2012

Median total farm household income increased by 5.3 percent in 2011, to $57,050, and is expected to increase another 1.0 percent in 2012, to $57,645. Most farm households, particularly those operating smaller farms, rely heavily on off-farm income--which is forecast to rise 3.4 percent in 2012. In contrast to the farm households that operate small farms, households associated with commercial farms derive more of their income from farming activities. Their median income from farming increased an estimated 7.9 percent in 2011 to $84,649, and their total household income also increased by 7.9 percent, to $127,009.



Vilsack on 2012 Farm Income Forecast

Agriculture Secretary Tom Vilsack made the following statement today about the 2012 farm income forecast from USDA's Economic Research Service:

"Today's forecast is heartening. It confirms that American farmers and ranchers remained impressively resilient in 2012, even with tough odds due to one of the worst droughts in more than a generation. Thanks to its ability to remain competitive through thick and thin, U.S. agriculture is stronger today than at any time in our nation's history, supporting and creating good-paying American jobs for millions. While down slightly from the August forecast, today's estimates for net farm income are the second-highest since the 1970s, while total farm household income is expected to rise. At the same time, the positive trend of falling debt ratios continue. The forecast suggests that strong farm income should remain a positive factor in carrying farmers and ranchers into the 2013 growing season. But as one season comes to an end and another lies on the horizon, we must continue to stand with America's farming families and rural communities, providing help and assistance to those who need it. This year, the farm safety net showed its mettle and merit, helping to deliver peace of mind to thousands of farmers and ranchers dealing with losses caused by natural disasters. It's a reminder that Congress must do the same, and pass a comprehensive, multi-year Food, Farm and Jobs Bill that provides greater certainty for farmers and ranchers in the season ahead. Providing the tools and certainty they need is the least we can do for those who grow our food, fiber, feed and fuel, even through the most challenging of times."



USDA Moving to Lower Insurance Premiums for Corn and Soybean Producers in 2012

The U.S. Department of Agriculture's (USDA) Risk Management Agency (RMA) announced today that it will update the methodology to set crop insurance premiums, leading to lower insurance premium rates for many corn and soybean producers in the 2012 crop year. The rate adjustment is based on findings of an independent study and peer review process. The study is part of RMA's ongoing effort to improve the methodology of determining premium rates for crop insurance.

"We are improving the formulation of our rate-making methodology, and are moving to establish the most fair and appropriate premium rates for today's producers," said RMA Administrator William J. Murphy. "On average, these new rates should reduce corn farmers' rates by 7 percent and soybean farmers' by 9 percent. As good stewards of taxpayers' dollars, we welcome the opportunity to match premium rates more accurately with current risks."

RMA contracted for a study by Sumaria Systems Inc., which examined premium rates, and the rating process, starting with the United States' two major commodities: corn and soybeans. RMA then requested an independent expert peer review to provide feedback on the Sumaria study results. RMA will conduct further review and analysis of the study's recommendations along with comments and issues raised by peer reviewers, making additional adjustments as warranted and appropriate. Accordingly, RMA is taking action to implement adjustments to premium rates in a "phased in" approach that allows for any further adjustment pending additional analysis of peer review comments.

RMA periodically reviews premium rates and makes necessary adjustments for actuarial soundness, aiming to establish the most appropriate premium rates for today's producers. The current approach will make a concerted effort to adjust premium rates in a manner that recognizes the latest technology, weather, and program performance information. Updated data pertaining to prevented planting, replant payment, and quality adjustment loss experience, was also used in determining rates changes.

RMA will release actuarial documents by November 30 reflecting premium rates and other program information that will be effective for the 2012 spring crop season.



NCGA Commends USDA’s Progress on Crop Insurance Rate Reforms

The National Corn Growers Association today voiced support for the U.S. Department of Agriculture’s announcement that rate adjustments will be made to crop insurance premiums over the next two crop years.

“Crop insurance rating reforms have been a priority for our members for many years,” NCGA President Pam Johnson said.  “NCGA feels the Risk Management Agency’s announcement represents real reform in decreasing the widening gap between the loss ratio for corn and the premiums charged to growers for policy coverage.”

The USDA’s Risk Management Agency stated in the announcement that an independent and peer reviewed study recommended more weight be given to recent years, rather than the current approach of giving equal weight to all years back to 1975.  This will help provide greater predictability for producers and crop insurance providers. RMA also announced it will be releasing documents by the end of the week that outline premium rates and other program information for the 2013 crop year.

The agency will continue reviews to provide the best rates that most accurately reflect the risk of growing a crop in an area and provide the most affordable crop insurance possible for farmers.

“The rate adjustments made for the 2012 crop year were a great first step and we are pleased to see the RMA following through with additional modifications,” Johnson said.  “Corn farmers have historically paid more than their fair share of crop insurance premiums and we are pleased to see USDA moving forward with the proper changes.”



Fertilizer Prices Sluggish

Retail fertilizer prices continue to remain fairly calm. The third week of November marks the third straight week prices of the eight major fertilizers tracked by DTN did not show a significant move in either direction.  Six fertilizers nudged higher compared to the third week of October, but these moves were fairly diminutive. DAP had an average price of $641/ton, MAP $680/ton, potash $619/ton, 10-34-0 $621/ton, anhydrous $858/ton and UAN28 $380/ton.  The remaining two fertilizers were all just slightly lower compared to a month earlier. Urea had an average price of $587/ton and UAN32 $421/ton.

On a price per pound of nitrogen basis, the average urea price was at $0.64/lb.N, anhydrous $0.52/lb.N, UAN28 $0.68/lb.N and UAN32 $0.66/lb.N.

Only one of the eight major fertilizers is still showing a price increase compared to one year earlier. Anhydrous is now 5% higher compared to last year.  Five fertilizers are actually lower in price compared to November 2011. Urea is now 6% lower while both potash and UAN28 are 7% lower and both UAN32 and MAP are 9% lower.  Two remaining fertilizers are now down double digits from a year ago. DAP is now down 10% while 10-34-0 is 25% less expensive than a year earlier.



The Sky’s the Limit at the 2013 Commodity Classic

Corn, soybean, wheat and sorghum growers who attend the 18th Annual Commodity Classic, Feb. 28 through March 2 in Kissimmee, Fla., will witness innovation and gather information that will grow their profitability potential and change the way they farm. Online registration for this one-of-a-kind, can’t-miss event is now open at www.CommodityClassic.com. Register before Jan. 20 to take advantage of the best rates.

“Commodity Classic is all about farmers – what farmers want, what farmers are doing, and the policies farmers need,” said Commodity Classic co-Chair Bob Worth. “This show has the best and the newest of what the industry is presenting to farmers. And on top of all the knowledge, you’ll make new friends and visit with old ones.”

Growers go to Commodity Classic to learn what will make them an even better farmer. The trade show offers attendees a venue to see and discuss the latest innovations with top industry leaders. The event’s orientation and focus is all about farmers helping farmers. An atmosphere of openness and peer exchange, educational sessions and candid policy briefings make Commodity Classic a yearly pilgrimage for those seeking to advance in U.S. agriculture.

Commodity Classic is the nation’s largest farmer-led, farmer-focused convention and trade show, presented annually by the American Soybean Association, National Corn Growers Association, National Association of Wheat Growers and National Sorghum Producers. The event offers a wide range of learning and networking opportunities for growers in the areas of production, policy, marketing, management and stewardship—as well as showcasing the latest in equipment, technology and innovation. For more information, visit www.CommodityClassic.com.



Delays in Summer Soybean Planting to Affect Corn Acres

Brazil's Mato Grosso will plant less corn as a second crop than previously anticipated in 2012-13 due to delays in the planting of the summer soybean crop, IMEA, the state's agricultural economy institute, said Tuesday.

The institute lowered its 2012-13 second-crop corn-planted area forecast to 6.7 million acres from 7.2 million acres after irregular rainfall in October across parts of Brazil's principle farm state put soybean planting back by a couple of weeks and, in isolated cases, forced farmers to replant.

Delays in the soybean cycle directly affect the corn, which is planted immediately after the oilseed's harvest in January and February. The later that corn is planted in February, the greater the risk to the crop during the dry Mato Grosso winter.

Nonetheless, the 2012-13 planted area remains higher than the 6.2 million acres planted last year.



ROOT DIG DEMONSTRATES DEEPER ROOTS, STRONG YIELD ADVANTAGE WITH DEKALB® DROUGHT-TOLERANT CORN

A root comparison study conducted this season at Monsanto’s Gothenburg Water Utilization Learning Center in Gothenburg, Neb., provided a dramatic demonstration of just how important a deep, strong root structure is to help corn plants withstand drought conditions.

The research program evaluated the performance of a DEKALB® drought-tolerant corn product versus two competitor products – a Pioneer® Optimum® AQUAmax™ hybrid and a shallow-rooted product.  A root dig conducted in mid-September showed that the DEKALB product had a significantly deeper, more evenly spread root structure than the other two products.

The result was healthier ears and a yield advantage for DEKALB of 12 bu./A versus Pioneer Optimum AQUAmax and 15 bu./A versus the shallow-rooted product.*

Michael Petersen, former soil scientist with the U.S. Department of Agriculture, compared the DEKALB root structure to a thick, vertical carrot that extended down 85 inches. In comparison, he said   the Pioneer Optimum AQUAmax roots were primarily limited to 24 inches in depth and 20 inches for the shallow- rooted product.

“DEKALB has really been a leader in the development of what’s going on below ground, so they can produce 700 to 800 kernels per ear,” said Petersen, who now serves as lead agronomist with Orthman Manufacturing, a tillage and earth-moving company which participated in the root dig excavation. “And when they do that, we know that we can produce big corn.”

Petersen said because more water and more nutrients are contained from 30 to 80 inches below ground, deeper roots can help plants withstand lengthy drought stress. “We see that when we have a deeper root system, it has a chance to be able to get water from all of that soil profile compared with only taking it predominantly from the upper 20 inches,” he explained.

Mark Reiman, Gothenburg Learning Center agronomist, said all three products received minimal irrigation, requiring the plants to stretch their roots, until around Aug. 1, at which time the water was shut off and plants had to cope with hot, dry conditions.

“Deep, strong roots mean that your plants are going to be anchored to the soil very well,” he said. “They are going to have a chance of rooting down and accessing the soil moisture and using that to help farmers protect their yield in a drought year.”

Reiman said despite moisture stress, the DEKALB product had healthier, more consistent corn ears compared with the other two products. “We actually saw very nice corn ears that had no tip back,” he said. “They were filled nicely, pollinated nicely, from the end of the ear to the tip of the ear.  In contrast, kernel set was spotty and ear size was less consistent with the competitive brands.”

This December DEKALB will continue a tradition of introducing innovative new products with the stewarded introduction of Genuity® DroughtGard™ Hybrids in the Western Great Plains for 2013 planting.  These products combine the DEKALB brand’s drought-tolerant genetics, developed through the brand’s industry leading breeding program, with the industry’s first drought-tolerant biotech trait and agronomic practices. The DEKALB DroughtGard Hybrids available for planting in 2013 delivered farmers more than 5 bu./A versus competitor products in field trails this year.

“The Gothenburg root dig demonstrated the superiority of DEKALB drought-tolerant genetics,” Reiman said.  “Combining those breeding genetics with the new drought-tolerant biotech trait in DroughtGard Hybrids will mean the potential for even more powerful yield protection for DEKALB farmers in 2013.”



Global Irrigated Area at Record Levels, But Expansion Slowing

In 2009, the most recent year for which global data are available from the United Nations Food and Agriculture Organization (FAO), 311 million hectares in the world was equipped for irrigation but only 84 percent of that area was actually being irrigated, according to new research conducted by the Worldwatch Institute for its Vital Signs Online service (www.worldwatch.org). As of 2010, the countries with the largest irrigated areas were India (39 million hectares), China (19 million), and the United States (17 million), writes report author Judith Renner.

The irrigation sector claims about 70 percent of the freshwater withdrawals worldwide. Irrigation can offer crop yields that are two to four times greater than is possible with rainfed farming, and it currently provides 40 percent of the world's food from approximately 20 percent of all agricultural land.

Since the late 1970s, irrigation expansion has experienced a marked slowdown. The FAO attributes the decline in investment to the unsatisfactory performances of formal large canal systems, corruption in the construction process, and acknowledgement of the environmental impact of irrigation projects.

The increasing availability of inexpensive individual pumps and well construction methods has led to a shift from public to private investment in irrigation, and from larger to smaller-scale systems. The takeoff in individual groundwater irrigation has been concentrated in India, China, and much of Southeast Asia. The idea of affordable and effective irrigation is attractive to poor farmers worldwide, with rewards of higher outputs and incomes and better diets.

"The option is often made even more appealing with offers of government subsidies for energy costs of running groundwater pumps and support prices of irrigated products," said Renner, a senior at Fordham University in New York. "In India's Gujarat state, for example, energy subsidies are structured so that farmers pay a flat rate, no matter how much electricity they use. But with rising numbers of farmers tapping groundwater resources, more and more aquifers are in danger of overuse."

If groundwater resources are overexploited, aquifers will be unable to recharge fast enough to keep pace with water withdrawals. It should be noted that not all aquifers are being pumped at unsustainable levels----in fact, 80 percent of aquifers worldwide could handle additional water withdrawals. One troubling aspect of groundwater withdrawals is that the world's major agricultural producers (particularly India, China, and the United States) are also the ones responsible for the highest levels of depletion.

Another problem with pumping water from aquifers and redirecting flows for irrigation is the impact on delicate environmental balances. Salinization occurs when water moves past plant roots to the water table due to inefficient irrigation and drainage systems; as the water table rises, it brings salts to the base of plant roots.Plants take in the water, and the salts are left behind, degrading soil quality and therefore the potential for growth.

A potentially better alternative is drip irrigation, a form of micro-irrigation that waters plants slowly and in small amounts either on the soil surface or directly on roots.Using these techniques has the potential to reduce water use by as much as 70 percent while increasing output by 20-90 percent. Within the last two decades, the area irrigated using drip and other micro-irrigation methods has increased 6.4-fold, from 1.6 million hectares to over 10.3 million hectares.

With predictions of a global population exceeding 9 billion by 2050, demand for higher agricultural output will put more strain on already fragile water reserves. Even without the effects of climate change, water withdrawals for irrigation will need to rise by 11 percent in the next three decades to meet crop production demands.Reconciling increasing food demands with decreasing water security requires efficient systems that produce more food with less water and that minimize water waste. Intelligent water management is crucial especially in the face of climate change, which will force the agriculture industry to compete with the environment for water.

Further highlights from the report:
-    The share of the area equipped for irrigation that is actually under irrigation ranges from 77 to 87 percent in Asia, Africa, the Americas, and in Oceania, but is only 59 percent in Europe. More reliable rainfall allows farmers in northern and eastern Europe to rely less on existing irrigation infrastructure than is the case in drier or more variable climates.
-    Worldwide, the most commonly used irrigation technique is flood irrigation, even though plants often use only about half the amount of water applied in that system.
-    India claims the lead in irrigated area worldwide, irrigating almost 2 million hectares of its land using drip and micro-irrigation techniques.



AGCO LAUNCHES MOBILE APP FOR PROFESSIONAL FARMERS

AGCO, Your Agriculture Company (NYSE: AGCO), today announced the availability of AGCO’s latest global mobile application built to serve agriculture professionals on-the-go, allowing them to manage their operation from anywhere, anytime. “AGCO’s industry-leading telemetry service, AGCOMMAND®, has gone mobile. Building on the capabilities of our existing AGCOMMAND wireless information solution, it’s exciting to deliver an app designed for the increasing demands of professional farmers and the dealer network that supports them,” said Martin Richenhagen, Chairman, President and CEO of AGCO. “Professional farmers and agriculture enterprises can increase their productivity through this new, wireless agriculture management tool that focuses on fleet management, vehicle health and overall machine uptime.”

AGCOMMAND is a complete end-to-end wireless information solution that provides actionable machine information for professional farmers and their dealers to support improved operations. With more than 13 new features in the core telemetry service*, including new baler-specific functions that benefit hay and forage farmers,  the enhanced fleet management capabilities allow users to more productively manage their operation. AGCOMMAND telemetry service for remote machine monitoring is available as an option on Challenger®, Massey Ferguson® and Valtra® tractors, harvesting and application equipment as well as fleet vehicles.

Features of the AGCOMMAND app include:
-    Unique, integrated radar feature tells you the weather conditions where your machines are located**
-    Turn-by-turn directions to machines, from your current location
-    History of machine status and machine data
-    Ability to compare the performance of multiple machines
-    User-defined alerts from vehicles and machines

The new AGCOMMAND app is available as a free download in the Apple App Store. The simple, yet powerful iOS application for both iPhone and iPad is easy to use and is available in 15 languages worldwide. To learn more about the AGCOMMAND telemetry solution, please visit http://www.agcotechnologies.com/naen/AGCOMMAND.htm. Visit the Apple App Store to download the AGCOMMAND app today: http://itunes.com/apps/AGCOMMAND. 



Ground-Breaking Crop Production Planning Service For 2013 Growing Season Announced By Colorado-Based Agricultural Services Company

This time of year, hundreds of thousands of U.S. growers wrestle with the decision of how many acres of each crop to plant next season.  To assist growers with their "bet the farm" decision Ag Production Planning Services is launching a new and innovative service targeting mid and large-scale growers with some flexibility in their rotations and crop mix.

Ag Production Planning Services is recruiting several growers in each of six U.S. agricultural regions to participate in a pilot program.  The pilot program is free.  It will demonstrate a new and innovative production planning service delivered over the Internet.  The consultant and the grower will work together to develop a crop plan for the 2013 season.  The crop plan will address:
-    How many acres of each crop to plant and which crops to plant in which fields.
-    How different diversification strategies can affect profitability and production and market risk.
-    The best use of labor, operating capital, equipment and other resources such as irrigation, storage (if applicable).
-    How much production contracting to commit to.
-    The best use of crop insurance.
-    Whether to rent additional land and if so what to pay, what to plant and what will be the impact on labor, equipment, credit needs and risk profile.
-    Bottom line impacts by changes in forecasted prices, yields or production costs.

Gary Schneider, President and founder of Ag Production Planning Services has years of experience delivering this service in-person on growers' farms.  Schneider says, "Our planning service is delivered one-on-one by our consultant equipped with our powerful farm planning software.  The service is delivered over the Internet to your office, living room or kitchen table.  Large diversified growers with three or more crop choices and some flexibility in planting decisions should find the service very valuable.  There's nothing like it."

At the end of the consultation the grower receives a Production Plan™ that shows the production scenarios evaluated, the one that is most favorable and the reasons why.  The plan can be easily updated prior to final planting decisions to account for changes in markets, weather, input costs, etc.  The Production Plan™ can be shared with an ag lender, partner/landlord, input supply retailer, agronomist, marketing advisor or crop insurance agent.

Schneider is looking for feedback from the growers who participate in the pilot to help hone the service and the software. "It's a win-win.  Growers participating in the pilot will be well-positioned for the 2013 crop year.  After developing their crop plan, growers are ready to finalize input purchases, production loans, forward contracts, crop insurance coverage, etc."

There is no cost to participate in the pilot program.  Participation is limited to three to four growers in each designated region.

Ag Production Planning Services is an agricultural services company located in Masonville, CO.  Its mission is to serve growers by combining its technology, planning methodology and its trained consultants with a grower's knowledge and experience – providing real-time, on-line, production planning expertice.