Thursday September 24 Ag News

OMAHA AREA STUDENTS TO EXPLORE AGRICULTURAL CAREERS AT INAUGURAL NAYI-OMAHA EVENT

Approximately 150 high school students from Omaha and the greater Omaha area tomorrow will be getting a glimpse at future career opportunities when they attend the first Nebraska Agricultural Youth Institute (NAYI) –Omaha.

The day-long event, being held at the CenturyLink Center in conjunction with AKSARBEN Stock Show and Rodeo, is designed to give students the opportunity to learn about non-traditional careers in the agriculture sector and the availability of those jobs in the Omaha area. NAYI-Omaha is being coordinated by the Nebraska Department of Agriculture (NDA) in partnership with the Greater Omaha Area Chamber of Commerce and the AKSARBEN Foundation.

“There is a very real demand for students studying in areas not typically thought of as being agriculture-related. These are well-paying positions in our industry,” NDA Director Greg Ibach said. “For instance, a student studying engineering could find a job designing grain bins or livestock facilities. A student with an interest in aeronautics could eventually be working for a company that specializes in ag-drones. The opportunities are endless.”

NAYI-Omaha was developed following work of the Greater Omaha Chamber of Commerce over the past year and a half to identify economic strengths within the Omaha region. The result of that effort is the Greater Omaha Economic Partnership Strategy, unveiled at the Governor’s Ag Conference in March. The goal of the strategy is to position Omaha as a global leader for value-added agricultural companies.

A component of the strategy is to train and educate a workforce that can meet the growing needs of the agribusiness industry. NDA participated in the task force that developed the strategy.

“Discussions with business leaders, time and again, returned to the point that talented individuals are in demand in our agribusiness sector,” said Greater Omaha Chamber Senior Vice President of Economic Development Randy Thelen. “To better positon our region for ongoing value-added agriculture development, we need events like NAYI-Omaha to introduce our youth to the idea that they can have a successful career right here with top companies in the agribusiness sector.”

Ibach said NAYI-Omaha is modeled after the department’s week-long summer agriculture youth institute, NAYI, which has been held for the past 44 years. Many of the students who attend the summer event typically come from rural areas or have direct exposure to agriculture.

Ibach said after seeing the Omaha Chamber’s value-added agriculture strategic plan, it made sense to extend NDA’s youth outreach efforts into the Omaha area.

The AKSARBEN Foundation came on as a partner for the NAYI-Omaha event because the concept fits with the Foundation’s work to promote the region’s cultural heritage, including an emphasis on agriculture education and youth events.

“NAYI-Omaha is a great fit for the AKSARBEN activities this weekend,” AKSARBEN Foundation President Jon Burt said. “This is a perfect venue to host both youth who are competing in traditional agriculture experiences, such as showing livestock, and Omaha area students who are exploring opportunities in non-traditional agriculture careers.”

Governor Peter Ricketts is scheduled to address the Omaha-NAYI participants at the opening session Friday morning.



$750,000 to Strengthen Nebraska Biotechnology Innovation

U.S. Deputy Assistant Secretary of Commerce for Economic Development Matt Erskine was in Nebraska Wednesday to announce that the Economic Development Administration (EDA) is awarding $750,000 grant to the Board of Regents of the University of Nebraska-Lincoln to create a biotechnology connector program that links the University of Nebraska, Nebraska Department of Economic Development, and Invest Nebraska with the private sector's Bio Nebraska. According to grantee estimates, the program is expected to serve eight startup biotechnology companies each year over the next nine years.

"Supporting innovation and cluster development is crucial to competitiveness in the global economy and is a major focus for the Department of Commerce and EDA," said Erskine. "The EDA grant announced today will help Nebraska leverage its strong agricultural sector into new innovative businesses and industries."

"The need for wet lab space in the area has been an identified need for several years. We are very appreciative that EDA has chosen to partner with us to help close this need," said Daniel J. Duncan, executive director, Nebraska Innovation Campus.

EDA's investment will help fund state-of-the-art research instrumentation and specialized equipment for wet laboratories. According to the grantee, the Biotech Connecter program will fill a critical gap in Nebraska's industry and research community and will enable members of industry and academia to initiate new ventures that will help retain Nebraska-based technology within state lines, spurring wage and job growth.

The Economic Development Administration marks 50 years of public service, leading the federal economic development agenda by promoting competitiveness and preparing the nation's regions for growth and success in the worldwide economy. An agency within the U.S. Department of Commerce, EDA makes investments in economically distressed communities in order to create jobs for U.S. workers, promote American innovation, and accelerate long-term sustainable economic growth.

Nebraska Innovation Campus is a research campus designed to facilitate new and in-depth partnerships between the university and private sector businesses. At full build-out, NIC will be a 2.2-million square-foot campus with uniquely designed buildings and amenities that inspire creative activity and engagement, transforming ideas into global innovation.



Current National Drought Summary
(droughtmonitor.unl.edu)

Large sections of the nation experienced dry weather, reducing topsoil moisture but promoting summer crop maturation and harvesting. On the Plains, some producers awaited rain before planting winter wheat. Pastures in portions of the Southern and Mid-Atlantic States continued to suffer from the effects of late-summer and early-autumn dryness. In contrast, locally heavy showers soaked Florida’s peninsula and the immediate southern Atlantic Coast. Significant rain also fell—albeit briefly—in parts of the Midwest, providing localized relief from recent dryness. Above-normal temperatures dominated the Plains and upper Midwest, favoring fieldwork and helping to push summer crops toward maturity. The late-season warmth also extended across the Great Lakes region and into the Northeast. Meanwhile, cool air settled across the southeastern and northwestern U.S. for several days, helping to hold weekly temperatures more than 5°F below normal in a few locations. Elsewhere, locally heavy showers dotted the West, with the most significant rain falling in the lower Southwest, southern California, and the northern Intermountain region. California’s rain, heaviest along and near the coast, fell mostly on September 15 in conjunction with tropical moisture associated with former Hurricane Linda, while Southwestern rainfall was courtesy of Tropical Depression 16E later in the period.

Central Plains
Dry, unseasonably warm weather maintained or worsened dryness over the central Plains. With sunny skies and temperatures topping 80°F from Colorado into Kansas and central Nebraska, Abnormal Dryness (D0) and Moderate Drought (D1) remained or expanded. Precipitation deficits are most pronounced at 60 days, with rainfall tallying less than 50 percent of normal in D0 areas, and locally less than 25 percent of normal in the D1 region of central Kansas. The rain which has since fallen over the central Plains will be accounted for in next week’s drought assessment, as the data cutoff for inclusion into the assessment is Tuesday morning.

Looking Ahead
A cold front infused with tropical moisture will remain the focus for locally heavy showers, primarily from the southern High Plains into the upper Midwest. Additional rainfall in the vicinity of the front could reach 1 to 3 inches in a few spots. Meanwhile, a low-pressure system will drift westward toward the middle and southern Atlantic Coast, bringing a mid- to late-week increase in rainfall. Five-day rainfall totals could reach 2 to 5 inches or more in the Carolinas and parts of neighboring states. Warm, mostly dry weather will cover the remainder of the country, except for some late-week showers in the Northwest. The NWS 6- to 10-day outlook for September 29 – October 3 calls for the likelihood of above-normal temperatures nationwide, with near-normal temperatures confined to the Pacific Coast States. Meanwhile, wetter-than-normal conditions over the Southeast and from the north-central Plains into the western Corn Belt will contrast with drier than normal conditions across the central and eastern Great Lakes Region and from the lower Four Corners into central and northern Texas.




Tightening Farm Income Continues to Loom
Nathan Kauffman, Assistant Vice President and Omaha Branch Executive
Matt Clark, Assistant Economist

After a run of profits fit for the record books from 2010 to 2013, many crop producers have been facing progressively tighter margins and incomes. The conditions that brought record profits have quickly eroded during the past two years, causing the debt servicing and operating structures for many producers to change considerably. An increased debt burden, persistently lower profit margins and existing headwinds for crop prices could continue to affect the U.S. farm economy into 2016, and further intensify concerns about emerging financial stress for the sector.

Farm Income
Farm income has continued to drift lower since 2013. In August of this year, the United States Department of Agriculture (USDA) lowered its forecast for 2015 net farm income to $58.3 billion. The Federal Reserve Bank of Kansas City’s Survey of Agricultural Credit Conditions has shown a similar decline in farm income for states in the Tenth Federal Reserve District. If the USDA’s 2015 farm income forecast stands, it would represent a 36 percent drop from 2014 and a 54 percent plunge from just two years ago. Moreover, the forecast for 2015 would also represent the second lowest measure of farm income since the mid-1980s.

A sharp decline in U.S. crop revenue and “sticky” input prices have been major factors contributing to the projected decrease in farm income. According to the USDA, feed, food and oil crop cash receipts are expected to drop more than $12.5 billion in 2015, a decline of 37 percent from the year before. Meanwhile, crop production expenses, though forecasted to be slightly lower in 2015, have remained relatively high. Dairy and beef cash receipts are also expected to fall by $22 billion from 2014 levels, a decline of 37 percent. In the case of livestock products, however, 2014 represented a record year for profits among many operations, and returns in the cow-calf sector have remained strong through 2015.

Debt Structure
Weaker farm income and depressed crop prices have forced operators to burn through working capital and increase their usage of operating loan lines. As highlighted in the Federal Reserve Bank of Kansas City’s Agricultural Finance Databook , bankers throughout Federal Reserve Districts located in concentrated agricultural regions have reported steady increases in loan demand since the second quarter of 2013. Moreover, the increased lending activity has been primarily due to a greater need for financing operating expenses.

The increase in operating loans has significantly altered the debt structure for many agricultural producers. According to the Agricultural Finance Databook, the volume of loans used to finance operating expenses now accounts for more than half of new non-real estate farm loans originated at agricultural commercial banks. This ratio compares with an average of 39 percent from 1990 to 2004.

Perhaps warranting more concern, however, is that the increased short-term debt burden has occurred alongside two consecutive years of declining farm income. Using data from the Agricultural Finance Databook and USDA, the ratio of operating loans to net farm income has surged dramatically the past two years. A ratio above 1.0 is a level where producers would ultimately need to draw on other income sources or accumulated wealth to pay for recurring operating costs. Since the mid-1980s, this ratio has averaged only 0.54. In 2015, however, the ratio has spiked to 0.99, and could soon eclipse the 1.0 mark for the first time since the early 1980s. This sign of an increasing debt burden is also consistent with USDA’s expectation of a slight uptick in both debt-to-equity and debt-to-asset ratios.

Concerns surrounding farm finances will significantly depend on the outlook for agricultural commodity prices in the coming year. Crop prices were somewhat volatile during this year’s summer growing months but appear to have generally stabilized recently. Despite some remaining uncertainty surrounding the fall crop harvest in the United States, though, corn and soybean yields are expected to be historically high in 2015. Corn, soybean and wheat prices have all returned to levels at, or below, those observed before the mid-summer run-up due to the relatively strong harvest expectations.

Looking ahead, it is noteworthy that recent years have shown very few price gains from the fall harvest in one year to the next year’s planting season. Since 2011, significant declines in corn and soybean prices have, in fact, been more common than notable price increases. With expectations of a relatively strong harvest this year, a substantial rebound in U.S. crop prices before next year’s growing season, then, would likely need to come from significant demand growth or international supply disturbances.

Barring significant supply setbacks in the coming months, however, recent demand trends point to further headwinds for U.S. crop prices. Two primary demand factors driving gains in crop prices over the past decade have been growth in Chinese consumption of U.S. agricultural products and an expanding U.S. biofuels sector. Since 2012, however, growth in U.S. ethanol production has slowed, and the value of agricultural products exported to China has declined. Recent volatility in the Chinese economy and a strengthening U.S. dollar, making U.S.-based exports more expensive for foreign buyers, have added to concerns about the potential for near-term demand growth originating from China. Sluggishness in both of these demand drivers, key in recent years, appears likely to keep downward pressure on crop prices heading into 2016.

Conclusion
Concerns about future financial stress in the farm sector have steadily intensified alongside a second consecutive year of declining farm income and rising debt levels. As 2015 winds down, underlying trends in the supply and demand for crops also appear unlikely to support major advances in crop prices in the coming months. Many producers have remained in a financially sound position through 2015, but a prolonged downturn through 2016 could start to challenge some of those financial positions.



Red Meat Production Up 3 Percent From Last Year

Commercial red meat production for the United States totaled 3.90 billion pounds in August, up 3 percent from the 3.79 billion pounds produced in August 2014.

Beef production, at 1.93 billion pounds, was 4 percent below the previous year. Cattle slaughter totaled 2.32 million head, down 7 percent from August 2014. The average live weight was up 34 pounds from the previous year, at 1,363 pounds.

Veal production totaled 6.5 million pounds, 9 percent below August a year ago. Calf slaughter totaled 34,500 head, down 21 percent from August 2014. The average live weight was up 41 pounds from last year, at 318 pounds.

Pork production totaled 1.95 billion pounds, up 11 percent from the previous year. Hog slaughter totaled 9.35 million head, up 13 percent from August 2014. The average live weight was down 4 pounds from the previous year, at 278 pounds.

Lamb and mutton production, at 11.7 million pounds, was up slightly from August 2014. Sheep slaughter totaled 175,100 head, 3 percent below last year. The average live weight was 134 pounds, up 5 pounds from August a year ago.

by State         million lbs      % of Aug '14
Nebraska ......:     626.5            103      
Iowa .............:     544.4            107      
Kansas .........:     411.6             95      

January to August 2015 commercial red meat production was 31.7 billion pounds, up 2 percent from 2014. Accumulated beef production was down 4 percent from last year, veal was down 17 percent, pork was up 8 percent from last year, and lamb and mutton production was down 4 percent.



Chinese Buyers Commit to Buy $5.3 Billion Worth of U.S. Soy
Buyers from China have agreed to buy $5.3 billion worth of U.S. Soy,  totaling more than 484 million bushels of U.S. soybeans. The announcement was made today in Des Moines, Iowa.

“Anytime an agreement like this is made, it is great for U.S. soybean farmers,” says Laura Foell, U.S. Soybean Export Council chair and soybean farmer from Iowa. “Our international customers demand a product that is sustainable and high quality, and that’s what U.S. soybean farmers continue to deliver.”

In the most recent marketing year, U.S. Soy exports accounted for 62 percent of U.S. Soy production. China alone imports approximately 25 percent of all U.S. Soy.  The country was the No. 1 buyer of whole U.S. soybeans in the 2013/14 marketing year and the second-biggest buyer of U.S. soybean oil.

“This is a great example of how our farmer-leaders’ work of establishing relationships in China are paying off,” Foell says. “We must continue this work with China and other countries since exports are so important to the U.S. Soy industry.”

In the most recent marketing year, U.S. soybean farmers exported 2 billion bushels of soy to international customers. The value of these exports set a record of more than $30 billion.



Keep air quality, ammonia in check this autumn

Fall is in the air. As temperatures decrease and relief begins from the summer sun’s intense rays, swine producers will prepare their facilities for the change in season.

“Just as with the summer heat, the fall/winter season also requires proper ventilation,” said Russell Gilliam, U.S. swine business manager for Alltech. “During colder months, a balance to keep air moving, without causing abnormal temperature changes in the barn, must be met.”

According to Gilliam, an effective air quality program for hog facilities should include the following procedures:
    Determine all fans are in working order. Clean fan blades, check the motors and make sure the fan’s thermostat works.
    Examine fan blades and louvers for damage and rust, and replace them if they are older than 10- to 15-years old.
    Pay close attention to curtains to make sure they close securely and that all debris or equipment are cleaned up and put away before snowfall.
    Check propane tanks for leaks and then test all supplemental heat sources for proper function.
    Examine your rodent control program.

While all of these tips can be quite useful in keeping the facility safe for the pig herd and the employees in the barn, swine operations may want to consider employing the use of a feed additive to combat the additional challenge of ammonia. Ammonia is a toxic gas that when present in high levels can damage the cell lining in the respiratory tract and easily become a chronic problem in the barn. The gas, released through the activity of waste-degrading microbes, can cause stillbirths, boar taint, tailbiting and respiratory diseases in pigs; it can also cause severe problems for humans. A number of management factors can contribute to poor air quality and ammonia, such as overfeeding nutrients as well as reduced ventilation.

One nutritional approach that some producers have found as a safe, natural way to reduce emissions and maintain air quality is the addition of a yucca plant extract that binds ammonia. The Yucca schidigera plant extract is known for its ability to reduce adverse manure emissions and the level of ammonia in animal housing when used as a feed additive (De-Odorase®). The plant extract keeps manure odor and ammonia at levels conducive to maintaining the pig’s respiratory health, creating a healthier environment for the animal as well as the producer.

“Reduced airflow and increased ammonia levels are inevitable in the barn during the fall/winter months. Producers need to make sure their barns can get through the long winter and prevent respiratory disease and health problems for both their herd and their employees,” Gilliam said. “Embracing new technologies and developing a management plan can help swine operations handle these cold weather challenges effectively.”



EIA: Higher Ethanol Stocks, Demand

Total U.S. ethanol inventories surged last week despite domestic plant production falling to the lowest level since early May, according to a U.S. Energy Information Administration report on Wednesday, Sept. 23.

The report showed ethanol stocks increased 600,000 barrels (bbl), or 3.3%, to a three-week high of 18.9 million bbl during the week-ended Sept. 18, with a year-over-year stock surplus at 1.7%.

EIA also reported 44,000 barrels per day (bpd) of ethanol imports were received along the East Coast last week.

The report showed domestic ethanol production fell 23,000 bpd or 2.4% to 938,000 bpd, the lowest since the week-ended May 8, while up 49,000 bpd or 5.5% year on year.

Blender inputs, a gauge for ethanol demand, rose last week by 14,000 bpd or 1.6% to 892,000 bpd while up 0.7% versus a year earlier.

Other EIA data showed implied demand for gasoline increased 232,000 bpd to 9.215 million bpd, roughly 5.0% higher than the same week a year ago.



ABA Conference: Ag Bankers Prepare for Volatile Times Ahead

The agricultural economy and the possibility of volatile times ahead will dominate the conversation at the American Bankers Association’s 2015 National Agricultural Bankers Conference. The conference, now in its 63rd year, will be held at the Kansas City Convention Center in Kansas City, Mo. Oct. 25 -28.

This year’s event, “Position to Transition: How to Navigate Volatile Times,” will shed light on managing risk, working smarter and strengthening customer relationships. Attendees will have unmatched access to industry experts, academics and peers willing to share strategies for success.

“For more than 60 years, this conference has brought ag bankers together to educate and motivate them about the challenges and opportunities in rural communities,” said Steve Apodaca, senior vice president of ABA’s Center for Agricultural and Rural banking. “With the uncertainty facing the ag economy, it’s a critical time for ag bankers to unite to better serve our nation’s farmers and ranchers.”

A new addition to the conference this year is the “New Ag Banker Track,” which features targeted sessions for young bankers with one to seven years of lending experience or professionals transitioning into ag banking from other careers. Sessions include:
    Navigating Through Difficult Times: Lessons Worth Learning from the 80s
    Know Your Documentation: The Top 10 Things Every Banker Needs to Know
    Making Good Loans: The Fundamentals of Credit Analysis
    Distressed Agricultural Loans: How Do You Minimize Losses and Survive the Workout

The conference will feature a general session with David Kohl, Ph.D., professor emeritus, agricultural and applied economics, Virginia Tech and Barry Flinchbaugh, Ph.D., professor, agricultural economics, Kansas State University. The professors will address the most commonly asked questions by agricultural bankers, producers and industry leaders. The session will begin with an outlook of the U.S. agricultural economy by Michael Swanson, Ph.D., ag economist at Wells Fargo Bank.

Other conference highlights include a keynote address on managing weather risk from Eric Snodgrass, director of undergraduate studies, Department of Atmospheric Sciences, University of Illinois at Urbana-Champaign. Attendees will also hear from Nathan Kauffman, assistant vice president and Omaha branch executive of the Federal Reserve Bank of Kansas.

The conference will close with an inspirational story of turning challenges into opportunities from thirteen time All-Star baseball great, George Brett of the Kansas City Royals.

Experts spanning the agricultural spectrum will lead more than 30 sessions including:
    Credit Impacts of the Commodity Price Roller Coaster: A free pre-conference seminar looking at key components in analyzing ag credits and current observations;
    Land Values Outlook: Retired Iowa State Economist Mike Duffy will provide an outlook on land values; and
    Lenders through the Ages:  Bankers Making Bankers Better Bankers: Panelists Sam Miller, managing director, group head, agricultural banking, BMO Harris Bank; Caleb Hopkins, loan officer, Westside State Bank; Dinese Watson, vice president, ag lending, Merchants Bank of Indiana; and Keith Phillips, senior vice president, First Bank and Trust Company will discuss the challenges of working with colleagues of various ages – and stages in their careers – and how to improve communications.

Registration for the conference is $975 for ABA members and $1,465 for non-members. Special discounts are available for early bird registration before Aug. 28 and attendees from the same member organization who register together. 

For additional schedule information or to register for the conference, call 1-800-BANKERS or visit http://www.aba.com/AgConference.