Monday March 21 Ag News

Nebraska Beef: It’s What’s For Dinner
U.S. Senator Deb Fischer

Wide-open spaces, grazing cattle in rolling pastures, and efficient feed yards cover Nebraska’s landscape. We are “The Beef State.” Our delicious products are the best in the world. They are found on dinner tables from New York to Tokyo, and many places in between. Because Nebraska’s producers are committed to delivering safe and high-quality beef, they continue to reach new consumers around the globe.

This success is the result of persistence in the face of adversity. In December of 2003, Israel was one of many countries to suspend imports of U.S. beef. Israel did so following a confirmed case of bovine spongiform encephalopathy, more commonly referred to as BSE. After this case was confirmed, U.S. beef producers quickly implemented strict improvements. But, for nearly 13 years following this discovery, America’s beef producers were unable to ship their products to Israel.

When I visited Israel last fall, U.S. Ambassador Dan Shapiro reached out to me to find a solution to this ban. He wanted to bring Nebraska beef back to dinner tables in Israel. The ambassador said he was especially interested in serving Nebraska beef at the embassy’s annual Fourth of July celebration. Following our conversation, I began a dialogue with the U.S. Department of Agriculture (USDA) to find a way to make this happen.

For the next few months, my office worked closely with the USDA’s Food Safety and Inspection Service. I also spoke regularly with officials from the Nebraska Department of Agriculture in a concerted effort to find the best solution. Finally, in February of 2016, an agreement was achieved. The ban was lifted, and the USDA announced that, for the first time in over a decade, an American shipment of beef will be delivered to Israel. What’s more, Nebraska will have the honor of supplying this shipment.

As part of this agreement, WR Reserve, a processing plant in Hastings, was selected to make the first delivery. This company’s hard work and dedication to complying with a rigorous inspection process made this agreement possible.

Agriculture is the driving force of Nebraska’ economy, and beef is a critical component of that success. With nearly $7.2 billion in annual cash receipts, our beef represents the largest sector of the state’s economy, while leading the nation in every aspect of beef production. In our state, cattle outnumber people by more than three to one. Nebraska is also the number one cattle on feed state. This fact illustrates our steadfast commitment to supplying the world with affordable, safe, and high-quality Nebraska beef.

This historic agreement with Israel is a win for both Nebraska and the Israeli people. For the first time in many years, consumers in Israel will once again be able to enjoy world-class Nebraska beef. And for Nebraska, opening this new market means increased opportunities that can benefit our communities and strengthen our economy.

According to the USDA, Israel imported $405 million in beef products from other nations. Ninety-five percent of these imports originated in Latin America, with additional volumes coming from Australia and the European Union. Nebraska now has an opportunity to be a competitor in that marketplace.

Throughout this process, I was honored to collaborate with state, federal, and international officials. This teamwork and persistence made it possible for Nebraska’s beef producers to lead the charge. I’m proud of our beef producers, and excited for the beef industry.

Going forward, I will continue working to ensure Nebraska’s beef producers have every opportunity to succeed and feed the world.



Grain Elevator Explosion, Hinton, Iowa

On March 17, 2016, an explosion at Central Valley Ag’s grain elevator in Hinton Iowa occurred at 1:10 PM. Two Central Valley Ag employees were taken to the hospital immediately following the explosion. These employees have been identified as Gustavo Gutierrez and Shane Noreen, both of these individuals are receiving the best care possible at the University of Nebraska Medical Center in Omaha. After talking to both families, we believe that both Gustavo and Shane are in stable condition and have seen slight improvement over the weekend. We will continue to pray for their recovery.

The following experts have been working over the weekend to determine the cause of the explosion; NOHR Engineering Company, LLC, Nationwide Insurance, the Iowa State Fire Marshall along with Dahl and Associates, Inc. A cause for the explosion has not been determined yet, but the investigation will continue. The Iowa State Fire Marshall plans to release a statement today.

Central Valley Ag’s CEO, Carl Dickinson is keeping his employees a top priority at this time. “We have two priorities at this point; number one is to care for our employees, the two individuals who were injured on site, and all of our other employees who work at our Hinton location,” said Carl. “The second priority is to identify what happened so we can do everything in our power to ensure it never happens again.”



 
 FRESH PORK PROCESSING FACILITY TO BE BUILT IN MASON CITY, IOWA

Pending finalization of state approvals, Prestage Foods of Iowa, LLC intends to build a state-of-the-art, pork processing facility on a proposed tract in Mason City, IA. This one shift plant will employ as many as 1,000 Iowans with a total capital investment over $240 million.

“We are excited to take the next logical step in vertical integration by building a new high tech pork plant in Mason City, IA,” commented Ron Prestage, DVM, on behalf of the Prestage family. “We see this as an opportunity to secure the future of our family business, its employees, and our contract growers, whether they are in the Carolinas, MS, OK, TX, or IA. We have been impressed with the help and support provided by local and state officials, the Iowa Pork Producers Association, NPPC, and the National Pork Board. We have always believed that our family and employees must be engaged in the communities in which we operate and the industry we represent. Having produced market hogs in IA for the past dozen years, we believe Mason City is the right place for us to strategically build this new plant,” added Dr. Prestage.

Prestage Farms believes that the consolidation of the pork packing industry has decreased competition for live hogs and helped depress prices to hog producers. As a large family-owned, independent hog producer, Prestage believes that vertical integration is necessary to protect its hog production investment in Iowa and elsewhere, and to create additional opportunities for independent producers in Iowa to maximize value for their livestock. “With the importance of Iowa to pork production in the United States, it is only natural that our first pork processing plant would locate here. Prestage Foods looks forward to building a long-lasting bond with the people of Mason City and North Central Iowa. The end result will be to provide delicious pork to people all over the world,” said Jere Null, COO – Prestage Foods of Iowa. “This facility will be built with exports in mind. Global consumers already know of the goodness of Iowa pork. These consumers will place additional value on the significant investment that we are making in engineering to insure that this plant produces the highest level of safe food available anywhere in the world,” says Null.

The project, as currently planned, will involve the design and construction of a new 650,000 square foot hog processing facility that will operate on one shift, processing 10,000 hogs per day and producing 600 million pounds of pork annually. While timing for a second shift is yet to be determined, the facility will be designed, but will not be initially constructed, for future expansion to two shifts. The plant will utilize the latest innovations in processing and automation technology to help ensure that it is a world leader in food, employee, and environmental safety. Construction is set to begin, pending finalization of state permits and approvals, in the summer of 2016 with completion and first shift operations beginning in mid-2018. Initially operating one shift, the plant will employ as many as 1,000 people with a total capital investment in excess of $240 million. Null added, “The people of Prestage Foods will work relentlessly to make this facility a source of pride for Mason City. We are impressed with the quality of the people we have met in Cerro Gordo County and Mason City, and feel that we share the same rural “small town” values in our home back in North Carolina.”



Iowa Cattlemen Appreciate Tax Coupling Relief
The Iowa Cattlemen’s Association applauds Governor Branstad for signing into law state tax coupling with portions of federal tax code Section 179. This action follows movement from the Iowa House and Senate earlier this week.

The bi-partisan approved legislation addressed two key tax policies for Iowans:
    - Coupling with federal tax policy for the 2015 tax year.
    - Signing the state’s manufacturing sales tax relief into law.

By coupling state and federal tax policy, Iowa farmers and small business owners can truly benefit from investments made in 2015. The legislation will provide $98 million in tax relief for Iowa farmers and small business owners. According to the state’s fiscal agency, this year’s federal tax coupling legislation could result in an additional $30 million of state revenue next year. This projection includes tax coupling; which legislators would need to address again during the 2017 session.

“Iowa cattlemen appreciate the support of our legislative leaders on the tax coupling issue,” says Justine Stevenson, ICA’s Director of Government Relations. “Coupling with federal tax policy allows our members to reinvest in their businesses and continue to grow Iowa’s economy.”

The Iowa Cattlemen’s Association encourages members to take advantage of this tax savings. If farm returns were filed by the typical March 1 deadline, farmers will need to file an amended return to take advantage of the new provisions. In late February Governor Branstad and the Iowa Department of Revenue extended the filing deadline for Iowa farmers from March 1 to April 30.



New Strategic Plan Puts Focus on Building Demand

At the recent Commodity Classic in New Orleans, the National Corn Growers Association finalized a new strategic plan that will focus NCGA's work on a vision of sustainably feeding and fueling a growing world.

The new plan sets four major strategic priorities that reflect the concerns heard through listening to farmers and key stakeholders:
-    Increase Demand
-    Strengthen Customer and Consumer Trust
-    Enhance Productivity & Environmental Sustainability
-    Strive for Organizational Excellence

Increasing demand is vital, noted NCGA President Chip Bowling at a news conference held earlier this month.

"Most corn farmers are well past the point of prices being below the cost of production, and prices have been there for some time now," Bowling said. "Facing this dramatic income drop, farmers have begun tightening their belts. We are already seeing the ripple effects of this on rural communities. Implement dealers are selling less equipment. Manufacturers are scaling back production. Agribusinesses have laid off employees."

For NCGA, this means a particular focus on increasing ethanol demand, exploring new uses, increasing livestock exports and pushing for transportation infrastructure that can more efficiently move corn and corn products to market. The target goal within the new plan is competitive market demand for 19 billion bushels of corn by 2025.

"Our growers know what's at stake," Bowling said. "They've worked hard to bring in the three largest crops ever over the past three years, and now we have the opportunity to lead in building demand, enhancing trust, and improving sustainability."

Click here to review the new NCGA strategic plan.... http://www.ncga.com/news-and-resources/news-stories/article/2016/03/new-strategic-plan-puts-focus-on-building-demand. 



Eggs For Your Spring Basket Up, Salad and Orange Juice Down

Lower retail prices for several foods, including salad, orange juice, shredded cheddar, ground chuck, sirloin tip roast, vegetable oil, white bread, ground chuck, deli ham and orange juice, resulted in a slight decrease in the American Farm Bureau Federation’s Spring Picnic Marketbasket Survey.

The informal survey shows the total cost of 16 food items that can be used to prepare one or more meals was $53.28, down $.59 or about 1 percent compared to a survey conducted a year ago. Of the 16 items surveyed, ten decreased and six increased in average price.

“Egg prices are up sharply from first quarter of 2015, a year ago but are down even more sharply from the third quarter of 2015. This shows the effect of the HPAI (High Pathogenic Avian Influenza) event last year,” said John Anderson, AFBF’s deputy chief economist. “Prices soared in the latter half of last year, but are working their way back down as increasing production has started to catch up with demand, which has moderated prices somewhat,” he said.

Prices on the beef items in the marketbasket – ground chuck and sirloin tip roast – are lower compared with the first quarter of 2015, explained Anderson. Retail beef prices peaked in early 2015 at record high levels. “Since then, a combination of increasing beef production, weaker exports, and lower competing meat prices have led to modest price declines,” he said.

Dairy product prices also remain relatively low. At $4.29 for a one-pound bag, shredded cheddar cheese price is at the lowest price in this survey since the third quarter of 2012. The whole milk price rose almost 3 percent from the third quarter of last year, but that third quarter price was the lowest price in the survey since 2010, noted Anderson. The whole milk price remains well below the 2015 first-quarter price.

“Apple prices are up quite a bit year-over-year. This is a reversal of retail prices that were historically low in 2015,” said Anderson. Last year, the apple market faced a really tough export environment with labor disruptions at west coast ports as well as an increasingly strong dollar.

“Current retail apple prices are still below some pretty recent years, for example 2011 and 2012,” he said.

Items showing retail price decreases from a year ago included:
-    bagged salad, down 11 percent to $2.20 per pound
-    orange juice, down 8 percent to $3.21 per half-gallon
-    shredded cheddar cheese, down 7 percent to $4.29 per pound
-    whole milk, down 6 percent to $3.23 per gallon
-    ground chuck, down 5 percent to $4.36 per pound
-    vegetable oil, down 5 percent to $2.55 for a 32-ounce bottle
-    white bread, down 3 percent to $1.69 per 20-ounce loaf
-    flour, down 1 percent to $2.49 for a 5-pound bag
-    sirloin tip roast, down 1 percent to $5.65 per pound
-    potatoes, down 1 percent to $2.71 for a 5-pound bag

These items showed modest retail price increase compared to a year ago:
-    apples, up 12 percent to $1.64 per pound
-    eggs, up 9 percent to $2.23 per dozen
-    bacon, up 8 percent to $4.78 per pound
-    toasted oat cereal, up 6 percent to $3.31 for a 9-ounce box
-    chicken breast, up 3 percent to $3.37 per pound
-    deli ham, up 1 percent to $5.57 per pound

Price checks of alternative milk and egg choices not included in the overall marketbasket survey average revealed the following: 1/2 gallon regular milk, $2.13; 1/2 gallon organic milk, $4.32; and one dozen “cage-free” eggs, $3.67.

The year-to-year direction of the marketbasket survey tracks closely with the federal government’s Consumer Price Index (http://www.bls.gov/news.release/cpi.nr0.htm) report for food at home. As retail grocery prices have increased gradually over time, the share of the average food dollar that America’s farm and ranch families receive has dropped.

“Through the mid-1970s, farmers received about one-third of consumer retail food expenditures for food eaten at home and away from home, on average.

Since then, that figure has decreased steadily and is now about 16 percent, according to the Agriculture Department’s revised Food Dollar Series,” Anderson said.

Using the “food at home and away from home” percentage across-the-board, the farmer’s share of this $53.28 marketbasket would be $8.52.

AFBF, the nation’s largest general farm organization, began conducting informal quarterly marketbasket surveys of retail food price trends in 1989. The series includes a spring picnic survey, summer cookout survey, fall harvest survey and Thanksgiving survey.

According to USDA, Americans spend just under 10 percent of their disposable annual income on food, the lowest average of any country in the world. A total of 87 shoppers in 28 states participated in the latest survey, conducted in March.



Brazil Soy Harvesting 61% Complete

Brazilian soybean harvesting moved forward quickly last week despite heavy showers in parts of the center-west and southeast, said AgRural, a local farm consultancy.  As a result, harvesting reached 61% as of Friday, an advance of 9 percentage points from the week before and ahead of 59% at the same time last year.  Farmers chose to harvest with high humidity rather than risk damage to the beans, AgRural said.

In Mato Grosso, the No. 1 soy state, fieldwork reached 85% complete, back from the 88% registered at the same point last year. The wet conditions have already damaged quality in parts of the north of the state.

In the south and southeast of the country, drier weather favored harvesting.  Farmers in Parana, the No. 2 soy state, have harvested 79% of the crop, up from 68% last week.

In the southernmost state of Rio Grande do Sul, dry weather also favoured fieldwork, but with only 6% of area ready for harvest, that is a net negative.



New Poll: Farm Credit Leaders Identify Commodity Prices as the Greatest Challenge Facing Ag Producers in 2016

Commodity prices are the greatest challenge facing agricultural producers in 2016, according to a poll of Farm Credit directors from America’s heartland.

More than 64 percent of the directors — from the boards of 17 Farm Credit lenders in 15 states and of AgriBank, their St. Paul-based funding bank — said commodity prices are the greatest challenge facing ag producers this year. The directors, most of whom are also farmers or ranchers, indicated the next biggest challenges are input costs (over 21 percent), and Mother Nature (nearly 8 percent). Farm Bill implications and land rents were each cited by approximately 3 percent of the respondents.

“The USDA forecasts real (adjusted for inflation) net farm income will be in the low $50 billion range annually for the next 10 years, which is down dramatically from recent highs and similar to the 1980s,” said Jeff Swanhorst, executive vice president, Credit, and chief credit officer of AgriBank. “The USDA 10-year baseline forecast assumes no domestic or external shocks to global ag markets and is largely driven by prices for corn and other key commodities, which have fallen significantly over the last couple years.  All we know for sure is the forecast will be wrong. Farmers will make many adjustments, depending on their circumstances, and they’ll be rewarded for their entrepreneurial spirit, management and good old-fashioned hustle.”

AgriBank conducted the poll March 8 among directors attending the AgriBank 2016 Annual Meeting in Phoenix, Ariz. The 17 affiliated Farm Credit Associations affiliated with AgriBank provide agricultural loans in a 15-state area stretching from Wyoming to Ohio and Minnesota to Arkansas. Farm Credit is a top source of loans for agriculture and rural borrowers in these states. Ninety directors participated in the poll.



Forecasting a Decline in Farm Income in 2016

       Farm income, assets, and equity are all expected to decline nearly three percent in 2016, while farm debt is forecasted to rise about two percent.

       But these numbers may not tell the whole story.

       Agricultural and Applied Economics Association members Ani Katchova (The Ohio State University) and Allen Featherstone (Kansas State University), along with Jeffrey Hopkins (USDA’s Economic Research Service), met with Senator Pat Roberts (R-Kan.), Chairman of the Senate Committee on Agriculture, Nutrition, and Forestry.

       The meeting was part of a day on Capitol Hill focused on “Dynamics of Farm Profitability: Factors Influencing the Decline in Income.”

       “I felt honored to have the opportunity to share information and present at the Capitol Hill briefing,” Katchova said. “Overall, the ag sector is coming down from historic highs but is currently in a strong position.”

       Because of the historic highs, Featherstone predicts a downturn, but says the unknown is how long it will last.

       “The financial situation of the farm sector is currently in excellent shape,” Featherstone said, “but farmers need to begin thinking about restructuring debt and adjusting crop insurance levels.”



CWT Assists with 4.1 Million Pounds of Cheese and Whole Milk Powder Export Sales

Cooperatives Working Together (CWT) has accepted 5 requests for export assistance from Dairy Farmers of America, Michigan Milk Producers Association and Northwest Dairy Association (Darigold) who have contracts to sell 178,574 pounds (81 metric tons) of Cheddar and Monterey Jack cheese and 3.880 million pounds (1,760 metric tons) of whole milk powder to customers in Asia, Oceania and South America. The product has been contracted for delivery in the period from March through September 2016.

So far this year, CWT has assisted member cooperatives who have contracts to sell 9.994 million pounds of cheese, 7.716 million pounds of butter and 10.728 million pounds of whole milk powder to fourteen countries on five continents. The sales are the equivalent of 344.167 million pounds of milk on a milkfat basis.

Assisting CWT members through the Export Assistance program, in the long-term, helps member cooperatives gain and maintain market share, thus expanding the demand for U.S. dairy products and the U.S. farm milk that produces them. This, in turn, positively impacts all U.S. dairy farmers by strengthening and maintaining the value of dairy products that directly impact their milk price.



Sorghum Industry Establishes Coordinated Research and Marketing Program

Beginning April 1, 2016, the Sorghum Checkoff, Kansas Grain Sorghum Commission and Kansas State University (KSU) will enter into a cooperative agreement to increase grain sorghum productivity and expand markets by 2025.

Coordinated efforts for the Collaborative Sorghum Investment Program will operate through the Center for Sorghum Improvement at KSU. However, results will impact sorghum producers throughout the country.

"After more than a year of planning and orchestrating, the Collaborative Sorghum Investment Program is now a reality," said Florentino Lopez, Sorghum Checkoff executive director. "This program will serve as a platform aimed at reaching the Sorghum Checkoff's mission of investing checkoff dollars to increase producer profitability and enhance the sorghum industry. This program helps by aligning many resources to meet the needs of sorghum farmers throughout the U.S."

The program will aim to increase the average national yield from 61.95 bushels per acre to 100 bushels per acre by 2025 by funding research in beneficial areas such as over-the-top grass control and yield improvements involving breeding program developments and field-level management techniques. Long-term research areas such as seed innovation and information management will also be addressed, including the development of new and novel genetic traits and the development of research and genomics databases.

The program will work to develop marketplaces, attributes, qualities and other factors capable of increasing demand to 1.25 million bushels of sorghum by 2025. This will include the expansion of international markets, domestic food use, livestock feeding, ethanol production, specialty products and more. In addition, tools, information and other factors will be developed in an effort to decrease the trading discount of sorghum to corn from 4.6 percent to 2 percent by 2025.

"This agreement will provide a valuable investment in long-term sorghum research," said Stephen Bigge, Kansas Grain Sorghum Commission chairman. "Sorghum producers will benefit from the advancement of sorghum technology for many years to come."

Support for this program will total $4.8 million, consisting of a $2 million investment from the Kansas Grain Sorghum Commission and $2 million from the Sorghum Checkoff, both made in annual payments of $200,000 for 10 years, as well as an $800,000 investment from KSU.

The resources will be used to hire a managing director of the program in Manhattan, Kansas, provide capital for center activities and research funding, and build the Center for Sorghum Improvement
Excellence Fund for long-term support of sorghum initiatives. Overseen by an advisory committee, the
managing director will actively seek additional funding for projects that serve the objectives of this
program and to extend the life of the program beyond 2025.

"We look forward to implementing this agreement to the benefit of the entire sorghum industry," said
John Floros, KSU Dean of the College of Agriculture and director of K-State Research and Extension.
"We are pleased to leverage our resources with this new program."



 NFU Renews Partnership with Feeding America Through the Invest An Acre Program

Food insecurity is a problem for millions of Americans across the country, and the National Farmers Union (NFU) has pledged to contribute to nationwide hunger relief through a renewed commitment to Feeding America’s Invest An Acre program. Following an announcement at the NFU 114th Anniversary Convention in Minneapolis, the organization officially kicked off its fundraising efforts this week.

“We often associate food insecurity with impoverished foreign nations, but we cannot ignore the hunger problem here at home in many rural communities,” said NFU President Roger Johnson. “As family farmers and ranchers, we have a responsibility to help families in need through local hunger relief efforts.”

More than 48 million Americans lived in food-insecure households in 2014, according to the USDA. To combat the problem in rural America, the domestic hunger relief organization created Invest An Acre to make it easy for farmers to donate a portion of their crop proceeds to the food bank serving their local community. Every dollar donated by farmers is matched by Monsanto to double the impact.  

“Food insecurity is not an individual problem; it can take a toll on an entire community. We are proud to renew our partnership with Feeding America and to continue NFU’s longstanding support of hunger relief efforts in rural America,” commented Barbara Patterson, a government relations representative with NFU, who is coordinating the renewed partnership.

From 2011 to 2014, NFU and its members contributed nearly $200,000 to various hunger relief initiatives through Feeding America, the Invest An Acre program and local food banks.

More information about NFU’s involvement in Invest An Acre and ways to donate is available at http://www.nfu.org/feeding-america.



Titan Machinery Reports Lower Sales for the Year

Titan Machinery ended its fourth quarter of fiscal 2016 with cash of approximately $89 million. The company's inventory level decreased to approximately $689 million as of January 31, compared to $890.7 million, including amounts classified as held for sale, as of January 31, 2015.

This includes a $180 million reduction in equipment inventory, of which approximately $27 million resulted from the impairment charges and the remaining $153 million resulted from the execution of the equipment inventory reduction plan during fiscal 2016. The Company had approximately $445 million outstanding floorplan payables on $1.0 billion total discretionary floorplan lines of credit as of January 31, 2016.

For the fiscal year ended January 31, Titan's net cash provided by operating activities is expected to be approximately $232 million on a GAAP basis. The company evaluates its cash flow from operating activities net of all floorplan payable activity and maintaining a constant level of equity in our equipment inventory.