Monday December 5 Ag News

Nebraska Farm Bureau President Calls on Governor, Legislature to Broaden Sales Tax Base to Reduce Property Taxes

The President of Nebraska’s largest general farm organization called on Gov. Pete Ricketts and members of the Nebraska Legislature to pass legislation initiating state tax reform that would broaden Nebraska’s sales tax base as a means to offset and reduce the reliance on property taxes. Nebraska Farm Bureau President Steve Nelson made the remarks during his annual address to attendees at the Nebraska Farm Bureau Annual Meeting and Convention, Dec. 5 in Kearney. Nelson emphasized the need for a revenue neutral solution that ensures every dollar generated in expanded sales tax would be used to provide dollar for dollar reductions in property taxes.

“Residential, commercial and agricultural property taxpayers are being punished by a broken tax system,” said Nelson. “It’s time for the governor and every state senator who campaigned on the promise of addressing property taxes to step up and address this issue head on.”

Nebraskans now pay the 7th highest property taxes in the nation with property taxes accounting for almost half (48 percent) of the three major revenue sources of property, state sales and state income taxes.

“We must have a more balanced tax system that doesn’t put the burden of funding schools and other state priorities so heavily on property taxes paid by homeowners, businesses and agriculture. Our tax system has allowed our three-legged tax stool to grow further and further out of balance,” said Nelson.

In remarks, Nelson said there’s been a “seismic shift” onto property taxes over the last decade that must be fixed and the solution to rebalancing the burden between property, sales and income taxes involves tax reform that includes broadening the state’s sales tax base. Sales taxes account for only 19 percent of contributions to Nebraska’s three-legged tax stool in comparison to 48 percent for property taxes.

“Today I call on our governor and the legislature to pass tax reform legislation in 2017 that broadens our state sales tax base as a means to offset and lower our property tax burden, and in a manner that is revenue neutral, ensuring every dollar from expanded sales taxes is dedicated specifically to provide dollar for dollar reductions in property taxes. This is the direction we must go to re-balance our broken tax system,” said Nelson.

Nelson also said there is no room for excuses when it comes to initiating tax reform.

"The state’s budget shortfall is not an excuse to avoid working for long-term tax reforms that balance our tax burden for current and future generations of Nebraskans. Nor is it acceptable to say that property taxes are not a state issue,” said Nelson. “K-12 schools are the largest user of property taxes in Nebraska and it is clear the vast majority of the costs associated with local school funding can be directly attributed to mandates from the state. Property taxes are very much a state issue for the governor and the legislature to address.”

Nelson also said the property tax problem isn’t just a major issue for farmers and ranchers, pointing to a coalition of homeowners, businesses and agriculture interests that recently formed to oppose and successfully defeat a $369 million community college bond in Southeast Nebraska. Nebraska Farm Bureau and its members partnered in the effort.

“There was a strong message in the vote that defeated the community college bond. Voters support education, but property taxes are just too high. The voice of Nebraska taxpayers is rising. Nebraskans want tax reform that fixes the property tax problem. Nebraska Farm Bureau will continue to lead the charge and we will continue to push forward in partnership with those who share our belief that the time for reform is now,” said Nelson.



IFBF Renew Rural Iowa program marks 10 year milestone, celebrates $125 million in economic impact for rural Iowa

The calendar may show this is the start of Iowa Farm Bureau Federation (IFBF) Week, as proclaimed by Governor Terry Branstad, but the state’s largest grassroots farm organization has always believed that agriculture thrives, when rural Iowa thrives.  That’s why 10 years ago, IFBF started Renew Rural Iowa (RRIA), a business mentoring, networking and funding program to help strengthen the economic sustainability of Iowa’s rural communities.

“Nearly 90 percent of Iowa’s farmers rely on off-farm income, so it’s important to encourage entrepreneurs as well as helping existing businesses grow,” said IFBF President Craig Hill.  “Encouraging small businesses helps maintain young families in rural Iowa, which keeps schools alive and Mainstreet open, which is integral to Iowa’s rural heritage.”

The last 10 years of RRIA has seen measurable success.  “To date, our Renew Rural Iowa program has helped more than 3,000 Iowans realize their potential by participating in business mentoring or a financial guidance seminar,” says Hill.

So far, the program has resulted in more than $125 million in economic impact for rural Iowa, and garnered national attention along the way.  “Our mentoring helped two young Iowa companies become national American Farm Bureau Rural Entrepreneurship Challenge winners (ScoutPro in ’14, AccuGrain in ’15), and helped two more young entrepreneurs win semi-finalist recognition--Performance Livestock Analytics (PLA) and Inland Sea, a Harlan-based company that is breaking ground now at an Atlantic salmon farm,” says RRIA Economic Development Administrator Sandy Ehrig.



CattleFax to Launch New Digital Platform

CattleFax has announced plans to launch a new digital platform with expanded online resources for both members and non-members.

Beginning Feb. 1, all cattle producers will have easy access to industry updates and management information on their mobile devices or desktops. The redesigned CattleFax.com and free CattleFax mobile application will become one-stop destinations for daily weather, futures markets, industry news, management tools and United States Department of Agriculture (USDA) data.

Traditionally, CattleFax market information has been available exclusively to the organization’s members. With the new digital platform, CattleFax will continue to serve its membership base while sharing consistent and valuable business information with all producers.

“CattleFax is recognized as a trusted source of market insights from the industry’s most knowledgeable experts,” says Randy Blach, CattleFax chief executive officer. “With this new offering, we’re pleased to provide even more cattle producers with tools and news they need to make more informed management decisions – especially as they deal with substantial price correction since the record-high prices of 2014.”
 
Tools for management decisions
Among the new CattleFax resources is a Daily Market Headlines e-newsletter, available with a simple, free-of-charge online registration. The e-newsletter will contain news of the day from CattleFax and other industry sources, saving producers time by compiling the most important daily updates in one place.

Features on the new CattleFax website and mobile app will include more than 100 data sets from cattle, grain, hog, dairy and poultry markets, more than 30 weather graphics and more than 25 futures quotes – all with charting capabilities.

New online management tools will include a cow-calf breakeven calculator to estimate operation profitability. Other calculators will help producers determine breakeven prices when purchasing calves or feeder cattle, as well as calculate breakeven sale prices for feeder cattle or fed cattle. 

Membership benefits
Blach emphasizes that Cattle Fax members will continue to receive the in-depth market data, analyses and consulting services that they have come to expect.

“Certain information and services from CattleFax will continue to be member-exclusive,” he says. “Our members rely on our expert insights to make better business decisions for their operations’ success, and they will continue to do so.”
 
Site launch schedule
The beta version of the new CattleFax digital platform is available now at CattleFax.com. New site features will be fully functional on Feb. 1.  The free mobile app will be available through Apple Store or Google Play starting Feb. 1 as well.

CattleFax will unveil the platform publicly at the Cattle Industry Convention and National Cattlemen’s Beef Association (NCBA) Trade Show in Nashville, Feb. 1 to 3. Cattle producers can visit booth 251 to sign up for the free Daily Market Headlines newsletter and view a demonstration of new online resources.



Cooperative CHS focuses on essentials that position member-owners for long-term success

CHS Inc., the nation's leading cooperative and a global energy, grains and foods company, continues to take essential steps that ensure it remains strong and positions its member cooperative- and producer-owners for long-term success.

"Since 2011, we've laid a strong foundation for the future. We've made tremendous investments to serve you at home and to connect you to the global marketplace," CHS President and CEO Carl Casale told about 2,000 member cooperative- and producer-owners attending the company's annual meeting. "Now we're using our new market reality to make us better. We're making sure our system is stronger and that we are more efficient."

The CHS Annual Meeting took place Dec. 1-2 at the Minneapolis Convention Center. With "The Essentials" theme, the event included a review of fiscal 2016 results and highlights, along with official company business. Among those attending were 111 next generation men and women who participated in the company's New Leader Forum designed to enhance leadership skills and expand industry and cooperative knowledge. The two-day CHS Annual Meeting also featured nearly four dozen educational sessions intended to provide business insights that help producers and their cooperatives succeed.

Casale said he remains optimistic about the outlook for U.S. agriculture based on global population growth and food demand projections through the end of the 21st century.

"Cycles will always be with us, but as farmers, ranchers and the cooperatives who serve them, we've got plenty of opportunity ahead," he said.

For fiscal 2016 (Sept. 1, 2015 – Aug. 31, 2016) CHS reported net income of $424.2 million on revenues of $30.3 billion, both down from fiscal 2015 and attributed to lower commodity prices and margins which affected significant portions of the company's core energy, grain marketing and fertilizer businesses.

In reviewing fiscal 2016 results, Tim Skidmore, CHS executive vice president and chief financial officer, said the cooperative "remains financially sound, with a strong balance sheet, and positioned for future growth opportunities."

Skidmore noted that during fiscal 2017, based on fiscal 2016 results, CHS will return an estimated $337 million in cash to its owners in the form of cash patronage, equity redemptions to eligible members and dividends on preferred stock.

CHS Board Chairman David Bielenberg, a Silverton, Ore., farmer, told members that in down economic cycles it's important to "be open to possibilities we may have overlooked and to focus on what's most important. We also recognize that we don't have to go it alone. We can count on our cooperatives and their trusted teams to be there when we need them."

CHS business highlights for fiscal 2016 included:
-    The completion of the company's $2.8 billion strategic investment in CF Industries Nitrogen, LLC, intended to create long-term supplies of patronage-eligible nitrogen fertilizer for its owners.
-    A new coker came on line at the CHS refinery at McPherson, Kan., allowing the refinery to process a larger variety of crude oils and deliver the best value to owners and customers by using the most cost-effective crude oil available. During fiscal 2017, completion of expansion projects at McPherson will bring the combined production of that refinery and a second at Laurel, Mont., to 155,000 barrels per day.
-    CHS Country Operations helped producer-owners deliver more value through collaboration by combining operations of eight of its business units and by expanding partnerships with cooperatives in Kansas and Alberta, Canada.
-    The CHS canola processing plant at Hallock, Minn., exceeded expectations in its first year, further linking farmer-owners to added value in food and food ingredients.
-    CHS Business Solutions invested in partnerships that support member-owners including gaining 100 percent ownership of Russell Consulting, which provides financial and marketing advice, and offering The Land As Your Legacy® to engage farm families in business transition planning.



Farmer-owned cooperative CHS elects directors; 2017 officer slate selected
The producer- and member-cooperative owners of CHS Inc. elected a Wisconsin farmer to a three-year term on the company's board of directors and re-elected four other producers to new three-year terms as directors of the nation's leading farmer-owned cooperative and global energy, grains and foods company.

The elections took place during the 2016 CHS Annual Meeting held Dec. 2 in Minneapolis. CHS directors must be full-time farmers or ranchers to be eligible for election to the 17-member board.

Newly elected director Mark Farrell of Cross Plains, Wis., succeeds Robert Bass who retired after 22 years. Farrell has served as a director for what is now Premier Cooperative of Mt. Horeb, Wis., since 1992, including four years as chairman. With his brother and son, he operates a 4,000-acre corn, wheat and soybean farm, along with a 6,000-head contract hog finishing operation. Farrell completed the short-course in agriculture at the University of Wisconsin-Madison.

Re-elected to the CHS Board were Dennis Carlson, Mandan, N.D.; Alan Holm, Sleepy Eye, Minn.; Randy Knecht, Houghton, S.D., and Steve Riegel, Ford, Kan.

Following the annual meeting, the CHS Board elected David Bielenberg of Silverton, Ore., to a fifth one-year term as chairman. Other directors selected as officers for 2017 were Daniel Schurr, LeClaire, Iowa, as first vice chairman; David Johnsrud, Starbuck, Minn., as secretary-treasurer; C.J. Blew, Castleton, Kan., second vice chairman, and Don Anthony, Lexington, Neb., as assistant secretary-treasurer.

Delegates also approved amendments to the CHS Articles of Incorporation and Bylaws. The amendments created a new membership class structure and criteria.



CWT Assists with 1.8 Million Pounds of Cheese Export Sales

Cooperatives Working Together (CWT) has accepted 15 requests for export assistance from members who have contracts to sell 1.785 million pounds (710 metric tons) of Cheddar cheese to customers in Asia, the Middle East, and Oceania. The product has been contracted for delivery in the period from December 2016 through March 2017.

So far this year, CWT has assisted member cooperatives who have contracts to sell 48.881 million pounds of American-type cheeses, 111.958 million pounds of butter (82% milkfat) and 21.316 million pounds of whole milk powder to twenty-five countries on five continents. The sales are the equivalent of 875.833 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.

The amounts of dairy products and related milk volumes reflect current contracts for delivery, not completed export volumes. CWT will pay export assistance to the bidders only when export and delivery of the product is verified by the submission of the required documentation.



USDA October 2016 Dairy Product Production Highlights

Total cheese output (excluding cottage cheese) was 1.03 billion pounds, 0.5 percent above October 2015 and 4.8 percent above September 2016.  Italian type cheese production totaled 442 million pounds, 1.0 percent above October 2015 and 3.3 percent above September 2016.  American type cheese production totaled 398 million pounds, 1.4 percent above October 2015 and 5.7 percent above September 2016.  Butter production was 143 million pounds, 3.6 percent below October 2015 but
5.7 percent above September 2016.

Dry milk powders (comparisons with October 2015)
Nonfat dry milk, human - 140 million pounds, up 18.0 percent.
Skim milk powders - 42.9 million pounds, up 8.1 percent.

Whey products (comparisons with October 2015)
Dry whey, total - 84.1 million pounds, up 9.0 percent.
Lactose, human and animal - 89.3 million pounds, up 7.5 percent.
Whey protein concentrate, total - 36.3 million pounds, down 13.8 percent.

Frozen products (comparisons with October 2015)
Ice cream, regular (hard) - 60.1 million gallons, down 5.1 percent.
Ice cream, lowfat (total) - 31.4 million gallons, down 1.7 percent.
Sherbet (hard) - 2.56 million gallons, down 12.5 percent.
Frozen yogurt (total) - 5.06 million gallons, down 8.8 percent.



Smithfield Announces Commitment to Reduce GHG Emissions 25 Percent by 2025
Stewart Leeth, Vice President, Regulatory Affairs and Chief Sustainability Officer

At Smithfield Foods, we are committed to continuously evaluating how we can optimize our operations while taking the lead in addressing environmental concerns. I am pleased to announce a new commitment that tackles greenhouse gas (GHG) emissions.

Today, we became the first protein company to announce a commitment to reduce GHG emissions throughout our entire supply chain 25 percent by 2025. The total reduction is equivalent to 4 million metric tons or removing 900,000 cars from the road.

To accomplish this far-reaching goal, Smithfield has partnered with Environmental Defense Fund (EDF), and will implement new projects and practices across its supply chain, on company-owned farms, in facilities and throughout its transportation network. For a visualization of this goal, please visit smithfieldfoods.com/25by2025.

To achieve this goal, Smithfield will invest in:
-    Improving fertilizer efficiency and soil health to reduce nitrous oxide emissions from grain farms through its collaboration with EDF to create grain supply chain sustainability.
-    Renewable energy and reuse projects on hog farms that utilize technology such as anaerobic digesters and lagoon covers, which will be installed on 30 percent of company-owned farms.
-    Upgrades to refrigeration, boiler and other equipment at processing facilities.
-    Optimizing its logistics network to better manage its animal and product transportation while reducing fuel consumption and carbon emissions.

The Wall Street Journal featured this commitment and our work with EDF both online and in print. The full article is available here.

Our GHG reduction commitment demonstrates our willingness and ability to take a leading role in addressing environmental concerns.

We’re proud of these efforts, their impact on our environment and their role in optimizing our business operations. I welcome you to share this information with others and reach out to me with any questions or to learn more about our commitment to reduce GHG emissions 25 percent by 2025.



Record Crop Yields Lead to Grain Storage Crunch, Higher Profits for U.S. Elevators
Exceptional harvests have created a storage capacity crunch at U.S. elevators and are contributing to a brighter economic outlook for elevator operators, according to a new research report from CoBank.

Record yields of corn, soybeans and grain sorghum are competing for storage space with the large wheat inventories harvested earlier this season. At the same time, futures markets are also incentivizing farmers to store crops well into next year. As a result, the value of grain storage space is on the rise, and storage shortages have been widely reported across the Western Corn Belt, and Central and Southern Plains regions.

“This year’s crop abundance is a welcome change for grain elevators that suffered depressed profits last year,” says Tanner Ehmke, a senior economist at CoBank and author of the new report. “With demand for storage being the highest in recent years, elevators will benefit from collecting more on storage fees in addition to capturing substantial carry in the futures market and the ability to buy basis at a much cheaper level than last year.”

The report notes that storage tightness could persist through 2017, given that U.S. Department of Agriculture forecasts call for the highest wheat and corn ending stocks total since the 1987–88 marketing year. As result of this year’s crop surpluses, interior basis levels for corn and wheat across the U.S. have reached multiyear lows, offering elevators the opportunity to profit on basis appreciation on company-owned grain.

“Grain companies widely figure there is more upside risk to basis this year than downside risk. The return of export demand for corn and an improved export pace for hard red winter wheat, combined with slow farmer selling, is expected to support basis levels for corn, soybeans and wheat in the weeks and months ahead,” said Ehmke.

Also benefiting elevators is increased shipping capacity in the nation’s rail and barge networks. Initially there was concern that U.S. transportation would not be able to handle this year’s bumper crops. But a decline in coal and crude oil shipments has greatly increased rail and barge capacity, allowing sufficient transportation to move the record harvests. Furthermore, after peaking earlier this year, rail freight rates in the secondary market continue to weaken going into the fall shipping season despite heightened export demand. Lower freight cost helps to bolster grain elevators’ bottom lines.

The confluence of all of these factors means elevator operators are looking at a promising economic environment. “Most grain elevators should anticipate higher returns over last year,” notes Ehmke.

However, the increased crop abundance does have some downside for elevators.

“While total storage appears to be sufficient on paper, grain handlers resorted to storing much of this summer’s wheat crop and this fall’s record corn and grain sorghum harvests in ground piles or bunker storage,” said Ehmke. “This raises concerns of increased losses to shrink and spoilage and higher costs from duplicate elevations for blending.”

A synopsis of the report, “Grain Storage and Transportation Logistics in 2016 – 2017” is available at CoBank.com.



The BioAg Alliance launches new yield-boosting microbial seed coating

As part of their commitment to develop and commercialize innovative microbial solutions for farmers through The BioAg Alliance, Monsanto Company and Novozymes today shared details of their newest product, the corn inoculant Acceleron® B-300 SAT. Derived from a fungus found in soil, Acceleron B-300 SAT showed a two-year average yield advantage of more than 3 bushels per acre. The Acceleron B-300 SAT inoculant will be applied to all of Monsanto’s new 2017 corn hybrids sold in the United States.

“Harnessing the power of nature’s microbes, farmers will be able to produce more crops while using fertilizer more efficiently and producing less CO2. This will benefit agriculture, consumers and the environment,” said Colin Bletsky, Novozymes’ Vice President for BioAg. “This is the first product jointly developed by Monsanto and Novozymes, and it shows the kind of innovation we can achieve in The BioAg Alliance. We believe it could be applied to more than 90 million acres by 2025 and become one of the biggest biological products in the ag industry.”

Farmers use seed coatings to protect their crops from yield-robbing threats, to improve plant health, and to increase nutrient availability. Acceleron B-300 SAT increases plants’ ability to take up nutrients and is an improved formulation of the JumpStart® inoculant (Penicillium bilaiae), a product that existed in Novozymes' pipeline before the formation of The BioAg Alliance.

The spores in previous versions of JumpStart last about 120 days on the seed after application. This means that farmers using JumpStart inoculants must treat their seeds within a short time before planting.  With Acceleron B-300 SAT inoculant, scientists from Monsanto and Novozymes have developed a formulation that, when seed is stored in proper conditions, is viable for at least two years on the seed and is generally compatible with other seed coating chemistries. This allows Monsanto to coat the seeds with the microbial product before the seeds are shipped to retailers and farmers. Acceleron B-300 SAT inoculant is the first ‘upstream’ corn inoculant ever developed. 

“Seed applied products – whether microbial or chemistry-based – can and should work together to help growers protect their seed investment and get more out of every acre,” said Juan Ferreira, Global Vice President of Monsanto’s Vegetable Seeds, Seed Applied Solutions and Crop Protection businesses. “Combining the fermentation and formulation expertise of Novozymes’ scientists – along with the innovative approach to seed coating and field-testing capabilities of the Monsanto team – produced a product that will give growers more flexibility in their application decisions and can ultimately result in higher yield.”

The Acceleron® B-300 SAT inoculant will be added to Monsanto’s Seed Applied Solutions portfolio. In addition to applying the product to its DEKALB®, Channel® and regional brands’ new 2017 corn hybrids, Monsanto said it will offer the product to its licensees and distributors.



Rabobank Global Poultry Quarterly Q4 2016: Avian Influenza Concerns Rise Again

The outlook for the global poultry industry in 2017, which is generally positive, is now being challenged by a new wave of avian influenza (AI) outbreaks. This is a most unwelcome development in a global market that was just recovering from the negative impact of the 2015 AI crisis.

New outbreaks—just at the beginning of the Northern Hemisphere winter season, when risk is usually high—certainly have the potential to shake up global market conditions in 2017—both in meat trade and breeding stock trade. This adverse development comes at the same time the industry has started reporting better results, and given the favourable fundamentals. The industry currently has strong market balances in most regions and ongoing low costs, despite pressure from declining red meat prices.

An unwelcome return
The return of avian influenza (AI) is now shaking up global trade conditions and is especially affecting the outlook for Asia, Europe and Africa. It will also be a test for the U.S. industry, after last year’s multiple AI outbreaks. As many European and Asian countries are exporters of meat and breeding stock, this will certainly impact the outlook for the industry, and could shake up meat and breeder trade again.

More differentiation
The rise of chicken concepts will lead to a more differentiated chicken market and also to changing supply and trade conditions. For example, in the EU this will lead to increasing standard chicken production in Eastern Europe, with concepts becoming more important in Western Europe and the U.S.

China’s supply remains tight
The ongoing Chinese supply shortage will continue to affect global market conditions. Imports to China and Hong Kong are expected to remain high, benefiting countries that are allowed to export directly to China, while Chinese consumers will continue to face high prices for specific preferred products, such as feet and wings. The Industry is working on new strategic sourcing initiatives to alleviate some of this supply pressure.

Trade volumes under pressure
Pressured global trade volumes are expected next year, given a continuation of high AI impacts and increasing trade protectionism. China’s import demand and the possibility of improved relations between the U.S.  and Russia are promising, but lower support for TTIP and TPP will have adverse impacts.