Monday February 13 Ag News

USDA TO SURVEY FARMERS’ PLANTING INTENTIONS FOR 2017

What is on the horizon for U.S. farmers in 2017 as they finalize plans for planting this spring? The March Agricultural Survey conducted by the U.S. Department of Agriculture’s National Agricultural Statistics Service (NASS) will survey approximately 84,000 of the nation’s farmers to determine their plans for the upcoming growing season.

“Each year, the agriculture industry eagerly awaits USDA’s Prospective Plantings report, which provides the first survey-based estimates of U.S. farmers’ planting intentions for the year,” said NASS’ Northern Plains Director Dean Groskurth. “The March Agricultural Survey provides the factual data that underpins these projections, making it one of the most important surveys we conduct each year.”

NASS will mail the survey questionnaire in February, asking producers to provide information about the types of crops they intend to plant in 2017, how many acres they intend to plant, and the amounts of grain and oilseed stored on their farms. NASS encourages producers to respond online or by mail. Those producers who do not respond by the deadline may be contacted for a telephone or personal interview.

NASS will compile and analyze the survey information and publish the results in the annual Prospective Plantings report and quarterly Grain Stocks report, both to be released on March 31, 2017.

As with all NASS surveys, the results of this survey will be available in aggregate form only, ensuring that no individual operation or producer can be identified. These and all NASS reports are available online at http://www.nass.usda.gov/Publications/. For more information call the NASS Nebraska Field Office at 800-582-6443.



Farm Credit Services of America and Frontier Farm Credit CEO Announces Retirement

Farm Credit Services of America (FCSAmerica) and Frontier Farm Credit today announced that Doug Stark has informed the Boards of Directors of his plan to retire as president and chief executive officer.  Stark will continue to serve until his successor is named but no later than March 1, 2018.

The Boards are forming a search committee to identify a new CEO.

Stark has served as president and CEO at FCSAmerica since 2005.  Under his leadership, the financial cooperative’s assets have grown from $9.7 billion to $25.8 billion as of September 30, 2016.  Annual net income from 2005 to 2015 grew from $144 million to $514 million.

Under a strategic alliance formed with FCSAmerica in 2015, Stark also serves as president and CEO of Frontier Farm Credit.  The association had assets of $1.9 billion on September 30, 2016, and net income of $31.2 million in 2015.

“It has been an honor to lead our teams and work with our Directors in fulfilling our mission,” Stark said.  “Our associations are as strong as they’ve ever been, and I’m confident our Boards will select a leader who not only continues our record of success but also takes our organizations to new levels of effectiveness and performance.”

Nick Hunt, chair of the FCSAmerica Board, said, “Doug has done a superb job as CEO.  He’s built an unrivaled organization in terms of financial stability, internal culture, and excellence in business processes and technology.  We’re especially well-positioned to continue serving customers as we transition to a new leader.”

Bill Miller, chair of the Frontier Farm Credit Board, added, “Doug’s vision and his passion for serving others are exceptional.  We are grateful for his leadership, his integrity and the legacy he’s created at our associations.”

Stark joined FCSAmerica in 1980 as an assistant loan officer.  Prior to being named CEO, he served for eight years as the organization’s chief credit officer.  He holds a Bachelor of Science degree from the University of Wyoming.



Slump in Farmland Values Continues
Cortney Cowley, Economist, Kansas City Federal Reserve - Omaha Branch
Matt Clark, Assistant Economist, Kansas City Federal Reserve - Omaha Branch

Farmland values and cash rents declined moderately in the fourth quarter of 2016. Bankers across the Tenth District noted that persistent weakness in farm income continued to weigh on farmland values. Although most farmland purchases in the quarter were financed with new debt, the portion of new loans with a cash down payment decreased. The persistent and widespread deterioration in farm income has occurred alongside increasing loan demand and lower repayment rates. These trends are expected to continue in the first quarter of 2017.

Farmland Values and Cash Rents
Farmland values continued to wane in the fourth quarter, according to the Tenth District Survey of Agricultural Credit Conditions. On average, nonirrigated and irrigated farmland values dropped 6 percent, and ranchland values fell 7 percent from the same period last year. These downgrades were the largest since the Great Recession of 2007-09 but were relatively small compared to declines in the 1980s. The largest changes in District states occurred in Kansas and Nebraska. The value of nonirrigated farmland fell 13 percent in Kansas, and irrigated farmland in Nebraska was 8 percent lower. Decreases in ranchland values in Kansas, Nebraska and Missouri were the largest since 2002.

Farmland values fell alongside moderate declines in the volume of farmland sales. A majority of bankers reported that fourth-quarter farmland sales were lower than a year ago, following a similar trend that has occurred since 2013.

Moreover, bankers expected the downward trend in farmland values to continue. Seventy-five percent of bankers responding to the survey indicated they expect the value of nonirrigated farmland to decrease further in 2017, while only 5 percent expected an increase in nonirrigated farmland values (Chart 3). More specifically, a majority of bankers expected a decline of 6 percent to 10 percent in nonirrigated farmland values by year-end 2017.

Amid the slump in farmland values, cash rents also edged down. Cash rents for nonirrigated and irrigated cropland each fell 8 percent while ranchland cash rents fell 12 percent from the fourth quarter of 2015. In fact, cash rents for each type of farmland were down from 2015 in each quarter of 2016. All District bankers surveyed in the fourth quarter expected cash rents to remain unchanged or decline in the first quarter of 2017.

After falling steadily for several quarters, cash rents in the fourth quarter were down sharply from their peak values. In the Mountain States, for example, cash rents on nonirrigated cropland have fallen 40 percent from their peak in the fourth quarter of 2012 to the fourth quarter of 2016.  In Oklahoma, cash rents on nonirrigated cropland have decreased 2 percent from peak values. Although total declines from peak values vary by state, annualized changes are more similar. For producers, a reduction in cash rents could help alleviate some pressure on profit margins because cash rents account for a large share of production expenses. 

Farm Income
Farm income also weakened in the fourth quarter. In fact, farm income fell for the fifteenth consecutive quarter, the longest such streak in survey history. Moreover, 70 percent of bankers expected the downward trend to continue in the first quarter of 2017. Capital and household spending extended declines to 15 and 10 consecutive quarters, respectively. Although the pace of decline lessened somewhat for all three measures, the persistent nature of the downturn continued.

Persistently lower farm income has been felt across the Tenth District. Bankers in each District state have, on average, logged at least six consecutive quarters of declining farm income. Furthermore, at least 50 percent of bankers in each state indicated they expect farm income to decline in the first quarter of 2017.

Evidence of tightening farm income is seen in the declining use of cash down payments on farmland loans. Since 2012, the share of farmland purchases that required new debt financing has remained little changed. However, the portion of farmland purchases made with cash down payments has dropped steadily from 23 percent in 2012 to 14 percent in 2016. Additionally, the portion of farmland purchases with pledged existing equity has increased about 9 percent since 2012, suggesting that persistent declines in farm income have led to reduced liquidity in the farm sector.

Credit Conditions
Credit conditions also weakened alongside lower farm income. Bankers again reported the growing divergence of increasing loan demand and declining repayment rates. In the fourth quarter, half of respondents recorded lower repayment rates and elevated demand for renewals and extensions. Additionally, more than half of respondents expected repayment rates to fall further in the first quarter of 2017, the largest share of bankers reporting a decline since 1991.

The steady declines in repayment rates, however, have not yet led to a significant increase in nonperforming loans at agricultural banks. In aggregate, producers appeared to be selling commodities only when necessary to make loan payments but otherwise storing commodities in the hope of better prices in the future. For example, the volume of corn in storage and the percent of bankers reporting lower repayment rates have been highly correlated in the Tenth District in recent years. The significant amount of commodities being stored may explain why farm loan delinquencies have not risen substantially, even as loan repayment rates have fallen sharply.

Agricultural Lending
Bankers have adopted some risk prevention measures in response to downbeat credit conditions. For example, variable and fixed interest rates increased for all types of farm loans. Notably, the variable interest rate for operating loans increased 0.20 percentage point, reaching the highest level since the third quarter of 2012. Minor movements in the interest rate market may explain a portion of the increase, but it also is likely that bankers have sought higher returns to compensate for increased risk.

In addition to raising interest rates, bankers also reduced the amount of funds available for financing. The fourth quarter was the sixth consecutive quarter in which the availability of funds either declined or remained unchanged. More than 30 percent of bankers also reported an increase in collateral requirements, the largest share in survey history. Though a credit shortage currently appears unlikely, marginal producers may find it harder to obtain financing at the same pace as when farm credit conditions were stronger.

Looking Ahead
In the fourth quarter, most measures of financial stress in the farm sector ticked up. Bankers reported reduced farmland values, lower farm income and weaker credit conditions. To mitigate risk, Tenth District banks increased interest rates and collateral requirements. Although some bankers reported that record yields supported farm income in 2016, another round of above-average yields could contribute to higher stocks, which are correlated with lower commodity prices and depressed repayment rates. Looking to 2017, bankers indicated that a decline in cash rents may provide some relief, but they still expect farm income to remain subdued.



Between Now and Summer Is Mud for Cattle Producers

Even with little winter snow cover to melt the forecast still looks muddy for cattle producers this spring. Most areas in Iowa had significant rain in the late fall and early winter before the ground froze. With the temperature warming up early this year mud is going to persist in cattle lots and pastures throughout the spring. For spring calving operations, mud can be deadly.

Even though the temperature may be warm, calves can still get chilled easily if they can’t dry off. The ground may be thawing and warming up in the day but nighttime temperatures will still drop below freezing, so calves will need a dry place to lie down.

The main problem with mud is that pathogens that can cause calf diarrhea persist in the environment longer and mud facilitates continual exposure to the calf. If the cow has to either lay down in a wet muddy environment or walk through deep mud to get to feed or water she will contaminate her udder with mud and pathogens. The calf is then re-exposed every time they nurse. Prepare now to deal with calf diarrhea this spring. Download the free Iowa State publication "Control of Calf Diarrhea (Scours) in Midwest Beef Cattle Farms"

Mud control
The two main options available at this time for controlling mud would be to haul in rock/gravel to establish a firm base with better drainage or apply lime. Quicklime or hydrated lime will dry up the soil so that it can be compacted. After the lime is applied and allowed to dry for a few hours it should be worked into the ground and then compacted.

Bedding
With or without combating the mud in the lot, bedding is still important but needs to managed properly. Unmanaged bedding can be worse than no bedding as pathogen loads will increase and persist in bedded areas. Cornstalks are one of the most available sources and generally superior than straw or sawdust. The bulky nature of the corn stalk helps water and manure settle while the surface stays drier. If the goal is to maintain a bedded pack, apply new bedding often to keep surface dry. Calves need a drier surface than typically seen in finishing barns. If not establishing a pack, then the bedding should be completely removed and new bedding applied as soon as it becomes damp or soiled.

Move cows often
Congregating cows leads to manure, mud and more pathogens. Keep bedding areas separate from feeding area to encourage cattle to not congregate in one spot. If you have the ability move cows to new areas it will help minimize the impact of mud. A modified Sandhills calving system where you move your pregnant cows and leave pairs behind can help to decrease disease outbreaks as we move through the calving season.

Contact your veterinarian and extension beef specialist to make sure your health and nutrition program are sufficient to provide your cows the best footing to get through the next few months.



Search Begins for Iowa’s Best Burger

Iowa’s cattle producers are asking their fellow Iowans to help find Iowa’s Best Burger in 2017. In this year’s quest, the Iowa Beef Industry Council (IBIC) and the Iowa Cattlemen’s Association (ICA) are encouraging you to nominate your favorite burger, whether it’s gourmet or down-home style.

This is the eighth year the two groups are holding the annual Iowa’s Best Burger contest, which officially kicks off February 13. All nominations must be in the IBIC office by 5 p.m. on March 13, 2017.

“We are in search of Iowa’s Best Burger,” says Brooke German, Director of Marketing for the IBIC. “To qualify to be named Iowa’s Best Burger, the burger must be a 100% beef burger and served on a bun or bread product.  Although burgers are often standard fare, we know from experience that the winners of this contest serve outstanding burgers.”

In order to recognize these great burgers, IBIC and ICA are asking Iowans to nominate their favorite burger for the award, and those nominations can be made by mail, text, or online. Details about the contest, rules, and nomination forms are available on the Iowa Beef Industry Council’s website, www.iabeef.org. Burger lovers can also find a link to the online nomination form at the Iowa Beef Council Facebook page; or by texting BEEF to 313131. Photos of your favorite burger can be shared socially using #IABestBurger.

“There are three ways to nominate your favorite burger,” explains Katie Olthoff, Director of Communications for the ICA. “We are accepting nominations online at www.iabeef.org; by texting BEEF to 313131, which will provide a link to the online voting page, or a paper nomination can be mailed to the IBIC office.”

The nomination period ends March 13, 2017. German noted that the top 10 restaurants with the most votes are eligible for the title of Iowa’s Best Burger. The top ten finalists will be announced on March 20. Finalists will receive a certificate and will be eligible for the secret taste-test of contest judges. The 2017 Best Burger in Iowa will be announced on May 1 and will kick-off May Beef Month.

"The Best Burger contest uses checkoff dollars to showcase some of Iowa's best restaurants, and obviously, best burgers! Every year, we have some loyal followers who make it a point to visit the top 10 restaurants and taste the best beef patties Iowa has to offer," says Steve Rehder, chairman of the Iowa Beef Industry Council.

In 2016, more than 6,200 nominations for 311 restaurants were received in the contest. The final winners in previous years are: 2016 – The Chuckwagon Restaurant, Adair; 2015 – The Cider House, Fairfield; 2014 – Brick City Grill, Ames; 2013 – 61 Chop House Grille, Mediapolis; 2012 – Coon Bowl III, Coon Rapids; 2011 – Rusty Duck, Dexter; 2010 – Sac County Cattle Company, Sac City.



Registration Now Open for April 2017 Pork Management Conference

The National Pork Board will host its annual Pork Management Conference, April 19-21, in Nashville, Tennessee.

The annual conference, moved to April this year, will accommodate a diverse set of experts from across the U.S. The 2017 conference will address current business trends and challenges facing the U.S. pork industry. Through presentations, breakout sessions and networking, attendees will gain important insight on the pork industry, its challenges and financial management practices that improve the performance and efficiency of pig farming.

“The Pork Management Conference is more than an industry meeting but an interactive experience,” said Andrew Reinecker, chair of the Checkoff’s Producer and State Services Committee and a pig farmer from York Springs, Pennsylvania. “The engagement between the guest presenters and experts and those working in the industry offers producers an opportunity to gain knowledge from different areas, ask questions and implement this information on their farms.”

In addition to the general sessions open to all attendees on Wednesday, Thursday and Friday mornings, two concurrent afternoon sessions are planned on Thursday, April 20. Topics include benchmarking, safety programs, emerging social media, accounting, tax updates and price discovery, and results from the recent industry employee compensation survey.

The registration fee is $425 per person through March 31 and increases to $475 beginning April 1.  A registration form and a detailed list of events are available at pork.org/pmc.



Checkoff Debuts Revamp of Beef U Online Training Program for Supply Chain

The beef checkoff is launching a newly revamped Beef University – or Beef U – a free, online training program focused on the latest information, insights and research on marketing and selling beef. Beef remains one of America’s favorite proteins, and with supplies on the rise for 2017, this tool serves as a complement to supply chain staff training aimed at helping capitalize on beef’s profit potential.

The revamped Beef U addresses the latest data and industry insights on hot topics in a new condensed, more user-friendly format. Each module can be completed in 15 to 20 minutes and includes a brief quiz at its conclusion. Once a user completes a module, they can access resources related to the topic.

“The new format encourages learner engagement while getting right to the meat of the topics presented,” said Buck Wehrbein, a cattle feeder for Mead Cattle Company, LLC and co-chair of the checkoff’s innovation subcommittee. “The information presented in this updated site represents the latest industry knowledge, so we encourage everyone, even those who have completed Beef U in the past, to check out these new courses.”

Developed for supply chain partners, such as packers, processors, grocery retailers and foodservice operators, but open to anyone interested in learning more about beef, the program provides staff training and professional development resources on current topics including:
-    Raising Beef:  Learn how beef is raised, information on the beef production cycle from farm-to-fork, the beef community’s commitment to animal welfare, and strategies to help answer customer questions about beef production
-    Nutrition and Health: Learn how beef deliciously delivers important nutrients, such as protein, iron, zinc and B-vitamins, as well as the latest findings on beef labeling and how to market beef’s nutritional story within grocery retail stores and restaurants
-    Beef Basics and Cuts: Learn the fundamentals of beef inspection and grading,  flavor, tenderness and composition, as well as how the beef community is answering consumer demand for beef that fits their changing lifestyles and details on various beef cuts and cooking methods that enhance the beef eating experience
-    The Modern Consumer: Learn the latest research on how today’s consumer approaches shopping, meal preparation and dining out, as well as what drives and impacts beef purchasing behavior, information that can help boost operators’ bottom lines

Beef U is designed to assist management teams in educating and training their employees on how best to market and sell beef. An informed and knowledgeable staff – particularly those who interact directly with consumers – leads to improved customer service and can translate to an improved bottom line.

The Beef University training program is free, but users will be prompted to register before they can view the content and become a member of the Beef U online community. Private groups can be created for companies seeking to track staff progress. For more information, visit https://www.beefu.org/.



House Ag Committee to Review State of the Farm Economy

The federal crop insurance program has functioned as the most important risk management tool available to producers where farmers pay a premium for their policies, just like any other type of insurance. The last Farm Bill was written when the economic conditions were not as harsh as what farmers are currently facing where wheat prices have dropped far below loan rates in some areas.

With these harsh economic conditions for wheat producers, the National Association of Wheat Growers looks forward to the upcoming House and Senate hearings in preparation for the 2018 Farm Bill.

The House Ag Committee will host two public hearings 'Rural Economic Outlook: Setting the Stage for the Next Farm Bill' as well as the 'Pros and Cons of Restricting SNAP Purchases' on February 15th and 16th at 1300 Longworth House Office Building.

Both of these hearings will have implications for the Farm Bill reauthorization process, particularly with the economic hearing laying some context for the need for a farm safety net.

Additionally, the Senate Agriculture Committee will host its first Farm Bill field hearing, 'Hearing from the Heartland,' in Manhattan, Kansas on Thursday, February 23rd which will be webcast live at ag.senate.gov.



5 Signs Consumers Just Might be Falling for the Food Industry - CFI Consumer Trust Research 

February has long been celebrated as a month of romance, but the relationship between consumers and the U.S. food industry isn’t always smooth sailing. A growing curiosity and skepticism about how food is produced and who’s producing it leaves some consumers with cold feet, wondering if they can trust that the people producing their food are doing what’s in their best interest.

But the latest consumer trust research from The Center for Food Integrity (CFI), “Inside the Minds of Influencers: The Truth About Trust,” shows five positive trends that point to a blossoming relationship.

1. "Is the food system headed in the right direction or down the wrong track?" Fifty-five percent said right track. That’s up 15 percent from the previous year – a significant upward trend. It was just 34 percent in 2013.

“While we didn’t ask why they believe it’s headed in the right direction, we assume that today’s consumer is pleased with the food industry and its willingness to provide the foods they’re looking for – from high-protein and gluten-free products to organic foods and “clean” ingredients,” said JJ Jones, director of development for CFI.

Each year, CFI surveys consumers on more than 30 trends in food and agriculture, asking them to rate statements on a scale of 1 to 10 where 1 to 3 is low agreement, 4 to 7 is moderate agreement and 8 to 10 is strong agreement.

2. “I have access to all of the information I want about where my food comes from, how it’s produced and its safety.” Forty percent strongly agree. That’s a significant jump from just 17 percent when the survey began in 2008. It shows the food industry has stepped up to engage and provide consumers access to the information that’s feeding their curiosity.

3. “I am confident in the safety of the food I eat.” Nearly half strongly agree, a big jump from the 35 percent seen the year before.

4. “I trust food produced in the U.S. more than I trust food produced outside the U.S.” A significant majority, 59 percent, strongly agree. That’s up from 51 percent from the previous survey.

5. "U.S food is among the most affordable in the world today.” Forty-four percent strongly agree. This is the strongest level of agreement with this statement since it was first posed in 2007. Strong agreement rose 14 percent from the previous survey.

The numbers are promising, but it’s certainly not a green light for the food industry to take its relationship with consumers for granted. There’s always room for improvement.

CFI research shows – and Dr. Phil would likely agree – they expect and deserve transparency, and they want the good, the bad and the ugly.

“They also want the ability to engage, to be heard and acknowledged, and get straight answers to their questions,” said Jones. “And consumers want to know they can trust the food industry, and earning trust starts with consumers knowing that you share their values when it comes to important issues like food safety, health, animal well-being and the environment.”

The CFI trust model demonstrates that communicating with shared values is three-to-five times more important to building trust than simply sharing facts and science.

Earning trust is a long-term commitment, but well worth the effort, said Jones. “You simply can’t have a meaningful relationship without it.”  

A summary of the research, “Inside the Minds of Influencers: The Truth About Trust,” is available for download at www.foodintegrity.org. The research identifies influential consumer groups and the motivations that not only dictate food trends, but drive conversations that impact the decisions of others as they make choices at the grocery store or form opinions about the products, processes, people and brands that define today’s food system.



What about Trade?
Brenda Boetel, Professor, Dept of Ag Econ, University of Wisconsin-River Falls

On Friday, February 10, 2017, Japanese Prime Minister Shinzo Abe met with President Trump on several issues including potentially laying the groundwork for a bilateral trade agreement. With the withdrawal from the Trans Pacific Partnership, a bilateral agreement with Japan is important to the US cattle industry.

US beef exports are expected to grow 5.6 percent in 2017 and the US is expected to retain the position of 4th largest exporter in the world, behind Brazil, India and Australia.  In 2016, almost 26 percent of total US exports went to Japan, 18 percent to South Korea, 15 percent to Mexico and 12 percent to Canada.  Uncertainty regarding trade policy exposes the beef and cattle industry to less favorable trade policies and potentially a loss of market share in some of these most profitable markets.

The US gained market share in Japan, South Korea and Mexico in 2016 partially due to the lower exports from Australia.  US exports to Japan were valued at almost $1.5 billion, while exports to South Korea and Mexico were valued at $1 billion and $790 million, respectively.  Total beef and hide exports added almost $240 of value to the finished animal in 2016; while almost $96 of that value came from beef exports to only Japan, Mexico and Canada.  I mention these three countries not only because they are where a large percentage of US beef exports go, but also because these three countries will be impacted directly by changes in trade policy.

The US faces a 38.5% tariff on fresh and frozen beef going into Japan, as compared to the 9% tariff that Australia faces.  The cattle industry needs to be concerned about whether that market share can be maintained once Australia's beef herd has increased. With the withdrawal of the US from the Trans Pacific Partnership, a bilateral agreement with Japan would help to secure a critical market for US beef and increase overall beef demand.  Any agreement to lower the tariff the US faces on beef going into Japan will benefit cattle producers in the long-run.

Renegotiation of the North American Free Trade Agreement (NAFTA) will expose the US cattle industry to uncertainty in two of our major beef export markets, Mexico and Canada.  And let's face it, recent conversations with Mexican President Enrique Pena Nieto have not necessarily built good will. Pena Nieto has sworn to walk away from NAFTA than accept a new deal that is worse than the current one.  That situation that would not benefit US cattle producers.



Dairy, Ag Groups Urge President Trump to Raise New Canadian Milk Pricing Scheme Issue in Meeting with Prime Minister Trudeau

The U.S. dairy sector is urging President Donald Trump to discuss Canada’s protectionist milk pricing policy during Monday’s meeting with Prime Minister Justin Trudeau.

The National Milk Producers Federation (NMPF), the U.S. Dairy Export Council (USDEC), the International Dairy Foods Association (IDFA) and the National Association of State Departments of Agriculture (NASDA) are calling the issue “one of the most sensitive and urgent topics complicating the relationship between the two countries.” The White House will host Trudeau in Washington today to discuss matters related to trade policy and the renegotiation of NAFTA, among other issues. According to the four groups, the two leaders need to devote time to addressing an imminent change in Canada’s milk pricing policy that would further antagonize industry relations between the United States and Canada.

The pricing scheme, already implemented in Ontario last year and slated to be used by Canada’s other provinces this year, is expressly intended to slash milk imports from the United States. The policy will also enable Canada to sell dairy ingredients below cost in international markets, in effect dumping the product at below cost in competition with U.S. dairy exports. The Ontario program has already cost U.S. companies $150 million in exports, thereby harming the American dairy farmers, dairy plant employees and rural communities that depend on the benefits of those foreign sales.

Implementation of this pricing measure “comes at a time when compliance with the letter and spirit of trade agreements is of paramount importance, both here in Washington and around the world,” said NMPF President and CEO Jim Mulhern. “Despite this, Canada still wants to move ahead with a policy that clearly violates its trade agreements with our country. We hope President Trump will remind Prime Minister Trudeau how important it is that Canada honor its commitments.”

The importance of U.S.-Canada trade issues was also raised last week in a meeting between House Speaker Paul Ryan and Canadian Foreign Minister Chrystia Freeland.  Ryan said after their meeting Tuesday that dairy market access is a key issue the two nations must improve upon.

Tom Vilsack, president and CEO of USDEC, said “American dairy producers and processors want a fair and level trade relationship, and have deep concerns about proposed changes to the Canadian supply-side management system, which are designed, in part, to discourage U.S. exports.”

Michael Dykes, D.V.M., president and CEO of IDFA noted: “Canada’s intentional and continued flouting of its trade obligations effectively blocks imports of U.S. ultra-filtered milk. What’s more, existing Canadian tariffs that range from 200 percent to more than 300 percent on other U.S. dairy products are unacceptable. Exports are vitally important to the health of the U.S. economy, especially in the rural heartland of our country, and we urge President Trump to stress the importance of market access for U.S. dairy products during his meeting with Prime Minister Trudeau.”

The organizations believe that this meeting between President Trump and Prime Minister Trudeau offers an ideal opportunity for the dairy pricing policy to be on the table during their discussion.

“The states are deeply troubled by recent actions taken in Canada, at the provincial and national level, which raise serious concerns about Canada’s compliance with international trade obligations,” said NASDA CEO Dr. Barbara P. Glenn. “We encourage President Trump to make this a top priority for his administration and we urge Prime Minister Trudeau to ensure Canada meets its obligations.”

Holding Canada to its dairy trade agreements has remained a strong focus for NMPF, USDEC and IDFA over the last year. Last week, a group of 17 dairy companies representing dairy farmers and processors from all over the United States asked governors in 25 states to urge Canadian policymakers to halt the national implementation of the milk pricing system. NMPF, USDEC, IDFA and NASDA also raised the matter with Trump last month before he assumed office.



Rising Demand for Organic and Non-GMO Grains Outpaces U.S. Production

Increasing consumer demand for organic and non-GMO foods led to a sharp rise in organic grain imports in 2016—prompting food manufacturers to explore new incentives for U.S. growers transitioning to organic production, according to a new report from CoBank. While U.S. production of non-GMO crops has risen, domestic production of organic corn and soybeans remains well short of demand.

“Domestic supplies of non-GMO corn and soybeans increased steadily in 2016, as growers converted acreage and captured moderate market premiums,” says Dan Kowalski, director of the Knowledge Exchange Division at CoBank. “Transitioning to organic production, however, is a multiyear, risk/reward calculation that’s likely holding some U.S. growers back from taking advantage of the market opportunity.”

Imports of organic grains, particularly corn, from countries such as India, Ukraine, Romania and Turkey surged in 2016 to meet the burgeoning U.S. demand for organic food products. Organic corn imports more than doubled from 2015 to 2016 and accounted for nearly one-half of the U.S. organic corn supply. The domestic shortfall for organic soybeans was even greater, with roughly 80 percent of soybeans supplying the U.S. organic market imported in 2016.

Animal feed for organically raised dairy, beef, pork and poultry products and ingredients used in organic consumer packaged goods are the two principal markets for organically produced grains. For U.S. farmers to satisfy this growing appetite for organic foods, analysts estimate between one and five million U.S. acres would have to be transitioned to organic production.

“Apprehension among growers is likely fueled by the three-year transition period before their crops can be certified as organic,” says Kowalski. “Remaining profitable during that period is often a struggle and, coupled with the volatility of organic price premiums in 2016, grower uncertainty about the sustainability of financial rewards for transitioning to organic is warranted.”

The report notes that some leading food manufacturers are finding new and innovative ways to incentivize growers for transitioning to organic production to help bolster domestic supply and reduce reliance on imports. Those include free agronomic services to contract growers and premiums for goods grown on transitional acres. A new transitional certification is also available that growers and food companies can use to market their products for a price somewhere between that of organic and nonorganic crops.

“Proximity to local markets is another critical consideration for prospective organic and non-GMO growers,” adds Kowalski. “If local buyers don’t exist, the cost of logistics involved with transportation can quickly erode pricing premiums, leaving little incentive to grow specialty crops.”

According to Kowalski, demand for both non-GMO and organic crops will continue to grow and, ultimately, monetary incentives will determine whether U.S. growers choose to step in and close the supply deficit. For growers in close proximity to a market and with options for multiyear contracts, non-GMO and organic production might be worth considering, Kowalski said.

A synopsis of the report, “Organic and Non-GMO Specialty Grains: Assessing the Impact and Opportunity for Growers” is available at CoBank.com.