Thursday August 17 Ag News

August Rural Mainstreet Index Falls Below Growth Neutral:  More than Half of Bankers Report Drought Impacts

After plummeting in July, the Creighton University Rural Mainstreet Index increased slightly for August, but remained below the 50.0 threshold according to the latest monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.  

Overall: The index, which ranges between 0 and 100, increased to a weak. 42.2 from 40.7 in July which was the index’s lowest level since November of last year.

“We continue to record economic weakness stemming from low agriculture commodity prices and fallout from the drought in parts of the region. Approximately 57.6 percent of bankers reported drought conditions were having a negative impact on agriculture production in their area, “said Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton University's Heider College of Business. 

Farming and ranching: The farmland and ranchland-price index for August rose to 43.0, its highest level since July 2014 and up from last month’s 36.6. This is the 45th straight month the index has fallen below growth neutral 50.0.

This month, and in August 2016, bank CEOs were asked the value of cash rents for cropland (not pasture) in their area. On average bankers reported a yearly cash rent of $241 per acre, which is down from 12 months earlier when bankers indicated $252 per acre. This represents a decline in yearly per acre cash rents of 4.3 percent over the past year.  

On average bankers expect farmland prices to decline by another 3.5 percent over the next year.  This is an improvement from this time last year when bank CEOs, on average, projected a 6.9 percent decline.

The August farm equipment-sales index increased to 25.6 from 20.0 in July. This marks the 48th consecutive month the reading has remained below growth neutral 50.0.
 
Below are the state reports:
Nebraska: The Nebraska RMI for August inched forward to 42.9 from July’s 42.1. The state’s farmland-price index expanded to 43.5 from last month’s 37.5. Nebraska’s new-hiring index stood at a solid 55.2, but down from 62.5 in July.

Iowa: The August RMI for Iowa expanded to 42.3 from 41.7 in July. Iowa’s farmland-price index for August advanced to a weak 43.1 from 37.3 in July. Iowa’s new-hiring index fell to 52.5 from July’s healthy 60.7.

Each month, community bank presidents and CEOs in nonurban agriculturally and energy-dependent portions of a 10-state area are surveyed regarding current economic conditions in their communities and their projected economic outlooks six months down the road. Bankers from Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming are included. The survey is supported by a grant from Security State Bank in Ansley, Nebraska.

This survey represents an early snapshot of the economy of rural agriculturally and energy-dependent portions of the nation. The Rural Mainstreet Index (RMI) is a unique index covering 10 regional states, focusing on approximately 200 rural communities with an average population of 1,300. It gives the most current real-time analysis of the rural economy. Goss and Bill McQuillan, former chairman of the Independent Community Banks of America, created the monthly economic survey in 2005.



Beef expo scheduled for Sept. 9-10-Ag complex once again event’s site

Members of the Agri-Business Council of the Norfolk Area Chamber of Commerce under the direction of co-chairs Susan Risinger Green and Jean Schmeckpeper and show organizers Kurt Dostal, Tony Schwartz and Kally King are readying the final details for one of the state’s premier 4-H and FFA market beef shows on Saturday and Sunday, Sept. 9-10.

The 68th annual Norfolk Beef Expo will again be held at the Northeast Community College Chuck M. Pohlman Ag Complex near the intersection of Highway 35 and Benjamin Avenue. Any member of a Nebraska 4-H club or FFA chapter — who is at least 8 years of age and not older than 19 years of age on Jan. 1, 2017 — is eligible to participate. Each showman may exhibit two market calves, with a $25 entry fee per head.

Steer and heifer entries for the Norfolk Beef Expo will be received from 4 to 6 p.m. only on Saturday, Sept. 9. 

Based on its popularity the past three years, this year’s expo will include a team fitting competition. The contest — sponsored by Lakeside Equipment Company and Sullivan Supply — will be at 6:30 p.m. Saturday, Sept. 9.

The public is welcome to attend judging of the calves by class beginning at 9 a.m. on Sunday. Selection of the junior, intermediate and senior showmanship winners will follow, with cash prizes awarded to the top three showmen. 

Selection of the grand and reserve champion market heifers and steers begins at 5 p.m., Sept. 10, followed immediately by the premium auction. The grand and reserve champion steers and heifers are required to be sold. The premium will be on a per-head basis. Each exhibitor is limited to one entry in the premium auction. The public is also invited to attend and participate in the auction. 

Entry forms must be completed and signed by the county Nebraska Extension educator or FFA adviser and sent to the Norfolk Area Chamber of Commerce office. Entries must be postmarked no later than Friday, Sept. 1.  Entries also can be hand-delivered to a beef expo committee member or to the Norfolk Area Chamber office by Tuesday, Sept. 5.  Details are at norfolkareachamber.com/chamber_event/beef-expo. 

As an added educational component for the youths, this year’s expo will again include a carcass contest with the entries to be evaluated on both quality grade and yield grade.

Prize money will be awarded to the top five exhibitors thanks to sponsors Reigle Cattle Company, LLC and Bank First. This year’s beef expo corporate sponsors are Progressive Nutrition, Sapp Bros. Petroleum, Aschoff Construction, Nucor, Agrex Inc., and Northeast Community College Agriculture Department.



ADDING GRASS TO THINNING ALFALFA
Bruce Anderson, NE Extension Forage Specialist

               Thin alfalfa stands can be rejuvenated by interseeding grasses and converting them to pasture or haying a grass-alfalfa mixture.

               Most alfalfa fields start to lose stand and production ability after cutting hay for several years.  Sometimes winterkill thins stands.  As your stands begin to get thin, consider interseeding grasses into this thinning alfalfa.  Not only might you extend the useful life of your alfalfa field by several years, you also will develop excellent hay or grazing for your livestock.

               Orchardgrass is the grass most commonly interseeded into alfalfa, but other grasses like endophyte-free tall fescue, meadow brome, festulolium, and wheatgrasses also can be used.  In fact, if the field will be used as pasture, a mixture of several grasses may be best since it adds diversity to your animals' diet.

               Interseeding immediately after a mid-August to early September hay harvest can be excellent timing if you have moisture to start the new seedlings.  Alfalfa regrows more slowly this time of year so it won’t compete as aggrossively with your new grasses.  Still, if your alfalfa is relatively thick, you probably will need to take another cutting in about four weeks, or as soon as the alfalfa starts to form a full canopy.  This allows sunlight to continue to reach new seedlings below the alfalfa.

               Next spring you will need to judge how well established your new grasses have become.  If they seem a little weak, cut hay real early to again open the canopy for better light penetration.  After that you should be able to hay or rotationally graze as you choose.

               Interseeding grass into existing alfalfa takes timely haying and planting, but both land and livestock will improve with your efforts.



Experts highlight high-octane ethanol future at ACE conference

The American Coalition for Ethanol (ACE), which concluded today, hosted a panel dedicated to discussing the shift to high-octane fuel. The panel of three experts checked some of the most important boxes to make the transition of motor fuel to high-octane ethanol blends—infrastructure, engine testing and regulations.

Trey Binford, product manager of North America Dispensers at Wayne Fueling Systems, discussed the infrastructure component. He explained why Wayne differentiated itself as the first equipment manufacturer to exclusively offer fuel dispensers UL-listed for E25 to gasoline retailers in North America. They manufacture two different ethanol dispensers: Ovation and Helix. Binford explained some pointers with conference attendees he shares with retailers.

“It’s important to have ethanol represented at all pumps rather than just a few,” Binford says. “Building a consistent experience for the consumer is good.”

Brian West works at the Fuels, Engines and Emissions Research Center at Oak Ridge National Laboratory and shared the testing underway on engines to help demonstrate the benefits of high-octane fuel to help automakers meet fuel economy and greenhouse gas (GHG) reduction targets.
“Engines can make more torque and power with higher octane fuel, and ethanol is very effective at boosting the octane number,” West said. “A new high-octane fuel could make better use of ethanol’s properties, moving the U.S. toward multiple goals.”

Adam Gustafson, partner at Boyden Gray & Associates, rounded out the panel discussing regulation. Gustafson is currently helping lead an effort to navigate the regulatory roadways which will enable automakers and consumers to experience the benefits of high-octane fuel and shared an update on this effort’s progress with conference attendees.

“It’s an important moment for the ethanol industry,” Gustafson said. “We’re erasing infrastructure barriers and providing the data we need for higher ethanol fuels in the marketplace. All that remains now is to remove regulatory barriers that stand in the way of mid-level ethanol blends. Now, EPA is inviting comment on the role high-octane fuel can play in meeting CAFE-GHG standards. This is a game-changing opportunity.”



 Smith Applauds Trump Administration Agreement to Send U.S. Pork to Argentina

Congressman Adrian Smith (R-NE) released the following statement today after the Trump administration finalized an agreement to restore trade access for U.S. pork to Argentina for the first time since 1992.

“More good news for Nebraska agriculture today, as the Trump administration continues opening more markets to producers,” Smith said.  “In June, U.S. beef producers gained access to China’s market, bringing an end to a 14-year ban.  Now, our pork producers can sell to Argentine consumers for the first time in 25 years.

“I applaud these efforts to bolster U.S. agriculture.  It is vital we continue working to increase market access for producers.”

Smith serves on the Ways and Means Committee, which has jurisdiction over trade, and is the founder and co-chairman of the Modern Agriculture Caucus. 



Ricketts, Ag Director Celebrate Opening of Argentina to U.S Pork

Today, Governor Pete Ricketts and the Nebraska Department of Agriculture (NDA) Director Greg Ibach issued statements following news that the Trump Administration has reached an agreement with Argentina that opens another market for U.S. agricultural products.

“President Trump’s deal to reopen Argentina to U.S. pork exports is good news which will help grow agriculture and the pork industry in Nebraska.  Nebraska’s number one industry relies on strong export markets for our high quality products, such as the pork our farmers and ranchers raise,” said Governor Ricketts.

“This new opportunity for Nebraska pork producers provides access to new consumers for the high quality pork raised in Nebraska,” said NDA Director Greg Ibach.  “Other countries in Central and South America have already shown strong demand and this can only enhance the sales in the region.”

“The opening of pork markets such as Argentina helps our Nebraska pork industry by providing additional customers for our products.  Pork is the number one protein product consumed worldwide.  Our family farmers are proud to help supply these international markets,” said Al Juhnke, Executive Director of the Nebraska Pork Producers Association



Fischer: U.S. Deal with Argentina Will Expand Opportunities for NE Pork Producers

U.S. Senator Deb Fischer (R-Neb.) released the following statement today after President Donald Trump announced a new U.S. deal to export American pork to Argentina:

"I am pleased the administration has negotiated a deal with Argentina, which will expand market access opportunities for Nebraska’s pork producers. Nebraska ranks sixth in the nation in hog production and this new agreement will provide consumers in Argentina with high quality pork from our state. I applaud the administration for following through on its promise to get better deals for our producers who work hard to feed the world every day." 



U.S. PORK GAINS LONG-AWAITED ACCESS TO ARGENTINE MARKET

The National Pork Producers Council (NPPC) applauds the Trump administration for negotiating U.S. pork access to the Argentine market. Argentina was among several countries with non-science based barriers to U.S. pork imports. With today’s White House announcement, trade-dependent U.S. pork producers now have unfettered access to this large pork-consuming nation.

“U.S. pork producers are the most competitive in the world and we have long sought the opportunity to provide affordable, high-quality pork in Argentina,” said NPPC President Ken Maschhoff. “We thank Secretaries Perdue and Ross, and their teams at the USDA and the Department of Commerce, as well as U.S. Trade Representative Lighthizer and his team, for their diligent work to win Argentine market access.”

Maschhoff added, “We also thank Vice President Pence for his efforts, including a recent visit to Argentina, to move a trade agreement that promises significant U.S. economic benefits over the finish line.”

The U.S. pork industry, which has been the world’s largest exporter of pork over the last 10 years, depends on exports for growth. Exports added $50 -- representing 36 percent of the $140 average value of a hog -- to every U.S. hog marketed in 2016. NPPC continues to urge the administration to negotiate market access in other countries, such as India and Thailand, that remain closed to U.S. pork due to non-science based trade restrictions.



South Korea Lifts U.S. Poultry Ban

The U.S. Department of Agriculture (USDA) announced today that the government of South Korea has lifted its ban on imports of U.S. poultry and poultry products, including fresh eggs. Korea had imposed the ban in response to a recent detection of highly pathogenic avian influenza (HPAI).

On August 11, the United States notified the World Organization for Animal Health (OIE) that it is now free of HPAI. This notification removed any justification for U.S. trading partners to restrict imports of U.S. poultry due to HPAI concerns. Currently, Korea imposes a ban on all U.S. poultry in response to any HPAI detection, but USDA continues to work with Korean officials towards limiting any future import restrictions to the affected area, consistent with OIE guidelines.

“The United States has the strongest avian influenza surveillance program in the world and we were at once able to quickly identify, confine, and control this most recent disease outbreak. Our hope is that Korean officials will recognize that our system works and will move towards a regional approach in the event of any future findings of bird flu,” said U.S. Agriculture Secretary Sonny Perdue. “South Korea is one of our best trading partners, and we want to continue being their most dependable supplier of high-quality food and farm products. Korea’s lifting of its most recent ban is an important move for our poultry and egg industries, but it is still just the first step.”

In 2014, the last full year without any HPAI-related trade restrictions in place, South Korea purchased $122 million in U.S. poultry products, including eggs, making it the United States’ tenth-largest market. South Korea’s imports from all sources exceeded $350 million in 2016, but only $39 million came from the United States.

Korea has also announced a temporary measure that will allow U.S. eggs and egg products to enter the country duty free in the face of a shortage of domestic supplies. Earlier this year, USDA worked with Korea’s agriculture ministry to reopen the market for U.S. eggs and egg products, but imports were again restricted after the HPAI detection in Tennessee. Year-to-date exports through June have totaled $12 million, up nearly $10 million compared with the same period last year.



Farm Journal's Midwest Crop Tour Kicks Off Next Week

The 25th annual Farm Journal Midwest Crop Tour kicks off next Monday, August 21, with participants taking on the challenging task of gauging this year's corn and soybean crops. Weather extremes at both ends of the spectrum this season, from drought in some parts of the Midwest to too much moisture in others, are impacting crop performance and will be reviewed each evening as scouts share their daily crop reports.

"Our job is to peg potential yield numbers to these really varied conditions we're seeing out there this summer," says Chip Flory, Farm Journal Pro Editorial Director. "Our measurements are critical, but it may actually be the qualitative observations of our scouts that will prove most important to people."

During Crop Tour, a group of more than 100 growers, industry experts and media reporters will scout about 2,000 fields in seven Midwest states during the four-day event, Aug. 21-24. The "Eastern leg" of the tour begins sampling in western Ohio, working its way across Indiana, Illinois, eastern Iowa and then southern Minnesota. The "Western leg" begins in southern South Dakota, then goes across eastern Nebraska, western Iowa and into southern Minnesota.

A summary of the Tour's findings will be presented at the Rochester, Minn., Event Center the evening of Aug. 24. Thursday's grand finale also includes a taping for the weekend edition of "U.S. Farm Report" and is followed up with Pro Farmer's national corn and soybean yield predictions and market impact analysis in Friday's Pro Farmer newsletter.



Farm Management Specialists Answer Extreme Weather Questions

Iowa farmers have seen their fair share of extreme weather conditions during the 2017 growing season. Farmers in the southeast and northwest portions of the state are dealing with drought, while those in the north and northeast have seen extensive flooding.

Losses due to drought and flooding are insurable under multiple peril crop insurance, and the August issue of Ag Decision Maker seeks to answer frequently asked questions about crop insurance. Iowa State University Extension and Outreach farm management specialists Charles Brown and Steve Johnson authored the article.

3 cobs of field cornApproximately 90 percent of the 23.5 million of acres of corn and soybeans planted in 2017 are insured using Revenue Protection multiple peril crop insurance. Once an insured farmer recognizes crop loss they should notify their insurance agent within 72 hours of discovering the damage. Despite damage to a crop, farmers should continue caring for it using “good farming practices” and get permission from the insurance company before destroying or putting any crop to an alternative use.

The spring price for calculating the minimum guaranteed revenue for corn is $3.96 per bushel and $10.19 per bushel for soybeans. This will be calculated again in October to get a fall or harvest price. If the harvest price is higher than the spring price, the harvest price will be used to calculate the guaranteed revenue. There is a maximum of twice the projected 2017 price for the harvest price; $7.92 per bushel for corn and $20.38 per bushel for soybeans.

Provided their claim is for more than $200,000, farmers will be asked to verify their production, which includes a three-year audit.

Additional questions answered in the article include:
-    What is the difference among insurance units?
-    When will farmers be receiving indemnity payments for their crop insurance losses?
-    Can indemnity payments for drought be deferred for income tax purposes until 2018?

Further resources and information on issues related to drought can be found at the ISU Extension and Outreach “Dealing with Drought” webpage....https://www.extension.iastate.edu/topic/dealing-drought-2017.



NGFA, Ag Transportation Working Group, urge STB to hold CSXT accountable for service failures

The Agricultural Transportation Working Group - a diverse network of national farm, commodity group and agribusiness organizations, including the National Grain and Feed Association (NGFA) - called upon the Surface Transportation Board (STB) today to aggressively continue its efforts to examine the underlying reasons for the precipitous, deteriorating rail service being provided by CSXT.

"We are concerned that CSXT's already-chronic service problems may only worsen as demand for rail service increases during the fall peak season, which will include near-record grain and oilseed harvests," states the letter, which was signed by 18 national producer, commodity and agribusiness organizations.

The groups noted that America's transportation infrastructure - including freight rail - is an "essential component of U.S. agriculture's world-class productivity and competitiveness, which contribute substantially to American job creation, U.S. economic growth and world food security."

The letter outlined a litany of significant service-related problems experienced thus far by CSXT's agricultural rail customers. The organizations asked the agency to continue to press the railroad for its plan to rectify the harm it has caused to its customers over the past few months and to restore service to levels that comply with CSXT's statutory obligations to provide reasonable service upon reasonable request.

The working group expressed its appreciation for the STB's action in sending its July 27 letter to CSXT President and CEO E. Hunter Harrison requesting that senior CSXT railroad officials engage in weekly conference call updates with the agency's Rail Customer and Public Assistance Office, as well as for its follow up letter sent Aug. 14 to Harrison expressing continued concern and requesting specific data addressing various service-performance indicators. However, the organizations urged the STB to take additional actions to facilitate the restoration of service before the peak fall shipping season.

"We respectfully believe that the gravity and widespread geographical nature of CSXT's service disruptions warrant further action by the (STB) to determine the underlying causes, the short- and long-term implications to rail customers, and the adequacy of any service recovery plan(s) being contemplated by CSXT," the letter states.

Among several specific requests, the groups asked the STB to hold CSXT accountable to meet specific, measurable targets for restoring service under its recovery plan, to explore ways to provide additional transparency regarding substantive information on CSXT's service performance that would be valuable to rail users in their logistics planning, and to promptly resume activity on existing Board proceedings related to enhancing rail competition, particularly to replace the agency's outdated rules governing reciprocal switching that could help alleviate some of the harm incurred by shippers captive to an incumbent railroad by enabling them to receive service from an alternative carrier.



Increase in Ethanol Production Likely to Outpace Near-Term Demand

According to a new report from CoBank’s Knowledge Exchange Division, the ethanol market will soon face worsening slim-to-negative profit margins, which could potentially push the industry toward consolidation. However, producers that are well-capitalized with strong balance sheets and cash reserves will be in the best position to weather the softening market.

The report, “Ethanol’s Growth Path: Output and Export Uncertainties Both Rising,” outlines how an ethanol market fueled by corn prices at multi-year lows, coupled with reinvestment into production capacity, will push supply past demand growth.

“Forecasts indicate that total ethanol production by 2020 will have increased by approximately 850 – 900 million gallons, compared to 2017 levels,” said Tanner Ehmke, CoBank senior economist. “Without a substantial increase in domestic demand or exports to clear excess supplies, ethanol producers are facing a downturn over the medium term. Those who have access to multiple transportation markets and have invested in new technology will be leaner and more cost efficient, enabling greater flexibility to endure prolonged periods of low prices.”
 
Multiple Variables Complicate Demand Picture
Domestic demand for gasoline blended with ethanol has been strong over the last 18 months, as low fuel prices resulted in consumers driving more. A second bright spot for ethanol has been continually rising ethanol blend rates at the pump. While E-10 (gas containing 10 percent ethanol) remains the dominant fuel blend, consumers are increasingly buying higher blends like E-15 (15 percent ethanol).

However, the longer-term picture for ethanol in gasoline is less optimistic. In 2017, export weakness and lower distillers grains (DDGS) prices have hurt margins.

Exports of ethanol, particularly to Brazil and China, have been strong over the last year, but that picture has changed significantly and the outlook for future ethanol exports suggests a continued decrease over the foreseeable future.

China has effectively ceased ethanol imports from the U.S. following its implementation of a 30 percent tariff on U.S ethanol. Exports to Brazil are also expected to erode as Brazilian sugar refiners come back online following a sugar crop failure in 2016, which led to the country’s heavy reliance on ethanol imported from the U.S.

Growth of U.S. exports to new markets such as India, Mexico and Indonesia, where governments are seeking to improve air quality, is possible, but will likely take time to fully materialize.
 
Who Will Weather the Storm
While a market correction is anticipated over the next two years, it is not expected to be as severe as prior corrections. Tight margins, limited profitability and consolidations are anticipated for the ethanol industry in the near future. However, ethanol producers who survived the last market correction have become wiser about the vagaries in the market and hedge their inputs and products—corn and ethanol—via the futures markets.

“More idling of production is expected in the next 18 – 24 months and aging facilities could be retired,” adds Ehmke. “Financially weak and less efficient producers who have limited access to dependable corn supplies and transportation risk being consolidated. But given the recent profitability, those producers with favorable cash positions and technology-driven efficiencies will have greater flexibility to endure prolonged periods of low prices or higher production costs.”

A brief synopsis of the report, “Ethanol’s Growth Path: Output and Export Uncertainties Both Rising,” is available on the CoBank YouTube channel.



Deadline Approaching for Producer Feedback on FARM Program Resources and Tools

Dairy producers have until Sept. 10 to complete a survey asking about their perceptions of the National Dairy Farmers Assuring Responsible Management (FARM) Program and how it can continue to improve the resources it offers farmers.

The voluntary survey, conducted by the FARM Program in conjunction with Colorado State University, probes producers’ knowledge of FARM and the value it provides to their operations. The results will help FARM’s Animal Care program better provide cooperatives and farmers with the appropriate guidance and materials required of program participants. Survey questions address topics such as the producer’s familiarity with the program, where they seek additional FARM Program information, and why stewardship practices are important to them.

The study, titled “Dairy Producer Perceptions of the National Dairy FARM Program,” is being led by Dr. Noa Román-Muñiz and Kayla Rink from Colorado State University’s Department of Animal Sciences. The survey is confidential and only summarized data will be shared with the primary researchers, so participants cannot be identified directly. Those interested in taking the survey can do so by clicking here.

The information gleaned from this survey will also help advance the FARM Program by increasing its efficiency and impact for farmers, and help staff understand producers’ needs. Improving the FARM Program will assist the dairy industry in forming uniform objectives on animal welfare.

Processors and cooperatives interested in distributing the survey to their members can contact dairyfarm@nmpf.org or Kayla Rink at Colorado State (kcalvin@rams.colostate.edu). Individual producers can take the online version or contact the FARM Program to be mailed a copy.