Wednesday January 10 Ag News

As Winter Looms, Key Risks Keep Ag Outlook Cool
Kansas City Federal Reserve Bank, Omaha office

Following steep declines for three consecutive years, farm income was expected to stabilize in 2017 and beyond. In inflation-adjusted dollars, real net farm income was forecast to be relatively unchanged from 2016. In nominal terms, farm income was forecast to increase about 3 percent from 2016. Forecasts for stable farm income were led by expectations that increasing revenues for livestock and livestock products would offset declining revenues in the crop sector. However, despite the forecast for stable farm income relative to 2016, levels for 2017 still were expected to be 18 percent lower than the long-run average. Longer-term projections for farm income were also expected to stabilize but at levels below the long-run average from 1970 to 2017.

Alongside forecasts of relatively stable farm income for 2017, bankers’ expectations of future declines in farm income have moderated throughout the Tenth District. The third quarter Tenth District Survey of Agricultural Credit Conditions indicates the share of bankers expecting further declines in income in the fourth quarter of 2017 was smaller than a year ago in each state. From 2014 to 2016, an increasing number of bankers in Kansas, the Mountain States, Nebraska and Oklahoma expected farm income to be lower in the next quarter. This trend reversed in 2017. Whereas a majority of bankers expected lower farm income in 2016, less than half of bankers in each state had the same expectations in 2017. In western Missouri, a region where crop production has been very strong in recent years, the share of bankers expecting lower farm income decreased for a third straight year.

Key Risks to the Outlook
Although farm income appears to have stabilized in the short to longer term, one risk to the outlook has been growing supplies. Yields for corn and soybeans have been above 20-year trend levels since 2014 and have contributed to increasing inventories. In 2017, corn yields in the Tenth District were slightly below trend, likely due to reports of moderate to severe wind damage, but in the United States, higher yields have contributed to significant increases in inventories, measured as stocks-to-use ratios. In addition, soybean inventories have doubled since 2015. Growth in U.S. corn and soybean inventories is a risk to the outlook because larger inventories have been linked to lower prices.

As growth in domestic production has continued to outpace domestic use, U.S. agriculture has become increasingly reliant on exports. The USDA recently reported that exports are responsible for 20 percent of farm income. Therefore, although international demand has provided some opportunities for the agricultural sector, uncertainty surrounding trade remains a risk to the outlook.

One reason trade is a risk to the outlook is because exports in recent years have contributed a larger share of the total value of U.S. crop production. The total value of crop production has declined since 2013. At the same time, the total value of crop exports has increased slightly. Over the last four years, the export share of the total value of U.S. crop production increased from 29 percent in 2013 to an estimated 40 percent in 2017. This seems to indicate that demand from international markets has provided some support for the U.S. agricultural sector during the recent downturn.

However, the U.S. share of world crop exports has fallen steadily over time. In the late 1970s, the U.S. held a 65-percent share of world crop exports. In 2017, the U.S. share of world crop exports was forecast to be 28 percent. The decline in the U.S. share of world crop exports suggests that the rest of the world has become more active in global export markets when the U.S. has become increasingly reliant on world trade.

One mitigating factor of increasing global competition has been trade deals, such as the North American Free Trade Agreement (NAFTA). Agricultural exports to both Canada and Mexico dramatically increased following the implementation of NAFTA in 1993. In fact, the value of agricultural exports to both NAFTA partners more than doubled following the implementation of NAFTA. It is unclear what would happen if the United States fails to renegotiate NAFTA. However, because the United States has become more reliant on international demand for agricultural products and international competition for agricultural exports has increased, uncertainty surrounding NAFTA and other trade deals is a key risk to the agricultural outlook.

Beyond risks related to crops and trade, recent developments in the cattle sector also present risks to the outlook. The cattle sector is a key industry to the Tenth District agricultural economy, contributing more than 50 percent of the District’s total agricultural revenues. As mentioned previously, cattle profit margins have supported aggregate measures of farm income and are expected to be positive in 2017, following negative profit margins in 2015 and 2016. Higher prices and positive profit margins have occurred alongside increasing inventories. However, the pace of inventory expansion has slowed; cattle slaughter weights have come down slightly and demand for beef has picked up, both domestically and internationally.

Despite higher (annual average) profit margins in 2017, risks to the cattle outlook still persist. Larger inventories have begun to weigh on prices in the second half of 2017. Although average profit margins are positive for the year, monthly-average profit margins have been negative to just over break-even since August.

In addition to lower prices and negative profit margins in the second half of 2017, one concern for ranchers has been the increasing variability of cattle prices. Since 2014, cattle prices have become much more variable. From January to November, the average monthly variance and the range of prices paid increased significantly from previous levels. In 2014, the larger range was due to a steady increase in prices from January to November. However, during the last three years, increasing price variability in a period of lower prices has contributed to added concern and uncertainty in the outlook for cattle producers.

Conclusion
In conclusion, although expectations for farm income have stabilized, the stabilization has occurred at much lower levels than in previous years. Continued oversupply of agricultural products, especially crops, is a significant risk and would likely keep prices from rising to more profitable levels. International trade could help support agricultural prices and incomes, but uncertainty over trade deals has generated additional risk for the agricultural sector. In the first half of 2017, strength in the livestock sector supported U.S. farm income, but increasing cattle inventories and greater price variability suggest that the outlook could remain weak.



Pork Association Congratulates Senator Fischer on Agriculture Committee Appointment

Nebraska’s pork farmers would like to congratulate U.S. Senator Deb Fischer on her appointment to the Senate Agriculture Committee. Working for agriculture and rural development organizations has been an essential part of Sen. Fischer’s life.

“Having a senator from Nebraska on the Senate Agriculture Committee has great value”, said Russ Vering, President of the Nebraska Pork Association. “Having a voice at the table on behalf of our industry and all of Nebraska agricultural is exciting”. 

“This coming year will be critical as Congress works on issues such as writing the next farm bill and dealing with trade agreements”, said Al Juhnke, Executive Director for the Association. “Expanding trade opportunities is of vital importance to our producers and having Sen. Fischer directly involved in those discussions will ensure Nebraska’s pork farmers are well represented.”

Nebraska’s pork farmers offer their sincere congratulations to Sen. Fischer on her appointment to the Senate Agriculture, Nutrition and Forestry Committee.



USDA to Gauge Financial Well-Being of Nebraska Farmers and Ranchers

In late December, the U.S. Department of Agriculture’s National Agricultural Statistics Service (NASS) began gathering information about farm economics and production practices from farmers and ranchers across Nebraska, as the agency conducts the third and final phase of the 2017 Agricultural Resource Management Survey (ARMS).

“ARMS is the only survey program that allows anyone to clearly see the current financial well-being of Nebraska producers and their households as a whole,” said Dean Groskurth, Director of the Northern Plains Regional Field Office. “The results of this survey will serve as a primary source of information for numerous local and federal policies and programs that affect Nebraska farms and farm families,”

NASS conducts ARMS jointly with USDA’s Economic Research Service (ERS). In an effort to obtain the most accurate data, the federal agencies will reach out to more than 35,000 producers nationwide, including 1,769 in Nebraska, between late December and April. The survey asks producers to provide in-depth data on their operating expenditures, production practices and household characteristics.

“We realize that this survey is lengthy and some producers may have questions or need clarification,” explained Groskurth. “In February, our interviewers will begin reaching out to those farmers who have not yet responded to answer any questions they may have and help them fill out their questionnaires.”

In addition to accurate data, NASS is strongly committed to confidentiality. The agency will only publish data in an aggregate form. This helps safeguard the confidentiality of all responses, ensuring no individual respondent or operation can be identified.

The economic data gathered in ARMS will be published in the annual Farm Production Expenditures report on August 2, 2018. All NASS reports are available online at www.nass.usda.gov. ERS also plans to release a series of reports based on ARMS data. All of these reports will be available on the agency’s site at www.ers.usda.gov.

For more information about the 2017 Agricultural Resource Management Survey visit www.nass.usda.gov/go/ARMS.



 SMITH CHALLENGES AG INDUSTRY TO TELL REAL STORY OF FOOD PRODUCTION

According to Donnie Smith, it's time for the agricultural industry to take back the story of food production.

Smith delivered the second Heuermann Lecture of the 2017-18 season Jan. 9 at Nebraska Innovation Campus.

Smith was president and CEO of Tyson Foods from 2009 to 2016 and continues to serve the company as a consultant while focusing on his work to feed the world. He said he believes consumers are being told fictional stories about modern agriculture, which is leading to mass fear of the food system.

"There's a story being told in America, and frankly around the world, today about agriculture and what we do," Smith said. "It's largely fictional, based on partial truth, but Americans are buying it hook, line and sinker."

These fictional stories are being told as the agricultural industry is seeing major achievements –  such as baby boomers doubling food production in their generation – while still facing tremendous challenges, Smith said. Today's generation must find a way to double the amount of food the baby boomers produced using the same amount of land, air and water. They'll also have to do so with additional pressures on the food system, such as increased life expectancy and increased incomes, both of which lead to people eating more food.

"Why isn't our noble effort in agriculture to feed this world, front-page news?" Smith asked.

He is no stranger to the challenges facing the food system. During his 36-year career with Tyson, he worked to learn every angle of the business. As an executive, he led the company to focus on feeding the world high-quality, affordable food.

Smith said the challenge of telling the true story of agriculture is that producers simply don't have the time. They spend considerable time making, processing, marketing and delivering food, so they don't have time to blog or post on social media.

"If we’re not telling the real story, the only story on the air is not true," he said. "That’s a huge problem and also a huge opportunity."

Smith is a proud supporter of America's land-grant system and believes the solution to the communication problem could be found at land-grant universities such as the University of Nebraska-Lincoln. Every day, university researchers are figuring out solutions, while extension professionals show producers how to implement those solutions, and the solutions become sustainable when the next generation is taught how to implement them. Smith said communication is just as important as these three missions.

"I think now, in our land-grant community, we're leaving out a new task that we've got to add to our repertoire," he said. "We've got to start prioritizing how to communicate what we're doing, and how we're doing it, and why that is so important."

Smith plans to dedicate the rest of his life to this effort, and to developing sustainable agriculture on the global scale. One way he is doing that is through the Smith Center for International Sustainable Agriculture at the University of Tennessee. The center aims to develop science-based agricultural solutions to meet sustainable development challenges in less economically developed countries, such as Rwanda. Smith praised Nebraska for its efforts in this region, specifically naming the Undergraduate Scholarship Program in the College of Agricultural Sciences and Natural Resources. Through this program, students from Rwanda are pursuing a bachelor of science degree in integrated science, with a focus on conservation agriculture, entrepreneurship, leadership and innovative thinking. These align with the areas of need identified by the Rwandan Ministry of Agriculture and Animal Resources.

"I cannot applaud you enough for what you're doing in Rwanda," Smith said. "It's critical to the development of the capacity for that nation and all of sub-Saharan Africa to be able to thrive through all of the changes that are going to happen in these kids' careers."

The theme for the seventh year of Heuermann Lectures is "Think Globally, Act Locally." The lectures are funded by a gift from B. Keith and Norma Heuermann of Phillips, Nebraska. The Heuermanns are longtime university supporters with a strong commitment to Nebraska's production agriculture, natural resources, rural areas and people.

Lectures are streamed live at http://heuermannlectures.unl.edu/ and air live on campus channel 4. Lectures are available online after the event and are later broadcast on NET2.



Long-Term, Dediated Water Quality Funding a 2018 Priority

Members of the Iowa Farm Bureau Federation (IFBF), Iowa's largest grassroots farm organization, plan to focus their 2018 legislative lobbying strength on issues that stand to impact all Iowans, mainly securing long-term, dedicated state funding to support Iowans' successful efforts to improve water quality and conserve soil, and measures which will protect taxpayers.

"Iowa farmers continue to take on the challenge of improving water quality and conserving the state's topsoil, and farmers have made significant progress reducing nutrient loss and implementing successful conservation measures," says IFBF President Craig Hill. "To continue that momentum, Farm Bureau will work with lawmakers during the 2018 session to secure long-term, dedicated funding to support the state's scientific-based Nutrient Reduction Strategy (NRS)."

Iowa Governor Kim Reynolds' Condition of the State Address demonstrated a commitment to also make water quality funding a top priority during the 2018 legislative session, a statement that earned a standing ovation from legislators in attendance and strong support from Iowa Farm Bureau members. "My hope is that a water quality bill is the first piece of legislation that I have the opportunity to sign as governor," Reynolds said.

Iowa Secretary of Agriculture Bill Northey said, "Governor Reynolds has been a strong supporter of the water quality efforts underway across the state and I appreciate her making long-term funding a priority in her Condition of the State address. The Legislature has provided increasing support for water quality over the past 5 years, including nearly $10.5 million this year, but this session is an opportunity to identify a long-term source of funding to allow us to continue to scale-up our water quality efforts.

"I also appreciate her focus on supporting our state's rural areas, including expanding broadband access. With agriculture as an important driver, I agree there are tremendous opportunities to see significant growth and economic development generated in our small towns and rural communities."

Farm Bureau strongly supports a bill that was originally passed by the Iowa House during the 2016 session and was slightly modified and passed by the Iowa Senate during the 2017 session. The bill, now called Senate File 512, is also supported by Governor Reynolds and the Iowa Department of Agriculture and Land Stewardship (IDALS). Senate File 512 advances science-based research and watershed projects outlined in the NRS, promotes and incentivizes watershed collaboration, and establishes accountability as progress continues with water quality improvements.

The long-term, dedicated funding provided through Senate File 512 would allow farmers and the state to conduct long-term planning for watershed projects, soil conservation efforts, and collaborative projects within a watershed. Senate File 512 also maintains the collaborative approach of the 2016 House bill, which treats both point source (urban) and nonpoint source (rural) equitably.

Another focus for IFBF during the 2018 legislative session is tax reform. Specifically, the organization will work with legislators to help ensure that tax reform legislation will protect the benefits of federal deductibility and will also include coupling with the federal tax code for Section 179 asset expensing, a critical economic tool for Iowa farmers and small business owners.

IFBF has a long track record of protecting property taxpayers, and the organization will remain committed in 2018 to ensure legislation protecting property taxpayers remains a priority for Iowa lawmakers. Iowans paid more than $5.5 billion in property taxes in 2017, a number that has more than doubled since 2000. IFBF is dedicated to working with legislators to maintain current levels for the Homestead Property Tax Credit and the Ag Land/Family Farm Tax Credit, and to continue to extend other key provisions beneficial to property taxpayers.

"The Legislature has the opportunity to address several measures that help protect property taxpayers from further increases, and we will work with them to do that," says Hill.



Iowa Pork Industry Center to Offer PQA Plus 3.0 Advisor Certification Training Feb. 13

Iowa Pork Industry Center at Iowa State University continues to work with industry professionals in offering Pork Quality Assurance Plus 3.0 advisor certification opportunities, including a newly scheduled session for Tuesday, Feb. 13. Iowa State Extension swine veterinarian Chris Rademacher reminded potential applicants that attendance at this all-day session and passage of an exam at the end of the session is required for certification.

“Everyone who wants to attend needs to complete the two-page application form and be approved in order to attend this session,” he said. “The application deadline is Feb. 2 so I encourage people to submit their application soon to ensure receipt in time for approval and payment.”

Rademacher is coordinating the session, which will be held at the Hansen Ag Student Learning Center on the Iowa State campus in Ames. There is a 15-person minimum with the application deadline of the earlier of Feb. 2 or when the 30-person maximum is reached.

No walk-ins are allowed and no individual spot is guaranteed until the application is approved and specific payment is accepted by IPIC. The cost is $75 per person and includes all materials, refreshments and the noon meal. The session begins with registration at 8:30 a.m. and instruction starting at 9 a.m.

Rademacher said veterinarians who plan to attend the IVMA Winter Conference in Altoona on Feb. 14-15 and want to start or continue their PQA Plus certification are encouraged to consider this opportunity just prior to that meeting.

Those who qualify and are interested in the program should download the application form from the IPIC website, then complete and submit it soon. The form is available as both a fillable pdf document and a word document. Applicants may use either version.

To be eligible to submit an application or recertify as a current advisor, people must meet the following qualifications:
-  Be a veterinarian, extension specialist or ag educator (defined for this program as a person who spends full time in adult education or at least half time in production training) AND
-   Have a D.V.M. or B.S. in animal science (or equivalent) AND
-   Have two years of recent documentable swine production experience.

The Iowa Board of Veterinary Medicine has approved seven hours of CE credit for the session.



Average Retail Prices for All Fertilizers Higher at Start of 2018

Average retail fertilizer prices picked up where they left off at the end of 2017, continuing to move higher the first week of January 2018, according to retailers surveyed by DTN.

For the first time in several weeks, all eight of the major fertilizers are now higher. However, the price of only one fertilizer was up by a significant amount.

Anhydrous is 12% more expensive compared to last month and has an average price of $474 per ton.

Prices for the remaining seven fertilizers were higher compared to the prior month, but none were up significantly. DAP had an average price of $452/ton, MAP $490/ton, potash $345/ton, urea $350/ton, 10-34-0 $409/ton, UAN28 $219/ton and UAN32 $256/ton.

On a price per pound of nitrogen basis, the average urea price was at $0.38/lb.N, anhydrous $0.30/lb.N, UAN28 $0.39/lb.N and UAN32 $0.40/lb.N.

All but one fertilizer is now higher compared to last year with prices pushing higher in recent weeks. Both UAN28 and UAN32 are now 1% more expensive, anhydrous is 2% higher, urea is 3% more expensive, DAP is 5% higher, potash is 7% more expensive and MAP is now 11% higher.

The only remaining fertilizer still lower in prices compared to a year prior is 10-34-0. Starter fertilizer is 6% lower looking back a year.



GRSB Announces 2018 Executive Committee

The Global Roundtable for Sustainable Beef (GRSB) is proud to announce the election of Ms. Nicole Johnson-Hoffman, Chief Sustainability Officer and Senior Vice President for OSI Group, as President of the GRSB. Additionally, Dr. Leon Mol, Director of Product Safety & Social Compliance for Ahold Delhaize has been elected Vice President, and Cameron Bruett, Head of Corporate Affairs for JBS, has been re-elected Executive Committee Member At-Large.

Ms. Johnson-Hoffman, formerly GRSB Vice President, replaces Mr. Dennis Laycraft of Canadian Cattlemen's Association, who exits after serving a full, 2-year term, and who will now formally serve as Past President.

Dr. Leon Mol is new to the GRSB Executive Committee after serving on the Board of Directors, and Mr. Cameron Bruett is also a Past President of GRSB. These three new GRSB leaders join Mr. Carlos Saviani of World Wildlife Fund, who is the Secretary – Treasurer, and Executive Committee Member At-Large, Dr. Ignacio Blanco-Traba of McDonald’s Global, to make up the 2018 GRSB Executive Committee.

"The GRSB focuses on continuous improvement, regardless of region, production system, scope of operation, or past performance. I'm pleased to be leading a growing membership-based organization that believes there are many paths to sustainability. GRSB brings together people from across the world, who represent all segments of the beef value chain, including individual producers, who ultimately agree there’s massive value in sharing knowledge, and who want to partner to drive exciting new levels of performance in areas impacting GRSB’s Principles and Criteria of Sustainable Beef" says Ms. Johnson-Hoffman.

"Continuous improvement in beef sustainability takes different forms and GRSB celebrates all the proactive work that’s being done across the globe. In some parts of the world sustainability is being driven by innovative producer education programs focused on soil management and quality cattle care. In other places, people are creating production system efficiencies that enable a reduction in the amount of water used in beef processing plants by tons each day. And in other locations, passionate people are coming together to form new regional roundtables focused on beef sustainability to aggressively address region-specific challenges.” Johnson-Hoffman adds.

“Sustainability doesn’t come from focusing on just one thing. Sustainability is not a buzzword. It’s not an initiative. It’s not a program. Sustainability is holistic. Sustainability is progressive. And the need for our work in sustainable beef only grows. GRSB is working to connect dots and drive best-in-class learning and thinking that prioritizes our planet, people and animals and we expect to see further growth in our organization in the coming months. We welcome those who are committed to sustainable beef to join us in this important work." encourages the new GRSB President.

Dr. Leon Mol brings a global retailer point of view to the GRSB executive team and agrees the momentum that’s been built within GRSB since 2010 is exciting and the collaborative approach that’s been taken is powerful.

"Sustainability is about continuous improvement, not perfection. The pre-competitive environment GRSB fosters and the way in which we're collaborating with regional roundtables and other key stakeholders is opening up new channels of transparency and monitoring progress. Consumers are asking for it and GRSB can act as a bridge and work to deliver what the market is waiting for."

Dr. Mol adds, "GRSB is collaborating in South America, Europe, Brazil, China, U.S., Canada, and more. Our work starts with a platform where knowledge is aggregated and shared and can move into joint initiatives for research projects and studies, which would not happen in a fragmented setting.

Ahold Delhaize takes responsibility for sustainability and I’m excited to work in this new leadership capacity with GRSB."

Mr. Bruett, who was an integral voice in the early formation of GRSB says he’s witnessed tremendous progress in global beef sustainability efforts and asserts that “Where we have weaknesses or opportunities for improvement, we should acknowledge them and focus on improving and documenting progress. GRSB recognizes there are many different approaches to sustainability and will continue to avoid prescriptive ways of doing business, and that is critical to our success.”

The new GRSB Executive Committee shares optimism and excitement about the future impacts GRSB will make and encourages you to visit grsbeef.org for more information.



Alltech opens applications for first North American Career Development Program

For recent university graduates and soon-to-be graduates who are eager to begin a career that makes a positive difference in the world of agriculture, Alltech’s new program could be a perfect fit.

Following the success of the company’s Corporate Career Development Program and specialized programs in quality, European beef, dairy and now ruminants, Alltech is introducing a region-specific model to North America focusing on beef, dairy and poultry. Applications are now open.

The Alltech North American Career Development Program (CDP) is a one-year, salaried, entry-level program, providing up to 12 recent university graduates the opportunity to train alongside experienced professionals in Alltech’s dairy, beef and poultry businesses. After an induction period at Alltech’s international headquarters in Nicholasville, Kentucky, trainees will be assigned to specific locations in the United States or Canada to prepare for sales positions. They will receive mentorship from senior managers who are experts in their respective fields. The CDP aims to equip and empower trainees with critical skills designed for a successful career at Alltech.

Dr. Aoife Lyons, director of educational initiatives and engagement at Alltech, is a licensed clinical psychologist who has conducted psychometric testing worldwide for hiring and training at Alltech for over 10 years. She works closely with the CDP programs and has seen firsthand how graduates have dived into the conversation about how we nourish the world’s plants, animals and people.

“These young people are chosen not just for their educational backgrounds and intelligence, but perhaps more importantly for their curiosity, enthusiasm and sense of adventure,” she said.

Like the existing corporate and specialized programs, the North American program will offer members the opportunity to train in a variety of functions to learn new business skills and sharpen soft skills that can be readily applied to support Alltech’s beef, dairy and poultry businesses.

“We look forward to welcoming a new group of talented, aspiring professionals who are passionate about agriculture and making a positive difference in the world,” said Suniti Mujumdar, manager of educational engagement at Alltech. “It is a privilege to be part of coaching the next generation of agribusiness leaders.”

The North American CDP is a unique first step on the path to an exciting and rewarding career at Alltech. Applications will remain open through Feb. 9, 2018.

Click here to apply, and visit the Alltech Education website to learn more about the program.... http://education.alltech.com/alltech-north-american-career-development-program.