Monday March 28 Ag News

Fischer, Grassley, Tester, Wyden Unveil Updated Cattle Market Reform Bill

U.S. Senators Deb Fischer (R-Neb.), Chuck Grassley (R-Iowa), Jon Tester (D-Mont.), and Ron Wyden (D-Ore.) today released an updated version of their legislation, the Cattle Price Discovery and Transparency Act. The senators first introduced the bill in November.

The updated bill would:
    Require the Secretary of Agriculture to establish 5-7 regions encompassing the entire continental U.S. and then establish minimum levels of fed cattle purchases made through approved pricing mechanisms. Approved pricing mechanisms are fed cattle purchases made through negotiated cash, negotiated grid, at a stockyard, and through trading systems that multiple buyers and sellers regularly can make and accept bids. These pricing mechanisms will ensure robust price discovery and are transparent.

    Establish a maximum penalty for covered packers of $90,000 for mandatory minimum violations. Covered packers are defined as those packers that during the immediately preceding five years have slaughtered five percent or more of the number of fed cattle nationally.

    The bill also includes provisions to create a publicly available library of marketing contracts, mandating box beef reporting to ensure transparency, expediting the reporting of cattle carcass weights, and requiring a packer to report the number of cattle scheduled to be delivered for slaughter each day for the next 14 days. The contract library would be permanently authorized and specify key details about the contents that must be included in the library like the duration of the contract and provisions in the contract that may impact price such as schedules, premiums and discounts, and transportation arrangements.

“Our family farmers and ranchers have told us about the need for both robust price discovery and transparency in the cattle markets. The updates to our legislation incorporate a variety of stakeholder feedback to achieve our goal of ensuring more fairness in cattle markets. It’s encouraging to see our bill gain momentum and I am hopeful we will have a hearing on this important legislation in the Senate Agriculture Committee in the coming weeks,” said Senator Fischer, a member of the Senate Agriculture Committee.

“I frequently hear from Iowa’s independent cattle producers about their struggle to get a fair price for their cattle while the nation’s four largest packers operate with record profits. I pushed for hearings in the Senate’s Agriculture and Judiciary committees to shine a light on these unfair market practices, and I’ve continued working with a bipartisan group of senators to develop a solution. Our latest proposal comes after months of working with staff at the U.S. Department of Agriculture to make technical changes that will allow them to best implement the bill. It takes several steps to improve cattle price transparency and will make much-needed market reforms to help independent producers in Iowa and across the country. This bipartisan bill is the best opportunity we have to make real reform in the cattle market this year, and I’ll continue to work with my colleagues to get this across the finish line,” said Senator Grassley, a member of the Senate Agriculture Committee and ranking member of the Senate Judiciary Committee.

“For too long, large corporations have raised prices on working families while giving Montana ranchers the short end of the stick. Increasing price discovery will give producers more control and better information when they sell their livestock, and is a key step in making markets more competitive. Montana ranchers raise the best beef in the world, and it’s about time they got a fair cut for their premium product,” said Senator Tester.

“Oregon’s ranchers shouldn’t face an unfairly tilted marketplace that favors corporate meat packers and undercuts their small family businesses from producing nationally renowned beef for consumers. This bipartisan legislation shows how both parties can come together to level the playing field by restoring market fairness, efficiency, and transparency for U.S. cattle ranchers,” said Senator Wyden, Chair of the Senate Finance Committee.



NFU Supports Revised Cattle Market Legislation

Today, the Cattle Price Discovery and Transparency Act of 2022 was publicly released, led by Sens. Jon Tester (D-MT), Chuck Grassley (R-IA), Deb Fischer (R-NE), and Ron Wyden (D-OR). The bill is a revised version of similar legislation introduced last year. As with the 2021 version, National Farmers Union (NFU) supports the bill and urges Congress to act quickly to pass this critically important legislation.

“Rampant consolidation in the cattle industry has made pricing in the cattle market increasingly opaque,” said NFU President Rob Larew. “Fair and competitive markets rely on price discovery and transparency. For farmers and ranchers to bargain effectively with packers, they need access to reliable, accurate pricing information. This bill would shed light on the market and bring about greater fairness.

“NFU thanks Senators Tester, Grassley, Fischer, and Wyden for their continued leadership on this issue. The bill improves upon the version from November 2021, and we encourage swift action by the Senate and House on this legislation.”

The Cattle Price Discovery and Transparency Act of 2022 makes important reforms, including:
·     Establishing mandatory minimum purchase volumes for packers through “approved pricing mechanisms” based on five to seven geographic regions, to be determined by the U.S. Department of Agriculture.
·     Bringing more transparency by requiring reporting of cattle weights and slaughter deliveries two weeks in advance.
·     Clarifying and implementing a cattle contract library.
·     Increasing penalties for violations by packers.
·     Requiring livestock mandatory reporting data be made consistently available.



NEBRASKA CROP PROGRESS AND CONDITION

For the week ending March 27, 2022, topsoil moisture supplies rated 37% very short, 43% short, 20% adequate, and 0% surplus, according to the USDA's National Agricultural Statistics Service. Subsoil moisture supplies rated 36% very short, 40% short, 24% adequate, and 0% surplus.

Field Crops Report:
Winter wheat condition rated 10% very poor, 16% poor, 47% fair, 24% good, and 3% excellent.

Weekly reports will begin April 4th for the 2022 season.



BENEFITS OF LEGUMES
– Ben Beckman, NE Extension Educator

Reducing pasture expenses can help your bottom line.  But don’t try to starve a profit from your pastures.  Sometimes you need to invest.  This spring, invest in legumes.

Warm weather should get you looking forward to spring.  I’m sure one thing you won’t look forward to, though, is paying for nitrogen fertilizer on your pastures.

Avoid this expense by adding legumes to your grazingland.  Five years of grazing research in eastern Nebraska showed that brome/legume pastures produced almost four-tenths of a pound higher average daily gain on yearlings than did straight brome pastures fertilized with 50 pounds of nitrogen.

That may not sound like a lot to you, but that much faster gain for the full season produced an extra fifty-one pounds of beef per acre, with no nitrogen fertilizer.  Adding the value of heavier yearlings plus reduced fertilizer expenses can result in nice amount of profit, especially with the extra high fertilizer prices this year.

Similar research was conducted with warm-season grasses with nearly the same results.

March is a good month to start adding legumes.  Red clover is the easiest one to establish because seed can be broadcast on pastures.  With a little attention to controlling competition from the existing grass, new red clover plants can start increasing your pasture production by summer. The biggest risk we may have for establishment this year is a lack of moisture, but unless your pasture is irrigated, all we can really do there is hope and pray.

Don’t become trapped by the never ending cost of nitrogen fertilizer.  Use legumes to reduce costs and increase production.

 

LENRD board votes not to study a bypass channel for Battle Creek

The Lower Elkhorn Natural Resources District (LENRD) is currently working with the Natural Resources Conservation Service (NRCS) and JEO Consulting Group (JEO) to complete a study of the Battle Creek Watershed.  At their March meeting, the LENRD board members discussed whether to sign an additional contract with JEO to further study a diversion channel to protect the City of Battle Creek.  The diversion channel was being revisited to give the board members more information about this alternative.

“It comes down to, what is this board comfortable with spending.  No matter which way you go, there will be tough decisions and people’s lives are going to be affected,” said Mike Sousek, LENRD general manager.  He continued, “We have always remained fiscally conservative with our tax levy.  If this is the direction you want to go, you need to know how that decision will affect the local taxpayers.”

The diversion channel is estimated to cost over $26 million.  The costs for this alternative would outweigh the benefits, which would make grant funding unavailable for this option.  Another flood control option is available for $6 million, with the use of grant funding.  Sousek says, “The real decision before this board is how much do we burden the local taxpayers when multiple projects provide flood protection to the city of Battle Creek.  The financial considerations warrant further board discussions.”

Chad Korth of Meadow Grove, who represents subdistrict 1, said, “The people of Battle Creek deserve to be protected.  That’s why we’re here, to help them.”

After hours of discussion, the board voted not to pursue a study of the bypass channel that would have cost approximately $80,000.  The board will continue to investigate options to protect the city and the watershed.  Continued discussion of the flood reduction possibilities will be held at upcoming board meetings and other public meetings.

The board also accepted the terms of amendment 7 to the Eastern Nebraska Water Resources Assessment (ENWRA) Interlocal Cooperative Agreement.  This project is sponsored by 6 NRDs, along with other cooperating agencies including the Nebraska Department of Natural Resources, Conservation and Survey Division, School of Natural Resources, University of Nebraska, and the U.S. Geological Survey.  “The ENWRA project is a progressive step forward in the way we approach groundwater management,” said, Brian Bruckner, LENRD assistant manager.  He added, “This project offers an opportunity to stay ahead of potential future problems by joining together and pooling resources.  By continuing with this agreement, we hope to avoid the pitfalls of overdevelopment and improper management as well as provide lasting benefits to our mutual economic and environmental interests.”

The Interlocal Cooperative Agreement for the Lower Platte River Basin Water Management Coalition was also accepted by the board.  The seven NRDs in the Lower Platte Basin along with the Nebraska Department of Natural Resources have signed the agreement to adopt, implement, and maintain a basin-wide water management plan.  Bruckner said, “The plan focuses on water use policies and practices that contribute to the protection of existing surface water and groundwater uses while allowing for future water development.  The agreement is intended to provide flexibility for NRDs in the basin to work cooperatively in ways they would not be able to individually.”

In other action, the board approved two motions to accept the bids to purchase mowers for the Maskenthine Lake and the Maple Creek Recreation Areas.

The next LENRD committee of the whole meeting will be held Thursday, April 14th at 7:00 p.m. with the board meeting to follow on Thursday, April 28th at 7:30 p.m.  Watch for further updates and stay connected with the LENRD by subscribing to their monthly emails at lenrd.org.



Scoular acquires Florida grain and feed facilities

Scoular has acquired two facilities in northern Florida to help the company better serve grain and livestock producers in the Southeastern United States.

Scoular purchased the assets of Columbia Grain & Ingredients in Lake City and Live Oak, Florida. The purchase provides Scoular with anchor locations in the region and includes feed ingredient and grain
handling facilities, storage space and a feed mill.

The facilities will provide upright storage space of close to 600,000 bushels and flat storage of over 10,000 tons, which will be used primarily to handle corn, bulk ingredients and micro ingredients. The facilities are capable of loading and unloading trucks, as well as railcars, with the Lake City site able to handle 135 rail cars.

The facilities will enable Scoular to provide just-in-time delivery and strengthen its existing grain and ingredient businesses in the Southeast. The purchase, which also will enable Scoular to add micro-ingredient blending to its services in the region, will include Columbia’s transportation fleet and team.

“This transaction is critical to better serving our feed and grain customers in the region,” said Eric Perry, Vice President and General Manager in Scoular’s Feed Division. “This investment expands our network, product portfolio and transportation presence in the region, demonstrating our commitment to providing high-quality ingredients and services to our customers. We are excited to leverage our operational expertise and experience in blending ingredients into this new and expanding business.”

A 130-year-old company with $6 billion in sales, Scoular creates safe and reliable supply chain solutions forend-users and suppliers of grain, feed ingredients, and food ingredients. From its more than 100 offices and facilities in North America and Asia, Scoular’s 1,000-plus employees lead the way by buying, selling, storing, handling and processing grain and ingredients as well as managing transportation and logistics for customers around the world. Scoular’s global headquarters are in Omaha, Nebraska



Agriculture’s clean water alliance elects new officers, Releases annual report

Agriculture’s Clean Water Alliance (ACWA), comprised of ag retailers across Iowa, elected officers at their board of directors meeting in late February, their first meeting of the new fiscal year.

Mark Kriegshauser with Helena Agri-Enterprises was elected president. Dan Dix of NEW Cooperative was re-elected as vice president. Dan Asklund with Van Diest Supply will serve as secretary, and Thomas Fawcett, Heartland Cooperative, was elected treasurer.

ACWA members are comprised of agricultural retailers who are in direct competition but have been united for more than 20 years in the goal of improving and protecting Iowa’s water quality while maintaining profitability for their clients.

At the recent ACWA board meeting, directors reviewed the status of the current work plan and approved the work plan for fiscal year 2022. One of the priorities of the work plan has been the expansion of membership across the state, beyond the group’s original boundaries of the Des Moines and Raccoon River watersheds. This effort continues to be a priority this year and into the future.

“The support and collaboration of ag retailers and associate members has had a substantial impact in the Des Moines and Raccoon River watersheds over the past 22 years,” says Kriegshauser. “It’s important we share these learnings and successes with farmers across the state in order to continue our mission of protecting our water and soil.”

The ACWA board also recognized successes in the Farm to River Partnership, a project that ACWA oversees in the North Raccoon watershed, now in its fourth year. The goals are to increase edge-of-field practices such as bioreactors, saturated buffers and targeted wetlands, and increase cover crop acres on farmland to reduce nitrogen and phosphorus entering rivers and streams.

Support for Conservation Agronomist positions is also gaining ground. ACWA launched the concept of embedding experts in agricultural conservation practices with ag retailers to work in tandem with staff field agronomists. The network of Conservation Agronomists continues to expand across the state.

Because of these collaborative efforts, ACWA is evolving the rural landscape of Iowa. In the Des Moines and Raccoon River priority watersheds, more than 1,400 acres have moved to no-till or strip-tillage; 40 edge-of-field practices have been enrolled in cost-share programs; and cover crops are on 24,400 new acres. The implemented conservation practices have resulted in the reduction of 245,000 pounds of nitrogen loss and more than 8,600 pounds of phosphorus loss.

“All these efforts will continue in the new work plan,” says Roger Wolf, ACWA executive director. “We intend to secure new ACWA members and expand our program’s offerings by growing support for conservation agronomists. Our internal work groups are providing a strong leadership voice as we implement the work plan and continue to evolve.”

2021 Annual Report Released
The ACWA 2021 Annual Report has recently been published and is on the website. Highlights include an overview of the three Core Pillars — an outcome from the group’s strategic planning — Leader and Advocate, Innovate and Sustain, and Science to Solutions. A component of the Core Pillars includes the establishment of three work groups to advance the organization’s goals: Membership Services, Programs and Projects, and Communications. Other highlights include updates on the water monitoring program, conservation agronomists, Farm to River Partnership, and the ACWA Code of Practice.

For more information about ACWA and to read the annual report, visit www.awcaiowa.com.



NORTHEY NAMED CEO OF AGRIBUSINESS ASSOCIATION OF IOWA

The Agribusiness Association of Iowa (AAI) has announced that Bill Northey, former Secretary of Agriculture for Iowa, has been named as its new CEO. Northey will be succeeding Joel Brinkmeyer, who will be retiring on May 1, 2022.

Northey is well known in ag circles in Iowa. An Iowa State University grad, Northey grew up on a family farm in Dickinson County that is still in the family today. Northey’s public service began as a District Commissioner for the Dickinson County Soil and Water Conservation District. His involvement with the Iowa Corn Growers Association and the National Corn Growers Association culminated in his role as President of NCGA in 1995-1996. Northey was elected three times as Secretary of Agriculture for Iowa in 2006, 2010, and 2014. Most recently, Northey served as Under Secretary for Farm Production and Conservation for the U.S. Department of Agriculture, his term ending in January of 2021.

“Bill’s passion for agriculture and extensive breadth of experience in Iowa agriculture are unparalleled. His interests in soil conservation and water quality will serve AAI and its membership well. His experience at the Iowa Statehouse as well as in Washington D.C. will be invaluable as AAI addresses the challenges its members face. The AAI Board of Directors is delighted to have Bill on board,” said Kevin Drury, Chair of the AAI Board of Directors.

“I am excited to be asked to have the opportunity to serve AAI as its CEO," said Northey. “AAI is made up of the leading agricultural companies in Iowa working to promote Iowa agriculture opportunities and support Iowa farmer and agribusiness leadership on improving Iowa’s environment.”

The AAI Board of Directors would like to thank outgoing CEO Joel Brinkmeyer for his nine years of steadfast and phenomenal leadership. Under Joel’s leadership, the Iowa Nutrient Research and Education Council (INREC) was formed to be a proactive environmental organization, dedicated to enhancing products and practices of the agricultural community to improve water quality. Likewise, the Agricultural Legal Defense Fund was formed as a novel approach to defend AAI members from negative precedent setting rulings through the court system. The AAI Board of Directors wish Joel and his wife, Linda, nothing but the best in their retirement.

About the Agribusiness Association of Iowa
The Agribusiness Association of Iowa is based in Des Moines, Iowa and was formed in 1994. AAI represents members, agriculture-based businesses, as one voice in a uniform, consistent, science based and common-sense approach. The opportunity to succeed is created by a unified agribusiness industry.

AAI’s mission is to lead by advocating, communicating, and educating to enhance the viability of our members. AAI’s membership consists of hundreds of businesses across the state that supply feed, seed, crop protection chemicals, grain, fertilizer, equipment and additional products and services that benefit agriculture, as a whole.  Along with the Agribusiness Association of Iowa Foundation, AAI provides specific services and educational opportunities to our members as well as eight statewide business associations related to Iowa Agriculture.



Supreme Court to Hear NPPC Case Against Prop. 12

The U.S. Supreme Court at its Mar. 25 conference agreed to hear a case brought by the National Pork Producers Council and the American Farm Bureau Federation (AFBF) against California’s Proposition 12, which bans the sale of pork from hogs born to sows that weren’t raised according to the state’s “arbitrary” production standards.

“We are extremely pleased that the Supreme Court will consider the constitutionality of Proposition 12, in which California seeks to impose regulations targeting farming practices outside its borders that would stifle interstate and international commerce,” said NPPC President Terry Wolters. “NPPC has poured a lot of blood, sweat and tears into preserving the rights of America’s pork producers to raise hogs in a way that’s best for their animals’ well-being and that allows them to continue selling pork to all consumers, both here and internationally.”

NPPC has waged a legal battle against the ballot initiative since it was approved in November 2018, arguing at the U.S. district and appellate court levels that Prop. 12 violates the Constitution’s Commerce Clause, which grants Congress the power to regulate trade among the states and limits the ability of states to regulate commerce outside their borders.

The high court is taking up the case on appeal from the U.S. Court of Appeals for the 9th Circuit, which in July upheld a lower court ruling against the NPPC-AFBF lawsuit. The appeals court found that despite the organizations plausibly alleging that Prop. 12 “will have dramatic upstream effects and require pervasive changes to the pork industry nationwide,” 9th Circuit precedent didn’t allow the case to continue. That precedent, however, runs counter to numerous Supreme Court decisions and is in conflict with nearly every other federal circuit court.

NPPC and AFBF in the coming weeks will file their initial brief with the Supreme Court, which could hear oral arguments in the fall and could render a decision by the end of the year. Prop. 12, which took effect Jan. 1, 2022, prohibits in California the sale of pork from hogs whose mothers were raised in pens — anywhere in the world — that do not comply with the state’s highly prescriptive housing standards. It applies to any uncooked pork sold in the state, whether produced there or outside its borders. Nearly all pork currently produced in the United States fails to meet California’s arbitrary standards. (Business groups in California recently got a state superior court to delay the effective date of Prop. 12 for 180 days after final implementing regulations are issued.)

“In addition to its unconstitutional extraterritoriality,” Wolters said, “Prop. 12 sets arbitrary animal housing standards that lack any scientific, technical or agricultural basis and that will only inflict economic harm on U.S. hog farmers and consumers.”

To continue selling pork to the nearly 40 million consumers who live in California, which represents about 15 percent of the U.S. pork market, pork producers would need to switch to alternative sow housing systems. Industry estimates for converting sow barns or building new ones to meet the Prop. 12 standards are in the billions of dollars. Even with farmers bearing most of the costs, consumers in California and across the nation will eventually see higher pork prices.

In addition to its legal efforts, NPPC weighed in on problems with the initial proposal implementing regulations for Prop. 12, including an unworkable annual certification of hog farms’ compliance with the initiative’s requirements. The California Department of Food and Agriculture, which wrote the regulations, has yet to issue final rules.



Naig Applauds U.S. Supreme Court Decision to Consider the Constitutionality of California’s Proposition 12

Iowa Secretary of Agriculture Mike Naig today issued the following statement in response to the U.S. Supreme Court decision to hear the case against California’s Proposition 12 filed by the American Farm Bureau Federation and the National Pork Producers Council. California’s Proposition 12 prohibits the sale of pork from hogs born to sows– anywhere in the world – not raised according to the state’s highly prescriptive housing standards.

“I am extremely pleased that the U.S. Supreme Court will consider the constitutionality of California’s Proposition 12. This decision is the first step in preserving the rights of our farmers, protecting the well-being of our livestock and ensuring consumers have access to affordable food.

“Over the last two years, Iowa farmers, consumers and rural communities have faced many challenges beyond their control, but they should not have to face another simply due to one state’s heavy-handed and unnecessary regulations. Our founders were clear when they wrote the Constitution; only the federal government holds the power to regulate interstate and international commerce. California politicians and activists cannot regulate activities outside of their borders, let alone Iowa farmers.

“As the country’s top pork producing state, Iowa farmers take great pride in caring for their animals and producing a high-quality, nutritious and affordable source of protein for consumers. California represents 15% of U.S. pork production. Iowa farmers need access to this market.”

California’s Proposition 12 took effect Jan. 1, 2022. In August 2021, Iowa Sens. Chuck Grassley and Joni Ernst co-sponsored the Exposing Agricultural Trade Suppression (EATS) Act, that would prohibit states from interfering with food production in other states.



AFBF Welcomes Supreme Court Decision to Hear Prop 12 Case

American Farm Bureau Federation President Zippy Duvall today commented on the U.S. Supreme Court decision to hear the case against California’s Proposition 12 filed by AFBF and the National Pork Producers Council. The state law seeks to ban the sale of pork from hogs that don’t meet the state’s arbitrary production standards, even if the pork was raised on farms outside of California.

“AFBF is pleased with the Supreme Court’s decision to consider the constitutionality of California’s law imposing arbitrary requirements on farmers well outside its borders.   We share California’s goal of ensuring animals are well cared for, but Prop 12 fails to advance that goal. We look forward to presenting the facts to the Court, including how Prop 12 hamstrings farmers’ efforts to provide a safe environment for their animals, while harming small family farms and raising pork prices across the country. One state’s misguided law should not dictate farming practices for an entire nation.”



2021 California E85 Sales Shatter Previous Record; Momentum Continues in 2022
    
Sales of E85 flex fuel in California surged to a new record in 2021, jumping 55 percent over 2020 levels and nearly doubling since 2018, according to new data released by the California Air Resources Board (CARB). Last year, California drivers purchased nearly 62.5 million gallons (mg) of E85 flex fuel, a blend containing up to 85 percent ethanol and 15 percent gasoline, for use in flex-fuel vehicles (FFVs). That’s up from about 40 mg in both 2019 and 2020, and 33.8 mg in 2018.

The surge in California E85 sales has accelerated further in 2022, as record-high prices for regular E10 gasoline are driving greater demand for lower-cost, lower-carbon alternatives. In recent weeks, E85 has typically been priced 30-50 percent below gasoline at stations across the Golden State.

California is one of just a handful of states that reports annual E85 sales volumes, but Renewable Fuels Association President and CEO Geoff Cooper said it is safe to assume that California now leads the nation in consumption of low-carbon flex fuels.

“During this time of record-high gas prices and heightened concerns about climate change, California drivers are seeking out options at the pump that are both more affordable and better for the environment,” Cooper said. “E85 satisfies both of those consumer demands. This new data show that when the fuel is made available and marketed properly, FFV drivers will absolutely respond. The combination of the California Low Carbon Fuel Standard, federal Renewable Fuel Standard, and a concerted promotional campaign by innovative retailers proves that the so-called ‘ethanol blend wall’ is a fictional barrier that can be eradicated with smart policy and marketing efforts.”

California’s largest provider of E85 noted that the momentum witnessed in 2021 has continued to build in 2022. “Demand for E85 has been on the rise this year, with increases of over 20 percent from January to February, and we expect to see the same for March,” said Greg Jones, Director of Business Development at Pearson Fuels. “We always want to encourage motorists to check their gas caps to see if they're driving a flex-fuel vehicle, and we are seeing more and more Californians taking advantage of our website and mobile app to find E85 stations near them. Drivers are seeing a real difference and saving quite a bit of money. In addition to that, we're focusing on blending our E85 with renewable naphtha, resulting in a nearly 100 percent renewable fuel that is 60 percent lower in greenhouse gas emissions compared to unleaded gasoline. We believe E85 can play an important role for decades and has the opportunity to become a low carbon fuel option for the millions of drivers who own these vehicles.”

Data from the California Energy Commission show that the number of FFVs on California roadways was nearly double the amount of electric vehicles at the end of 2020.



Black Sea Shutdown Increases Price Prospects for U.S. Corn and Wheat

High prices for U.S. corn, soybeans and wheat are not expected to be a short-term shock, according to a new RaboResearch report, “The Grain Drain After Ukraine.” While the sudden shutdown of trade in the Black Sea region has sent corn and wheat prices to their highest in a decade, the 10-year outlook for all major crops has shifted up to a new price level. The report cites transformative geo-political changes, continued increases in demand and limited acreage availability as the shift’s drivers.

The war in Ukraine has caused trade routes shipping agricultural products grown from the Black Sea region to other parts of the world to effectively shut down. The continuing conflict will cut supplies of corn and wheat available to the global market. RaboResearch expects the U.S. to increase its exports to help fill the gap. The additional global demand for U.S. products should also increase the prices paid to farmers for these crops. According to RaboResearch analysis, a 200 million bushel increase in exports for each commodity would increase the 2022/23 average on-farm price for corn by approximately 13% and wheat by approximately 50%.

“We projected U.S. farm prices to be strong this coming year,” writes lead report author, Andrick Payen, grain and oilseed analyst with Rabo AgriFinance. “But the Ukrainian conflict is likely to push wheat prices to reach record highs.”

For the 2022/23 crop marketing year, RaboResearch estimates the average on-farm price, which takes local basis into account, to be $5.77 for corn and $10.50 for wheat when their export sales increase by 200 million bushels.

This year’s report is also the first annual outlook to incorporate the expected expansion of U.S. soybean crush capacity into the 10-year acre and price estimates. Fueled by the growing demand for soybean oil as an ingredient for renewable diesel, the crush capacity expansion is an important transformation driving long-term commodity prices to a higher level.

Higher prices, however, do not spell bigger profits. Costs for farm inputs such as seed, fertilizer and land will likely also rise, squeezing farmers’ margins over the next decade. Grain companies will have to navigate great volatility in their trading activities. And livestock producers will likely face higher feed prices.



Statement by Secretary Vilsack on the President’s Fiscal Year 2023 Budget

The Biden-Harris Administration today submitted to Congress the President’s Budget for fiscal year 2023. The President’s Budget details his vision to expand on the historic progress our country has made over the last year and deliver the agenda he laid out in his State of the Union address—to build a better America, reduce the deficit, reduce costs for families, and grow the economy from the bottom up and middle out.

“The President’s budget provides USDA with the tools needed to support a vibrant, revitalized, and prosperous rural America. It contains transformational investments that will help rural communities build resilience to the climate crisis, increase landscape resiliency to the impacts of climate change, create more and better markets for our hardworking producers, bolster access to healthy and affordable nutrition for families, help connect all Americans to high-speed, affordable, and reliable internet, strengthen USDA’s efforts to build equitable systems and programming, and position the United States to be a leader in Agricultural Research. It will also help many of USDA’s agencies rebuild capacity after years of staff losses, strengthening the Department so we can better perform our duties and serve the American people. This budget proposal is a statement of intent that underscores President Biden’s commitment to the success of rural Americans and their communities.”

The Budget makes critical investments in the American people that will help lay a stronger foundation for shared growth and prosperity for generations to come. At USDA, the Budget would:

Invest in climate resilience and U.S. agriculture’s ability to be part of the climate solution. As part of President Biden’s whole-of-government approach to confronting the climate crisis, the Budget proposes $1.177 billion in funding to address climate change across private, working agricultural land. The Budget proposes $1 billion to support agricultural producers and landowners to undertake conservation and climate-smart practices on agricultural lands. The Budget builds on the $618 million investment to protect and restore watersheds made in the Bipartisan Infrastructure Law by proposing an additional $135 million for these efforts.

The Budget also builds on the $5.5 billion investment in the U.S. Forest Service made by the Bipartisan Infrastructure Law to reduce the risk of wildland fire, restore ecosystems, and protect communities. It proposes increases of $285 million for forest restoration activities on National Forest Service lands and $5 million for Forest Inventory and Analysis. The Budget includes $390 million in additional funding to ensure ongoing support for President Biden’s direction that no firefighter is paid less than $15 per hour, hire additional firefighters, increase their pay, and convert more firefighters from temporary to permanent. These changes support USDA's ability to confront the wildland fire crisis due to longer fire seasons associated with a changing climate.

Prioritize consistent access to safe, nutritious food for all Americans. USDA’s core nutrition programs are the most far-reaching, powerful tools available to ensure that all Americans, regardless of race, ethnicity, or background, have access to healthy, affordable food. The Budget proposes $111 billion for the Supplemental Nutrition Assistance Program (SNAP), a budget level that supports 43.5 million Americans per month. It maintains funding for the Special Supplemental Nutrition Program for Women, Infants and Children (WIC) at $6 billion. In 2023, an average of 6.4 million low-income women, infants and children are expected to participate in the program each month. The budget also proposes to continue the provision of enhanced Cash Value Benefits (CVBs) through 2023 to ensure that all participating women and children have access to the scientific-based recommended level of fruits and vegetables thereby improving health outcomes as well as program retention.

Build stronger rural economies. The President’s Budget invests $935 million in rural America. It builds on the $65 billion investment made by the Bipartisan Infrastructure Law to make high-speed internet available to all Americans, bring down high-speed internet prices across the board, and provide technical assistance to rural communities seeking to expand broadband through an additional $113 million over the 2022 enacted level for Reconnect to provide access to quality broadband to rural residents and address challenges for Tribal communities. Access to high-speed internet serves as an economic equalizer for rural America while creating high-paying union jobs in rural America. The Budget also provides $300 million to bring affordable electric power to rural residents, Tribal communities, community facilities, schools and medical institutions that perform critical services each day. The Budget also provides $1.9 billion and includes a requirement that funding for construction, preservation or rehabilitation will be targeted to projects that improve energy or water efficiency, implement green features, and addresses climate resilience.

Develop more and better markets for U.S. agricultural products. USDA is working to transform the nation’s food system by making it fair, competitive, distributed, and resilient and by building new markets at home and abroad. The Budget builds upon the Biden-Harris Administration’s efforts to create a fairer, more competitive and more resilient meat and poultry supply chain by providing more than $10 million for oversight and enforcement of the Packers and Stockyards Act. It also provides support to the Food Safety and Inspection Service to help small and very small processing facilities by reducing user fees. The Budget also provides money to support innovation in agriculture and livestock industries, including $22 million for the Dairy Business Innovation Initiatives, for example, which supports dairy businesses in the development, production, marketing and distribution of dairy products.

Ensure underserved groups can more fully access and participate in USDA programs and services. Since day one of the Biden-Harris Administration, USDA has taken bold, historic action to root out generations of systemic racism, to deeply integrate equity in decision-making and policymaking, and to build equitable systems and programming inclusive of all of its employees and the American people. The Budget supports ongoing efforts to help agricultural producers and landowners resolve heirs’ land ownership and succession issues by proposing a program level of more than $60 million. In this Budget, the National Institute of Food and Agriculture proposes more than $315 million for Minority-Serving Institutions (MSI), an increase of more than $53 million above the 2021 Enacted level. The Budget also proposes $39 million for the Rural Partners Network – a renewed and expanded initiative to leverage USDA’s extensive network of county-based offices to help people in high poverty counties, including energy communities.

The Budget makes these smart investments while also reducing deficits and improving our country’s long-term fiscal outlook.

For more information on the President’s FY 2023 Budget, please visit: www.whitehouse.gov/omb/budget.