Thursday October 19 Ag News

Rural Mainstreet Economy Slumps to a 2023 Low

For a second straight month, the overall Rural Mainstreet Index (RMI) sank below growth neutral according to the October survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

Overall: The region’s overall reading for September fell to 44.4 from September’s 49.5. The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral.

“This is the weakest recorded reading for 2023 and points to weaker farm and non-farm economies. Despite this weakness, only 26.8% of banks reported tightening credit standards for farmers while 34.5% indicated that their bank had tightened credits standards for businesses in their area,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

Farming and ranching land prices: The region’s farmland price index dropped to 55.6 from September’s 65.4. “Creighton’s survey continues to point to solid, but slowing, growth in farmland prices as farm commodity prices weaken,” said Goss.

Farm equipment sales: The farm equipment-sales index for October increased slightly to a weak 48.0 from September’s 44.0. “This is the fourth time the past five months that the index has fallen below growth neutral. Higher borrowing costs are having a negative impact on the purchases of farm equipment,” said Goss.

“For a second consecutive month, several bankers voiced concerns over economic losses of pork producers in their area,” said Goss.

Bankers were asked the greatest challenge to farming profitability over the next 12 months. Approximately:
*44.4% named low or falling crop prices.
*22.2% identified rising or high interest rates.
*14.8% registered rising or high farm input costs.
*7.4% reported trade barriers and trade restrictions.
*The remaining 11.2% named other factors such as low hog prices and marketing of crops.
*Despite higher interest rates, no bankers identified farm loan bankruptcies.

Below are the state reports:
Nebraska: The Nebraska RMI for October fell to 44.3 from 48.0 in September. The state’s farmland-price index for October declined to 54.3 from 63.4 in September. Nebraska’s October new-hiring index increased to 49.8 from September’s 48.3. According to U.S. BLS data, the state’s Rural Mainstreet Economy has expanded employment by 1.2% over the past 12 months, compared to a higher 1.4% for urban areas of the state for the same period-of-time.

Iowa: Iowa’s October RMI increased to 43.5 from 41.4 in September. Iowa’s farmland-price index for October slumped to 45.9 from September’s 61.5. Iowa’s new-hiring index for October dropped to 44.2 from 45.9 in September. According to U.S. BLS data, the state’s Rural Mainstreet Economy has expanded employment by 0.8% over the past 12 months, compared to a higher 1.4% for urban areas of the state for the same period-of-time. Terry Engelken, vice-president and lender at Washington State Bank in Wash. reported that, “Corn and Soybean yields are higher than most farmers expected, considering we are in a drought area.”

The survey represents an early snapshot of the economy of rural agriculturally- and energy-dependent portions of the nation. The Rural Mainstreet Index is a unique index covering 10 regional states, focusing on approximately 200 rural communities with an average population of 1,300. The index provides 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 and launched it in January 2006.



Central Valley Ag Partners to Improve Fertilizer Efficiency, Water Quality

Central Valley Ag, a leading agricultural cooperative, partners with Nebraska’s Natural Resources Districts (NRDs) on the development of the Producer Connect app. Producer Connect is a groundbreaking web and mobile application suite designed to empower agricultural producers with the tools they need to optimize inputs, enhance agricultural profitability, improve water quality, and increase irrigation efficiency.

“Central Valley Ag wants to assist our growers in the proper use of nitrogen fertilizers to maximize crop uptake and minimize loss to the environment,” said Tim Mundorf, Central Valley Ag director of soil management.  “Producer Connect app is a tool for our growers to track nitrogen application, improve management of nitrogen credits, and maximize nitrogen-use efficiency.”

Additional partners on the project include the Nebraska Corn Board, Natural Resources Conservation Service (NRCS), 17 of Nebraska's 23 NRDs, the Nebraska Association of Resources Districts (NARD) and the NARD Foundation.

“We are pleased Central Valley Ag is joining us to move Producer Connect forward,” said Dr. Orval Gigstad, NARD president. “The development of Producer Connect is a joint effort that underscores the commitment of key stakeholders to foster a thriving agricultural industry while protecting Nebraska’s water quality and quantity.”

Producer Connect will be free to producers and offer a wide range of features designed to simplify nitrogen and water management, including:
    Producer-specific data
    Protected data
    Customizable nitrogen recommendations
    Irrigation efficiency
    Historical data analysis
    Economic analysis of nitrogen applications
    Information exchange

Producer Connect is currently in its initial stages of development and is expected to launch in June 2024. The initial rollout will focus on Phase 2 and Phase 3 Groundwater Quality Management Areas and areas with irrigation allocations.



Heartland United Way Food Drive Thrives at Husker Harvest Days 2023

Husker Harvest Days, in partnership with the Heartland United Way, continues its tradition of supporting an annual food drive in Grand Island, Neb. For this year’s event, FFA members from across the state donated a minimum of five nonperishable food items and received free entry to the show. In addition, the food drive extended to local grocery stores in Hall, Hamilton, Merrick and Howard counties during the show week.

The 2023 food drive resulted in 15,101 pounds of food, supporting 22 backpack programs and food pantries across the four counties.

“The food collected is so important to local backpack programs, shelter meal providers and local food pantries to help ensure people have access to food,” said Karen Rathke, President of Heartland United Way.

At collection sites, including Super Saver, Hy-Vee, MNO Market, Whitefoot Market, Hometown Market and Kerry’s Grocery, people could donate to cover groceries pre-bagged with items selected to meet the needs of the area. Heartland United Way then picked up the donations, making it convenient for donors and further supporting backpack programs by providing families with easily preparable food.  

“We are committed to creating a world free of hunger,” said Matt Jungmann, Farm Progress National Events Director. “Husker Harvest Days is an opportunity to support that mission locally in the state of Nebraska. We are honored to partner with the United Way and FFA to serve the food insecure in rural America.”



Iowa elementary students invited to learn with pigs
    
Iowa elementary school students will have the chance to learn about life on a pig farm through a virtual visit on Thursday, October 26. The Iowa Pork Producers Association is working with the Iowa Agriculture Literacy Foundation (IALF) to host a "Learning with Pigs Farmchat®". Students can join IALF's Education Program Coordinator Alex Osborn virtually as she tours the Benton County pig farm of Todd and Denise Wiley.

“We appreciate the opportunity to educate grade school students as well as 4-H and FFA kids who have a genuine interest in learning about animal agriculture and raising pork,” said Todd Wiley.

Kids will learn how farmers keep their pigs safe, what a hog building looks like, what pigs eat, and much more. Students can also ask questions as they engage with a farmer and see pigs in real time. This webinar is ideal for elementary students in 4th grade or older.

Kelly Foss, Executive Director of the Iowa Agriculture Literacy Foundation, emphasized the importance of showcasing the connection between agriculture and students’ daily lives. “We focus on helping youth see the relevance of agriculture in their daily lives and support teachers as they integrate agriculture into their curriculum. The Learning with Pigs FarmChat® provides students a unique insight into where their food comes from.”

To support educators in making the most of this experience, a comprehensive kit and associated resources will be provided to teachers. These tools help teachers see that agriculture isn’t confined to a one-day event, but rather serves as a lens they can use to help students explore scientific and social studies concepts.

“I hope the kids get a basic understanding of what goes on inside the barns, an opportunity they might not have had otherwise,” Wiley said. “While they might not remember every detail we discuss, we hope they remember these animals are well cared for and treated with a great amount of respect.”

The Iowa Pork Producers Association and IALF encourage teachers all over the state to participate in this learning opportunity.

Questions can be directed to Cathryn Carney at ccarney@iowaagliteracy.org.

Teachers can go to this link to register for Ag in Action: Learning with Pigs https://us06web.zoom.us/webinar/register/WN_YqXv38srRmm6SGzN7Dnrcg#/registration. It will take place at 10:30 a.m. on Thursday, October 26.



Record Low Veal and Lamb and Mutton Production in September

Commercial red meat production for the United States totaled 4.35 billion pounds in September, down 7 percent from the 4.66 billion pounds produced in September 2022.

Beef production, at 2.15 billion pounds, was 10 percent below the previous year. Cattle slaughter totaled 2.61 million head, down 10 percent from September 2022. The average live weight was down 2 pounds from the previous year, at 1,362 pounds.

Veal production totaled 3.6 million pounds, 15 percent below September a year ago. Calf slaughter totaled 21,700 head, down 31 percent from September 2022. The average live weight was up 50 pounds from last year, at 287 pounds.

Pork production totaled 2.19 billion pounds, down 3 percent from the previous year. Hog slaughter totaled 10.5 million head, down 2 percent from September 2022. The average live weight was down 4 pounds from the previous year, at 281 pounds.

Lamb and mutton production, at 10.2 million pounds, was down 6 percent from September 2022. Sheep slaughter totaled 173,800 head, 1 percent above last year. The average live weight was 116 pounds, down 9 pounds from September a year ago.

By State          (million lbs - % Sept '22)
Nebraska ......:     606.2             89       
Iowa .............:     720.9            101       
Kansas ..........:     465.7             91       

January to September 2023 commercial red meat production was 40.4 billion pounds, down 2 percent from 2022. Accumulated beef production was down 5 percent from last year, veal was down 12 percent, pork was up slightly from last year, and lamb and mutton production was down 3 percent.



September Milk Production up slightly
                        
Milk production in the 24 major States during September totaled 17.5 billion pounds, up slightly from September 2022. August revised production, at 18.1 billion pounds, was down 0.7 percent from August 2022. The August revision represented a decrease of 73 million pounds or 0.4 percent from last month's preliminary production estimate. Production per cow in the 24 major States averaged 1,960 pounds for September, 3 pounds above September 2022.  The number of milk cows on farms in the 24 major States was 8.91 million head, 16,000 head less than September 2022, and 2,000 head less than August 2023.

Milk production in Iowa during September 2023 totaled 480 million pounds, up 1 percent from the previous September according to the latest USDA, National Agricultural Statistics Service – Milk Production report. The average number of milk cows during September, at 240,000 head, was unchanged from last month but up 2,000 from September 2022. Monthly production per cow averaged 2,000 pounds, unchanged from last September.

July-September Milk Production down 0.7 Percent
Milk production in the United States during the July - September quarter totaled 56.1 billion pounds, down 0.7 percent from the July - September quarter last year. The average number of milk cows in the United States during the quarter was 9.38 million head, 43,000 head less than the April - June quarter, and 33,000 head less than the same period last year.

NEBRASKA MILK PRODUCTION
Milk production in Nebraska during the July-September 2023 quarter totaled 334 million pounds, down 4% from the July-September quarter last year, according to the USDA's National Agricultural Statistics Service. The average number of milk cows was 54,000 head, 3,000 head less than the same period last year.



EPA, Iowa State University, and the University of Iowa Announce Discounted Registration for Media at Anaerobic Digestion on the Farm Conference  

Today, EPA Region 7 announced members of the media will receive discounted registration fees for the upcoming conference titled "Anaerobic Digestion on the Farm: Optimizing environmental and economic outcomes for rural communities and beyond."

EPA Region 7, with partners Iowa State University and the University of Iowa, will co-host the regionally focused conference on anaerobic digestion (AD) in agriculture on Nov. 6-8, 2023, at Iowa State University in Ames, Iowa.

Media members are eligible for 50% discounted registration fees available for $150. Standard registration for professionals is available for $300. All registration fees collected will go solely toward defraying conference expenses incurred by Iowa State University. EPA Region 7 will provide its own funding for its participation in the conference and will not receive any funding from the registration fees collected by Iowa State University.

The conference will feature presentations, exhibits, and panel discussions covering a variety of anaerobic digestion topics. The conference will also include virtual tours of anaerobic digestion facilities and a poster session. Additional information regarding the upcoming conference, including a full conference agenda, is available on EPA’s conference page https://www.epa.gov/ia/forms/anaerobic-digestion-farm-conference.



Corn Grower Leaders, Other Ag Groups, Caution Commerce Secretary About Fertilizer Duties

Saying fertilizer shortages are creating a hardship for farmers across the U.S., the National Corn Growers Association (NCGA) – along with 62 other agricultural groups, including state corn grower organizations – sent a letter today to Commerce Secretary Gina Raimondo calling on her to consider the current difficulties faced by farmers as she recalculates duties on phosphate fertilizer imported from Morocco.

The letter comes after the U.S. Court of International Trade ordered the agency to reconsider its previous decision on calculating the duties.

“High costs and limited availability of fertilizer continue to strain family farms across the United States,” the letter said. “[We] urge you to consider the impact of phosphate duties as the Department of Commerce works to reconsider its duty rate calculation.”

The duties levied on fertilizes have caused one of the U.S.’s top importers of certain phosphate fertilizers, the Moroccan-based OCP Group, to drastically reduce U.S. imports over the last few years, even on products not sold in this country or easily attained by American farmers.

As the letter explains, these developments are having a financial impact on farmers.

“Duties levied on phosphate imports combined with these other factors have led to substantial price volatility over the past three years as evident by phosphate price increases of over 230% from 2020 to 2022,” according to the letter signatories. “During 2022, farmers spent $36.9 billion on fertilizer and lime, compared to $24.4 billion in 2020.”

The issue originated in February 2021 when Commerce called on the International Trade Commission to implement duties of almost 20% on imported fertilizers from Morocco after the Mosaic Company, which manufactures fertilizers used in the U.S. and abroad, filed a petition with the department seeking the levies. The ITC voted in March of that year to impose the duties while adding similar levies on Russian imports.

Soon after, NCGA and state corn grower groups launched a full campaign to raise awareness among policymakers, including members of Congress and administration officials, about the impact the duties would have on farmers. The organization worked with the media and provided written statements and farmer testimony on the matter.

The court’s recent ruling to remand Commerce’s decision was seen as a partial win by grower leaders, but advocates say for farmers to be successful, trade barriers must be eliminated completely.

“American agriculture must have market access to compete globally, and a major impediment like a fertilizer duty only undermines the ability to establish and expand markets,” the letter noted.

Absent delays, Commerce is expected to finalize its administrative review by November 1, and issue its remand determination by December 13.



Latin American Delegation Tours SD Ethanol Supply Chain as a Model for Starting Blending Programs in Their Countries

The American Coalition for Ethanol (ACE) and the South Dakota Corn Utilization Council are hosting a tour in conjunction with the U.S. Grains Council (USGC) in South Dakota this week to show stakeholders from Costa Rica, Guatemala and Panama the opportunities for sourcing, marketing and retailing ethanol-blended gasoline as these three countries and others in Central America consider starting ethanol-gasoline blending programs in 2024-2025.
 
The delegation is comprised of public officials, including representatives from the Ministries of Mines and Energy, Environment and Agriculture, and representatives from the private sector and the agricultural industry. The trade mission group will visit a farm, two ethanol plants, fuel stations, a rail receiving and blending facility, and a pipeline terminal. The purpose of the tour is to show the group of delegates the entire process of turning corn into ethanol, as well as getting that ethanol to the consumer.
 
“ACE, U.S. Grains Council, and the Iowa Renewable Fuels Association co-hosted a successful tour across Iowa with a Mexican delegation in 2019. The model we used helps marketers and nations considering ethanol see how the ethanol supply chain has developed, and more importantly, gives delegates opportunities to talk to people working with ethanol every day, who often dispel a lot of the myths that exist all over the world, not just in the U.S.,” said Ron Lamberty, ACE Chief Marketing Officer. “By coming to South Dakota and seeing the process from the corn field to the fuel pump, diverse groups of stakeholders can visualize what is possible and hopefully shorten the time it will take to implement ethanol blending programs in their countries.”
 
“It’s great to see this delegation visiting South Dakota to learn more about ethanol production and possibly blending ethanol into their own fuel supply,” said Chad Blindauer, President, South Dakota Corn Utilization Council. “With so much of our corn going into ethanol production, we are more than happy to show potential customers how clean burning ethanol will help with their environmental and fuel supply issues.”
 
According to Federico Salcedo, USGC Ethanol Consultant for Latin America who is helping lead the group, these technical visits to the ethanol-producing states in the U.S., such as South Dakota, are an opportunity for representatives of public and private sectors from foreign countries to learn about the ethanol value chain in the U.S.
 
"Being able to learn first-hand about ethanol production, processing and marketing stages helps these delegations and countries identify the economic, social and environmental opportunities of ethanol blends,” Salcedo said. “The U.S. Grains Council is committed to showcasing the United States' experience with other countries, such as Guatemala, Costa Rica and Panama, that are considering starting in the near future ethanol-gasoline blending programs.”



Growth Energy Welcomes New Chairman of the Board

Today, Growth Energy, the nation’s largest biofuels trade association, announced the election of Tom Willis as chairman of the association’s board of directors. Willis was previously the board’s treasurer and is CEO of Conestoga Energy Holdings, a leading provider of sustainable, low-carbon ethanol with the capacity to produce more than 200 million gallons annually.  

“Growth Energy and its members have always been at the forefront of innovation and that’s never been truer than it is today. We’re building a broad, sector-spanning bioeconomy, poised to provide solutions to any number of economic and environmental challenges,” said Willis. “I’m honored to serve as Growth Energy’s chairman during this exciting time. I look forward to working with our board, our members, and the Growth Energy staff to ensure continued progress for an ever-expanding industry.”

Growth Energy’s outgoing Chairman Dan Sanders, CEO of Front Range Energy, welcomed Willis to the position, noting his strong leadership within the industry and strong background in agriculture. “For years, Tom has been one of our resident experts on how the biofuels industry is delivering on the nation’s energy, environmental, and economic goals,” Sanders said. “Beyond his leadership at Conestoga, he’s farmed hundreds of acres, raised livestock, and was one of the country’s first evangelists for carbon capture technology, which is only growing in popularity and importance for our industry. His leadership, acumen, and vision make him uniquely positioned to take the reins and lead our membership into this next chapter.”  



The Arab Oil Embargo and Ethanol: 50 Years Later
Renewable Fuels Association President and CEO Geoff Cooper
        
Fifty years ago this week, the Organization of Petroleum Exporting Counties (OPEC) announced an embargo on oil exports to the United States in retaliation for America’s support of Israel in the Yom Kippur War. The embargo took a devastating toll on the U.S. economy, as world oil prices quadrupled in a matter of weeks. Americans faced record high gas prices, long lines and rationing at gas stations, and—in many cases—stations that had no fuel at all. More broadly, the 1973 energy crisis was a major driver of the high inflation rates and stagnation that plagued the U.S. economy throughout the remainder of the 1970s.

Five decades later, with war again raging in Israel and global energy markets again on edge, the semicentennial anniversary of the Arab oil embargo provides an opportunity to reflect on how far we’ve come in improving U.S. energy security—but also how far we still have to go to achieve true energy independence.

A few years after the Arab oil embargo was lifted, newly elected President Jimmy Carter signed legislation focused on strengthening U.S. energy security and better insulating the economy from global oil shocks. Among many other provisions, the bill included the first-ever tax incentives supporting the production and use of renewable fuels. And, thus, the seeds of today’s U.S. ethanol industry were planted.

In the decades since, the ethanol industry has grown dramatically. Indeed, renewable fuels have led the transition to a U.S. energy market that is far more secure and resilient than it was in the 1970s. The facts are undeniable:
    Today, ethanol makes up 10.5 percent of the nation’s gasoline supply, up from essentially zero in 1973 and less than 1 percent 30 years ago in 1993.
    Since 1973, the U.S. industry has cumulatively produced 6.1 billion barrels of cleaner-burning ethanol—that’s 256 billion gallons. It would take 9.3 billion barrels of crude oil to refine an equivalent amount of gasoline (each 42-gallon barrel of crude oil yields roughly 19 gallons of gasoline).
    The 15.4 billion gallons of U.S. ethanol produced in 2022 displaced an amount of gasoline refined from roughly 600 million barrels of crude oil. That means $61 billion stayed in the U.S. economy, rather than flowing to OPEC to pay for oil.
    U.S. petroleum imports from OPEC are down almost 60 percent since the 1973 crisis (from roughly 3 million barrels per day to 1.25 million barrels per day in 2022) and down 80 percent from the peak level (6 million barrels per day) in 2007, which—not coincidentally—was the year the Renewable Fuel Standard was extended and expanded.
    After peaking at 9.2 billion gallons in 2005, U.S. imports of finished motor gasoline have plummeted to about 1 billion gallons annually in recent years.
    Adding low-cost ethanol to the nation’s gasoline supply not only improves energy security, but it also enhances economic security for American households. A recent study by university economists concluded that “adding ethanol to gasoline decreases the price paid by U.S. drivers at the pump. We estimate the average discount per gallon to be $0.77 between 2019 to 2022 and averaged across our models. …this would add up to total savings of $95.1 billion per year for U.S. consumers.”

Clearly, our nation has made enormous strides toward energy independence since the Arab oil embargo of 1973. But we’re not there yet. As recent events have shown us, geopolitical events and unrest—like conflict in Israel and war in Ukraine—still significantly influence the price of gasoline for U.S. consumers. While increased domestic energy production (in all forms) has absolutely helped to blunt the impact of geopolitics on fuel prices and supplies, the American consumer’s pocketbook is still affected by events unfolding halfway around the world. Why? Consider these facts:
     Even though the U.S. is now a net energy exporter, we still import a lot of crude oil. In 2022, nearly 2.3 billion barrels of oil worth roughly $232 billion were imported by U.S. refiners. The U.S. still imports almost twice as much crude oil as it exports. Almost 40 percent of the crude oil processed by U.S. refiners last year was imported, meaning the U.S. market continues to feel the effects of global oil shocks.
    For example, U.S. oil prices jumped more than $21 per barrel (23 percent) in the month following Russia’s invasion of Ukraine. Not surprisingly, gas prices followed, surging by about $1.50 per gallon and eventually hitting a record high of $5.01 in June 2022.
    About 16 percent (360 million barrels) of our oil imports still come from OPEC, meaning our nation still transfers billions of dollars every year to the cartel. In 2022 alone, the U.S. sent roughly $31 billion—or $240 per American household—to OPEC nations to pay for crude oil imports.
    As recently as 2016, more than one-third of U.S. oil imports came from OPEC, and with the recent easing of U.S. sanctions on oil imports from Venezuela, OPEC’s share of total U.S. imports is set to rise again.
    Meanwhile, the amount of crude oil in the U.S. Strategic Petroleum Reserve has essentially been cut in half over the past decade, falling to a 40-year low in 2023.
 
As long as U.S. gas prices are significantly influenced by developments in the Middle East, Eastern Europe, and other regions, no one can credibly argue that the United States is truly “energy independent.” Yes, our nation’s energy market is undeniably more secure, resilient, and diversified than it was 50 years ago—and that’s great news for American consumers. But we still have plenty of work to do, and ethanol and other renewable fuels hold the key to a safer and more secure American energy future.

That’s why RFA will continue our diligent efforts with Congress and the administration to ensure renewable fuels have a prominent role in our nation’s energy strategy. From removing arcane barriers that prevent year-round consumer access to higher ethanol blends (like E15) to protecting the Renewable Fuel Standard to ensuring smooth and rational implementation of clean energy tax provisions from last year’s Inflation Reduction Act, we will continue to work with our nation’s leaders to capture ethanol’s full potential as a homegrown, low-carbon, low-cost energy source.