Thursday November 29 Ag News

AGRICULTURAL ECONOMISTS STUDY HOW MORAL HAZARD AFFECTS CROP INSURANCE

New research by agricultural economists at the University of Nebraska–Lincoln challenges traditional thinking on federal crop insurance.

Since the inception of the federal crop insurance program, researchers have questioned whether the program causes moral hazard in input usage, meaning that if producers are shielded from yield risk via crop insurance, they respond by increasing low-yield risk exposure by applying fewer inputs. Opponents of the federal crop insurance program claim moral hazard leads farmers to use crop insurance to transfer costs from themselves to taxpayers, who help fund the program.

Previous research found evidence of moral hazard in input usage, suggesting crop insurance gives producers an incentive to reduce the economic-maximizing input amount, particularly nitrogen, to reduce yields and receive crop insurance payments.

Unlike previous research, the new project includes Actual Production History when examining producer input use behavior related to crop insurance. The addition of APH is important as it is used to calculate liability when producers file crop insurance claims and directly influences indemnity payments. For example, when APH decreases, the size of indemnity amounts decreases as does the likelihood of a payment.

When the role of APH is considered, the amount of moral hazard declines to miniscule amounts. When producers are thinking ahead to future growing seasons, their current year input use is not heavily influenced by the presence of crop insurance.

“Our research is based on the assumption that farmers want to farm next year with a strong crop insurance policy,” said Cory Walters, assistant professor of agricultural economics and study co-author. “Results from the study indicate that the presence of APH in the liability calculation can do a lot in limiting the amount of moral hazard in input usage in crop insurance.”

Walters is active in his family’s farming operation. His experience with production agriculture inspired the new research.

“It did not make sense to me that crop insurance research would not take into account the role of APH and the fact that farmers are forward-thinking,” he said.

Other study co-authors are Lilyan Fulginiti, professor of agricultural economics, and Taro Mieno, assistant professor of agricultural economics.

The results were recently published in the American Journal of Agricultural Economics.



State Beef Councils Join R-CALF USA’s Beef Checkoff Lawsuit: An Action that Will Reveal How Producers’ Money is Spent
The District Court for the District of Montana has allowed the Montana Beef Council, Nebraska Beef Council, Pennsylvania Beef Council, Texas Beef Council, and three individuals to join in R-CALF USA’s beef checkoff lawsuit, a request made with R-CALF USA’s consent. The lawsuit was recently expanded to include 15 state beef councils, including those now joined as parties.

R-CALF USA explained in its response to the intervention request that the intervening state councils’ statement to the court confirm the beef checkoff program is being administrated in an unconstitutional manner, violating producers’ First Amendment rights. However, R-CALF USA stated it agreed to them entering the case so the court can have a full record of how the checkoff money is spent by these private entities.

In their request to join the case, the beef councils argued they are entitled to join because their interests in accessing and using beef checkoff money are different from those of the government. They explained they are entitled to retain “state-specific control” over the checkoff money, where the state activities are directed by a non-governmental board, without committing to input from all producers. R-CALF USA stated this is in direct contradiction to the U.S. Department of Agriculture’s (USDA’s) statements that it remedies the earlier constitutional problems with the beef checkoff program by requiring all councils to subject themselves to USDA review. 

R-CALF USA also explained that for the beef checkoff program to be constitutional it must only produce government speech, which is speech controlled by the federal government, not subject to local or state control by nongovernmental entities. Therefore, R-CALF USA stated it would agree to the councils entering the case because their statements are proof that the councils are using producers’ checkoff tax dollars to fund private speech. As one example, R-CALF USA pointed out that the government did not agree to the councils’ request to join the case as parties. Yet, the councils have expended checkoff taxes to do just that.

The case will now go forward with the councils as intervening-Defendants. “This will allow R-CALF USA to uncover how the councils decide to expend checkoff dollars, helping producers be better informed about how their money is used or misused by the state beef councils,” said R-CALF USA CEO Bill Bullard.



On-Farm Research helps growers generate results
Laura Thompson, NE Extension Educator - Ag Technology

While fall harvest wraps up the final phase of the production season, now is also when growers are making plans for the 2019 growing season. If growers are looking for confirmation the production practices they used this year were profitable, they can turn to the Nebraska On-Farm Research Network.

The Nebraska On-Farm Research Network (NOFRN) provides a way for growers to validate their production practices and make decisions for future years based on what they have learned in their own fields. Research typically is conducted with the producer’s equipment, on the producer’s land and using the producer’s management practices. The on-farm research team works with growers to develop custom plans for research experiments.

“A number of projects can be planned and evaluated in the 2019 growing season, such as soil fertility, cover crop management, starter fertilizer, row spacing, seed treatments, plant populations, variable rate planting prescriptions and in-season fertilizer applications,” says Laura Thompson, extension educator. “Now is the time to start planning these studies. I would encourage people who are interested in doing a study to visit with a Nebraska Extension educator.”

According to Thompson, extension educators can help producers plan a study so they will have confidence in the results. They can also help provide opportunities for additional data to be collected, such as aerial imagery, photographs and other measurements.

Don Batie, a corn-soybean farmer near Lexington, conducted two on-farm research studies in 2017.

“I’m a firm believer of testing it out before we implement a change. We try things all the time, but by doing the on-farm research with the university, we used a statistical approach that brought a lot more confidence to the findings,” said Batie.

South-central Nebraska farmer Ken Herz raises corn, wheat, soybeans, and alfalfa and has a cow-calf operation on a dryland farm. Herz researched the effects of grazing cover crops after wheat in a three-year corn-soybean-wheat rotation. 

“This experience has been extremely rewarding. I would encourage anyone who has questions about agronomic practices that have not been researched to consider doing some on-farm research,” Herz said.

NOFRN is a collaborative partnership of Nebraska Extension, the Nebraska Corn Growers Association, the Nebraska Corn Board, the Nebraska Soybean Checkoff and the Nebraska Dry Bean Commission. The goal of the network is to put to use a statewide on-farm research program addressing critical farmer production, profitability and natural resources questions.

For more information on the project or how to participate, call 402-624-8030, email laura.thompson@unl.edu, contact a local Nebraska Extension office or visit cropwatch.unl.edu/farmresearch.



Dairy Webinar Asks If It’s Time to Visit Your Lender

The I-29 Moo University is hosting a webinar Thursday, Dec. 20 focused on preparing the information that lenders request. The “Improving Conversations with Your Lender” webinar will outline and explain the banking benchmarks and financial documents that lenders need to evaluate loans. The hour-long webinar is scheduled to begin at 11 a.m. and will include time at the end for questions.

In addition, the program will focus on improving enterprise expense breakdowns and identify available follow-up information.

Heather Gessner, extension livestock business management field specialist at South Dakota State University, will present the information. Gessner grew up on a diversified operation raising cattle and hogs, as well as corn, soybeans, oats and alfalfa. Since joining SDSU Extension in 2001, she has earned a national reputation providing farmers and ranchers with enterprise analysis, budget spreadsheets, marketing education and estate and transition planning, education and assistance.

There is no fee for the webinar, but an online registration is required at:
https://tinyurl.com/LenderConversationsI29MooU. Upon registration, a confirmation email containing information to join the meeting will be sent.

The I-29 Moo University is a consortium of extension dairy specialists from Iowa, Minnesota, Nebraska, North Dakota and South Dakota. Now in its thirteenth year, the consortium provides resources and education to enhance a sustainable dairy community along the I-29 corridor by focusing on best management practices, utilization of research-based expertise and resources, and ag-vocating the benefits of a vibrant dairy community. For more information about this webinar or other I-29 Moo University programs contact Fred M. Hall at 712-737-4230 or fredhall@iastate.edu.



Crop Advantage Series Helps Producers Make Decisions for 2019

Crop Advantage meetings provide a solid foundation of current, research-based crop production information to help producers make informed decisions for the farming operation. The 2019 meetings are an opportunity for farmers and crop advisers to hear current research and crop production information from Iowa State University.

Extension specialists will travel to 14 Iowa locations from Jan. 3-30, providing updated management options and recommendations on current and future crop production issues. Meetings offer continuing education credits for Certified Crop Advisers and pesticide safety recertification.

“There is no other program in our crop production education year that brings this many extension specialists together at individual sites across the state,” said Joel De Jong, field agronomist with Iowa State University Extension and Outreach.

In 2018 nearly 2,000 individuals attended one of the meetings, representing all 99 Iowa counties and surrounding states. Eighty four percent of attendees responding to follow-up surveys said information from Crop Advantage would likely save them between $5 and $20 per acre.

“Our goal is to prepare producers to manage potential issues when they arise, or even before they arise, by sharing the most up-to-date scientific knowledge from Iowa State University,” said De Jong. “Content at the meetings is driven by county needs and local production issues.”

Program topics vary by location and are selected for regional concerns and issues. Topics on the agenda this year include: market outlook for 2019 and strategies for dealing with stress, weed management and herbicide resistance, soybean gall midge as a new Iowa pest, nitrogen management in variable environments, and soil pH and liming strategies with low crop prices.

2019 CAS Meeting Dates and Locations
Jan. 3 – Sheldon
Jan. 4 – Burlington
Jan. 8 – Storm Lake
Jan. 9 – Ames
Jan. 10 – Moravia
Jan. 11 – Mason City
Jan. 15 – Okoboji
Jan. 16 – Fort Dodge
Jan. 17 – Waterloo
Jan. 18 – Davenport
Jan. 22 – Le Mars
Jan. 24 – Atlantic
Jan. 29 – Iowa City
Jan. 30 – Denison
For locations, times and program details visit www.cropadvantage.org.

Early registration for each location is $50; late registration made less than seven days prior to the meeting or on-site is $60. Registration includes lunch, printed proceedings booklet, private pesticide applicator recertification and CCA credits. Online registration and additional information is available at www.cropadvantage.org. Contact ANR Program Services at 515-294-6429 or anr@iastate.edu, or contact your regional Iowa State University Extension and Outreach field agronomist with questions.



House and Senate Ag Leaders: We've Reached Agreement in Principle on 2018 Farm Bill

House and Senate Agriculture Committee Chairmen Mike Conaway (R-Texas) and Pat Roberts (R- Kan.) and Ranking Members Collin Peterson (D-Minn.) and Debbie Stabenow (D-Mich.) made the following announcement today on the state of 2018 Farm Bill negotiations:

“We’re pleased to announce that we’ve reached an agreement in principle on the 2018 Farm Bill. We are working to finalize legal and report language as well as CBO scores, but we still have more work to do. We are committed to delivering a new farm bill to America as quickly as possible.”



NCGA Welcomes News of Farm Bill Agreement

National Corn Growers Association President Lynn Chrisp today released the following statement after an announcement that farm bill negotiators – Senate Agriculture Committee Chairman Pat Roberts, R-Kansas, and Ranking Member Debbie Stabenow, D-Mich., and House Agriculture Committee Chairman Mike Conaway, R-Texas, and Ranking Member Collin Peterson, D-Minn., have reached an agreement in principle on a new farm bill.

“It’s imperative that farmers and rural communities have a new farm bill this year. NCGA is grateful for today’s announcement that sets the steps in motion to ensure that happens. Our grower members have been making phone calls and sending emails to Capitol Hill urging lawmakers to reach a deal before year’s end. We thank them for heeding this call and look forward to fully reviewing the conference agreement.”



NAWG Applauds Farm Bill Negotiators for Moving Process Forward

The leadership of the House and Senate Agriculture Committees have announced that they’ve reached a tentative agreement on a conference report for the 2018 Farm Bill, pending final scores from the Congressional Budget Office. While the bill still needs to be reported out of the conference committee, voted on by both Chambers and signed into law, NAWG is pleased the process is moving forward. NAWG President Jimmie Musick made the following statement in response:

“NAWG appreciates conferees diligently working together to reach an agreement to strengthen the agriculture industry. This past year our growers have dealt with the impact of the trade war between U.S. and China, extreme weather conditions, and a struggling rural economy and more. Farm Bill support programs provide them with some certainty during these volatile times.

“NAWG looks forward to reviewing the language within the bill.”



NFU Encouraged by Farm Bill Deal, Urges Swift Passage

Agriculture committee leadership today announced that they have reached an agreement in principle on the farm bill. While the final details of the bill have yet to be released and negotiators wait on cost estimates from the Congressional Budget Office, National Farmers Union (NFU) today expressed optimism that relief from the lapsed 2014 Farm Bill might soon arrive for family farmers and ranchers. NFU President Roger Johnson issued the following statement in response to the news:

“Getting a farm bill through the finish line before the end of the year is critical for the long-term viability and sustainability of family farmers and ranchers across the country. Farmers are enduring a growing financial crisis in the farm economy, and programs that support farm sustainability and diverse markets for family farmers have expired. Senate and House agriculture leaders and their staff have worked tirelessly to resolve differences in the chambers’ respective farm bills, and we’re optimistic they’ve come to terms on a farm bill that begins to provide the relief and certainty farmers need amidst struggling markets due to oversupply and trade volatility. We urge Congress to approve a farm bill before the end of the year.”



Farm Bureau Calls for Final Farm Bill Approval
President Zippy Duvall

"The 2018 farm bill emerging from the conference committee is good news for farmers amid a prolonged downturn in the agricultural economy. Chairmen Roberts and Conaway and Ranking Members Stabenow and Peterson made the bill a priority for this Congress, and all Americans—farmers and consumers—are better off for it.

“Continued access to risk management tools, assistance in foreign market development, and conservation and environmental stewardship programs within the legislation are especially important for farmers and ranchers. These programs will help provide certainty to rural America at a time when it is much needed given the financial headwinds so many family farms now face. Additionally, the bill continues to help low-income children, families, seniors and military veterans access the high-quality foods produced by farm families.

“Farmers and ranchers continue to face challenges outside of the farm bill. Every day we struggle to find the workers we need. Exports were once a backbone of U.S. agriculture, but we now face an uphill battle reclaiming our once robust market share. While the Administration is reviewing the cost and effectiveness of federal regulations, overregulation remains a burden that farmers and ranchers cannot afford, especially now. We urge Congress to continue working on these issues to maintain our nation’s food security and continue agriculture’s significant contributions to U.S. job creation and economic growth.

“The farm bill and ag policy broadly remain bipartisan matters and we encourage both houses of Congress to approve this bill once it is finalized by House and Senate Ag Leaders. We are thankful the Agriculture committees have stayed true to their mission to serve the American farmer and rancher and our nation's consumers, and we look forward to working with the next Congress on all the issues facing agriculture.”



EIA Study: Refiners Could Meet 95 RON Standard Without More Ethanol

A new Energy Information Administration (EIA) study concludes that U.S. petroleum refineries would have “no problem” meeting a requirement to produce gasoline with a higher minimum octane rating (95 Research Octane Number, or “RON”) beginning in 2022, and assumes that refiners would not use more ethanol beyond current levels to meet such an octane standard.

Automakers have called for the broad introduction of higher octane fuels to facilitate fuel economy improvements and reduce tailpipe emissions.

The EIA-commissioned study, conducted by oil industry consulting firm Baker & O’Brien, Inc., examines a scenario in which all new vehicles beginning with model year 2023 require the use of 95 RON gasoline, which is equivalent to today’s premium grade gasoline. According to the study, refiners would simply increase reformer severity to produce higher octane gasoline blendstock, which would then be blended with 10% ethanol to produce a 95 RON finished fuel. The authors found that “…no significant changes in refinery configuration or throughput would be required to meet the minimum 95 RON gasoline requirement.”

Increasing the reformer severity to make higher octane gasoline at the refinery “is well within the range of normal operations,” the report says, noting that “...existing domestic refineries should have no problem meeting the (95 RON) requirements...” Even as the demand for 95 RON gasoline grows as more 95 RON-required vehicles enter the fleet in the study’s 2027 scenario, refiners “…appear to be able to meet the increased 2027 octane requirements with minor operational adjustments. No industry-wide capital intensive projects would be needed to meet the 2027 requirements.”

Reacting to the EIA report, Renewable Fuels Association (RFA) President and CEO Geoff Cooper said, “This study confirms that a 95 RON requirement by itself would do nothing to expand the market for ethanol, even though ethanol will continue to reign as the cheapest and cleanest source of octane available on the market. Rather than using ethanol to boost octane, refiners would choose to run their reformers more intensively to increase production of higher octane hydrocarbons, many of which are highly toxic and would worsen air quality. However, if implemented alongside of—not in lieu of—the Renewable Fuel Standard, a 95 RON requirement could provide new market opportunities for America’s ethanol producers and farmers, as refiners would be compelled to do the right thing and choose ethanol as the primary means of raising octane levels. Still, to truly deliver the efficiency gains and emissions reductions needed in the future, a high octane, low carbon fuel with 98-100 RON would be a much better option.”



Cuba Offers Potential For Grains, But Poses Unique Trade Barriers

Huge potential remains for U.S. agricultural exports to Cuba, including corn, sorghum, barley and their co-products, but so do steep trade challenges, U.S. Grains Council staff learned on a recent industry mission to the country.

Council staff from the Western Hemisphere office participated this month in the Cuba and U.S. Agriculture Business Conference in Havana to learn more about current U.S. export and import policies regarding Cuba, investing in Cuban agricultural production and creating a viable and long-term trade relationship between the two countries. The three-day conference endeavored to increase sales of U.S. agricultural commodities and boost cooperation.

The Council has been involved with Cuba many times over the years, sending a delegation to the island nation as recently as 2015 to examine the market potential for the U.S. grain trade and the financing possibilities the U.S. could offer the country.

The recent mission continued this outreach focused on ag trade. Taking a page from U.S. companies already successfully doing business in Cuba, including Marriott and Jet Blue, meeting attendees pooled their knowledge and know-how to better understand the political and commercial situation to find ways to facilitate U.S trade to Cuba. Comprised of Cuban agribusiness leaders and farmer cooperatives and members of the U.S. ag sector - including corn, soybean, wheat, rice, poultry and potato industries – the mission participants had high hopes to begin to hash out the barriers between the two countries.

“There are no easy answers in Cuba,” said Catalina Correa, U.S. Grains Council regional marketing specialist, Western Hemisphere, who attended the conference, "yet the soil is prepared for greater discussion in how to make the way to higher economic development despite the political realities of both countries.

"There is momentum. Particularly with trade disputes in other regions of the world, U.S. ag producers are searching for other markets, and ones that once seemed too challenging to surpass, like Cuba, now have greater promise.”

According to the U.S.-Cuba Trade and Economic Council, the United States has sold $5.7 billion in food and feed to Cuba since 2000, when an amendment to the trade embargo allowed agricultural sales for cash. U.S. farmers and agribusinesses would like to expand the market, but because the Cuban government is not allowed to make purchases on credit, there are still barriers to getting food and feed grains to the country of 11.4 million people.

Despite this hurdle, the market is expected to offer significant opportunities for U.S. farmers with marketing year 2018/2019 import estimates of a million metric ton (39.3 million bushels) of corn annually, mainly from Argentina. If U.S. farmers could capture that market share, Cuba would be the 12th largest importer of U.S. corn and would also have the potential to increase its usage of U.S. distiller's dried grains with solubles (DDGS) and other grains.

It’s not just the credit issue that’s causing issues in Cuba, and it’s not just sales that are the main driver of U.S. interest. The humanitarian consideration of malnutrition is a reality for the population of the island nation.

There is an established need for animal ag industries including broilers, eggs and beef, and this trip offered the opportunity for discussion about these needs between U.S. and Cuban farmers.

“Today, Cubans aren’t getting enough protein,” Correa said. “The average Cuban eats only four eggs per month. Milk is only accessible to infants until they reach the age of two. Malnutrition is their daily concern. The embargo touches the lives of every Cuban; it affects all aspects of their lives.”

Maintaining a consistent dialogue with Cuba is an important part of the Council's programs with the country's ag sector.

USGC President and CEO Tom Sleight also recently met with the new president of Cuba, Miguel Diaz-Canel, in New York City in conjunction with the U.S. General Assembly meeting.

“In many ways, meeting President Diaz-Canel reminded me of the early days of the reopening of the Cuban market back in the late 1990s,” Sleight said. “President Diaz-Canel was open and affable. The barriers to expanded U.S. trade are considerable, yet the desire on both sides to keep talking was sincere.”



NCGA Welcomes Sarah Doese Back to DC Team
   
The National Corn Growers Association welcomes back Sarah Doese, who rejoins the organization as the manager of regulatory affairs and public policy in the Washington office. Doese previously served at NCGA as the legislative assistant. In her new position, she will manage a diverse issue portfolio with an emphasis on regulatory affairs and emerging issues, including precision agriculture and technology, labor and immigration, and rural broadband.

“Sarah is a talented, knowledgeable and passionate advocate for agriculture. We are excited to welcome her back to NCGA,” said CEO Jon Doggett. “With her new experience on Capitol Hill and a long family history in production agriculture, she will be a strong advocate for corn farmers on policy and regulatory matters affecting their operations. I am confident that she will help us expand our relationships on the Hill and find common ground on our most important policy priorities for agriculture.”

Doese comes to NCGA from the House Appropriations Agriculture Subcommittee where she served as majority staff. Prior to that, she worked for Rep. Adrian Smith (R-NE) as a legislative correspondent.

Doese graduated from Iowa State University in December 2015 with a bachelor’s degree in agriculture education. She has completed internships with CropLife America, Iowa FFA Association, and the National Association of Agriculture Educators. Sarah is a former Iowa FFA state officer and was a member of the Sigma Alpha professional agriculture sorority at Iowa State.

She is a native of Fairbank, Iowa.



Avoid Yield Losses From Volunteer Corn With Herbicide Control

Farmers in the Corn Belt have an option for controlling yield-robbing volunteer corn next season. Many farmers are considering the use of corn with the Enlist™ trait to control volunteer corn by applying a FOP herbicide in 2019.

“Outside of cultivation, controlling volunteer corn can be a challenge for farmers due to herbicide resistance traits,” says Jason Welker, Mycogen Commercial Agronomist in Nebraska. “However, if the traits differ between last year’s and this year’s corn, then control through the use of a herbicide is possible.”

Mycogen® brand corn hybrids with the Enlist trait were first commercially available in the 2018 growing season. Farmers experienced success controlling grasses and volunteer corn last year. For farmers planting corn after corn, Mycogen brand hybrids with the Enlist trait provide an option for farmers in 2019. Corn with the Enlist trait includes tolerance for FOPs and acetyl-CoA carboxylase (ACCase) enzyme inhibitor, making it an option to spray FOP herbicide. DuPont™ Assure® II is the only grass herbicide labeled to control volunteer corn in corn hybrids with the Enlist trait.

“In areas where there were stalk integrity issues, especially in the western Corn Belt, farmers might be challenged with volunteer corn this next year,” Welker says. “Today’s equipment does a pretty good job of picking up down corn, but those in corn-after-corn situations who are concerned with the potential of volunteer corn should consider this new option for control.”

Threats to next year’s yield
Research shows significant yield loss results from delayed control of volunteer corn, regardless of the control method.

In an article authored by Kansas State University Cropping Systems Specialist Ignacio Ciampitti and Kansas Corn, the authors note the following statistics:
-    A study from South Dakota State University reported yield losses of up to 13 percent in corn from volunteer corn.
-    Research from the University of Minnesota showed volunteer corn plants lagged from one- to six-leaf stages behind the crop and few plants produced an ear by harvest.
-    Iowa State University reported one volunteer corn plant per 10 feet of row reduced corn yield 1.3 percent.
-    The University of Nebraska-Lincoln found volunteer corn population of 3,500 plants per acre resulted in a 2 percent yield reduction in corn and doubling the density to 7,000 plants per acre caused a 5 percent yield reduction.

“Corn with the Enlist trait is a great option to protect yield from volunteer corn and other yield-robbing weeds and grasses,” Welker says. “Grasses like Johnsongrass, which are hard to control with glyphosate, can be managed using a grass herbicide such as DuPont Assure II labeled for use in hybrids with the Enlist trait. We’ve seen some strong yield advantages this year with Mycogen brand hybrids with the Enlist trait.”