Monday November 30 Ag News

 NEBRASKA CROP PROGRESS AND CONDITION

For the week ending November 29, 2020 there were 5.8 days suitable for fieldwork, according to the USDA's National Agricultural Statistics Service. Topsoil moisture supplies rated 24% very short, 41% short, 34% adequate, and 1% surplus. Subsoil moisture supplies rated 31% very short, 40% short, 28% adequate, and 1% surplus.

Field Crops Report:
Winter wheat condition rated 6% very poor, 20% poor, 39% fair, 33% good, and 2% excellent.

Pasture and Range Report:
Pasture and range conditions rated 22% very poor, 23% poor, 28% fair, 26% good, and 1% excellent.



IOWA CROP PROGRESS & CONDITION

Scattered rain and snow showers only allowed Iowa farmers 4.6 days suitable for fieldwork during the week ending November 29, 2020, according to the USDA, National Agricultural Statistics Service. The southeastern portion of the State received the most precipitation. Fieldwork activities included harvesting corn for grain, baling corn stalks, applying fertilizer and manure, and hauling grain to elevators.

Topsoil moisture condition rated 12% very short, 28% short, 58% adequate and 2% surplus. Subsoil moisture condition rated 20% very short, 33% short, 46% adequate and 1% surplus.

Only 1% of Iowa’s corn for grain crop remains to be harvested, over 2 weeks ahead of last year and just over 1 week ahead of the 5-year average. Most of the scattered fields left to harvest are in the southern one-third of the State.

Cattle remain on corn stalk fields. Producers continue to haul water for cattle on corn stalks. Fluctuating temperatures have caused some stress for calves in hutches.



USDA - Winter Wheat Condition Up 3 Percentage Points

U.S. winter wheat's good-to-excellent rating gained back last week what it lost the previous week, according to USDA NASS' weekly Crop Progress report released Monday. This is the final weekly Crop Progress report of 2020.

After falling 3 percentage points to 43% the previous week, wheat's good-to-excellent rating rose 3 percentage points last week to reach 46% as of Sunday, Nov. 29. That remains below 52% at the same time a year ago.

An estimated 92% of winter wheat had emerged as of Sunday, 1 percentage point ahead of the five-year average of 91%.

Topsoil moisture for the lower 48 states was estimated at 38% very short to short and 62% adequate to surplus compared to 17% very short to short and 83% adequate to surplus last year. Subsoil moisture was estimated at 43% very short to short and 57% adequate to surplus compared to last year's 18% very short to short and 82% adequate to surplus.

The first weekly USDA NASS Crop Progress report for 2021 will be released on Monday, April 5, 2021.

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What Lies Beneath?  A Report on the Monitoring and Assessment for Groundwater Nitrate Contamination in Cuming, Colfax, and Dodge Counties

Do you know what’s in your water?  High nitrates in your drinking water can pose health risks for you and your family.  Increased levels of nitrates can also create additional expense for many private well owners and public water supply systems with the installation of treatment systems to remediate the issue.  To learn more about what lies beneath, and to find out what’s in your drinking water, plan to participate in a virtual informational meeting hosted by the Lower Elkhorn Natural Resources District (NRD) at 6:30 p.m. on Thursday, Dec. 17.

Nitrate is found naturally in the environment, however, since nitrate is a primary component of fertilizer and manure, losses can occur in the form of field run-off and leaching into groundwater aquifers.  Nitrate pollution can occur in numerous forms including from wastewater treatment plants and septic systems, but losses from fertilizer and manure are the main culprits in agriculture-heavy regions.  Nitrate dissolves readily in water and when carried through the soil below plant roots it can easily contaminate groundwater.

“This informational meeting is a step toward informing stakeholders on the results of the groundwater monitoring conducted by the NRD and addressing potential health risks and the critical need to protect our water supply,” said Lower Elkhorn NRD Assistant Manager Brian Bruckner.  He continued, “By implementing best management practices, we can work together to reduce groundwater contaminates and protect our drinking water.”

The U.S. Environmental Protection Agency has established the maximum contaminant level (MCL) of nitrate-nitrogen for drinking water at 10 parts per million (ppm).   High levels of nitrate can be particularly harmful to infants and children and can lead to methemoglobinemia, commonly known as “blue baby syndrome.”  Blue baby syndrome is caused by decreased ability of blood to carry vital oxygen around the body potentially leading to death.  Pregnant women and adults with certain health conditions are also at increased risk.  Health researchers are looking at the potential links between nitrate contamination in drinking water and incidences of birth defects, pediatric cancer, and Non-Hodgkin’s lymphoma.  Bruckner added, “While the body of science is still limited on some of these conditions, the long-term implications of these relationships deserves our attention.”

As part of Lower Elkhorn NRD’s Groundwater Quality Sampling Program, technicians collect annual water samples to document changes or trends in groundwater quality.  Beginning in 2018, the NRD prioritized the collection of groundwater samples as part of its routine monitoring in Cuming, Colfax, and Dodge Counties.  The results from this groundwater quality study have been provided to well owners and indicate the presence of elevated groundwater nitrate that warrant additional action by the NRD.  In October 2020, the Board of Directors voted to begin the formal process of considering a Phase 2 Groundwater Management Area in portions of these three counties.  This informational meeting will provide you with additional insight on the monitoring and assessment segment of this process, along with an explanation of the proposed management area boundaries and controls that accompany a Phase 2 Area in the NRD.

Participation links for this informational meeting webinar will be available on the Lower Elkhorn NRD website and Facebook page.  The public will have the opportunity to view the webinar and submit comments and questions during the event.  For additional information, contact the Lower Elkhorn NRD at 402.371.7313.



USDA Alters Service Center Status at Locations Across State in Response to Coronavirus

The U.S. Department of Agriculture (USDA) is temporarily restricting in-person visits for numerous Service Centers in Nebraska because of elevated rates of coronavirus community spread, but USDA employees will continue to assist agricultural producers with programs and services.

USDA is using a phased, data-driven approach to determine which Service Centers are open for in-person appointments. Field work, including conservation planning assistance, will continue with appropriate social distancing.

“While many of our Service Centers across Nebraska will be physically closed to visitors, we remain open for business,” said Nancy Johner, State Executive Director for USDA’s Farm Service Agency (FSA) in Nebraska.

Added Craig Derickson, State Conservationist for USDA’s Natural Resources Conservation Service (NRCS) in Nebraska, “Throughout the pandemic, our work with producers has continued, and we remain committed to serving our customers.”

All USDA Service Centers are for open for business, and Service Center staff members from FSA and NRCS will continue to work with producers by phone, email, and digital tools like Microsoft Teams, Box, and OneSpan. Producers can learn more about how to use these digital offerings by visiting https://www.farmers.gov/mydocs.

Producers wishing to conduct business with the FSA, NRCS, or any other Service Center agency should call ahead to confirm and schedule appointments. More information on Service Center status can be found at https://www.farmers.gov/coronavirus/service-center-status, and contact information for local Service Centers is available at https://www.farmers.gov/service-center-locator.  



PRESCRIBED BURNING FOR CONTROL OF CEDAR TREES
– Jerry Volesky, UNL Pasture & Range Specialist
 
Eastern red cedar trees are a significant and expanding problem across many pasture and rangeland acres in Nebraska.  When fire is planned and controlled properly, it can be a very useful tool to control these unwanted plants.
 
It is estimated that a single cedar tree with an 8-foot diameter could reduce forage production by 3 pounds.  If you had a density of 200 trees per acre, that would translate into nearly a 1/3 loss in forage production because of the effects of area coverage, moisture use, and shading.
 
In addition to cedar tree impacts on forage production, excessive cedar trees will also dramatically alter habitat for many wildlife species that are adapted to a grassland environment.  Also, in the event of a wildfire, uncontrolled cedar tree growth can result in devastating and destructive wildfires.
 
While mechanical cutting or shredding and herbicides are options to control cedar trees, a prescribed burn is by far the most economical approach.
 
Safe and controlled prescribed burns don’t just happen.  It takes preparation, planning, and an understanding of how fire reacts in certain weather conditions, with particular fuel loads, and on various types of topography.
 
You can begin to learn how to conduct a safe, legal, and effective prescribed burn by attending the virtual 2020 Nebraska Prescribed Fire Conference.  This webinar will be held on the morning of Tuesday, December 8th and speakers include a variety of researchers and land managers.
 
To learn more about this conference, including registration and agenda, go online at www.nefirecouncil.org.   



ICON proposal upholds core purpose of livestock identification

The Independent Cattlemen of Nebraska presented a fresh approach to reforming Nebraska’s livestock brand laws at a legislative committee meeting in North Platte Wednesday, Nov. 18.

The Legislature’s Agriculture Committee is conducting an interim study with cattle owners across the state to try to find consensus on reforming Nebraska’s Livestock Brand Act, which is often a contentious and misunderstood issue. A proposed reform was introduced last session but support for it collapsed, so Chairman Steve Halloran called for the interim study.

The ICON proposal starts with the underlying, intended purpose of proof of ownership; commonly mislabeled as the brand laws. The ICON proposal simply promotes equitable application and enforcement of livestock ownership identification requirements across the state and allows for multiple types of ownership identification.

ICON’s proposal is called the Livestock Ownership Verification Act.  Proposed by ICON leaders Don V. Cain, Jr. of Broken Bow and David Wright of Neligh, the proposal creates a framework to ensure the equity of proof of livestock ownership in all areas of the state.

It also:
•          Stipulates that the governor would appoint five members of the Livestock Ownership Verification Agency, as is required now of brand commission members, adding the requirement that members must be from five different geographic areas of the state and own cattle exclusively within Nebraska.
•          Acknowledges that hot brands are still primary evidence of ownership, but also recognizes more technological forms of livestock ID, including electronic devices, nose prints, retinal scans and DNA matches, so long as those forms are first approved by the state livestock ownership verification agency.
•          Makes livestock ID inspectors employees of the state’s law enforcement division.
•          Simplifies the ID requirements for moving cattle to a registered feedlot from a grow yard that is contracted by the feedlot.
•          Provides for enforcement of ownership verification laws.
•          Requires livestock ownership verification inspection only if ownership is changing or the cattle are leaving the state.

“Modernizing the livestock title laws is long overdue,” Cain said. “This is an issue that everyone can agree on and most all of the language has been in state statute for decades. While we will still recognize existing forms of ownership identification, it also allows for flexible and more modern approved forms of ownership verification. Identification is the key to modernization, implementation and acceptance.”

“This is a way to get everyone together, to focus on the basic intent of the law,” ICON President Jim Dinklage said. “It would be a step forward to preserve the integrity of Nebraska’s cattle industry.”



Tax Planning 2020
Austin Duerfeldt, Nebraska Extension Educator
 
With harvest wrapping up or complete, it is time to finish the last bits of 2020 operation tasks. Many of these tasks are part of tax planning. Here is a brief summary of some of the topics to discuss with your tax preparer before year-end.  

1099s  
As with every year, 1099s are a requirement by law. Farmers and ranchers are required to issue 1099s for any cumulative payments of $600 or more made in the course of business to a specific entity. Corporations do not receive 1099s though. This includes LLCs that are taxed as a corporation. Sole Proprietors, Partnerships, and LLC Partnerships all need 1099s when they hit the monetary threshold. Taking time to gather the necessary identification numbers, EIN or SSN, and calculating amounts should move towards the top of the to-do list. Three of the most missed are for cash rent paid, attorneys, and non-employee compensation. If you wish to read, more on 1099s there is a CropWatch article at https://cropwatch.unl.edu/2017/who-needs-1099. You can also read more on the IRS website at https://www.irs.gov/forms-pubs/about-form-1099-misc.

Prepaid Expenses
With projected farm income being high for the year 2020 due to a late surge in crop prices and direct government payments, many will be looking at prepaid expenses to help with their tax planning. IRS publication 225 goes into detail on prepaid expenses. The expenditure must be for an actual purchase. It cannot be a deposit to buy items in the future. To be a true prepaid expense it should outline a quantity and amount purchased, and should not be refundable or available for substitution. To read more on prepaid expenses and the other rules to follow, visit the CropWatch article at https://cropwatch.unl.edu/2018/prepaid-expenses.

Constructive Receipts
For cash-basis taxpayers, one common tool in tax planning is the rule of constructive receipts. This is a timing recognition tool. A full outline of constructive receipts can be found in §1.451-2. To sum it up constructive receipts look at when you had access to a payment. For example, if you receive a check in the mail on January 3, 2021 for $2,000 for harvest work and the check is dated December 29, 2020, is it 2020 income or 2021 income? With constructive receipts, we would claim the income in 2021 as that is when we had the ability to cash and use the check. For a more in-depth article on constructive receipts, visit the CropWatch article https://cropwatch.unl.edu/2018/accounting-agriculture-using-constructive-receipts.

Government Payments
I saved the most complicated for last. With multiple direct payments, loans, and grants issued during 2020 there is going to need to be some time dedicated to sorting this out. To give a brief example you have Coronavirus Food Assistance Program 1, Coronavirus Food Assistance Program 2, Paycheck Protection Program, Economic Injury Disaster Loans, Employee Retention Credit, and Livestock Producer Stabilization Grants for an abbreviated list of potential talking points. Some of these are state, and some are federal. Some of these are grants or have forgiven portions, some are loans that must be paid back, and some are direct payments. The IRS has made some comments on most of these, but a few of them are still being debated as to if they are treated as taxable income. This is all in addition to the more recognizable payments of ARC/PLC and crop insurance. The best advice I can give is to create a summary sheet of all the different types of payments received in 2020 with supporting documents in an easily accessible folder. Once you have your list made and have estimated production income and expenses for 2020, schedule a meeting with your tax preparer. Giving time to digest all of the gears and cogs that are turning this year will give you a better understanding of what tax planning tools need to be utilized.

Other Common Topics
In addition to all of the above points of conversation, there are still parts of the Tax Cuts and Jobs Act (TCJA) of 2017 that are commonly forgotten about. Like-Kind Exchange tends to be the one that catches people the most. Many farms do not trade equipment yearly, so it may be the first time equipment has changed hands since the TCJA passed. I have received many phone calls in panic when producers discover that Like-Kind Exchange no longer applies for trades on equipment. To read more on the subject go to https://cropwatch.unl.edu/2018/trading-equipment-without-kind-exchange. The TCJA changed Section 179 and Bonus Depreciation to help with planning with Like-Kind Exchange no longer available for those assets.

Summary
I can honestly say that when the TCJA came out I thought it was going to be one of the most complicated tax planning seasons in memory (I missed out on the implementation of the 1981 Economic Recovery Tax Act). The year 2020 though is bucking for a top spot. If you wish to get the most bang-for-your-buck out of taxes, try to get your information together early and schedule a meeting with your tax preparer.



The Likelihood of Regional Triggers Under the Industry’s Proposed “75% Rule”
Elliott Dennis, Livestock Extension Economist, UNL Dept of Ag Econ

Concern about packing concentration has led to numerous requests for USDA to investigate the potential connection between packet concentration and depressed cattle prices. These calls for investigations and concerns about meatpacking concentration and impact on cattle prices are not new.[1] The most recent concern raised by cattle producers about packer concentration was due to depressed fed cattle prices post-Holcomb fire and COVID-19 pandemic resulted in a USDA report and pending DOJ investigation.

Some legislation has been enacted as a result of previous investigations; most notably the Packers and Stockyards Act in the early 1920s. The recently proposed legislation has largely focused on the potential connection between these market shocks and the level of negotiated trade that occurs. One overarching concern is that to achieve price discovery that is informative in the marketplace, a regional sufficient level of negotiated trade must occur. To help achieve these goals, three bills have been proposed: Senator Grassley’s “50-14” rule, Senator Fisher’s “Cattle Transparency” bill, and Congressman Johnson’s “PRICE” act. These primarily aim to increase the level of negotiated trade, and, in some cases, create a cattle contracts library similar to the one available in the hog industry.

The industry has long been opposed to government regulation that could distort market signals. It responded to proposed legislation by advocating for the “Bid-the-Grid” program and more recently the “75% rule”. The “75% rule” is a voluntary framework that includes cattle feeder and packing plant triggers based on levels of negotiated trade and marketplace participation. The overarching objective is to increase the frequency and price transparency in all major cattle feeding regions.

The framework functions off a series of triggers – four cattle feeding and four packer participation. The packer participation portion of the plan is still under development. The four cattle feeding areas are 1) Nebraska-Colorado, 2) Texas-Oklahoma-New Mexico, 3) Kansas, and 4) Iowa-Minnesota. A minor cattle feeding trigger occurs if less than 75% of the robust level of negotiated trade occurs in less than 75% of the weeks in a given quarter. Three minor triggers equal a major trigger. A major trigger occurring in (a) two of four rolling quarters, (b) any two consecutive quarters, or (c) any two quarters in a calendar year, would prompt the industry to seek legislative action. This policy is likewise conditional on updates from literature and industry, and qualifying Black Swan events or ad hoc events that disrupt the normal cattle flows.

The question is whether this policy meets the objective to increase the level of negotiated trade and cattle price transparency. In other words, if this policy were historically in place, how likely would have minor (major) triggers occurred? Using public data published weekly and available through USDA-AMS from 2013-2020, I analyze this policy by addressing eight underlying assumptions. I further demonstrate potential considerations that could impact the “efficiency” of this policy.
1)     Number of minor triggers required: The current policy states that three minor triggers constitute a major trigger. Details and data on the required packer participation portion are not yet available. Focusing only on the cattle feeding regions and minor triggers defined by the current 75% rule, no three regions have ever triggered in the same quarter. Two or more cattle feeding triggers have only occurred in six quarters, and one region triggering has occurred in 10 quarters. All two or more triggers only occur in the Kansas and Texas-Oklahoma-New Mexico regions. There is at least one trigger in approximately 50% of quarters from 2013-2020. In other words, it is unlikely that a major trigger would occur due solely to cattle feeding negotiated cash levels.
2)     Nebraska-Colorado combination: Colorado and Nebraska are combined in the policy to form one region. The justification for this combination is not stated. Currently, USDA reports these as two separate regions and recent USDA-AMS discussions have recommended combining Colorado with Wyoming, not Nebraska. Two reasons for this combination are possible: 1) Western Nebraska and Colorado have similar climates and 2) issues with the lack of reporting in Colorado. Historically, Colorado has failed to meet USDA confidentiality requirements leading to nonreporting weeks. Combining Nebraska and Colorado reduces the number of minor triggers that would likely occur in a five region – three minor trigger scenario. Figure 1 plots the average percentage of weeks within a quarter failing to meet robust negotiated trade minimums under the four proposed regions plus Nebraska and Colorado. The horizontal dotted black line represents the proposed 75% minimum. Points above this line indicate the region failed to meet robust minimum requirements in that quarter and thus a minor trigger occurred. The NE-CO combination never triggers. Separating Colorado and Nebraska shows that Colorado frequently triggers while Nebraska never violates more than 30% of weeks. Clearly, combining Nebraska and Colorado reduces the potential number of minor triggers.
3)     75% of reporting weeks: For a region to trigger, less than 75% of the robust negotiated trade must occur in more than 75% of the weeks in a quarter, or 10 out of 14 weeks. As the percent of weeks increases towards 100, the policy is less likely to trigger. On the other hand, as the percent of weeks required decreases towards 0, the policy is more likely to trigger. Table 1 illustrates this by fixing the percent of robust trade at 75% and varying the percent of weeks required to satisfy the 75% minimum and determine the percent of quarters activating a minor trigger by each of the four regions. Regardless of the required percent of weeks, there are levels in which Texas-Oklahoma-New Mexico and Kansas regions will trigger. Iowa-Minnesota region would rarely, if ever, trigger, and the Nebraska-Colorado region only begins triggering around 50%.
4)     75% of robust negotiated trade: For a region to trigger, less than 75% of the robust negotiated trade must occur in more than 75% of the weeks in a quarter, or 10 out of 14 weeks. How one defines these robust levels of negotiated trade is likely to be debated. Current robust levels are taken from the Price Discovery Research Project (2017). As the percent of robust trade required each week goes towards 100, more regions will trigger. On the other hand, as the required percent of robust trade decreases towards 0, fewer regions will trigger. Table 2 illustrates this by fixing the percent of weeks at 75% and varying the percent of robust trade required in each week by region and determine the percent of quarters activating a minor trigger by each of the four regions. Under the most stringent policy (i.e. robust trade = 100%) Texas-Oklahoma-New Mexico will trigger in approximately 75%, Kansas 50%, Nebraska-Colorado 10%, and Iowa-Minnesota 0% of quarters. If the policy aims to increase the level of negotiated trade, increasing the required level of robust trade each week will meet this objective but to a slower and lesser extent than changing the required number of weeks (see point 3 above), all else held equal.
5)     Policy evaluation choice: Whether a major trigger is likely to occur is largely dependent on the combination of the level of robust trade required in each week and the percent of weeks required to meet this minimum. The policy defines three minor triggers equal a major trigger. For the industry to seek legislative action, a major trigger must occur in (a) two of four rolling quarters, (b) any two consecutive quarters, or (c) any two quarters in a calendar year. Which of these three criteria to use in the official policy is currently being debated. As mentioned in point 1 above, it is historically unlikely that three cattle feedings regions would trigger at the same time. Thus, I show that the performance of these three criteria varies by the percent of required robust trade, percent of weeks required to meet this minimum, and varying levels of minor triggers required to equal a major trigger. Figure 2 plots the average number of violations within a quarter by these variations. The black dotted vertical line represents the current 75% rule robust negotiated trade minimum proposed in the policy. The panel combination “PCT.OF.WEEKS: 75 & MINOR.TRIGGERS: 3” is the performance of the current proposed “75% rule”. Under the current policy, historically, a major trigger would not have been triggered due to only cattle feeding participation. The criteria of “2 of 4 rolling quarters” and “Any 2 quarters in a calendar year” have similar levels of regional triggers regardless of the percent of robust trade or percent of weeks, both of which, are higher than “Any 2 consecutive quarters”. At higher levels of required robust trade, all policy criteria increase. At lower amounts of weeks required to meet minimum policy, triggers increase. Figure 2 can be used to explore a variety of potential scenarios involving changes to the percent of robust trade and percent of weeks violating minimums and how these choices subsequently affect policy triggers. On average, policy criteria largely perform the same.
6)     Nominal vs. percent of trade: The current policy requires regions to meet the nominal level of trade rather than a percent of total transactions (negotiated cash + negotiated grid + formula + forward contract). In stable market circumstances, the difference between nominal values and percentage is negligible. If cattle slaughter increases over time, then negotiated cash as a percentage of total transactions would decrease and the policy would be less binding. On the other hand, if cattle slaughter decreases over time, then negotiated cash as a percentage of total transactions would increase and the policy would be more binding. Current conversations about the appropriate level of negotiated sales have predominately centered on the percentage or share of transactions, not on the nominal level. For example, the percent of steers and heifers sold via negotiated cash has decreased from about 30% in 2016 to 20% in 2020. Likewise, commercial cattle slaughter has been increasing since 2014 and there is debate on whether carcass weights should continue to rise any further. Given these circumstances, and as the United States seeks to increase beef exports, cattle slaughter is likely to continue to rise, making this issue more important. A comparable parallel would be the hog industry, which has increased hog slaughter to meet increasing export demands, but the percent of hogs sold via negotiated trade has decreased – to approximately 5% of all transactions.
7)     Negotiated sales = negotiated cash + negotiated grid: The policy states that negotiated sales consist of negotiated cash + negotiate grid. Historically negotiated grid is infrequently used, and if used it is more common in regions where there are high amounts of formula and forward contract sales. Defining negotiated sales as negotiated cash plus negotiated grid makes regions less likely to trigger since there are fewer cattle qualifying as negotiated sales. The debate would likely center around whether negotiating grid sales provides the same type of information as negotiated cash sales. Regions that already have a large number of negotiated cash transactions are likely to be less affected by this change in definition than other regions that have historically struggled to meet robust negotiated trade minimums.  
8)     Adjustments due to Black Swan events and ad hoc regional cattle disruptions: The policy currently has a qualifying statement that allows for adjustments to the required robust levels of negotiated trade and weeks satisfying the robust minimum given Black Swan events and ad hoc regional cattle disruptions. Both the Holcomb Fire and COVID-19 pandemic would fit under this category. If required robust trade was reduced and weeks increased during these events then regions would likely not trigger. However, given these potential ad hoc adjustments would this policy helped stabilize negotiated trade during the recent Holcomb Fire and COVID-19 pandemic? If not, then the current market situations which spurred these industry policy changes would not have been improved by the prior implementation of this policy.

The industry’s “75% rule” was developed in response to proposed legislation to solve potential concerns about thinness in negotiated trade across different regions. The current concern surrounding thinness in negotiated trade has more to do with lower cash prices received by producers due to the Holcomb Fire and COVID-19 pandemic. Changes to the federal law or industry policy would not have effectively raised producer prices received for cattle. Further, if this policy would have been implemented before either the Holcomb Fire or COVID-19 it would not have changed packing plants’ ability to process cattle (supply from feedlots) or lack of foodservice’s demand for beef. Figure 1 shows that only the Texas-Oklahoma-New Mexico region tripped during those events.

This policy, in its current form and from the four cattle feeding regions perspective, is not likely to significantly improve the level of negotiated trade nor cattle market transparency. Since it does not change the supply of fed cattle nor the demand for wholesale beef, it is also not likely to increase the cash price received by producers. Anytime a policy is implemented, whether industry prompted or legislatively enacted, there is a potential for creating increased costs and reducing profitability for the entire beef complex. For example, to advert potential legislation, packers and feedlots could change cattle marketing behavior from profit-maximizing to negative policy aversion creating inefficiencies in the beef complex. Consistent with the economic theory of derived demand, these additional costs, spurred on by potential policies, are likely to predominately be carried by the cow-calf industry.

[1] The first time the term the “Big Four” was used was in 1860s. Since then at least eight major investigations have been called for by cattle producers alleging that packing concentration negatively impacted cattle prices. Likewise, concerns about the farm to retail spread or present as early as in 1905. It is important to note that prior to 1960, packer concentration occurred at cattle harvest where carcasses were shipped to meat wholesalers to be broken down carcasses. Post 1960 packer concentration has occurred as packers began breaking down carcasses and selling boxes of beef.



DMC an Essential Risk-Management Option for 2021

Forecasts for prices and politics both make signup for the Dairy Margin Coverage Program a compelling risk-management choice for 2021, National Milk Producers Federation Senior Vice President for Member Services & Strategic Initiatives Chris Galen.

“Congress is still trying to pass another stimulus bill to help all walks of life in our society and our economy and hopefully agriculture will be part of that, but right now there aren't any serious negotiations. Who knows if that can will be kicked into 2021?” Galen said. “What we do know is that the DMC program is forecast to make payments in the first part of 2021. So you've got to go with what you know.”

NMPF is offering dairy farmers, cooperative members and state dairy associations a free webinar on Wednesday, Dec. 2, to help them develop effective risk management plans that can protect them in what’s predicted to be a volatile year in 2021. NMPF Chief Economist Peter Vitaliano will be discussing the dairy price outlook for next year, and the value of risk management tools including Dairy Margin Coverage, in the webinar, moderated by Galen, at 1:30 p.m. EST on Wednesday, Dec. 2.

Participants will be able to ask questions about the year ahead and learn more about how farmers can manage their risk through expected turbulence. The webinar will examine the milk and feed price forecast, forecast margins, and analyze how the Dairy Margin Coverage program will offer farmers protection against price volatility. Dairy producers seeking more information can visit NMPF’s page on risk management to learn more about DMC, CFAP and other tools to promote financial security for dairy operations.  



Ethanol Producers Call for Increased Octane in New Efficiency Rules
Clean Fuels Development Commission

Several ethanol producers representing more than one billion gallons of capacity  called on the ethanol community to focus their near term advocacy efforts on fuel efficiency rules that are likely to be a top priority for the incoming Biden Administration.
 
In an open letter to the ethanol community published in Biofuels Digest, the producers said the industry was facing some tough questions as to how to overcome a trend line of lowered demand due to a number of factors. Regardless of who is in the White House they say, reduced gasoline demand, an RFS under constant attack, the emergence of electric vehicles, and inconsistent exports are variables that hinder any sustained pathway for growth.
 
The letter argues that a high octane low carbon fuel strategy is a win-win for the ethanol industry, refiners, and automakers.  “While E15 provides one point of octane, we have the ability to provide an increase of 2-3 points at the pump and triple ethanol demand from today’s E10!   That much ethanol reduces carbon, not just in the fuel, but also at the refinery level by replacing energy intensive aromatics used for octane.”

The fuel economy rule established in 2012 was regarded as a significant achievement of the Obama-Biden Administration before the Trump Administration rolled back most of the required efficiency increases.   It is widely accepted that this may be one of the first climate related measures the new Administration will address.

The letter concludes with a call to action stating  “Ethanol producers and corn growers need to get behind the rewrite of the SAFE Rule and argue for higher octane while enforcing toxics controls, give us a fair reckoning in our carbon footprint, remove barriers such as RVP limits, and allow ethanol to be used in whatever volume the market demands. Incorporating these pieces into a revised future automobile efficiency standard results in an unfettered path for growth and expansion without federal subsidies or mandates.”



USDA Announces Expansion, Other Improvements to Hemp Crop Insurance

The U.S. Department of Agriculture (USDA) today announced it is expanding the pilot Multi-Peril Crop Insurance (MPCI) plan for hemp. The expansion, as well as other improvements to the plan, will begin in the 2021 crop year.

“We are pleased to expand the hemp program and make other improvements for hemp producers,” said USDA’s Risk Management Agency (RMA) Administrator Martin Barbre. “Hemp offers exciting economic opportunities for our nation’s farmers, and we are listening and responding to their risk management needs.”

The changes announced today include:
    - Expanding the program:
        New states included: select counties in Arizona, Arkansas, Nevada and Texas
        New counties (13) in states with existing coverage: Conejos, CO; La Plata, CO; Moffat, CO; Routt, CO; San Miguel, CO; Kenton, KY; Whitley, KY; Houghton, MI; Granite, MT; San Miguel, NM; Valencia, NM; Scott, TN; Alleghany, VA

    - Allowing broker contracts for hemp grain

    - Adjusting program, reporting and billing dates:
        - Sales closing, cancellation, production reporting and termination dates adjusted to match dates of similar crops
        - Acreage Reporting Dates adjusted based on regional final planting dates
        - Premium billing dates for all states changed to August 15
        - For specific information on dates by county, see RMA’s Actuarial Information Browser

For more information on USDA risk management programs for hemp producers, visit farmers.gov/hemp.