Wednesday May 05 Ag News

Shrinking beef production margins create industry structure change
Alfredo DiCostanzo, Nebraska Extension Beef Systems Educator

A beef industry magazine editorial, which focused on the size of the industry, particularly the cow-calf segment, and age of operators, led me to think a bit further about what is causing change in our industry. More importantly, reading about these trends led me to think about the implications of this change and its effects on the future of the beef industry.

Between 2017 and 2022, the United States reported 106,884 fewer farms with beef cows. Most of the reduction (77%) came from farms which reported owning between 1 and 49 head. Although this drop represents about 1 million cows, it also represents start up producers and those slowing down production nearing retirement. A total of 100,000 producers aged 45 to 64 exited the cow-calf business between 2017 and 2022. While 24,000 producers aged 44 years old or younger exited the cow-calf business during the same period. These figures are not good news for the beef industry.

The feedlot business also experienced a drop of 4,500 operations between 2017 and 2022. Although not much larger than the drop between 2012 and 2017 (3,600 operations); the implications of this change are also significant.

Operator age is often brought up as a factor cited why individuals exit the beef industry. Long hours, hard work and volatile markets are not uncommon. Yet, in the past, children and grandchildren continued owning and managing the herd.

The large number of individuals ages 45 to 64 exiting the cow-calf business indicates that factors other than age are influencing this decision. Although the Ag Census provides information on industry trends and producer demographics, there is no information in it to describe why individuals make certain decisions.

Results of the 2017 and 2022 Ag Census span a period of high volatility in cattle markets and the world. In 2019, the fire at the Tyson plant in Holcomb, KS, and in 2020 the COVID pandemic and ensuing social unrest. Soon after, the war in Ukraine affected the global economy. Lately, rampant inflation with the threat of economic recession shaped decisions individuals and families make. As with many other career decisions, it is likely that the combined effect of these internal and external influences shaped the long-term goals of many of these cow-calf operators.

Similarly, during the 2017 and 2022 Ag Census, approximately the same number of cattle were sold from feedlots (24.5 million), except for in 2022, there were 4,500 fewer feedlots participating in feeding cattle. Most of these feedlots were feedlots that sold fewer than 2,500 head of cattle yearly.

When looking at these trends, these segments of the beef industry are consolidating. Fewer operations with more cows or fewer feedlots marketing larger totals yearly.

In previous columns I mentioned that many of these factors are here to stay mandated changes that affect production and utilization of fossil fuels and their effects on transportation costs, and an overall reduction in the labor force coupled with increased labor costs. These factors are affecting profit margins in beef cattle production.

Aging cow-calf operators are facing difficult financial decisions while they experience little interest from their heirs to participate in the business. Meanwhile, in the feedlot sector, smaller feedlots facing highly volatile markets with narrow margins resulted in a decline in interest in cattle feeding.

As long as consumers continue to enjoy beef and its price point is within their economic reach, consumer demand should remain strong. However, at some point, some of us ask: who will run the cowherds that produce calves for the feedlot?

If the appetite for beef does not wane, someone will keep cows and raise calves, and someone else will feed the resulting calves. Where and how, it is not clear. Calves raised in foreign soil and finished in the US by larger corporations? That is one option.

Another option is government-driven incentives (or disincentives). Yet, one only needs to look at the effect of these on the structure of the dairy industry. Fewer and larger farms; not the intended objective of preservation of the family dairy farm.

This leaves the responsibility on the individuals that participate in the beef industry. Are there incentives or arrangements that ought to be generated amongst producers to

attract and retain young operators to cow-calf ranches and cattle feedlots? Many examples of these incentives and arrangements have been developed by progressive cattle producers in Cuming County. Is this the time to be more purposeful about developing and offering incentives and arrangements for young operators? Is it also time for others in Nebraska or other states to learn from what has worked locally?



NEBRASKA TEAM DEVELOPS TECHNIQUE TO SPEED UP CORN GENE IDENTIFICATION

The genome of a corn plant contains almost 40,000 genes, thousands more than the human genome. But 15 years after the publication of the first draft of the corn genome, the roles 98% of those genes play in making a corn plant or determining how corn will respond to different growing conditions remain unknown.

Conventional methods to figure out the job of each gene have proven slow and expensive, but Husker scientists have taken a major step forward in identifying the function of corn genes. The work was led by Vladimir Torres-Rodriguez, a postdoctoral associate working with James Schnable, a professor and corn genetics specialist in the University of Nebraska–Lincoln’s Department of Agronomy and Horticulture.

Their findings, recently published in The Plant Journal, could lead to faster creation of more resilient corn varieties and broader producer access to improved crops by identifying the functions of individual corn genes more rapidly and accurately. Torres-Rodriguez is lead author of the paper, “Population level gene expression can repeatedly link genes to functions in maize.”

The technique he developed and tested with the team of corn-focused researchers from the Schnable lab uses RNA rather than DNA. This innovative approach identified about 10 times as many corn genes affecting flowering time than widely used DNA-based methods for identifying genes.

Doing a better job of figuring out gene functions could decrease the cost of bringing gene-edited corn varieties to market, resulting in more competition and better prices for farmers, said Schnable, who last year contributed to the landmark completion of corn genome mapping.

Only a handful of large seed companies have the resources to invest hundreds of millions of dollars for new gene-focused product development. But faster and more accurate approaches like the one UNL demonstrated could reduce costs and open up the market.

To make this project possible, the Husker team measured the RNA levels of more than 39,000 corn genes in each of roughly 700 varieties of corn, using plants grown at the university’s Havelock Farm in Lincoln. The researchers combined those RNA measurements with measurements of the corn plants themselves collected both in Lincoln and by collaborators at Michigan State University.

Making the project work required new approaches not only on computers, but in the field, said Schnable, the Nebraska Corn Checkoff Presidential Chair. The team needed to collect samples from every corn plant in less than two hours and flash freeze them before environmental conditions could quickly break down the RNA that was the key to Torres-Rodriguez’s analysis.

Achieving those conditions required special equipment designed by Jonathan Turkus, a research manager who works with Schnable at the university’s Center for Plant Science Innovation. Turkus fabricated equipment using 3D printers and other tools from Nebraska Innovation Campus’s makerspace.

The result, Torres-Rodriguez said, is that “UNL has produced the largest data set of corn gene expression measurements in the world.”

“Vladimir had to build a software pipeline to analyze this data,” Schnable said of Torres-Rodriguez’s innovations. The work required “repurposing other tools, figuring out other ways to process data and then figuring out all of the new quality control steps to make sure things were working properly. It was an amazing undertaking.”

Torres-Rodriguez will follow up the project with genetic analysis of additional corn traits. The goal, Schnable said, is “to make sure that, decades from now, when a Nebraska farmer is driving his tractor, the corn being planted has the genetics to perform well and tolerate harsher conditions.”

Through projects like this one, Schnable said, UNL is positioning itself as the go-to research institution that companies, from corporate giants to small startups, can turn to for corn-focused data sets, expertise or in-the-field support.

An early example of such private-sector collaboration helped launch this project. Schnable was working with Brad Zamft, a California-based scientist leading a team developing new artificial intelligence-based tools for agriculture.

“Brad asked me for a bigger data set,” Schnable said. “At the time, we were using the biggest data set of its kind that existed in the public sector. He thought about that for a moment and then asked, what would it cost to do this right?”

Ultimately the pair worked together to secure a $650,000 grant for the project through the U.S. Department of Energy’s Advanced Research Projects Agency–Energy program.

“There is no doubt in my mind the University of Nebraska is an agricultural technology powerhouse,” said Zamft, the project lead of a stealth plant biology project at X, Alphabet's “moonshot factory” division exploring a range of scientific innovations. “The expertise that we have experienced, the collaborations that we have engaged in, have been delightfully productive, and I think could have real impact on the world. I’m not sure our team could have made it this far without the support of the researchers at the university.”

Schnable said UNL has a real opportunity.

“We want to be, and we're becoming, the place where people from across the country come to get cutting-edge corn research done,” he said.



Water Wells Not Properly Abandoned Pose Hazards to Water Quality, People, and Animals

Unused water wells left unsecure are a hazard to water quality, people, livestock, and pets. The Papio-Missouri River Natural Resources District (Papio NRD) is aiming to help educate landowners within its six-county area of the importance of abandoning unused wells, as well the cost-share program it provides to help with the associated expense.

Wells that aren’t properly abandoned provide a pipeline to groundwater and can be easily polluted with chemicals, fertilizers, and other contaminates. They can also pose safety risks to people and animals that may not see the wells and become trapped or potentially seriously injured.

“To help eliminate or reduce these hazards and assist landowners with the cost of abandoning unused wells, the Papio NRD provides the Well Abandonment Program,” said Terry Schumacher, land and water programs coordinator for the Papio NRD.

The Well Abandonment Program provides cost-share at a rate of 75% of the total eligible costs with a maximum of $750 for domestic drilled wells; $1,000 for dug wells; and $1,500 for city, irrigation, commercial or municipal wells.

Ed Thiele, project engineer for Habitat for Humanity of Omaha, took part in the program, as the organization is developing sites in Sarpy and Douglas counties to build new homes. “We decommissioned three wells in Sarpy County and two in Douglas County,” said Thiele.

“Obviously, we want to make sure the land is safe before construction starts and families move in. The Papio NRD’s cost-share program was of tremendous value for us on many fronts and I would most definitely recommend it to others,” said Thiele.

Eligible costs of the program include pulling rods and pump, filling cistern, chlorination, sand, bentonite, plug, and concrete. A State of Nebraska licensed well contractor, driller or pump installer must complete the abandonment to proper Department of Natural Resources rules and regulations.

“It’s really a win-win opportunity,” said Schumacher. “Our program offers landowners and others, like Habitat for Humanity, significant financial assistance to help protect our drinking water, groundwater, the public and make the process as easy as possible.”

For more information, please contact one of our Field Office representatives in your county:
Washington, Douglas & Sarpy counties: Kalani Fortina at 402-426-4782 ext. 3
Burt County: Deb Ward at 402-374-1920 ext. 3
Thurston County: Tamara Tipton at 402-846-5655
Dakota County: Mahkenna Koinzan at 402-494-4949



TenCorp and Heartland Builders Announce Strategic Partnership to Meet Growing Needs of Midwest Cattle Producers

Two proven livestock barn builders, TenCorp Inc. and Heartland Builders Co., are forming a strategic partnership to expand availability of high-quality, innovative deep-pit cattle barns across Iowa, Kansas, Minnesota, Missouri, Nebraska and South Dakota. This alliance allows both companies to reach more beef producers, and advance their feeding operations, across the Midwest.

Leveraging decades of combined experience and a shared commitment to livestock farming, Heartland Builders will oversee the construction of TenCorp-designed deep-pit cattle barns throughout the Midwest. TenCorp will also continue to handle both the design and construction for cattle operations throughout the Midwest.  

“Heartland Builder's strong track record in barn construction compliments our cutting-edge design features like enhanced ventilation systems, efficient waste management and optimal space utilization to optimize cattle health and productivity,” says Kristin Tentinger, general manager at TenCorp. “Together, we are going to serve more producers and modernize more farms.”

“This collaboration allows us to tap into the premium cattle barn market and cater to the increased number of producers moving to covered feeding systems,” says Brian Palmer, president of Heartland Builders. “We are excited to partner with an industry leader known for their superior designs, which have become the new gold standard in the industry.”



Iowa Swine Day Will Be Held July 25 in Ames

Pork producers and others involved with swine production can learn the most current information on emerging critical industry topics at Iowa Swine Day, July 25 at the Iowa State Center in Ames. Sessions will be presented by renowned speakers from the U.S. and around the world. The event is oganized and presented by the Iowa Pork Industry Center at Iowa State University.

The planning committee of producers and allied industry representatives ensures that no two programs are alike, and that every program offers information not available elsewhere.

Following the morning plenary session and lunch, participants will choose their own schedule from the four concurrent topical sessions with four presentations in each: current topics, improving on-farm labor, protecting herd health and Iowa State research. With speaker consent, sessions are recorded and provided later on the Pork Center’s YouTube channel.  

The preconference symposium, on July 24, will feature eight leading swine industry experts presenting Soybean Meal 360. Moderated by David Holzgraefe, the topics include the dynamic landscape of increased soybean meal availability, the expanding horizons of soybean meal discoveries in swine diets and field-proven feeding strategies for improving pork production. The preconference symposium runs from 12:30-5 p.m. July 24, at the Scheman Building, 1805 Center Drive.

Including the preconference symposium, there are six primary sessions, 28 individual talks, 31 speakers and more than 30 sponsors. Cost is $85 and parking for all events is free. Registration begins at 7 a.m. and the official program starts at 8 a.m. at Stephens Auditorium, 1900 Center Drive.

All attendees registered for Iowa Swine Day are welcome to attend the symposium as well as the swine networking social following the event. Sponsored by AB Vista, Iowa Pork Industry Center, Lynch Livestock and TechMix, the social starts at 5:30 p.m. at the Hansen Agriculture Student Learning Center, at 2508 Mortensen Road.

Registration cost for the networking social is $85. Students may attend at no charge and preregistration is strongly encouraged. Walk-in registration is discouraged.

The full program, information, registration forms and directions to the venues are available on the Iowa Swine Day conference website https://www.ipic.iastate.edu/iowaswineday.html.

Iowa Swine Day is hosted by the Iowa Pork Industry Center with support provided by Iowa State’s College of Agriculture and Life Sciences.



April DMC Margin Little Changed from March
NMPF

The April Dairy Margin Coverage Program margin was $9.60/cwt, down by $0.05/cwt from March, just above the maximum $9.50/cwt maximum Tier 1 coverage level for the second month in a row.

The April All-Milk price dropped from March by $0.10/cwt to $20.50/cwt, and the April DMC feed cost calculation dropped by $0.15/cwt, on a $11/ton lower premium alfalfa hay price. Small changes in the corn and soybean meal prices offset each other on a per hundredweight of milk basis in the formula.

Available forecasts at the end of May indicate an increasingly high likelihood that the DMC margin will remain considerably above $9.50/cwt for the rest of the year.



Farmer sentiment recovers in May; interest in solar leasing rising

U.S. farmers’ outlook improved in May as the Purdue University/CME Group Ag Economy Barometer index rose to 108, marking a 9-point increase from April. Both of the barometer’s subindices saw increases, with the Index of Future Expectations climbing 11 points to 117 and the Current Conditions Index rising 6 points. The rise in crop prices played a role in boosting farmer sentiment this month. By mid-May, Eastern Corn Belt cash corn prices had increased by 6% to 7%, and soybean prices had risen by 2% to 3% since the April survey was conducted. The improvement in prices aligned with good corn and soybean planting progress, which likely contributed to the sentiment improvement. This month's Ag Economy Barometer survey was conducted from May 13-17, 2024.

“The boost in the Index of Future Expectations reflects farmers’ expectation that conditions will improve, although it’s clear 2024’s financial challenges are still a concern,” said James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture.

The Farm Financial Performance Index rose to 82 in May, a 6-point increase from April. This index, which asks producers to compare their farm’s expected financial performance to last year, shows some improvement. However, despite the gain, the index remains 15 points lower than at the end of last year. This indicates that producers still anticipate 2024 to be a more financially challenging year compared to 2023.

Producers’ outlook on capital investments improved modestly in May, with the Farm Capital Investment Index rising to 35, up 4 points from its all-time low reading of 31 in April. Despite this increase, the survey revealed that 77% of respondents believe it is a bad time to make large investments, while only 12% felt it was a good time. Interest rates and elevated prices for farm machinery and new construction were the main reasons cited for this cautious approach. Among those who considered it a good time to invest, nearly half (45%) cited high inventories at machinery dealers as the key factor.

Producers’ views on farmland values in May remained steady, with a small 3-point increase in the Short-Term Farmland Value Expectations Index. Compared to last fall, producers’ sentiment in 2024 has weakened, as indicated by an average index of 116 from January to May, down 6% from the average of 124 in October-December 2023. Those expecting higher farmland values in the coming year point to nonfarm investor demand and inflation as key drivers for their optimism. Notably, the survey expanded its response categories in April and May to include energy production from wind and solar installations as a reason to expect values to rise. In May, 12% of optimistic respondents cited energy production as a factor for their positive outlook, up from 8% in April.

“While the overall outlook on farmland values showed little change in May, the evolving landscape of energy production is beginning to play a role in producers’ views,” Mintert said. “We are seeing a shift in how alternative revenue sources are impacting farmland value expectations.”

Interest in developing Carbon Capture and Storage (CCS) projects is rising among ethanol plants, partly driven by tax credits in the Inflation Reduction Act. This month’s survey inquired about farmers’ experiences with potential CCS projects from ethanol plants. Seven percent reported being approached about such projects. Payment rates per acre ranged from under $26 to over $50, showcasing considerable variation. Future surveys will delve deeper into CCS project specifics.

Interest in leasing farmland for solar energy production is on the rise, according to recent survey findings. In both April and May, approximately 20% of respondents — up from just 12% in March — have discussed leasing farmland for solar energy production within the last six months. Notably, over half (55%) of respondents were offered long-term lease rates of $1,000 per acre or more, with 27% receiving offers exceeding $1,250 per acre. Combining data from both April and May surveys reveals that approximately 30% of respondents who explored leasing options have now signed solar energy leases for farmland they control.