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Arkansas Farmer’s Almanac What to expect during 2018, from weather to prices, pests, trade and more
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FEATURES Arkansas Farmer’s Almanac Rob Anderson | Page 6
COLUMNS
Farm Bureau Perspective Randy Veach | Page 3
Ag News Staff Report | Page 14
Policy Update Michelle Kitchens | Page 24
Ag Law Update
Harrison Pittman | Page 26
COVER DESIGN BY BRYAN PISTOLE
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WINTER 2018
Edition 48
Farm Bureau Perspective by Randy Veach | President, Arkansas Farm Bureau Federation
With all the forces pulling on agriculture these days, I am encouraged when I see different segments of our industry work together toward the common good. I am speaking specifically about the recent show of support from the Arkansas Cattlemen’s Association and the Arkansas Agriculture Board with regard to C&H Hog Farms, which has unjustly had its operating permit denied by the Arkansas Department of Environmental Quality despite no environmental infractions during its more than four years of operation. Their support, along with that of the Arkansas Pork Producers Association, is meaningful. The Arkansas Cattlemen’s Association and the Arkansas Agriculture Board understand, as do we, that denying an operational permit for reasons other than regulatory or environmental violation, sets a dangerous precedent that threatens our state’s largest industry, agriculture. This situation stirs emotion, especially among the men and women of agriculture, who understand the care and protection they routinely provide our natural resources. Our support for C&H Hog Farms lies firmly in our foundational support for private property rights and right-to-farm laws, as defined by ArFB’s grassroots, member-developed policy. This is about doing what is right for Arkansas’ farmers and ranchers who are compliant with the law. In announcing its support for C&H, the Cattlemen’s Association had this to say: “… The controversy surrounding the C&H Hog Farm has caused a great deal of confusion and fear among cattlemen and cattlewomen statewide, and rightfully so. Agriculture in Arkansas is like a family, and trouble for one section of our industry troubles us all. After gathering as many facts as possible, and hearing from Arkansas Cattlemen’s Association (ACA) members from across the state, we believe it is time to speak. “As cattle producers, we believe it is the undeniable right of the owners of C&H Hog Farm to use their land as they see fit. We support the continued operation of the C&H Hog Farm and animal production agriculture across the state of Arkansas. Because of the complexity of many permitting applications, we believe that C&H should be able to supplement and revise their denied application with science based facts and evidence as
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the permitting appeal process moves forward. We respectfully request that Governor Hutchinson ensure C&H and all agriculture producers statewide that this appeals process will be carried out in an open, transparent, and timely process... We look forward to seeing this issue resolved as quickly as possible so that C&H Hog Farms can continue their family operation as normal.” The Arkansas Agriculture Board, which serves as an advisory panel for the Arkansas Agriculture Department, passed the following resolution at its most recent meeting: “Whereas, C&H Hog Farms (C&H) has demonstrated an exemplary record of compliance with required regulations and environmental stewardship; Whereas, the Big Creek Research and Extension Team (BCRET) has been monitoring C&H, the creek and the surrounding area for more than four years and in its latest quarterly report stated that “no impact of farm operation on water quality has been observed”; Whereas, Governor Asa Hutchinson has publically expressed support for C&H, agreed with the Pollution Control and Ecology Commission in its granting of a stay for the recently denied Arkansas Department of Environmental Quality permit, and believes C&H should be allowed to supplement the permit record through the appropriate appeals process; Therefore, be it resolved that we the Arkansas Agriculture Board express our support for animal agriculture. We further express that applicants for permitting as addressed in this resolution should be allowed to submit specific information that will complete the permitting record, and that decisions regarding permit approval will be based on sound science.” Allow me to re-emphasize a point that seems to be lost in this debate. Farm Bureau supports a clean, healthy, vibrant Buffalo River. Our farmers and ranchers, without exception, are the best caretakers of our water, soil and air, as well as the animals they raise. And they do this to provide us with the safest and most affordable food supply in the world. We agree with the Cattlemen’s Association that this situation should be resolved quickly, so that the families of C&H and all members of the Arkansas agriculture community can return their focus to the critical work of providing food, fiber and shelter for our state, our country and the world. *
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An official publication of Arkansas Farm Bureau Federation distributed to more than 43,000 farming and ranching households in Arkansas. SUBSCRIPTIONS
Included in membership dues ARKANSAS FARM BUREAU OFFICERS:
President • Randy Veach, Manila Vice President • Rich Hillman, Carlisle Secretary/Treasurer • Joe Christian, Jonesboro Executive Vice President • Warren Carter, Little Rock DIRECTORS:
Jon Carroll, Moro Terry Dabbs, Stuttgart Sherry Felts, Joiner Mike Freeze, Little Rock Bruce Jackson, Lockesburg Tom Jones, Pottsville Terry Laster, Strong Jeremy Miller, Huntsville Gene Pharr, Lincoln Caleb Plyler, Hope Rusty Smith, Des Arc Joe Thrash, Houston Dan Wright, Waldron EX OFFICIO
Megan Allen, Bismarck Donna Bemis, Little Rock Adam Cloninger, Keo Mark Morgan, Clarksville Executive Editor • Steve Eddington Editor • Rob Anderson Contributing Writers • Ken Moore, Gregg Patterson, Maddison Stewart, Keith Sutton ADVERTISING
Contact Tom Kennedy at Publishing Concepts for advertising rates tkennedy@pcipublishing.com (501) 221-9986 Fax (501) 225-3735 Arkansas Agriculture is published quarterly by the Arkansas Farm Bureau Federation 10720 Kanis Rd., Little Rock, AR 72211 POSTMASTER: Send address changes to Arkansas Agriculture, P.O. Box 31, Little Rock, AR 72203 Issue #47 Publisher assumes no responsibility for any errors or omissions. All rights reserved. Reproduction without permission is prohibited. The Arkansas Farm Bureau Federation reserves the right to accept or reject all advertising requests. Send comments to: arkansasagriculture@arfb.com
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ARKANSAS FARM
What to expect during 2018, from weather to prices, pests, trade and more “Prediction is very difficult, especially if it’s about the future.” — Niels Bohr, Noble Prize-winning physicist
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MER’S ALMANAC Each year on Feb. 2, people across the country tune in to the news to see if a small, furry animal has emerged from a hole to tell us when winter will end. Sadly, there is no animal that can reliably tell us what the year holds for agriculture, so we decided to reach out to a collection of experts to get a better idea of what the rest of 2018 – from planting and growing season to harvest – might have in store for Arkansas farmers. What weather can they expect? What do markets have in store for crops and livestock? Will they be swarmed with pests? What about land prices and the agriculture economy?
Photo by Keith Sutton
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WEATHER WOES OR NO? Arkansas weather in 2017 was all about swings, moving from a period of flooding into an extended period of drought across much of the state. John Lewis, senior forecaster with the National Weather Service in North Little Rock, says that the lingering drought is still a factor moving toward spring in 2018. “Soil moisture is pretty low right now. We still have a drought and the only way we will finally get rid of it is to get a lot of rain in the next couple or three months,” Lewis says. “However, it looks favorable for that right now, so we see some potential for relief, which is good because once you get into late spring and summer, precipitation becomes spotty.” Despite the good news about drought conditions, Lewis does see potential danger ahead for farmers, particular in the form of sudden cold snaps. “We are still getting rounds of cold air from Canada and there is a potential for late freezes,” he says. “We may warm up in March and people may not be prepared for a freeze, but all it takes is one shot of cold air and you’ve got an issue. We’re in that pattern where we could possibly get one of those April freezes.” Once spring and the danger of late freezes has passed, Lewis says it may be a relatively mild summer in the state. “The Climate Prediction Center is not confident that we will have a hot summer,” he says, adding that the extreme summer heat is likely for states in the southwest, from central Texas across to Nevada.
Photo by Keith Sutton
“This winter we should see a big reduction in numbers on all those kind of pests.” – Gus Lorenz on red-banded stink bugs, fall army worms and soybean loopers.
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“We are still getting rounds of cold air from Canada and there is a potential for late freezes.” – John Lewis.
Photo by Keith Sutton
PEST RELIEF The cold Arkansas winter may be a positive for farmers, according to Gus Lorenz, extension entomologist and professor for the University of Arkansas System Division of Agriculture. “The last two winters were relatively mild and as a result we had some pests – like the red-banded stink bug, the soybean looper and fall army worms – that don’t typically overwinter in the state sticking around. So, when winter ended we already had a rested population that was already here,” Lorenz explains. “That meant that early in the season we were already dealing with a high population of a lot of these pests.” A cold winter this year changes things, Lorenz says, noting that, “this winter we should see a big reduction in numbers on all those kind of pests.” Lorenz said he expects the red-banded stink bug population to be down drastically from 2017 and the fire ant population may be reduced as well. He points out this is good news for farmers, because “some growers had to treat (their fields) three or four times last year for some of these pests” and it is “not sustainable to have to deal with such a heavy insecticide cost.” “Last year we had fall army worms in almost every crop – even in rice and in pastures. Even some cattle folks had to spray multiple times,” he said. “I think as we go into the season, we’ll hopefully not see a fast buildup of these types of pests. We may see some by end of the season, but not early.”
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“Farmers face several challenges in 2018, because lower commodity prices and large stocks will continue to depress net farm income which is down almost 50 percent over the last five years.” – Matt King.
Photo by Keith Sutton
MARKET AND TRADE TROUBLE Matt King, Arkansas Farm Bureau isdirector of market information and economics, says there are some bumpy roads ahead for Arkansas farmers in 2018. “Farmers face several challenges in 2018, because lower commodity prices and large stocks will continue to depress net farm income, which is down almost 50 percent over the last five years,” King says. In fact, the 2018 Farm Sector Income Forecast from USDA Economic Research Service, released in mid-February, predicts that net farm income is expected to fall to around $59.5 billion, a 12-year low. Meanwhile, net cash income in 2018 is projected to be $91.9 billion, which is a drop of slightly more than 5 percent from 2017 levels. If this prediction holds true, it would be the lowest level since 2009. International trade, which is critical to Arkansas, may also become a source of pain in 2018. “Arkansas agriculture counts on trade, more than 36 percent of Arkansas’s production enters the export market,” explains King. “Ten percent of broilers are exported, 50 percent of rice and soybeans is exported, 80 percent of cotton is exported and the top markets for Arkansas agricultural products are Mexico and Canada.” The ongoing effort to renegotiate the North American Free Trade Agreement, or NAFTA, is critical and the threat of ending the agreement remains a concern. According to King, the U.S. exports around 20 percent of its poultry production to Mexico each year. If the U.S. were to pull out
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of NAFTA, Mexico could put tariffs of up to 75 percent on U.S. chicken and turkey under its World Trade Organization commitments. If NAFTA is scrapped, he says, the U.S. would face heavier competition from Brazil, the world’s top chicken exporter that has tariff-free access to the Mexican market through 2019. In addition to NAFTA fears, King says the “worst news” could have an impact on soybean growers. He cites recent reports that China may retaliate on soybeans if U.S. implements possible safeguards and penalties for intellectual property theft. King says that reports are that the Chinese Ministry of Commerce (MOFCOM) convened a meeting in early February with the Chinese soybean industry leaders to get their thoughts on the consequences of restricting access for U.S. soybeans into the China market. “Another problem that could grow in 2018 is that large supplies not only in U.S., but in other countries have caused our exports to face increasing competition on the global market,” King says. On the livestock side’s, the cattle industry is “guardedly optimistic” about the remainder of 2018, says Travis Justice, Arkansas Farm Bureau Commodity & Regulatory Affairs director and chief economist. According to Justice, the cattle inventory to start the year – 94.4 million head in the U.S. and 1.76 million head in Arkansas – marked the fourth year of expansion in the cow herd. Beef supplies, he says, have will continue to grow throughout 2018, keeping some pressure on cattle prices.
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“Continued growth in international demand, along with weather, will be a key factors in cattle pricing throughout the year.” – Travis Justice.
Photo by Keith Sutton
“Continued growth in international demand, along with weather, will be a key factors in cattle pricing throughout the year,” says Justice. “Domestic beef demand remains strong, reflecting positive shifts in the U.S economy. However, while the demand profile in the meat sector is positive, record levels of overall meat supplies will likely push consumer meat prices lower.” Justice also warns of “further erosion in prices received by cattle producers,” due to the larger cattle inventory, record center-of-the-plate competition and expected higher cost of feedstuffs.” Justice ticked off a series of expectations for other animal agriculture sectors throughout the year: • In the dairy sector, he says, cow numbers and resulting milk production is poised for continued expansion in 2018. In the U.S., 9.4 million dairy cows were on farms to start the year – 6,000 head in Arkansas. An expected leveling-off in milk cow productivity, could provide some relief from additional milk supplies. Prospects for market stability (and even some recovery) are reasonable for the second half of the year, but prices at the farm level should remain relatively lackluster throughout 2018. • Pork supplies are growing as the number of animals and productivity-per-head continue to rise. Supplies are clearing the Market, he says, but producer prices will likely remain stagnant. International trade developments will remain a key factor in prices. • Poultry products face a mixed outlook for the rest of 2018. Broiler meat production will continue to export given favorable domestic consumption patterns and positive export growth into lesstraditional areas such as Cuba, Taiwan, and Vietnam. Eggs, on the other hand, will likely see prices at 10-year lows as production reaches near record levels. The demand for turkey meat has not kept up with recent production levels and prices have responded accordingly.
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Arkansas Agriculture
ArFB File Photo
Photo by Ken Moore
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FARMLAND FORECAST The remaining months of 2018 could be an interesting time for farmers interested in either buying or selling land. “We think (land) values have remained amazingly stable in spite of commodity prices,” says Gar Lile, president and principal broker at Lile Real Estate, Inc. “There is still a lot of demand for good, quality farmland. However, we’ve seen a 20-30 percent softening in marginal farmland value.” Lile describes “quality” farmland as premium land for crop farming with recreational value (usable for waterfowl or deer hunting). Marginal land, he says, is production agriculture land that has not been precision leveled and may not have irrigation capabilities or is in area of state where groundwater aquifer is weak. “The biggest looming issue out there in terms of buying and selling farmland is interest rates,” he explains. “In Arkansas, the most important factors for farmland value are recreational value, crop prices, and interest rates and the interest rate factor is what to watch (in the coming months).” *
Photo by Keith Sutton
“We think land values have remained amazingly stable in spite of commodity prices.There is still a lot of demand for good, quality farmland.” – Gar Lile, president and principal broker at Lile Real Estate, Inc.
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AgNEWS
Photo by Keith Sutton
Understanding the ELD Rule: What it does and doesn’t mean
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t the Arkansas Farm Bureau winter commodity meetings in January, a major topic of discussion was what is known as the “ELD rule” and the confusion surrounding its implementation, particularly among those who regularly haul horses and cattle on Arkansas roadways. Major Jay Thompson of the Arkansas Highway Police spoke at the commodity meetings to address the confusion and misinformation being spread about the rule. “With the recent ELD rule – Electronic Logging Device rule – a lot of assumptions have been made that the rules have changed for our farmers here in Arkansas, but that is simply not the case,” Thompson said. Indeed, a letter went out to legislators in January from Arkansas Highway Police Chief Ronnie Burks that stated, “No laws or regulations have been newly instituted or changed regarding Commercial Drivers’ License (CDL), Commercial Motor Vehicles (CMV), and/or the applicability of the Federal Motor Carrier Safety Regulations (FMCRs) to persons hauling livestock or cattle.” So, what is the real ELD rule story? We put together a list of key information about this new rule, starting with what it is and what it means. If you or someone you know has been concerned about this rule and what it means for you and your business, see our breakdown below. For more information from Major Thompson, you can watch as short video at http://bit.ly/ELDInfo. What is the ELD Mandate? In 2012, Congress enacted the “Moving Ahead for Progress in the 21st Century Act (MAP—21.) A part of this bill included a provision requiring the Federal Motor Carrier Safety Act
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(FMCSA) to develop a rule mandating the use of electronic logging devices (ELDs) on commercial vehicles. Installation of such devices is designed to better enforce the “Hours of Service” requirements of commercial drivers. There are “agricultural use” exemptions from the Electronic Logging Device and Hours of Service rules. The ELD rules were slated to take effect in mid-December; but a 90-day “stay” was approved and certain parts of the rule were opened for public comment. Without legislative intervention, these rules will likely take effect this spring. Listed below are the current Arkansas DOT regulations pertaining to farm vehicles. With these existing rules and the proposed ELD rules, most agricultural operations in Arkansas should remain largely unaffected. Drivers in the agricultural community who are less certain as to their qualification for the agricultural exemption may include: those transporting animals for exhibition or recreation purposes, those routinely transporting ag products over 150 miles, and commercial haulers of farm products. Arkansas Farm Vehicle Regulations Section 32934 provides a statutory exemption from most of the FMCSRs, including those pertaining to commercial driver’s licenses (CDL) and driver physical qualifications (medical) requirements, for the operation of “covered farm vehicles” by farm and ranch operators, their employees, and certain other specified individuals under specific circumstances. The operation of “covered farm vehicles” is exempt from: The term “covered farm vehicle” includes any commercial motor vehicle (CMV) (defined in 49 CFR 390.5, but excluding vehicles transporting hazardous materials in a quantity
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(i) 26,001 pounds or less, for vehicles operating in interstate commerce anywhere in the United States; or (ii) greater than 26,001 pounds and traveling in interstate commerce within the State in which it is registered, or (iii) greater than 26,001 pounds and traveling in interstate commerce within 150 air miles of the farm or ranch with respect to which the vehicle is being operated, regardless of whether it is being operating within the State it is registered.
requiring placards), traveling in the State in which the vehicle is registered or another State, and: (a) Is operated by— (i) a farm owner or operator, or an employee or family member of the farm owner or operator; or (ii) a ranch owner or operator; or an employee or family member of the ranch owner or operator. (b) Is being used to transport to or from a farm or ranch— (i) agricultural commodities; (ii) livestock; or (iii) machinery or supplies; (c) Is equipped with a special license plate (i.e. Farm Tag) or other designation by the State in which the vehicle is registered to allow for identification of the vehicle as a farm vehicle by law enforcement personnel; and (d) Has a gross vehicle weight rating (GVWR), gross combination weight rating (GCWR) or gross vehicle weight or gross combination weight, whichever is greater, that is—
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The operation of “covered farm vehicles” is exempt from*: • • • • •
49 CFR Part 383: Commercial Driver’s License Standards; Requirements and Penalties. 49 CFR Part 382: Controlled Substances and Alcohol Use and Testing. 49 CFR Part 391: Subpart E: Physical Qualifications and Examinations. 49 CFR Part 395: Hours of Service. 49 CFR Part 396: Inspection, Repair and Maintenance.
*These exemptions took effect on Oct. 1, 2012. *
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PolicyUPDATE Michelle coordinates the policy development process for Arkansas Farm Bureau and regularly updates the membership on legislative and regulatory issues. She grew up on a cattle and poultry farm in southwest Arkansas and earned a degree in communication management from Harding University.
By Michelle Kitchens, Assistant Director, ArFB Public Affairs & Government Relations
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his year will be a whirlwind of legislative activity, a brutal campaign and election followed by a lame duck Congressional session. In Washington, Congress has been working diligently to pass spending bills and reach a compromise on immigration reform. Both are time sensitive and turbulent, as Democrats and Republicans maneuver to include their own ideas. Individuals qualifying for Deferred Action for Childhood Arrivals, or DACA, have launched a larger immigration overhaul push, but any legislative effort to give them legal status will encompass other reforms. Agriculture has been negotiating their own reforms for inclusion and the top agriculture priority is being able to find and hire the legal workers they need WHEN they need them. This is a simple priority, but it comes with many complications, including a probable cap on the number of guest workers, E-Verify requirements, benefits for guest workers, “touchback” and pathways for visas or citizenship for those already in the workforce. In addition to immigration, the Farm Bill is set for renewal in 2018 and it has been a quiet process thus far.
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Members of Congress have focused on maintaining most of the current structure with most major changes expected in cotton and dairy. Consensus seems to be that there will be no new money in the bill, only shifting of existing funding. U.S. Secretary of Agriculture Sonny Perdue released the administration’s priorities for a new Farm Bill in January. Some of the most interesting goals were: • Avoid market distortion or increasing shallow loss payments; • Conservation should focus on most environmentally sensitive acres, possibly increasing CRP acres with lower rental rates; • Potential work requirements for SNAP recipients; • Infrastructure focused (broadband) but don’t be surprised if some opioid initiatives are included; • Make forests “work” again; • Grow programs for new, beginning, veteran and under-represented producers; • Make the farm bill meet budget goals. If the farm bill isn’t done by the July 4th break, it will wait until the lame duck session post-election. If it isn’t done then, it could mean starting over with a new Congress next year. Finally, NAFTA renegotiations began in August of 2017. Six rounds of talks have yielded few results and there is no deadline. Trade deals such as these frequently cross administrations. For example, President George H.W. Bush negotiated the original NAFTA, but it was ratified under President Clinton. There has been discussion of including provisions related to building a wall on the southern U.S. border and a sunset clause, but both are probably deal killers. Mexico is also in an election year and won’t want to ratify a new NAFTA after July. It is hard to believe a NAFTA deal will get done and ratified before summer. American Farm Bureau’s NAFTA priorities are: • Updated, science- based sanitary and phytosanitary rules; • Improved dispute settlement procedures for fresh fruits, vegetables and horticultural products; • Eliminated or reduced Canadian tariff barriers to dairy, poultry eggs and wine, as well as the recently implemented barriers to ultra-filtered milk; • Addressing the misuse of geographical indicators; and • Developing a consistent, science-based approach to biotechnology. *
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Ag LawUPDATE Harrison M. Pittman is director of the National Agricultural Law Center at the University of Arkansas System Division of Agriculture, which serves as the nation’s leading source of agricultural and food law research and information. The Center which deals with legal issues around the country that impact agriculture at the state and federal levels.
Photos by Keith Sutton
by Harrison Pittman
W
aters of the United States Repeal of the 2015 “Waters of the United States,” or WOTUS, continues to be a top priority of American Farm Bureau Federation, state farm bureaus, and virtually every other farm group in the United States. The path to repeal is a daunting challenge, and a messy legal process. In late January, the United States Supreme Court issued a key ruling that defined where – federal district courts or before the federal courts of appeals – legal challenges to the 2015 WOTUS must be brought. The Supreme Court ruled that such challenges must be brought before federal district courts. Recall that the Sixth Circuit Court of Appeals had previously consolidated the various legal challenges filed in federal district courts into one action before the Sixth Circuit. The Supreme Court’s ruling has the effect of now sending all those challenges back to the federal district courts in which they were initially filed. This ruling is generally a welcome development for many in the ag industry, but also raises the issue of what will become of the nationwide injunction the Sixth Circuit had placed on the WOTUS rule. While in place, that injunction prevents the rule from being implemented. Within about a week of the Supreme Court’s decision, EPA issued a final rule that seeks to delay implementation of the 2015 rule for two years while it continues to work toward repeal. To the surprise of no one, new litigation was then filed to challenge that two-year extension. If it all sounds very confusing, it’s because it is. Expect this epic generational battle over the role of the federal government over agricultural and other private lands to rage on for a long time to come.
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WOTUS and Arkansas. Ironically, the immediate impact in Arkansas may be minimal because the rule will likely will not be implemented in Arkansas for the foreseeable future. This is true even if the WOTUS rule ultimately becomes effective in other states while the current EPA seeks to repeal it. Soon after the WOTUS rule was issued in 2015, Arkansas Attorney General Leslie Rutledge joined 12 other states to challenge the rule in North Dakota federal district court. Back at that time, the North Dakota court issued an injunction that barred implementation of the WOTUS rule in those 13 states. The Supreme Court’s recent decision means that Arkansas’s challenge returns to the North Dakota federal district court. Once officially returned, the North Dakota injunction issued in 2015 will apply, thereby prohibiting implementation of the WOTUS rule in Arkansas.
HSUS & the Pork Checkoff. The Humane Society of the United States, or HSUS, is a major political force for animal rights and has proven to be a constant opponent of the ag industry. Since 2012, HSUS has led a legal fight challenging the purchase agreement between the national pork board and the National Pork Producers Council. Under that agreement, the pork board agreed to pay about $35 million (annual payments of $3 million spread over 20 years) for trademarks, including “The Other White Meat.” In a partial but potentially temporary victory for HSUS, a federal district court has ordered that the annual payments be stopped. If the decision stands, it could be a financial blow to the NPPC. It could also have implications for any similar transactions with other checkoff programs. For more information, visit the Center’s website at www.nationalaglawcenter.org. *
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PRESORTED STANDARD U.S. POSTAGE PAID LITTLE ROCK, AR PERMIT NO. 1884