Page 1

PARTICIPANTS HAVE been chosen for the Market Study Tour to Cuba in March. One farmer hopes to interest Cubans in sheep and prawns. ....2

U S dA’ S l A S T p r o d u c t i o n report for the 2011 crop will be released Jan. 12. No significant change in yields is expected. .........4

H o g P Ro d U C E R S s aw a profitable year in 2011 and 2012 looks to be every bit as good and perhaps even better. .....................10

Monday, January 2, 2012

Two sections Volume 40, No. 1

Farm Bureau to set national ag policy goals BY MARTIN ROSS FarmWeek

As the American Farm Bureau Federation (AFBF) Resolutions Committee (RC) drafted 2012 policy for national delegate debate, “there was not much debate about whether direct payments will be continuing,” an AFBF economist noted. Instead, farmers gathering next week in Honolulu likely will focus on the shape — and potential scope — of the 2012 farm bill safety net. AFBF’s 93rd annual meeting begins Sunday. Acknowledging congressional budget concerns that appear

to signal a significant shift in ag policy direction, the 10 state Farm Bureau presidents comprising the RC in December reviewed a potential “changing around of priorities,” according to AFBF economist Veronica Nigh. Delegates will consider farm bill proposals keying on “strong and effective safety net/risk management programs that do not guarantee a profit, but instead protect producers from catastrophic occurrences while minimizing the potential for farm programs affecting production decisions.”

The RC incorporated not only diverse policy offerings from across the country but also AFBF’s “systemic risk reduction program,” which was developed in the heat of congressional deficit “super committee” speculation. AFBF offered the revenue-based, disaster-type program as an alternative to so-called “shallow loss” programs proposed by other commodity groups and farm state lawmakers. Illinois Farm Bureau President Philip Nelson, an RC member, thus foresees “two avenues” of possible delegate

Mild winter for Midwest?

Dryness in South America now igniting crop markets

BY DANIEL GRANT FarmWeek

Periodicals: Time Valued

The corn and soybean markets last week raced to six-week highs as dryness in South America continued to threaten crop yield potential there. Bryce Anderson, DTN ag meteorologist, reported soil moisture is less than 10 percent of normal in much of the central crop belt in Argentina.

“I’d classify soil moisture there as short to very short,” Anderson told FarmWeek. “With that kind of problem, it’s not looking good at all for the majority of the corn crop (in Argentina).” Concerns have escalated in recent weeks as the South American corn crop enters pollination. “The situation is most concerning for the corn crop. Corn has one shot to pollinate,” Anderson said. “Soybeans, on the other hand, can hang on a little more and take advantage of late-season showers.” The crop markets responded to the production concerns in South America by racing to six-week highs. Futures prices last week were above $6.30 for corn, $12 for beans, and $6.40 for wheat. Anderson on Thursday forecast rain for south central Brazil over the New Year’s weekend but little relief was in sight farther south. “La Nina has a high correlation with dry conditions in Argentina and southern Brazil and we’re seeing that,” he said. Elsewhere, weather conditions in the Midwest so far this winter have been unseasonably

warm and wet. Precipitation in Illinois the first three weeks of December averaged nearly 3 inches, 1.1 inches above normal, while the temperature averaged 35.6 degrees, 4.5 degrees above average and 13.8 degrees warmer than last December. “With the warmer temperatures, we have seen lots of rain but not much snow,” said Jim Angel, state climatologist with the Illinois State Water Survey. The situation so far is a sharp contrast to last winter (December through February) when snowfall totals ranged from 15 inches in Southern Illinois to 50-plus inches in Northern Illinois. “We’re seeing a different pattern in North America than we’ve seen the past couple years,” Anderson said. “We’re not seeing any real pooling of cool air over central Canada, so there just isn’t any real mechanism to develop winter storms in the Midwest.” The weather pattern could continue as the National Weather Service projected increased chances of above-normal temperatures and above-average precipitation across much of Illinois this month.

FarmWeek on the web: FarmWeekNow.com

discussion: support for a shallow loss program that would “expand on the ACRE (Average Crop Revenue Election) program” vs. a revenue program that functions more as “a type of insurance program.” This fall, House/Senate Ag Committees put forward a $23billion ag savings blueprint for the super committee, agreeing to eliminate direct payments in order to assure crop insurancesafety net funding. While the super committee ultimately failed to reach an agreement, “most folks had come to the conclusion that we have to imagine a world without direct payments,” Nigh told FarmWeek. “If they do come to an end, what is our backup?” she posed. “What would we like

farm policy to be? This is probably a very critical point in policy debate.” Echoing IFB’s emphasis on crop insurance, RC members agreed insurance should serve as “the primary safety net for agriculture,” Nigh related. They reasoned that with removal of more catastrophic “systemic risk” from the equation via the farm program, crop insurance could function more effectively for southern growers and others “it hasn’t been so helpful for in the past,” she said. Ridgway producer and Illinois Soybean Association board member Bill Raben will closely follow the farm bill debate, especially as ag committees nail down safety net details. See Policy, page 4

TALKING TURKEY

DeKalb County independent turkey grower Howard Kauffman, seen here, is a proponent of judicious antibiotics use. He argues, however, that “antibiotic-free” meat is an industry standard rather than a claim that can be made only by niche marketers. See more details on page 6. (Photo by Antony Boshier)

Illinois Farm Bureau®on the web: www.ilfb.org


FarmWeek Page 2 Monday, January 2, 2012

IFB IN ACTION

Quick Takes BEEFY BENEFITS — If eating a heart-healthy diet tops your list for 2012, a new study by Pennsylvania State University may provide some beefy motivation. The study, published in the American Journal of Clinical Nutrition, found that eating lean beef products including top sirloin, tenderloin, and 95 percent lean ground beef daily could improve LDL cholesterol (“bad” cholesterol) levels by 10 percent. Researchers followed 36 men and women, ages 30-65, who had moderately high cholesterol levels. The participants were divided and followed four diets. Two of the diets, labeled “BOLD” and “BOLDPLUS,” which included heartier servings of lean beef, proved to offer more protein and lower carbohydrate levels and provide about the same amount of fat as diets with minimal lean beef. U.S. WIND ENERGY ADVANCES — The U.S. wind energy industry noted milestones reached in 2011. Iowa and South Dakota each generated 20 percent of their electricity from wind, a first for the U.S. Illinois’ renewable energy portfolio standards seek to obtain 25 percent of the state’s energy from renewable resources by 2025, and wind power is to supply 75 percent of that renewable energy. Turbine technology continued to improve last year, allowing cost-effective harvesting of slower wind speeds and expanding potential areas of development. However, the wind energ y industr y is looking toward Dec. 31, 2012, when the federal production tax credit is set to expire. Some companies have said the uncertainty of the credit extension already hascooled project development, according to wind industry organizations. ED REFORM FUNDS COMING — The third time was the charm for Illinois to secure U.S. Department of Education “Race to the Top” funding. The state will receive $43 million for school reforms. Illinois had been a finalist, in two previous rounds, but lost each time. State Superintendent Christopher Koch announced in his online newsletter the money will allow the state to move forward with Science, Technology, Engineering, and Math (STEM) initiatives. One proposed initiative is development of careerbased learning about agriculture and eight other industry sectors in Illinois. Koch said the state education board will use about half of the funding “to build up the overall educational infrastructure in the state.”

(ISSN0197-6680) Vol. 40 No. 1

January 2, 2012

Dedicated to improving the profitability of farming, and a higher quality of life for Illinois farmers. FarmWeek is produced by the Illinois Farm Bureau. FarmWeek is published each week, except the Mondays following Thanksgiving and Christmas, by the Illinois Agricultural Association, 1701 Towanda Avenue, P.O. Box 2901, Bloomington, IL 61701. Illinois Agricultural Association assumes no responsibility for statements by advertisers or for products or services advertised in FarmWeek. FarmWeek is published by the Illinois Agricultural Association for farm operator members. $3 from the individual membership fee of each of those members go toward the production of FarmWeek.

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“Hair sheep” graze on the banks of Grover Webb’s Pope County prawn ponds. The Simpson-area producer sees opportunities to market his unusual specialty products to Cubans. In addition, his flock, which does not grow wool, controls vegetation around the ponds, eliminating the need for potentially treacherous equipment use. (Photo courtesy of Grover Webb, Tanglefoot Ranch Prawns)

Participants selected for Market Study Tour

BY MARTIN ROSS FarmWeek

Grover Webb trades in sheep and “shrimp.” Someday, the Pope County producer hopes he might trade with Cuba. Webb, owner of Tanglefoot Ranch Prawns in Simpson, is one of the “at-large” producers and two alternates selected for Illinois Farm Bureau’s 2012 Cuba Market Study Tour in March. Because personal and commercial travel to Cuba are coordinated through the U.S. Department of State, IFB applied last week for a commercial license in order to lead an ag products marketing, sales, and sales-servicing delegation to Cuba. Formal approval of the travel license is not expected before mid- to late February, so a March 26-31 timeframe for the tour is planned. The trip will focus on farmers representing potential products they are interested in selling to Cuba. Products represented by farmers selected for the tour include corn, soybeans, wheat, sorghum, pork, beef, live animals, fresh water shrimp, eggs, milk, dairy products, and vegetables. Given Cuba’s growing tourist trade, evolving appetites, and agricultural environment, Webb envisions a possible new market for his freshwater prawns and live “hair” sheep. Hair sheep, which, ironically, originated in the Caribbean, lack standard wool and thus the oily lanolin that can affect the taste of lamb from conventional breeds. Further, hair sheep have a generally stronger maternal instinct than more heavily bred U.S.

sheep, and they don’t need grain to finish. Webb suggests a lower-maintenance, better-tasting sheep might appeal to lower-income Cuban producers themselves in search of new markets. “The hair sheep are very hardy — we let them lamb outside in the middle of winter,” he added. “It’s a very tough kind of animal; they’re easy to raise. If anyone were going to go into the sheep business at this time, they ought to be interested in hair sheep.” While citizens of and visitors to the island nation already have developed a taste for seafood, Webb believes Illinois prawns could provide an exotic taste profile for Cubans and their international guests. While Asian prawns are larger, they also often are a few years older. Webb harvests shrimp annually to ensure improved flavor, he said. In addition to Webb, producers picked for the Cuba tour include: Joe Bierman, Jasper County; Kevin Green, Vermilion; Paul Honnold, Edgar; Robert Inman, Pulaski; Gerry Kopping, Cook; Tom Jennings, Sangamon; Glenn Leighty, Lawrence; Thomas Marten, Montgomery; Keith Mussman, Kankakee; Hugh Scates, Gallatin; Doug Scheider, Stephenson; Grant Strom, Knox; Jamie Walter, DeKalb; Bill Wykes, Kendall; and Joe Zumwalt, Hancock. Alternates are Richard Gates from White County and Kent Warren from Clay County. IFB President Philip Nelson and District 14 Director Steve Hosselton also will accompany the group. IFB Director David Serven will serve as the Board alternate.

IFB’s Governmental Affairs Leadership Conference to focus on 2012 issues The Illinois Farm Bureau Goving a statewide legislative recepFarmWeekNow.com ernmental Affairs Leadership tion on Wednesday evening. Go to FarmWeekNow.com to Conference (GALC) will offer Registration is being offered two days of issue-oriented gener- learn more about IFB’s 2012 for either or both days. The cost Governmental Affairs Leader- is $50 for Wednesday only, $30 al sessions and workshops Feb. ship Conference. 29 through March 1 at the for Thursday only, or $70 for Crowne Plaza, Springfield. both days. Participants will be able to select from nearly 30 Online registration will be available after Jan. workshop topics. Issues covered will include trans- 15. Hotel reservations are due directly to the portation, environment, legislative updates, local hotel by Feb. 1. To register for the conference government, the farm bill, and rural development. or to obtain additional information, contact Again this year, Farm Bureau leaders will your county Farm Bureau or go online to have an opportunity to talk with lawmakers dur- {www.ilfb.org}.


Page 3 Monday, January 2, 2012 FarmWeek

goverNmeNt

Biodiesel tax credit early on 2012 agenda? BY MARTIN ROSS FarmWeek

Deprived of a Christmas miracle, the biodiesel sector is hopeful Congress soon will act to help keep demand rolling. The American Soybean Association called Congress’ recent failure to extend an expiring biodiesel blender’s tax credit “a disappointing end to an otherwise very positive year for the biodiesel industry.” The credit expired Saturday. The industry set a production record in 2011, with more than 800 million gallons produced through October, and industry experts continued to speculate that year-end production could reach 1 billion gallons. That was after a year in limbo as lawmakers delayed renewal of the $1-per-gallon biodiesel credit, which had lapsed Dec. 31, 2009. The sector rallied following a retroactive extension in late 2010; hopes are high Con-

gress will enact a retroactive tax extenders package early this year. A recently circulated draft Senate package included the biodiesel credit. Renewable Energy Group (REG) spokesman Alicia Clancy, whose company oversees 105 million gallons in combined biodiesel production capacity at Danville and Seneca, notes corn ethanol interests were willing to forego their 45-cent-per-gallon blenders credit (which also expired Dec. 31) in favor of ethanol infrastructure incentives. However, U.S. ethanol production is closing in on 13 billion gallons. “The biodiesel industry in 2003 only produced 14 million gallons,” Clancy told FarmWeek. “In nine years, we’ll have gone from 14 million gallons to a billion gallons. But the industry is still young. We still have a lot of room to grow and a lot of market penetration that can occur.

Shimkus: Pipeline push package’s only ‘positive’ Congress’ payroll tax cut compromise provides a merely temporary reprieve for rural health care providers and hopes for action on a plan to bolster North American energy security, according to U.S. Rep. John Shimkus, a Collinsville Republican. President Obama has signed a measure that keeps a reduced 4.2 percent Social Security payroll tax in place through Feb. 29. The package — the product of intense debate between the Republican-controlled House and the Democrat-run Senate — also extends unemployment benefits and heads off cuts in reimbursement to Medicare providers. The measure further requires the president to U.S. Rep. John make a decision within 60 days on a permit to authorize construction of a proposed CanadaShimkus to-Texas Keystone XL oil pipeline. For Shimkus, a member of the House Energy and Commerce Committee, that’s one of the few silver linings in the measure. The House originally proposed keeping the payroll tax cut in place through 2012. “This is only a two-month compromise — I think that when we get to the end of February, people are going to be looking around saying, ‘Boy, I wish we would have had a one-year deal,’” Shimkus said in an RFD Radio-FarmWeek interview last week. “As far as unemployment insurance extension, you go to rural America, where they’re trying to hire folks, and they tell us that if we keep extending unemployment (benefits), they’re going to continue to have trouble filling their jobs. “The only thing positive here is an attempt to push the president to make a decision on the Keystone XL pipeline, which would bring more crude oil to the U.S. from our partner and friend up north, Canada. “They’re (Canadians) willing, ready, and able to sell us that oil. Look at what’s going on with the Iranians threatening to close down the Strait of Hormuz. Think about how it would affect our producers if that area were cut off from crude oil supplies.” As part of their compromise, lawmakers designated a House-Senate conference committee to develop legislation that would extend the payroll tax cut through 2012 and devise a longer-term extension of Medicare reimbursement provisions. Farm Bureau monitored the payroll tax measure because rural primary care doctors on average see a higher percentage of Medicare patients than their urban counterparts. The Natural Rural Health Association argued Medicare “extenders” were “vital to ensuring that rural hospitals, doctors, and other professionals can provide needed emergency and primary care.” Shimkus emphasized the need to build on what he termed Congress’ mere “two-month ‘doc’ fix.” — Martin Ross

“If you keep in mind that the entire (diesel) distillate market in the U.S. is something like 65 to 70 billion gallons, we’re very much just getting started. Having stable and sound federal policy is really important.” The credit is a vital part of what she terms a “three-legged stool.” The federal Renewable Fuels Standard (RFS2) sets requirements for biodiesel blending “from the top down”: Last week, the U.S. Environmental Protection Agency announced a 1 billion-gallon

RFS2 biodiesel target for 2012. The federal tax credit helps keep biodiesel price-competitive for mid-level blenders who then may invest in biodiesel fuel terminals, heated tanks, and retail pumps needed to expand use of higher blends. The third leg includes incentives such as Illinois’ recently extended biofuels tax credit, which are crucial in determining “which states are the hotbeds for biodiesel blending and use,” Clancy said. REG’s Danville and Seneca

plants, which run on various feedstocks including soy and corn oil, enjoyed “very strong demand” in 2011, she said. The sector sees promise in new oil crops such as Illinois pennycress, but REG and others have a stake in the ethanol industry’s continued health, as well, given the value of inedible corn oil generated as an ethanol coproduct. “We see that being a very quickly growing feedstock market for the biodiesel industry,” Clancy related.

EPA sets biofuels goals; study adjusts footprint The U.S. Environmental Protection Agency (EPA) last week released renewable fuel requirements under the federal Renewable Fuel Standard program (RFS2), following on the heels of a new report on ethanol’s greenhouse “footprint.” Under RFS2, annual renewable fuel volume targets — including conventional and biomass ethanol and biodiesel — are gradually increased to reach 36 billion gallons in 2022. Refiners and importers use the standard to determine the minimum volume of renewable fuel they must blend into transportation fuels. For 2012, EPA has set a 1-billion-gallon target for biomass-based diesel (see related story above), directed 8.65 million gallons of cellulosic (biomass) biofuels use, mandated 2 billion gallons of nextgeneration “advanced biofuels” use, and set an overall renewable fuels goal of 15.2 billion gallons. Corn-based ethanol accounts for nearly 13 billion gallons of current annual renewable fuels pro-

duction. With expiration of the longstanding federal ethanol blenders excise credit Saturday, RFS2 mandates are viewed as important in sustaining ethanol demand as renewable fuel infrastructure continues to expand. However, RFS2 corn ethanol requirements are capped at 15 billion gallons, largely because it is not deemed to offer sufficient greenhouse gas reductions to qualify as a “advanced” biofuel under EPA definitions. New findings from USDA, though, could help strengthen the case for conventional ethanol and its environmental benefits. A new USDA study indicates that the country’s total cropland decreased by 34 million acres from 2002 to 2007, contradicting earlier predictions that farmers would cause “indire ct land-use change” as ethanol production rose. The report found that the country’s rangeland, grassland, and forestland acres increased significantly during that period.

ISA to host transportation discussions

Groups seek infrastructure action

With 2011 in the rearview mirror, Illinois agricultural and commercial interests are looking to assemble a 2012 roadmap for federal transportation priorities. The Transportation for Illinois Coalition (TFIC) seeks a $500 billion, six-year congressional transportation package early this session. The last surface transportation funding bill expired in 2009 but has been extended repeatedly, most recently through March. A new coalition study argues timely passage of a new multi-year bill is crucial “in order for public agencies to appropriately plan for multi-year capital projects, in order for construction and engineering firms to make decisions regarding hiring and the purchase of equipment.” Mike Steenhoek, executive director with the multi-state Soy Transportation Coalition (STC), sees a narrow political “window of opportunity” for the package. If lawmakers fail to act by March, transportation debate likely will be “overwhelmed by the 2012 elections,” he warned FarmWeek. Illinois Soybean Association (ISA) consultant Scott Sigman reports freight issues are “front and center” in a number of transportation proposals circulating in Washington. He sees political recognition “that it is freight that’s going to drive the economy — not just the consumer the economy has relied on in the past.” Sigman urges attention to road, rail, river, and even air resources “integral to the freight network.” However, Steenhoek sees “two strong and unfortunately competing developments occurring right now, as we look at our political landscape.” “You have a strong and increasing aversion to going into greater debt or increasing taxes on the American people,” he said. “On the other hand, there’s this strong desire to pass legislation with significant job-creating potential that would help facilitate economic growth. “Unfortunately, the surface transportation bill touches on both aspects, and there’s a real inherent

conflict with it right now. On the one hand, some might say there’s no chance something like this will pass. On the other, someone could say that this is exactly what our economy needs right now.” The TFIC report warns state roads are wearing out 33 percent faster than they are being repaired and predicted that by 2018, one out of every four miles will be in “unacceptable” condition without much-needed, federally supported rehab. At the same time, FarmWeekNow.com “substantial For details of the Illinois Soybean portions” of Jan. 17 roundtable Illinois’ inter- Association’s on soy transportation, go to state system FarmWeekNow.com. have come to need reconstruction rather than “simple resurfacing,” but the state since 2005 has been able to fund only 20 percent of the miles projected to need rebuilding, the study reported. ISA plans a Jan. 17 focus group on soy transportation in Bloomington. The roundtable will deal with multimodal infrastructure, containerized shipment, truck weights, bridge needs, and efficiencies such as matching “head hauls” (incoming containers of manufactured goods) with “back hauls” — use of empty containers to ship commodities back to those markets. Slots on the roundtable may be available. To inquire, e-mail Nancy Gargano at garganon@ilsoy.org, by Jan. 10. The roundtable is a sort of precursor to a Feb. 16 ag export symposium sponsored by ISA and Governors State University in Will County’s University Park. The symposium will feature market analysis and insights into export procedures, multimodal capabilities for bulk commodities, and the impact of the Panama Canal on Midwest inland waterway demand. Details of the February symposium will be available soon at {www.ilsoy.org/transportation/events}. — Martin Ross


FarmWeek Page 4 Monday, January 2, 2012

production

Good: Acreage USDA to finalize 2011 battle unlikely crop numbers Jan. 12 this season BY DANIEL GRANT FarmWeek

If the weather permits, farmers generally are expected to plant more acres of corn this year than last. Darrel Good, University of Illinois ag economist, recently predicted farmers this year could plant an additional 2 million acres. “For the most part, expectations are farmers will plant more acres of corn this year than they did in 2011,” Good said recently at the Illinois Farm Economics Summit in Galesburg. Informa Economics made a similar projection when it estimated corn acreage this year could total 94 million acres, up from about 92 million last year. But a possible jump in corn acres isn’t expected to heat up the markets this spring in what seemingly has become an annual battle for acres. Instead, planted acres of all crops are expected to get a boost this year from a return to production of a high number of prevent-plant acres (9.5 million last year), previously abandoned acres, and about 1.5 million acres recently released from the Conservation Reserve Program. “It (the return of acres to production) suggests there will be a fair amount of acreage for planting crops in 2012, and corn will get its fair share,” Good said. The economist projected soybean plantings will remain steady at about 75 million acres, which was close to Informa’s projection of 76.1 million acres of soybeans. Informa projected wheat seedings would total about 57 million acres. If the estimates are realized this year, crop plantings still would total about 1 million fewer acres than what was seeded in the 2008 season. “I’m not envisioning an acreage battle,” Good said. “I think there will be plenty of acreage to go around.” Good projected increased corn acreage plus a return of trend-line yields could push corn production to nearly 14 billion bushels this year. A boost in corn production, plus waning demand, could drag prices lower this year, the economist predicted. “We’re not looking for a lot of demand growth,” Good said. “That suggests we’ll be looking at lower (but still profitable) prices” this year. Weather will be the wildcard, though, as Good’s predictions were based on a third consecutive record bean crop in South America and normal planting and growing conditions in the U.S. “The acres are there. The economic incentive will be there (for U.S. farmers to maintain or boost planted acres),” said Dale Durchholz, AgriVisor market analyst. “The unknown is whether the weather will allow the acres to get planted.”

Farmers, traders, and others in the grain industry should keep an eye on Jan. 12 as USDA that day will release its annual crop production report. Many analysts at this point don’t expect significant changes to yield estimates as 2011 production generally was a bit disappointing for corn and a pleasant surprise for soybeans. The national yield averages as of November were pegged at 146.7 bushels per acre for corn and 41.3 bushels for soybeans. In Illinois, yield estimates from August to November were lowered from 170 bushels per acre to 156 bushels for corn and from 48 bushels to 46 bushels for beans as dry conditions late in the summer trimmed off the top end of yield potential. “In August, we saw excellent (plant) populations and ears on about every stalk,” Brad Schwab, state statistician with the National Agricultural Statistics Service’s (NASS) Illinois field office, said last month at the Illinois Farm Economics Summit in Galesburg. “But expectations changed.” Hot and dry conditions affected crops in much of the state in July and August. “This is the second year in a row (corn) production was a bit lower than expected,” said Darrel Good, University of Illinois ag economist. The corn yield in Illinois the last two seasons averaged 156.5 bushels per acre compared to the previous three-year average of 176 bushels per acre from 2007 through 2009. Schwab predicted the current yield estimates will be close to the final numbers released next week.

“By November we have a pretty good indication of what yields will be,” he said. “As we go through harvest, the range of error (in production estimates) decreases.” Clayton Pope, AgriVisor manager, predicted the final crop production estimates will wind up close to the November projections of 12.3 billion bushels for corn and 3.05 billion bushels for beans. “(USDA) can make some big changes, still,” Pope said. “But I’m not looking for anything dramatic.” USDA last month also reinstated a number of crop reports it planned to discontinue, including the July cattle inventory report and the January sheep and goat report. USDA’s proposed report on distiller coproducts for feed, however, remains on the shelf.

“This (coproducts report) would have allowed analysts to improve their projections for corn feed use in forward quarters and likely reduced the volatility in livestock and poultry prices relating to changes in the price of corn,” authors of the CME Group’s Daily Livestock Report noted. Current estimates suggest ethanol byproducts have displaced about 1.2 billion bushels of corn from the national feed supply and export markets. Schwab at the summit also encouraged farmers to fill out USDA NASS surveys and to prepare for the next Census of Agriculture, which will be mailed in December 2012. “Our numbers are only as good as the farmers who take the time to fill out the questionnaires and the information they give us,” Schwab added. — Daniel Grant

Policy Continued from page 1 “I’d like to see some sort of security blanket that can help us in times where prices fall short of our breakeven price — something that’s going to help us out a little bit,” Raben said. “Crop insurance seems to be the best way to go, I think.”


Page 5 Monday, January 2, 2012 FarmWeek

outlook

Farm Credit chairman: Risk warrants caution BY DANIEL GRANT FarmWeek

Fairbury farmer Kevin Harms, left, describes the split-nitrogen trials on his family farm to participants of last summer’s Indian Creek Watershed tour. (FarmWeek file photo)

Central Illinois farmers assess nutrient ideas and look ahead BY KAY SHIPMAN FarmWeek

Livingston County farmers involved with the Indian Creek project recently marked a watershed year and look forward to more results from their conservation practices. Fairbury farmer John Traub used strip-till in second-year corn and employed variable nitrogen rates, among other practices. In the first year, Traub, who serves on the project’s steering committee, said he saw some yield benefits from the conservation practices. “At the end of three years, I think we’ll have a good database of proof,” Traub said of the information being collected from his operation and those of other participating farmers. Located primarily in Livingston County, the Indian Creek Watershed is an 82square-mile drainage area containing about 52,840 acres. The watershed is in the national spotlight as one of USDA’s Mississippi River Basin Initiatives. The goal of that program is to reduce nutrients going into rivers and streams in the basin. Supporters of the Indian Creek project can point to farmer involvement and acres enrolled in the effort. Nearly 40 percent of the watershed’s farmers are enrolled in programs to increase conservation through such practices as planting cover crops, sidedressing nitrogen, splitting applications of nitrogen, and using nitrogen stabilizer. A total of 32 percent of the watershed’s acres is involved. In July, a tour of participating farms attracted more

than 100 farmers. However, watershed farmers aren’t the only ones who are working to improve their nutrient efficiency. Forrest farmer Marcus Maier, another project steering committee member, farms just outside of the watershed boundaries. He completed his second year of sowing an oat-tillage radish cover crop into soybean stubble. Maier said he appreciates the fact that data are being collected from field trials and demonstrations at specific locations within the watershed. That will be helpful in building nutrient management systems, he noted. “It’s important for farmers to be on the front end of this work with the IEPA (Illinois Environmental Protection Agency) ... We want it (practices) to make sense,” Maier said. The new year will bring new demonstrations to the mix of watershed projects. Those will include cover crop uses and benefits, drainage management, and potassium management in soybeans. Both Maier and Traub said they hoped the word — and the excitement — spreads among area farmers and the number of participants will continue to increase. “Maybe with time and continued effort we will get more people on board,” Traub said. Information about the Indian Creek Watershed project will be presented at the Illinois Farm Bureau Governmental Affairs Leadership Conference Feb. 29-March 1 at the Crowne Plaza in Springfield. Additional information about the project is available online at {www.ctic.purdue.edu/IndianCreek/}.

Record-high income in 2011 allowed many U.S. farmers to pay down debt, update machinery, and help bid up land values. But while the economic picture generally looks bright in farm country, Leland Strom, chairman of the Farm Credit Administration (FCA), recently advised farmers to proceed with caution this year. A number of factors — including the possibility of lower commodity prices, higher input costs, higher interest rates, and changes in currency values — could Leland Strom squeeze farm margins this year or in the future. “This environment warrants extreme caution by all parties,” Strom, a former Illinois Farm Bureau Young Leader, told the IFB Board of Directors during a recent meeting in Bloomington. “There are growing risks in this market.” Strom noted 2010 and 2011 marked the first time U.S. farmers harvested back-toback below-trend corn yields since the late 1970s. A return to trend-line yields or better this year likely will boost corn supplies and pressure prices, he said. Meanwhile, economic uncertainty caused by everything from the European debt crisis and instability in the Middle East to the MF Global meltdown also could pressure prices or affect demand for farm products. “The Farm Credit System as a whole should be able to weather this (collapse of MF Global, which was the eighth-largest futures commission merchant in the U.S.) due in part to its strong capital position,”

said Strom, who noted capital in the Farm Credit system has grown from $27.1 billion in 2008 to $35.9 billion in 2011. “The biggest issue is the question of confidence the ag sector will have in the futures industry” moving forward, he said. Strom said he believes it’s possible farmers who lost money through MF Global could have difficulty getting credit this spring. There also is concern in the industry that if elevators wind up paying higher interest rates because of the debacle, lower cash bids and a wider basis for crops could result. Higher prices already have been witnessed at farmland auctions the past year-plus. Farmland values in the third quarter were up 23 percent in Illinois and 31 percent in Iowa. “Obviously there has been an extreme pace of acceleration (in land values),” said Strom, who does not believe the market has entered a bubble. “But from what we see, underlying economics in the farm sector support what we’ve seen in land values.” The situation could change if commodity prices fall for an extended period, interest rates increase, or if the general economy improves and investors leave the farm sector and return to the stock market, according to the FCA chairman. Farmers, however, continue to buy a good portion of farmland with cash and also have paid down debt in the past year. The percentage of acceptable loans in the Farm Credit system has increased from 90.4 percent in December 2009 to 91.5 percent in September 2011, Strom reported. “Credit quality continues to gradually improve (in the farm sector),” Strom added. “Farmers are paying down some debt even in the face of low interest rates.”


FarmWeek Page 6 Monday, January 2, 2012

EMERGING ISSUES

‘Clean meat’ perceptions pose legislative risk BY MARTIN ROSS FarmWeek

As the CEO of a popular fast-food chain beats the drum for so-called “clean meat” in theaters and in Congress, Northern Illinois turkey grower Howard Kauffman argues clean meat can be found on any given day at the nearest grocery. In December testimony, Chipotle CEO Steve Ellis urged Congress to curb antibiotic use in meat production. Ellis joined other specialty marketers to back Rep. Louise Slaughter’s (D-N.Y.) proposal to restrict use in livestock of seven antibiotics that also have human applications. Slaughter argues drug use in food animal production may be raising consumer resistance to antibiotics and thus lowering disease resistance. She was in a stronger position to push the measure during Congress’ previous session, when she was chairman of the House Rules Committee, American Farm Bureau Federation policy specialist Kelli Ludlum told FarmWeek.

Antibiotic use generally is not a partisan issue, but Ludlum noted “more influential Democrats” support the legislation than Republicans, and the debate thus has “been a little quieter.” However, Ellis and other key food industry voices continue to publicly press a variety of animal care issues. In movie theaters, Chipotle has aired “Back to the Start,” an animated ad featuring music by Willie Nelson and depicting a fictional farmer’s move from “factory” production to pasture-based production. The ad depicts drugs being pumped into cartoon hogs on an assembly line before they are stamped into cubes of pork. Ludlum argued “small farms and local foods,” and consumer perceptions relating to them, are “in vogue right now,” potentially influencing lawmakers. “This is obviously something we’re still very concerned about — something we’re watching and opposed

to,” she said DeKalb County’s Kauffman Turkey Farms is one of the U.S.’ last independent family turkey operations, boasting its own federally inspected dressing plant. Kauffman raises birds both on the range and in the house, and his flock health program includes early vaccination for routine diseases. He is sensitive to public debate over antibiotic use in mature poultry, but will use veterinary drugs when unexpected threats put consumers at risk or may cause animal suffering. He questions the concept of “antibiotic-free” meat, citing drug withdrawal standards that assure birds are clean and clear of drug residues when they reach the market. “Go to any meat case: I’ll show you antibiotic-free meat,” Kauffman challenges. Illinois Farm Bureau has tried to educate Chicago-area “Field Moms” about judicious antibiotic use. During a recent Field Moms tour of Hampshire-based Lindale Holsteins dairy, veterinar-

ian Brian Gerloff noted milk from treated animals is segregated until antibiotics are “cleared from the milk.” Identification of precise withdrawal times is required under U.S. Food and Drug Administration animal drug approvals. Gerloff said producers have “tremendous economic incentives” to comply with withdrawal requirements: Each tank of milk that leaves Lindale Holsteins is tested be-

fore it is unloaded, and milk would be dumped if antibiotics are found. “Slaughter would say livestock have a big role in contributing to antibiotic resistance in humans,” Ludlum said. “The fact is, there are no peer-reviewed scientific studies that show a linkage between antibiotic use in livestock and resistance in humans — at least not with the current practices we use.”

USDA: Antibiotics position unchanged USDA has not changed its position on farm antibiotics use (see accompanying story), despite recent comments by Ag Secretary Tom Vilsack that some groups viewed as signaling a tougher stance, a department staffer says. While unveiling a new report detailing the Obama administration’s food safety efforts, Vilsack stated, “It’s clear we would like to see those antibiotics used in the context of disease control and disease response as opposed to any other reason or purpose for using them.” USDA spokesman Courtney

Rowe stressed “Secretary Vilsack’s comments do not reflect a change in policy for the department.” The USDA food safety report outlined stricter standards to prevent bacterial contamination of food, stronger surveillance to detect contamination problems early, and more rapid response to illness outbreaks. However, Vilsack said, “We’re working with state veterinarians and veterinarians’ associations and land-grant universities to ensure that there’s a better understanding of the importance of using antibiotics judiciously.”

AFBF board names five Illinois producers to advisory committees The American Farm Bureau Federation (AFBF) Board of Directors has named five Illinois producers to 2012 commodity advisory committees. They are: Don Ahrens, labor; Pat Bane, swine; Dean Campbell, soybeans; Kevin Miller, feedgrains; and Craig Tanner, ag nursery and greenhouse. The Illinois Farm Bureau representatives will attend na-

tional meetings of the AFBF advisory committees in Anaheim, Calif., in February. Commodity advisory committees provide an opportunity to discuss and recommend solutions to problems that directly affect the commodity for which the member is appointed. The committees serve in an advisory capacity to AFBF President Bob Stallman and the AFBF board.


Page 7 Monday, January 2, 2012 FarmWeek


FarmWeek Page 8 Monday, January 2, 2012

FB IN ACTION

Food bank network seeks to work directly with farmers BY DANIEL GRANT FarmWeek

Feeding Illinois, a state association of food banks, is looking to build on its positive relationship with Illinois Farm Bureau Young Leaders and work directly with more farmers. Tracy Smith, state director of Feeding Illinois, told FarmWeek her association plans to source more food from farmers in the state so needy Illinoisans have access to fresh, healthy foods. Feeding Illinois plans to provide more fresh fruit, vegetables, and dairy products to its eight food banks that serve all 102 counties in Illinois. The association hopes to source the food items from around the state. “These are the (food items) we need to emphasize,� Smith said. “We’re not just filling bellies (with empty calories).� Representatives from Feeding Illinois will be on hand to

network with IFB members and others in the ag industry Jan. 11-13 at the Illinois Specialty Crops, Agritourism, and Organic Conference and Feb. 3-4 at the Young Leader State Conference. Both events will be held in Springfield. “We’re hoping to educate farmers that the need (for food) in communities is far broader than most people think,� Smith said. “And we’d like to show farmers how they can build (food donations) into their business model.� Feeding Illinois the past two years reportedly has seen a 50 percent increase in requests for emergency food assistance. About 1.6 million Illinoisans are food insecure, and about 42 percent of the food insecure don’t qualify for federal assistance programs, according to Smith. “Service providers have been overwhelmed with the level of need,� Smith said. “Food insecurity exists in every county in the state. Many people don’t have access to fresh fruits, vegetables, and dairy products.� A lack of

proper diet is believed to contribute to a rise in health problems such as obesity and diabetes. Some of the specific food products Feeding Illinois hopes to source around the state include potatoes, onions, carrots, sweet corn,

apples, and cabbage. But Smith noted, “We’re willing to take just about anything.� IFB Young Leaders in the past partnered with Feeding America, and now Feeding Illinois, to raise funds, food, and generate volunteer hours to

benefit food banks around the state. Young Leaders last year raised enough money to feed about 950,000 Illinois residents and won several national awards from the American Farm Bureau Federation for their efforts.

Illinois Farm Bureau State Young Leader Committee District 3 representative Todd Verheecke, left, and IFB District 3 Director Wayne Anderson, center, talk with River Bend Foodbank Executive Director Tom Laughlin about food purchased with donations from the District 3 Farm Bureaus’ second grain drive. (Photo by DeAnne Bloomberg, manager of Rock Island County Farm Bureau)

Five Farm Bureaus raise donation through grain drive BY KATIE BORUFF

MAZIMIZING EVERY ACRE

‹*52:0$5.,QF$)DUP%XUHDX$IÀOLDWH$&       

The Henry, Mercer, Rock Island, Stark, and Whiteside county Farm Bureaus recently wrapped up their second annual “Bushels for Hunger� grain drive for the RiverBend Foodbank, collecting $22,258.70. The District 3 County Farm Bureaus began a relationship with the food bank several years ago when the Harvest for All campaign netted a check to the food bank for $750. In 2010, Illinois Farm Bureau District 3 Director Wayne Anderson and IFB District 3 Young Leader representative Todd Verheecke decided to see if there was interest in a districtwide grain drive for the regional food bank. The first Bushels for Hunger kicked off in August 2010 with farmers donating grain to any of the participating elevators until Nov. 30. The program that year yielded more than $9,500 for the food bank. Each of the county Farm Bureaus reviewed the first-year project and agreed to continue again in 2011 with increased publicity and more participating elevators to accept farmers’ grain donations. The 2011 Bushels for Hunger kicked off in August with 11 participating elevators, including two ethanol plants. Verheecke, a Henry County young farmer, said, “We were pleased with the amount of grain donated in 2010. We knew we could grow in 2011. And, quite honestly, we’re ecstatic.� Anderson said the program is a great way for farmers to help families in need during the holiday season and it is humbling for farmers to donate grain that will provide more than 100,000 meals in the Quad Cities region. The Farm Bureaus offered thanks to the following elevators and ethanol plants for their participation in the program: ADM Grain, Atkinson Grain, Big River Resources, Cargill, Gold Star FS, Hillsdale Elevator, Michlig AgriCenter, Patriot Renewable Fuels and CGB, Kistler Prairie Mill, River Gulf Grain, River Valley Cooperative, and Rumbold & Kuhn. Katie Boruff is manager of the Henry County Farm Bureau. She can be reached at 309-937-2411.


Page 9 Monday, January 2, 2012 FarmWeek

from the counties

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UREAU — The annual meeting will be at 6 p.m. Thursday, Jan. 19, at Wise Guys Bar and Grill, Princeton. Dinner will be served. Tickets are $10 and must be purchased by Monday, Jan. 16. Tickets are available at the Farm Bureau office or from a director. Call the Farm Bureau office at 815-875-6468 for more information. • The Bureau County Farm Bureau Foundation has scholarships available to students majoring in agriculture. The student must be a Farm Bureau member or a dependent of a Bureau County Farm Bureau member. Applications are available by email and must be postmarked by Feb. 24 to the Farm Bureau office. Call the Farm Bureau office at 815-875-6468 for more information or for an application. • An agriculture internship is available for the summer and is open to a Bureau County resident who has completed two semesters in college. Preference is given to applicants who have a farm background or are in an agriculture-related field of study. Submit an application, a resume, and two personal recommendation forms to the Farm Bureau office by Friday, Feb. 24. Call the Farm Bureau office at 815-876-6468 or e-mail jillfrueh.bcfb@comcast.net for more information. HAMPAIGN — The Young Leader committees from Champaign, Douglas, Edgar, and Vermilion County Farm Bureaus will sponsor their annual Illini Farm Toy Show Friday through Sunday at the Urbana Holiday Inn. Show hours are 5 to p.m. Friday; 9 a.m. to 5 p.m. Saturday; and 9 a.m. to 2 p.m. Sunday. Special events at 9 a.m. Saturday include a farm toy consignment live auction and a pedal tractor pull at noon. Contact Kurt Wolken at 217-2022730 for exhibitor or auction information and Steve Huls at 217-202-4657 to enter a toy in the auction.

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HRISTIAN — Farm Bureau will sponsor an ag outlook meeting at 6:30 p.m. Tuesday, Jan. 17, at Krieger’s, Taylorville. Curt Kimmel, Bates Commodities; Jacquie Voeks, Stewart Peterson Group; and Bill Mayer, Strategic Farm Marketing, will be the speakers. Dave Dickey, WILL Radio, will moderate the panel. Dinner will be served. Call the Farm Bureau office at 217-824-2940 for reservations or more information. OUGLAS — The Young Leader committees from Champaign, Douglas, Edgar, and Vermilion County Farm Bureaus will sponsor their annual Illini Farm Toy Show Friday through Sunday at the Urbana Holiday Inn. Show hours are 5 to p.m. Friday; 9 a.m. to 5 p.m. Saturday; and 9 a.m. to 2 p.m. Sunday. Special events at 9 a.m. Saturday include a farm toy consignment live auction and a pedal tractor pull at noon. Contact Kurt Wolken at 217-2022730 for exhibitor or auction information and Steve Huls at 217-202-4657 to enter a toy in the auction. DGAR — The Young Leader committees from Champaign, Douglas, Edgar, and Vermilion County Farm Bureaus will sponsor their annual Illini Farm Toy Show Friday through Sunday at the Urbana Holiday Inn. Show hours are 5 to p.m. Friday; 9 a.m. to 5 p.m. Saturday; and 9 a.m. to 2 p.m. Sunday. Special events at 9 a.m. Saturday include a farm toy consignment live auction and a pedal tractor pull at noon. Contact Kurt Wolken at 217-202-2730 for exhibitor or auction information and Steve Huls at 217-202-4657 to enter a toy in the auction. EE — The application deadline for the Lee County Farm Bureau Foundation scholarships is Feb. 1. Scholarship applications are available on the website {www.leecfb.org}. High school seniors and under-

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‘Grain for Groceries’ donations benefit nine local food pantries

Kris Reynolds, chairman of the Montgomery County Farm Bureau Young Leaders Committee, recently presented a check for $6,320 to nine local food pantries. This was the first year for the “Grain for Groceries” program, which allowed farmers to donate a portion of their grain through local elevators in Montgomery County to benefit the food pantries. The grain was marketed at that day’s closing market price, and the proceeds were collected at the end of November to be divided among food pantries in the county based on the origin of the donations. Reynolds thanked everyone for the work they did in the community and said next year the Young Leaders Committee is looking to expand the program. The nine local food pantries that received a portion of the donations are: Grace Fellowship Church, Continuing Recovery Center, Litchfield Food Pantry, the Salvation Army, Nokomis Food Pantry, St. Clare Food Pantry, Panhandle Food Pantry, Montgomery County CEFS, and Coffeen Food Pantry. — Robert Lentz Robert Lentz is the Montgomery County Farm Bureau manager. He may be reached at 217-532-6171.

graduate students who are pursuing degrees in agriculture are encouraged to apply. • The annual meeting will be at 10 a.m. Thursday, Jan. 19, at the Farm Bureau office. Voting members who cannot attend may return their ballots and proxies to the Farm Bureau office by Thursday. The winner of the Lee County Farm Bureau Foundation raffle will be selected during the meeting. • A crop insurance meeting will be at 10 a.m. Wednesday, Jan. 25, at the Farm Bureau office. Doug Yoder, Illinois Farm Bureau senior director of affiliate and risk management, will be the speaker. Call the Farm Bureau office by Friday, Jan. 20, for reservations or more information. IVINGSTON — The Livingston County Farm Bureau Foundation has scholarships available for high school and college students. Applicants for the $2,000 Elite scholarship must be enrolled in the fifth semester and beyond in an undergraduate program. The Ethel K. Hoerner scholarships are up to $1,500 each and students must be entering the third semester or beyond in college. Applicants for both scholarships must be a resident or a dependent of a Livingston County Farm Bureau member. Applications may be submitted through the website {www.livcfb.org} and

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must be returned by Feb. 28. ONTGOMERY — The Prime Timers will meet at noon Wednesday, Jan. 18, at the Lion’s Club, Hillsboro. A roast beef lunch will be served. Cost is $8. Tammy Braye, Doc’s Maytag, will be the speaker. Call the Farm Bureau office at 217532-6171 by Friday, Jan. 13, for reservations or more information. EORIA — The county plat books are available at the Farm Bureau office. Township aerial maps are included in the book. Farm Bureau members will receive a 40 percent discount. Call the Farm Bureau office for more information. • The Prime Timers will meet at 11:30 a.m. Wednesday at the Hometown Buffet, Peoria. The Midland High School FFA will conduct a debate on animal antibiotics at the Farm Bureau office for the program. CHUYLER — The annual meeting will be at 2 p.m. Monday, Jan. 16, at the Rushville State Bank Annex. Call the Farm Bureau office for more information. ERMILION — The Young Leader committees from Champaign, Douglas, Edgar, and Vermilion County Farm Bureaus will sponsor their annual Illini Farm Toy Show Friday through Sunday at the Urbana Holiday Inn. Show hours are 5 to p.m. Friday; 9

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a.m. to 5 p.m. Saturday; and 9 a.m. to 2 p.m. Sunday. Special events at 9 a.m. Saturday include a farm toy consignment live auction and a pedal tractor pull at noon. Contact Kurt Wolken at 217-202-2730 for exhibitor or auction information and Steve Huls at 217-202-4657 to enter a toy in the auction. • The Marketing Committee will sponsor a spring outlook seminar at 9:30 a.m. Monday, Jan. 16, at the Farm Bureau office. Paul Coolley, ADM Investor Services; Dale Durchholz, AgriVisor; and Blake Miller, Illini FS, will be the speakers. Call the Farm Bureau office for more information. HITE — The annual meeting will be at 7:30 a.m. Wednesday, Jan. 11, at the Farm Bureau office. An all-youcan-eat pancake breakfast will be served. A silent auction benefiting Ag in the Classroom will be held. The Carmi-White County High School Choir’s “Singin’ Six” will provide the entertainment. Call the Farm Bureau office at 618-382-8512 by Wednesday for reservations or more information. The website {www.whitecfb.com/press/ann ualmtg.html} will have the notice of the meeting posted.

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FarmWeek Page 10 Monday, January 2, 2012

profitability

Warm weather builds propane stocks in U.S. BY RANDY MILLER

I know it’s Illinois, but recent temperatures make me think we’re in Georgia! (I wanted to say Florida, but thought that was taking it a bit too far.) After completing one of the warmest Decembers in recent history, one would think forecasts for early 2012 might Randy Miller call for below-normal temperatures. However, most forecasts are for the remainder of the winter to be warm in the Midwest, which could make this winter one of the warmest in history. Propane supplies, with the warm December, are back in line with historic levels for this time of year. Propane seems well supplied at this point throughout the U.S., especially considering the current weather forecasts. However, as I am reminded frequently, I didn’t believe in the Cardinals in August, either, so let’s not rule out a colder winter just yet. Currently, propane supply in the Midwest (Conway, Kan.) is at 25 million barrels, some 6 percent over the five-year average. U.S. total propane stocks are about 59 million barrels, about 5 percent under the

five–year average, but as close to the five-year average as we have been in some time. Gulf Coast stocks continue to remain short at 25.5 million barrels, which is 17 percent under the five-year average, but only 6 percent behind last year. Those stocks remain low due to exports and a fairly strong petrochemical demand. Petrochemical demand for propane is to produce olefins which are the building blocks for materials such as solvents, detergents, and adhesives, and are the basis for polymers and oligomers used in plastics. Chemical plants produce olefins by steam cracking natural gas liquids, namely ethane and propane. Petrochemical demand for propane, shown in

BY DANIEL GRANT FarmWeek

U.S. hog producers in 2011 made an average profit of about $5 per head, according to Steve Meyer, president of Paragon Economics. But economics don’t seem to favor major expansion in the industry any time soon, despite the profitable year, as the U.S. hog inventory posted just modest gains in USDA’s quarterly hogs and pigs report last month. All hogs and pigs in the U.S. as of Dec. 1 totaled 65.9 mil-

Feeder pig prices reported to USDA* Weight 10 lbs. 40 lbs. 50 lbs. Receipts

Range Per Head Weighted Ave. Price n/a n/a n/a n/2 n/a n/a This Week Last Week n/a n/a *Eastern Corn Belt prices picked up at seller’s farm

Eastern Corn Belt direct hogs (plant delivered) (Prices $ per hundredweight) This week Prev. week $77.69 $79.09 $57.49 $58.53

Change -1.40 -1.04

USDA five-state area slaughter cattle price Steers Heifers

strong demand source for propane as well, with exports in November 2011 the fourth largest month in history. But propane exports from the U.S. have occurred only with the

Randy Miller is GROWMARK’s director of propane operations. His e-mail address is rmiller@growmark.com.

Consolidation in the hog industry in many cases has shifted production decisions from a farm-by-farm basis to a regional business decision by larger companies, according to Aideyan. “The short-run numbers indicate modest growth,” Aideyan said. “But, long-run, profitability is what drives these companies’ decisions.” Meanwhile, record-high feed costs and volatile hog prices also could keep a lid on expansion plans. “There is enormous risk in the hog business,” said Ron Plain, ag economist at the University of Missouri. The breakeven price last year fluctuated from $81 to $90 per hundredweight, Meyer reported.

This year, the analysts projected hog prices will average between $84 and $85 per hundredweight in the first quarter, $91 to $92.33 in the second quarter, $90 to $91.67 in the third quarter, and $75 to $83.67 in the fourth quarter. “The competing meat supply will be down (and pork production is expected to increase slightly),” Plain said. “You can make a case for profits in the year ahead.” USDA previously forecast a 5 percent drop this year in beef production while broiler production the past six weeks dipped 5 to 10 percent. Current economics suggest an average profit this year for hog producers of about $9.70 per head, Meyer added.

U.S. hog inventory up slightly; profitable year predicted

M A R K E T FA C T S

Carcass Live

the accompanying chart, has been well above the five-year average over the last several months and is likely to continue. Exports continue to be a

additional production from U.S. shale plays and the current weak dollar, making our propane prices attractive to other parts of the world. Exports in 2011 likely will be greater than the previous two years combined. Look for propane prices to remain fairly steady throughout the winter of 2011-12, providing forecasts are correct for normal or above normal temperatures. Look for exports and petrochemical demand to keep prices and inventories supported at current levels.

(Thursday’s price) (Thursday’s price) Prev. week Change This week n/a 123.00 n/a 124.00 122.98 1.02

CME feeder cattle index — 600-800 Lbs. This is a composite price of feeder cattle transactions in 27 states. (Prices $ per hundredweight) Prev. week Change This week $144.20 143.42 0.78

Lamb prices n/a

Export inspections (Million bushels) Week ending Soybeans Wheat Corn 12-22-11 38.2 13.5 39.1 12-15-11 31.7 16.4 45.2 Last year 34.0 21.4 45.0 Season total 529.0 580.3 522.3 Previous season total 778.1 643.4 557.4 USDA projected total 1300 925 1600 Crop marketing year began June 1 for wheat and Sept. 1 for corn and soybeans.

‘Efficiency is what seems to be driving the increase in por k production.’ — Victor Aideyan Market analyst

lion head, up 2 percent from last year but down 1 percent from the previous quarter. The breeding inventory (5.8 million head) was up 0.4 of a percent from last year while the market hog inventory (60.1 million head) was up 2 percent from a year ago. “The numbers came in about as expected,” Meyer said during a teleconference hosted by the National Pork Board. Analysts predicted U.S. pork production will grow slightly this year — hog slaughter was projected to increase 1 to 2 percent the next two quarters — but much of the growth will be due to efficiency gains. Pigs saved per litter last quarter was a record-high 10.02 compared to 9.89 a year ago. “The story the last few years is the efficiency displayed by hog producers through genetics and herd management,” said Victor Aideyan, senior risk management consultant for a commodities firm in Ontario, Canada. “Efficiency is what seems to be driving the increase in pork production.” Farrowing intentions, on the other hand, were projected to increase 1 percent from December through February before declining 1 percent in the spring.

Three regional Illinois tillage seminars set this month Three Illinois tillage seminars will focus on conservation tillage and agronomic stewardship from 8:50 a.m. to 3:30 p.m. Jan. 23 in Mount Vernon, Jan. 24 in Springfield, and Jan. 25 in Utica. Registration begins at 8:30 a.m. for each. National and state-recognized agronomists, environmental leaders, and researchers will be featured speakers. The speakers and topics have been chosen specifically for each area. Each seminar will include farmer panels discussing tillage management. In Springfield and Utica, the topics will include nutrient placement in strip till and the “Keep it for the Crop” (KIC) 2025 program. The Mount Vernon seminar will offer similar topics plus nutrient placement on karst and sodic soils and issues with Palmer Amaranth. A $25 pre-registration fee is due by Jan. 18. Seating is limited with registration on a first-come, first-served basis. Register online at {www.ccswcd.com} or send your name, check, and seminar location to the Champaign County Soil and Water Conservation District, 2110 West Park Court, Suite C., Champaign, Ill., 61826. The seminars are co-sponsored by the Association of Illinois Soil and Water Conservation Districts, Natural Resource Conservation Service, the Illinois Department of Agriculture, University of Illinois Extension, Farm Credit Services, and the Illinois Environmental Protection Agency. For more information, go to {www.ccswcd.com} or call 217-352-3536.


Page 11 Monday, January 2, 2012 FarmWeek

PROFITABILITY Corn Strategy

C AS H ST RAT E GI S T

Corn price is high compared to soy, wheat The accompanying graphics best illustrate one of the major factors that could be a large part of the grain markets over the next couple of years. When you look at the relationships, you can see wheat and soybeans are both cheap relative to corn. Or to put it another way, corn is high priced compared to the other two. And as much as one wants to believe the environment is different today because of the changes in the industry, notably corn’s demand for fuel, the current levels are close to what has proven to be the historical extreme. More important is that these relationships tended to move back toward historical norms within a number of months. Because of that, the present situation suggests that either corn

prices have the least upside potential or most downside risk in the months ahead. For months, wheat has encroached on corn’s feed demand base around the world because wheat was abundant and more attractively priced. In the soybean complex, we could say something similar, with cheap soybean meal shifting rations away from corn to the maximum possible extent. But primarily, it’s the competition for acreage that corn is winning away from soybeans because of the relative returns for each. That’s true in North and South America, and maybe some other areas as well. We can only guess what fundamental changes will occur to move these relationships back to more normal levels. But over the long haul, corn should have the most difficulty sustaining rallies and have the least upside potential and the most downside risk. That dictates you need to be a disciplined marketer of corn the next couple years.

Cents per bu.

ü2011 crop: The rally confirmed the trend for the 40week cycle turned higher, positioning prices to rally over the next number of weeks. Target a move to $6.65-$6.75 to make catch-up sales, and possibly add to sales. We don’t expect to see prices reach that until late January at the soonest. We still like spring hedge-to-arrive (HTA) contracts for farm stored grain. Commercial storage is a closer call depending on your storage rate. Compare your options on those inventories. ü2012 crop: The turn up was too quick to recommend buying call options. Make catch-up sales if December futures hit $5.95. We may add to sales at that level, too. HTA contracts still are the best tool for making sales, but consider forward contracts if the basis is good. vFundamentals: South American weather triggered the surge. Until forecasts change, prices will be supported. End users haven’t chased the market yet, but farmers have been steady sellers on strength. The Jan. 12 USDA reports loom on the horizon.

Soybean Strategy

ü2011 crop: Gains in soybean prices have been strong enough to turn the short-term trend higher. Wait on a move to $12.50-$12.75 on March futures to make catch-up sales. We may add to sales at that level as well. A HTA for spring delivery for farm-stored soybeans has become more attractive with the spread widening. Compare your alternatives for commercial storage. ü2012 crop: Target a move to $12.50-$12.75 on November futures for making catch-up sales. We might add to them there as well. For new-crop sales, we prefer HTA contracts, but would use a cash contract if the basis level is good. vFundamentals: South American weather problems have fueled gains. But because there’s still time for weather to change and the crop to recover, end-users don’t have a sense of urgency to cover needs. Because of that, exports still are being accumu-

lated at a subdued pace. Chinese buyers are being more careful as well because of signs their economy is slowing.

Wheat Strategy

ü2011 crop: Wheat prices are riding the coattails of the surge in corn prices. Even though prices are higher, wheat fundamentals and demand remain weak. Target a move to $6.75-$7 for making catch-up sales. We may even add another small sale at that level. The carry in futures still pays for commercial storage, making spring HTA contracts the best tool. ü2012 crop: Use a

rebound to $6.95 on Chicago July futures to make catch-up sales. We may use a rally above that to add to sales. vFundamentals: Slowly, the production prospects for our crop, and those around the world, continue to improve. We wouldn’t expect another bumper crop, but it’s reasonable to expect a crop large enough to cover demand, keeping supplies very comfortable for the next year. USDA will release a winter wheat planting estimate on Jan. 12. Traditionally, the USDA number comes in below expectations.

Cash Strategist sales recommendations AgriVisor endorses crop insurance by

Beans '11 '12 9/13/10 10% 10.27 8/29/11 10% 13.50 10/11/10 10% 11.54 11/15/11 10% 11.99

AgriVisor LLC is not liable for any damages which anyone may sustain by reason of inaccuracy or inadequacy of information provided herein, any error of judgment involving any projections, recommendations, or advice or any other act of omission.

Policies issued by COUNTRY Mutual Insurance Company®, Bloomington, Illinois AgriVisor Hotline Number

309-557-2274

4/25/11 10% 13.76

9/13/10 10% 4.61

8/29/11 10% 6.65

10/11/10 10% 5.28 11/15/11 10% 5.671/2 1/24/11 10% 5.87

1/31/11 10% 13.31

AgriVisor LLC 1701 N. Towanda Avenue PO Box 2500 Bloomington IL 61702-2901 309-557-3147

Corn '11 '12

80% unsold

4/25/11 10% 6.76 80% unsold

Wheat '11 '12 7/13/10 10% 6.00

7/30/10 10% 6.98

5/31/11 10% 6.79

8/6/10 15% 7.35

8/1/11 10% 13.71 11/15/11 10% 11.99

8/1/11 10% 6.77 11/15/11 10% 6.45

8/8/11 10% 6.68

30% unsold

30% unsold

Prices are new crop or nearby futures

Prices are new crop or nearby futures

5/26/11 10% 13.75

1/2

11/17/11 20% 6.343/4

7/21/10 15% 6.60

11/17/11 20% 6.30 20% unsold Prices are new crop or nearby futures

80% unsold


FarmWeek Page 12 Monday, January 2, 2012

pERspEcTIvEs

If you tell the bees, will they listen? For thousands of years humans have taken advantage of what has been called the “food of the gods.” We’re talking about honey. Honey is a sugar-laden substance produced by a few species of bees as their food. And somewhere in our history, ancient TOM humans got a TURPIN taste of honey, and we have been eating it ever since. Of course, bees don’t willingly share their food stores with humans — or other animals, for that matter. So the first honey eaters had to resort to stealing from the bees. And such pilferage wasn’t a pleasant thing because, as Shakespeare wrote, bees are “armed in their stings.” Nonetheless, first as honey gatherers and then as beekeepers, humans and bees have forged a close association. As testimony to this enduring relationship, bee-related folklore is common. Consider the following: “Where there is honey, there are bees.” “He who would gather the honey must bear the sting of the bees.” “The bee from his industry in the summer eats honey all the winter.”

Folklore about bees includes the practice of “telling the bees” that, in a nutshell, purported colonies of honey bees must be “told” when their keeper had died. The origin of this activity is obscure but certainly existed in England during the Middle Ages and was

brought to North America by the early European settlers. A plausible explanation for this belief is rooted in the fact that ancient people did not fully understand the biology of honey bees and created ideas consistent with religious beliefs or other notions prevalent at the time. For instance, ancient people believed honey bees originated from the carcass of an ox. Lat-

er, the concept arose that baby bees were gathered from flowers. In spite of these and many other misconceptions regarding the biology of the honey bee, humans admired and respected the creatures. Consequently, peasant farmers began

to equate human characteristics to the bee. One practice became known as “telling the bees.” It might be as simple as tapping on the hive and announcing that the current master is dead and saying the name of the person who would become the new owner. The idea was that sensitive bees would be assured they would be cared for and would not leave the hive.

As part of the activity, some people held that the hives had to be turned so the bees would not witness the funeral procession. Sometimes an additional ritual would be to drape the hives in black cloth, just as the human mourners would adorn themselves in black clothing. America’s “Quaker poet,” John Greenleaf Whittier, wrote a poem appropriately entitled, “Telling the Bees.” Whittier’s poem is the story about a man going to visit his girlfriend — a beekeeper — who lived with her father at Fernside Farm. The following three stanzas from the poem capture the process and the reason for telling the bees: “Just the same as the month before — The house and the trees, The barn’s brown gable, the vine by the door — Nothing changed but the hives of bees. Before them, under the garden wall, Forward and back, Went drearily singing the chore-girl small, Draping each hive with a shred of black. Trembling, I listened: The summer sun Had the chill of snow; For I knew she was telling the bees of one

How a butter tariff Grinch nearly stole Norway’s Christmas I’m thankful for faith, family, and rich traditions of Christmas. To that list, I’m tempted to add the fact that I’m thankful I don’t live in Norway — a country that suddenly found itself without butter. Over the holidays, butter was not just an option for me. At my daughter’s home, we baked sugar cookies with a lot of it. It’s one of our Christmas traditions. We’re hardly alone. Around the world, millions of others have their own CAROL rituals involving ChristKEISER mas and food, including cookies. Many of them use good, wholesome butter. But not in Norway, where people found themselves trapped in an awful predicament at precisely the wrong time. During the Cold War, the Soviet Union used to have bread lines. In December, Norway witnessed butter lines. According to some reports, desperate Norwegians have paid as much as $500 for a pound of butter. Norway’s butter shortage was an entirely man-made political problem. There’s no sensible reason why Norwegians, who enjoy one of the world’s highest per-capita gross domestic products, ought to run out of something as basic as butter. The rest of us should learn from Norway’s mistake — and support trade policies that will allow us not only to bake

delicious cookies, but also to maintain our food security year round — especially when we are talking about food staples. Norwegians lack butter now because their government uses tariffs as steep as a fjord’s cliffs to keep people from importing it. In a normal year, high tariffs would lead merely to artificially inflated consumer prices. However, last summer it rained a lot in Norway, hurting the quality of animal feed and leading to poor production on dairy farms. Meanwhile, many Norwegians are choosing low-carb, fatrich diets. Norway’s demand for butter is high, but its supply is low. The current shortfalls are the result. They’re expected to last into this month. The rational solution would be to buy butter from foreign producers. This is what many ordinary consumers have done. They are turning to supermarkets in Sweden, where butter is plentiful and grocers love the extra business. There are even reports of butter smuggling: A Russian man was arrested when he tried to sneak 200 pounds of butter into Norway. In fairness, it must be said that Norway’s conundrum isn’t a case of ordinary protectionism. Norway imposes high tariffs to prop up the Norwegian dairy industry — and not for entirely bad motives, as Matthew Yglesias observed in an article for “Slate.” Much of the country’s wealth comes from oil, which generates a high-value

currency, and the possibility that highoctane purchasing power will create a flood of imports that destroys the domestic production of just about everything except North Sea oil drilling. Even so, Oslo seems to understand its butter tariffs have become a big problem, has cut them by 80 percent, and promises to keep them at this level at least until March. A nation that takes pride in awarding the Nobel Prize in Economic Sciences each year probably should realize that meddling in markets invites serious risks. Protectionism of any sort always comes with a steep price. Norway’s population is less than 5 million. Maryland and Minnesota have more people. A country so small can’t produce everything it needs and also maintain a high standard of living. This is especially true when the country is cold, limiting its agricultural potential. Even if Oslo were to eliminate its butter tariff, the U.S. probably wouldn’t take over the Norwegian butter market. Denmark is a big dairy producer and is closer. However, we can all profit from Norway’s butter fiasco by learning the right lesson: High tariffs create shortages and low tariffs create abundance. Carol Keiser owns and operates cattle feeding operations in Illinois, Kansas, and Nebraska. She is a Truth About Trade and Technology board member.

Gone on the journey we all must go!” The biological reality of “telling the bees” long ago has been proven baseless. But today a museum exhibit called “Tell the Bees” at the Los Angeles Museum of Jurassic Technology, or an acoustic British band called “Telling the Bees,” perpetuate the idea. My question is, “If we tell the bees, will they listen?” Any bee whisperers out there? Tom Turpin is a professor of entomology at Purdue University, West Lafayette, Ind. His e-mail address is turpin@purdue.edu.

LETTER TO THE EDITOR Thanks IFB for help on cemetery law changes

Editor: I wish to thank the Illinois Farm Bureau on behalf of the many church-owned cemeteries for its help in getting changes made to the Illinois Cemetery Oversight Act to exempt religious cemeteries from the regulatory requirements in the original law. Those requirements would have bankrupted the perpetual-care funds that maintained these cemeteries. If these changes had not been made, we would have had to deed our cemetery to the State of Illinois and would no longer have a place to bury the Christian dead. Please continue your support to make sure that Governor Quinn signs these changes into law. VERNON L. HENZE, Mt. Carmel, Chair of St. John’s Lutheran Cemetery Association

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FarmWeek January 2 2012  

FarmWeek January 2 2012