AG Mag Grundy County Area
A Publication of Shaw Media
Technology brings new buyers to Illinois auctions, but traditional customers remain a top priority
Also Inside: • AG community keeps an eye on Springfield • New Farm Bill breakdown • Snowfall amount could help, weather cycle could hurt • Price is the greatest fertilizer
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2 Morris Daily Herald • Grundy Area Ag Mag • Spring 2014
Worth the wait? IFB: Top 3 priorities addressed in new farm bill BY PAM EGGEMEIER For Grundy Area Ag Mag
President Barack Obama signed a nearly $1 trillion farm bill Feb. 7, finally removing the uncertainty hanging over the heads of American farmers. Members of Congress had been at odds for years over proposed cuts to the nation’s food stamps program that provides assistance to one of every seven Americans. Last fall, House Republicans had fought to approve a plan to cut $40 billion from SNAP, but it was shot down in the Senate. This farm bill will cut the program by $8 billion over 10
years – about a 1 percent reduction. Some of the eligibility requirements also will be raised. Much of the savings in the food stamps program will come from the closure of what is known as the “heat and eat” loophole. This loophole allowed some states to artificially increase benefit levels when heating assistance is provided through the Low Income Home Energy Assistance Program. Illinois is not among the 17 states that are targeted by this reform.
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Grundy County Area Ag Mag is a specialty publication of the Morris Daily Herald, A Division of Shaw Media. Articles and advertisements are the property of the Morris Daily Herald. No portion of this guide may be reproduced without written consent of the publisher. Ad content is not the responsibility of the Morris Daily Herald, and will not be held liable for the quality of performance of goods and services provided by advertisers listed in any portion of this publication.
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Expert says sagging market could last awhile BY DAVID GIULIANI | For Grundy Area Ag Mag
For years, corn farmers have seen prices of $6 or $7 a bushel. In recent months, though, the price has fallen to just above $4. This situation could last awhile, an expert says. “Over the years, there tend to be periods of relatively ‘low’ prices that last longer than periods when prices are relatively ‘high,’” Daryll Ray, director of the University of Tennessee’s Agricultural Policy Analysis Center, said in an email. That’s because more acreage is brought into production relatively quickly – both domestically and internationally – during times of high prices, as has been the case in recent years and, earlier, in the 1970s, Ray said. “Once the acreage is brought into major crop agriculture, farmers tend to farm it even when the prices have declined considerably,” he wrote. “So it can take a number of years for farmers to move it back out of production and into
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more extensive use such as pasture or hay land.” What could break that trend? If climate changes cause big reductions in annual crop yields or water for irrigation becomes increasingly tight, Ray said, prices might not follow the historical pattern but would allow corn to remain at relatively profitable levels. Many farmers, he said, switched to corn when its price jumped so fast, moving away from soybeans. “Many of those farmers went back to, or are going back to, their previous rotations, for a variety of reasons, including pest control,” Ray said. In recent years, planted soybean acreage in Illinois and Iowa has generally declined, according to numbers from the U.S. Department of Agriculture. Corn acreage, meanwhile, has risen since the 1990s in Illinois, but has stayed about the same in Iowa, with some exceptions. Rock Katschnig, a fourth-generation
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farmer near Prophetstown, said that years ago, his farm did a 50-50 rotation between corn and soybeans. In recent times, though, that ratio is two-thirds corn, one-third soybeans. That change, he said, hasn’t affected the land’s conservation. Katschnig said one of the major drivers for corn is ethanol, which gives farmers more opportunities to sell their crops. “Ethanol has changed the landscape of farming communities around the United States,” he said. “You see new machinery and new buildings. We went through many years where we sold corn for under the price of production.” Kevin Urick, who has a sesquicentennial farm near Prophetstown, said he will stick with the traditional 50-50 rotation. It’s better for the land, he said. “A lot of guys have two-thirds corn, one-third beans,” Urick said. “Right or wrong, I’m in 50-50 rotation. I’m not going to change any.” Brian Duncan, who farms north of Polo, is not letting the falling price change his strategy for the coming season. He plans to devote 90 percent of his acreage to corn. “We’ll plant as many corn acres as we did last year,” said Duncan, who is also the president of the Ogle County Farm Bureau, “We’re set up to grow corn.” Asked whether he expected the low prices to continue for a long time, Duncan said: “It depends on Mother Nature. We have the capability to produce bumper crops.
Ultimately, it boils down to the temperature and rain in July. It’s tough to have good growing seasons. We had one last year. That’s one in a row.” He said farmers will need somehow to stimulate demand to see prices like the last couple of years. “The old saying is that price is the greatest fertilizer,” Duncan said. “We’ve seen a lot of areas respond to the higher prices. We’ve got worldwide production increases.” The lowering of the renewable fuel standard is bad for agriculture, he said. “We seem to be backing away from our commitment to renewable fuels,” he said. Lee County farmer Leonard Sheaffer said he plans to plant two-thirds corn, one-third soybeans. “That works well for me,” he said. “I know that for farmers who have a lot of acres, price is a big issue on what’s planted. I don’t farm many acres.”
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Going once, going twice, ...
Fairview Sale Barn values its repeat buyers, sellers By Terri Simon and Matt Mencarini For Grundy Area Ag Mag
espite the inclement weather outside, there is a warm and welcoming feeling when you walk inside the Fairview Sale Barn. An aroma of something cooking in the kitchen wafts through the building, and already, farmers are making their way toward the sale ring. In the background, you can hear the cattle grunting and bawling, and the rustle of farmers’ conversations grow louder as the auctioneer’s starting gavel
draws near. Fairview Sale Barn owners, brother and sister team Bob Fidler and Bev Morrell, along with Bob’s son, sale barn manager/auctioneer Jake Fidler, call the farmers by name as they chat casually before the first animals are ushered into the ring. nnn Bob Fidler said he doesn’t see sale barns going by the wayside anytime soon. He has owned the Fairview Sale Barn along with his sister since the early ’90s, but the business has been in the family for years; his father owned the well-known Fulton County sale barn.
“A live auction at a sale barn is where you might get too much for your cattle,” Fidler said. “I base that on a seller’s reputation over the years. Sellers build up a reputation, and people come back because of the seller, no matter what.” Fiddler said that reputation is built on a variety of items, but the healthy state of the animals is one of the most important aspects. He said buyers remember those reputable sellers and often seek out other livestock being sold by that same person. Still, as in other areas of life and farming, technology is giving cattlemen newer tools to raise, track, market and sell their animals. From climate-controlled hog buildings to
ABOVE - Jake Fidler auctions off a calf at the Fairview Sale Barn. Jake is the sale barn manager and auctioneer. His father, Bob, owns the sale barn with his sister, Bev Morrell. The Fairview Sale Barn now has an online component to its auction house where potential buyers can watch the sales. Photo by Kath Clark/Grundy County Area Ag Mag.
8 Morris Daily Herald • Grundy Area Ag Mag • Spring 2014
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computerized sale barns to online auctions, cattlemen have new ways to do old things that have been done for generations. The growing popularity of online auctions, for example, means that livestock can be bought and sold nearly every day, from anywhere, said Marshall Ruble, who specializes in livestock as an agriculture research station manager at Iowa State University. Online auctions, including online exclusive auctions or bidding in a live auction on the Internet, has led to a more competitive market and put more eyes on cattle, he said. “Even 5 years ago, I go out and look at a lot of cattle, you could find a diamond in the rough,” Ruble said. “But they’re not hidden anymore. They’re all out there.” Even sale barns can take advantage of an online auction, Ruble said, when inclement weather may keep buyers away. If they can access an auction 5, 20 or even 100 miles away, there are more eyes and bids possible. Bob Fidler does have an online component to his auction house where potential buyers can watch the sales at
LMA Auctions (www.lmaauctions.com). But he said he and his sister have customers who have come to the Fairview Sale Barn for 20 to 30 years, and those repeat buyers and sellers – many with sizable herds – are valuable. “Everybody means the same to me, whether they have one head or 1,000,” he said. Fidler said one of the special services Fairview Sale Barn offers is a personal relationship with its sellers across the state, and the company also prides itself in keeping in close contact with its longtime buyers, friends and customers – a service one might not receive from online marketing or an online auction. “From a selling perspective, we keep in contact with potential buyers with mail, phone and Internet,” Fidler said, adding he has many customers from North Central Illinois, including Bureau, Henry, Putnam, Marshall, LaSalle and Stark counties. Meanwhile the doors to the ring open and slam closed as the sale continues. Steam rises from the snorting noses of the cattle in the ring. Bidders remain inconspicuous – tapping their hats,
nodding quickly, raising one finger to signify their bid to the auctioneer. Except for the auctioneer’s eyes darting back and forth – from one farmer to the other – you wouldn’t even realize anyone was bidding. Fidler said his Fairview Sale Barn is one of the two largest sale barns in Illinois, and while he’s seen his industry change to fewer farmers with bigger operations, that doesn’t mean he still doesn’t appreciate the smaller farmer. “[Online marketing] has taken some of the big guys, but it will never take the little guys,” he said. “... We dearly cherish the smaller operations” One of the regulars at the Fairview Sale Barn is Bureau County farmer Larry Magnuson, who has a cow/calf operation south of Tiskilwa. Magnuson, who said he’s been going to the Fairview Sale Barn since the mid-’80s, has never bought livestock online, and he doesn’t plan to anytime soon. “I’m way too old to start doing that,” he said with a chuckle. Magnuson goes to the Fairview Sale Barn a couple of times a year, or he
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sends his son to the auction. He said there are a variety of reasons that he prefers to see the animals firsthand. “You get a closer view of them. You can inspect them a little better, and you can walk around among them,” Magnuson said. “Sometimes, you see one that doesn’t actually fit, so when they come in the ring, you can say you want one of [the animals] out. “I’ve always gone in person, and I don’t see that changing,” he said. Magnuson agrees with Fidler’s comments on the reputation of the seller. He also said he thinks buying the livestock at the sale barn is easier on the animal. “[If you’re buying online], you might be buying from several states away, and you’re hoping they are reputable people. You are hoping the [seller] gave them their shots or their implants. ... “But if you go to the sale barn, you can send them right to the vet pen. You’ve talked to the vet to tell them what you want them to have, so the vet knows exactly what kind of shots to give them. By doing that, it takes a little stress off of them, so you don’t have to put them
through the chute again. It’s just a lot easier on the animal.” Dan Shike, an associate professor of animal science at the University of Illinois, said numerous developments have taken livestock sales from private sales to live auctions to online auctions. At each step, he said, the market opened wider to where it is now. “You basically have a national market rather than a local market,” Shike said. That’s great for sellers, and that’s great for buyers, too.” Scott Cuvelier, 58, who runs live barn sales in Walnut and in Cascade, Iowa, has been hesitant to fully embrace online auctions. Like most things on the Internet, there are positives and negatives to online auctions, he said, adding that those auctions are another tool, “a two-edged sword, so to speak.” But Cuvelier isn’t opposed to using technology in his business. “As far as sale barns go, we’re one of the more technologically advanced – fully computerized from the auction block to the office,” he said. Story continued on page 16
Terri Simon/Grundy County Area Ag Mag
Larry Magnuson owns a cow/calf operation south of Tiskilwa in Bureau County. Magnuson said he buys his cattle at the sale barn so that he gets a better look at animals he might buy. Plus, he said, the sale barn is a lot easier on the animals.
Morris Daily Herald • Grundy Area Ag Mag • Spring 2014 11
Snowfall amounts could help; weather cycle could hurt By Terri Simon | For Grundy Area Ag Mag
WQAD News 8 Chief Meteorologist James Zahara isn’t pulling any punches about the winter of 2013-14. “What an interesting winter it has been so far,” Zahara said from his weather room in Moline. “Numerous rounds of decent snowfall combined with a couple of polar outbreaks this winter, resulted in some of the coldest air in years.” While Zahara predicted a couple of more polar outbreaks this winter – though not as brutal as the one that hit the Midwest early in January – he does believe the winter of 2013-14 will be a bit longer than normal. “Fortunately, snowfall amounts this winter have been leaning about or just above normal,” Zahara said. “If we keep this rate going through the rest of the winter season, then we could easily reach over 40 inches, which would be well above the norm of 36 inches.” No farmer in the area will be disappointed with the precipitation, Zahara predicts, especially since the discussion throughout the agricultural
world last summer was all about the widespread drought that covered not only most of the state but much of the Plains and the Midwest. “By the summer of 2013, it was more dryness that challenged the farmers in the fields than any drought,” Zahara said. “The key to a good planting season this year will be the amount of the subsoil moisture. I would say about all of our counties are showing subsoil moisture reserves are nearly up to normal. The exception could be around west central Illinois, where reserves are a bit lower due to the limited rainfall in 2013.” While predicting the weather this far ahead of the planting season is difficult, Zahara relies on past indicators that have been historically analyzed, like El Nino and La Nina weather cycles, which are tracked by scientists during any given year. El Nino is when surface water temperatures
are warmer than normal along the equator in the Pacific Ocean. In La Nina years, the water temperatures are cooler, and the weather becomes a bit drier. “El Nino years produce better growing season weather for Illinois as well as most of the Midwest,” Zahara said. “La Nina years usually produce problems for farmers. We had six years in a row dominated by an El Nino weather pattern and very good corn yields. Recently, we had three years of La Nina, and we continue to lean toward that even today.” Zahara said climatologists use a Southern Oscillation Index and indicator for upcoming weather clues. “The SOI is still hanging toward the La Nina side of neutral now and acting like it wants to remain so for the next couple of months,” Zahara said. “There may be an El Nino event during the growing season, but we could return quickly to a La Nina trend for weather patterns the rest of the year.” So what will 2014 really hold for the world of Midwest agriculture? “Obviously, it’s hard to say, unless you like to rely on your trusted Farmer’s Almanac,” he said.
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The most significant piece of the $956 billion Agriculture Act of 2014 for farmers is the transformation of the agricultural safety net from one based on direct payments to a strengthened crop insurance system. The heavily criticized $5 billion direct payments program that gave subsidies to farmers whether they grew crops or not was eliminated. In return, $7 billion will be added to the crop insurance program, now the key to farmers’ financial security. The crop insurance gains were clearly the biggest win for farmers, said Adam Nielsen, director of national legislation and policy development for Illinois Farm Bureau. “Crop insurance was targeted by many groups on both sides of the aisle, and it survived intact,” Nielsen said. However, given the timing of the bill’s passage, insurance changes will not be implemented until 2015. Two new insurance programs are included: agriculture risk coverage, which will cover some losses before more extensive crop insurance begins; and price loss coverage, which sets specific target prices for different crops. If
actual prices fall below those targets, farmers will be covered. Emily Pratt, crop insurance specialist for 1st Farm Credit Services and a representative on the new Agriculture Advisory Committee of Illinois Congressman Adam Kinzinger, said she was happy with the bill’s focus on strengthening the crop insurance system. “We survived the worst drought in our nation’s history because farmers took it upon themselves to insure their crops,” said Pratt, based in Rock Falls, Ill. “We were able to avoid a lot of turbulence in the economy without the help of ad hoc programs.” Pratt said she was relieved to learn that the changes will not be put in until next year. “We were getting anxious, wondering how quickly we could set up the crop insurance programs,” she said. The deadline for corn and soybean enrollment usually is March 15, but because that is a Saturday this year, it will be extended until March 17. It is estimated that the bill will bring $23 billion in federal spending cuts. The three biggest priorities the Illinois Farm Bureau had set for the bill came to fruition,
Nielsen said. “We wanted to protect and enhance crop insurance, have choice in commodities programs, and see the conservation programs streamlined but maintained,” he said. “We got all of those things, so we’re very happy with this bill.” The direct payments for better crop insurance was a trade-off most farmers supported. “I think most farmers are in agreement that the direct payments could go,” said Donna Jeschke, a Grundy County farmer who is a former president of Illinois Corn Producers and now serves on Kinzinger’s ag committee. “We feel that having a strong crop insurance program gives us a good risk management program.” Nielsen said that everything except dairy and regulatory issues were a done deal before the holiday break in December. Without a deal by the end of January, decades-old milk support laws could have kicked in that farmers warned could cause milk prices to spike to $8 a gallon. A compromise sets up a dairy insurance program that offers protection against the huge fluctuations in feed prices that have challenged dairy farmers. Small dairy farms
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will catch a break on premiums. The government is authorized to address oversupply problems by purchasing dairy products for local food banks. Renee Sheaffer, a Lee County, Ill., dairy farmer, sells raw milk privately. She would have been one of the few dairy farmers to benefit from $8 milk. “My milk sells for about $5 a gallon, so that probably would have helped me,” Sheaffer said. “At that price, though, demand for milk would really go down, and I’m not sure that’s good for anybody.” Nielsen said the bill offered several benefits. “Farmers needed a bill that is updated for today’s needs versus a farm bill that was developed in 2006 and 2007,” she said. “This bill will result in a deficit reduction that all taxpayers can benefit from.” One disappointment came in the area of federal regulatory policies. The Illinois Pork Producers Association and other livestock groups had urged Congress to change its mandatory country-of-origin labeling (COOL) law to avoid tariffs that could be imposed on U.S. pork by Canada and Mexico. The labeling law could
still be dealt with, but many hoped it would be part of the farm bill. “There was no appetite for regulatory reform,” Nielsen said. “We were hoping COOL would be resolved, but it didn’t surprise me that Congress left it out.” The most significant regulatory win could be the creation of a permanent subcommittee within the EPA Science Advisory Board. The panel will conduct reviews of agency actions considered to have a negative impact on agriculture. The Environmental Quality Incentives Program will for the first time receive mandatory funding. The voluntary conservation program provides financial and technical assistance to producers who sign contracts of up to 10 years. The Livestock Disaster Assistance Program was made permanent in this farm bill. Its benefits also were made retroactive to 2012. The farm bill includes an amendment sponsored by U.S. Rep. Cheri Bustos, D-Ill., to track the impact on agriculture of upgrades to river transportation infrastructure, including the aging locks and dams along the Mississippi and Illinois rivers.
“Waterway infrastructure is a vital component in our agriculture markets, and this amendment will strengthen the case for investments in river transportation improvement projects,” said Bustos, a member of the House Agriculture Committee. A bill that ends the business uncertainty for farmers is long overdue, the 17th district congresswoman said. “While not perfect, I’m encouraged that Democrats and Republicans have finally come together to pass a farm bill that will protect our region’s economy and critical nutrition programs,” Bustos said. Kinzinger, R-Ill., realizes that farmers must have parameters for running their businesses, and they need a strong arsenal for fighting the unknowns. “Ask any farmer, and he will tell you that being able to plan ahead to future harvests is crucial to his business,” Kinzinger said. This bill gives Illinois farmers the certainty they need to do that, while strengthening our farm safety net, and helping protect farmers against natural disasters.”
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“The ability to track and analyze information to put more
precise economic values on livestock has also developed
Dan Shike, associate professor of animal science at the University of Illinois
Story continued from page 11
The Walnut sale barn went computerized in 1991, Cuvelier said, streamlining the process, eliminating some errors, and speeding up the time it takes to print checks. He now has newer computers that can do more, he said, but they have a tendency to crash or require a reboot more often. Not every advancement is perfect. But the benefits of technology seem to outweigh the occasional risks, he said, emphasizing that the mishaps were only occasional. Cuvelier bought the Cascade sale barn about 5 years ago, he said, when it had a few computers in the office and a sign that said, “Please wait 20 minutes for your check,” A week later, the sale barn was fully computerized without missing an auction, he said. Now, most checks are printed and ready to be picked up by the time a cattleman walks from the stands to the office window.
Both Walnut and Cascade allow bids to be placed by phone, but not online. “I can hear the people’s voice on the phone, and I know who they are,” Cuvelier said. Technology hasn’t affected just the way livestock is marketed or sold. The ability to track and analyze information to put more precise economic values on livestock has also developed, U of I’s Shike said. “Now, if you were to go to a pure feed stock sale, there would be so much information that you would be given, besides just looking at the bull,” he said. “How the bull looks will make an impact, but there are tremendous amounts of info now available.” What started with tracking weights at different ages and comparing to the rest of the herd, Shike said, has now evolved to looking back at an animal’s ancestors to get a sense of how the animal should produce.
“It’s pretty amazing how technology [is playing a role],” Shike said. “And certainly, we’re in a time period of rapid increase in that area. And I think there will be time when we will be able to take a blood sample of an animal and really be able to understand the genetic potential of that animal.” Those technological advancements are becoming more essential in the livestock business, Shike said. “The only way we’ll be able to increase our food production to keep up with demand is technology,” he said. Even for researchers and early-adopting cattlemen, predicting where technology in the industry is heading can be difficult, Ruble said from his office at Iowa State. But knowing the direction it’s going can put a farmer “in the driver’s seat.” “I know where the hockey puck is at this exact second,” he said. “But I’d like to know where it’s going to be in 5 minutes.”
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Morris Daily Herald • Grundy Area Ag Mag • Spring 2014 17
keeping an eye on
Gov. Pat Quinn speaks during a visit to Sterling on Sept. 22, 2013. Photo by Alex T. Paschal Grundy Area Ag Mag
BY PAM EGGEMEIER | For Grundy Area Ag Mag
Budgetary constraints, income taxes, and renewable fuels are key state issues that farmers are eyeing in 2014. Ag producers are anxious to see the fiscal year 2015 budget plan that was expected from Illinois Gov. Pat Quinn in late February. Preliminary numbers show a budget shortfall of about $2 billion for 2015. That deficit could approach $4 billion by fiscal year 2016 if the Legislature does not extend a temporary income tax increase that is set to expire at the end of this year. In January 2011, a bill was passed to raise the income tax on individuals to 5 percent, up from 3 percent. The rationale for the tax was that it was needed in the short term to pay down a backlog of state bills. The tax has padded the state’s general fund to the tune of about $7.2 billion a year. Lawmakers would have to vote to extend the tax, not something they would prefer to do with elections looming in November. Making things more difficult for Quinn is that although the tax increase sunsets at the beginning of 2015, the new fiscal year begins this coming July 1. “The government must by law build the budget on current legislation,” said Kevin Semlow, director of state legislation for Illinois Farm Bureau. “If this sunsets in January 2015, the governor won’t have that money for half of a fiscal year.” Farmers fear that a larger budget deficit could bring the governor’s ax to a variety of ag programs. “We’re still looking at broader issues such as pensions, school funding, budget and the temporary tax,” Bureau County Farm Bureau Manager Jill Frueh said. “Less money could bring cuts to inspection programs, Extension programs, and Soil and Water Conservation Districts, as well as fee increases.” In November, the EPA proposed to lower the amount of renewable fuels in gasoline, setting off a whirlwind of lobbying activity at the local level and in Washington. Included would be ethanol, biodiesel, and cellulosic biofuels. The proposed rule has sent fear into grain and energy markets, and threatened the stability of investments with biofuels producers. “We’ve really been gearing up for our efforts against the EPA proposal,” Frueh said. Those efforts include an Illinois Farm Bureau petition drive that warns of the damage the EPA cutbacks could do to ethanol and biodiesel industries. Jim Rapp, who raises corn north of Princeton, is District IV director of the Illinois Corn Marketing Board. He also is an investor in Patriot Renewable Fuels in Annawan. He has been heavily involved in efforts to defeat the EPA proposal. “We’ve sent out emails, news releases, and encouraged people to contact EPA to tell them how important ethanol is to the American farmers,” Rapp said. 18 Morris Daily Herald • Grundy Area Ag Mag • Spring 2014
Robocalls from the Illinois Petroleum Institute are circulating that tell people that ethanol is bad for their cars and it is responsible for rising food prices, Rapp said. “These guys have a lot of money, and they are known to tell some tall tales,” Rapp said. “Ethanol has enabled me and my two sons to sell crop for a profit. We need to keep that market strong.” Some other issues fall into the category of private property rights, Semlow said. “Farmers want some consistency with the regulations for energy-related property rights, especially gas pipelines and wind farms,” Semlow said. Uniformity is also sought in how commissioners set weight limits for roads.
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20 Morris Daily Herald • Grundy Area Ag Mag • Spring 2014