THURSDAY, FEBRUARY 21, 2013
Thursday, Feb. 21, 2013
DAILY NEWS • NEWS-MONITOR B1
Tuesday, Feb. 26, 2013
B2 • DAILY NEWS
THURSDAY, FEBRUARY 21, 2013
Farm bill necessary to ag producers BY MATTHEW LIEDKE • DAILY NEWS firstname.lastname@example.org
“I think that the Farm Bill is still a tremendously important piece of legislation for the state of North Dakota,” said N.D. Gov. Jack Dalrymple, R. He understands the importance of getting a new five-year Farm Bill passed in Washington D.C., and legislators on both sides of the aisle agree. “I’m concerned about the lack of a Farm Bill,” said Sen. Heidi Heitkamp, D-N.D. She is a new Senator for the state, elected in 2012. “It presents a level of uncertainty that I feel is inappropriate. The bill gives certainty to farmers.” The Farm Bill is legislation that is reauthorized every four to five years in Washington D.C. “Traditionally, it has been a five-year bill,” Dalrymple said. “Five years has been the pattern. People want it long enough that there is stability. By the same token, by five years things have changed enough that you need to revise it.” The last Farm Bill was passed by the United States Congress back in 2008. A year ago, Congress tried once again to push a Farm Bill through the Legislature, and, while it successfully made it through the Senate, it failed to come out successfully from the U.S. House of Representatives. “The original bill was supported by Senators on both sides of the aisle. It had a great send-off out of the Senate but just couldn’t get momentum
Legislators on both sides of the aisle understand the importance of a Farm Bill
‘I think we will really get started on this when the budget issues get resolved. I expect that is where we (the House) start, some time in April or May.’
‘Farmers realize that with the amount of risk we are taking, more than ever, we need that revenue insurance. Every time I talk to farmers that is without a question their top priority.’
Both North Dakota Legislators are getting things rolling. ‘We are going to do everything in our power to make sure that it (getting stalled in the House) doesn’t happen.’
‘The original farm bill was supported by Senators on both sides of the aisle. It had a great send-off out of the senate, but just couldn’t get momentum going into the house.’ Farm Bill 2012 Issues List
• Beginning Farmer and Rancher Opportunity Act • Limit direct farm subsidy payments, close loopholes in the cap on other farm payments, and re-align subsidies to reward farmers for climate friendly methods • Ensure that effective conservation programs remain in place • Bar federal crop insurance and disaster payments for conversion of native sod and fragile lands to cropland
going into the house,” Heitkamp said. Sen. John Hoeven, RN.D., was in the Senate during the last session and said, “My effort was to get the five-year Farm Bill passed. We were ready to go to conference. I think we could have gotten it through conference no problem.” Unfortunately, the bill stalled in the House around the same time that the “fiscal cliff” talk was going on. “More than ever in history, the budget crisis has overwhelmed all other normal discussions like the one about the Farm Bill,” Dalrymple said. “Last year we got into a real mess.” Because of the problem, Congress instead had to provide a lastminute extension to the 2008 legislation. “When we finally got down to the end of the year, we were at risk of losing our baseline if we didn’t do an extension,” Hoeven said. The extension, which was passed at the end of 2012, will last the nation for just a single year. “While the extension is better than nothing, it’s not the right way to do it,” Heitkamp said. “Everybody is anxious about getting a five-year bill. No one likes to live year to year on a Farm Bill,” Dalrymple said. This year, the budget is still weighing heavily on the Legislators in the nation’s Capitol. “I think we will really get started on this when the budget issues get resolved,” said Collin Peterson, D-Minn 7th District. “I expect that SEE FARM BILL, PAGE B11
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THURSDAY, FEBRUARY 21, 2013
DAILY NEWS • NEWS-MONITOR B3
Factors given for high farmland sales BY KATHLEEN LEINEN • DAILY NEWS email@example.com
Some ag producers have paid dearly for pockets of land, with prices averaging higher than ever before. This steep price has caused people to speculate about two issues: What is driving the price of land? And, will the price reach a plateau? Jason Goltz, Richland County Extension agent, said there are varying reasons for the elevated prices, including emotional attachment and location. “A family may be buying into the land to maintain possession,” he said. “It may also be located in an ideal spot that makes paying more, affordable, instead of having to drive farther.” Even so, Goltz realized that although the price of some recent land sales seems unusually high, there are oftentimes extenuating circumstances involved. State Sen. Jim Dotzenrod, D-District 26, said the North Dakota Legislature is seeking to establish farmland value for purposes of taxing it as part of an overall predictable and fair system of taxing all classes of property. There are a number of factors that are currently driving the market for the price per acre of land, including grain prices at or near record highs, yields at or near record highs, a supply of farmland for sale at any one time and interest rates at or near record lows. All of these contributing factors are also impacted by less specific thoughts. “When you multiply high prices times high
yields, you get large gross incomes per acre,” Dotzenrod said. “These numbers are also setting records.” With the price of crops selling at or near record highs, many farmers have money to invest, he said. When comparing land to other investments such as stocks, commercial property, income property, bonds, CDs and savings accounts, many are seen as giving declining returns and may even be seen as a risky investment compared to farmland, he said. Even if grain prices take a sharp decline, the worldwide market is influencing crop prices as well, which in turn is impacting land sales. There is an awareness that the world needs food and buyers continue to acquire supply, which is the law of supply and demand. The higher the demand, the higher the prices people are willing to pay for that good, Dotzenrod said. In most investments there is some risk involved. However, crop insurance has taken a lot of the risk out of farming because today’s insurance covers not just yield, but crop revenues, which is yields times price, Dotzenrod said. “There is a speculative aspect or element in today’s pricing of farmland. It has always been part of the selling price, but today it seems to be a much larger part of the final selling price,” he said. “The speculative component has characterized many ‘bubbles’ in other parts of our economic history, the ‘dotcom’ of the 1990s, the mortgage meltdown of
What is behind the price for the steep sales of farmland? ‘Today’s buyers of farmland are paying more than productive measurements can justify, but they are speculating that some years from now, the value of the land will be greater than it is. It is very difficult to separate the speculative component from the emotion, attitude and some subjective judgment about the future.’ Sen. Jim Dotzenrod, D-District 26
2008 and even the farm crisis of the 1980s. “Today’s buyers of farmland are paying more than productive measurements can justify, but they are speculating that some years from now, the value of the land will be greater than it is. It is very difficult to separate the speculative component from the emotion, attitude and some subjective judgment about the future,” he said. “North Dakota’s approach to valuing farmland for tax purposes is an attempt to separate the speculative element from the productive value that can be
set on a parcel of agricultural property.” Dotzenrod brings up a good point about the speculative nature of the high land prices. Frayne Olson, crops economist/ marketing specialist for NDSU Extension Service, agreed that there are many factors driving land prices, the first are the areas that influence agriculture and the second is local dynamics. He described a bigger picture of what is influencing land values in the United States. There are two pieces in the bigger picture, one of which is the ability to pay and the second is alternative
investments. In North Dakota, the prices are farmer-driven. In the majority of cases, when land is for sale in the state, it is local farmers bidding for the land rather than outside interests. If that is the case, neighbors are often bidding against each other, he said. “In the last several years we have near record farm net income nationally. What has happened is there is a real driving force of crop prices rising faster than expense,” Olson said. “In 2012 and into 2013, really high (crop) prices are being paid because of a
variety of reasons – the drought in the Midwest being one of them. Nebraska had a dryer year than North Dakota last year, so locally there has been good yields and high prices.” These high prices are driven by an increase in demand. If the ability to pay is already factored in, and the revenues are rising faster than cost, it means agriculture is doing well in the state and has been for a few years. Olson agreed with Dotzenrod on the factor of alternative investments. SEE LAND PRICES, PAGE B10
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B4 • DAILY NEWS
THURSDAY, FEBRUARY 21, 2013
Hovland: A Minnesota Century Farm BY CARRIE MCDERMOTT • DAILY NEWS firstname.lastname@example.org
The Minnesota Farm Bureau and the Minnesota State Fair work in conjunction on the Century Farm program, and each year recognize roughly 250 Century Farms. The program honors Minnesota families that have owned their farms for at least 100 years, are at least 50 acres in size and are currently involved in agricultural production. Wilkin County Commissioner Lyle Hovland lives on a Century Farm in the northeastern part of the county, in Prairie View Township. “The abstract shows my grandfather on my mother’s side acquired the home place in 1896 and it has been continuous since then,” he said. “Our son, Kurt, is the fourth generation here.” The family owns more than 1,000 acres of farmland, which is substantially more property than the original farm — a 160acre parcel. Hovland’s grandparents lived on the sustenance farm raising hogs, chickens and cows. “They probably grew mostly hay and oats, I would guess, in order to The Hovland farm as it looks today, above. Below left: a young Lyle Hovfeed the livestock,” he land on his family’s farm. Below right: Hovland’s father and grandfather said. “There was probably very little grain sold initially, but as time went on they probably grew a little bit of wheat as a cash crop.” He describes his grandfather, Andrew Malingen, as “a progressive guy.” His grandfather arrived in the United States from Norway at the age of 14, by himself.
work in the field. Lyle said his maternal grandfather acquired the farm’s homestead in 1896 and his family has lived on it ever since.
SEE CENTURY FARM, PAGE B9
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THURSDAY, FEBRUARY 21, 2013
DAILY NEWS • NEWS-MONITOR B5
Programs prepare future farmers
Nurturing the land and providing food is a testament to the human spirit BY ROBYN ROHDE • NEWS-MONITOR email@example.com
The feeling of pride most farmers hold after completing a season’s harvest is nearly indescribable. How these men and women work the land and produce lifesustaining nourishment just like their ancestors did before them is a true testament to the human spirit. However, the agricultural business is growing and changing so new farmers will not be able to use the same tried and true methods as their forerunners. Thankfully vocational technology classes and organizations such as Future Farmers of America are helping train the next generation farmer for what he or she may face. “We do a good job of hitting a bunch of different areas,” Wyndmere Teacher Darin Spelhaug said. “It’s a pretty broad spectrum of topics we cover, anything from
animal science to plant science to landscaping, wildlife, ag mechanics ... we cover a lot of areas.” Spelhaug explained that part of agricultural education is FFA and supervised agricultural experiences. Wyndmere boosts one of the top FFA programs in the area and the focus on agricultural education is apparent by the program’s massive greenhouse next to the school building. “In FFA we do a lot of leadership activities and career development events where they compete,” Spelhaug said. “We promote supervised ag experiences where students will go out and get a job, start a business, or do research in an ag field. They can find their own interest and really get into the heart of the industry there.” Research has been one area, especially chemistry and biology, where those interested in a career in agriculture have SEE FUTURE FARMERS, PAGE B8 There are many different avenues of instruction in the Vo-Ag Department at Wyndmere School. Instructor Darin Spelhaug covers a broad range of topics from plant and animal science to landscaping. Left: Ana Braaten arranges flowers.
Area 4-H groups are preparing themselves for a future in agriculture through classroom activities and supervised
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B6 • DAILY NEWS
THURSDAY, FEBRUARY 21, 2013
USDA action opened haying acres Secretary announces pilot program to provide more water for haying and grazing, memorandum to improve drought forecasting WASHINGTON, D.C. – Agriculture Secretary Tom Vilsack announced in December that the U.S. Department of Agriculture’s measures to open conservation land to emergency haying and grazing during the 2012 drought freed up a record 2.8 million acres and provided as much as $200 million in forage for producers facing critical feed shortages. Vilsack made the announcement during the national drought forum in Washington, D.C., cosponsored by numerous federal agencies, governors’ associations and academic partners. “The Obama Administration remains committed to doing everything it can to help farmers, ranchers, businesses, and local and county governments meet drought-related challenges,” he said. “Now we know that the actions taken by USDA and other federal agencies at the height of the drought provided much-needed flexibility during a difficult time. We also know that drought recovery is a long-term proposition, and we will continue to partner with producers to see it through.” At the height of the 2012 drought, the Secretary announced expanded use of Conservation Reserve Program (CRP) acres for haying and grazing including a two-month extension for emergency grazing on CRP acres without incurring an additional CRP rental payment reduction. By providing this flexibility, USDA
The U.S. Department of Agriculture opened up conservation land to emergency haying and grazing during a drought in 2012, to free up 2.8 million acres and provided almost $200 million in forage for producers facing critical need. freed up forage and feed to benefit all livestock producers during a critical period, on top of additional USDA actions, including lowering the interest rate for emergency loans and working with crop insurance companies to provide flexibility to farmers. USDA’s Farm Service Agency reported to the secretary that roughly 2.8 million acres under 57,000 CRP contracts utilized the emergency haying and grazing option, compared to more than 1 million acres in 2011. In 2005, producers utilized roughly 1.7 million CRP acres for emergency haying and grazing, the previous record. USDA estimates of the gross value of forage provided in 2012 run from $140 million to $200 million. Vilsack also announced a new pilot program administered by
the Natural Resources Conservation Service in Kansas and Colorado to remove sediments from ponds to help provide more water for livestock or for irrigation. Part of the Environmental Quality Incentives Program, the pilot provides an additional conservation option for producers who face drought-related issues on their agricultural operations. Also, for the current fiscal year, Natural Resources Conservation Service has made available more than $16 million through the EQIP program to farmers and ranchers for water conservation, practices and wildlife habitat that have been affected by the drought. Those funds are in addition to the more than $27 million provided to farmers ranchers in 22 states for drought miti-
gation during fiscal year 2012. Additionally, Vilsack noted that during the period of the recently expired Farm Bill, conservation systems installed with support from Natural Resources Conservation Service programs reduced water withdrawn from the Ogallala Aquifer by at least 860,000 acre feet. This is more than enough water to cover the area of Washington, D.C., nearly 20 feet deep and is equivalent to the domestic water use of approximately 9.6 million individuals for a year (based on USGS estimated use of 80 gallons per person per day). The quantity represents about 1.1 percent of the total groundwater irrigation withdrawals from the aquifer during the same period. At the agricultural sales level
from the 2007 Census of Agriculture, an extension of aquifer life of 1.1 percent would transfer into sales “today” of about $82 million. These reduced water withdrawals have also resulted in a related energy savings of the equivalent of at least 18 million gallons of diesel fuel. The Natural Resources Conservation Service Ogallala Aquifer Initiative supported more than one-quarter of these reduced withdrawals, approximately 238,000 acre feet, and achieved these reductions in the most sensitive areas of states in the Ogallala region. Funding through the initiative is targeted to areas where there has been a significant (more than 25 foot) decline in the level of the aquifer or where there is a significant vulnerability for contamination of the aquifer through groundwater recharge. While USDA’s efforts during the drought have delivered assistance to those who need it most, Vilsack noted that the department is hampered in its efforts by lack of a Farm Bill and he urged Congress to take action so that programs that could assist affected producers could be used to help them. Vilsack also announced that, in the wake of a series of regional drought conferences with farmers, ranchers, business owners and other stakeholders, a memorandum of understanding is being entered into with the Department of Commerce,
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including the National Oceanic and Atmospheric Administration, to improve sharing of data and expertise, monitoring networks and drought forecasting efforts. The MOU is a direct outcome of the regional conferences, Vilsack said. In recent months, USDA has partnered with local governments, colleges, state and federal partners to conduct a series of regional drought workshops. Hundreds of producers met with government officials to discuss needs, and programs available to them. Vilsack kicked off the first meeting in Nebraska, and additional meetings were held in Colorado, Arkansas, and Ohio. In addition, nearly 2,000 producers have taken advantage of funding from Natural Resources Conservation Service. So far, these drought recovery efforts have impacted more than a million acres of farmland. In recent months, USDA has also announced: • Purchased approximately $170 million of pork, lamb, chicken, and catfish for federal food nutrition assistance programs, including food banks, to help relieve pressure on American livestock producers and bring the nation’s meat supply in line with demand. • Updated the emergency loans application process to allow these loans to be made earlier in the season. SEE USDA, PAGE B7
THURSDAY, FEBRUARY 21, 2013
DAILY NEWS • NEWS-MONITOR B7
Study documents conversion to crops
USDA: Has been working tirelessly on ag producers’ behalf in drought conditions
SIOUX FALLS, S.D. (AP) — A new study documents a loss of 1.3 million acres of grassland during a five-year period in the Western Corn Belt — a rate not seen since the 1920s and 1930s. The research by Christopher Wright and Michael Wimberly of the Geographic Information Science Center of Excellence at South Dakota State University said a recent doubling in commodity prices has created incentives for landowners in South Dakota, North Dakota, Nebraska, Minnesota and Iowa to convert grassland to corn and soybean cropping. “Historically, comparable grassland conversion rates have not been seen in the Corn Belt since the 1920s and 1930s, the era of rapid mechanization of U.S. agriculture,” the authors wrote. The study is published in Tuesday’s edition of the Proceedings of the National Academy of Sciences of the United States of America. It found that corn and soy production has expanded onto marginal lands with high potential for erosion and drought. The authors compared the land use change rate in the Western Corn Belt to the deforestation of Brazil, Malaysia, and Indonesia, but Wright said it’s over a much smaller area. “And we’re not talking about a pristine landscape like a Brazilian rainforest,” Wright said. The researchers say that high corn and soybean prices, prompted largely by demand for biofuel feedstocks, are driving the change. Growers groups say the increased demand for their crops is also spurred by the rising in-
CONTINUED FROM PAGE B6
COURTESY METRO CREATIVE GRAPHICS
A new study is documenting a loss of 1.3 million acres of grassland during a five-year period in the Western Corn Belt. ternational need for protein sources, and American farmers are doing all they can to keep up with the skyrocketing demand. The analysis identifies areas with elevated rates of grass-to-corn and grass-to-soy conversion, ranging from 1 percent to 5.4 percent annually. Grassland conversion between 2006 and 2011 was mostly concentrated in North Dakota and South Dakota, east of the Missouri River. In Minnesota and the Dakotas, this expansion was concentrated near wetlands, posing a threat to waterfowl breeding habitats. The percentages don’t appear large during a single year, but when they accumulate over a longer period, it could mean the loss of hundreds of thousands of acres, said Eric Lindstrom, a Bismarck, N.D.based government affairs representative for Ducks Unlimited.
“We’ve been very concerned about the accelerated loss of native prairie,” Lindstrom said. The conservation organization is supporting the Protect Our Prairies Act, a U.S. House bill introduced last week by Rep. Kristi Noem, R-S.D., and Tim Walz, D-Minn. The bill would conserve native grasslands by reducing crop insurance for the first four years on newly broken native sod or grasslands. Ducks Unlimited also would like federal crop insurance subsidies based on the productivity of the land versus incentivizing wetland drainage and habitat destruction. In their study, the South Dakota State researchers found some differing trends when looking at state-level data. In the Dakotas and Minnesota, grassland conversion was concentrated on relatively highquality land, suggesting
that land owners are seeking higher rates of return by moving from livestock ranching to growing corn and soybean. In Minnesota, the researchers found that much of the grassland conversion was on lands with excessive wetness, pointing to a likely increase in the use of manmade drainage systems. Grassland conversion in Iowa was concentrated on less suitable land, likely reflecting a relative lack of higher quality land available for growing more corn and soybeans. The change in Nebraska focused on lands highly unsuited to crop production, suggesting an increase in irrigation in southwest Nebraska. The authors say that their findings may have implications for the region’s land productivity, carbon sequestration, biodiversity, flood risk and vulnerability to drought.
• Filed special provisions with the federal crop insurance program to allow haying or grazing of cover crops without impacting the insurability of planted 2013 spring crops. • Authorized up to $5 million in grants to evaluate and demonstrate agricultural practices that help farmers and ranchers adapt to drought. • Granted a temporary variance from the National Organic Program’s pasture practice standards for organic ruminant livestock producers in drought impacted states in 2012. • Authorized $16 million in existing funds from its Wildlife Habitat Incentive Program and Environmental Quality Incentives Program to target states experiencing exceptional and extreme drought. • Transferred $14 million in unobligated program funds into the Emergency Conservation Program to help farmers and ranchers rehabilitate farmland damaged by natural disasters and for carrying out emergency water conservation measures in periods of severe drought. • USDA worked with crop insurance companies to provide flexibility to farmers and one-third of all policyholders took advantage of the extended payment period. • Authorized haying and grazing of Wetlands Reserve Program easement areas in drought-affected areas where haying and grazing is consistent with conservation of wildlife habitat and wetlands. • Lowered the reduction in the annual rental payment to producers on CRP acres used for emer-
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gency haying or grazing from 25 percent to 10 percent in 2012. • Simplified the Secretarial disaster designation process and reduced the time it takes to designate counties affected by disasters by 40 percent. The National Drought Forum is co-sponsored by: NOAA, USDA, EPA, DOI, FEMA, National Drought Mitigation Center, National Integrated Drought Information System, Western Governors’ Association, Southern Governors’ Association, Midwestern Governors’ Association, and the University Corporation for Atmospheric Research. The Obama Administration, with Agriculture Secretary Vilsack’s leadership, has worked tirelessly to strengthen rural America, maintain a strong farm safety net, and create opportunities for America’s farmers and ranchers. U.S. agriculture is currently experiencing one of its most productive periods in American history thanks to the productivity, resiliency, and resourcefulness of our producers. A strong farm safety net is important to sustain the success of American agriculture. USDA’s crop insurance program currently insures 264 million acres, 1.14 million policies, and $110 billion worth of liability on about 500,000 farms. In response to tighter financial markets, USDA has expanded the availability of farm credit, helping struggling farmers refinance loans. Since 2009, USDA has provided more than 128,000 loans to family farmers totaling more than $18 billion. More than 50 percent of the loans went to beginning and socially disadvantaged farmers and ranchers.
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B8 • DAILY NEWS
THURSDAY, FEBRUARY 21, 2013
Above: Abby Braaten, Chris Rickabaugh and Bryce Orth work with one of the Vo-Ag projects their instructor gave them. Below: Austin Rhody works with the welding simulator at
Wyndmere Public School. This class, and others like it around the nation, are helping train the next generation of farmers.
FUTURE FARMERS: Growing up in the rural section has helped decide careers CONTINUED FROM PAGE B5
really been focused on. Growing up in the rural setting, Wyndmere junior Alec Johnson has a natural inclination toward the land and is planning on becoming a third generation farmer. But first he knows it’s important to go to either North Dakota State University or North Dakota State College of Science to learn more about the agricultural business. “I think harvesting is probably the best but I like the idea that
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ally comes back to take over the family business. “Right now we are going over the farm business unit in class and that is helping out a lot,” Johnson said. “It’s showing you the business side of what farming is like. It shows how much work (my grandfather and father) have put into farming.” Classmate Bryan Ford echoed his friends’ sentiment in the pride of continuing on the legacy started on his family farm. Although Ford does
not compete a lot in FFA programs, he finds the hands-on work in the technical classes very helpful. “I like working in the shop: welding, woodworking, green house, pretty much anything,” Ford said. Following in his father’s footsteps, Ford has aspirations to take over the family farm but first he wants to solidify is knowledge with a degree. “It will be better off for you and make it easier since the business is changing,” he said.
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you are not doing the same thing on the farm so you get to do different things every day,” Johnson said. The last two years, Johnson has competed in the crop section of FFA and this year he is exploring the wildlife portion. He said through the crop portions he learned a lot about weeds and threats on the yield and now in wildlife, he is gaining a better understanding of what he sees in nature every day. All of this and more will be a big asset when he eventu-
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DAILY NEWS • NEWS-MONITOR B9 CENTURY FARM: ‘My grandfather on my mother’s side acquired the home place in 1896 and it has been continuous since’ THURSDAY, FEBRUARY 21, 2013
CONTINUED FROM PAGE B4
“He came over about 1888. As time goes on, he managed the elevator in Lawndale in the 1920s, and he was the VP of the bank in Lawndale, which is no longer there,” he said. “He was progressive for his time. They went through that hard time in the ‘20s, he was in that position at that time. They talked about how difficult it was for everyone. They had mortgaged the farm at that time to pay back depositors. It was pretty tough stuff back then.” Hovland’s mother, Agnes Malingen, was born in 1912 on the farm with sisters Ella, Gladys and Ruby. She went to school to become a teacher, then married Hovland’s father, Alvin, at a young age. The couple eventually bought the farm from her parents. Hovland said as a boy, being able to grow up on a farm was “always a good place to be.” One of his memories from childhood is baling hay. “It was always hard work, hot, dirty but really kind of satisfying,” he said, remembering. “You pushed hard.” Growing up around it, he said he didn’t realize how much information he was absorbing — about the business side, agronomy, reading the weather, knowing when to plant and when to harvest. “You don’t think of all of it,” he said. “Sometimes being an old farmer, you get stuck in your ways, too, and it’s hard to be progressive sometimes.” He said the family ran a dairy farm while he was in high school. “In 1953, the old original barn burned down, and dad built a state-ofthe-art stanchion barn for the dairy. But it’s not
Above: The original farmhouse is now used as a storage building on Lyle Hovland’s farm. Below: A young Lyle like the parlor types they have now,” he said. The farm was then at 440 acres, and Hovland helped out until he joined the U.S. Marine Corps in 1961. He came home in 1964 and began farming with his father. “We still had the dairy and expanded it to some extent,” he said. “I rented some additional ground for awhile. We grew alfalfa for dairy, some corn for chopping silage, wheat for a cash crop and oats for feed. Maybe barley once in awhile too, as a cash crop.” Hovland purchased his first farm in the 1960s from his mother’s cousin, about 1/2 mile north of his family’s farm. Later he farmed with his distant cousin, Robert Hovland, who retired from farming several years ago. “My son, Kurt, has been farming now with me for seven years,” he said. “You work hard for 30 years and build up a net worth and equity, and
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Hovland with his parents Agnes and Alvin and the family dog. he’s in the best of times, he doesn’t know it,” Hovland joked. “It took him seven years to acquire what it took me the first 30, in terms of net worth.” Hovland said the family has been out of the dairy business for some time now. “1975 was a bad drought year, there was very little feed and I was just burned out on dairy. I sold my herd, cut the Herefords back,” he said. A brother-in-law got into dairy farming, and Hovland provided feed for that for a time. “It was a family affair for awhile,” he said. “Now we just grow corn and soybeans. We did grow wheat for awhile, but not for about 10 years.” Hovland explained corn crops weren’t predominant in the area until about 15 years ago, with the advent of ethanol and the fructose plant being built. “That pushed it,” he said. “Two hundred thou-
sand acres more corn grew in the state years after the plant opened. It’s just increased exponentially since then.” Along the way, Hovland has seen big changes in the farming industry, from improved seed options to technological advances with machinery. “I can spend more hours in a tractor because of the auto steer and things like that. It makes it less tedious, and I very much appreciate that,” he said. “I’m not a techy by any means, but I get done what I need to do.” He said the new technology has made things easier, if you’ve adapted to it. “Making the adaptation is what’s harder for me. It’s easier for the younger generations,” he said. On property sizes, he said the smaller quarter and half-section farm units were sustainable back in the 1940s. “The growth has been interesting. It’s a doubleedged sword. It makes for some great farm units, some nice operations, but less neighbors,” he said. “The larger units pushed everyone further away, that’s a downside. You don’t have that close-knit populace.” Hovland said farming has become much more of an industry than a family-type business or way of life. Since its inception in 1976, approximately 8,000 farms in Minnesota have been recognized as Century Farms. The Minnesota State Fair designates Century Farm status in early summer every year. Century Farm families receive a commemorative sign and a certificate signed by the president of the State Fair, president of the Minnesota Farm Bureau and Governor of Minnesota.
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Farmers have extra revenue and have decided to invest in machinery and land. Locally, there has been some land auctioned off and other areas that attribute to high prices are land quality and location. There is more value for sugarbeet land located next to a piling station as compared to acres further out that loads need to be trucked in. “In many cases it comes down to a bidding war that has been driving prices as well,” Olson said. A better return on their investment is a contributing factor as well. “If you only get 1-3 percent return outside of ag and 5 percent return in agriculture, farmers will invest in agriculture. In the case of supply and demand, the more demand, the more people are willing to pay for it.” Many people have heard about isolated pockets of land selling for $6,000-$7,000 an acre. Olson cautioned people to put these sales into a realistic scenario. People hear about the high land sales and assume their land should be worth the same, if not more. “We’ve got to be careful of the difference between marginal and average,” he cautioned. “The average cost of my land as a landowner can be different from an extra 80 acres I just bought as compared to buying larger tracts of land. The prices we hear about in the coffee shop are marginal acres.” Farmers are willing to pay higher prices for smaller tracts of land versus what they are willing to pay for larger tracts, Olson said. The land value has to sustain what the farmer can recover in their crop. It also goes back to supply and demand. If there is an extra quarter of land available for purchase and 10 farmers bidding on it, the price will reflect the high demand and limited sup-
ply. However, if there are 10 farmers trying to buy and 20 quarters available for purchase, the supply is higher than demand and the prices will reflect a lower price per acre. “That’s what makes this a complicated issue,” he said. “You can’t point to one thing, there is an interaction of a lot of different forces.” Some people remember what happened in the late 1970s when there was an agriculture boom. It caused a lot of excitement in the agriculture community when the Russian market opened up and a huge amount of grain was exported out of the United States. Officials predicted the export sales would continue to grow and farmers aggressively bid up land values. In the early 1980s the market busted, Olson said, and the price of land took a severe plummet. Cost caught up with revenue and margins were thin. Producers also had high interest rates taken out on their loans, with many farmers agreeing to variable rates of interest on those loans. The lower prices and cost caught up to the market and the thin margins and high interest rates made for a depressed farming economy. This is a duplicate of the housing market seen a few years ago, he said. In four to five years during the mid-80s, the land values dropped 50 percent due to the financial stress. Many farmers faced foreclosure and the U.S. government began a support program. “Many of the people who lived through that are now toward the end of their careers and say the land prices looks similar to what happened in the ‘70s and ‘80s,” Olson said. “But this current trend is acting differently.” A major difference between these three decades is the low interest rates currently available. Most farmers are locking their interest rates and ag
lenders are only going to loan a certain percentage of the value. In the 80s, land purchases were 80 percent financed, Olson said. “Today, 60 percent of the value is financed with lenders forcing farmers to put up a larger portion of the money. There is a wildcard, though, in this scenario and it is unpredictable. Olson doesn’t know what will happen with commodity prices. In the United States there are a lot of crops produced and a higher supply will cause prices to fall. But is this current trend a boom and bust crisis? Experts say the odds of this happening are low. “What might happen? Have we plateaued?” he asked. “That is a good question and no one knows the answer to it.” There are some issues that affect price: Drought, crop prices, good production and lower interest rates. When linked together, Olson said they can affect land prices. If the stock market takes off, other investments may look more profitable and instead of investing in land, farmers may decide to invest somewhere else. Land needs to be competitive in return rates of investments. Currently, land is tending to rate a higher return, he said, but it isn’t always true. “What farmers pay for interest rates and what rates of return they can gain in their investments is the other piece of what is driving land values,” Olson said. “Interest rates are very low now and interest rates influences what farmers can afford to pay for land.” In agricultural practices of today, farmland is a scarce resource. Producers can make more tractors, seed, chemicals, fertilizer and more, but the limiting factor in today’s mechanized agriculture is access to farmland. This finite piece of the pie is the true factor driving the price.
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FARM BILL: If the worst scenario came to pass, the 2008 bill would be extended
DAILY NEWS • NEWS-MONITOR B11
THURSDAY, FEBRUARY 21, 2013
Drought impacts U.S. soybean quality results
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we (the House) will start some time in April or May.” On the Senate side, both North Dakota Legislators are getting things rolling. “We think we will be able to mark it up in March and get it on the Senate floor,” Hoeven said. “We are going to do everything in our power to make sure that it (getting stalled in the House) doesn’t happen.” “We’re going to introduce the bill, get it through the Senate, bring it to the House and see what happens there,” Heitkamp said. The main issue that could cause a delay is “sequestration,” which is major automatic cuts that could occur in the spring if no action is taken by Congress. “We know that sequestration is coming. We all recognize that everyone needs to tighten their belts and needs to understand that budgets need to get cut,” Heitkamp said. “We’ve argued all along that we did work that helps address the sequester,” Hoeven said. “We have at least $23 billion in savings that we passed through the Senate last time.” The legislation that is being pushed through is likely to be similar to the 2008 Farm Bill legislation. “I expect when we get around to this it will look like what we had last year,” Peterson said. On the Senate side, Heitkamp said the legislation is the same as what the Senate passed last year. The language is identical, she said. One of the key items in the bill is crop insurance for farmers. “I think the one thing that everyone really
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Ag producers throughout the country are awaiting the outcome of a new Farm Bill, while North Dakota and Minnesota Congressional delegates explain the process. cares about now is crop insurance,” Dalrymple said. “Farmers realize that with the amount of risk we are taking, more than ever, we need that revenue insurance. Every time I talk to farmers, that is without a question, their top priority.” According to the USDA, crop insurance is a risk management tool available to agricultural producers. Each producer can consider a policy to work in conjunction with their own risk management strategies. “We passed a good Farm Bill that strengthens crop insurance and that was the No. 1 thing that our producers wanted,” Hoeven said. “Our concern is that if we don’t have a longterm strategy for crop insurance, what we will end up with is higher interest rates,” Heitkamp said. Another area of concern with a new bill is the dairy industry.
“It is critical that we have this five-year Farm Bill in place for both consumers who buy dairy and the dairy farmers,” Heitkamp said. “There’s a difference between small dairy producers and large dairy producers that has to get sorted in the house,” Hoeven explained. One of the highlights of the work being done on the bill is that it works in a very bipartisan manner. “To move the Senate Farm Bill with real reform in it, elimination of direct payments, taking a look at streamlining the conservation programs, all of those things we can come together on a bipartisan basis,” Heitkamp said. “It is very bipartisan. I think ag is exceptional in that regard,” Hoeven said. Hoeven brought up not only the importance of the Farm Bill to the state of North Dakota, but to the entire nation.
“We point out to those from urban areas that a good farm policy is benefitting you,” he said. “I make the case that if every other sector of our economy was doing what we are doing in ag, it would be really good for our economy, job growth, trade and for reducing our deficit. Ag supports 16 million jobs.” In the state of North Dakota, Dalrymple said that agriculture is still the state’s No. 1 industry. That safety net that farmers have in the federal Farm Bill is critically important to everyone. Dalrymple said he talks to both Senators and North Dakota Representative Kevin Cramer regularly about the matter. If the worst possible scenario did happen, and the current legislation failed to pass, Peterson said the 2008 Farm Bill would receive another one-year extension.
ST. LOUIS – According to a recent soy-checkofffunded study, the overall oil levels in last year’s U.S. soybean crop increased over the previous year, while average protein fell. United Soybean Board (USB) Customer Focus Action Team Chair Sharon Covert says U.S. soy’s biggest users pay attention to those results. “The oil and protein levels in our soybeans are very important to our customers,” says Covert, a soybean farmer from Tiskilwa, Ill. “We should take every possible course of action to improve our soy oil and meal, which will help us protect and expand our markets.” The results of the soy checkoff’s annual U.S. Soybean Quality Survey found the oil level in the overall U.S. soybean crop rose by 0.3 point to 18.5 percent last year. And protein dropped a half-point to 34.3 percent. But for a crop baked by drought conditions for much of the year, that’s pretty good, says the scientist in charge of the research. Seth Naeve, Ph.D., who conducts the study, says the drought likely had a hand in holding protein levels down. “Weather has a dramatic impact on soybean quality,” says Naeve, an associate professor at the University of Minnesota. “Last year, the drought affected different regions differently, so we weren’t exactly sure how quality would play out. Overall, I think we’re happy that quality was as good as it was.” Beginning with the 2013 crop, the checkoff will be implementing a new program to monitor weather conditions in soybean test plots and correlate that information with quality outcomes and variety performance. This work will complement the Soybean Quality Survey. The checkoff uses the survey to give buyers a preview of protein and oil levels. Naeve says he recently joined the U.S. Soybean Export Council in presenting the results to buyers in Asia, who want to know what U.S. farmers are doing to improve quality long-term. Animal agriculture consumes nearly 98 percent of U.S. soy meal, feeding the protein-rich meal to poultry, swine, fish and other animals. The food industry, which uses nearly 70 percent of soy oil, depends on an abundant supply of healthy and functional oil to use as frying oil or as an ingredient in many food products. Naeve says variety selection is a farmer’s best tool to improve soybean quality – even during a drought. “In general, the highest-protein varieties tend to be higher-protein in most environments,” he says. The 69 farmer-directors of USB oversee the investments of the soy checkoff to maximize profit opportunities for all U.S. soybean farmers. These volunteers invest and leverage checkoff funds to increase the value of U.S. soy meal and oil, to ensure U.S. soybean farmers and their customers have the freedom and infrastructure to operate, and to meet the needs of U.S. soy’s customers.
THURSDAY, FEBRUARY 21, 2013
B12 • DAILY NEWS
P h o t o B y Ve r n W h i t t e n P h o t o g r a p h y
Cargill Cargill Corn Corn Milling, Milling, headquartered headquartered in in Wayzata, Wayzata, MN, MN, is is aa manufacturer manufacturer of of value-added value-added corn the Food, Food, Feed Feed and and Fermentation Fermentation markets, markets, both both corn and and sugar sugar based based products products serving serving the domestic and export. Cargill operates the Wahpeton facility under a lease agreement with domestic and export. Cargill operates the Wahpeton facility under a lease agreement with ProGold ProGold LLC., LLC., that that began began in in 1997. 1997. The The facility, located northwest a corn wetwet milling fanorthwest of ofWahpeton Wahpetonon onCounty CountyRoad Road8E, 8E,is is a corn milling cility, which separates corncorn into into four parts: oil, fiber, and starch. oil isThe extracted facility, which separates four parts: oil, protein fiber, protein and The starch. oil is from the germ cornofkernel (at kernel a different facility) is consumed primarily extracted fromof thethe germ the corn (at aCargill different Cargilland facility) and is consumed primarily as cooking oil around the world. The fiber and the protein provide high as cooking oil around the world. The fiber and the protein provide high quality feedquality ingrefeed ingredients to theindustry. livestockThe industry. The starch isinto converted into and cornissugar and is dients to the livestock starch is converted corn sugar delivered to delivered to food and beverage companies in North and South Dakota, Minnesota, Monfood and beverage companies in North and South Dakota, Minnesota, Montana and the tana coast. and theThe west coast. The plant processes corn per day (30 million west plant processes 90,000 bushels85,000 of cornbushels per dayof(30 million annually). annually). Cargill has 130 on-site employees and contracts services with Allied Reliability, EuroCargill has DTZ 130 Services on-site employees and contracts services with50Allied fins, G4S and , which combined, employ an additional peopleReliability, onsite. The Eurofins, G4S and UGL Services , which combined, employ an additional people plant operates 24 hours per day, 7 days per week with four rotating technical50teams on on12site. The plant operates 24 hours per day, 7 days per week with four rotating technical hour shifts. 12-hour teams The on Cargill teamshifts. has been recognized for various quality, performance and energy exThe Cargill team has been recognized for various quality, performance and energy cellence awards over its 15 years. “Those are nice recognitions to receive,” said facility excellence awards over its 14 years. “Those are nice recognitions to receive,” said facilimanager Jason Stevens. “The reality of our is food safety,safety, environmental ty manager Jason Stevens. “The reality of day our to dayday to focus day focus is food environsafety employee safety. If we take great of care our customers, take great our mentaland safety and employee safety. If we takecare great of our customers, takecare greatofcare community and take great care of each other, each and every day, we have met our promise of our community and take great care of each other, each and every day, we have met our to Cargilltoand ourselves.” promise Cargill and ourselves.”
To about Cargill, visit visit us at us www.cargill.com or call Tolearn learnmore more about Cargill, at www.cargill.com Cargill Merchandising at (800) 266-6732 or (701) 671-1675