A Very Good Year: USDA forecasts record farm income, with strong key ratios

Guest author Bryce Knorr, published Farm Futures story

While farmers worry about falling crop prices and rising land costs, the government’s forecasting a rosy outlook for 2013.

USDA’s latest estimates project record net farm income for 2013 of $128.2 billion. Even when adjusted for inflation, which is up more than 400% in the last four decades, this year’s income could be second only to the results from 1973.
 
USDA’s projections show 2012 income faltered a bit due to the historic drought, falling $5.1 billion, or 4%, from 2011, the previous record for income in “nominal” dollars that were not adjusted for inflation. But in 2011, both livestock and crop farmers prospected. The government’s latest forecast shows gains would be uneven in 2013.

Sales from crop production would rise 11%, as growers benefit from prices that are still 
historically high. Livestock producers, by contrast, would foot the bill for higher feed costs. Their sales are forecast to rise just 3%.

The government’s forecast doesn’t project differences in key financial ratios between crop and livestock producers. But it’s likely the balance sheets of growers would fare better than those involved in animal production. USDA forecasts an 8% increase in farm assets over the year, likely due to rising farmland values. Real estate would increase 8%, while the value of livestock declines 1%. Farm machinery would take a big jump, rising 9%. Non-real estate debt would rise faster than real estate debt, which would drop. Overall farm equity is expected to grow 8%.

Financial ratios would continue to reflect that strengthening balance sheet, assuming land values hold up. The overall farm debt-to-asset ratio would fall to just 10.2%, the lowest since USDA began tracking the measure of solvency in 1960. Interest as a percentage of both income and expenses would also fall to record lows. Even return on equity, which began to falter under the weight of rising land values from 2006 to 2010, would edge higher to 5.2%.

While the forecast doesn’t account for any change in farm program spending, in the current environment that might not matter, for now. Direct government payments as a percentage of net farm income are expected to fall to 8%, their lowest level since the 1970s.

Photo obtained from: http://www.ers.usda.gov/amber-waves/2013-march/farm-income-forecast-to-remain-high-in-2013.aspx#.UWWFFhmvzHw

Program Offers Assistance to Beginning Farmers

As a new generation of farmers begin their agribusiness careers, a new program from the United States Department of Agriculture (USDA) offers them the opportunity to receive some assistance.

The USDA’s Transition Incentive Program (TIP) is designed for retired or retiring farmers to transition their expiring Conservation Reserve Program (CRP) land to a beginning or socially disadvantaged farmer who will return the land to production for sustainable grazing or crop production.

The USDA’s Farm Services Agency (FSA) defines a beginning farmer as an individual or entity who has not operated a farm or ranch for more than 10 years. They define a socially disadvantaged farmer as an individual that has been subjected to racial, ethnic or gender prejudice including, women, African Americans, American Indians, Alaskan Natives, Hispanics, Asian Americans and Pacific Islanders.

An Ohio Ag Manager article states that TIP provides annual rental payments to the landowner for a maximum of two additional years after the date of the expiration of the CRP contract, provided that the transition is not to a family member.

In most instances, the most difficult thing for a beginning farmer to get his/her hands on is land.

“Being able to rent CRP acreage nearly doubled the size of my operation in one year,” said Taylor Grabanksi, a beginning farmer in North Dakota. “I started farming about 50 acres in 2002 and by 2010 was farming 550 acres.”

To be eligible for TIP, a landowner must be a retired or retiring farmer on land enrolled in an expiring CRP contract. The owner must agree to sell, have a contract to sell or agree to lease long-term (at least five years) the land enrolled in an expiring CRP contract to a beginning or socially disadvantaged farmer.

The USDA FSA sponsors a website, TIP Net, to assist those farmers who are interested in TIP and serves as a matchmaker to link farmers with expiring CRP contracts to beginning farmers.

Beginning farmers and CRP participants may enroll in TIP one year before the expiration date of a CRP contract. For more information, farmers can contact their local FSA office.

What do you think of the TIP? Do you know a farmer who has participated in the program and benefited? What was his/her experience?

Photo obtained from: blogs.usda.gov

Farmers faced with important crop insurance decisions

Farmers need to make some important decisions in these last few weeks leading up to the March 15 crop insurance deadline.

The crops impacted by this deadline include corn, soybeans, grain sorghum, green peas, barley, dry beans, forage seeding, oats, popcorn, cabbage, mint, sweet corn, sugar beets, tomatoes, potatoes, processing beans and processing pumpkins.

For most farmers, crop insurance affects those who want to:

• Purchase crop insurance for their spring-planted crops
• Make a change to the crops that they have insured or to the level of their crops’ protection
• Change insurance providers
• Cancel a policy
  

According to an article in Ohio’s Country Journal, volatility is expected in the prices for corn, soybeans and their inputs and the weather is always an unknown. These risks, at the current high price levels, are tremendous.

“Prices are higher this year, the volatility in the markets is greater than ever and input prices are high, so it is really important to keep crop insurance at high levels, said Keith Summers, agent and broker at Leist Mercantile in Circleville. “With that, the cost of crop insurance is going to be higher as well. We’re seeing rates anywhere from 25 percent to 30 percent over last year.”

Along with the higher prices, the Risk Management Agency for the United States Department of Agriculture (USDA) is offering farmers a new crop insurance option for the 2011 crop year.

This new option for crop insurance is “WeatherBill,” which offers customized protection from the uncertainties of the weather, including:

• Drought throughout the growing season
• Excessive rainfall during key planning dates
• Cold weather throughout the season
• Heat stress during pollination
• Killing freeze before the harvest
• Rains that can delay harvest
  

WeatherBill coverage does not depend on insurance adjusters, but on the National Agricultural Statistics Service (NASS) weather data for a nationwide grid of 12-mile by 12-mile squares throughout the country. The insurance can be purchased by the acre within these grids.

This new crop insurance option, along with the higher prices, increases the need for farmers to meet with their crop insurance agent.

“There are a lot of dollars on the table this year and it is important for farmers to make sure they have the right coverage for their farm. Using crop insurance is a really good way to lock in some revenue,” said Summers.

For more information and a list of local crop insurance agents, farmers can visit www.rma.usda.gov/tools/agent.html.

Do you use crop insurance? Do you know a farmer who doesn’t use it? What do you think about the new insurance option, WeatherBill, which is available to farmers?

Photo obtained from: newinsured.com

Insurance cuts worry farm industry

In a time of national financial stress, Congress is trimming its monetary-assistance programs whenever it can.

America’s crop-insurance industry is the latest business sector to experience insurance cuts – six billion in target crop insurance cuts throughout the next 10 years to be exact.

The 2008 Farm Bill provided funding for crop insurance and permanent disaster relief programs to benefit farmers nationwide. But in February, the Obama administration announced plans to amend the safety-net provisions specified in the Farm Bill.

The Obama administration estimates $2.26 billion can be saved throughout a 10-year period by reducing federal farm payments to "wealthy farmers," while $8 billion can be saved by reforming the crop insurance program to end what it calls "huge windfall profits" for insurance companies, according to a Corn & Soybean Digest article.

Federal crop insurance is sold and serviced by means of private insurance companies. A portion of the premium, as well as the administrative and operating expenses of the private companies, is subsidized by the federal government. The Federal Crop Insurance Corporation re-insures the companies by absorbing some of the losses of the program when indemnities exceed total premiums.

The United States Department of Agriculture released its final Standard Reinsurance Agreement (SRA) contract June 29, outlining the details of the $6 billion cut:

• Lowers the projected long-term return for insurers to about 14.5 percent by modifying the terms under which the Risk Management Association provides re-insurance
• Phases out federal crop subsidies to people with more than $250,000 in adjusted gross income (AGI) from off-farm sources or more than $500,000 in on-farm AGI
• $2 billion will be used to “strengthen successful, targeted risk-management and conservation programs
• $4 billion is intended to reduce the national deficit
• Imposes a cap on commissions at 80 percent of the administrative and operating (A&O) subsidy to carriers under the program and a cap of no more than 100 percent of A&O when profit sharing is included

Insurance companies have 30 days to respond and make technical corrections.

In a letter to members of the Senate Committee on Agriculture, Nutrition and Forestry July 2, Roger Johnson, president of the National Farmers Union (NFU) said:

“The fact that the number of farmers has declined is not a reason to weaken the farm safety net. The population of our country - the people fed by American farmers - continues to grow. We must work together to provide sufficient federal investment in domestic food production.

Since the last farm bill was enacted, many farmers have endured some of the most difficult economic conditions in decades,” said Johnson. “The next farm bill must address the new realities we face: extreme volatility in market prices for commodities, extended periods of extraordinarily high energy costs and the ongoing exodus of young people and job opportunities from our rural areas.”

The National Association of Crop Insurance Agents also wrote to Congress to express its members’ concern about proposed legislation.

“While the farm economy is currently strong, we should be careful to avoid doing anything that could undermine the financial infrastructure of rural America. Although farm prices are generally up, farm input costs have risen even faster in many cases. This makes crop insurance even more important to farmers who need credit in order to plant a crop.”

Individuals may write to his/her respected legislator to offer opinions at http://pianet.capwiz.com/pianet/issues/alert/?alertid=15150501&type=CO.

Do you feel that the USDA should resume its intent to cut funding? Are there other ways to contribute to the national deficit? Do farmers deserve federal safety nets?

*Photo obtained from: http://insurance.yoursfree.biz/crop_insurance.htm

Summit to Ignite Rural America

The federal government recognizes the power of rural America.

To harness and leverage this power, the United States Department of Agriculture (USDA) will host The National Summit of Rural America: A Dialogue for Renewing Promise, June 3, 2010.

“This Summit will be an opportunity for rural Americans to share their vision for creating a more prosperous and promising future for rural America,” said Agriculture Sec. Tom Vilsack.

The campus of Jefferson College in Hillsboro, Mo., will welcome the event.

Participants include farmers, ranchers and foresters, as well as agriculture policymakers and community leaders, and features Vilsack, Agriculture Deputy Sec. Kathleen Merrigan and the full USDA sub-cabinet.

In addition to plenary topics, several breakout sessions are planned about rural issues concerning:

• Creation of new jobs
• Improvement of infrastructure
• Improvement of farm competitiveness
• Development of small businesses
• Encouragement of innovation in renewable energy

A complete itinerary of the summit is located at its Web site.

The summit’s overall goal is the development of proposals into future program and policy discussions. The summit culminates the USDA’s Rural Tour – a 22-state circuit of specific rural-development discussions.

Interest in the summit is so great; registration for it has reached capacity and has been closed. But, the USDA has utilized social-media sites to help bring the discussion to as many people as possible.

Individuals can listen to the summit live at the USDA’s media center home page, or visit its Facebook page to participate in an online chat.

However, some are not as optimistic about the administration’s rural goals.

Sen. Orrin Hatch, R-Utah, and other members of the Senate Western Caucus, wrote a letter to President Obama stating that current rural policies are hurting rural communities across the country. They requested a meeting with Obama before the summit.

“It is past time for the administration to put its misguided policies for rural America out to pasture,” said Hatch. “Before foisting more onerous federal regulations, costs and other burdens on rural communities in Utah and other states, the administration needs to consider the damage its current policies are doing to family farms, domestic-energy production and access to public lands and make a course-correction.”

Regardless of one’s perceptions about current rural strategy, it is certain that there is significant potential for expanding the capabilities of rural America to continue to economically support and to increase its economic support of our national economy.

Do you think rural America deserves this much federal attention? How can the administration utilize feedback from the summit in the most effective manner? Do Sen. Hatch and other critics of current rural strategy have a valid opinion?

*Photo obtained from www.USDA.gov







Government funds biorefinery developments

To increase the production and use of renewable-energy sources, the United States Department of Agriculture (USDA) is soliciting federal grants for biorefinery projects.

One such project, the Biorefinery Assistance Program, provides guaranteed loans for the development and construction of commercial-scale biorefineries or for the retrofitting of existing facilities (including, but not limited to, wood-products facilities and sugar mills) for the development of advanced biofuels.

“Renewable-energy production is a key to sustainable economic development in rural America,” said U.S. Agriculture Sec. Tom Vilsack. “We must rapidly escalate production of biofuels to meet the 2022 Federal Renewable Fuels standard goal, and much of this biofuel will come from feedstocks produced by America’s farmers and ranchers. This will be an increasing source of income for rural America and it represents an opportunity to increase the number of green jobs available not only to farm families, but also to residents of rural communities.”

Vilsack specifically mentioned feedstocks – crops or products that can be used as or converted into biofuels and bioenergy. Common feedstocks include soybeans and rapeseed while alga and ethanol byproducts are emerging feedstocks.

Farmers of these and other sources of feedstock can benefit from biorefinery developments because of increased market opportunity. However, the advancement of this renewable energy comes with a price tag.

According to a blog at Biofuels Digest, “Because biofuels projects cost in the hundred of millions, the “family member” guarantor of choice in the U.S. is Uncle Sam – the one with the balance sheet and the policy interest to make commercial biofuels happen.”

But programs such as the Biorefinery Assistance Program expand the promise for biofuels in America.

Program Information:

• Eligible applicants: Individuals, tribal entities, state-government entities, local-government entities, corporations, farm cooperatives, farmer cooperative organizations, associations of agricultural producers, national laboratories, institutions of higher education, rural-electric cooperatives, public-power entities and other groupings of any of the previous entities

• Loan limits: Maximum of $250 million; no minimum requirement; maximum loan will be reduced by the amount of other direct federal funding the eligible borrower receives for the same project

Eligible projects:

• Projects must be located in a rural area (50,000 or less population)
• Projects must use “eligible technology,” which is defined as either:

1. A technology that is being adopted in available commercial-scale operation of a biorefinery that produces an advanced biofuel; or
2. A technology not described in the previous paragraph that has been demonstrated to have technical and economic potential for commercial application in a biorefinery that produces an advanced biofuel

In 2009, this initiative, and other provisions within the overarching program to stimulate energy development, funded 1,557 projects in 50 states, the territory of Puerto Rico and the Western Pacific Islands, expecting to reduce greenhouse gases by 1.5 million metric tons of carbon. These investments will generate a projected equivalent of 1.5 million kilowatts of electricity.

As America works to develop a clean-energy economy, the use of programs like the Biorefinery Assistance Program, is vital. This program, and others modeled like it, provide rural, green jobs and propel us toward energy independence. They also provide more economic incentive for American farmers to continue the production of feedstock crops.

*Photo obtained from www.clear.certh.gr/img/bio-refinery%201.jpg

Biological research advances American agriculture

Industries large and small utilize research and technology to develop and provide goods and services to society. Now, the U.S. agriculture sector can reap more technological benefits resulting from biological research under the direction of the U.S. Department of Agriculture (USDA).

Agriculture research has produced disease testing for livestock, specialty-crop varieties and GPS technology for farm equipment to name a few.

The Agriculture and Food Research Initiative (AFRI), sponsored by USDA and created within the 2008 Farm Bill, established a competitive grant program to provide funding for fundamental and applied research, extension and education in food and agricultural sciences with a focus in six development areas. Grants that emphasize sustainable agriculture are preferred.

Priority Issues for Grant Applications

1. Plant health and production and plant products
2. Animal health and production and animal products
3. Food safety, nutrition and health
4. Renewable energy, natural resources and environment
5. Agriculture systems and technology
6. Agriculture economics and rural communities

"By focusing our resources on achievable and measurable outcomes, USDA's investment in science will help address some of America's – and the world's – intractable problems," said USDA chief scientist and director of USDA's Nation Institute of Food and Agriculture (NIFA) Robert Beachy.

"Today's announcement demonstrates USDA's commitment to supporting research, education and extension to bring about true change in areas like climate change, obesity and bioenergy."

In addition to the six priority issues for grant funding, the 2008 Farm Bill added conventional (classical) plant breeding, conventional (classical) animal breeding, renewable energy, domestic-marketing strategies and rural entrepreneurship as grant focal points.

There are also five designated primary challenge areas around which AFRI is structuring the grant program.

Challenge Areas

1. Keep American agriculture competitive while ending world hunger
2. Improve nutrition and end child obesity
3. Improve food safety for all Americans
4. Secure America’s energy future
5. Mitigate and adapt to climate change

Agriculture Sec. Tom Vilsack allotted $262 million to this effort. State agricultural experiment stations, colleges and universities, university-research foundations, other research institutions and organizations, Federal agencies, national laboratories, private organizations or corporations and individuals are eligible to apply for grants. Grants are awarded on a 10-year basis and some grants are eligible for renewal upon conclusion of the term.

The benefits of research and technology to society cannot be quantified. The USDA has stepped to the plate to motivate the sustainability, efficiency, profitability and development of one of the nation’s most economically providing sectors.

Do you agree that the selected issues and challenge areas should be addressed, or are there other issues? Should more or less money be awarded for research grants? Do you think the research will result in significant technological gains?

*Photo obtained from http://ucommphoto.nmsu.edu/newsphoto/anderson_john.jpg

Workshops to stimulate American Agriculture

A series of workshops throughout the coming months will feature discussions about competition and regulatory issues in agriculture.

These all-day forums, sponsored by the United States Department of Agriculture (USDA) and Department of Justice (DOJ), were first announced by Attorney General Eric Holder and Agriculture Sec. Tom Vilsack Aug. 5, 2009.

"In my travels across the country, I hear a consistent theme: producers are worried whether there is a future for them or their children in agriculture, and a viable market is an important factor in what that future looks like," said Vilsack. "These issues are difficult and complex, which is why this is so important and long overdue."

According to a USDA-issued news release, five workshops will promote dialogue among interested parties and foster learning with respect to the appropriate legal and economic analyses of these issues, as well as to listen to and learn from parties with experience in the agriculture sector.

Workshops involve farmers, ranchers, processors, consumer groups, agribusinesses, government officials and academics. This collection of stakeholders will create a forum for discussion and will ensure various industry perspectives.

Montana Attorney General Steve Bullock spoke about the scope of the workshops.

"Agriculture ranks as one of the top sectors of most state economies. And while the agricultural heritage of each of our states differs—sometimes dramatically—the concerns about market concentration, transparency and effective regulation cross geographical boundaries, and are shared concerns irrespective of the crops we produce and the animals we raise."

The first workshop, held March 21 in Ankeny, Iowa, focused on “issues of concern to farmers,” including seed technology, vertical integration, market transparency and buyer power.

Brownfield posted audio from the first workshop featuring its opening commentators.

All meetings are free and open to the public. There is time allotted for public testimony at the conclusion of the workshops.

Upcoming workshops:

• Poultry industry – May 2, in Normal, Ala. – Attention will be given to production contracts in the poultry industry, concentration and buyer power.
• Dairy industry: June 7, in Madison, Wis. – Specific areas of focus may include concentration, marketplace transparency and vertical integration in the dairy industry.
• Livestock industry: August 26, in Fort Collins, Colo. – Specific areas of focus will address beef, hog and other animal sectors and may include enforcement of the Packers and Stockyards Act and concentration.
• Margins: December 8, in Washington, D.C. – Discussions may be about discrepancies between the prices received by farmers and the prices paid by consumers; discussions from previous workshops will be incorporated into the analysis of agriculture markets nationally.
• Each workshop is designed to highlight the management issues facing a particular agriculture sector.

“According to many farmers and ranchers, the DOJ and USDA workshops are long overdue as an essential step to address concentration of ownership within agriculture,” stated the Kansas Rural Center.

Many in the industry consider the workshops the government’s renewed commitment to strengthening one of its premier industries, while others think that they are the first steps to moderating “Big Ag.” Holder noted that some farmers are “suffering from a lack of free and fair competition in the marketplace.”

Vilsack commented that insights gleaned from the workshops would be used in consideration of the 2012 Farm Bill. Lessons learned will be used to structure broad policies rather than develop a massive oversight system. Government officials were quick to note that potential anti-competitive practices are being studied and antitrust regulations will continually be further enforced.

“‘This is not just about farmers and ranchers,” Vilsack said. “It’s really about the survival of rural America.”

Is the format of the meetings conducive to change? Should other topics be addressed and discussed?

*Photo obtained from farmamerica.org










Program supports development of U.S. producers

Earlier this month, the United States Department of Agriculture (USDA) implemented a new support program to help America’s farmers hurt by the recent economic crisis. USDA Sec. Tom Vilsack introduced the Trade Adjustment Assistance for Farmers Program, also known as the TAA for Farmers Program.

"As we work to help rural America recover from the worst economic crisis since the Great Depression, the Trade Adjustment Assistance for Farmers Program will create new opportunities for producers hurt by import competition," said Vilsack. "Eligible producers will receive much-needed technical assistance and cash benefits to help them adjust to the current economic environment."

Farmers receive financial assistance after meeting eligibility requirements and upon completion of stringent training and education courses that can last up to three years.

According to USDA, the TAA for Farmers Program helps producers of raw agricultural commodities and fishermen adjust to a changing economic environment associated with import competition by means of technical assistance and cash benefits.

It’s not another subsidy, said Kevin Klair, extension economist at the Center for Farm Financial Management at the University of Minnesota.

“Congress was very intentional when structuring this program. Important management and competition issues were considered to make it most effective,” said Klair.

The American Recovery and Reinvestment Act of 2009 (ARRA) reauthorized and modified the TAA. The Act includes measures to modernize the nation's infrastructure, enhance energy independence, expand educational opportunities, preserve and improve affordable health care, provide tax relief and protect those in greatest need, according to the Obama administration.

Eligibility

• The commodity on which the farmer claims losses must qualify for the program as determined by the USDA (notifications issued in Federal Register notices).
• Farmers must have experienced a greater than 15-percent decrease in the national average price, the quantity of production, value of production or cash receipts of the commodity compared to the average of the three preceding marketing years, and imports contributed importantly to this decline.
• Applicants must complete a series of workshops/education sessions.
• Farmers can apply until April 14.

The public had the opportunity to weigh-in about program procedures and eligibility criteria in August. Most public commentary centered on payment limitations with consideration to adjusted gross income and specialty crops, a well as consideration to the length of intensive training about how to use the program. There is an additional 30-day period for public comment commencing March 1.

Farmers may receive $4,000 in assistance after an initial series of free technical-training classes. Klair said farmers are eligible to receive an additional $8,000 after writing an approved long-term business-adjustment plan to aid them in their future operations.

“It teaches farmers how to be more-efficient U.S. producers,” said Klair, who said the program has received numerous inquiry calls.

Klair said the “downside” to the program is its strict qualification requirements.

“It would be great if everyone could qualify,” said Klair.

Farmers can appeal a denied application.

To learn more about the intricacies of the program, visit http://www.fas.usda.gov/ITP/TAA/taa.asp or http://www.taaforfarmers.org/.

Should the federal government take more or less of a role in financially assisting farmers? How can farmers relay the significance of this program to media/the public if criticized?

Trade surplus has agriculture sitting pretty in 2010

“We need to export more of our goods,” said President Barack Obama in the State of the Union Address, stating his plans to double America’s exports throughout the next five years to strengthen the economy. This includes agricultural efforts.

According to the Outlook for U.S. Agricultural Trade, issued Nov. 30 by the USDA Economic Research Service, we are well on our way.

It’s a big year for the U.S. in terms of agricultural trade. 2010 exports are forecast to be the second highest on record, increased $1 billion from the August 2009 forecast alone. Our country will also experience resumed import growth.

A reviving global economy is a factor in this surplus. Demand for U.S. high value-products, such as corn, soybeans and cotton, is also influencing the predictions.

Increased demand in oilseed, cotton and dairy markets is also important to note. The USDA says the recent decision by the European Union to sharply reduce its export subsidies has provided a significant boost to global dairy prices.

Since the August 2009 Forecast

• Exports raised $1 billion to $98 billion
• Imports lowered $4.5 billion to $77.5 billion
• Surplus raised $5.5 billion to $20.5 billion

Grain Export Forecasts in Summary

• Corn exports will increase
• Soybean exports will increase

So what does this mean to American farmers and consumers?

Farmers in highly affected industries – corn, soybeans – should sell stored grain to take advantage of the strong export demand. Farmers in industries in which exports are predicted to decrease should carefully measure future-production planning.

Consumers can take comfort in a healthier national economy. "Retail food-price inflation in 2010 will rebound from the 2009 level toward a moderate level, slightly above the long-term historical average," the USDA stated.

Food-price inflation will not be as strong as in 2008, when corn, wheat, soybean and fuel prices were much greater.

Forecasted Exports in billions by Commodity Group







The financial gains of bountiful exports should be reflected in our nation’s GDP. When the dollar appreciates against foreign currencies, U.S. exports cost more in foreign local currencies and thus demand for them declines. Conversely, a depreciation of the dollar increases U.S. agricultural competitiveness by lowering prices of U.S. products in foreign markets, as explained by the U.S. Department of Economic Analysis.

America is exporting more goods than ever to East Asia but exporting less to North America. Though export figures to Canada have decreased, Canada and Mexico will remain our country’s top export markets in 2010.

In regards to our country’s imports, though the volume of U.S. farm imports fell by 3 percent in 2009, which is the first volume drop since 1995, USDA said that a further retreat is not forecasted in 2010.

2010 agricultural imports are forecast up $4.1 billion since August to $77.5 billion. The increase consists of an additional $400 million in livestock and meats, $200 million in dairy products, $200 million in grains and feeds, $650 million in oilseed products and $1.2 billion in sugar and tropical products.

High domestic unemployment, weak disposable income, and lower purchasing power of the dollar contributed to our country’s need for increased imports.

America’s balance of trade is welcoming to consumers and the agricultural industry and is beneficial to our national economy.










USDA Campaigns for Local, Regional Food Systems

Food and agriculture are at the center of national dialogue as of late, re-introduced to the masses because of the “Food, Inc.” movie release, TIME magazine commentary “America's Food Crisis and How to Fix It” and most recently, a new USDA campaign launch.

The government branch is allocating millions of dollars in its budget to spur a nationwide conversation about how food travels from farms to plates.

“Know Your Farmer, Know Your Food” is Agriculture Secretary Tom Vilsack and Deputy Secretary Kathleen Merrigan’s initiative that aims to educate Americans about the importance of promoting local and regional food economies in our country’s food system to:

• Create new income opportunities for farmers
• Promote sustainable agriculture
• Generate wealth that remains in rural communities
• Supply healthier food
• Decrease energy expenditure

"An American people that is more engaged with their food supply will create new income opportunities for American agriculture," said Vilsack. "Reconnecting consumers and institutions with local producers will stimulate economies in rural communities, improve access to healthy, nutritious food for our families and decrease the amount of resources to transport our food."

The USDA will “use existing USDA programs to break down structural barriers that have inhibited local food systems from thriving” and has allocated the following toward the campaign:

• Risk Management Agency – $3.4 million for collaborative outreach and assistance programs to socially disadvantaged and underserved farmers. These programs will support “Know Your Farmer” goals by helping producers adopt new and direct-marketing practices. For example, nearly $10,000 in funding for the University of Minnesota will bring together experts on food safety and regulations for a discussion of marketing to institutions like K-12 schools, colleges, universities, hospitals and other health-care facilities.
• USDA's Food Safety and Inspection Service proposed regulations to implement a new voluntary cooperative program under which select state-inspected establishments will be eligible to ship meat and poultry products in interstate commerce. The new program was created in the 2008 Farm Bill and will provide new economic opportunities for small meat and poultry establishments, whose markets are currently limited.
• Rural Development – $4.4 million in grants to help 23 local business cooperatives in 19 states. The member-driven and member-owned cooperative business model has been successful for rural enterprises and brings rural communities closer to the process of moving from production-to-consumption as they work to improve products and expand appeal in the marketplace.
• USDA's Rural Development will also announce a Rural Business Opportunity Grant in the amount of $150,000 to the Northwest Food Processors Association. The grant will strengthen the relationship between local food processors and customers in parts of Idaho, Oregon and Washington and will also help the group reduce energy consumption, a major cost for food processors.

Advocates of buying locally produced foods cite safety and transportation-energy costs as primary factors in the dialogue.

Michael Abelman, founder and executive director emeritus of the Center for Urban Agriculture at Fairview Gardens, as well as a recognized practitioner of sustainable agriculture and proponent of regional food systems, commented about the government movement:

“We (society) are part of a broad movement reclaiming food from faceless, long-distance industrial providers. We're demanding not only that it be safe, but that it taste good – and that it be grown in a way that honors the land and those doing the work. And while it's true that we could slip up and make someone sick, the results of any carelessness would be smaller, more local.

“Food safety doesn't hinge on monitoring tiny bacteria. It depends on the most fundamental aspect of a healthy food system – relationships – biological, personal, ecological and local. Those relationships are on a scale small and, so, familiar.”

Vilsack solicits the campaign in a YouTube video and encourages consumer feedback to help shape the $65 million promotion at the campaign Web site via e-mails or comments via Twitter.

“Know Your Farmer, Know Your Food” poses the question, “Every family needs a farmer. Do you know yours?”

Will the campaign be successful in its goals to create awareness and change? What reforms/modifications to the food system should the USDA consider? Should any agribusinesses be concerned?

Congress initiates first female ag chair

Sen. Blanche Lincoln (D-AR) replaces Sen. Tom Harkin as our nation’s chairwoman of the Senate Committee on Agriculture, Nutrition and Forestry.

Former Ag Chairman Harkin filled the vacant Health, Labor, Education and Pension Committee chair seat, left vacant after the passing of Sen. Ted Kennedy.

This is another first for Lincoln, who became the youngest female senator at age 38 in 1998.

Since 1825, the committee has been responsible for legislative oversight of all matters relating to the nation's agriculture industry, farming programs, forestry and logging, and legislation relating to nutrition and health.

Born and raised in Arkansas, Lincoln considers herself qualified both personally and professionally for the position. Lincoln is confident that her background as a farmer’s daughter and her service in Congress have prepared her for the role.

"The American farmer and rancher could not have a better friend in Washington than Senator Blanche Lincoln,” said Mark Williams, president, Southwest Council of Agribusiness.

Lincoln’s former committee involvement:

• Served on the Senate Committee on Agriculture, Nutrition, and Forestry since January 1999; has served as chairwoman of the subcommittee on Rural Revitalization, Conservation, Forestry and Credit
• Served as chairwoman of the subcommittee on Production, Income Protection and Price Support
• Played a role in the 2008 farm bill debate
• Served as chair of Rural Outreach since 2005
• Founded bipartisan Senate Hunger Caucus in 2004
• Served on the House Committee on Agriculture from 1993-1995

Several high-profile individuals from a variety of industry segments have publicly declared their support of Lincoln, including American Farm Bureau President Bob Stallman:

"Senator Lincoln has represented the interests of agriculture and rural America since her election to the House of Representatives as a moderate Democrat in 1992 and her election to the Senate in 1998. She has deep ties to farming and hails from a seventh-generation Arkansas farm family. We know she will continue to be a strong voice for our industry and will continue as a consistent leader on key Farm Bureau issues such as those that relate to farm policy, the environment and estate-tax reform."

Progressive Farmer ag reporter Chris Clayton said, “Lincoln is also likely going to be more skeptical of climate legislation because it may offer little benefit for rice growers or producers of other southern crops. She was quoted in mid-August saying Congress should just focus on a renewable-energy bill and drop the cap-and-trade emissions plan.”

Some believe her strong sentiments will definitely affect policy, including journalist Phil Brasher of the Des Moines Register, “Lincoln is as vigorous a proponent for large farms and livestock interests (think Arkansas-based Tyson Foods) as there is in Congress. Pair her with the panel’s senior Republican, Saxby Chambliss of Georgia, and you have a powerful one-two punch for the southern perspective on agricultural policy.”

Interestingly, Lincoln is up for re-election in 2010, causing others to consider her new position as a self-seeking political move. Will she prove herself as the authority on a number of significant issues? Only time will tell.

Do you think having a chairwoman will impact legislation? What, if any, influence will her home state have on her decision-making process? Should other congressional members have been considered?

Rural Tour: Renewing America’s Promise

Concerts, comedians and a variety of shows regularly travel the nation to educate and entertain. Most recently, the president’s Rural Tour has been making pit stops throughout the U.S. to elicit feedback about and support for government involvement in programs to better rural America.

U.S. Secretary of Agriculture Tom Vilsack is spearheading the awareness initiative that began June 30. The tour, designed to facilitate conversation via a blend of education outreach and community forum feedback, is part of the Obama Administration’s plan to “renew America’s promise.”

According to the USDA, “The variety of topics that will be addressed reflects the array of issues facing rural America, including broad-based rural health, economic development, infrastructure, education, energy, natural resources and agriculture.”

At each stop, Vilsack, alongside local elected officials, discusses how the USDA and other federal agencies are working to strengthen rural America by means of current and proposed government programs. Attendees then have an opportunity to voice opinions, suggestions and concerns in efforts to promote a dialogue between government and constituents.

“Government does not have all the answers, but it can help share innovative ideas and problem-solving techniques from communities with the rest of the country,” Vilsack said. “Building a foundation for success and prosperity for the new 21st-century economy will take a collective and collaborative effort with all of us talking, debating and solving together.”

Vilsack encourages citizens to “call, e-mail, write, videotape, photograph, you name it,” to offer input about the state of rural America.

Highlighted agricultural topics include rural broadband access, climate-change legislation and forest management, with emphasis on localized concerns.

Discussions involved ag-debt restructuring in Iowa, obstacles facing the dairy industry in California, carbon sequestration in Virginia and creating business-relationship opportunities among food industry entities in Ohio.

Scottsbluff, Neb., will welcome the tour this week to discuss production agriculture, and Las Cruces, N.M., will conclude the nine-stop circuit with a discussion aimed at rural infrastructure.

You can get more information and updates about the Rural Tour at RuralTour.gov or at Twitter or Facebook.

A summary of the tour can be viewed in a YouTube video created by the USDA.

Is the Rural Tour a success? Should other states/topics have been included for discussion? Can members of the agricultural industry model a similar tour for industry-specific topics in the future?

Emerald ash borer affecting more states by the day

In a Sept. 3 article in the Dayton Daily News, scientists estimated that the emerald ash borer (EAB) beetle has already killed millions of ash trees in the United States. It is considered one of the most serious threats facing the forests in North America. It is capable of eliminating an entire species of trees.

The consequences of this beetle’s destructive path are bigger than some might think. Around 114 million board feet of ash saw timber, which is valued at roughly $25.1 billion, is grown in the eastern U.S. each year. Since EAB was introduced to the U.S. in the 1990s, over 25 million ash trees have died or are dying and 7.5 billion ash trees are still at risk.

Not only is there money being lost by EAB destruction of ash trees, but millions of dollars are being spent by the USDA to destroy the beetle. In 2004, the USDA committed $40 million to destroy the beetle and plans to spend over $350 million in the next eight years.

EAB is a green beetle, but don’t be deceived by its innocent look - it’s not as harmless as it appears. The EAB is native to parts of Russia, China, Japan and Korea, so how did it get to the United States? It is suspected that it was accidentally imported from China in the 1990s. In 2002, it was discovered in Canton, Mich. It has since migrated and today threatens numerous states throughout the U.S.

Since 2007, there have been reported cases of EAB attacks in Ohio, Michigan, Missouri, Pennsylvania, Illinois, North Dakota, West Virginia, Wisconsin, Maryland, Indiana and Illinois. In Ohio alone, 43 counties are under quarantine.

Currently, the United States Department of Agriculture (USDA) is trying to exterminate all the beetles in the U.S., destroying every ash tree within a half mile of a known infested tree.

So how does this effect Ohio? In a recent study by the U.S. Forest Service, there are roughly 3.8 billion ash trees in Ohio, or one in every 10 trees in the state. The value of ash timber in Ohio is valued around $1 billion. Before EAB attacked, the ash was considered to be the most important tree to nursery and landscaping businesses. It can cost up to $1,000 for some homeowners to completely remove one tree. Ohio’s Division of Forestry predicts that over the next 10 years, the economic impact from EAB on Ohio could reach over $3 billion. The estimated total cost, if Ohio’s urban ash trees were completely lost, would be roughly $7.5 billion.

Not only is EAB affecting nursery and landscape businesses, but it’s also hitting the tool-handle market. A large portion of the market for ash in Ohio is focused around the tool-handle market, meaning anything from handles on hammers to screwdrivers, and other tools with wooden handles. There are two major plants focused on this market in Ohio, both of which get roughly 25 percent of their wood from ash trees. Ohio is actively seeking federal assistance to help destroy EAB to avoid the continued financial threat to the state’s already weakened economy.

So how does EAB kill ash trees? The adults lay eggs in the crevices in the bark of the ash tree. The larvae then burrow into the bark after they hatch and consume vital cambium and phloem. This typically causes the tree to die within two years. The good news is that the average life span of the EAB is one to two years. The bad news is that a female can lay between 75 to 300 eggs.

EAB continues to be a threat to Ohio and the surrounding states with no end in sight. Will the USDA be able to eliminate this pesky beetle? Let me know your thoughts.

High Prices a Problem for Corporations, Consumers Alike

Everyone from the CEOs of huge corporations to stay-at-home moms are feeling the squeeze of the high cost of living. Soaring food and fuel prices are leaving their mark in grocery stores, on the roads and in homes across the United States.

The U.S. Department of Agriculture recently estimated that food prices will climb 4.5 to 5.5 percent this year and another 4 to 5 percent in 2009. Many are scrambling to find new ways to survive in this volatile economy. The “trickle-down” effect has become obvious.

With the increased cost of living, many farmers are losing money with each chicken and cow they sell. Grain farmers are hurting from rising fertilizer and fuel prices as well. When those at the source of our food supply are hurting, the high cost of inputs are sure to be passed on to the consumer.

“It costs $1,000 to fill up some farm tractors every time they pull up to the diesel pump with an empty tank,” said Mark Schneidewind, Illinois Farm Bureau manager for Will County. In an Aug. 22 article in the Morris Daily Herald, he explained that anhydrous ammonia, a common fertilizer, has risen from $200 per ton to more than $1,000 in the past two years.

Like farmers, food manufacturers also must tighten their belts. Though often seen as responsible for hiking prices, companies like General Mills are suffering, too. According to an Aug. 8 Wall Street Journal article, to save dwindling profits, General Mills and other companies like Pilgrim’s Pride, Sara Lee and Tyson Foods have been forced to charge more for smaller boxes of cereal, cartons of ice cream and jars of mayonnaise.

The next place increased prices have a significant impact is in the grocery aisles and the wallets of families across the U.S. Already driving less, opting out of their usual activities and switching to more fuel-efficient cars, moms and dads are watching their food purchases closely. Even children at school can feel the effects of the market. Schools in many states are being forced to raise the price of all lunches, including their “low-cost” meals and are reducing the variety of foods they offer.

“We were so used to getting into the car and going places, trying new things,” said Jennine, a suburban New York mother of two. “I try to drive only as necessary so I can make a tank of gas stretch for two weeks. You have to think about how you do food shopping and where you are taking the kids.”

On the upside, makers of items like bicycles and wood-burning stoves are enjoying increased sales. Online and bulk shopping are also on the rise.

“High energy prices are forcing consumers and businesses to reconsider both short-term and long-term decisions, from where to go on vacation to where and how to organize product lines,” said Scott Horsley in his Aug. 13 NPR article. “Some of these changes will be long-lasting.”

The endless cycle of finger pointing is obviously not helping anyone solve the problem of higher prices. What is the solution? Are these market conditions here to stay? Let me know what you think.

High-tech Tools Transform Farms

From tractors that drive themselves to “remote” cow herding, technology is quickly changing the way farmers operate in the U.S. and around the globe.

Though humans have been growing crops and raising animals for centuries, the techniques for producing food has changed so drastically only recently. Touching almost every aspect of the family farm, new technology is keeping food safe, environmentally friendly, abundant and profitable.

Starting with the seeds they plant, farmers are using technology each and every day. Intensive breeding research is now being conducted to increase yields and to improve stress tolerance, drought and heat protection and increase seed size. According to an article in the Western Farm Press on July 8, technology-led innovations have increased U.S. corn yields by 60 to 70 percent since 1996.

“Not only do farmers have to adapt to new technology to stay profitable, they also must embrace it in order to feed a growing global population,” said Tamara Kass, director for agricultural products for DTN, an electronic information service. “It’s apparent how successful technology is in farming today, as we are producing more every year.”

Farming machinery has also seen many new improvements in the past decade. Fuel efficiency and precision are vital to keep costs low and productivity high. Global positioning systems (GPS) help farmers plot their fields to the inch, control distribution of seed and fertilizers and eliminate waste from crooked rows and overlaps. Durable computers, text-message market alerts and up-to-the-minute weather tracking are also making life easier for savvy farmers.

“All the technology has changed so much just over the past 10 years,” said Greg Place, a Wisconsin farmer who attended a recent “Farm Technology Days” event in his hometown. “I never thought I’d see this in my day.”

Crops and machinery are not the only areas of agriculture riding the technology wave. Those who raise livestock are finding new inventions useful as well. A manufacturer in the Netherlands recently introduced a rotating milking parlor, perfect for increasing profits for U.S. dairies that need to milk more cows per hour.

For ranchers, U.S. Department of Agriculture researcher Dan Anderson unveiled the “Ear-A-Round,” a device that can corral cattle remotely by funneling sounds directly to the animals. Eliminating the need for fences and allowing for better use of grazing land, this device could change the age-old role of the American cowboy.

According to an Aug. 10 Associated Press article, ranchers and cowhands will no longer have to spend time building and repairing fences. Instead, “they’ll devote more time to leading animals to areas for better nutrition while protecting natural resources.”

Anderson said that this device, which works by using sound to create a “virtual paddock” through GPS technology, could take the mundane physical labor inherent in herding cattle and help farmers and ranchers focus more on management.

“It’s looking for the best management with the best skills that technology can provide,” he said.

There is no question that technology positively impacts the American farmer, but do you think that there is a flip side to these advancements? Let me know your thoughts. Please comment below.

The Graying Farmer: The Future of U.S. Agriculture

While we await the 2008 agricultural census results, the trends in some of the data are fairly predictable. A prominent feature of the 2002 statistics, the “graying” of the American farmer, continues to be a cause of concern for many.

In 2002, the census conducted by the U.S. Department of Agriculture showed that the average age of America’s estimated 2 million farmers was 55.3 years. With only 5.8 percent of farmers under the age of 35, some fear that the retirement of older farmers and a shift to large-scale operations will have a negative impact on the industry.

“There’s a real cause for concern,” said Chuck Hassebrook, executive director of the Center for Rural Affairs in Lyons, Neb. “We need a new generation of farmers to reinvigorate farming and our communities.”

Not all have a negative outlook, however. According to a new survey conducted by the American Farm Bureau Federation earlier this year, the next generation of farmers are ready to step up to the plate.

The study, which surveyed farmers and ranchers ages 18 to 35, found that the vast majority of young farmers (83 percent) are more optimistic about farming than they were five years earlier. In addition, 92 percent see themselves remaining in farming for the rest of their lives and 95 percent would like to see their children follow in their footsteps.

Young farmers are earth-savvy as well. Taking care of the environment, practicing conservation tillage and utilizing new technology were a priority of those surveyed. High levels of involvement in agricultural organizations like the Farm Bureau and Future Farmers of America is also encouraging.

The availability of land, overall profitability, urbanization, government regulations and the cost of health care were cited as the biggest challenges faced by young farmers. Though these are very real obstacles, many are finding ways to give these fresh faces a hand.

Some states now offer low-interest loans, tax breaks and mentorship programs for new farmers. Colleges and universities are also getting in on the act. The University of Oregon introduced its Small Farms Program to offer guidance and education for both young and old farmers across the state. Drawing a different demographic, the new organic and small farm niche has opened the doors for a new “hip” generation of farmers.

“Young farmers are an emerging social movement,” said Severine von Tscharner Fleming, who is making a documentary called “The Greenhorns” about the trend.

Do you think that this enthusiastic generation will prove to capable of handling the future of American agriculture? Will this organic movement, new technology and a “green” focus lead us to where we need to go? Let me know your thoughts.

Local Food Important to Consumers

Safety, quality and the environment seem to be on the minds of American consumers lately. In light of recent food scares and the push for greener lifestyles, many are opting to buy local foods or get their produce directly from the farmer. This cuts down on the amount of energy and emissions associated with transporting food from different areas of the country.

A recent study by Ohio State professor Dr. Marvin Batte found that grocery shoppers are willing to shell out more money for locally grown foods. Deemed fresher, more environmentally friendly and a boost to local farmers, consumers say they were willing to pay more for quality produce.

On the heels of this study, Wal-Mart announced that it is beginning an initiative to purchase and sell more than $400 million worth of produce grown by local farmers this year. This move will cut 672,000 “food miles” and add up to about $1.4 million in annual savings for the company. Wal-Mart is now the nation’s leading purchaser of community produce.

Local farmers’ markets are also thriving. The number of markets in the U.S. has increased 21 percent in the past four years. According to the U. S. Department of Agriculture, farmers’ market revenue will top $1 billion this year. What used to be a rural phenomenon has turned into a hip trend.

Some consumers are taking their environmental convictions and love of local food one step further. A growing group of Americans has passed over grocery stores and markets completely by purchasing shares of community farms. According to a July 10 article in The New York Times entitled “Cutting Out the Middlemen, Shoppers Buy Slices of Farms,” this new brand of sharecropping has increased in popularity since its inception in the 1990s. Shareholders in these farms pay a fee and are entitled to a certain percentage of crops and livestock. This movement has supported small local farmers and allowed the community to take an active role in food production.

These trends are already making an impact on how farmers operate. In addition, the push for local food and environmentally friendly practices seem likely to continue for the foreseeable future.

The question now is: How will this affect the American agricultural industry?