Roofs for Cows

Mon. May 23, 2016 2:21 PM


By Victoria G. Myers
Progressive Farmer Senior Editor

Some Midwestern corn and soybean producers may want to get into the cattle business, but with land still averaging more than $8,000 an acre, it's impossible to pencil in a profit using traditional methods. Jeff Morse, Council Bluffs, Iowa, did that math a few years back, and he couldn't make it work.

"We were looking for a way to bring my sons, Jared and Joshua, into the operation," he said. "We initially were thinking we wanted to expand our feeder operation, but we got caught with some heifers when the market went down, so we decided to expand with a cow/calf operation. Land price was the element that made adding pasture acres a cost-prohibitive move."

Morse was looking at buying pasture for 64 cows -- a herd size that would have required around 160 acres. The purchase price for that much ground in 2011 around Pottawattamie County was a shocking $1.5 million. And Morse points out that in Iowa, those 160 acres would only have supported the cattle for part of the year.

"Providing you get ample rain and you fertilize well, you are only going to feed them from May through August [on pasture]. Maybe, if you're really creative, you get five months off those pastures. The rest of the year, you are going to have to feed hay, cornstalks or something," he said.

ANOTHER OPTION

Morse started to consider a cow/calf operation that wasn't so traditional. What about raising calves under-roof 365 days a year?

He has now pulled the trigger not once, but twice, on hoop barns designed to do just that. The first year, 2011, he added a barn with a capacity for 64 pairs; then in 2014, he put in a second barn with a capacity for 128 pairs. These systems come with the added benefit of Morse being able to reuse cornstalk residue from where cows bed down on corn and soybean ground. The residue fertilizes and aids in the soil's biological activity.

FAST ADOPTION

Brent Bryant is managing director of Hoop Beef System (www.hoopbeef.com) and a fourth-generation Iowa beef producer. The Bryant family started selling hoop barns for cattle in 2003. Today, these structures are being used by both feeders and cow/calf operators across the country.

The Bryants not only provide the barns but also expertise and even their own composite-type heifer they believe adapts especially well to the controlled environment. Cost for a structure varies based on size and customization. Bryant said a general turnkey price for a cow/calf facility can be figured at about $1,400 per pair. Estimates show there are now close to 1,000 hoop-barn systems in the state of Iowa alone.

Morse uses the Hoop Barn System, with most of his cow herd coming from the composite heifers he bought from the Bryants. He said they are half Jersey and half Gelbvieh, bred to Black Angus or Black Simmental-cross bulls. Average cost for these bred heifers in 2015 was $2,400. Prices change monthly based on the market. At press time, Bryant said bred heifers were being contracted at $2,000 each.

"A lot of people will look at you and question the Jersey, but these heifers have decent size and the hips that will take the capacity of that high-performance black bull," Morse said.

Bryant said because they don't sell just hoop barns but also breed cattle and finish 3,000 to 4,000 head of feeders annually, they know from experience what will work in a given situation. He explained the original hoop barn system (there are multiple variations, depending on what a producer needs) is 36 feet wide with a 4-foot awning over the feedbunk and a center ridge vent down the length of the building to keep air circulating. End walls and roll-up doors are steel. Lengths of buildings vary.

Life of a hoop barn is between 20 and 25 years, with the fabric guaranteed for 15 years. Morse said he has seen no unusual wear and tear on his buildings, and believes they will last longer. Bryant said they've built systems in 14 states to date, with capacities ranging from 80 to 4,000 head. Recommended stocking rate is one cow/calf pair per 2 feet of running space or 2 feet of bunk space.

"Ten years ago, we saw the first wave of cows going under-roof into a year-round controlled environment," Bryant says. "The main force behind this move was a lack of pasture, affordable or otherwise, in the Corn Belt. We take calls now from guys from Canada to North Carolina, all facing the same challenges. If I have grass, and I look at the cost for a cow/calf unit on that ground, many operators can't make it pencil out. That's why we developed this system."

NOT FOR EVERYONE

Bryant said some producers using the system are under-roof year-round, some for part of the year. It depends on the resources of each operation.

"We match those resources with the producer's goals to come up with the type of system that best fits their operation and their skill set," Bryant explained. He added a cow/calf operation under-roof is not for everyone. "When we put feeder cattle under a roof, we can hide a lot of management flaws. The buildings allow people who aren't the world's best managers to do a great job of feeding. But the opposite is true if we're talking about a cow/calf operation. If you are a below-average manager, this will expose flaws. This is not for everybody, and it doesn't solve all your problems," he stressed. "If you just want to check cows once a week, this is not the best choice for you. You will be with them every day. You will need an up-to-date vaccination program, a consulting veterinarian and a nutritionist. Those are important elements in a profitable operation. Once you have cows under-roof, it's not a hobby, it's a professional operation."

Grant Dewell of Iowa State University College of Veterinary Medicine agreed cows under-roof necessitate more intensive management. He said calves born in this environment can be more prone to scours and respiratory disease if management is anything less than excellent. The reason is partly because calves are in close proximity to each other, but it also can be due to something rare in a pasture environment—cross-fostering among cows.

"The colostrum a calf gets from its dam is so critical to the immune function of that calf the first couple of months of life," Dewell explained. "In confinement, we sometimes have problems with cows that have strong maternal instincts trying to clean other cows' newborn calves; sometimes, they will do this to two or three calves. Once they clean that calf, it will nurse them, but since that cow has no colostrum, the calf won't get the immunity it needs."

Dewell said this makes it critical that cow/calf producers working in this type of controlled environment have management in place to ensure calves are nursing from the right cow as soon as they are born.

In the hands of a good cow/calf producer, even with these type of challenges, Bryant said he has come to believe a roof can be the best tool to get the highest number of live, weaned and healthy calves. It eliminates weather losses and deaths to predators, helps ensure cows maintain the best body condition conducive to rebreeding and makes it easier to spot and treat health issues in a timely manner.

In Morse's case, breedback on the herd is at 91%. He feeds cornstalks, supplemented with distillers syrup from a nearby ethanol plant. Calves get creep feed and are weaned with their dams until moved to the feedlot.

TEMPERATURE CONTROLS

When asked how these barns are heated or cooled, Morse explained the design makes both unnecessary. In the winter, cattle are out of the wind, and the ridge vent down the top of the building releases steam that can build up and cause lung problems. The cattle stay dry and out of the elements. In the summer, Morse opens the north side of the building and allows the natural airflow to create a fan effect through the barn. He added there are no flies and no smell associated with the building thanks to its design and management that focuses on keeping everything dry inside the facility.

Morse's operation has three calving seasons balanced around row-crop work, the need to split bull usage and marketing. Those times fall around November, February and April. Asked if he can tell a difference in terms of disposition of cows under-roof and those on pasture, the producer said there is a big improvement in cows in the barn. He describes them as more docile and said, in most cases, they allow him immediate access to their newborn calves for tagging and inspection.

"I can go right up next to mom and welcome her baby to the herd," he said. "Most of these cows will let me put my hands on their heads and their hips. Honestly, it wouldn't take much for me to be able to walk up and start milking them, they have that good of a disposition. And as they get older, they just get tamer and tamer."

GROWTH AREAS

Bryant expects to see the use of controlled environments for cow/calf operations continue to increase, especially in the Midwest. While some in the industry commonly refer to these systems as confinement, Bryant stressed that paints the wrong picture.

"'Confinement' as a word has a lot of negative concepts," he said. "We are putting cows in a controlled environment where they have cornstalks to lay on; they aren't in the mud or the snow or the rain. It is absolutely the best maternal environment you can give a cow. We give her the exact food she needs. Our goal is that she never have a bad day. Even when we wean calves, it is a totally nonstressful event. They are already eating, and they are weaned nose to nose with their dams."

There's one more plus to the system, Morse said, that often goes unsaid. He believes it's about as green of a system as exists thanks to the use of the decomposed cornstalks from his fields.

"Before, we'd leave cornstalk residue on the ground," he said. "It takes about five years for it to completely decompose into the soil. If we take that residue off to feed and bed our cows, and then haul it back and spread it on the same ground, we've helped speed up nature's process, and we've improved the soil. We are, in essence, utilizing a waste product, and we don't have to buy commercial fertilizer. I believe that savings alone will pay for these barns. That is green. It's a win-win for me."

(AG/BAS)

GMOs: A Sweet Debate

Mon. May 23, 2016 11:53 AM


By Chris Clayton
DTN Ag Policy Editor

OMAHA (DTN) -- U.S. sugarbeet industry leaders question USDA's decision last week to increase sugar cane imports due to "uncertainty" surrounding GMO labeling issues. Industry representatives note the imports were needed more to deal with growing complications with sugar imports from Mexico.

Sugarbeets are in the bullseye of the national GMO debate. Some are calling for a national law that would preempt Vermont's mandated labeling law from going into effect. Some companies have announced they will use their own labels while others are changing ingredients -- reformulating -- to avoid having a GMO label on their food.

When USDA announced on Wednesday it was allowing 200,000 tons more raw cane sugar into the U.S., the department stated, "America's beet sugar producers have made significant investments in a strong 2016 crop, but they continue to face uncertainty." USDA lifted some tariff restrictions and quotas "to maintain an adequate sugar supply in an uncertain market. This uncertainty is in part due to inaction on GE [genetic engineering] labeling legislation and lack of consumer information about genetic technology."

At a Senate Agriculture Committee hearing on Thursday, Sen. Thom Tillis, R-N.C., asked representatives from the Farm Credit Administration if they have factored in the risk of food-company formulation changes affecting the finances of farmers and processors.

"This represents a major risk in demand for the future," Tillis told the Farm Credit witnesses. Tillis added that ingredient reformulation by major food companies would shut down demand for commodities, specifically sugarbeets.

David Berg, president and CEO of American Crystal Sugar, said he wants to shoot holes in some of the comments being made about the sugarbeet industry, but he acknowledges sugar is unique because it's the one food item with two distinct GMO and non-GMO production methods.

"Sugar is on the tip of the spear, because there is no other crop or food ingredient that I can think of where a buyer can simply say, 'I want non-GMO so I will simply go to cane sugar,'" Berg said. "You can't do that with corn in most instances. You can't do that with vegetable oil or some other products. It doesn't mean they aren't there, but the products aren't as readily available as sugar cane."

Berg said some false statements about a decrease in sugar orders have been made as Washington lobbyists try to push the Senate into action. The sugarbeet growers trade association shows sugarbeet demand is down about 2.2% from two years ago, he said. USDA, in numbers reported last week, shows sugarbeet deliveries and exports combined were down 5% in 2015 from 2014, and down about 3.3% from two years ago.

"Beet sugar demand is not down, because it will go up or down based on the size of the crop," Berg said. "We feel we have lost 2.2% of our total customer volume to cane sugar for GMO reasons -- 2.2% of our volume has switched to cane because of GMO reasons." In addition, Berg said there has been some reduction in beet sugar deliveries in 2016.

Duane Grant, who grows about 7,000 acres of sugarbeets near Rupert, Idaho, is chairman of the board for Amalgamated Sugar, the nation's second-largest sugarbeet processor, behind only American Crystal. Grant said the issue of GMO reformulation is overblown. The potential uncertainty is causing some customers to postpone purchasing decisions, but beet refiners continue to run at capacity.

"Everyone is running at capacity in our system on the beet side," Grant said. "Any representation that we on the beet side of the sugar market have not been able to move all our sugar to market is just inaccurate. We have been able to move our sugar at prices right on par with cane."

Grant noted there is a price difference right now between cane and beets. USDA's Economic Research Service, tracking prices from Milling and Baking News, has reported a spread in the spot price for sugars from 3 cents to 5 cents. As of May 6, sugarbeets were at 30 cents to 31 cents a pound while cane was at 33 cents to 36 cents. That's one of the larger spreads, but not the largest since early 2012.

"Some customers have said if cane is tough to get, they would be happy to switch to beets and get a price break for it," Grant said. "So the market is still evolving."

As a grower, Grant said he believes the GMO labeling debate distorts the understanding that biotech sugarbeets grow in a more environmentally friendly way. Grant said farmers make eight to 10 fewer passes over the field planting glyphosate-resistant sugarbeets. Further, they aren't spraying multiple different herbicides that generally had restricted uses, required sprayers to have licenses, and wear special gear.

"The change was just dramatic. We were able to park our plow and go to no-till farming techniques. We were able to close the door on the insecticide and herbicide shed and stop using a mixture of six or seven different herbicides."

IMPORTS AND CANE REFINERS

Luther Markwart, executive vice president of the American Sugarbeet Association, said there are two different issues regarding the raw sugar market for cane refiners and the GMO reformulation issue.

USDA's order to increase imports of cane sugar by 200,000 short tons included 60,000 tons from Mexico. Another 140,000 will come from any countries already holding a quota to export sugar into the U.S. USDA said there was a 500,000-ton shortfall in the U.S. sugar cane production.

Last fall, the U.S. International Trade Commission (ITC) ruled that subsidized Mexican sugar imported into the U.S. dragged down the prices for U.S. sugar growers. The trade commission ruled to keep specific Mexican export quotas that maintain a stocks-to-use ratio of 13.5%.

Sugar importers were upset over the trade commission's ruling last September, but the U.S. sugar industry praised it, expecting it would hold the limit on Mexican imports.

The U.S. imports 1.3 million to 1.7 million tons of sugar from Mexico annually, but U.S. sugar growers complain because the Mexican sugar industry isn't willing to ship enough lower-quality sugar that can be further refined by U.S. refineries. Those U.S. refiners then become starved for business and push for further imports of raw sugar to keep operating.

"Our cane refiners are being harmed because of the Mexicans aren't supplying those refineries with enough sugar," Markwart said. ... "You have just got to make sure that mix is right of how much refined sugar is coming up and how much [raw] sugar is coming up to feed those cane refineries. And they have just got to find a way to fix it."

According to the latest World Agricultural Supply and Demand Estimates, the U.S. is already set to import 3.48 million short tons through various country trade quotas -- up 7% from the 2015-16 crop year. The total includes 1.758 million tons from Mexico, which will increase its exports to the U.S. for 2016-17 by 26% over last year.

While the imports are up, total U.S. sugar supply is projected down compared to a year ago by 46,000 tons to 13.932 million short tons. That's due mainly to a 6% decline in projected U.S. cane production for the 2016-17 year.

All of those WASDE numbers come down to U.S. total use for 2016-17 at 12.275 million tons and ending stocks at 1.657 million tons, a potential final stocks-to-use ratio of 13.5% -- the goal set by the ITC. With a boost in 2015-16 ending stocks, and new-crop beginning stocks, the 200,000 tons of extra imports have the potential to move the 2016-17 stocks-to-use ratio to just above 15.1%.

The Sweetener Users Association welcomed USDA's decision to increase raw sugar imports by 200,000 tons, declaring it would ease "uncertainty in the U.S. sugar market caused by America's broken sugar policy." The U.S. Sugar Alliance, which represents both cane and beet growers and processors, was lukewarm to USDA's decision, stating that the department has a challenging job given the pressures from food processors to lower prices, more subsidized Mexican sugar being sold globally, and the "unstable conditions on the heavily-subsidized world market."

IMPACT OF GMO LABELS

Industry leaders note sugarbeets are facing some turbulence because of the lack of a federal bill on biotech food labels. So companies are switching to cane to avoid putting on a label in Vermont.

"The impact of that today is relatively small, but it is something that could grow and it has grown a bit already," Duane Maatz, executive director of the Red River Valley Sugarbeet Growers Association, said. Industry leaders are concerned about how refined sugar from sugarbeets would be treated under a GMO label law.

A National Academy of Sciences report released last week declared there are no added health risks from foods derived from genetically engineered crops. Still, the report also looked at other issues and noted food companies in Europe reformulated food products to avoid using a GMO label.

"That would be exactly the concern we would have," Maatz said. "Is that going to happen? I don't know. We think there has been more acceptance of GMO in the market."

Sugarbeet growers have been highly critical of chocolate manufacturer Hershey's for announcing last December that it was moving completely away from sugar refined from beets. They are doing so, even though there is no distinction between cane and beet sugar. Scientific studies have sought to distinguish refined sugar from glyphosate-resistant beets, non-GMO beets and sugar cane. They can't tell the different because the final extracted sucrose is the same. http://dld.bz/…

Markwart said the sugarbeet industry went through great pains in 2006 before converting to glyphosate-resistant sugarbeets to test samples from all over the world in an effort to show food companies and confectioners that the refined sugars from cane and beets are identical.

Vermont's law was scheduled to go into effect on July 1 and could fine manufacturers up to $1,000 for failing to label products. The state legislature there is advancing language that would delay a key part of the enforcement provision of that law for at least one year and at least prevent companies from putting labels on food that might be shipped before July 1.

"If Vermont were more the rule of the land, it would be a bigger problem," Markwart said. "But it's more of a minor issue now, but long-term if you don't get something that supersedes or preempts Vermont, then you've got a long-term problem."

Australia, New Zealand and Japan all have labeling laws for foods from genetically-engineered crops, but actually exclude products made with refined sugar from the U.S. because of the lack of difference in sugar.

"Part of this is American agriculture has not educated American consumers the way they should have," Markwart said. "It was always someone else's job to do and then you have got activists, frankly, out there scaring people and drive this out of the food system."

Chris Clayton can be reached at chris.clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

(CZ/BAS)

Don't Forget IRS' Share

Mon. May 23, 2016 11:49 AM


By Marcia Zarley Taylor
DTN Executive Editor

DENVER (DTN) -- Ag lenders are promoting leasing as a way to help farmers get financially fit. Equipment dealers need to keep moving inventory in the midst of a farm recession. But the pressure to lease equipment also is exposing many farmers to credit misunderstandings and unexpected tax bills just at a time they can least afford to write the IRS a five- or six-figure check, warned some of the 200 attending an agricultural meeting of the American Institute of CPAs this week.

"Due to lower crop prices and economic conditions, farmers have been enticed to 'trade in' their fully depreciated equipment for a lease of new equipment," said Paul Neiffer, a CPA with CliftonLarsonAllen in Kennewick, Washington, and a conference instructor. Depending on the type of lease, this can result in unintended tax consequences to the farmer, Neiffer added, sometimes to the tune of $100,000 or more.

Jim Reeve, a manager for Latta Harris CPAs in Tipton, Iowa, counts half a dozen clients in the last few months who traded owned farm equipment for what turned out to be "operating" leases -- essentially tax lingo for lease-rentals with no bargain purchase price at the end of the lease term.

"The way they understood their machinery dealers, they thought they were trading equipment as a down payment on a lease," Reeve said. "They were surprised when we looked at the contracts and had to tell them, no, this wasn't a trade. It was a sale and they owed IRS for all their depreciation recapture in the year of the trade."

In a sale, a fully depreciated combine with a market value of $200,000 could trigger $70,000 in state and federal taxes, Neiffer estimated.

SHELL SHOCKED

Imagine the shock when a Pennsylvania farmer learned the damages from Mike Peachey, a CPA who heads ag services for Acuity Advisors and CPAs in Lancaster, Pennsylvania. His client understood he was trading owned equipment for a "capital" lease, one that simply financed the ultimate purchase of the new equipment. He expected to be able to use Sec. 179 depreciation to write off up to $500,000 on the new acquisition. Instead, Peachey interpreted the contract as an operating lease that triggered a surprise $100,000 tax bill. There was no immediate $500,000 write off, either.

The confusion stems from the complexity of lease contracts and the terminology that calls contracts leases when some are more like rentals and others resemble purchase contracts with built-in financing. "Failure to understand the differences can be catastrophic," Peachey said.

The problem is exacerbated by the fact that many operators fully depreciated farm equipment with Sec. 179 or bonus depreciation during the heyday of peak commodity prices. When they trade in the owned equipment for an operating (rental) lease, they trigger an immediate recapture of depreciation on the full market value of the equipment. "It's tantamount to a sale," Peachy added.

Here are examples Neiffer gave on why it pays to understand the type of lease you are signing.

CAPITAL LEASES

If a farmer enters into a capital lease, IRS treats this as a purchase of new equipment. The traded equipment is eligible for like-kind exchange treatment, generally resulting in no gain or loss, Neiffer said. However, since the transaction is treated like a purchase, the equipment is depreciable and the lease payments are not expensed.

Say Larry trades his three-year-old John Deere tractor worth $100,000 for a new S680 on a capital lease. The total present value of the lease payment is $400,000. Larry will recognize no gain on the transaction and have a depreciable basis of $300,000 in the new S680.

OPERATING/FINANCE LEASES

Larry trades in a three-year-old John Deere tractor worth $100,000 for a four-year operating lease on a new John Deere S670 combine. The tractor originally cost $200,000 and has been fully depreciated. Larry will owe regular income taxes on a gain of $100,000 this year but will be able to deduct a $25,000 lease expense each year for the next four years to partially offset this bill.

"In essence, the farmer will get to amortize the cost of the trade-in over the life of the lease, but it's a question of timing," Reeve said.

With so much confusion reigning over leases, CPAs highly recommend that clients ask for a lease review before documents are signed. That way, there will be no surprise tax bills post mortem.

Do farmers normally ask for tax advice before they make an equipment deal? "Heck no, it's usually after the fact," said Latta Harris' Reeve. "But we definitely need to get the word out. There will be a lot of this the next few years. Equipment dealers are starting to feel the sales slump and farmers need to reduce their costs."

Marcia Taylor can be reached at marcia.taylor@dtn.com

Follow Marcia Taylor on Twitter @MarciaZTaylor

(AG/CZ)

Changing ARC-County Formula

Fri. May 20, 2016 11:06 AM

By Jerry Hagstrom
DTN Political Correspondent
and
Chris Clayton
DTN Ag Policy Editor

WASHINGTON (DTN) -- State Farm Service Agency offices will get some say in evening out uneven or imbalanced county yield data under the Agricultural Risk Coverage ARC-County program through a potential pilot program.

Sen. John Hoeven, a Republican from North Dakota, added an amendment to USDA's funding bill on Thursday that would create a $5 million pilot program to change ARC-County payment calculations for the 2016-17 crop.

If Hoeven's amendment makes it into the final 2017 fiscal year budget for USDA, the department will be required to provide state Farm Service Agency offices with a role in adjusting county yield determinations for the ARC program. In a news release, Hoeven stated that if the FSA office finds disparities in county yields, then the office would be allowed to change them using a different calculation method.

Essentially, FSA would ensure a more even distribution of farm-program payments across the state. Complaints over payment distribution have come from several states. Iowa's senators wrote FSA earlier this month asking for some clarification on how ARC-County payments are calculated.

North Dakota Corn Growers was among the first groups last fall to raise issues with the Farm Service Agency over disparities between counties on the 2014 payments issued last fall. The group argued farmers in the state lost out on $14 million to $15 million in payments because of disparities in yields from county to county.

"The North Dakota Corn Growers are very appreciative of Senator Hoeven's leadership on the ARC county payment issue in urging USDA to find a fair method to calculate ARC," said Carson Klosterman, president of the North Dakota Corn Growers. "Today's passage of Hoeven's amendment is an important step forward in making sure farmers don't face the same yield disparities in crop year 2016 that they have experienced in the 2014 crop year, and we hope the Hoeven amendment sends USDA a strong message that it needs to find a solution for the 2014 and 2015 crop years."

FSA relies on county yield data from the National Agricultural Statistics Service from its annual yield survey sent to farmers across the country. To use that NASS data, however, reports from the NASS county surveys need to account for at least 25% of the acreage in a county and at least five farms in the county as well.

Hoeven stated that if NASA data creates a "substantial disparate" result, then FSA should look at yield data from neighboring counties, as well as look at data from the Risk Management Agency or NASS district data.

FSA has stated the agency already turned to the Risk Management Agency to get the 2014 yield in counties where NASS did not get enough information to make an accurate calculation. RMA calculates yield by taking total production of crop insurance records and dividing that production total by the number of insured acres in the county. If there is not enough RMA data to make a determination, then FSA uses district yield data and in some crops turns to state yield information.

The Senate Appropriations Committee on Thursday approved the fiscal year 2017 Agriculture appropriations bill with several provisions and amendments that were not in the bill approved by the Senate Agriculture Appropriations Subcommittee on Tuesday.

The full committee roll call vote was 30 to zero in favor of the bill.

Senate Agriculture Appropriations Subcommittee Chairman Jerry Moran, R-Kan., added several amendments in a manager's package.

An amendment from Sen. Lisa Murkowski, R-Alaska, would continue the ban on the commercialization of genetically modified salmon if the salmon is not labeled. She also wants the Food and Drug Administration to change the labeling of golden king crab to avoid confusion with crab caught in Russian waters.

Another voice amendment offered by Sen. Tom Udall, D-N.M., would ban the inspection of horse meat intended for human consumption.

Committee Republicans and Democrats each posted summaries of the bill.

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

(CC/AG)

Tweets From the Field

Fri. May 20, 2016 10:36 AM

By Emily Unglesbee
DTN Staff Reporter

ROCKVILLE, Md. (DTN) -- Finally, a good excuse to spend time on Twitter!

University Extension scientists are hoping to harness the power of farmers on Twitter to track the spread of corn and soybean diseases this summer.

Led by Iowa State University plant pathologist Daren Mueller, the tweet campaign is the first step in a larger effort to better identify and track agricultural diseases. A crowdsourcing website is under construction to create a place where growers can report and identify diseases, and scientists hope to use disease tweets to create real-time maps of diseases in the field.

The ultimate goal is a predictive service for the spread of crop diseases much like the weather forecasting industry, Mueller said. The project is funded by iPIPE, the Integrated Pest Information Platform for Extension and Education.

For now, Mueller and his colleagues are urging growers to whip out those smartphones in the field during scouting trips this summer.

Two Twitter handles have been created for the campaign. Growers should direct their disease tweets to either @corndisease or @soydisease, and they can follow those accounts to see what diseases are being tweeted.

When you find disease symptoms in your field, take a close-up picture. Then compose a tweet that includes the corn or soybean disease handle, the county and state your field is in, and the disease you believe you've found.

"The goal is for this to become a normal thing to do while scouting," Mueller told DTN. "If we get enough information, modelers could use it to develop some predictions."

Mueller and his IPM team will sort through the soybean disease tweets and University of Kentucky plant pathologist Carl Bradley will curate the corn disease ones. The scientists will use the tweets to create maps of diseases moving across the country, county by county.

The picture quality will be important, Bradley noted. "It won't be error-free," he said of the campaign. "We can't always give 100% accurate diagnosis with a picture, but with a good picture, we can usually tell the difference between gray leaf spot, northern corn leaf blight and southern rust on corn, for example."

The Twitter disease campaign will probably be most useful for rust diseases that spread quickly, such as soybean rust and southern corn rust, the plant pathologists noted.

Both diseases are of particular concern this year. Soybean rust has moved north early this spring, and conditions are favorable for the disease to thrive this year.

Southern corn rust especially would benefit from real-time tracking, Bradley said. Most hybrids are susceptible to it, and the disease has gotten an earlier start than usual the past few years, which permitted it to infest fields as far north as Illinois in 2015.

"Rust diseases like southern corn rust and soybean rust blow in from the South, so if we know what's going on to south of us, it gives us a heads up," Bradley said.

Bradley hopes the disease tweets could also alert growers to the presence of certain diseases in their area, and spur them to scout and manage diseases they might not have noticed otherwise.

Work is still ongoing for a crowdsourced website for disease tracking and identification, which will allow growers to upload and identify disease pictures from their own fields and keep tabs on the spread of diseases around the country.

The Twitter campaign, however, commences immediately. You can find the Twitter handles here: https://twitter.com/… and here: https://twitter.com/….

So as soon as those crops get out of the ground, start scouting and tweeting. "The more information we get, the better this will work," Mueller said.

For more information on the iPIPE program behind this campaign, see the website here: http://ed.ipipe.org/….

Emily Unglesbee can be reached at emily.unglesbee@dtn.com

Follow Emily Unglesbee on Twitter @Emily_Unglesbee

(PS/AG)

Drainage Plight

Fri. May 20, 2016 7:24 AM


By Todd Neeley
DTN Staff Reporter

OMAHA (DTN) -- Onion farmer Chris Pawelski's farm near Warwick, New York, is in a regulation no-man's land of sorts. It's a place where any farmer could end up if regulatory boundaries are muddled or existing state law not enforced.

Pawelski can hardly find a government agency to protect his drainage ditch.

He once lobbied Congress against the waters of the United States rule now hung up in federal court. Ironically, Pawelski said he now would give anything for the U.S. Environmental Protection Agency and the U.S. Army Corps of Engineers to provide some regulatory oversight.

Federal agencies have shown no interest in taking a look at work done by a neighbor who built an access road and wall in the center of a drainage ditch on Pawelski's property under the auspices of an easement dating back to the 1930s. The wall basically wiped out 80% of the drainage capacity of Pawelski's ditch, but he can't get anyone to do anything about it.

"EPA and the Army Corps of Engineers refuse to act in any regulatory capacity," Pawelski said.

The Warwick Township granted a permit to allow work on an access road that severely altered the flow of Pawelski's ditch which drains some 175 acres, including 19 on his farm in a mucky southeast region of the state. If a current dry spell ends, Pawleski said, it could easily lead to some $70,000 in crop losses from flooding on his property.

Given the ferocity EPA and the Corps have displayed around the country going after landowners over Clean Water Act violations, Pawelski is dumbfounded that regulators have chosen to ignore his battle over the drainage ditch.

Pawelski and his neighbor, who did not respond to DTN for this article, have had various disputes over the years.

Pawelski filed suit against the town and the neighbor and continues to explore his legal options. A court has since affirmed the easement is valid, but has left open a possibility the neighbor may have trespassed on Pawelski's property in doing the work.

"Not only does this affect me and my property but it affects all my neighbors upstream and any farmer who relies on these laws and protections to farm. This could happen to anybody."

Pawelski contacted Sen. Kirsten Gillibrand, D-N.Y. She reached out to officials at the EPA and the Corps of Engineers. The agencies responded to the senator in October 2015, according to letters to Gillibrand acquired by DTN.

The Corps said because Pawelski's neighbor has an "established farming operation, construction of this road in waters of the United States is exempt from regulation."

EPA said a permit wasn't needed if the "discharge of fill material is associated with 'normal farming' such as plowing, cultivating, minor drainage, construction and maintenance of farm and forest roads..."

Maintenance of drainage ditches generally is exempt from the Clean Water Act. The new waters of the U.S. rule -- now tied up in federal court -- could put more ditches under jurisdiction if they connect to rivers, tributaries and other waters of the U.S.

The Pawelski ditch drains directly into Quaker Creek, a main tributary of the Wallkill River.

FEMA INVOLVEMENT

The New York Department of Environmental Conservation did not respond to multiple requests by DTN for clarification about state law.

Paul Ruszkiewicz, Pawelski's representative in the County Legislature and chairman of the Wallkill Valley Drainage Improvement Association, http://bit.ly/…, did not respond to DTN's multiple requests for comment.

Michael Sweeton, Warwick town supervisor, http://bit.ly/…, told DTN he is frustrated about the state's lack of action. Sweeton noted a drainage district law created in the 1930s clearly puts the Department of Environmental Conservation in Charge of ruling on such issues.

"They, to date, have refused to act in this capacity in this case," Sweeton said. "The town was the only agency to take any action to ensure the law was followed. I understand Chris' anger but against the town I think it is misplaced."

Sweeton told DTN the easement gave Pawelski's neighbor right of ingress and egress on the land that includes the ditch. The path and use of the ditch, Sweeton said, has changed during the years. The neighbor decided to fill in the ditch initially in an attempt to create a path wide enough for access to his farm fields behind Pawelski's land.

Sweeton said the town is the flood plain administrator according to state regulations. The town required the neighbor to do an engineering analysis and the town accepted the conclusion the project would not impede drainage ditch function.

"All of this was presuming he (the neighbor) had the right to do any work there," Sweeton said. "That right was presented as the easement granted in 1930. Our attorneys reviewed this and opined that indeed it was valid."

The Federal Emergency Management Agency, or FEMA, is looking into the situation since the ditch is in a designated flood plain.

STATE LAW

State environmental conservation law has very clear language forbidding unlawful interference of drainage works.

A conservation and management plan for the Wallkill River watershed where Pawelski's farm resides also lays out protections for drainage ditches. The 16,000-acre region was designated as an agricultural drainage district by the state in the late 1930s.

An engineer hired by Pawelski determined the ditch would need to be moved and widened by 20 to 30 feet to match the previous drainage capacity.

A rough sketch submitted to the local township by the neighbor shows the walls were to be installed to abut Pawelski's ditch. Instead, the walls were installed well into the channel.

The designation allowed for the planning and construction of a network of drainage channels and established legally binding requirements for the maintenance of the channels.

Laying out the local, state and federal laws on drainage districts, Pawelski is angry that no regulatory agency is willing to protect the initial purpose of the drain ditch.

"I keep asking everyone at every level of government, 'where is the adult in the room?'" he said. "Not only does this affect me and my property but it affects all my neighbors upstream and any farmer who relies on these laws and protections to farm. This could happen to anybody."

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on Twitter @toddneeleyDTN

(CC/CZ)

Foliar Madness

Thu. May 19, 2016 3:15 PM


By Daniel Davidson
DTN Contributing Agronomist

Micronutrients are getting more attention thanks to farmers doing more routine soil testing and plant analyses. Those tests show more micronutrient deficiencies even though farmers might not see foliar symptoms in the growing crop.

Applying micronutrients also is making more economic sense because today's higher yields remove more micronutrients from the soil and many of today's commercial fertilizers contain less residual micros.

The questions many farmers ask center on how to best determine a deficiency, and if found, whether to apply micronutrients on the seed, in the soil or to foliage. The best time, of course, is to apply before a deficiency occurs (seen or unseen).

There are eight nutrients that crop plants need in very small quantities; boron (B), chlorine (Cl), copper (Cu), iron (Fe), manganese (Mn), molybdenum (Mo), nickel (Ni) and zinc (Zn). Soil and plant tests measure them in parts per million instead of a percent and constitute, in total, less than 1% of the dry weight of plant biomass. A soil application rate is typically less than 10 pounds per acre.

Most growers are already aware of the importance of adding zinc to corn and manganese to soybeans. Boron is now getting more attention as well.

DISCOVERING THE LEVEL

It is easy to get soil micronutrients levels, it's just an additional measurement during standard N, P and K soil tests.

However, micronutrient soil tests aren't reliable predictors of a crop response especially when test levels are low to medium. In those cases an actual crop response to micronutrients depends on the crop grown (corn responds to zinc, soybeans more to manganese) as well as soil characteristics that affect nutrient availability including pH, organic matter, soil texture, and soil phosphorus levels.

Plant tissue testing uncovers unseen deficiencies, nutrient imbalances and even toxicities. Tissue testing is easy and measures the concentrations of nutrients taken up to date and scores the values as deficient, sufficient or excess. Since crop deficiencies can exist without visible symptoms, tissue tests are a good check on whether soil resources and your fertility program are providing enough nutrients to the crop.

Combining soil and tissue tests can help answer the question of how and when to apply micronutrients.

Soil applied: Historically the most common method has been soil application. It's a natural next step when soil tests show overall deficiencies. Micronutrients can be blended with commercial fertilizer at a retail plant, manufactured with other nutrients (such as with Mosaic's MicroEssentials) or offered as a granule coating (such as the WolfTrax EvenCoat line). Micros can be added to either granular or fluid fertilizers, and applied either broadcast or banded (including popups.) Including micronutrients with fertilizers is convenient, enables uniform distribution and reduces application cost.

Seed-applied: Seed treatments are an attractive way to deliver small amounts of micronutrients. Any micronutrient seed treatment can improve stand establishment, speed up early growth and development and overcome short-term spring nutrient deficiencies. The limitation is that seed companies today are loading the seed with so many pesticides, inoculants and biologicals that adding the necessary amounts of micronutrients may not be practical.

Foliar applied: It's become more popular to apply some type of foliar spray, which might include micronutrients, growth regulators and carbon. Most of the foliar micronutrients are soluble and chelated inorganic salts and easily taken up across leaf surfaces. Foliar sprays are uniform, applied at lower rates than soil application and can be combined with pesticide passes. Crops respond immediately by taking up and banking these nutrients in their tissue rather than relying on roots to access them. There is a risk of some leaf burn and the plants are limited in how much they can absorb, so foliar applications can't overcome soil deficiencies of macronutrients.

Rely on soil and tissue tests to guide application to get a return on your investment.

Dan Davidson can be reached at AskDrDan@dtn.com

Follow Dan Davidson on Twitter @dandavidsondtn

(GH/SK)

Growers Cotton to Incentives

Thu. May 19, 2016 2:22 PM


By Elton Robinson
Progressive Farmer Special Correspondent

Excitement for cotton has been palpable this spring in the Buffalo Island region of northeast Arkansas. Bags of cottonseed filled retail warehouses and local gins geared up for a big season early based on falling prices in competing commodities and generous gin rebate and equity programs for cotton.

Sam Wilson, who runs the Monette Cooperative in Monette, Arkansas, said area cotton producers booked about 31,000 acres of cotton with the cooperative this year. If cotton yields reach the typical average yield for the four-county region, it could mean somewhere in the vicinity of 65,000 bales of cotton running through the cooperative's three Cherokee gin stands this fall. The cooperative ginned a little under 23,000 bales in 2015.

"This is the most interest I've seen in cotton in Buffalo Island in 11 years," Wilson said.

At Monette Cooperative, the equity program for producers is a hefty 16.5 cents per pound. Gin rebates have averaged 15.3 cents per pound over the last five years. The gin rebate fell to 8 cents last year, but Wilson expects this year's to be higher. The gin rebate for 2016 won't be determined until March 2017.

Gin rebates are generated by profits from the cooperative's enterprises, including its farm supply store, fuel sales, NAPA parts sales, cottonseed sales from the gin and rental income from Crop Production Services, which operates in the complex.

Merchants offer equities for cotton to buy it out of the CCC loan program. Equity programs can be offered prior to the season based on factors such as the perceived value of the cotton in the open market, the LDP, warehouse charges and quality of the cotton. Such programs are also valuable to lenders considering farm production loans.

Cotton producers who sign up for the equity program place their cotton in the CCC loan program where they can capture around 52 cents for their cotton, and more if it exceeds base quality. In 2015, the average loan price in the region was 54.85 cents. With equity and gin rebates hopefully totaling 24 cents a pound or higher, a farmer can land a cotton price of 76 cents to 78 cents or more.

That was incentive enough to stir interest among farmers since futures prices were sitting around 60 cents a pound at planting. Dennis Gathright, cotton producer and president of the board of the Monette Cooperative, said producers responded because spring corn and soybean prices were below the cost to produce them in the region, while cotton, with incentives, was closer to breakeven.

"In some ways, cotton is the lesser of the evils," Gathright said. He planted most of his acres in cotton this year.

Producer Michael Mangrum, who is secretary of the board at the cooperative, said he will plant all his acreage in cotton in 2016 after a year in which grain yields and prices disappointed.

In early spring, producer Darin Owens, vice president of the board at the cooperative, was a lone holdout, thinking about going with peanuts over cotton. "We're in the middle of some of the best peanut ground in the United States," said Owens. "In cotton, on our farm, we've had a couple of disasters -- a hailstorm and bacterial blight in the cotton left a bad taste in my mouth. Cotton doesn't look attractive to me. Peanuts do."

Seconds later, Owens shook his head and appeared to change course. "This cooperative deal is very attractive. I'm still blowing in the wind over it." Eventually, Owens decided to plant 120 acres to cotton.

Wilson believes a cotton price of 80 cents per pound can be profitable for producers. "A lot depends on the lint per acre. If a farmer makes 1,000 pounds per acre, that's marginal. But if he can make 1,200 pounds to 1,500 pounds, then he's making money," he said.

MERCHANT BUY-IN

Sam Clay, a trader with Olam Cotton, in Memphis, worked with Wilson to construct the equity program for the cooperative. After ginning, the cotton is transported immediately to Olam's facility in Memphis. As classing information comes in, Kathi Watters, who runs Harvest LSA, a subsidiary of Olam Cotton, will place the cotton in the loan and funds in producers' hands within 24 to 48 hours.

At that point, Olam will be the subholder of the receipts and the Commodity Credit Corporation will be the holder of the receipts. Olam will then have approximately 10 months to decide when it is best to "redeem" the cotton from the loan. All charges including the loan value must be paid to allow this. Afterwards, he may also take positions in the futures markets for hedging purposes.

"When they deliver the cotton to us, our cash outlay is only the equity portion," Clay said. "So right then, you're looking at a financing benefit. It allows us be a little more creative with our money."

A warehouse rebate from Olam Cotton also figured into the equity program at Monette thanks to some creative thinking by Clay and Wilson. Warehouse rebates in the Midsouth are typically 5 cents to 6 cents per pound, which are paid to gins for their choice of distribution. In Monette Cooperative's case, Clay rolled it into the producer's equity program on the front end.

Because the cooperative owns the gin, "the gin pays it back to farmers anyway, so we might as well get it all on the front end," Wilson said.

Equity programs and gin rebates can be risky because some aspects of them, the price of cotton and cottonseed for example, do fluctuate. Still, the programs reward producers, gins and bankers, who see them as a tangible asset for lending purposes, and cotton merchants like Clay, who too often compete against one another for a shrinking amount of cotton.

COTTON IS CONTAGIOUS

"We are absolutely thrilled at the opportunity this has given us," Gathright said. "That's not just for the cooperative but for the community. I think people just feel better when cotton is out here. We're farmers. If we're making money, we're spending it. A little spark of upbeat news, it makes everything go better."

"This is just cotton country," Wilson adds. "Producers want to raise cotton if they can make money at it."

USDA's March 31 Prospective Plantings survey indicated that the incentives could be having an impact. Midsouth producers reported intentions to plant 1.435 million acres to cotton this year, a 46% increase over last year's 985,000 acres.

The biggest percent increase is expected in Arkansas, where acres increased from 210,000 in 2015 to over 330,000 estimated for 2016.

While the rebound is impressive, cotton acres in the Midsouth are still off from the 2.475 million acres planted in 2011, when prices hit over a dollar a pound. That year, Arkansas planted 680,000 acres to cotton.

Wilson said it takes a team effort -- from suppliers to merchants -- to maximize the equity program and gin rebates for producers. "We at the cooperative realize that if we don't make a profit, we don't have a job. That's the way it works. The more that we can do to help the farmer, and the better prices we can offer, the more profits we can offer back."

(BAS)

Brazilian Farmers Sell 2016-17 Soy

Thu. May 19, 2016 2:17 PM


By Alastair Stewart
DTN South America Correspondent

SAO PAULO, Brazil (DTN) -- Brazilian farmers have jumped into the soybean market in recent weeks and sold an unusually large portion of the 2016-17 crop only a short time after they harvested the last crop.

According to Celeres, a local grain consultancy, farmers have committed to sell 16.4% of the projected 2016-17 crop, up significantly on the average of 5% sold at this stage over the last five years.

Last year, it took farmers until July to forward sell the same amount of crop, which goes into the ground starting in September.

Most of the soybeans are sold in Brazilian reals, via barter deals, in which the farmer books inputs in return for delivery of the resulting crop, said Celeres.

Farmers sought to take advantage of the recent surge in international prices, at the same time locking in foreign exchange risk for the next season.

Another factor prompting farmers to sell is the economic crisis. High interest rates and limited credit availability are forcing growers to seek alternative sources of operating credit, said Celeres.

The terms of exchange for future soybean delivery in return for inputs are currently attractive. In Mato Grosso, the input costs for 2016-17 soybeans are currently around 28 60-kilogram bags per hectare (25 bushels per acre) compared with 35 bags in May 2015, according to the Mato Grosso Agricultural Economy Institute (IMEA).

Of course, there are also farmers playing the market, keen to fix prices before the weight of the U.S. 2016 crop starts to bear on prices.

Meanwhile, exporters and crushers have chosen to be more aggressive in securing soybeans than usual amid expectations that supply in early 2017 will be tighter than previously thought. Carryover stocks are seen lower after losses to 2015-16 crops in Mato Grosso and the northeast and a very strong start to the 2016-17 export season following losses in Argentina.

The brisk future soy trade over the last month is a strong indicator that Brazilian soybean area will indeed continue to expand next season, although likely at lower levels than in recent years.

Alastair Stewart can be reached at talk@dtn.com

Follow him on Twitter @Astewartbrazil

(CZ/AG)

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