ARC Yield Lawsuits Possible

Tue. Feb 09, 2016 11:49 AM

By Chris Clayton
DTN Ag Policy Editor

OMAHA (DTN) -- Law firms and grain marketers are pushing for possible legal action against the U.S. Department of Agriculture over the way USDA came up with the final county yield totals for the Agriculture Risk Coverage program.

Complaints have festered since last fall when the Farm Service Agency released the final 2014 payment rates. Payments weren't as high as projected in some counties around the country, especially in areas with high yields for particular crops.

A caveat to the 2014 farm bill is that it requires the Farm Service Agency to calculate yearly county yields for ARC-County payments. Therein lies the problem. At least a couple of law firms and others are holding meetings with farmers in parts of the Plains and Midwest to argue that FSA did not accurately calculate county yields.

"We've had a lot of inquiries, a lot of questions from producers in eastern Colorado, Kansas and other states as well where they believe FSA did not follow the proscribed procedures in determining county yield," said Jeff Todd, an attorney in Oklahoma City for the law firm McAfee & Taft.

ARC-County and Price Loss Coverage were created in the 2014 farm bill and farmers were given a choice of which program they wanted to enroll individual commodities in for the life of the farm bill. Farmers enrolled roughly 96% of soybean base acres and 91% of corn base acres in ARC-County.

Producers are used to direct payments that allowed them to go to bankers and point to a consistent, steady payment. Under ARC, potential government payments could vanish for counties, districts or states that see bumper crops.

USDA has paid out roughly $4.4 billion for ARC-County, of which $3.7 billion went to corn farmers. PLC has paid out about $756 million, mainly to long-grain rice and peanut farmers.

Farmers in just three states -- Iowa, Minnesota and Nebraska -- account for just under $2.19 billion of that $4.4 billion paid out for ARC-County, a full 49% of the payments.

Todd points out that the terms and conditions of the program spell out how FSA is supposed to determine county yield. That language begins, "Actual average county yield means the yield calculated as the production of a covered commodity in the county divided by the commodity's total planted acres for a crop year in the county, as determined by FSA."

Ray Grabanski, president of the North Dakota-based marketing and risk-management company Progressive Ag, recently wrote a column on ARC-County yields describing that farmers "got shafted" and "got screwed" by FSA's yield calculations. Grabanski estimated $100 million or more in government payments may have been lost.

"This program (ARC-County) looks arbitrary and capricious in the way it's administered," Grabanski said in an interview.

Grabanski is collecting contact information for farmers and consulting other attorneys who have a history of challenging USDA in court.

At least a few commodity organizations have posted information on their websites about meetings with attorneys over FSA calculations of ARC-County yields.

USDA officials have pointed out in the past that ARC-County has 21 covered commodities spread over more than 3,000 counties nationally. In order to do ARC-CO calculations, FSA needed five years of county benchmark yields, as well as the yield for the current year. That translates into six years of yields for each crop in each county, or roughly 100,000 separate crop-county combinations for yields.

FSA officials said they had solid county-level yield data on about 43,000 of those 100,000 or so crop yield-county combinations. The best data was concentrated in areas where about 90% of the base acres are centered for a given crop. Thus, the bigger struggles lie in the marginal production areas, outliers or areas where farmers may have added new commodities to the rotation in recent years.

FSA's yield rules were laid out in the agency's handbook procedure and in an FSA fact sheet on the ARC program.

The Farm Service Agency has essentially a cascading system of trying to get data on county yields. The starting point for FSA is county yield data from the National Agricultural Statistics Service. NASS provides data from its yield survey. As a minimum standard, though, reports from the NASS county survey need to account for at least 25% of the acreage in a county and at least five farms in the county as well.

This means surveys that may be deemed voluntary now play a critical role in coming up with county yield data for ARC-County payments.

FSA officials declined to be quoted but maintain the agency has a solid system and process for coming up with county yield data considering the constraints on getting accurate yields. A process is needed for data and best estimates when farmers decline to fill out and return yield surveys.

For counties where NASS did not get that level of survey response, the Farm Service Agency turned to another sister agency, the Risk Management Agency, to get the 2014 yield. 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.

Officials from North Dakota complained about that procedure last month after RMA data led to a record 2014 yield in one county, causing an estimated loss of $7.5 million in payments in that one county.

The McAfee & Taft law firm points to all of the counties in particular regions of a state, such as eastern Colorado, for example, where six or seven neighboring counties were all listed with the same county yield. "It is virtually impossible for that to happen," Todd said.

In such cases, FSA likely had to turn to district-level data from NASS where yield surveys from multiple adjacent counties were used. District-level data is used as a default, but the Farm Service Agency provides state FSA committees some discretion to adjust those yields based on crops and soils. In some states, there is little yield reporting and so few base acres for crops such as sunflowers or sorghum in northern states, so every county ended up with the same yield as the state yield for the crop.

Todd and Grabanski argue FSA did not implement the program for 2014 payments consistent with the contract terms or the 2014 farm bill language. FSA was supposed to determine county yields in all cases. Todd said he thinks it's possible there will be legal action sooner rather than later.

"I think you can look at the FSA data and identify issues in nearly every state; whether or not that results in producers wanting to take action in every state, that has yet to be determined," Todd said. He added, "Obviously folks who didn't get a payment, when all the data indicated they were going to receive a payment, you can imagine they probably feel like the FSA numbers are inflated."

Grabanski said his firm, Progressive Ag, could announce its possible actions on ARC-County yields as soon as this week.

Chris Clayton can be reached at

Follow him on Twitter @ChrisClaytonDTN


DTN Retail Fertilizer Trends

Tue. Feb 09, 2016 11:46 AM

By Russ Quinn
DTN Staff Reporter

OMAHA (DTN) -- Fertilizer prices continue to slowly decline in price, according to retailers tracked by DTN for the first week of February 2016.

All eight major fertilizer prices slipped lower compared to a month earlier, with only one down any significant amount. Anhydrous was down 5% compared to last month and the nitrogen fertilizer had an average price of $555/ton.

The remaining seven fertilizers were lower but just slightly. DAP averaged $488/ton, MAP $502/ton, potash $381/ton, urea $370/ton, 10-34-0 $549/ton, UAN28 $263/ton and UAN32 $305/ton.

On a price per pound of nitrogen basis, the average urea price was at $0.40/lb.N, anhydrous $0.34/lb.N, UAN28 $0.47/lb.N and UAN32 $0.48/lb.N.

Since mid-2015, declining retail fertilizer prices have encouraged some farmers to delay fertilizer purchases.

Chris Bowman, who farms near DeWitt, Iowa, said he normally would have some fertilizer locked in by this time of the year. However, with lower fertilizer prices this winter, he has chosen to wait.

"I plan on committing some tons in the next few weeks just to be sure the supply is there in time for preplant application," Bowman told DTN.

Bowman will purchase phosphorus and potash and possibly some nitrogen as urea and anhydrous.

Other farmers decided to lock in some fertilizers but not other types of nutrients. Levi Taylor, who farms near Ypsilanti, North Dakota, said he purchased his nitrogen source, urea, several months ago but hasn't committed to P needs yet.

"We locked in our urea at $350/ton right after Thanksgiving as we thought that was a good price," Taylor said. "We haven't pulled the trigger yet on MAP but at some point soon we will."

Taylor said he has been in contact with local fertilizer retailers and MAP has a local retail price of $450/ton. He doesn't apply much potash and also does not use any starter fertilizers.

Thanks to the price slide, all fertilizers are lower compared to a year earlier. All but one fertilizer is now double digits lower. The only fertilizer not down much is 10-34-0, which is down 7% versus the same time a year ago.

DAP is now 14% lower, MAP is 16% less expensive, UAN32 is 17% lower and UAN28 is 20% less expensive from a year previous. Potash, urea and anhydrous are all now 22% lower compared to a year earlier.

DTN collects roughly 1,700 retail fertilizer bids from 310 retailer locations weekly. Not all fertilizer prices change each week. Prices are subject to change at any time.

DTN Pro Grains subscribers can find current retail fertilizer prices in the DTN Fertilizer Index on the Fertilizer page under Farm Business.

Retail fertilizer charts dating back to November 2008 are available in the DTN fertilizer segment. The charts included cost of N/lb., DAP, MAP, potash, urea, 10-34-0, anhydrous, UAN28 and UAN32.

DTN's average of retail fertilizer prices from a month earlier ($ per ton):

Feb 2-6 2015 569 597 488 473
Mar 2-6 2015 570 597 489 471
Mar 30-Apr 3 2015 569 598 491 462
Apr 27-May 1 2015 571 598 492 455
May 25-29 2015 570 597 492 459
June 22-26 2015 572 597 490 469
July 20-24 2015 569 594 487 469
Aug 17-21 2015 568 587 477 448
Sept 14-18 2015 563 579 462 432
Oct 12-16 2015 547 564 440 418
Nov 9-13 2015 547 561 426 405
Dec 7-11 2015 534 555 417 397
Jan 4-8 2016 495 521 392 381
Feb 1-5 2016 488 502 381 370
Date Range 10-34-0 ANHYD UAN28 UAN32
Feb 2-6 2015 589 707 329 369
Mar 2-6 2015 626 706 331 371
Mar 30-Apr 3 2015 642 708 333 370
Apr 27-May 1 2015 652 711 332 371
May 25-29 2015 650 710 332 371
June 22-26 2015 641 690 330 369
July 20-24 2015 636 689 324 354
Aug 17-21 2015 611 667 309 349
Sept 14-18 2015 593 653 300 345
Oct 12-16 2015 584 640 295 338
Nov 9-13 2015 581 631 289 332
Dec 7-11 2015 575 625 284 330
Jan 4-8 2016 572 582 273 316
Feb 1-5 2016 549 555 263 305

Russ Quinn can be reached at

Follow him on Twitter @RussQuinnDTN


USDA Reports Summary

Tue. Feb 09, 2016 11:21 AM

By Katie Micik
DTN Markets Editor

WASHINGTON (DTN) -- USDA increased its forecast for Brazil and Argentina's corn production to 84 million metric tons and 27 mmt, respectively. Both numbers were above the range of pre-report expectations.

Soybean production in Brazil was left unchanged at 100 mmt, while Argentina's production was increased 1.5 mmt to 58.5 mmt.

Domestically, USDA increased corn and soybean ending stocks in February's World Agricultural Supply and Demand Estimates report, which was released at 11 a.m. CT on Tuesday.

USDA's domestic stock estimates should be viewed as bearish for corn, soybeans and wheat, according to DTN Analyst Todd Hultman. The world estimates should be viewed as neutral-to-bearish for corn and bearish for soybeans and wheat, he said.

Crop Production:…

World Agricultural Supply and Demand Estimates (WASDE):…


USDA pegged U.S ending stocks at 1.837 billion bushels, up 35 mb from last month. USDA increased its forecast for imports by 10 mb and ethanol by 25 mb. It also trimmed its export forecast by 50 mb.

The domestic ending stocks-to-use ratio increased slightly to 13.6%. USDA left the range of national farm gate prices unchanged at $3.30 to $3.90 per bushels.

Globally, USDA estimated ending stocks at 208.8 mmt, slightly smaller than last month's estimate. The global stocks-to-use estimate held steady at 21.6%.


USDA boosted soybean ending stocks by 10 mb to 450 mb. USDA lowered its crush forecast by 10 mb to arrive at the slightly higher stocks figure.

Domestic stocks-to-use, at 12.2%, went up slightly. The range of national average farm gate prices was unchanged at $8.05 to $9.55 per bushels.

Globally, USDA put ending stocks at 80.4 mmt, up about 1.14 mmt from last month. Brazil's production was left unchanged, and most of the growth in ending stocks came from prospects for an improved Argentine harvest.

The stocks-to-use ratio increased to 25.6%.


U.S. wheat ending stocks came in at 966 mb, up 25 mb from last month. USDA arrived at that change by trimming exports by 25 mb. It now forecasts the U.S. will only export 775 mb in 2015-16.

The stocks-to-use ratio for wheat continues its rise and came in at 49.3% compared to 47.5% last month.

Globally, USDA pegged world stocks at 238.87 mmt, up 6.8 mmt, largely because of a 2 mmt increase to China's beginning stocks. World wheat production is forecast to be at a record high.

Global ending stocks-to-use were pegged at 33.6%, up from last month's 32.4% estimate.


USDA increased its estimate of U.S. corn ending stocks for 2015-16 from 1.802 billion to 1.837 billion bushels, which was more than expected. "Tuesday's report should be viewed as bearish for corn," DTN Analyst Todd Hultman said.

USDA's estimate of U.S. soybean ending for 2015-16 was increased from 440 million to 450 million bushels, more than expected. "Tuesday's report should be viewed as bearish for soybeans," Hultman said.

USDA's estimate of U.S. ending wheat stocks for 2015-16 was increased from 941 million to 966 million bushels, which was more than expected. "Tuesday's U.S. report should be viewed as bearish for wheat," Hultman said.

Meanwhile, on the global side, USDA's estimate of global ending corn stocks for 2015-16 was reduced slightly from 208.94 mmt to 208.81 mmt, but was still more than expected.

USDA's world ending soybean stocks estimate for 2015-16 was increased from 79.28 mmt to 80.42 mmt and was more than expected.

USDA's estimate of world ending wheat stocks for 2015-16 was increased from 232.04 mmt to 238.87 mmt and was much more than expected.

"Tuesday's world estimates from USDA are neutral-to-bearish for corn and bearish for soybeans and wheat," Hultman said.

U.S. ENDING STOCKS (billion bushels)
Feb. Avg High Low Jan. 2014-15
Corn 1.837 1.809 1.852 1.772 1.802 1.731
Soybeans 0.450 0.444 0.475 0.403 0.440 0.191
Sorghum 0.065 0.064 0.066 0.062 0.065 0.018
Wheat 0.966 0.946 0.968 0.930 0.941 0.752
WORLD ENDING STOCKS (million metric tons)
Feb. Avg High Low Jan. 2014-15
Corn 208.8 208.0 210.0 203.5 208.9 207.2
Soybeans 80.4 79.1 81.0 76.4 79.3 76.9
Wheat 238.9 231.9 234.0 229.7 232.0 212.8
WORLD PRODUCTION (million metric tons)
Feb. Avg High Low Jan. 2014-15
Australia 26.0 26.0 23.7
Argentina 11.0 10.5 12.5
Brazil 84.0 81.6 83.0 80.5 81.5 85.0
Argentina 27.0 25.3 26.0 23.0 25.6 27.0
Brazil 100.0 99.2 101.0 98.0 100.0 96.2
Argentina 58.5 57.1 59.0 56.0 57.0 61.4


Cash Market Moves

Mon. Feb 08, 2016 4:53 PM

By Mary Kennedy
DTN Cash Grains Analyst

Despite a three-year extension approved by Congress late last year, three of the nation's largest freight railroad companies informed the Federal Railroad Administration this month that they will not meet the 2018 deadline to install new required safety systems.

The Rail Safety Improvement Act of 2008 originally mandated that Positive Train Control (PTC) systems be implemented across a significant portion of the nation's rail industry by Dec. 31, 2015. PTC are integrated command, control, communications and information systems for controlling train movements with safety, security, precision and efficiency.

However, following warnings by several railroad companies that they would not be able to meet that deadline, the House Transportation and Infrastructure Committee on Sept. 30, 2015, introduced bipartisan legislation to extend the Dec. 31, 2015, deadline for all railroads operating in the United States to be compliant with Positive Train Control (PTC) technology.

In response to that request, U.S. Senator Richard Blumenthal, D-Conn., a member of the Senate Commerce, Science and Transportation Committee, cautioned that any Congressional action on PTC should ensure that railroads still move swiftly to install the new systems.

"It has been more than 45 years since the National Transportation Safety Board first urged railroads to implement positive train control -- an unacceptable delay in implementation of this critical, life-saving technology that has allowed numerous, preventable tragedies," Blumenthal said in a statement on his website. "Instead, the House Transportation and Infrastructure Committee's bill provides a blanket extension to 2018, a troubling move considering that some railroads are on track to meet the current deadline. Extensions should be granted only to railroads that have demonstrated diligent, good faith efforts to meet the mandate. Only by holding railroads' feet to the fire will this critical, life-saving technology finally be implemented."

On Oct. 27 and 28, 2015, bipartisan votes by lawmakers in the House and Senate passed HR 3819, which extended the deadline for implementing PTC by three years, to Dec. 31, 2018. President Barack Obama signed the bill into law on Oct. 29. All railroads were required to provide their timeline of implementing PTC to the Federal Railroad Administration (FRA) by February 2016.

CSX, Canadian National and Norfolk Southern informed the FRA this month that they will not meet the 2018 deadline. Here is the link to the Feb. 3, 2016, FRA report on the status of PTC for all railroads operating in the U.S.:…


On Sept. 9, 2015, Michael Ward, chairman and CEO of CSX Corporation wrote a letter to Sen. John Thune, R-S.D., chairman of the Commerce, Science and Transportation Committee, explaining the challenges his company faced in implementing the new safety systems.

"Because of the PTC mandate and the nascent technology it represents, CSX's investment for development as of Sept. 9 totals more than $1.3 billion dollars and will ultimately reach east of $1.9 billion," said Ward. "As part of that substantial investment, we must replace 52% or our existing signaling system at a cost of over $800 million."

"The development and implementation of PTC constitutes an unprecedented technological challenge for America's railroads. Such a system requires highly complex technologies able to analyze and incorporate the large number of variables that affects train operations," added Ward.

To read Ward's full letter to Sen. Thune, visit…

On Jan. 28, 2015, Frank Lonegro, vice president of service design for CSX Transportation, Inc., also testified before the Commerce, Science and Transportation Committee about the challenges of implementing PTC.

"This task is made particularly complex by the need to ensure that PTC systems are fully and seamlessly interoperable across all of the nation's major railroads," Lonegro said. "It is not unusual for one railroad's locomotives to operate on another railroad's tracks. When that happens, the 'guest' locomotives must be able to communicate with, and respond to commands from, the 'host' PTC system. Put another way, a CSX locomotive has to behave like a Norfolk Southern locomotive when it's traveling on NS's tracks; a BNSF locomotive must be compatible with Union Pacific's PTC system when it's on UP tracks, and so on. That's much easier said than done, and ensuring this interoperability has been a significant challenge."


On Sept. 9, 2015, Norfolk Southern wrote a letter to Sen. Thune explaining the company's position on the implementation of PTC.

The letter stated: "Having begun to look at PTC as early as 2005, NS recognized that there would be significant challenges ahead after the Rail Safety Improvement Act (RSIA) of 2008 legislation established a deadline to complete the installation of an interoperable PTC system by Dec. 31, 2015. So, immediately after RSIA was enacted, NS began to work on multiple fronts to develop the many systems and subsystems necessary to implement PTC. NS began to enter into agreements with other railroads of all sizes regarding standards to ensure that PTC systems would be interoperable across multiple railroads. With industry partners, it created a new company, called PTC 220, to go into the market and acquire the wireless spectrum needed for PTC systems (at the 220 MHz frequency) because of the need for greater coverage, reliability and security than provided by the cellular networks in the U.S.

"In essence, NS and the other Class I railroads were forced to create a private radio frequency network capable of transmitting and receiving data necessary to support an interoperable PTC network. NS also invested to become a 25% owner of Meteorcomm, along with BNSF, CSXT and UP, to design a software-defined radio capable of operating on the 220 MHz frequency as no manufacturers were producing radios meeting those standards at the time. Meteorcomm also worked to design a robust messaging system that would be able to securely transmit the millions of messages an interoperable PTC system requires."

"But that was just the beginning. Before it can fully implement PTC, NS must also:

-- Install almost 5,000 wayside devices along its PTC 'footprint;'

-- Install PTC equipment in 3,400 locomotives;

-- Replace nearly 2,700 exiting signals;

-- Complete GIS mapping and attributing of over 16,000 track miles; and

-- Train over 20,000 employees.

"All of these efforts are well under way. As of September 2015, NS has spent nearly $1 billion and hired or retained 698 signal-related personnel to implement PTC on its system."…

DTN reached out to the NS for comments, and in turn, the company sent this link to a video that Norfolk Southern made about the complexities of installing Positive Train Control:…

Mary Kennedy can be reached at

Follow Mary Kennedy on Twitter @MaryCKenn


USDA Reports Preview

Mon. Feb 08, 2016 4:51 PM

By Darin Newsom
DTN Senior Analyst

You know the feeling of eating to the point your mind goes numb, so you eat a little bit more? Domestic and global stocks of grain are looking at the same situation.

USDA will release its latest Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports at 11 a.m. CST Tuesday.


Average pre-report estimates for domestic ending stocks show slight increases for all three major grains (corn, soybeans and wheat). Most likely, these gains will come from decreases in demand with the latest weekly export shipment report showing marketing-year totals for soybeans trailing last year by 11%, wheat lagging by 15%, and corn behind last year's pace by a whopping 22%. In its January Supply and Demand report, USDA pegged year-to-year changes at 8%, 6% and 9%, respectively. Given these numbers, it would not be surprising to see USDA come in larger than the average estimates, but most likely not near the high side of estimates, at least not yet.


On the other hand, global ending stocks are expected to be trimmed ever so slightly. The average pre-report estimate for corn came in at 208 million metric tons as compared to January's WASDE figure of 208.9 mmt. Soybeans were estimated at 79.1 mmt versus last month's 79.3 mmt, while global wheat stocks were near a virtual tie with January's 232.0 mmt. Again, the end result could be bearish if global production numbers come in higher than expected and demand stays near unchanged.


As usual, this category could be one of the most closely watched in the February reports. There has been a great deal of discussion about the size of South America's corn and soybean crops, some of it echoing what has been heard in the U.S. the last couple of years. "Early season weather problems should trim crop production," the argument goes. Yet it hasn't been seen domestically and most likely won't show up in the February WASDE report either. The average pre-report estimate for Brazilian soybeans came in at 99.2 mmt, down slightly from the much-talked-about 100 mmt from the last few months. There is a strong likelihood USDA could leave this number unchanged for another month. Argentina's soybean crop is expected to be forecast slightly larger than last month's 57.0 mmt. The situation in corn is similar, with average pre-report estimates showing only small changes from January.

U.S. ENDING STOCKS (billion bushels)
Feb. Avg High Low Jan. 2014-15
Corn 1.809 1.852 1.772 1.802 1.731
Soybeans 0.444 0.475 0.403 0.440 0.191
Sorghum 0.064 0.066 0.062 0.065 0.018
Wheat 0.946 0.968 0.930 0.941 0.752
WORLD ENDING STOCKS (million metric tons)
Feb. Avg High Low Jan. 2014-15
Corn 208.0 210.0 203.5 208.9 207.2
Soybeans 79.1 81.0 76.4 79.3 76.9
Wheat 231.9 234.0 229.7 232.0 212.8
WORLD PRODUCTION (million metric tons)
Feb. Avg High Low Jan. 2014-15
Australia 26.0 23.7
Argentina 10.5 12.5
Brazil 81.6 83.0 80.5 81.5 85.0
Argentina 25.3 26.0 23.0 25.6 26.5
Brazil 99.2 101.0 98.0 100.0 96.2
Argentina 57.1 59.0 56.0 57.0 61.4

Darin Newsom can be reached at


Argentina Crop Outlook - 1

Mon. Feb 08, 2016 12:54 PM

By Alastair Stewart
South America Correspondent

URANGA, Argentina (DTN) -- The soybeans plants here have a nice deep-green hue, but the turned leaves betray a pressing need for rain.

"We are getting to the stage where the early planted soybeans really need some rain," said Ignacio Uranga as he drives through his 7,500 acre farm at the center of Argentina's main grain belt

After a wet winter and early spring, the rain stopped in northern Buenos Aires and southern Santa Fe province -- Uranga's farm in southern Santa Fe got just 4 inches in December and January combined.

Of biggest concern are the early planted beans, which are now flowering and starting to fill pods.

The good news is meteorologists indicate farmers will get their wish. Rainfall of between 1 and 3 inches fell across the region on Sunday, and further heavy showers are forecast for the region this week. Meanwhile, the El Nino weather phenomenon is expected to re-exert its influence the rest of February, bringing more moisture.

"If the forecasts are correct, we are on course for an excellent soybean crop," said Gustavo Lopez, grain analyst at Agritrend in Buenos Aires.

This good production outlook is, in part, because issues with lack of rain do not extend across the whole grain belt. In Cordoba and farther west, for example, they are still dealing with excess moisture in this El Nino-driven season.

Uranga also farms 7,500 acres in southern Cordoba where some soy area was lost to flooding. Excess moisture remains an issue, but the soybeans still look generally good, he said.

Argentina planted approximately the same soybean area as last year at 50 million acres.

Most farmers planted beans as a defensive play. With the Argentine election taking place midseason, nobody knew what the rules for selling corn would be at harvest and so opted for the oilseed, for which there is always a ready market.

However, with credit tight and prospective margins even tighter, investment in the crop was cut to a minimum.

"Farmers have been cutting every corner possible in an attempt to protect themselves," said Michael Dover, who farms 5,000 acres in Pergamino, northern Buenos Aires province.

But the crop has fared pretty well with disease and insect attacks limited so far. Argentina is on course for a crop of between 55 million and 60 million metric tons, down marginally from the record 61 mmt produced last year. USDA pegs the crop at 58.5 mmt.

The outlook is radically different for next year, though

The victory of Mauricio Macri in December's presidential election turned the local grain market on its head.

In Macri's first week on the job, the market-friendly right-leaning politician stripped away tariffs and restrictions on corn and wheat and devalued the peso.

The devaluation boosted margins all round, while the end of the quotas and tariffs of around 20% on the cereals made these attractive choices once again.

As a result, corn and wheat area will certainly bounce back next year, with preliminary forecasts indicating a 3-million-acre jump in each, and likely limit the size of the soybean crop.

Corn competes for acres directly with soybeans. Wheat is double cropped with soybeans and the cereal's growth won't pressure area, but soy yields are typically lower in this system.

But a couple of factors will offset the impact on soy.

Firstly, the more favorable conditions will prompt farmers to invest more in soybean crops. Fertilizer applications have been very low for a couple of years.

Meanwhile, total grain area will likely grow with marginal areas coming back into production, reversing the trend of lower acreage in recent years, notes Agritrend's Lopez. Overall grain area will be 81.5 million acres in 2015-16, down from 85 million acres in 2011-12, he noted.

And looking further ahead, the return of proper rotations instead of soy upon soy will increase yield potential, said Andres Alcaraz, communications manager at the Argentina Vegetable oil Industry Council (CIARA).

Alastair Stewart can be reached at

Follow him on Twitter @astewartbrazil


Investors Still Fans of Farmland

Fri. Feb 05, 2016 12:05 PM

By Elizabeth Williams
DTN Special Correspondent

WEST DES MOINES, Iowa (DTN) -- Wall Street's romance with farmland hasn't waned despite commodity price setbacks. In fact, professional investors attending the recent Iowa Land Expo see the steep drop in crop prices since 2013 as a buying opportunity for farm real estate.

Three publicly traded agricultural real estate investment trusts (REITs) now join other institutional investors combing the country for farmland deals. Although total investor ownership of farmland is just a small slice of farm sales, interest is increasing as farmland values slide lower.

"We're finding good return deals in this market. You just have to be selective," said Paul Pittman, CEO of Farmland Partners, Inc., the Denver-based ag REIT that made headlines in 2015 with the record purchase of 22,300 acres in Illinois.

Farmland Partners Inc., listed on the New York Stock Exchange ((NYSE: FPI) is the largest publicly traded agricultural REIT. It now owns 258 farms for a total of 107,900 acres in 13 states. Another REIT, Gladstone Land Corp. (Nasdaq: LAND) based in McLean, Virginia, owns 43 farms totaling 16,810 acres in six states. The newest publicly traded company devoted to farmland ownership is American Farmland Company (AMEX: AFCO), whose agricultural headquarters is in Salt Lake City. It went public in October 2015 and owns 18 farms in six states (California, Illinois, Arkansas, Alabama, Georgia and Florida) with about 16,000 acres.

While farm operators are somewhat wary about investors competing to buy farmland, "we don't set high prices," said Pittman. "A well-financed farmer will out-bid an investor looking for a higher return. In fact, we support the market at the lower end [when few want to bid on a farm]."


Wealthy individuals also remain on the hunt for farmland, said Steve Bruere, CEO of People's Company, a real estate/farm management company based in West Des Moines. "We get calls all the time: 'I've got $10 million and want a 5% annual return, do you have any farmland property I could buy'."

Bruere tempers their expectations, given lower commodity prices and rents. "You're not going to find that kind of return in row-crop farmland," he said. "Today, we're looking at a 3% to 3 1/2% cap rate (cash rent divided by land value)."

For example, $250 per acre cash rent divided by $8,000 per acre land yields a 3.125% return (cap rate). "In this land market, you might be able to get a 4% gross return, before property taxes. For good quality land a year or two ago, you might have been able to get $350 per acre, but now you're looking at cash rent levels more around $250 per acre," Bruere added.

Pittman believes deals can still be had. "It depends on the area, as to what return we're looking for," he said "In the Southeast U.S., we want a 5%-5.5% return rate. In the Delta: 4.5%-5%. In the High Plains: 4.5%-5%. In eastern Nebraska: 4%-4.5%. In Illinois or Iowa 3.5%-4%." The higher the risk, the higher return.

For specialty crops, such as vegetables or permanent crops (orchards or vines), Pittman looks for a 7%-8% return on investment, but he is not a big fan of permanent crops.

"I don't want more than 15% of my portfolio in specialty crops because two-thirds of the value of the purchase is wrapped up in a tree or vine that won't last forever. For example, a disease or storm could wipe-out an orchard, or consumer demand could shift (such as in oranges), or over-supply could collapse prices (as with almonds) and you're stuck with a permanent crop," he said.


Investor buyers are not new to ag land. Pension companies such as Prudential and Metropolitan Life have had farmland in their investment portfolios since the Depression. TIAA-CREF (Teachers Insurance and Annuity Association of America), a relatively newcomer to farmland ownership, owned 227,380 agricultural acres in 12 states at the end of 2014. That didn't count an even larger overseas portfolio.

Still the negative impression of outside investors in agriculture persists. "Nobody likes an investor, unless it's their own investor," noted Bruere. "To run a commercial farming operation of 5,000 acres, the capital investment just to operate is huge. It's hard to own all the ground you operate. Renting is a necessary part of doing business."

"Investor funds don't prevent farmers from owning farmland," Pittman noted. "The farm operator should own what he can afford and rent the rest. Our company is the simplest way to bring equity to American agriculture.

The advantage of an ag REIT is that it allows small investors to participate in the market and diversify their geographic risk. That's important when prime Midwest farmland still commands $10,000 an acre in some locales. "A teacher or firefighter or business person can buy our stock and own agricultural land," said Pittman. "And we only charge around a 1% management fee that includes the farm management."

Another advantage of owning farmland through a REIT, said Pittman, is if you want to sell, you simply sell your stock without having to sell the farmland.


"Although we're seeing more interest from investment funds in farmland, they are still a small part of the market," said R.D. Schrader, owner of Schrader Real Estate and Auction Company, based in Columbia City, Indiana, which conducts more than 200 agricultural auctions per year in more than 40 states. "As land values were climbing, 70% to 80% of the buyers were farm operators. As the farmland market has softened in the past two years, investor buying has picked up maybe another 10%.

"There is still a lot of cash out there looking to invest in farmland from both farm operators and outside investors, Schrader reported. "Since farm profits aren't there right now, there is still pressure on land prices, but they haven't fallen as far as some expect."

Elizabeth Williams can be reached at


Biotech Regs Proposed

Fri. Feb 05, 2016 11:01 AM

By Todd Neeley
DTN Staff Reporter

OMAHA (DTN) -- USDA is asking for the public's input on whether the agency should draw up new rules to regulate biotechnology products, according to a notice filed in the Federal Register this week.

The Animal Plant Health Inspection Service has faced heavy criticism from environmental and food groups for not conducting a complete environmental assessment on the potential effects of biotechnology crops. The APHIS announcement is part of an overall reexamination of the "coordinated framework" of regulations on biotechnology by USDA, the Environmental Protection Agency and the Food and Drug Administration. The White House ordered a review of the rules last summer.

APHIS is asking for public comment on a number of fronts, including proposed definitions of biotechnology and regulated organisms. APHIS proposes a number of regulatory and non-regulatory options on biotechnology, including genetically engineered organisms, and to safeguard agricultural plants and natural resources from plant pests or noxious weed damage caused by biotechnology.

Nathan Fields, director of biotechnology and crop inputs for the National Corn Growers Association, told DTN there are concerns APHIS will broaden the definition of biotechnology.

He said NCGA would rather limit the definition to transgenic crops. Transgenic crops include plant genes that have been artificially inserted instead of plants acquiring them through pollination, such as Bt corn.

Fields said NCGA may ask for an extension of the 30-day public comment period.

"There are some concerns we have," he said. "First and foremost, it's kind of odd we only have a 30-day comment on this. I'm not sure that's adequate time to address. USDA seems to be broadening the definition."

Jacque Matsen, public affairs manager for DuPont Pioneer, told DTN the company is watching the process closely.

"I can tell you we are closely following and engaging in USDA's efforts to update its biotech regulations," she said. "We will review and provide feedback on this latest development as well, but don't have anything specific yet."

Karen Batra, director of food and agriculture communications for the Biotechnology Innovation Organization, or BIO, said the group will be providing public comment to APHIS at some point.

"We are currently reviewing the proposal, but we are not able to comment yet," Batra told DTN. "We need to have a number of discussions first to outline the key issues we need to address."

Patty Lovera, assistant director of Food and Water Watch, said APHIS is taking a good first step. Food and Water Watch will be urging APHIS to include in their environmental impact statements the full list of impacts from adoption of biotech crops, including associated herbicide use, potential for contamination of organic and identity-preserved crops, development of resistance and any other potential impacts. "It is long overdue for APHIS to consider all of the ways that biotechnology impacts the environment," Lovera said. "The extremely limited scope of what is evaluated in APHIS' current process needs to be addressed in any update to their regulations."


The APHIS notice said there are a number of options including taking no action to change existing regulations for certain organisms developed through biotechnology that could pose a plant-pest risk, but would continue to regulate those potential biotech organisms as the agency does now.

A second alternative is to revise current APHIS regulations on biotechnology. That would include creating a review process to regulate certain biotech products to protect plant health, analyze potential plant pest and/or noxious weed risks first, and "thereafter regulate only when appropriate and necessary."

The second option calls for setting a procedure to first analyze which biotech products would require an agency review. In addition, APHIS is asking for input on possible "justifiable exceptions or exemptions" that would exclude certain biotech products from regulatory review.

APHIS would propose to eliminate the notification procedure, as "APHIS anticipates that many GE organisms currently regulated under the notification procedures would not be regulated nor subject to further review under this alternative," the agency said in the notice.

The second option would eliminate the current petition process for non-regulated status and conduct new risk analyses when new information is made available.

A third alternative would be for APHIS to regulate biotech products as either plant pests or noxious weeds using an existing plant pest or noxious weed "analysis trigger."

"Under this third alternative, APHIS' proposed regulations would substantially increase oversight and resources over those currently used to regulate GE organisms," the notice said. In addition, the third alternative would not exempt certain biotech products and would eliminate notification and petition procedures.

The fourth option put forward in the notice would be to withdraw the current regulations completely and implement a voluntary, non-regulatory "consultative" process for certain biotech products.

With the fourth alternative, biotech developers would be responsible for ensuring their products "do not pose risks" as a plant pest or noxious weeds.

Despite the complexity of the proposed changes for the biotechnology industry, companies or others wanting to weigh in need to have their comments sent in before March 7. Full details can be found in the Federal Register notice:…

Todd Neeley can be reached at

Follow him on Twitter @ToddNeeleyDTN


Woodbury: Family Business Matters

Thu. Feb 04, 2016 5:04 PM

By Lance Woodbury
DTN Farm Family Business Adviser

Estate planning, on the surface, has two primary goals -- transferring wealth and minimizing taxes. Both are important to agricultural families, as the high cost of land and equipment can be a barrier to entering a farming or ranching business. Additionally, a large estate tax liability can erode the equity built over generations, if assets must be sold to pay tax.

At a deeper level, however, estate planning serves another meaningful purpose. It can enhance the ties that bind heirs together. In my conversations with business owners, I often hear them express a desire to create something beyond financial significance with their planning efforts. They recognize that passing assets such as land, equipment and cash to the next generation is important, yet insufficient, to create or nurture strong bonds between family members.

We've all heard of siblings who inherited land, but then fought incessantly and eventually sold it. Or we know of family members who, in only a couple of years, exhaust the wealth accumulated over decades. Or we see heirs who can't make the adjustment from being siblings to being partners in business with one another, and their once-positive relationship deteriorates. How can you avoid these scenarios? By cultivating the following two non-financial principles that will enhance the ties between generations, siblings and cousins for the future.


A successful estate plan fosters shared values, and those values form the foundation of a successful business partnership. Such values reflect our most deeply held beliefs about the world and our interaction in it, serving as guideposts along the path of family business growth. When values don't match, conflict more easily emerges.

Values show up in all kinds of day-to-day business decisions. For example, the value of stewardship is demonstrated in decisions about land and facility improvements. Financial values emerge in discussions about crop or livestock marketing, or equipment purchases. How you value the people who work for you is evident in your supervisory relationship, your human resource policies, compensation and benefits.

Values are also demonstrated in the events and stories that have shaped the family and business. Homesteading, survival in the 1930s or 1980s, off-farm jobs, weather or market events, family tragedy or success -- your family's values are apparent in all of these events, which is why it's important to tell, and retell, those stories.


A successful estate plan embodies a shared vision among family members or business partners. For example, many family business partners believe that keeping their capital together provides a better life for all of them. Other families I know share a vision of making a contribution to society by producing food. Another family believes that working together encourages strong family relationships, while another believes their family business is the best place to foster an entrepreneurial spirit.

In all of these examples, the family shares a common view of where they are headed. They are in agreement, at a high level, of what they want to accomplish. Sure, at times there are disagreements on the details and tactics of getting there. But the shared vision keeps them motivated to work through disagreements and train the next generation.

As a family in business, take time to articulate the values that have shaped your organization. Discuss your vision for the future with your heirs or business partners, and encourage them to participate by sharing theirs. It costs very little to have these discussions -- mostly time. But the ties between family members can be immensely strengthened with the investment, and your estate planning process will likewise be enhanced.


Editor's Note: Lance Woodbury writes family business columns for both DTN and our sister magazine, "The Progressive Farmer." He is a Garden City, Kansas, author, consultant and professional mediator with more than 20 years of experience specializing in agriculture and closely-held businesses. Email questions for this column to


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