Minding Ag's Business
Marcia Zarley Taylor DTN Executive Editor

Friday 10/24/14

Landlords Refuse to Blink
My inbox is filling with irate landowners who took offense at a column I wrote for the October issue of Progressive Farmer on "fat cat rents." Actually, the thrust of the article was that average and below-average rents weren't likely to budge in 2015, only the "fat cat," above-average leases like we've seen at those $400-to-$500/acre Iowa cash rent auctions a few years ago.[Read Full Blog Post]
Posted at 3:00PM CDT 10/24/14 by Marcia Zarley Taylor | Post a Comment
Comments (12)
So how far under water are typical Midwest grain producers who rent most of their land? University of Illinois economist Gary Schnitkey forecast the steepest losses in at least 15 years for an average Illinois cash renter who paid $262/acre with corn production. For 2014 losses could average $109 an acre and in 2015 $143. "These are large losses from a historical standpoint," said Schnitkey. The only other time since 2000 corn growers averaged losses was in 2009, when gross revenue minus costs equaled negative $21/acre. Get Schnitkey's full report at: http://farmdocdaily.illinois.edu/2014/10/cash-deficits-projected-for-corn-2014-and-2015.html
Posted by Marcia Taylor at 3:42PM CDT 10/24/14
How about this to describe the mess on all sides? It is not the cost of living that is high, it is living high that cost. (author not known)
Posted by Bonnie Dukowitz at 7:22PM CDT 10/24/14
As a landowner in SD I receive 1/3 crop as rent. No renegotiating necessary and I have skin in the game. Farming is about risk.
Posted by greg schimkat at 11:06PM CDT 10/24/14
Thanks Greg. I appreciate (and I am sure your renter does as well) that you have skin in the game. Your cash rental equivalent should be the highest of all (i.e. share, flex, straight cash). I understand the quibble from the landowner's side. They are the only ones being asked to lower their rents because they are the only input that is "negotiable". Every other input price is set by someone else that is selling a product. Hence that is where everyone goes to seek relief. Now for the farmers who had the high flat cash rents, they will be hurting and those rates are most likely not long term sustainable. For the landlords, stop going back to $7 corn as a tag line. Most producers did not have corn to sell at that price (the reason corn got so high was small supply). Even if they did have corn that year, there was a substantial amount pre-priced. Everyone needs to understand that you can pick the high's and low's and claim I got "screwed" on each end of the scale. Be reasonable to each other. Renting ground is a relationship between the landowner and the tenant. If you make it a transactional relationship, don't complain either way.
Posted by Pedro Sanchez at 8:42AM CDT 10/27/14
Because most farmland has no alternative use it remains in production no matter what it is paid. We saw this in the 1980s when land values fell but almost all land continued to be farmed. This suggests that if prices remain low land owners will have no choice but to accept lower rents, because farm operators simply cannot afford to pay what they did in the past. While other input suppliers can reduce production or sell to other counties farmland has no alternative options that can generate money for the owner. An important question in this environment is what will the recent buyers of farmland who thought it was going to continue to appreciate do if their income falls? Do they walk or stay? --David Freshwater, University of Kentucky economist
Posted by Marcia Taylor at 10:42AM CDT 10/27/14
Not true, Marcia. Rented Farmland is a commodity just like imputs subject to market influences. As we all know too well, markets can remain irrational as long as it takes to bust the out of position trader.
Posted by Unknown at 8:43PM CDT 10/27/14
As a renter, and a landowner, I can see both sides. But what about those landowners who are all out for the almighty dollar no matter who farms their land. There has been life long friendships and relationships broken up the last few years over landlords getting renting their land to complete strangers just for the top dollar. Well guess what, those are the landlords that get to drop their prices considerably and now they have no idea who is going to be "farming" their land or "taking care" of their land. Who do you think benefits the most from high commodity prices...? DING DING DING, the landlords always come out of high commodity price cycles better than most farmers. I do agree that yes seed, fertilizer, chemicals, machinery etc etc is also very expensive, but that is less negotiable on a personal level than land rent. To drive down the rest of those prices it takes a significant decrease in farmers' business nationwide. But, land rent is one input the farmer can negotiate.
Posted by RJZ Peterson at 9:05AM CDT 10/28/14
Sorry landlords but there is going to come a point when even the the big operators aren't even going to be paying you your coffee shop money. And btw...do you really think mr 10k+ acres farmer who is paying you money is REALLY taking care of your land???? You know, it really ticks me off when the small guys do all the little things, maintain fertility, organic matter, cover crops, manage every little detail and then you greedy landlords say the heck with it! Do all that AND pay me more money even though it means you go in the hole! Worse yet is landowners who inherited ground, don't have a dime in it, and could care less about what goes on in the field and only care about their pocket book, this whole system is broken! Give me a Tylenol!
Posted by Farmer Johnson at 1:44PM CDT 10/28/14
I farm, I rent and I own.I don't want to hear any crying about how you can't afford your rent. After all who agreed to that rent figure in the first place?Did you really think prices would last forever? talk about greed, you only rented it because you wanted to keep up with Joe Blow who is now in the same position as you.I had lots of opportunies to rent the past few years but when these guys got stupid you let them have it.Made more money doing a good job of farming what we have.
Posted by Raymond Simpkins at 3:36PM CDT 10/28/14
Show me the money, baby. If you don't, one of your neighbors will.
Posted by Unknown at 7:20PM CDT 10/29/14
Not many "neighbors" left, mostly competitors now.
Posted by TOM DRAPER at 8:56PM CDT 10/29/14
Unlike other businesses like retail where there are way too many income & expense transactions to have anything else other than a rental agreement....in farming you only have a few if not one income instance(s)/inflow w/ only a few major expenditures/outflow i.e. fertilizer, chemicals, seed, etc. to put out a crop. So I say legislatively outlaw agricultural cash rents & everybody operates on 50/50 crop share basis/agreement. This would probably crash land values because it could chase the non-farmer/city/absentee land owner from ownership, leaving a much more affordable land price for the ONLY ones who should be buying/owning farmland in the first place....the U.S. farmer. Another result would be the importance of the farmer who does a better job of marketing than his neighbor competitor. Not just in overall picking a higher CBOT/cash price....but having a better marketing plan in place w/ specialty crops garnering a premium such as white corn, specific corn traits for ethanol, high oleic or food grade soybeans, etc. But finally, w/ the now obvious trend of volatile grain prices a foreseeable trend in agriculture due to the emergence & reliance on ethanol which has left no room/cushion for a supply shock not only in the U.S. but in any major world supplier (the double edged sword aspect of ethanol).....it will have a ripple effect w/ every aspect in agriculture for inputs, cash rents, etc. as they become more volatile as well. If I was a land owner I wouldn't want such volatility in determining cash rents....the constant renegotiating or being too low during the boom/grain price periods like the past few years or too high on rent during the price slide now or in the expected near term future just as you're trying to catch up for any delay on the increase up. However, if the landowner doesn't want to be caught in the middle between the "hassle" of having to renegotiate cash rents much more frequently now than in the past due to grain price volatility OR having to price/market their crop under a crop share arrangement due to the same volatility....they can do the same thing as the city/absentee/speculative land owner (if they are not one in the same person anyway) mentioned above.....they can sell their land & leave this now volatile agricultural landscape to again.....the American farmer!! (I was raised on an East Central IL grain farm) And by the way if legislatively outlawing crop cash rents doesn't work in the favor of the U.S. farmer the law can always be changed back to the way it is now. Nobody said it has to be permanent. But I sure would like to see it tried. I'm betting that it wouldn't be the end of the world.
Posted by Todd Young at 1:27AM CDT 10/30/14
 

Thursday 10/23/14

Forgive and Forget Disaster APHs
Matt Huie of Beesville, Texas, could hardly contain his relief when he heard that USDA would implement a new farm bill rule in time to patch his crop insurance coverage for 2015 after all. The surprise reversal means growers of most major crops--except winter wheat--will be able to exclude extreme yield disasters from their 10-year Actual Production History (APH).[Read Full Blog Post]
Posted at 9:57AM CDT 10/23/14 by Marcia Zarley Taylor | Post a Comment
Comments (1)
Glad the farmer in Texas is happy. However, dropping 4 of the past 8 years of your ACTUAL YIELD HISTORY because of weather is a horrible actuarial decision. You are talking about a 50% write down of bad production. Maybe what should happen is farmers in high risk areas drone to drought, hail, and other weather related issues assume more of the financial risk than the tax payer. I get we want to keep farmers in business, but at what cost? With cash rent and input costs at obscenely high levels relative to gross revenue we need corrective action. If the government is going to play this game, we will artificially raise the price level of what we have to pay for inputs as the floor of loss moves up. If the support wasn't nearly as good, we would see input prices and rental rates drop faster in corrective fashion. Granted most of the above is purely my humble opinion, but I deal with enough business persons and know enough about economics to understand the "mentality" out there. The risk-reward dynamic is completely out of whack because of our crop insurance program. Yet we farmers happily (or grudgingly most likely) pay the price to the landlords and input suppliers.
Posted by Pedro Sanchez at 9:22AM CDT 10/24/14
 

Wednesday 10/22/14

Defend Against Reversals of Fortune
Given the abrupt drop in commodity prices this year, "the solvency of some farm customers could shift quickly," David Lynn, a senior vice president for Farm Credit Mid-America cautioned ag economists attending a conference in Louisville this month.[Read Full Blog Post]
Posted at 11:05AM CDT 10/22/14 by Marcia Zarley Taylor | Post a Comment
Comments (1)
Sometimes interesting insights are provided by trying to answer a stupid question. The question was; "What needs to happen for corn yield protection crop insurance (YP) to equal a corn harvest option revenue product (RA) in Northwestern Illinois?)" A lot of assumptions were needed to provide our outcomes. We tried to narrow the variables to spring insurance price and US planted corn acres. We assumed a farm yield to US yield relationship and an ending corn stocks to price relationship. Beginning balance, imports and use were assumed from the current WASDE report. The conclusions were: 1. For the harvest option price of RA to kick in (trigger), the farm yields need to be at the same yield levels for YP to kick in (trigger). 2. RA always has scenarios were it will have a higher indemnity than YP because there is always a chance for harvest insurance prices to be above spring. 3. For our assumptions, it looks farm yields could drop below 85% of an adjusted APH about 20% of the time. RA looks to have an indemnity above YP and its additional premium 75% of those times YP is triggered. A scenario with the lowest possibility of an indemnity occurs with low planted acres and a low spring price. RA's indemnity minus premium will net more than YP at least 15% of the time (20% X 75% = 15%) with above price outlook. RA with harvest price exclusion rarely to never have an indemnity in this low chance of an indemnity scenario. Those expecting a low spring price with low planted corn acres may want to review their insurance coverage if RA with harvest price exclusion is to be used this coming season. 4. If planted corn acres for the 2015-16 marketing year are north of 90 million acres and spring price is around $4.00 per bushel, there appears to be at least a 40% chance of an indemnity in Northwestern Illinois with the assumption used. Those chances drop to about a 20% minimum chance with a $3.50 price with the same scenario. 5. If corn planted acres come in at 85 million acres both a $4.00 and a $3.50 spring price has a 20% chance of an indemnity. It seems at this chance level of an indemnity, the spring price is too low or the assumptions of fall prices are too high. This is the scenario were YP may work if price assumptions are close to being correct. The same could be said for $3.50 on 90 million spring acres. When looking for places to reduce cost this coming growing season, your crop insurance decision appears to hinge on the relationship of the spring insurance price against the expected fall harvest price. The challenge, in part, becomes guessing the number of acres planted to corn this spring. Spring planted acres will be a large factor in fall prices. The USDA releases the spring acreage estimate after our crop insurance decisions are made. So fall expected price is very much a guess at insurance sign up. If spring price feels high for the expected fall price, RA with the harvest price exclusion might save some premium and provide some revenue protection. With this choice, one needs to acknowledge a high fall price may make this choice worthless. If springs price feels low for the expected fall price, YP could have the same trigger yield as RA. With this choice, one needs to acknowledge RA with harvest options will, most of the time, net a higher indemnity. One needs to weigh the higher premium and lower chance of indemnity with this scenario against the higher net payout - when it occurs. At least for Northwestern Illinois and barring an extreme spring price compared to expected fall price, the highest level of RA one has used in the past seems reasonable. Freeport, IL
Posted by Freeport IL at 4:26PM CDT 10/22/14
 

Thursday 10/16/14

Beware Gaps in SCO
Your actual losses may not mirror the county average, leaving you unprotected in the event of yield disasters.[Read Full Blog Post]
Posted at 2:27PM CDT 10/16/14 by Marcia Zarley Taylor | 0 Comments | Post a Comment
 

Friday 10/10/14

Possible 2014 Insurance Pay Day
Steep drop in corn prices could make claims possible for corn growers with revenue insurance policies, even with average or slightly above average yields. Not since 2008 has difference between planting and harvest prices tumbled so far so fast.[Read Full Blog Post]
Posted at 3:52PM CDT 10/10/14 by Marcia Zarley Taylor | 0 Comments | Post a Comment
 

Tuesday 10/07/14

More on Wall Street's Dive Into Land Pools
Farmland Partners CEO Paul Pittman doesn't want to perpetuate the image of a big, bad institutional investor. He knows insurance companies who promised 50-year horizonsthen ditched their farm portfolios during the 1980s credit crisis.[Read Full Blog Post]
Posted at 1:09PM CDT 10/07/14 by Marcia Zarley Taylor | Post a Comment
Comments (4)
This will be the start of the end of private farmer land ownership. Farmland should be allowed to follow the market for individuals. The chance for young farmers to get back into the land market with the future pull back in land prices will be hindered if this is ignored and allowed to happen. In the end, this will make our food supply that has been supplied by independent individual farmers be put at risk. Surely this is not what our founding fathers had in mind.
Posted by Unknown at 7:27AM CDT 10/08/14
Unknown, you make a great point. The large, wealthy investment funds will suck up excess land. One solution that could stem the purchase and flow of farmland by corporations would be to create a different property tax category that would make their returns "unattractive". I find it interesting that FPI claims to be in it for the long haul, hoping to get 4% returns on the land they purchase. Does he actually follow what is happening in the commodity market and input side of farming? There is a huge disconnect. I don't know what they are charging for cash rent, but to get those kinds of returns, it is a large number. Cash rental rates should be based on the near term to 3 year expected commodity price. Have you seen the CBOT prices for the next 3 years? Where is the risk/reward payoff for farmers in this scenario?
Posted by Pedro Sanchez at 8:28AM CDT 10/08/14
And after years of watching farmers and ranchers turn from their local grocers and going to Costco, Walmart and other national chains when they go to town, I don't see a problem here.
Posted by CRAIG MOORE at 10:38AM CDT 10/09/14
Good point, Craig. Do not forget the Government financing to promote the same. Along with Government approval of gigantic mergers and financing, direct or indirect of banking institutions, railroads, trucking firms, food processers, packers, do I need continue? Then try to finance local growers. I say, GOOD GRief, already.
Posted by Bonnie Dukowitz at 9:14PM CDT 10/09/14
 

Monday 09/29/14

Let Watson Pick Your Farm Program
Computer simulators do the heavy lifting on your farm program choices.[Read Full Blog Post]
Posted at 4:49PM CDT 09/29/14 by Marcia Zarley Taylor | Post a Comment
Comments (2)
Forgot to mention that the University of Illinois is hosting free webinars every Friday at 8 am- 9 am central time to coach you on farm bill decision aids. For our full schedule of webinars visit www.farmdoc.illinois.edu/webinars. Or pre- register for the hour-long webinar at https://www1.gotomeeting.com/register/752956945
Posted by Marcia Taylor at 3:51PM CDT 09/30/14
$2.70 corn futures -0.95 basis --------------------- =$1.75 cash corn I hope I never have to paddle that raft.
Posted by Unknown at 12:33AM CDT 10/03/14
 

Friday 09/26/14

Reshuffling Crop Insurance
News this week that John Deere had appointed Citigroup to sell its crop insurance unit opens the door to more jostling among the nation's 19 multi-peril insurance providers. The company's chief financial officer told an investor conference in Brazil that proceeds from the potential sale would be used to repurchase Deere stock, J.P.[Read Full Blog Post]
Posted at 12:29PM CDT 09/26/14 by Marcia Zarley Taylor | 0 Comments | Post a Comment
 

Tuesday 09/23/14

The Cash Rent Squeeze
Cash rents rarely back pedal, but 2015 could turn out to be the exception to the rule for a large number of growers.[Read Full Blog Post]
Posted at 11:09AM CDT 09/23/14 by Marcia Zarley Taylor | Post a Comment
Comments (3)
What about the guys that bought? nobody is going to change their payments. Like I stated on Katies blog theres going to be alot of auctions next year.
Posted by Raymond Simpkins at 11:29AM CDT 09/23/14
Property tax increase lag? I think the past increases have more than covered those expenses. I believe the pinch is going to be felt by the LANDOWNER, FARMER AND MAINSTREET RURAL AMERICA. Many of these landowners have been living high on the hog!
Posted by Unknown at 1:55PM CDT 09/23/14
Soys in my area typically yield 35 bus/ acre direct costs are at $292.00/acre this year and will be similar next year NOT including land rent . Corn yields about 165bus/acre direct costs are at $413.00 NOT including land rent ( and also not including drying charges) Right now today's local cash prices are $8.32 for soys and $2.28 for corn. How much are you willing to give for rent ?
Posted by Unknown at 12:15AM CDT 10/03/14
 

Monday 09/22/14

Farm Payments a Moving Target
Six months of bearish news for corn prices means farm programs are suddenly relevant.[Read Full Blog Post]
Posted at 1:00PM CDT 09/22/14 by Marcia Zarley Taylor | Post a Comment
Comments (1)
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Posted by Shahid Afridi at 8:06AM CDT 10/29/14
 

Tuesday 09/16/14

Q+A on Farm Bill Choices
We've been busy answering questions from the more than 1,000 people registered for our August webinar on "ARC or PLC: What's the Right Farm Bill Option for You?" You can still listen and download power points from a free one-hour rebroadcast with economists Gary Schnitkey of the University of Illinois and Carl Zulauf of Ohio State University at http://tinyurl.com/qz7aq6d.[Read Full Blog Post]
Posted at 11:05AM CDT 09/16/14 by Marcia Zarley Taylor | Post a Comment
Comments (2)
I have customers that have recently purchased ground that has been in CRP the last 30-50 years. It is good farm ground and should never have been put in the program. The problem is it doesn't carry very many base acres. Is there a way to add base acres? I have spoken with several FSA offices, and they are not aware of any way, but it seems that there should be some way for these producers to update their base acres on those farms. Just something we have run into here in Kansas. --Aaron Cross
Posted by Marcia Taylor at 11:11AM CDT 09/16/14
Aaron, its my understanding as well that we are not going to be able to increase the total base acres a farm has, only reallocate the mix of crops contained in that total base.
Posted by Jarrod Bennett at 7:11AM CDT 09/17/14
 

Tuesday 08/26/14

Land Costs Hamper US Competitiveness
Cheap land costs in Brazil and Ukraine negate some of the USA's natural advantages in corn and soybean production, a team of researchers from 40 countries concludes.[Read Full Blog Post]
Posted at 1:26PM CDT 08/26/14 by Elizabeth Williams | Post a Comment
Comments (3)
I see no actual numbers here for direct production costs. How much more is our land cost vs the other countries? How much is the difference of our input costs from one region to the other. Even seed costs are different from one region to the next here in the USA since the suppler will usually charge what the market will bare. We really don't know much if we can't get our heads around the per acre margins in other countries.
Posted by Vince Moye at 6:42AM CDT 09/03/14
I am wondering if in this analysis we aren't overlooking the elephant in the room. The US is producing GMO based commodities while in Russia, and China, and much of Europe there is a strong resistance against them. This resistance appears to be well established in Europe and growing. Except for transportation costs, unless we stratify the GMO vs. non-GMO as different crops, production costs by country aren't reliable. This is because the GMO's win on yield per acre, but are serving different customer bases. We should be aware that there appears to be increasing resistance to sale of meat produced with GMO inputs .
Posted by Lloyd Willard at 7:56AM CDT 09/05/14
Crop production works best in a Democracy where there is relative stability as in we know what is going to happen when we budget for a crop. We don't get "blindsided" too often. Fortunately a "Jimmy Carter " doesn't happen too often. I have heard of $3.50 corn 2014 for two years . As the Man says, "Save some for the lean times".
Posted by james kuntz at 10:33AM CDT 09/05/14
 

Friday 08/22/14

Help for Farm Program Homework
More than 700 attendees registered for DTN's free webinar yesterday, "ARC or PLC Choices: Which Farm Bill Contingency Plan is Right for You?" with economists Carl Zulauf of Ohio State University and Gary Schnitkey of the University of Illinois.[Read Full Blog Post]
Posted at 3:34PM CDT 08/22/14 by Marcia Zarley Taylor | Post a Comment
Comments (1)
Editor's Note: The correct link to the webinar is http://tinyurl.com/qz7aq6d
Posted by Marcia Taylor at 4:02PM CDT 08/22/14
 

Wednesday 08/13/14

Debate Rages Over APH Forgiveness
Great Plains wheat growers are howling over USDA's decision to postpone relaxing crop insurance's APH rules until 2016. Some Illinois corn growers are losing out, too.[Read Full Blog Post]
Posted at 3:23PM CDT 08/13/14 by Marcia Zarley Taylor | Post a Comment
Comments (15)
Let's side aside the promise part of the issue for now and just look at the logic of the promise... During a ten-year period, crop yields fluctuate mainly due to weather. Farmers buy crop insurance to protect themselves during the bad weather years. Taxpayers subsidize crop insurance for farmers to lower the premiums for farmers. The actual costs/payouts of crop insurance is directly related to weather. Farmers would like to be able to insure and be paid out for yields that would occur if we didn't experience bad weather. If we ignore bad weather in the equation, are we not setting up taxpayers for higher insurance costs subsidies for crops that may no longer be suited to be planted county-line to county-line for certain areas of the country? Farmers understand risk and they understand it very well when some sucker takes it away for them. Sure it is a lot more fun to drive up land rent costs to $400/acre than to pay full insurance costs of $45/acre. But all that whining sure does knock down the integrity bar for the American Farmer. Or did I miss something and we just threw the whole gadget away?
Posted by Timothy Gieseke at 8:13AM CDT 08/14/14
Tim, you have a legitimate argument, but in the past growers were able to plug a bad year in their individual APH with 60% of the county's 10-year average. The Senate bill would have raised that to 70%. During the Farm Bill debate, critics argued the current rule rewarded those who were "farming crop insurance." CBO actually argued the "forgiveness" provision would save money, Barnaby says. I'm not taking sides, I'm just pointing out this was supposed to limit taxpayer exposure, if CBO is accurate.
Posted by Marcia Taylor at 9:17AM CDT 08/14/14
I think Tim got a it pretty much right. You cannot take the variable of weather and throw it out the window. If we do not account for the worst years of weather, be it drought, excess moisture, frost, etc., then we set up our insurance program to be actuarial unsound and pay out more than necessary with our APH's to high. We already have the trend line yield adjustment. I think we have a good crop insurance program. Why do we continually look for more ways to lessen the risk of farmers, by off loading that risk on the taxpayer in the form of higher subsidy, artificially higher APH's, program expansion (i.e. corn in western plains). Farming is a risky business. Make farmers put more skin in the game, otherwise we will be nothing more than Wall Street, reckless and unsound because we know the government will bail our butts out!!!
Posted by Pedro Sanchez at 10:30AM CDT 08/14/14
I think if it was promised it should be delivered.
Posted by Unknown at 1:39PM CDT 08/14/14
Crop insurance providers would like RMA to stall implementation because it would raise coverage (amounts of insurance) without an increase in premium over the current status quo. When the APH yields go down, the premium cost per acre stays the same for the same coverage level. If farmers need to increase their coverage to cover operating loans or cash rent they will have to crease their coverage levels, say from 75% to 80%, at significantly higher premium cost per acre.
Posted by Steven Griffin at 10:47PM CDT 08/14/14
The purpose of the APH is to establish a realistic estimate of the productive value of the crop going into a crop year. It is not to discount the riskiness of that productivity, that is done by the rate itself. Reducing coverage simply because you have had a catastrophic event is like not being able to insure your new car at its value just because you had an accident with a previous car. Of course you don't want to over-insure the car. Otherwise there is the hazard of people having wrecks just to collect the insurance. Risky drivers and riskier parts of the country should pay higher premiums.
Posted by Steven Griffin at 10:55PM CDT 08/14/14
Then I guess the govt needs to let farmers install drainage in the prairie pothole region. We are riskier not by choice but because of govt regs. Let us be on the same playing field as everyone else. Let's next time have all of the rules written before a law
Posted by Unknown at 9:31AM CDT 08/15/14
passes. How is it even legal to pass these laws then write the law after it passes? Crazy!
Posted by Unknown at 9:34AM CDT 08/15/14
There appears to be some lack of understanding of how the APH adjustment will work and why it is necessary to have it in some parts of the country. The southwest region of the US suffered with a drought of record from late 2010 till mid year 2014. Actually, there are still areas that are considered in drought despite recent rainfall. You have to go back to the early-mid 1950s and the Dust Bowl of the 1930s to find anything corresponding to this recent situation. It is not like this is an every other year weather situation. The current APH rules and yield plugs were not constructed to deal with a weather cycle that only occurs every few decades. Compounding the problem along the Texas coast, a hurricane destroyed production once prior to the drought years. Producers, even with the yield plug, have seen their APH and thus the amount of coverage available decline dramatically. Depending on the county and individual producer's yields, by as much as 25-40%. This has become problematic to ag lenders trying to finance producers. I believe there are producers in the Midwest and northern Plains who may also benefit from the APH adjustment due to the combination of too much rain in some years and the drought of 2012. In Texas growers cannot simply buy up coverage to a higher level for two reasons. First, coverage is not offered above 75% and second, it is very expensive to buy above 65%. For corn, the counties of the Texas Panhandle have loss ratios very comparable to the best corn producing counties of Illinois and Iowa yet our cost per acre is 2-3 times higher for the same coverage. Producers who use the APH adjustment will not pay less premium for coverage. Actually they will pay the same as they would have without the adjustment or perhaps will even see higher premiums since the adjustment only applies to the APH yield. The APH yield determines the amount of coverage a producer can purchase. There is also a rating yield which determines the cost of insurance. The rating yield will not be adjusted so the producer will still pay an insurance premium reflecting his actual history. This is potentially a very expensive situation for the producer because cost of insurance is affected by both the rating yield and dollars of coverage. Low yields from the past few years will make the rating yield expensive while the APH adjustment will increase coverage, also adding to the cost of insurance. The APH adjustment needs to be implemented for the 2015 crop, including wheat that will be planted this Fall. RMA is delaying implementation till 2016, the third year of the farm bill. RMA is busy patting itself on the back for having SCO and STAX available for the majority of counties for 2015. It would never be tolerated for FSA to announce it will have ARC, PLC, and the ability to update bases and yields available in the majority of counties. My question then is why does RMA get a pass to delay some counties for SCO and STAX and the APH adjustment for another crop year. It was clearly Congressional intent that all of the new crop insurance provisions be available for the 2015 crop year. This intent is obvious not only from the language of the farm bill but also the fact Congress added millions of dollars in new funding for USDA to implement the farm bill. RMA can use those funds to hire outside contractors to help with the data collection and research necessary to implement the new provisions. Sadly, while RMA dithers on this issue, some producers will not be able to get financing for 2015. Dee Vaughan
Posted by MICHAEL D VAUGHAN at 3:41PM CDT 08/17/14
I scratch my head when I see all the destruction going on in farming now. Farmers farming land that should NEVER be touched(but yet getting tax payer money to do it) Drain Tiling land that is used to filter out the chemicals out of the water. And then that water is put in sloughs or rivers and that leds to more or worse flooding and then the tax payer has to pick up that bill to. Example red river valley and devils lake and northeast South Dakota. I have NO issue helping farmers on declared bad years( declared floods or drought, has to be a total wipe out). But why should we put the bill for their "risky" practices? Side note we farm, but we do a balance of conservation and farming since 1886. We have seen many farmers(still some balanced farmers out there) plow up pastures and hill sides and plant beans and corn and the beans last yr didn't even make 10 bushel, but yet they are paying over 180 per acre to rent it. now tell me, how is that even possible to maintain, easy, they falsified the yields they carried over, thus get the government check. this yr, the corn isn't even putting on ears on most of the plants, and it was a good yr for weather in that part. erosion is horrible in that field but yet they just put culverts in to cross...this is becoming the norm now,, Truly sad
Posted by ryn bohr at 4:33PM CDT 08/20/14
Scratch your head a little more. Research a little science and get by your uneducated opinion corrected a bit. Proper drain tiling will actually decrease the net run-off of chemicals, nutrients and solids. Todays Ag drain tiling is unlike the common storm sewer principles used in a curb and gutter practices. There is much info out there, take a look at facts, rather than the fabricated info which supports your opinion.
Posted by Bonnie Dukowitz at 8:33PM CDT 08/20/14
Great article and real interesting comments. Thanks
Posted by G. Sean O'neill at 8:41PM CDT 08/20/14
according to the University of Iowa , the chemical treatment on corn seed is filling the rivers and steams(which leads to the drinking water of iowa) at a alarming rate, in fact the chemical company themselves have said the amount in the water sources is 5 times!! the recommended leval for safe drinking water. They said, every since 2000, the amounts have ski rocketed so fast that they started to find the source. and according to them, they put sample monitors by the pipes of drain tiles( most of them drain into the ditchs which led to rivers,public land) and they found the rapid run off of phosphates, nitrates AND the chemical treatment on corn seed. I find it funny how the "agi companys" always use study's done by the chemical,seed, or drain tile companys themselves . Geee I wonder what they will say..lol,, remember when you mess with mother nature, she hits you right back. But then again, when you get gov. checks, what do they care about the land and environment. remember we got a farm to of over 700 acres.
Posted by ryn bohr at 12:45PM CDT 08/21/14
Let us consider this: If we (farmers) are allowed to pull our extreemly low yields should the insurance companies be allowed to pull the highest yields? I would argue it may be a way to get to the "real" average yield of an individual farm. You may pull as many low yields as you desire and the insurance company pull the same amount of high yields and average the rest.
Posted by DORAN ZUMBACH at 9:40PM CDT 08/21/14
There are many different departments and many different sources of funding in all University's Ryn. If the funding came from an anti-ag group, the results were in the computer prior to any research being conducted. I did try to describe the difference in the open tile inlet drain tile and a subsurface system. Remember such things as according the U.S. Geological survey indicates the Greater Chicago area is the largest single source of hypoxia issues in the gulf. I am not defending the reckless abusers on both sides of the issue. You mention UofI placing sensors. If they did, as these systems are mostly private, it was with cooperation of the land owner who is trying to improve the practices used on their land, rather than just whining about it, pointing their finger at someone else. If all the Enviro's would clean up their own curb and gutter, many issues and problems would correct themselves. In our watershed, several lakes were declared "Impaired" do to high concentrations of chlorine. I assume the source is not ag related.
Posted by Bonnie Dukowitz at 4:30AM CDT 08/22/14
 

Monday 08/04/14

Expert Advice to Pick a Farm Bill Contingency Plan
Do you or your landowners need more coaching on your one-time 2014-2018 farm bill decisions? If farmers I interviewed last week in Indiana are typical, many growers spent the last decade wishing farm programs would go away.[Read Full Blog Post]
Posted at 12:44PM CDT 08/04/14 by Marcia Zarley Taylor | Post a Comment
Comments (1)
This post was corrected to reflect that landowners have 60 days to report incorrect, incomplete or missing records, USDA points out. If your history is correct, no response is necessary at this time. More information from USDA about the base and yield decision will follow.
Posted by Marcia Taylor at 3:34PM CDT 08/05/14
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