An interesting addendum: David Asbridge, an economist and president of NPK Fertilizer Advisory Service, thinks the last 12-18 months in the fertilizer industry "are such an anomaly that they won't make much difference." Remember 2000-2001 when the spike in natural gas prices bankrupted Farmland Industries? A year or two later the fertilizer business was back to normal, he says. What more likely to change the landscape in fertilizer business is consolidation of the manufacturer-dealer wholesale chain, he argues. Should CF Industries succeed in a Terra acquisition, it would combine two of the nation's biggest N producers under one roof and create the potential for market disruptions in UAN (the most significant N fertilizer in US today). He worries less about the potential marriage of Agrium and CF on farmers, since their product lines don't overlap as much.

marcia, i thought nh3 was the biggest n fert on the market. not uan. dave wiebke

Sure hope Mr. Olsens' fert. dealer is not also his grain purchaser. Too many people have forgotten; what goes around, comes around.

I don't know where the crop is "that good". It took us six weeks to get a crop "adjuster" here in southern Mich. The corn had long since been chopped off. This crop insurance bussiness is one of the long list of crap we farmers have to deal with.

I think the same as you James except maybe they are the biggest pile of crap in the farming industry.

I'm a Mississippi rice and soybean producer. I still cannot believe our losses. In least than 10 days the soybean crop was destoyed by rot. Since August 30 we have had over 30 inches of rain. Cloudy day or rain have shortened harvest days by 75%. If one looks at harvest percent by region or crop things are questionable.

We would like to get something done.........but it is so wet we can not get on the ground. It looks like spring when the snow melts off........ditches are full of water and every low spot is full of water and some are running together. It is too bad crop insurance is just like any other government influenced program. They like to hike the premium , but sometimes when you have a lose they really drag their feet. I am doing everything in my power to harvest my beans and corn........but constant rainy,cloudy,cold,and snowy weather does not make any type of harvest possible. --Dick and Janelle Meyer

In our area of northcentral Illinois, none of our local elevators have even taken any corn at all, today being Oct.27.With 32%moisture, its easy math to see that we will not be even close to being done by Dec.10.Water standing in every feild, with more rain comming in on the weekend. What a nightmare.

Gary I am from NELA can yall harvest after the winter and heavy snow starts falling?

Let's get real Marcia, given the current state yield projections for corn and soybeans coupled with current prices how many corn belt states can expect any payment for either crop? Then if you are a good producer will your farm trigger? There were too many items farmers could not control nor anticipate and the five year term coupled with landlord willingness to comply were huge issues! The one year price carrot wasn't enough to give up some of your direct payments for 5 years and if university economists "knew" that crop insurance subsidies are falling by the way they should have said so straight out.

Compare that poor signup to the slow adoption of Revenue Insurance policies for crop insurance. The "cost" of ACRE was pretty marginal compared to the potential benefit in case of a price meltdown for many of us. If prices turn higher due to harvest problems, I'm OK with that -- I make more money. But if prices go lower with bushels eventually being produced, I will still make decent money. And I won't/don't have any symapthy for those who complain they don't understand. It's not that hard.

I was one of the most vocal critics of ACRE when it was announced because of its complexity. I still am not a cheerleader for more and expanded farm programs, but in the end our farm signed up every square inch we could. Why? As the summer unfolded and the ACRE calculators started providing us with tools to analyze the cost/benefit, it became obvious to me the benefit dwarfed the cost for a wheat farm in 2009. To discover the cost/benefit advantage though took days upon days of analysis coupled with asking numerous questions, coupled with some outlook of wheat market potential. All of this takes time and effort in front of a computer with the phone receiver on one ear. These are not tasks most farmers enjoy doing especially in the summer. It was very similiar to figuring out the CSP signup in our region back in 2005. In my opinion, the homework was a major obstacle to widespread participation. Nate Riggers

I guess I'll take a stab at it. First of all, who knows if anything is wrong? We're all going to be a year older before we know if there will be an ACRE payment. Today, who knows if ALL the Ag Economists are going to be wrong? Second, "noise" about the ACRE program does not necessarily equal understanding. As with the 2002 Farm Bill, a proper analysis and perspective must include historical price charts. Finally, many are trained to pretty much take the word and analysis of the Ag Economists. However, until those analyses go beyond a brief summary analysis to include the effect on the entire operation, cash flows, and marketing plans, most farmers will not accept them.

Dear Marcia, Tell your university professors not to look for complex answers when a simple one will do. IMHO, this program failed because the source of information most trusted by farmers, FSA Office personnel, were given no official training about it, and the unofficial word in their break room was that it was going to be a lot of extra work on their end. Three vignettes: 1) Feb/March FSA farmer meetings were heavily attended in my area. Every farmer that walked into my office afterward said the same thing ... the CED had no information on ACRE whatsoever. Most farmers left angry. 2) A June timeframe mailing from one of the three FSA offices where I farm was almost comical in its ACRE "fact sheet". It read like an abbreviated version of Letterman's 10 reasons not to sign up for ACRE. A) 20 % reduction in payments B) 4 year commitment C) Must prove yields D) Price guarantee levels undetermined E) Landlord must sign Nowhere on the page did it say, if the price of corn drops below $3.00, ACRE could pay you over $100 per acre in one year. 3) In XXX Co., IL the acting CED is a farmers wife who is very involved in her husband's operation, and who did the ACRE research on her own for their farm. She shared her findings in an easy across the counter manner with farmers one on one. I do not know how the final numbers turned out, but early on, over half of the farms signed up in the state of Illinois were from her county. I enjoy your posts on DTN. Peter from Illinois.

Marcia, I enjoyed the article the comments following the article. Everyone will have their own reasons because every farm and every geographic region has different needs and priorities. But, FSA created their own issues that caused many to hesitate and step back. 1) Farm Bill was eventually passed in June of 2008. The following 14 months failed to provide a clear concise path of policy. ACRE policies were segmented in parcels and each parcel was dribbled out like bread crumbs to pigeons. 2) The most important policies were announced late in the game after most of the midwest was slugging out a horrific spring planting in muddy conditions. Who had the time to sit and ‘ponder’ all the variables to the program. Our local FSA office hosted a dozen public meetings from January through August. I don’t think they averaged 40 people per meeting, overall. 3) FSA at the national level is notorious in changing policies in mid-stream. Who can afford the transitions when policies impact your enrollment decisions. 4) Most of the farmers have more ‘on-the-line’ than the professors making decisions to enroll their own farms. The typical farmer in the midwest will have 4 to 10 farms (different landlords) and keeping production straight is a challenge in itself depending on your access to drying & storage facilities. Or, how many times does a guy ‘start’ a field before skipping around until he finds a field that is dry enough to commit to? How many times is the FSA County office field reporter going to visit that binsite? 5) Relative to comment #4, a guy may participate on 2 or 3 farms but does not enroll the other 3 farms in ACRE…..those are usually the cash rented farms because getting their signatures was tough enough for the DCP contracts! Also, keeping production evidence separate between DCP farms from ACRE farms will be interesting. 6) Too many variables and estimates between now and 2012. 7) I think I’ll stick with my CRC and stay away from the circus. --Jerry from Illinois

Here in Sumner county Kansas we were hurt bad by the spring late freeze on the winter wheat crop. From highway 54 north there was no damage, resulting in a bumper crop for the state while the southern tier of counties had 50% loss. Acre would not have paid us one dime. Crop insurance was not much better as they set the "harvest price" a full $1.00 per bushel more than the market was at harvest. I challenged a bureaucrat in Washington DC to show me an elevator anywhere in the state let alone my county where I could have gotten $6.34 for wheat. Harvest price means the posted bid at the local elevator when you deliver the grain from the field to the elevator. These paper pushers use futures on the board. All these programs are rigged by bankers and paper pushers to keep us from going under water but not let us get out past the neck. Control is the key drive to all these programs and acre ties you up tighter than any program that has come before. If this is not the case then why does it not allow you to get out of it? Karl Marx would have been proud of the acre program.

A simple reason is that payments with certainty tend to be favored over payments with uncertainty, even if the latter deal may be better. Too complex, too much uncertainty, too much work.

The comment from Jerry catches my problems. I cash rent from multiple landlords, have no scales, put all production in my bins, and have only yield monitor data to separate production from participating and non-participating farms. So far crop ins accepts these records, but FSA would not commit on whether these would be adequate for ACRE. Some farms would have required multiple signatures from family members scattered about over a wide area. There was a state FSA guy at the office one day when I was there, and he ran numbers for me on their spreadsheet, but even he, a month before signup date, could not answer my questions about recordkeeping. I use the CCC loan regularly for fall cash flow, and the cut in rates would be very inconvienent at best, probably cause tax management problems. I was leaving for a two week vacation in late July, and the decision not to enroll was one I backed into without reluctantly, and without a lot of confidence.

ingore the first "without" in the last sentence. editing error.

All of the above reasons sounds legit. The paperwork and landlord communication was why even those who enrolled did so on farms they owned, rather than rented. However, as Jerry points out, keeping your production straight on farms in and farms out of the program adds another bookkeeping complication. In case you missed the news report yesterday, FSA reports that 13% of eligible base acres enrolled in ACRE this year, and corn was the predominant crop among those who enrolled. No surprises there. Nobody mentioned that you won't get your ACRE checks until a year from now, so that's when we'll know the real score.

didnt like the lockin portion on acre. i have to sign up yearly for regular program. also didnt like the cut in loan rate with acre, which i use almost every fall. and to me the 1 year wait for apossible payment was a nonstarter. what will the dollar be worth a year from now? dave wiebke

From thereports that you attribute to FCS ( or just Mid-America FCS ?) , would suggest that farmers borrowing from the "FCS" are borrowing short term operating funds at 3.75% accross the board , i.e. "The Feds policy of stimulating ,cheap credit Farm Credit's varible-rate operating loan has been running 3.75% since January 1 , rates likely to continue through early 2010 in this environment , according to Medley . Just curious , this story of all the Mid-America Borrowers only paying just 3.75% for operating funds since Jan 2009 , expected to early 2010 , accross the board ( or even for all FCS borrowers everywhere , can not really tell from how the story is reported ?) is somewhat remarkable ! How fortunate it has the quasi backing of the government ( Fannie/Freddie ) to allow its bonds sales to allow its customers such even handed bargain basement pricing . Kind of reminds me of that issue with Government Health Ins Option potentially creating an environment to drive competion in the open market out of business . None the less , it remains remarkable that FCS borrowers have been borrowing operating financing at 3.75% since Jan 1 , 2009 , everyone who reads your article should take note and give them a call , since it is stated that its bargain basement rates are likely to continue into next year !

The quasi government status of all Farm Credit institutions has really put local banks at a major disadvantage. It is a shame because the banks and bank employees are usually far more active in their local communities but they have a hard time keeping customers due to the unfair advantages Farm Credit has. The way FC parades around the county knocking on doors to steal credits is shameful. They are making rediculusly risky loans because they know they can get a government bailout either thru capital infusion or fed backed guarantees. I have ignored all the FC salesmen and kept my business at the local bank and paid the higher rate because I am against government bailouts, for free markets, and for my local community.

Pat, we post Farm Credit Services of Mid-America's interest rates for operating and real estate credit on a daily basis on the Interest Rate Snapshot and Farm Finance page and consider them a bellwether of ag credit conditions. When rates are at a turning point, they affect all borrowers, not just those in the Farm Credit System. FCS of Mid-America notes these are rates for borrowers with good credit, so high risk borrowers may pay more and lower risk borrowers could pay less (no different than commercial banks' risk ratings). In my experience, country banks have been very competitive with Farm Credit on operating money and that should be especially true now that they are paying 0.1% on our checking and money market account balances!

Marcia , I merely mentioned that I found it remarkable that per Mr Medley's statement , Mid-America's customers were paying 3.75% for operating funds since Jan. 1 . The story you reported did not say anything other than that was the rate it was charging . Apparently Mr. Medley gave you a broader range of rates being charged than was inferred ( i.e. one rate of 3.75%) , however the reader would not have known that until now . I think country banks can be very competitive , however one can not ignore that the suedo govt. backing of FCS bond funding is not available to them , thus they have to compete in service and talent , beyond the Walmart approach of lowest pricing . Why don't you ask your readers how close to an average rate of 3.75% their local banks are charging them , since Jan. 1 , I think you might be surprised . One can simply follow the treasuries , understand liquidity premiums a little , the TED spread , etc , and could be well forewarned in advance of transitional rate pricing risks , but might be better advised to understand what changes might have taken place in the credit underwriting standards of its lender , Mid-America included . From what I garnered from Mr. Medley's lead on of 3.75% to embelish the story is not unlike those promotional 0% Interest for 30 Days deceptive advertising mailings we all receive ( or DTN quoted representations in this case ) , its the fine print that the tells the real story , but the point is to get the application first , and then tell the rest of the story . P.S. Marcia , based on all the regulatory oversight , new capital ratios , FDIC Ins. costs , I must remark on your comment that "country banks should be very competitive with FCS on operating money , especially now that they are paying .01% on our checking and MM accts " . That might be how you feel , but it is no more ligitimate than the price of a bu. of wheat , or the farmgate price of milk constituting 90% of what the retail cost of bread or gallon of milk would be priced at in your Walmart store . While the FCS does indeed have the lion's share of farm R.E. term financing in this Country , they do not share that position in operating financing , thus they may not be the most representative bellweather snapshot for working capital financing . This financing is often a much more analytical task than underwriting term financing of real estate ( though they may find out once more the perils of soley lending on inflated R.E values as was the case in the early 1980's , and wish they had remembered some 1980's lessons ) . Thanks for the forum , and the freedom to express .........

Pat, healthy competition between lenders is good for farmers. They value their lender relationships and are willing to pay a little premium for those who understand their business, but I also say amen to those who are brave enough to post their rates publicly on a daily basis. From what I can gather, the Federal Reserve is the only one who collects such bank rates, they only do it quarterly and they tend to lag the market by months. For the first half of the year (the latest data), the Chicago Federal Reserve reports that the average rate charged by commercial banks for ag loans in their district was 6.2% for operating money and 6.15% for real estate loans. Of course, rates and terms vary between large/small banks, size of loan and credit quality, as they should. My commercial farmer friends tell me their country banks match what Farm Credit offers on operating money, though.

Marcia, Not to bemoan the point , but I think you just affirmed my point when you state that the Chicago Federal Reserve reported its district's commercial banks charged an "average" rate of 6.20% for agricultural operating loans for the for the first 6 months of 2009 . Per Mid-America's presentation , its "implied average rate on varible rates ( m/l standard ) for ag. operating loans since Jan. 1st is 3.75% (personal knowledge of what most the larger community banks and regionals charged would be in-between ) . From your earlier story that the Government would be well advised to model its homeowner's mortgage relief pledge on what the Farm Credit Services has adopted ( arbitration , etc. ) , I can not help but gather that you are a strong proponent of the FCS in general , with good intentions I'm sure . I will grant you that the FCS is competitive , so much so that they it is attempting at every turn to enter into competition with all banks everywhere for commercial real estate loans , manuafacturing , whatever ! As was my point , with its (FCS) Quasi-Government bond backing , and perception that its debt obligations are fail proof ( Fannie , Freddie ) , it enjoys a competitive advantage that its competition does not have , its that simple , that's why the Mid-America rates for 1st half of 2009 were quopted at 3.75% , and Chicago Fed Reserve District ag. operating rates were reported at 6.20 . As I also mentioned in my earlier post , this same Govt. backed logic can alos be applied to the debate over the competiveness in the health care industry if the Government were to create its own plan . Who can compete with an industry peer with unlimited access to capital , and a "get out of jail free card" , as the FCS was handed in the 1980's , and yes , History has been known to repeat itself . In closing , while I respect that you view Mid-America FCS as "being brave enough to post their rates daily" , I would suggest that perhaps "boastful enough" could perhaps be the case ? I do not know what brave has to do with telling the public you charge on average 3.75% ( thanks to the U.S. Govt.) .

History has repeated itself Pat. FCS and AgStar are in deep with the hog guys and their years of equity lending will bite them big again in this deal. Many weak producers in our area go to FCS because they don't have to do cash flows and are only required to provide limited documentation. Basically, they recieved subprime ag loans to finance their operations but FCS/AgStar knows they will be bailed out so they can afford to take the extra risk.

I am confused. In the first paragraph, white mold is not an insurable loss. In the fifth paragraph it is. Which is it?? I picked two ears from a field (NE KS) last week, and one of them was completely covered with white mold. The other was clean. I have not looked further yet.

Stephen, I find crop insurers' description confusing, too, which is why I have asked RMA to clarify. Unlike aflatoxin, which is an insurable loss and adjustments made based on yield and the percent price dockage, there's no public pronouncement of how RMA handles this yet. I'll check back when I get more details.

4-6 cent dockage on soybeans? that's not even significant. we are being hit $1.00/ bu on 1 % protein on wheat.

Winter Wheat country experienced this 3 years ago when June and July were so wet and the wheat crop sprouted and test weights went into the low 50's. We were hit by the double blow of crop insurance standards being so far apart from the elevator. No one gave a rats ass back then. USDA would be better off by offering to the farmer the choice of either the crop insurance policy as it is or letting the farmer take the premium being paid to the insurance company and use it to self insure. That option would sure make the insurance companies do a better job. As the system stands now the only way it works if you have a 100% wipe out. A 50% loss or quality loss and the policy should be made of two ply paper, that's all its good for.

Marsha: At this juncture, we don't see a contraction in cash rents providing a "relief value" for crop farmers. Rather, we see a continued strong cash rent market in which farm operators are willing to give back some of the record profits of 2007-2008 to maintain or continue to expand their crop acreage base. Early results of competitive-bid lease offerings across the Midwest show firm-to-rising lease rates for 2010. A lease auction yesterday in Hardin County, IA of two tracts totalling 607 acres fetched $280/A for 2010--20% above the 2009 rate. Our enterprise research indicates that in private negotiations, most tenants are inquiring about rent cuts but that landowners are resisting and that at minimum, rents are staying the same. Central Iowa market participants report a lot of early negative sentiment regarding 2010 rents, but with strong anticipated crop yields, the rent market appears to be strengthening. Mike Fritz Editor www.farmlandinvestorletter.com

Michael, I think the panelists on DTN's Oct. 7 webinar concluded that the very highest cash rents in 2009 will be shaved in 2010, but that "average" rents will probably stabilize. Since the 1980s, Federal Reserve surveys show only a handful of years when rents dipped, and then only a percent or two. In the early 2000s, Iowa-Illinois growers could operate on a $50 per acre profit margin, but given the excess volatility we've seen in commodity markets and in input costs, that's just not enough today. Maybe $90 or $100 margins aren't unjustified--but those big $300 rents don't compute for many growers if corn averages just $3.75.