Top 10 Ag News Stories 2015

By DTN Staff

OMAHA (DTN) -- Each year during the week between Christmas and New Year's Day, DTN publishes our choices for the top 10 ag news stories of the year. Today we continue our rundown with No. 7, 6 and 5.

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No. 7 Farm Bill Programs ARC and PLC Evolved Throughout 2015

By Chris Clayton
DTN Ag Policy Editor

Lower prices for corn and soybeans meant farm-program payments would be more critical for farmers in 2015 just as they were wading through the intricacies of new farm programs.

With net farm income falling 38% from 2014, the first round of roughly $3.9 billion in payments from Agricultural Risk Coverage and Price Loss Coverage programs provided necessary cash flow in the fall to about 800,000 farm operations.

Farmers throughout most of Missouri saw historically high corn yields, so only a couple of counties triggered any kind of ARC payment. The same held true for most of Mississippi, Alabama and Tennessee, as well as southern Illinois, southeast Kansas and northeast Oklahoma.

Fewer counties nationally generated payments for soybeans. The national market average price for the 2014-15 soybean crop was $10.10.

For wheat, ARC payments generated by county were predominately in the Southern Plains -- Kansas, Oklahoma and Texas panhandle -- as well as the major growing counties in Washington State, Oregon and northern Illinois.

All of this occurred after an extended enrollment period stretching into last spring. USDA reported farmers ended up overwhelmingly choosing ARC for corn and soybean base acres. For corn, roughly 1.24 million farms totaling more than 90 million acres, or about 91% of all corn farms, signed up for ARC.

For soybeans, ARC was chosen on 52.6 million acres by more than 1 million farms, or 96% of the eligible farms.

Wheat acres are more divided. About 35.4 million acres and 527,000 farms signed up wheat acres for ARC while 27 million acres went for PLC by 271,000 farms.

For grain sorghum, about 5.9 million acres were enrolled in PLC while another 2.99 million acres went into in ARC.

Nearly all rice acres -- 4 million or so -- were enrolled in PLC, along with more than 2 million peanut acres and 3.8 million barley acres.

Sequestration cuts reared up and took a bite out of safety nets. Farmers ended up taking a 6.8% cut in their payments.

Farmers learned how important it was to understand the "administrative" county at the Farm Service Agency. For growers with farms in multiple counties, the designation of an administrative county meant Agricultural Risk Coverage-County checks would not be paid at county rates where the ground is located, but where records are housed. That initially meant some farmers were getting minimal payments even though most of their ground was located in counties collecting larger ARC checks.

After some reporting by DTN, FSA retroactively changed its policy to allow farmers to calculate ARC-County payments based on the physical location of each tract of the farm.

FSA stated farmers will have until Feb. 1, 2016, to request a recalculation. For the 2016-18 crop years, farmers would have to transfer the farm to a different county or reconstitute the separate tracts of the farm that would then allow those tracts to be transferred.

In mid-December Congress reopened the farm bill to allow unlimited gains through marketing loans by reinstating commodity certificates. The language included in the omnibus spending bill was considered critical to the cotton industry, which has been struggling with low prices. Cotton cooperatives remain one of the biggest users of marketing loans.

USDA also finalized a rule tightening requirements on active engagement for farm managers in general partnerships and joint ventures. Such entities are now limited to a maximum of three farm managers collecting payments if the farm meets definitions regarding size and complexity.

Farm managers must prove they contribute at least 500 hours of farm-management work per year or at least 25% of the time necessary to run the farm. They must also keep some sort of record book to show they are indeed doing the management or labor required. This new definition defines "active personal management" on the operation and only applies to farm managers on non-family farming operations seeking to qualify multiple people for program payments.

If a person is found ineligible, the overall operation could lose payment eligibility for up to $125,000.

As farm programs move into 2016, the ARC guarantee will likely lessen because of lower prices, meaning there will likely be a lot of arguments next fall over county yields.

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

Follow him on Twitter @ChrisClaytonDTN

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No. 6 Farmland: The Bust That Wasn't

By Marcia Zarley Taylor
DTN Executive Editor

This was the year Grain Belt farmland values were supposed to implode. Instead, sales of good quality land continued to defy gravity, with many land markets trending sideways and some areas with bumper yields actually booking year-over-year gains.

Corn revenues have plunged 40% between 2012 and 2015, USDA estimates, removing much of the spark for farmland's boom this past decade. By mid-year -- when cash corn collapsed to the $3-range -- realtors like Steve Bruere, CEO of Peoples Company based in Clive, Iowa, had expected the state's land values to ultimately bottom 30%-40% below their 2013 peak.

Instead, "good" quality Iowa farmland actually nudged up about 4.8% through November 2015 to $8,448/acre and had only dipped about 8% since its 2013 high, according to the Peak Soil Iowa Farmland Value Index which measures actual sales transactions in half of Iowa's 99 counties. Meanwhile, average Indiana farmland values slipped 4% through November, select Minnesota cropland counties ended with no change and select cropland counties in Wisconsin gained 1.3%, Peak Soil indexes found (see chart http://goo.gl/…). The indexes include private transactions which never hit real estate listings, as well as auctioned and listed property.

Bruere's five Iowa-based appraisers confirmed much the same upward trend by tracking every listing and closing auction results throughout the state.

Many Midwest counties benefited from excellent yields which partially compensated for lower prices. In addition, 2014 ARC-County payments paid in October 2015 ran about $88/acre in places like Boone County. Relatively low sales inventory -- only about 1.5 farms per county with 85% tillable land -- also kept Iowa values higher than expected. What's more, the Federal Reserve's reluctance to raise interest rates until December -- and then by only a quarter of a percent -- meant investors had few safe places to earn a return.

Land markets may be propped up for now, but most land watchers say projected 2016-2018 farm price losses will eventually cause more erosion in farmland prices. Each 2% drop in farm income should reduce farmland values about 1%, according to Iowa State University economist emeritus Mike Duffy.

What's different about this land value cycle, however, is that pools of private investors and institutional owners are waiting in the wings. Wall Street has had a love affair with farmland since 2008, but in many cases investors have been outbid by farmers flush with cash. Now that farm incomes are slipping, outsiders are looking for buying opportunities. For example, Farmland Partners Inc. (NYSE:FPI) smashed real estate records with its announced purchase of 120 Illinois farms totaling 22,300 acres in November. The deal catapulted the REIT into one of the Grain Belt's largest landlords with a total of nearly 105,000 acres under its control, up from 7,300 acres in just 18 months earlier. Similar investor groups are regular land buyers in Texas, Nebraska, Colorado and the Delta.

Duffy remains optimistic about farmland's investment value long term. Between 1950 and 2015, Iowa farmland averaged 11.2% annual returns including both net cash rents and capital gains, he calculated. Over that 65-year period, it showed 52 years of positive returns. That's still better than the S&P 500 gains (with dividends) over history.

Timing counts, however. "If you invested in farmland the 1970s and early 1980s, you would have been better off in stocks than in farmland," Duffy said. "Any other time, except the past couple of years, you'd have been better off investing in farmland."

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

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No. 5 Pest Picture Intensifies in 2015

By Emily Unglesbee
DTN Staff Reporter

Let's face it, American farmers grow some mighty desirable crops.

Each season, growers compete with thousands of species of insects, fungi, nematodes and weeds. This year, the odds tipped in the pests' favor.

The 2015 season served up two new corn diseases, a newly identified soybean disease, and one aggressive new caterpillar pest. In the meantime, weeds continued to outpace available technology. Two long-awaited herbicide-tolerant crops remained in regulatory limbo as weed resistance to products on the market continued to expand.

Glyphosate resistance remains a top concern for producers across the country. Dense resistant waterhemp populations sent some Midwestern growers back to weeding by hand in 2015, and marestail had a field day in fields left fallow from flooding.

Those high water issues set back Palmer amaranth in some parts of the Midwest, but down South, grass weeds gained momentum, said University of Tennessee weed scientist Larry Steckel. Populations of ryegrass, Johnsongrass, and goosegrass with tolerance to glyphosate are becoming increasingly difficult to control, particularly in post-emergence situations.

"Not all glyphosate-resistant weeds are created equal, however," Steckel said. "Palmer amaranth remains the driver weed." This king of weeds dealt growers another blow after populations with resistance to PPO-herbicides were confirmed in Arkansas and Tennessee this year. PPO-inhibitors such as Flexstar, Cobra and Valor have been a staple of broadleaf control in rice and soybeans, particularly since the advent of glyphosate-resistance. Losing those PPO options will hurt, Steckel noted. "In 2015, we took a big step back on the management of Palmer pigweed; we have a lot of fields that look like they did in 2011," he said.

The weeds are moving faster than new technology can get to the field. Monsanto's Roundup Ready 2 Xtend traits, which tolerate glyphosate and dicamba, still await global import approvals and need EPA approval of the complementary herbicide. Monsanto launched the Xtend trait system over a limited number of cotton acres in 2015, but there was no herbicide approved for use.

Dow AgroSciences' Enlist Weed Control system, a trait program designed to tolerate a proprietary pre-mix of 2,4-D Choline and glyphosate, also needs critical China approvals before it can be commercially launched. That system was dealt a further blow this fall when EPA petitioned a federal court to withdraw registration of herbicide premix for further review.

In the meantime, growers are spending more money on weed control than ever before. "A lot of growers' costs have gone up 200% to 250%," Steckel estimated. "And that doesn't even count a lot of the folks hired to go out and hand weed."

Heavy and persistent rainfall across the Midwest and South in the spring and early summer gave crop diseases a chance to thrive in soybean and corn fields. Familiar old standbys -- northern corn leaf blight and gray leaf spot in corn and sudden death syndrome and white mold in soybean -- showed up. Meanwhile, new diseases also joined the fray.

Mississippi State researchers have discovered a new soybean disease they're calling soybean taproot decline. MSU scientists are testing and studying the fungus, which they believe may have been confused with sudden death syndrome in the past.

Tar spot, a fungal disease native to Central America and Mexico, was identified in Indiana and Illinois in September. Shortly after, bacterial leaf stripe, which hasn't been spotted in the U.S. since the '70s, cropped up in Illinois corn fields.

Tar spot isn't a significant yield robber in its home countries near the equator, and bacterial leaf stripe had no economic impact on corn crops in the past. But scientists are urging growers to be on the lookout for both in 2016.

In July, an aggressive global agricultural pest known as the Old World Bollworm landed on U.S. shores for the first time. Three moths were found in Manatee County, Florida -- a small discovery with big implications for American farmers.

Known officially as Helicoverpa armigera, the Old World Bollworm caterpillar causes enormous global agricultural damage each year to vegetables, cotton, soybean, corn and many other grain crops. It has a history of developing resistance to insecticides and some Bt proteins, and nearly a third of all global pesticide applications are aimed at killing it in China, India, Australia, Africa and Europe.

USDA's Animal and Plant Health Inspection Service has launched multi-state surveys to see if the bollworm has made it beyond Florida.

In the meantime, eradication is unlikely, so American growers will have to learn to live with this new pest once it is established, said Louisiana State University entomologist David Kerns. "I would be surprised if we could contain it," he said. "It could hybridize with our native bollworm, and we have no idea what that hybrid will be like. There are a lot of unknowns with this pest. I think the next couple seasons will tell us a lot."

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

Follow Emily Unglesbee on Twitter @Emily_Unglesbee

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Check Wednesday for No. 4, 3 and 2 in our top 10 list.

(CZ/ES)

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