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2014 Farm Custom Rates

Due to the high cost of investment in farm machinery, an ever-increasing number of farm operators are hiring other farm operators to provide some or all of their machinery resources for their farm operation. this is especially true with new and younger farm operators, and with children that decide to start farming with their parents. Also, some land investors are choosing to operate the farm themselves rather than cash renting the land another farm operator. In that case, the landowner is generally hiring a farm operator to provide necessary tillage, planting and harvesting crop operations under a custom farming agreement. Some farm operators also hire specific farm operations through a custom arrangement with another farm operator, such as combining or hay baling. Many farm operators negotiate these types of custom rate and custom farming arrangements in the Spring of the year.  [ read more ... ]

 

2014 Likely To Be A Late Spring

It appears that 2014 will likely be similar to 2013, with a later than normal initiation of Spring fieldwork in many areas of the Upper Midwest. This year, we are not likely to see much full-scale field work in much of Southern Minnesota until after April 20, and it will probably be late April or early May before a significant amount of corn is planted. Soil temperatures are still well below minimal acceptable levels for planting corn, and there is still a considerable amount of frost in the ground in most areas. Some portions of Central Minnesota still have significant snow cover to melt. As recently as 2012, most farmers in Southern Minnesota and Iowa began full-scale field work during the week of April 10-17, with most of the corn being planted by the end of April.  [ read more ... ]

 

USDA Reports For 3-31-14

On March 31, 2014, USDA released its “Prospective Plantings Report” and its “Quarterly Grain Stocks Report”.  These were very highly anticipated USDA Reports, due to the uncertainty in grain prices in recent months, as well as with the potential for large increases in USDA estimated grain stocks in the coming year. Typically, these late March USDA Reports are very critical to farm operators and grain traders because these reports tend to have a high impact on grain market prices in the Spring and early Summer. This is the time of the year when many farm operators try to sell remaining grain inventories from the previous growing season, as well as look for opportunities to forward price a portion of the anticipated crop for the current year. In a majority of years, corn and soybean prices usually reach their peak price in the Spring months, from April until June.  [ read more ... ]

 

2014 National Ag Week

“National Ag Week” is being celebrated March 23-30 all across the United States, as well as in Minnesota, with Tuesday, March 25, being designated as “National Ag Day”.  As we celebrate “National Ag Week”, it is a good time to reflect on all the traditions and advancements that help make the U.S. agriculture industry second to none !  [ read more ... ]

 

PED Virus Affecting The Swine Industry

Porcine epidemic diarrhea virus (PEDV) is a newer swine disease that first entered the United States in May, 2013, and is now causing major economic loss to some hog producers, as well as impacting several other aspects of the swine industry. PEDV is deadly to baby pigs from birth until about three weeks of age, and infected swine herds can suffer a 75-100 percent loss of baby pigs for a four to five week period. PEDV poses no threat to humans, or has no food safety impact on retail pork supplies. [ read more ... ]

 

New Farm Bill Offers Choices

The new Farm Bill, which will govern farm commodity programs for the next five years (2014-2018) will offer several new farm program choices for producers to consider. Direct payments will be eliminated, as will potential counter-cyclical payments, the average crop revenue (ACRE) program, and the permanent disaster program for crops (SURE), which were all part of the last Farm Bill. These programs will be replaced by either a new revenue-based Ag Risk Coverage (ARC) program, or a Price Loss Coverage (PLC) program. [ read more ... ]

 

USDA Report Lowers Corn Supply

On February 10, USDA released the latest World Agriculture Supply and Demand Estimates (WASDE) Report, which showed slight decrease in the expected U.S. corn ending stocks for 2013-14, compared to the January estimates. The projected 2013-14 corn ending stocks are now estimated at 1.48 billion bushels, as compared to 1.63 billion bushels in the January Report. By comparison, corn ending stocks were only 821 million bushels at the end of the 2012-13 marketing year, and 989 million bushels at the end of the 2011-12 marketing year. The all important corn “stocks-to-use” ratio for 2013-14 is now estimated to be near 11.1 percent by the end of the current marketing year, as compared to a stocks-to-use ratio of only 7.4 percent for the 2012-13 marketing year. [ read more ... ]

 

Passage of the New Farm Bill

The long-awaited new Farm Bill finally passed the U.S. House on Wednesday, January 29, by a vote of 251-166. The legislation is likely to pass the U.S. Senate in the coming days, and will be signed into law by President Obama shortly after that. The new Farm Bill will reduce overall Federal spending, will reduce total CRP acreage, and will make some significant changes to farm commodity programs. The new Farm Bill will govern Federal farm programs for the next five years (2014-2018), and commodity programs will be implemented for the 2014 crop year. [ read more ... ]

 

Farm Size Comparisons

Ask many farmers or ag professionals, and probably anyone with any knowledge of crop farming, whether larger farm operations have a lower cost of production, and they would probably say “YES”. However, the farm management data from Minnesota and other States does not support the assumption that average costs of production per acre get lower as crop farm sizes gets larger. Interestingly, in some cases it is just the opposite, and in most situations there is very little correlation to farm size. [ read more ... ]

 

January 10 USDA Reports

As expected, the USDA Crop Production Report released on January 10 indicates that the total U.S. corn production for 2013 will increase significantly, and the 2013 soybean production will increase moderately, as compared to production levels in 2012. The final national average yields per acre for corn and soybeans in 2013 are also expected be significantly higher than the drought-reduced 2012 yields. Following are some highlights of the latest USDA Crop Report, as well as the latest Supply and Demand (WADSE) Report : [ read more ... ]

 

2014 Farm Management Strategies

As we look ahead to 2014, crop revenues are likely to be significantly reduced compared to 2013 revenue levels. There is likely to be some moderation in 2014 crop input costs, due to lower fertilizer costs; however, land rental rates will likely remain fairly high, which could add more risk to 2014 crop production. The profit margins in the livestock sector look improved for 2014, due to the moderation in feed costs that is expected. Credit availability for agriculture should remain good for farm businesses that are on a solid financial base; however, credit could get tighter for farm businesses that are in a “higher-risk” financial position. [ read more ... ]

 

Looking Ahead To 2014

2014 is setting up to be another interesting year in the agriculture industry, following a fairly profitable year in 2013 for many crop producers in the upper Midwest, as well as for many livestock producers later in the year. 2013 will end without a new Farm Bill passed to replace the current Farm Bill that officially expired on September 30, 2013, and with some deep concerns relative to the future of the renewable fuels industry. Following are some items that are likely to be on the forefront in the agriculture industry for 2014 :  [ read more ... ]

 

2013 Ag Review (Part 2)

This is the second of a two-part article highlighting what happened agriculturally in 2013. Last week’s  article provided a review of 2013 crop production and weather conditions. This week we will focus on some highlights regarding livestock production, input costs, grain prices, and the overall farm economy for 2013 ……  [ read more ... ]

 

2013 Ag Review (Part 1)

As we reach the end of the year, it is a good time to reflect on what happened agriculturally in the region and across the United States in 2013. This will be the first of a two-part article, with a review of 2013 crop production and weather conditions this week, and a review of livestock production, input costs, grain prices and the overall farm economy next week. Following are some highlights regarding crop production and weather conditions for 2013 ……  [ read more ... ]

 

Proposed Changes To The RFS Requirements

The U.S. Environmental Protection Agency (EPA) recently announced a proposal to reduce the Renewable Fuels Standard (RFS) for 2014 from the previous requirement of 18.15 billion gallons to a revised level of 15.21 billion gallons. The EPA proposal represents a reduction of approximately 16 percent from the original RFS fuel volume for 2014, which was originally established by the “Energy Independence and Security Act (EISA) of 2007. The overall goal of this legislation was to reduce U.S. dependence on foreign oil to meet our energy needs, and to expand the production of renewable fuels domestically in the U.S.     [ read more ... ]

 

2013 Rural Legislative Forum

“Keeping Rural Minnesota Relevant during the Next Decade” is the theme of the 31st annual Rural Legislative Forum on Thursday, December 12, from 3:30 p.m. to 8:00 p.m. at the South Central College, 1920 Lee Blvd., North Mankato. Registration cost for the Forum is $10.00 per person, which includes a pork chop dinner prepared by the Nicollet County Pork Producers, and all printed materials. Advance registration is requested prior to December 12.  [ read more ... ]

 

High Land Rental Rates

Cash corn and soybean prices have dropped significantly in the past few months, and the projected forward prices for the Fall of 2014 do not show much improvement, or could be even lower. This is causing some concern among farm operators, as they negotiate land rental rates for the 2014 crop year. Most of the Upper Midwest experienced some rather large increases in cash rental rates in recent years, reflecting the much higher levels of crop prices that existed in the past 2-3 years, prior to the last half of 2013. Some 2014 land rental rates may be set at levels that do not offer much opportunity for profit potential from crop production in 2014, or could even result in a net loss to the farm operator. [ read more ... ]

 

2013 Grain Bin Management

Many corn and soybean producers across the Midwest completed harvest by mid-November, and now need to pay close attention to grain that is stored in on-farm grain bins for potential storage problems. Much of the corn and soybeans in 2013 were harvested and placed into grain bins at fairly warm temperatures; however, we have had a wide range of temperatures in the past several weeks. [ read more ... ]

 

Update On Farm Custom Rates

An increased number of farm operators are now providing some type of custom work to other farmers during the growing season. Many times, the farmers involved in custom work arrangements wonder what a fair custom rate is for the various faming practices that were performed. Iowa State University releases the annual “Iowa Farm Custom Rate Survey” each year in February, which is based on a survey of custom operators, farm managers, and ag lenders on what they expect custom farm rates to be for various farm operations to be for the coming year. This is probably the most widely used and updated custom rate information that is available in the Upper Midwest. [ read more ... ]

 

Farm Bill Conference Committee

 

The forty-one members of the U.S. House and Senate Conference Committee, designated to determine a new Farm Bill, are in the process of trying to reach a compromise on the versions of the new Farm Bill that were passed earlier this year by both the Senate and House. There are a lot of major differences in the two versions of the Farm Bill that need to be worked out by the Conference Committee, as well as some other issues that will likely impact the debate. The current Farm Bill extension expired on September 30, 2013, with many programs and provisions set to be discontinued after December 31, 2013, so timing is very critical for this Conference Committee. [ read more ... ]

 

Flexible Lease Agreements For 2014

The strength in corn and soybean commodity prices in the past few years, and the resulting increases in gross crop income per acre, has caused many landlords to significantly increase cash rental rates in recent years. Many crop producers are now facing the prospects of much lower crop prices for the next few years, and fear that the gross income per acre in coming years may not be high enough to justify the higher cash rental rates that are currently being charged. In addition, crop input costs for seed, fertilizer, chemicals, fuel, and crop drying are not projected to decline much in 2014, as compared to the 2013 crop year, and in fact some expenses may even increase for 2014. An alternative to the proposed high cash rental rates for 2014 and beyond, may be for producers and landlords to consider a “flexible cash lease” rental agreement, which allows the final cash rental rate to vary as crop yields and market prices vary, or as gross revenue per acre exceeds established targets. [ read more ... ]

 

2013 Crop Insurance Calculations

With Federal Crop Insurance, every year is different, and with the multiple options available to producers, there are many variable results from crop insurance coverage at harvest time. 2013 will be no different, with some producers choosing Yield Protection (YP) policies (yield only) versus Revenue Protection (RP) policies (yield and price), and also having differences in the level of coverage chosen, “optional units” or “enterprise units”, etc. that affect final insurance payments. [ read more ... ]

 

November 8 USDA Reports

As expected, the USDA Report released on November 8 increased the estimated total corn and soybean production in 2013. Crop production estimates were raised, despite many areas of Iowa, Minnesota, and the Upper Midwest dealing with very late planting, along with some late season drought conditions. However, overall 2013 crop conditions in the U.S. were better than expected, with many areas benefiting from some very favorable weather in late Summer, and the extended growing season in the Upper Midwest enhanced some of the later planted crops. The changes in the November crop production figures were a bit more dramatic than normal due to the fact that no October USDA Reports were issued, as a result of the Federal Government shutdown in early October. [ read more ... ]

 

Harvest Progressing Nicely

The Fall harvest season started a bit later than normal in 2013, but has been progressing at a fairly nice pace in recent weeks across the region. Following above normal temperatures through most of September and early October, it appears that late October will feature much cooler temperatures, which should not impact harvest progress. Many areas have also received some beneficial rainfall in recent weeks, which has only caused minor delays in harvest progress, due to the very dry soil conditions that existed prior to harvest. [ read more ... ]

 

Government Shutdown Impacts Farmers

As of October 1st, the Federal government officially went into a “shutdown” mode, meaning that all government services deemed as “non-essential” were temporarily discontinued. Federal offices were closed and Federal employees were placed on indefinite “furlough”. There have been 17 Federal government shutdowns since 1976, with the longest lasting 21 days in 1995-96. As of this writing, there is still no resolution forthcoming on the Federal government shutdown. [ read more ]