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2011 Ag Year In Review

As we reach the end of the year, it is a good time to reflect on what happened agriculturally in the region in 2011. Following are some highlights regarding crop production, grain prices, crop input costs, and livestock profits for 2011. [ read more ... ]

New Farm Bill Stalled

In mid-November it appeared that we may be heading for a quick resolution toward adopting a new Farm Bill. U.S. Senate Ag Committee Chair, Senator Debbie Stabenow (D-Michigan), and U.S. House Ag Committee Chair, Representative Frank Lucas (R-Oklahoma), drafted potential new Farm Bill language to be included in a proposed Congressional Super  Committee agreement to reduce the Federal Budget deficit by $1.2 trillion. The Super Committee did not reach agreement, so there was never an opportunity to have the new Farm Bill proposal included in any final agreement. [ read more ... ]

Flexible Cash Rental Leases

The continued strength in corn and soybean commodity prices in the past few months, and the resulting projected increase in crop income per acre, has caused many landlords to consider significant increases in cash rental rates on rented farm land for 2012. This comes after substantial increases in many rental rates from 2008-2011. Many crop producers are concerned that the favorable crop prices may not last long term, and that the gross income per acre in future years may not be high enough to justify the higher cash rental rates that are being proposed for the 2012, or potential future rental rate increases. In addition, crop input costs for seed, fertilizer, chemicals, fuel, and crop drying are likely to be higher in 2012, as compared to the 2011 crop year. An alternative to the proposed high cash rental rates for 2012, or potentially even higher rental rates in the future, 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 ... ]

Check Grain Bins

Corn and soybean producers across the Midwest had very good Fall harvest season, with many farm operators completing harvest by early November. Producers need to pay close attention to monitoring grain that is stored in on-farm grain bins for potential storage problems. Much of the corn and soybeans in 2011 were harvested and placed into grain bins at very warm temperatures; however, we have had a wide range of temperatures in the past several weeks, from fairly cold to quite warm. [read more ... ]

DCP And Acre Program Sign-Up For 2012

USDA announced in earlier this Fall that sign-up for the 2012 DCP and ACRE programs at County Farm Service Agency (FSA) Offices will not start until January 23, 2012, and will continue through June 1, 2012. There is no scheduled advance direct payment for 2012, so the entire 2012 direct payment will be paid to producers after October 1, 2012. Producers that enrolled in the ACRE program in 2009, 2010 or 2011, or that opt for the ACRE program for 2012, will have their total direct payments reduced by 20 percent for 2012. Producers that have changes in owned and rented land for 2012 will need to have those adjustments made at the County FSA office prior to enrolling in the 2012 DCP program. Any changes in government farm programs resulting from a potential new Farm Bill most likely would not be implemented until the 2013 crop year. [ read more ... ]

Use Caution on Cash Rental Rates

Cash corn and soybean prices have been strong for the past 12-18 months, which is spurring some very rapid and dramatic increases in annual cash rental rates. Cash corn prices in Southern Minnesota are near $5.75 per bushel as of 11-21-11, and cash soybean prices are near $11.00 per bushel; however, local corn prices were as high as $7.00 per bushel in early September, and were above $6.00 per bushel, until mid-November. Local cash soybean prices were above $13.50 per bushel in early September, before dropping back to the current price levels. Producers can still forward price their 2012 corn at a new crop local price near $5.00 per bushel, and 2011 soybeans near $11.00 per bushel, which are slightly below the current cash grain prices. These higher commodity price levels for 2011 corn and soybeans, as well as very good price prospects for the 2012 crop year, are definitely being reflected in higher land rental rates across the Midwest. [ read more ... ]

Farm Bill Cuts Likely

Balancing the Federal budget and making budget reductions has been receiving major attention in recent months. Major developments have included the debt ceiling /deficit reduction bill passed by Congress this past Summer, and the current 12-member Congressional super committee that was named to develop an adjustment plan for the federal budget deficit. If the Super Committee can not reach an agreement, the Administration will be authorized to make across-the board cuts in nearly all Federal programs. [ read more ... ]

Ethanol Industry Faces Challenges

What a difference a decade makes ! In 2000, U.S. ethanol production was less than 2 billion gallons per year, with 54 ethanol plants operating in the Country, and many of them being quite small. The estimated ethanol production for 2011 is over 13 billion gallons per year, with over 200 ethanol plants operating in 29 States, with a majority of the ethanol plants in the Midwest. Today, over 85 percent of the motor fuel sold in the U.S. contains some type of ethanol blend, and the use of ethanol has reduced the need for oil imports from OPEC and other nations by about 445 million barrels per year, which saved the U.S. about $34 billion. In 2010, it was estimated that there were over 7 million “flex-fuel” vehicles in use in the U.S., compared to virtually none a decade ago. [ read more ... ]

Land Value "Bubble" ?

In the Fall of 2010, Sheila Bair, Chair of the Federal Deposit Insurance Corporation (FDIC), raised a few eyebrows when she suggested that we could be headed for a “farm land financial bubble”, due to the very rapid increase in farm land values in recent years. The FDIC oversees the financial health of many of the Community Banks that are involved in agricultural lending. Since that time, the Kansas City Federal Reserve Bank has also raised similar concerns, which raises the question …… Are we headed for a “financial bubble” in land values ? [ read more ... ]