Cattle marketing during an economic downturn

Beef prices have ridden a world-class roller coaster in recent years, making profitable cattle marketing an enormous challenge. Prices peaked in 2014, going as high as they’d been in recent memory. However, they began a downward slide in mid-2015 before tanking through most of 2016.

cattle marketing

Troy Hadrick, pictured with wife Stacy, recently began doing things different when it came to his cattle marketing efforts. Those efforts helped him and other producers get through a recent run of the worst cattle prices the industry has seen in some time. (photo courtesy of advocatesforag.com)

Troy Hadrick is a producer from Faulkton, South Dakota, who rode the highs and lows in beef cattle prices, experiencing firsthand the challenges that low prices present. While fed cattle prices had rallied from October of 2016 into early this year, the business is cyclical and low prices will come around again. Hadrick said it is possible for beef cattle producers to make it through the down times, provided they’re willing to try new things.

There are a lot of theories as to why prices began a free-fall in 2015, falling at an unprecedented pace. Before prices got to that point, Hadrick says beef saw a perfect storm of conditions that drove prices to record highs in 2014. A large number of pigs in the U.S. had died of PED so pork production was way down. An Avian Influenza outbreak had pushed chicken and poultry production lower as well. Combine those facts with the lowest cattle numbers America had seen since the 1940s and you have the recipe for high beef prices.

“There wasn’t enough beef and protein to go around,” Hadrick said, “so our industry did what it always does. It responds and makes a bunch more of the product.”

But the number of cattle head in the herd doesn’t paint the full picture. It’s more about the pounds of product the industry produces. High prices meant producers were getting cattle as fat as possible to produce as many pounds as possible. The industry was at record carcass weight during the boom.

“We were producing carcass weights of approximately 850 pounds at that time,” he said. “Our recent carcass weights were around 814 pounds. So if we kill approximately 500,000 head a week, take that times 30 pounds a head, and look at the difference. The population stays the same as we’re killing the same number of head but the amount of product we’re producing is different.”

Needless to say, prices going from record highs to unbelievably low prices came down hard on the beef industry. There’s no doubt producers were pushed out of business as profits margins shrank to razor-thin levels. Theories ranging from oversupply to market manipulation abounded as the industry was under stress. Hadrick is very sympathetic to the plight of his fellow producers, having gone through the downturn himself. He does want to point out that if producers are willing to try new things, it’s possible to weather the downturns more efficiently.

Back in 2012, the Hadricks began changing their breeding and marketing programs for their cattle. There are different grades of beef and those grades are priced differently.

 

 

Higher quality beef demands a higher price because there’s less of it available. There’s a good demand for higher quality beef because it tastes better.

“We started shooting to produce cattle that would give us the beef that would qualify for these premium programs, such as Certified Angus Beef and USDA Prime,” he said. “If you produce cattle that fit into those categories then you get a nice premium price for your product.”

They did a couple of different things to try to speed up the process of producing premium beef. The family implemented an AI program on the ranch that covered the entire herd, using the best genetics they could find on the market to help them produce the highest quality beef. There’s a lot of data being collected on sires and they looked for the bulls that could get the job done.

So, with that as their focus, here’s where they did something different from what might be considered the ‘norm’ in beef production. Their cattle go down south to be finished but the Hadricks retain ownership.

 

 

“Those cattle are then marketed on a grid,” Troy said. “They harvest those cattle, they hang on the rail, and they’re graded by a USDA Inspector. Based off of that grade and the weight, that’s how the price we receive is calculated. We don’t know the final value of the cattle until they’re hanging on the rail as meat.”

Obviously, there’s a risk of being discounted when you market on a grid. The actual grid is just like other grids you may have seen. For example, if a particular animal graded Prime and was a Yield Grade 3, you follow those two columns and where they meet, that’s what the price was that week for that animal and that’s what we’re paid.

“We started our program with AI and then combined it with genomic testing,” Hadrick said. “We would take DNA samples from some of our cattle, get it analyzed, and that would give us an indicator as far as which cattle would perform well on the grid. We’d also keep back those females that would produce the best calves.”

Between those two technologies, Hadrick said their production went from grading 90 percent Choice, 35 percent Certified Angus Beef, and no Prime, to cattle that finished 57 percent prime, and 100 percent Choice. Hadrick said producers get really good premiums for numbers like that.

“The nice part about it is it doesn’t cost us any more money to raise those cattle,” he said. “It doesn’t cost us any more to feed them, either. Of course, we have to get them bred, but at the end of the day, they’re worth more money.”

There is an additional cost with the genomic testing, but Hadrick says it’s worth it to them because the idea is to identify the cattle that are going to make the family money and those that won’t. They sort cattle accordingly and market those cattle accordingly.

The Hadrick cattle are harvested through a cooperative called U.S. Premium Beef. It’s a rancher-owned cooperative based in Kansas that owns parts of the National Beef Packing Plants in Dodge City and Liberal, Kansas. Hadrick said some visionary people put this idea together back in the 1990s.

“They wanted to give producers the incentive to produce better beef,” Hadrick said, “and they wanted food service businesses and consumers that need beef to be able to come and know they’re getting the highest quality beef. They also wanted to reward the producers that could give them the highest quality beef consistently.”

The grid system runs off what they call plant average. Hadrick said in order to get the premiums, producers have to bring in cattle that are better than what everyone else brings in. That can be a big challenge as they’re attracting a lot of cattle that are high quality right from the start.

The plant isn’t buying cattle from the Hadricks, but instead, they’re buying carcasses. Hadrick said that makes it much harder for producers to try to sneak a bad one through the plant. There’s no hiding a poor carcass once the hide comes off.

He said the new system has advantages from the traditional way of doing business in the cow/cattle industry.

 

 

“On the farming side of things, we got into ethanol, we got into crushing soybeans, in order to get our product closer to the end point,” he said. “The closer you sell your product to the final consumer of your product, the more you’re going to get for it because you’ve added some value to it.”

He said doing business this way isn’t easy. Producers have to manage risk more, they have to have a relationship with the packer, and with the feedlots they work with. Producers also have to know their cattle because they won’t get away with trying to slip a bad one through the chain.

“If you market average cattle, you’re going to get an average price,” Hadrick said. “We’re trying to do things a little differently to do things better.”

Sheep and goats getting more popular on southeast MN farms

The sounds of sheep and goats on southeast Minnesota farms are becoming a little more common than most residents realize. The last couple of years have seen increasing interest in raising the smaller breeds of livestock for a variety of reasons.

sheep and goats

Sheep and goat numbers are picking up on farms across southeast Minnesota, due in part to the smaller size of the animal, especially when it comes to 4H competition.

As sheep interest continues growing in both Houston and Fillmore counties, the Extension Service will host a couple of sheep-related workshops this summer. A sheep producer workshop is set for Rushford on June 16th, with a sheep workshop for area 4H members on the 17th in Preston. Extension Educator Michael Cruse said many area residents might not know that sheep and goat numbers are on the rise.

“Sheep and goats are on the increase in Houston and Fillmore counties,” Cruse said, “especially for 4H projects. There are a number of reasons for this, but the primary reason is they’re smaller animals and easier to handle for 4H kids.”

He said the sheep producer meeting in Rushford is a unique opportunity for area livestock farmers. The University of Minnesota Extension Service recently hired a Sheep Specialist named Travis Hoffman, who the U of M is sharing with North Dakota. After talking with Hoffman over the winter, Cruse wanted to put together a couple of events to maximize his time if he made the trip to southeast Minnesota.

sheep and goats

Houston and Fillmore County Extension Agent Michael Cruse is putting on Extension programs for sheep farmers and 4H kids that want to exhibit sheep and goats at local competitions. (photo from bluffcountrynews.com)

“That’s why we put together a two-day event, starting on June 16th from 2-5 pm,” Cruse said, “Hoffman will be here to do a producer meeting in Rushford and talk about everything from lamb marketing to production management to economics, with a pizza supper at the end.

“A lot of the raising and marketing of sheep is similar to other types of livestock,” Cruse added. “But with sheep, there are a lot of products you can get from them. You can market the wool, the meat, or market them as show animals. There’s a whole range of avenues you could take, and that doesn’t even take into account the organic and grass fed categories that beef is also subject to.”

He said producers would have a chance to visit with both Hoffman and Cruse after the meeting. Then, the attention turns from sheep producers to 4H kids the next day from 8 till noon at the Fillmore County Fairgrounds.

“It’ll be a rotational type of educational event with three or four sessions for the youth,” Cruse said. “Showmanship will be one of the educational sessions as Travis (Hoffman) was also a state judge for sheep. The kids will be allowed to bring one of their own 4H-registered sheep to this event in order to practice showing their sheep, learning to get their feet in the right spot, and how to answer a judge’s questions professionally.”

He said this is a great opportunity for area 4H kids to learn, providing they can get enough people signed up.

Cruse said there are a number of reasons for the growing interest in sheep and goats across the area. First and foremost, there are marketing opportunities for sheep and sheep products, especially in Iowa. There’s also an immigrant population in Rochester and the Twin Cities that prefers both sheep and goat meat.

The other side of it is the animals themselves. They’re much smaller and don’t require as much land to raise, especially for 4H families. Sheep and goats don’t need as much space as a beef cow or larger hog.

“It’s a lot easier to get three or four ewes onto a piece of property than a full-grown dairy steer, for example,” Cruse said. “It’s also easier for the younger children in a farm family to handle the animals too.

 

 

 

 

 

 

MN Cattlemen and Women Meet for 2016 Annual Convention

More than 300 cattlemen, cattlewomen & cattle industry members gathered in Bloomington, MN for the 2016 Minnesota Cattle Industry Convention. This premier policy & educational event in the Minnesota cattle industry featured speakers and an industry leading tradeshow that gives cattlemen and women the tools to connect, learn and innovate into 2017.

“This year’s convention was a fantastic event.  I was very happy to see a great turn out for from both MSCA members, as well as political leaders” – MSCA newly elected President Krist Wollum.

Minnesota state Cattlemen and Cattlemen’s convention

Krist Wollum of Porter, MN was elected to lead MSCA as President for 2017 & 2018.

During general sessions, attendees had the opportunity to learn about new and innovative ways to connect with the consumer, as well as cattle focused economic and political summaries for 2016.

Convention goers also heard from state and national cattle industry and political leaders about current efforts to grow and defend the cattle industry in Minnesota and across the country.

Political leaders including Lt. Governor Tina Smith, Minnesota Department of Agriculture (MDA) Commissioner Dave Frederickson and Senator Amy Klobuchar shared their efforts to defend the agriculture industry on behalf of Minnesota farmers and Ranchers in St. Paul and Washington, D.C.

Members of the Minnesota State Cattlemen’s Association (MSCA) resolution committee set new policy on buffers, deer, health insurance, and agency programs.

Attendees of the 2016 MSCA Cattlemen’s College had the opportunity to listen and interact with some of the most influential regional & national experts in the beef industry. Topics included Beef Quality Assurance (BQA) assessment programs, third-party audits, consumer trust and on-farm BQA best management practices. This program, sponsored by Zoetis, was a joint effort between the National BQA program, the Minnesota Beef Council, IMI Global and Wulf Cattle.

Cattle producers also had the opportunity to engage with various government agencies to learn more about programs to open additional state and federal owned land for public grazing, along with best management practices to implement livestock into cropping operations with the use of cover crops.  This workshop was a joint effort between the Minnesota Department of Natural Resources (DNR), MSCA, The US Fish and Wildlife Service and Prairie Creek Seeds.

Minnesota State Cattlemen’s Convention Cattlemen

Dan Anderson of Roseau, MN was selected as the 2016 Minnesota Cattlemen of the year. (Contributed photo)

During Friday evening’s banquet, Dan Anderson of Roseau, MN, was recognized as the 2016 Minnesota Cattlemen of the year for his efforts to assist cattlemen in his region and across the state with issues impacting their herd health.  He has also been a leader in assisting fellow cattlemen in dealing with wildlife issues impacting their farm’s profitability and an exceptional leader in his dedication to growing MSCA membership.

The Minnesota Corn Growers Association was named the 2016 Beef Industry Service Award recipient for their efforts to support and grow the livestock industry in Minnesota.

Newly elected leadership included Grant Binford, Luverne as Feeder Council Chairmen and Jim Wulf, Starbuck as Cow/Calf Council Chairmen.  Newly elected regional directors include, Dan Anderson, Roseau – Region 1, Darvi Keehr, Little Falls – Region 5, Warren Jansma, Ellsworth – Region 7 and Frank Brand, Lake City – Region 9.  The MSCA executive committee for 2017-2018 will consist of Krist Wollum, Porter as President, Mike Landuyt, Walnut Grove as President-Elect and Grant Breitkreutz, Redwood Falls as Vice President. Glen Graff, Sandborn was selected by the president to serve as MSCA’s Legislative Chairmen.

“I’m very excited about the level of professionalism we have in our newly elected board of directors.  Each one of them brings a new and focused perspective of Minnesota’s cattle industry.” Krist Wollum, MSCA President

 About the Minnesota State Cattlemen’s Association

The Minnesota State Cattlemen’s Association (MSCA) is a membership-based organization that represents cattle farmers and individuals who are part of the cattle community in Minnesota.

 

###

Farm Bureau Opposes Speed Limiters Proposal

Speed limitersThe United States Department of Transportation’s (DOT) proposal to require speed limiters for large commercial vehicles doesn’t account for the fact that many commercial vehicles often cover hundreds of miles on open roads with few other vehicles around. The American Farm Bureau Federation (AFBF)  recently submitted comments on the idea, saying the proposed rule would pass on significant costs to farmers and ranchers who only use heavier trucks seasonally.

Speed Limiters

The US Transportation Department is proposing the addition of speed limiters on vehicles with a gross weight greater than 26,000 pounds, which would mean more costs to farmers who only use those larger vehicles seasonally. (Photo from truckernews.com)

The proposed rule was put forth by the National Highway Traffic Safety Administration, the Federal Motor Carrier Safety Administration and DOT. The new rule would require vehicles with a gross vehicle weight rating of more than 26,000 pounds to be equipped with a speed limiting device. It would be set to a speed to be specified when the final rule comes out. It would require motor carriers operating such vehicles in interstate commerce to maintain functional speed limiting devices at all times.

The AFBF says speed limits should not be arbitrarily established by federal rule. Instead, it should be based on conditions in the area in which it’s posted.

“The proposal ignores the fact that many commercial vehicles often operate for hundreds of miles without much interaction with other traffic. There is no clear rationale in the rule for suggesting a truck traveling in a rural setting with minimal traffic should have the same top speed as a truck traveling in a large city,” said AFBF.

The organization also points out that the proposal would be too costly for farmers and ranchers who use large trucks only during certain times of the year.

“If adopted, the rule would pass on significant costs to our members who do not operate as commercial motor vehicle enterprises but only utilize heavier trucks seasonally. These costs would impact an industry that is currently struggling to make ends meet with the recent downturn in the farm economy,” said AFBF.

Minnesota Cattle Industry Convention Registration Open

The Minnesota Cattle Industry convention is an event that brings together producers and beef industry partners for educational opportunities, policy discussion and development, and a cattle focused trade show.  The Minnesota State Cattlemen’s Association, along with the Minnesota Cattle women and the Minnesota Beef Council, will host the Minnesota Cattle Industry Convention and trade show December 1st – 3rd, 2016 at the Double Tree Hotel in Bloomington, MN.

Minnesota Cattle industry convention

The Minnesota Cattle Industry Convention is coming up on December 2 and 3 at the Double Tree Hotel in Bloomington, MN (Pic provided by the MN State Cattlemen’s Association)

The convention will kick off with “Mom at the Meat Counter” Janeal Yancy –PhD Meat Scientist and professor at Arkansas State University, mom and beef industry advocate blogger speaking about consumer engagement and the need for science based facts.

National association leadership will also be joining us in welcoming everyone to the convention, including NCBA President Tracey Bruner – Ramona, KS and ANCW President Penny Zimmerman – Foley, MN. 

The 2016 Cattlemen’s College speakers will focus on the need for self and third party evaluations as part of an increased need for on farm transparency.  These speakers will include Josh White – NCBA Director of Producer Education – Denver, CO, IMI Global – Castle Rock, CO and Wulf Cattle or Morris, MN.  

Friday will also include a public grazing workshop featuring a team of speakers from the Minnesota DNR and the USFWS, along with Cody Nelson of Prairie Creek Seeds discussing strategies for integrating livestock into cover crops.  

Friday’s events will round out with the 2016 Best of Beef Banquet highlighting many of the successes from 2016 and recognizing the best of the best from Minnesota’s beef industry.  The entertainment for the night will be Jerry Carrol: Farmer, Comedian & Agriculture Speaker from Raleigh, NC.  The evening will wrap up the MSCA’s annual live auction.

Saturday’s events will include the 2016 Breakfast Briefing featuring MSCA’s and NCBA’s policy work in 2016 and set the stage for policy priorities for 2017.  This session will feature Bruce Kleven – MSCA Legislative Advisor and Colin Woodal – Sr. Vice President of Government Affairs, NCBA – Washington D.C.

The convention will round out with a Beef Market Status Round Table featuring Jeff Stolle – Nebraska Cattlemen’s Association Marketing Program Manager – Lincoln, NE, Micheal Klamm – USDA-NASS – Washington D.C. and Brad Kooima – Kooima and Kaemingk Commodities, Inc. – Sioux Center, IA.

Registration and room reservation information is available at www.mnsca.org or in the November edition of the Minnesota Cattleman newspaper.  The Minnesota State Cattlemen’s Convention and Trade show block will be held until November 10th, 2015. Exhibitors and vendors are also encouraged to attend, sponsorship opportunity details available at www.mnsca.org or call 612-618-6619 with questions.

We look forward to you joining us in December!

China lifts 13-year old U.S. beef imports ban

Restoring American beef imports to China is a top priority for U.S. farmers because they want to take advantage of the country’s growing demand for meat.

But there are some conditions attached. Beef older than 30 months will still be barred, and U.S. exports will have to comply with China’s traceability and quarantine rules. China’s agriculture ministry did not say when beef imports would resume.

The U.S. Meat Export Federation called the announcement an “important first step.”

China first imposed a beef embargo in 2001 in response to mad cow disease in Europe. The agriculture ministry announced the ban would include American beef after the disease appeared in the U.S. in 2003.

China beef imports

 

The U.S. exports over 1 million metric tons of beef a year, worth $6.3 billion. Mexico is its largest export market, followed by Japan, South Korea, and Canada.

Here’s another edition of the ChadSmithMedia weekly podcast talking beef:

 

China is already the world’s second-biggest beef buyer. Imports grew roughly 10 times between 2010 and 2015, according to the U.S. meat export federation.

Demand for imported meat is growing in China as the country’s middle class gets richer, and domestic farmers can’t keep pace.

U.S. meat producers are hoping to return to China with a big bang. Australia, Uruguay, and New Zealand are currently the top exporters of beef to China.

 

Miracle of Birth Center brings agriculture to the public

Miracle of Birth Center at the Olmsted County Fair in Rochester, Minnesota

The Ag Star Miracle of Birth Center at the Olmsted County Fair in Rochester gave the public a chance to get up close to animal agriculture, with the goal of educating the public on just where there food comes from and how it’s produced. (photo by Chad Smith)

As some people entered the Ag Star Miracle of Birth Center at the Olmsted County Fair in Rochester, the sounds of a brand new calf, ten-day-old goats, and just-born piglets fighting for the best positions near mom to nurse brought back a flood of memories from living on a farm.

However, most of the people entering the Center didn’t have an agricultural background to draw on so it was a completely new experience for some of them.  That’s the reason Ag Star Financial and several local sponsors pooled their resources to bring the Center to life.  The goal is a simple one: to educate the public about agriculture.

“We have a lot of education stations in here for kids and adults too,” said Tracy Nelson, Miracle of Birthing Center Manager.  “People can get up close with hens that laid eggs and then watch the eggs hatch.  We also have baby chicks and ducklings they can touch.  We also have ten-day-old goat kids.”

Miracle of Birth Center at the Olmsted County Fair in Rochester.

The Ag Star Miracle of Birth Center gave the public a chance to get up close and personal with ten-day-old goats and other animals found in American animal agriculture. (Photo by Chad Smith)

Ed Kuisle of Rochester brought the goats, and he said it’s been one of the most popular exhibits in the Center for one reason:  personality.  The goats are a novelty for the kids, and he said they have a lot of personalities already at just ten days old so kids really enjoy interacting with them.  The goats come from a big dairy farm down by Altura.

“The owner of the farm milks about 600 of them.  These goats are billies (male),” said Kuisle, who grew up working on a dairy farm near Rochester. “The owner of the farm feeds them out to 50-60 pounds and then sells them.  All the does stay on the farm for milking.”

Four sows were on display during the fair, and they were all expected to farrow.  One of the sows farrowed on Thursday morning and had ten brand new piglets.  The birthing didn’t stop there either.  A brand new Holstein calf was born on Thursday afternoon.  The bull took his first steps in front of an appreciative crowd shortly after 2:30.

Miracle of Birth Center in Rochester

The general public had a chance to watch a Holstein bull calf being born on Thursday afternoon, July 27, at the Olmsted County Fair in Rochester as part of the Miracle of Birth Center. (photo by Chad Smith)

“We actually announce that we have a birthing going on over the public address system of the fair and it fills up,” Nelson said.  “There are a lot of people on the bleachers and standing around.  We even put it up on the TV’s here in the building and do some play-by-play for people in the building.”

Nelson said people ask lots of questions.  For example, they seem surprised at the size difference between a mother sow and her piglets.  Another question they get is how the little chicks could actually fit inside the eggs they hatch from.  They also think the size of the bigger animals is surprising.  And those kinds of questions are the reason the Center is in existence.

“The biggest purpose of the Center is to educate the public about animal agriculture,” Nelson said.  “It’s about giving people the experience of seeing live animals of different ages and sizes.  Whether they actually get to see a live birth or just come and see the animals here, they’re learning about animal agriculture.”

Nelson said Kuisle is one of many volunteers that make the Center possible.  Kuisle said with a smile on his face that he volunteers one week a year, and it’s at the county fair.  But he was quick to add that a project like the Miracle of Birthing Center has been very successful.

“It’s gone very well,” Kuisle said. “It was slow the first couple of days but it’s really picked up.  The goal is to expose young people to what happens on the farm.  Most children today can’t come out to a farm anymore so this type of project works out well here.”

Kuisle said he gets a lot of questions too.  Some of them include ‘are the animals born with teeth?  Are they boy or girl?’  And the biggest question he gets is ‘can I pet them?’

Miracle of Birth Center in Rochester

The Ag Star Miracle of Birth Center at the Olmsted County Fair in Rochester gave youngsters a chance to interact with live animals raised in American agriculture. (Photo by Chad Smith)

Nelson also grew up on a dairy farm.  She said she’s a little surprised at the disconnect between rural and urban folks, but not entirely surprised.  She said a lot of people grew up with agriculture in the family, but those numbers are falling.

“It’s surprising how much some of the people know about agriculture,” she said, “and it’s surprising how little others may know about Ag.  Most people really seem to want the information about where their food comes from”

 

 

 

 

 

 

 

Dairy Night at Mayo Field with the Honkers

Milking cows in the middle of a baseball game?  As a farm boy and lifelong baseball fan, there was no way in the world I was going to pass that up.

Dairy night at the Ballpark in Rochester, Minnesota

Mayo Field in Rochester, Minnesota, was home to Dairy Night at the Ballpark, featuring the 22nd annual cow milking contest to help promote agriculture. (photo by Chad Smith)

The Rochester Honkers baseball team was home to the St. Cloud Rox in Northwoods League baseball on Friday night, July 8.  The night’s sponsor included the Olmsted County American Dairy Association, with help from the Minnesota Farm Bureau Federation.  It was Dairy Night at the ballpark with an unusual way to promote agriculture.

The highlight of the night was a cow milking contest that took place at the end of the first inning.  And this wasn’t a new idea, either.  For over 20 years, the Honkers have been hosting an annual milking contest.  This year’s edition featured coaches from both teams in a one-minute, old-fashioned milking contest.  There wasn’t a milking machine to be found for miles.  This one was done by hand.

Dairy Night at the Ballpark In Rochester, Minnesota, sponsored by the Olmsted County ADA

St Cloud Rox Assistant Baseball Coach Phil Imholte is ready for the Dairy Night at the Ballpark main event, a cow milking contest intended to help promote agriculture at Mayo Field in Rochester, Minnesota. (Photo by Chad Smith)

Honkers Manager Trevor Hairgrove was the Rochester entrant and Rox Assistant Coach Phil Imholte was a good sport by jumping into the contest for St. Cloud.  Hairgrove was the eventual contest winner in spite of the fact that his cow was much more agitated and jumpy than Imholte’s.

“It was the 22nd annual Cow Milking Contest,” said Minnesota Farm Bureau Southeast Area Program Director Katie Brenny.  “It was put on by the Olmsted County American Dairy Association and we were glad to join them and help promote agriculture.”

The cows were on loan from the Shea Dairy farm near Viola, Minnesota.  June was officially Dairy Month across the country, but they wanted to continue to promote agriculture with the Rochester Honkers here in early July.

A dairy cow is jumpy while getting ready for the Dairy Night at the Ballpark event in Rochester, Minnesota.

A dairy cow on loan from the Shea Dairy farm near Viola, Minnesota, isn’t excited about being in the Dairy Night at the Ballpark milking contest on Friday night, July 8, at Mayo Field in Rochester, Minnesota. (photo by Chad Smith)

“It’s important to do this because consumers have questions,” Brenny said.  “They want to know where their food comes from and how it’s grown, and we hope they also want to know the people who are producing their food, getting up early in the morning to do the chores and drive the tractor.”

If agriculture doesn’t promote itself, she said consumers with questions typically get their information from non-factual sources .  Farmers want to tell their stories, similar to the way a teacher wants to tell others what they teach or doctors want to talk about what they do.

“There’s always work to do to tell our story,” she said.  “Agriculture changes almost every day, and if we’re not sharing the change, no one will know what we’re doing.  For instance, 97 percent of our farms are family owned and we love to share that message with others.  Farmers are more than willing to answer any questions about what they do.”

Heading home after Dairy Night at the Ballpark in Rochester, Minnesota.

Heading home to the dairy farm after the Cow Milking Contest at Mayo Field in Rochester, Minnesota, on Friday night for Dairy Night at the Ballpark, sponsored by the Olmsted County American Dairy Association (Photo by Chad Smith

Katie is the Southeast Area Program Director for the Minnesota Farm Bureau Federation.  She spends a lot of time keeping things organized for Farm Bureau members in this part of the state.

“I work with all 11 counties down here in the southeast,” Brenny said, “doing anything from working with our elected officials on Ag policy to consumer events such as tonight, partnering with Ag commodity groups, county fairs, Ag in the Classroom, and more.  We were just at the Rochester Farmer’s Market last weekend and doing all kinds of events to promote the voice of agriculture.”

Brenny and some volunteers spent some time Thursday at the Ronald McDonald House in Rochester.  Some of the pictures can be found here.

In addition to the dairy contest, there was some pretty good baseball too as you’ll see in a few highlights I’ve put together here.

CoBank Report Predicts Easing Of U.S. Protein Glut

DENVER, Colo. (January 21, 2016) —The supply glut that plagued U.S. beef, pork and poultry protein markets last year and ratcheted down margins is expected to ease in 2016, according to a new research report from CoBank.

The bank, a major agribusiness lender, says leading indicators point to animal protein supplies moving toward a state of equilibrium, with protein stocks more in line with overall levels of demand.

Meat Protein supplies expected to ease this year.

Trevor Amen is a protein specialist at Cobank. He expects improving market conditions for US beef, pork, and poultry producers in 2016.

“It’s clear that in the coming year, the headwinds and adverse conditions created by excessive protein stocks are clearing,” said Trevor Amen, animal protein economist with CoBank. “Surprisingly strong U.S. consumer demand helped lay the groundwork for improving market conditions in the coming year, meaning the net trade balance is expected to shift toward growing exports and fewer imports.

“This is welcome news for U.S. beef, pork and poultry producers.”

On the Horizon
In the first half of 2016 protein exports are expected to remain somewhat of a challenge. “But conditions are predicted to improve over depressed 2015 levels due to a variety of economic factors,” added Amen.

Meanwhile, imports of lean beef should slow significantly and domestic consumer demand for beef, pork and poultry is anticipated to remain strong and supportive of prices. Supply imbalances have already begun the correction phase, with supply and demand expected to achieve equilibrium by about mid-year. The strength of consumer demand going forward will impact how much and how soon U.S. meat prices change.

For instance, meat demand in the restaurant sector continues to grow. The Restaurant Performance Index and the Expectation Index each indicate positive restaurant business conditions. Combined with lower gas prices, current consumer attitudes indicate a willingness to spend more at restaurants versus in-home meals during 2016.

Price outlooks are mixed:

  • Pork and chicken prices have an upside potential compared to last year’s low levels, based on adjustments made for future production.
  • Beef prices will likely remain under pressure for the next two years, however, as the industry is coming off cyclical highs of 2014.

Of course, optimism for 2016 should be tempered by the oversupply lessons of 2015.

“Total red meat and poultry production set an all-time high in 2015,” said Amen. “Combined with fewer exports and more imports, total domestic meat supplies surged by 4.4 percent, the highest year-over-year increase in 40 years.” That increase in supply translated to an additional 9 pounds of protein per person—historically, protein supplies rose an average of 0.8 pounds per person per year from 1960 to 2015.

As the market works through the recent protein oversupply hangover, the long-term outlook remains positive, especially with continued global middle class growth. “The increasing demand for a higher-quality diet likely provides domestic protein producers with significant opportunities in the next decade,” concludes Amen.

A synopsis of the 2016 Protein Demand Outlook Report is available at www.cobank.com. The full report is available to media upon request.
Meat Protein supplies expected to level off in 2016, thanks in part to surprising domestic demand and improving exports.

About CoBank
CoBank is a $110 billion cooperative bank serving vital industries across rural America. The bank provides loans, leases, export financing and other financial services to agribusinesses and rural power, water and communications providers in all 50 states. The bank also provides wholesale loans and other financial services to affiliated Farm Credit associations serving more than 75,000 farmers, ranchers and other rural borrowers in 23 states around the country.

CoBank is a member of the Farm Credit System, a nationwide network of banks and retail lending associations chartered to support the borrowing needs of U.S. agriculture and the nation’s rural economy. Headquartered outside Denver, Colorado, CoBank serves customers from regional banking centers across the U.S. and also maintains an international representative office in Singapore.

For more information about CoBank, visit the bank’s web site at www.cobank.com.

Famers assessing their finances for 2016

January is a time when farmers are typically doing paperwork, looking back at 2015 ahead of the upcoming tax season.

What some may find is their books don’t necessarily balance they way they want. The good news is, it’s possible to make better decisions in a difficult Ag economy if you have a clear understanding of where you’re operation is at financially.

Rob Holcomb wants farmers to keep a sharp eye on their finances heading into 2016.

Rob Holcomb is a University of Minnesota Extension Educator, specializing in Ag Business Management over in the Marshall regional office. (Photo from extension.umn.edu)

“What I’m seeing happening right now is people in the habit of doing a FINPACK (software from the Center for Farm Financial Management) analysis,” said Rob Holcomb, Ag Business Educator for the University of Minnesota Extension Service, “including balance sheets and income statements, are really analyzing what happened in 2015.”

He added, “A lot of people are doing analysis, and unless they’ve got some special circumstances, farm returns are due on March 1.”

Dave Bau is encouraging farmers to get their finances in line.

Dave Bau is a University of Minnesota Extension Educator also specializing in Ag Business Management, and based in the Worthington office.

Looking ahead to 2016, Holcomb said the financial condition on farms is a mixed bag.

“We had people last year that had big trouble managing the tax bill,” Holcomb said. “What led to this challenge was the buildup of $8 per bushel corn, which caused more trouble than first thought. You hate to be negative about it, but I knew it would cause trouble down the line, and that’s what we’re finding now.”

He said certain farmers were doing a lot to avoid paying some taxes, like deferring income to the next year.

“They were also maxing out on pre-payments,” Holcomb said. “The problem is, a lot of farmers were rolling these massive deferred tax liabilities forward every year, even though they’re showing a loss. They may have a loss over the last couple years on their accrued farm income, but they still have this cash they have to deal with, because if they don’t do it, they have a monstrous tax bill.”

He said a lack of steady farm income leads to an obvious problem in that situation.

“The challenge is the recent lack of cash flow is such that they can’t afford to have that big tax bill,” Holcomb said. “In a sense, they’ve backed themselves into a corner with their tax problem.

“But that’s not everybody,” he added. “Some folks have been paying a little more as they go and didn’t have a big aversion to paying taxes, I think those folks are in much better shape.”

Holcomb said one of the big buzzwords in the Ag industry is working capital.

“It’s a current and intermediate cushion that the farmer has,” Holcomb said. “The more working capital you have, the better. Unfortunately, we’ve been burning some working capital over the last couple years. That’s probably the thing that lenders are getting the most squeamish about right now.

The lack of working capital on some farms is showing signs of getting serious.

“I got a call last week from a banker in my area that was asking about lender mediation,” Holcomb said. “That conversation can only be the result of one thing, which is a farmer out there that the bank is getting ready to pull the plug on.

“That means there are farm folks who could be in tough shape,” he added.

He’s especially worried about young farmers.

“When the $8 per bushel corn began coming down,” Holcomb said, “some of the younger guys were paying ridiculous land rental rates to try and get their hands on some acres to work. The problem is they’ve got the least ability to weather out low prices because they don’t have a lot of working capital. They have a cost structure that’s not sustainable.”

High land rental rates are squeezing farmers finances.

The high cost of land rental rates in farm lease contracts are putting a heavier squeeze on farmers and their financial bottom line than we’ve seen in several years. (photo from americasnewfarmers.org)

Rents are beginning to come down, but they have a ways to go to ensure profitability for both farmers and landowners.

Rent is the largest input cost for corn and soybeans,” said Dave Bau, University of Minnesota Ag Business Management Educator in Worthington. “Rents are going down, but at current corn and bean prices, they should be around $100 to $125 an acre. Even base rents on flexible leases are still much higher than this.”

There is still pressure on farmers for land rents to remain very high for at least one more year.

“Farmers are doing more and more flexible agreements with a base rent and additional rent if prices improve,” Bau said. “With other input costs not coming down significantly, break-even prices for corn are $3.80 to $4.00 for corn, and $9.50 to $10 for soybeans.”

Bau adds, “Cash prices currently are around $3.40 for corn, and $8.25 for soybeans.”

With this much economic gloom ahead, what’s the key to surviving the downturn in 2016?

“I think the number one thing is you have to get your cost structure in line,” Holcomb said. “Land rent is one of those high costs that can be negotiated. $400 land rent won’t work right now.”

One of the best things farmers can do is figure out where they’re at financially before they make decisions on the year ahead.

“The farmers I fear for the most are the ones that aren’t doing any kind of financial analysis,” Holcomb said. “They have no idea where they’re at. It’s a sad situation when they find out they’re in trouble, and it’s their banker that tells them”

He added, “The smart producers know where they’re at, and that can alleviate a lot of trouble.”

Farmers need to do a better job of marketing their products in 2016.

“There are marketing workshops going on around the state,” Holcomb said, “and I think it’s really important to look at that.”