The Crop Production Report came out today (Thursday, August 10), predicting a record-high soybean production. As you know, it’s the first time USDA gives out its yield estimates based on surveys. Do you think they’ve come in about where you expected?
U.S. farmers are expected to produce a record-high soybean crop this year, according to the Crop Production report issued today by the USDA’s National Agricultural Statistics Service. Up 2 percent from 2016, soybean production is forecast at 4.38 billion bushels, while corn growers are expected to decrease their production by 7 percent from last year, forecast at 14.2 billion bushels.
The first yield estimates for the current growing season are out from USDA and the numbers are showing record soybean yields as the August Crop Production report came out Thursday. (Photo from gourmet.com)
Up 7 percent from last year, area for soybean harvest is forecast at a record 88.7 million acres with planted area for the nation estimated at a record-high 89.5 million acres, unchanged from the June estimate. Soybean yields are expected to average 49.4 bushels per acre, down 2.7 bushels from last year. Record soybean yields are expected in Delaware, Georgia, Kentucky, Missouri, Mississippi, Pennsylvania, and South Carolina.
Average corn yield is forecast at 169.5 bushels per acre, down 5.1 bushels from last year. If realized, this will be the third highest yield and production on record for the United States. NASS forecasts record-high yields in Alabama, Louisiana, Michigan, Mississippi, New York, Pennsylvania, and South Carolina. Acres planted to corn, at 90.9 million, remain unchanged from NASS’ previous estimate. As of July 30, 61 percent of this year’s corn crop was reported in good or excellent condition, 15 percentage points below the same time last year.
Wheat production is forecast at 1.74 billion bushels, down 25 percent from 2016. Growers are expected to produce 1.29 billion bushels of winter wheat this year, down 23 percent from last year. Durum wheat production is forecast at 50.5 million bushels, down 51 percent from last year. All other spring wheat production is forecast at 402 million bushels, down 25 percent from 2016. Based on August 1 conditions, the U.S. all wheat yield is forecast at 45.6 bushels per acre, down 7 bushels from last year. Today’s report also included the first production forecast for U.S. cotton. NASS forecasts all cotton production at 20.5 million 480-pound bales, up 20 percent from last year. Yield is expected to average a record-high 892 pounds per harvested acre, up 25 pounds from last year.
Agriculture has been waiting with anticipation, and some trepidation, for the North American Free Trade Agreement renegotiations to finally begin. Now that the negotiations are free to begin on August 16th, the next logical question is what happens next during the actual NAFTA renegotiations?
Ambassador Darci Vetter, former chief agricultural negotiator at the Office of the U.S. Trade Representative, has a lot to say about the upcoming NAFTA renegotiations, slated to begin on August 16th. Contributed Photo by Craig Chandler / University Communication
Darci Vetter was the lead agricultural trade negotiator for the Obama administration. She has firsthand experience in this situation as she was heavily involved in negotiating the Trans-Pacific Partnership that new president Donald Trump withdrew from. Vetter says the renegotiations are an opportunity to improve the landmark trade agreement, but there are serious pitfalls to watch out for.
“It’s an opportunity to update an agreement that’s been around for 25 years,” Vetter said, “but it’s also an opportunity, if not done carefully, to reopen the terms of trade between three countries that really rely on each other. I’m hoping that the three countries will focus on bringing an agreement that’s dated in some ways up to the standards we need in 2017.”
Vetter said negotiators need to keep in mind that the economies of three separate countries have really integrated themselves based on duty-free access for almost all products in each other’s markets. She doesn’t want the flow of trade interrupted.
Certain segments of NAFTA do need to be updated. She compares it to the recently abandoned Trans-Pacific Partnership. There are chapters in TPP that simply didn’t exist when NAFTA was signed over two decades ago. The digital economy is a big development that needs to be addressed in the renegotiations.
“Look at the digital economy and the importance of the free flow of data,” she noted, “making sure that goods sold over the internet can be easily exchanged between the countries and that people can do business across borders no matter where their brick-and-mortar locations may be. We didn’t have the internet and e-commerce back in the early 90’s.”
The way countries protect intellectual property is more robust than it was in the 90s. There are whole classes of products like pharmaceuticals and crops that just didn’t exist back then. Vetter says we may want to bring the standards for protecting intellectual property from any of the three countries up to today’s standards. She notes there are a lot of good foundations in the original agreement that America can build on to make it a more current agreement.
Here’s the complete conversation with Darci Vetter:
The Minnesota Department of Agriculture (MDA) is gathering information on plant damage that may have been caused by the use of the herbicide dicamba. The MDA is encouraging anyone with damage to complete a survey. The survey will be open until September 15.
“We are trying to gather as much information on this issue as possible,” said Assistant Commissioner Susan Stokes. “Often, neighbors don’t want to file a formal complaint regarding crop damage against their neighbors. This survey, along with information we’re gathering from the product registrants, applicators, and farmers, will help us collect info to assess the scope of the situation. We’re asking for everyone’s cooperation on this issue.”
Dicamba is a herbicide used to control broadleaf weeds in corn and a variety of other food and feed crops, as well as in residential areas. In 2016, the United States Environmental Protection Agency (EPA) conditionally approved the use of certain new products on dicamba tolerant (DT) soybeans.
It’s a highly volatile chemical that can drift and/or volatilize. Drift may cause unintended impacts such as serious damage to non-DT soybeans, other sensitive crops, and non-crop plants. This survey looks to gather information about these unintended impacts to other crops and plants.
The Minnesota Department of Agriculture is looking for information on possible damage to soybeans caused by dicamba drift. This is an example of what it looks like. Producers who have this in their bean fields are asked to fill out the MDA survey as soon as possible. (photo from dtnpf.com)
As of Thursday, August 3, the MDA had received 102 reports of alleged dicamba damage; not all of those reports requested an investigation. Those who have already submitted a report to the MDA are encouraged to complete the survey.
If you believe dicamba was used in violation of the label or law, and you wish to request an MDA investigation, you will also need to complete the pesticide misuse complaint form or call the Pesticide Misuse Complaint line at 651-201-6333.
You can find out more information on dicamba at http://www.mda.state.mn.us/dicamba.
Not good news for American beef producers to end the week on. Japan just announced it’s triggering a tariff increase on U.S. beef imports, which means our product just got a lot more expensive for the consumers in what’s been a very valuable export market.A big part of the problem is not having a bilateral trade agreement with Japan. Thank Washington for not making that happen sooner. Here’s some reaction from agriculture:
The really interesting part is the note from the Meat Export Federation that says the increase in American beef imports really hasn’t hurt domestic supplies, with carcass and feeder cattle prices lower than in recent months, but prices are still at RECORD HIGHS.
WASHINGTON, July 28, 2017 – The government of Japan has announced that rising imports of frozen beef in the first quarter of the Japanese fiscal year (April-June) have triggered a safeguard, resulting in an automatic increase to Japan’s tariff rate under the WTO on U.S. beef imports. The increase, from 38.5 percent to 50 percent, will begin August 1, 2017 and last through March 31, 2018. The tariff would affect only exporters from countries, including the United States, which do not have free trade agreements with Japan currently in force.
U.S. Secretary of Agriculture Sonny Perdue issued the following statement:
USDA Ag Secretary Sonny Perdue isn’t happy to hear that the tariff rate on U.S. beef imports to Japan is taking a 12 percent jump because higher import totals this year triggered a “safeguard.” (photo from usda.gov)
“I am concerned that an increase in Japan’s tariff on frozen beef imports will impede U.S. beef sales and is likely to increase the United States’ overall trade deficit with Japan. This would harm our important bilateral trade relationship with Japan on agricultural products. It would also negatively affect Japanese consumers by raising prices and limiting their access to high-quality U.S. frozen beef. I have asked representatives of the Japanese government directly and clearly to make every effort to address these strong concerns, and the harm that could result to both American producers and Japanese consumers.”
U.S. exports of beef and beef products to Japan totaled $1.5 billion last year, making it the United States’ top market.
National Cattlemen’s Beef Association (NCBA) President Craig Uden issued the following statement in response to the tariff increase:
NCBA President Craig Uden says the Japan announcement of a tariff increase on U.S. beef imports should send a message to Washington about the need for a bilateral trade agreement with the largest export customer of American beef. (photo from cattle business weekly)
“We’re very disappointed to learn that the tariff on U.S. beef imports to Japan will increase from 38.5 percent to 50 percent until April 2018. Japan is the top export market for U.S. beef in both volume and value, and anything that restricts our sales to Japan will have a negative impact on America’s ranching families and our Japanese consumers. NCBA opposes artificial barriers like these because they unfairly distort the market and punish both producers and consumers. Nobody wins in this situation. Our producers lose access, and beef becomes a lot more expensive for Japanese consumers. We hope the Trump Administration and Congress realize that this unfortunate development underscores the urgent need for a bilateral trade agreement with Japan absent the Trans-Pacific Partnership.”
Background: Japan was the top export market for U.S. beef, valued at $1.5 billion in 2016. According to data compiled by the U.S. Meat Export Federation, first quarter U.S. beef sales to Japan increased 42 percent over 2016. In addition to the United States, the 50 percent safeguard tariff also applies to imports from Canada, New Zealand, and other countries that do not have a free trade agreement with Japan.
The U.S. Meat Export Federation also weighed in on Japan’s move:
“USMEF recognizes that the safeguard will not only have negative implications for U.S. beef producers, but will also have a significant impact on the Japanese foodservice industry,” explained U.S. Meat Export Federation (USMEF) President and CEO Philip Seng. “It will be especially difficult for the gyudon beef bowl restaurants that rely heavily on Choice U.S. short plate as a primary ingredient. This sector endured a tremendous setback when U.S. beef was absent from the Japanese market due to BSE, and was finally enjoying robust growth due to greater availability of U.S. beef and strong consumer demand. USMEF will work with its partners in Japan to mitigate the impact of the safeguard as much as possible. We will also continue to pursue all opportunities to address the safeguard situation by encouraging the U.S. and Japanese governments to reach a mutually beneficial resolution to this issue.”
As agreed to in 1994 in the WTO Uruguay Round, Japan maintains separate quarterly import safeguards on chilled and frozen beef, allowing imports to increase by 17 percent compared to the corresponding quarter of the previous year. The duty increases from 38.5 percent to 50 percent when imports exceed the safeguard volume. Japan’s frozen beef imports in the 2016 Japanese fiscal year were lower than in previous years, thus the growth in imports during this first quarter of the current fiscal year exceeded 17 percent, driven in part by rebuilding of frozen inventories and strong demand for beef in Japan’s foodservice sector. The most recent quarter saw strong growth in imports from all of Japan’s main beef suppliers.
The implications for U.S. beef exports are significant because U.S. frozen beef now faces an even wider tariff disadvantage compared to Australian beef. The duty on U.S. frozen beef imports, effective Aug. 1, 2017 through March 31, 2018, will be 50 percent while the duty on Australian beef will remain at the current rate of 27.2 percent, as established in the Japan-Australia Economic Partnership Agreement (JAEPA). The snapback duty of 50 percent will apply to frozen imports from suppliers that do not have an economic partnership agreement (EPA) with Japan, which are mainly the U.S., Canada and New Zealand.
The U.S. Meat Export Federation isn’t happy to hear the tariff rate on U.S. beef imports is taking a twelve percent jump in Japan. They point out the move normally would protect domestic supplies. but carcass prices for feeder cattle are just off record highs.
Conditions have changed since the quarterly safeguards were established in 1994, and the growth in Japan’s imports this year has not adversely impacted Japan’s domestic beef producers. Prices for wagyu carcasses and wagyu feeder cattle are down from the record highs of last year, but are otherwise the highest in recent history. Japan has also moved away from the quarterly safeguard mechanism in its recent trade agreements. Through the JAEPA, Japan transitioned from quarterly safeguards to annual safeguards, which are much less likely to be triggered. The snapback duties on Australian beef have also been reduced, minimizing any potential impact on trade. Japan also agreed to similar terms in its economic partnership agreement with Mexico and in the Trans-Pacific Partnership (TPP).
Supplemental information on Japan’s imports of U.S. beef and possible implications of the safeguard are available in this brief USMEF fact sheet. Further analysis and charts are also available online.
Southeast Minnesota crops are progressing in spite of a back and forth weather pattern. It’s gone from hot to cool and dry to wet multiple times this spring, and, for the most part, the crops have gotten enough water at the right times to continue development.
Southeast Minnesota corn that didn’t need to be replanted because of wet weather is now at tasseling stage, when wet weather becomes a little more critical for continued development. (photo from cornbeanspigskids.com)
The corn crop is coming into the tasseling stage, a critical time in the crops’ development. Fillmore and Houston County Extension Agent Michael Cruse said the ten days before tasseling and the two-week period afterward are when rain becomes critical to continued development for southeast Minnesota crops.
“The corn is working on set and going through the reproductive cycle,” said Cruse, “and it’s important that we get rain. If the water gets limited by dry weather during that period, it will limit the crops’ final yield numbers.”
There is some extra water in the soil profile from rainfall this spring and early summer, which Cruse says doesn’t hurt at all. However, after talking with several farmers in the area, Cruse said several had to go into their fields when it was probably too wet. The farmers told Cruse they were concerned about compaction in their sidewalls when they were planting.
“That means the roots weren’t able to grow out and down into the soil like they typically do,” Cruse said, “so even though we do have water in the soil profile, if people had that type of compaction issue in their fields, the roots won’t get down to the water that’s there. It’s possible that water will be limited for the crop, even though there’s water in the soil profile.”
Though we did get plenty of rain at times this spring, Cruse said it messed up a lot of the timing for getting out in soybean fields and spraying herbicides. There are soybean fields in southeast Minnesota that have weed infestations that they couldn’t get into and spray. Farmers had to try and hit ragweed when it was 2 – 2.5 feet tall.
Due to wet conditions, it was tough for southeast Minnesota farmers to get out and spray soybean fields at the correct time for maximum weed control. (Photo from ottofarms.com)
“They had to put something down that not only burned the weeds but hit the soybean plant as well,” he said. “That’s okay, but all you really did was burn the leaves on the weeds. Most of the time, you won’t kill them by doing that. If you did knock the ragweed back a little, they’re greening up and shooting out more buds. They’re not really under control and still growing.”
Cruse’s extension colleagues are telling stories about soybean fields in their areas that were incorrectly sprayed. Farmers sprayed the incorrect product on soybean fields that aren’t resistant to that specific chemical. There have actually been soybean fields in Minnesota that were completely killed off.
“There were some fields that may not have been completely killed off,” Cruse added. “But beyond even that, the other concern is are we getting enough growing degree days? We’re actually pretty close to average. We may be a little behind the last couple of years, but we’re close to average.”
Similar to corn and soybeans, this year’s alfalfa crop is a mixed bag, with some good and some not-so-good results. The biggest comment that Cruse is getting from farmers is problems dealing with winterkill.
“I’ve seen plenty of it that’s down and I’ve seen plenty that’s ready,” he said. “I’ve seen people that are constantly cutting alfalfa. But, other fields are slower than others, likely due in part to winterkill. It’s all over the board.”
University of Minnesota Extension educator Michael Cruse says even though southeast MN crops are progressing, some alfalfa fields have struggled to be productive because of late season winter kill. (Photo from Michigan State Extension)
Disease pressure has been somewhat limited so far in southeast Minnesota crops, but Cruse said they’re likely going to show up in the immediate future. This is the time of year to be scouting for diseases like Northern Corn Blight.
As far as pest pressure, Cruse made an interesting point, asking, “How many mosquitoes have you seen this year?” What makes it even stranger is we’ve had plenty of the right conditions to have a lot of mosquitoes, but they just aren’t there in numbers we’re used to.
“We may have an infestation here and there,” Cruse said, “but I haven’t heard anything that’s overly concerning about southeast Minnesota crops, at least up to this point.”
Today, the Minnesota Board of Water and Soil Resources announced two additional resources for landowners working to come into compliance with the state’s buffer law. The law was passed with bipartisan support in 2015 and signed into law by Governor Dayton. The buffer law requires the implementation of a buffer strip on public waters by November 1, 2017 and a buffer on public drainage ditches by November 1, 2018.
“These additional resources, both financial and found online, are designed to help landowners be successful in complying with the buffer law.” explained John Jaschke, Executive Director BWSR. “Local SWCDs and landowners have been working together over the past 18 months and, we are making great progress with 64 counties already 60-100% compliant.”
The Minnesota Board of Water and Soil Resources has approved a new buffer cost-share program, allocating almost $5 million dollars to support landowners in meeting the requirements of the state buffer law.
The funds will be distributed to soil and water conservation districts (SWCDs) and are to be used for cost-sharing contracts with landowners or their authorized agents to implement riparian buffers or alternative practices on public waters and public drainage ditches.
The Minnesota Board of Water and Soil Resources announced a couple of different aids for landowners looking to come into compliance with the Minnesota Buffer Law signed last year. The BWSR says a good number of counties are already 60-100% compliant with the new regulations. (photo from bwsr.stste.mn.us)
These Clean Water Funds, passed by the legislature and signed by Governor Dayton at the end of the 2017 legislative session, provide important support to the Governor’s Buffer Initiative.
The 2017 legislation also recognizes that some landowners may have hardships (such as weather) in meeting the public waters deadline. The added language allows for an eight-month extension for implementation when a landowner or authorized agent has filed a riparian protection “compliance plan” with their local SWCD by November 1, 2017. Compliance waivers offer a buffer deadline extension until July 1, 2018.
NEW ONE-STOP WEBSITE
Minnesota landowners with questions about compliance waivers and other buffer law topics also have another option available today with the launching of a new one-stop website for information and tips to implement the buffer law. The new site, mn.gov/buffer-law, is a user-friendly and convenient resource for landowners and the public to learn about the law, find answers about alternative practices, and get information about financial and technical assistance and more.
The new buffer site, launched by the State of Minnesota is found at mn.gov/buffer-law. For more information on the buffer law, including the cost-share program, contact your local soil and water conservation district.
Soil and Water Conservation Districts have been hard at work with landowners statewide and progress toward compliance is being made. 64 of Minnesota’s 87 counties are 60 – 100 percent in compliance with the buffer law. Statewide, preliminary compliance with the buffer law is 89%.
Here’s a talk on the buffer law presented by Darren Mayers, District Technician Crow Wing Soil and Water Conservation District
BWSR is the state soil and water conservation agency, and it administers programs that prevent sediment and nutrients from entering our lakes, rivers, and streams; enhance fish and wildlife habitat; and protect wetlands. The 20-member board consists of representatives of local and state government agencies and citizens. BWSR’s mission is to improve and protect Minnesota’s water and soil resources by working in partnership with local organizations and private landowners.
It’s a debate that is guaranteed to incite emotions, both for and against. Increasing trade opportunities with Cuba is a hot button topic in Washington D.C., but it’s an important topic for agriculture. Minnesota is one state in the Union that recognizes the opportunities in Cuba. Several state officials and Ag groups took part in a recent June trade mission to our neighbors 90 miles to the south of Florida.
The timing felt a little ironic. Minnesota Lieutenant Governor Tina Smith put the trip together months ago as a follow-up to a recent state trip to Cuba last December. The Friday before the delegation arrived in Cuba on the most trade mission, President Donald Trump decided to roll back some of the Obama-era regulatory moves that opened up opportunities for the countries to do business. That made the trip a little more important in the minds of Minnesota officials and Ag groups.
Minnesota Farm Bureau President Kevin Paap was a member of the recent Minnesota delegation to travel to Cuba to talk about increasing trade opportunities between the state and the island nation 90 miles south of Cuba. (contributed photo)
“It (Trump’s announcement) didn’t change any of our goals going down there,” said Minnesota Farm Bureau President Kevin Paap, a member of the delegation, “but it certainly ratcheted up the importance of our being there. We were the first Ag trade team down there after the Trump announcement, so everybody down there was aware of it.”
Paap said it was a vital opportunity for Minnesota to highlight the importance for agriculture that the countries continue to work together to become better neighbors and trading partners. It was also an opportunity to do what they could politically to help change the situation.
That was vital because Minnesota and Cuba have been doing business for some time, dating back to 2002 when then-Governor Jesse Ventura hosted the first big trade mission to Cuba. That’s where things began to really take off with trade reaching a high water mark between Cuba and Minnesota, but things have been tailing off for the last few years. The potential is there for things to improve.
“We have to understand,” Paap said, “they aren’t the biggest market, but it is an important market and a close market. It’s important to remember when dealing with perishable goods, in terms of quality and price, distance has a negative effect on all that. We should be able to beat everyone else on quality, price, and transportation.”
Despite some of the rhetoric people may hear when talking about Cuba, it’s important to note that the people of Cuba are enthusiastic about possibly trading with America.
The opportunities are there in Cuba for commodities like corn, soy products, black beans, dried beans, and some livestock opportunities too. He said there are things Cuba just can’t produce on their own.
“They have a lot of silt in their soils with not much in the way of organic matter,” Paap said. “They really haven’t put down a lot of nutrients into the soil in the last 50 years or so. There are some tillable acres in the country but it’s just not high quality.”
It’s not just the soils. Farmers in Cuba are working with a lack of modern equipment that American farmers are used to. A Cuban farmer used a one-bottom plow and two oxen to work one of the fields Paap saw during the trip. He says it seems like the country is locked in time decades in the past.
A trade mission like this always has two goals at the top of mind. Obviously, one goal is to do business but the other, and more important, goal is to build relationships.
“When you deal with an international trade mission, it’s always about building relationships before doing business,” Paap said. “We (Americans) probably aren’t as aware of that when you talk about dealing with other countries. You have to have a relationship. There has to be a reason for doing business besides dollars and cents.”
That’s hugely important and not just in Cuba. It’s the same if you’re talking trade with Asian countries or anyplace else in the world. The trip was a big opportunity to make sure the Cuban people understood the importance America placed on the relationship in light of the Trump announcement.
“It was a chance for us to say agriculture worked hard to make sure it wasn’t affected by the Trump announcement,” Paap stressed. “When it comes to the changes by President Trump, we weren’t as affected by those as others were and we wanted the Cubans to see that as a good sign.”
It was a chance for Minnesota to also point out they have two “champions” for trade with Cuba in Senator Amy Klobuchar and Representative Tom Emmer, working in a bipartisan manner on the topic for a long time.
The delegation went face-to-face with a lot of different people while they were in the country and Paap said it ran the gamut.
One of the most interesting changes in Cuba has to do with how they deal with foreigners. As recently as the mid-1990s, Cuban farmers weren’t allowed by law to even talk to people from outside the country, even those on a trade mission. Now, everyday people in Cuba told the delegation members that they’re hoping to get some help from the USA.
It’s not the biggest market but there are opportunities there. Paap and the American delegation were walking into the Ministry of Agriculture to meet with Cuban officials and a Chinese trade delegation was walking out at the same time.
“If we’re going to choose not to be there and involved in infrastructure upgrades, that doesn’t mean it won’t happen,” Paap said. “There’s a lot of countries putting some money into the country. Even Minnesota Ag Commissioner Dave Fredrickson (who was on the first trade mission) said it was amazing how much the country had changed, even since last December.”
There’s a lot of work to do to improve the lives of the average Cuban who earns between 20 and 24 dollars a month. Paap is a farmer in Blue Earth County and his Cuban counterparts have lots of questions for the American farmers on the trip.
“I always make sure and bring along a picture book,” Paap said, “especially when there’s a language barrier. There was a lot of interest in that. They had a lot of livestock questions about pigs and what we feed them and how heavy they are. They had a lot of questions about things like rainfall and crop yields. We had a lot of great farmer-to-farmer conversations.”
Cubans understand there are things they can’t grow in their fields. Paap wants to know why wouldn’t we want to sell Ag commodities to a country that’s only 90 miles south of America. After all, farmers understand logistics and travel better than most. Farmers realized a long time ago the value of working together, and that the people you work the best with are likely those closest to you.
The biggest obstacle for agriculture to overcome in order to improve trade with Cuba is the financing mechanism. In order for America to sell agricultural products to Cuba, the buyers have to come up with all the cash up front through a third party. That’s a big disadvantage when America’s competitors are more than happy to offer financing.
“That’s where the work of Senator Klobuchar and Congressman Emmer comes in to help try to get rid of some of those requirements,” Paap says. “That would make us a more desirable trading partner as well as the closest.”
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.
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.”
The Minnesota Department of Agriculture is looking for public input on a proposed rule dealing with nitrogen fertilizer and possible runoff into Minnesota waters. (photo from netnebraska.org)
The Minnesota Department of Agriculture (MDA) is seeking public review and comment of a draft proposal for regulating the use of nitrogen fertilizer in Minnesota.
The purpose of the proposed Nitrogen Fertilizer Rule is to minimize the potential for nitrate-nitrogen contamination from fertilizer in the state’s groundwater and drinking water. Nitrate is one of the most common contaminants in Minnesota’s groundwater and elevated levels of nitrate in drinking water can pose serious health concerns for humans.
The MDA is seeking public input and will be holding five public listening sessions throughout the state to discuss the proposed Nitrogen Fertilizer Rule at which written comments can be submitted. The draft rule can be viewed online at www.mda.state.mn.us/nfr.
All comments regarding the proposed rule must be submitted in writing. After consideration of comments received, the MDA expects to publish the final draft of the rule in the fall of 2017. The rule is expected to be adopted in the fall of 2018.
The draft Nitrogen Fertilizer Rule is based on the Minnesota Nitrogen Fertilizer Management Plan (NFMP) which recommends steps for minimizing impacts of nitrogen fertilizer on groundwater and emphasizes involving the local community in developing local solutions.
The NFMP went through an extensive development process with input provided by farmers, crop advisors, and others in the agricultural community.
Listening sessions on the draft rule will be held at the following locations:
Thursday, June 22, 5:00 pm Marshall Public Library
201 C Street, Marshall, MN 56258
Wednesday, June 28, 6:00 pm Chatfield Center for the Arts
405 Main Street, Chatfield, MN 55932
Thursday, June 29, 2:00 pm University of Minnesota Extension Office
4100 220th Street West, Farmington, MN 55024
Thursday, July 6, 3:00 pm Great River Regional Library
1300 West Saint Germain Street, St. Cloud, MN 56301
Tuesday, July 11, 6:00 pm Robertson Theatre, Wadena-Deer Creek High School
600 Colfax Ave. SW, Wadena, MN 56482
Written comments on the draft Nitrogen Fertilizer Rule should be submitted by Friday August 11, 2017 via mail or email to:
Fertilizer Technical Unit Supervisor
Minnesota Department of Agriculture
All comments should, but are not required to, include a contact name, phone number and/or email address to provide for follow-up discussion on specific comments. To stay up to date on the rule writing process, please visit: www.mda.state.mn.us/nfr.
The Freshwater Institute is working on ways to keep nitrogen from running into our water supply, but they’re doing it with an eye on keeping farmers as profitable as possible. I thought that was a refreshing change from the usual rhetoric. Here’s a video on something called a bioreactor. Is this something you’d be willing to do on your farm?
Here’s a photo of winter wheat in western Kansas buried under a snowstorm last weekend. Crop insurance is an important product for farmers in times like these. (Photo from the High Plains Journal)
WHEAT GROUP TWEAKS HERITAGE OVER BLIZZARD DAMAGE: David Schemm, president of the National Association of Wheat Growers, wants representatives of The Heritage Foundation and taxpayer watchdog groups that criticize the federal crop insurance program to witness the damage a spring blizzard inflicted on fields in Kansas, the country’s biggest wheat state, over the weekend.The storm, which dropped a foot to 17 inches in places, hit eastern Colorado, parts of Nebraska and the western part of Kansas, where NAWG estimates it destroyed 43 percent of the state’s winter wheat crop. The timing couldn’t be worse, as wheat farmers are already reeling fromseveral years of extremely low prices.
“From their rhetoric, they would say a lot of farmers will go bankrupt and that’s how it’s supposed to be,” Schemm said of taxpayer groups and the conservative think tank on Tuesday as he surveyed his 4,500 acres of damaged wheat in Sharon Springs, Kan. NAWG had earlier tweeted: “A late season blizzard puts 43% of Kansas’ planted wheat acres under 14 inches of snow. @Heritage how would you handle w/o #cropinsurance?”
About7.7 million acres of wheat in Kansas – more than 90 percent – are covered by a crop insurance policy, a liability amount equal to $1.1 billion, NAWG estimates based on USDA’s 2016 data. Most of those policies protect against revenue losses, as opposed to just drops in yield, the group said, making an important distinction.
Heritage’s two cents: It’s not true that the Heritage Foundation is against all forms of crop insurance, said Daren Bakst, the group’s research fellow on agricultural policy. “On the yield side, we should be covering deep losses,” like those experienced in the recent storm, he said. “Other risks farmers should be managing on their own.” Heritage did call for eliminating crop insurance policies that guarantee revenue when it released a 65-page paper – which Bakst edited – on managing risk in agriculture last year. Pros, read the report here.
Here’s the podcast recapping the damage in Kansas as well as some better news regarding rebuilding after the wildfires that raged through the plains states: