livestock | Field 2 Field

December 4, 2023December 4, 2023

2023, the Ag Economy, and a New Year Ahead

What’s the first thing that comes to mind when I say, “Describe the year 2023 farm economy in one word?” Actually, I’m not sure one word would be adequate, especially if you live and work in rural America. The best way to describe 2023 in the agricultural community for many may be “Is it 2024 yet?”

Ag Economy, 2023 — In today’s ag economy, 2023 saw many of us pinching pennies to grow crops.

Dave Widmar is an agricultural economist with Agricultural Economic Insights in West Lafayette, Indiana, and keeps a close eye on the ag economy. We had a conversation during the last National Association of Farm Broadcasting Annual Convention in Kansas City in November, a week before Thanksgiving.

“One of the biggest stories of 2023 is declining net farm income,” Widmar says as the crowd in the Trade Talk event walked by in the background. “That’s not a big shocker to most people in rural America, but we have to put it in perspective. It’s still historically high, so we need to bring it into balance.”

Unfortunately, that income balance doesn’t apply equally to all parts of farm country. He said the Midwest and the Corn Belt did especially well during the last three years combined. In fact, he called the last three years (2021-2023) the “best three-year run” since the 1940s.

“On the other side of the narrative, commodity prices have trended lower,” he said, “especially on corn. We also had another year of below trendline yields combined with higher interest rates.”

AEI isn’t necessarily watching the interest rates the general public hears about during the evening news. Those are the short-term rates the Fed adjusts at their meetings, and, since June, the Fed has raised short-term rates 25 basis points. “On the other hand, long-term rates have increased 150 basis points,” he said.

“That may continue into 2024 as that yield curve un-inverts as we move into a different economy next year,” Widmar said. “As the Fed spent time raising rates, the curve got inverted, meaning short-term interest rates got more expensive than long-term rates. This is often thought of as an indicator that recession may be coming.”

2023 ag economy — The 2023 farm economy showed producers it’s time to keep a tight reign on how they use debt.

Now the Fed has paused interest rate hikes, the long-term interest rates have continued higher. That means the yield curve is starting to un-invert, something he’ll continue watching.

There is some good news for the economy. The unemployment rate remains low, which is a positive trend, and inflation has come down “significantly.” In his words, “the genie isn’t back in the bottle yet.” The country isn’t back to two percent inflation, and the last 150 basis points on inflation are going to be the hardest to reduce. “A lot of moving pieces in 2023,” he added.

So, what do those moving pieces possibly mean for 2024? For those looking for the economy to settle down, they may be disappointed. Widmar said “hold on.”

“The volatility is probably going to continue,” he said ruefully. “That isn’t all bad. Despite record fertilizer prices, the uncertainty around usage, demand, and inflation, the farm economy had a good run between 2011 and 2023.

“We could see some reversion to the mean,” Widmar added. “Farm incomes might be lower next year but not necessarily historically bad. What we need to realize is the last three years are not normal.”

The last three years weren’t typical in terms of government payments, commodity prices, or profitability. Widmar says it’s time to start recalibrating our expectations as to what’s normal and what we should plan on being normal in the future. Speaking of the future, what should producers be thinking about heading into next year?

“One of the big things we’re keeping an eye on is acreage distribution,” Widmar said. “There’s always at least some reallocation. One of the things that we observed in 2023 was that we had a lot of corn acres and not as many soybean acres. That’s resulted in an imbalance in ending stocks.”

That’s put corn ending stocks are above the long-run average, closer to 15 percent than the average of 13 percent. Soybeans are closer to five or six percent instead of the long-run average of eight.

“That means we may see some acreage reallocation,” Widmar said. “Producers should keep an eye on the relative price ratio and how that’s going to impact their budgets.

“They also need to keep an eye on fertilizer expenses,” he added. “Fertilizer has come down a lot recently, and that’s going to benefit corn budgets quite a bit.”

Another thing to watch for is farm debt. One of the things the economists at AEI have observed is new farm loans with different terms than in the past. Take a machinery loan, for example. The payment terms have been stretched out. How does that affect the bottom line?

“For every $1,000 of farm debt one takes on, the payments are going to be about the same as they were the last few years,” he said. “The payment hasn’t changed. What’s changed is the ‘stretching out,’ which means more payments get added to the backside. The extra interest expense is backloaded into the form of additional payments.”

Interest expenses are increasing as we go forward, and it will take more payments to maintain the same level of debt that farmers have had in the past. He said a lot of the economic challenges we face today may be getting “kicked down the road.” But there is one good sign amid some uncertainty looking to the new year and 2024 spring planting.

“Lenders are still confident and comfortable making long-term loans on things like machinery,” he said. “One of the big differences between the 1980s and today is back then, we had very high interest rates and short repayment periods. Some repayment periods lasted less than a single year.”

That created a large problem of no access to capital in the ‘80s. Today, Widmar said there’s a lot of available access to debt markets, which are very accommodating right now. But, he says, just because someone will lend to you at those terms doesn’t mean you as a farmer need to accept them. “Always be thinking about the implications of any loan terms you accept,” he added.

“Stretching the terms out has kept the payments low, but now that we’re in a high-interest environment, how are producers going to adjust,” he asked. If costs like fertilizer, electricity, or gasoline go up, Economics 101 teaches that we should be using less of each input.

“What do we do then with the higher cost of money,” he said. “Using less of an input is one particular approach. We can also shift the way we’re using money, including using more long-term debt last year and then shift it to short-term debt going forward. We always have to be evaluating how we’re using debt.”

In closing, he pointed out that agriculture hasn’t been in many rising interest rate environments in the past. The 1980s was one, and farmers and now in another. Producers need to revisit the strategies they’ve been deploying around farm finances, the use of farm debt, and their cash flow.

August 10, 2022August 11, 2022

Rain Finally Shows In Farm Country Last Weekend

Rain. Finally. Last weekend saw at least some rain in parts of farm country. Had a chance to talk with John Baranick (rhymes with mechanic), ag meteorologist for DTN, who lives just down 169 from me in Jordan, Minnesota. He says while the rain benefitted the parts of rural America stuck in a drought, other areas didn’t need a lot of rainfall.

“It wasn’t just here in southern Minnesota. We also saw that it was even heavier south of the border in Iowa, with a lot more four-to-six inch amounts there. Very helpful for some areas, but not a lot of those areas needed it. It also extended down through southern Wisconsin and into Northern Illinois. A lot of those crops, again, didn’t really need it, but it’s definitely helpful wherever it hit. And that front is starting to come through the eastern half of the Corn Belt. Again, a lot of these areas are doing much better than we are out here in the West, but Illinois, Indiana, and Ohio are all seeing bouts of rain this week. They’ve had some flooding in some of these areas, but the rainfall that’s gone through is mostly favorable. It’s just those Western states that just haven’t.”

The Dakotas saw mixed results from the weekend rain.

“South Dakota got some pretty good rainfall. The eastern half of it did, but the western half didn’t, really. North Dakota has kind of been missing out on a bunch of rain lately, although their soil moisture, for the most part, and the crop conditions are still pretty good.”

The Plains States are still struggling with drought…tape

“It’s the states of Nebraska, Kansas, kind of northern Missouri that have missed out on a lot of the rainfall even with these fronts coming through, and they’ve had a lot hotter. Temperatures have been up near or eclipsing 100 degrees very consistently all summer long, so the heat has been putting on a whole lot of stress for those areas.”

There may finally be some cooler air on the way into the Plains next week and may bring at least a little rain with that front…tape

“We’re seeing late next week, maybe mid-to-late next week, a push a cooler air move through and that’s gonna come with a bit of showers too, so it’s not a whole lot of rainfall and probably on the order for most people have a half inch or less, But the temperatures are going to cool back down. Instead of seeing highs in the 90s and up near 100. It’s more like the 70s and 80s for several days, so it’s actually gonna be below-normal temperatures for a bit. That kind of occurs late next week into the following week, so it’ll be a nice relieving break for them.

Unfortunately, many parts of rural America are still stuck in a drought. We’ll talk about that more later this week.

Again, that’s DTN ag meteorologist John Baranick

July 27, 2020July 27, 2020

Mystery Seeds Entering the U.S. from China

“Mystery Seeds.” The first thing that came to mind was a possible title for a “Scooby-Doo” episode. Just when you thought 2020 couldn’t get any stranger, people in at least 10 states have received packages with a Chinese postmark and a label that says some kind of jewelry is inside. However, it’s a different story after they open the box.

What these Americans are receiving is an unsolicited package of seeds. States like Minnesota, Louisiana, Utah, Virginia, Kentucky, Washington state, and others are reporting similar situations. One thing to get out of the way right away is that under no circumstances should anyone plant those seeds.

“We’re uncertain what those seeds may be and why people are receiving packages they didn’t send for,” says Denise Thiede, Seed Unit Supervisor with the Minnesota Department of Agriculture. “Until we know more, we’re encouraging people to contact us because of the risk those seeds may pose to Minnesota agriculture and our natural landscapes.”

Washington state just recorded its first known case of an unsolicited seed shipment late last week. I talked with Karla Salp, the Public Engagement Specialist with the Washington State Department of Agriculture. Not one but two Washington residents picked up seeds in the mail they didn’t order from China.

“One of those residents sent us a picture of the seeds so we could see what they were talking about,” Salp says. “We thought they looked a lot like some kind of citrus seeds, while the labels said the packages contained some sort of jewelry.

More “Mystery Seeds” from China. (Photo from the Minnesota Department of Agriculture)

“Initially, we had been telling folks who received the seeds to report it to USDA,” she said. “They handle reports of agricultural smuggling. “The social media post advising people to contact USDA has been seen by over 30 million people. We’re sure that USDA knows all about the problem now.”

So, the Washington Ag Department is asking their residents to put the seeds in a Ziploc bag and put them in their regular trash. Do not putt them in something like a compost pile. “Most of the packages have another package within them,” Salp says. “The seeds are often in a second package inside the shipping container. Residents need to leave the seeds inside the sealed container. Do not open them up, and definitely do not plant them.”

Each state will have its own directions for residents who receive the seeds through the mail. The Minnesota Ag Department says don’t throw away the package or its contents and do not plant the seeds,. After that, contact the Arrest the Pest line at 888-545-6684. They’ll need your name, contact info, and the date you received the package.

Minnesota officials will then coordinate shipping the package and its contents to the MDA Seed Program. The MDA is currently working with the USDA’s Smuggling Interdiction and Trade Compliance Program on identifying and destroying the seeds.

Salp says putting unknown seeds in U.S. soil could be problematic.

“It could be a combination of any of those three reasons I just listed,” she added. “It could be an invasive species that also carries a specific plant disease. These are some of the serious reasons that things like this need to go through the proper channels at the border if they’re a plant-based product.”

The USDA is working with federal and state agencies to investigate these unsolicited packages.

“We are also working with various online retailers to address some of these issues as well,” Salp said.

May 6, 2020May 6, 2020

Bison ranching industry struggling through COVID-19

Bison ranching. The first thing that may come to mind is hundreds of Bison thundering down the prairie a long time ago. Did you know we raise bison on farms across the country? In fact, the U.S. has bison production in every state in the union. While it’s been a growing industry for many years, the impact of COVID-19 on raising Bison has been anything but positive.

“We’re a small segment of agriculture,” says Dave Carter, the Executive Director of the National Bison Association. “However, we’ve been growing for the last 15 years and turning into a strong and steady business. Most producers have been pretty profitable over that stretch.”

Here’s an interesting conversation about raising bison in the United States. It’s from a YouTube channel called Off-Farm Income

Bison is marketed in two locations, similar to the other major protein segments in U.S. agriculture. Those markets include the restaurant/foodservice sector and the retail sector. Carter said because bison processors tend to be smaller than their counterparts that process beef and pork, they often specialize in one market or the other.

“When COVID-19 hit and restaurants shut down, those processors serving the foodservice customers really took a hit,” he said. “Some have had to lay off up to 60 percent of their employees almost overnight. Those folks who saw restaurants shut down were suddenly scrambling and trying to adapt as retail demand went up.

Bison ranching — Dave Carter is the Executive Director of the National Bison Association. (Photo from the Business Journals)

“Herein lies the problem,” Carter added. “Most of the higher-end cuts like steaks go into the restaurant and foodservice sector. On the retail side, customers are going into stores to buy ground bison. When the higher-end cuts like tenderloins at $24 a pound aren’t selling while people are buying ground bison at $9 a pound, it has a significant financial impact.”

The prices that processors have paid to ranchers over the past month have dropped around 40 cents a pound, a significant price cut for a large animal like bison. Prices have been around $3.70 a pound. He admits while other livestock sectors would love to see that price, it’s still a significant drop for bison producers in just one month’s time.

The ranchers in the finishing segment of the bison industry are the ones being hit hardest because they’ve got animals that are ready to go and are having to hold onto them longer. Processors aren’t working as quickly as they normally would due to layoffs and illness. Animals that stay longer on the farm tend to gain more weight than is optimum and it adds more expense to the bottom line.

One of the biggest challenges the industry faces is getting enough feed because of what’s going on in the ethanol industry. “Distiller’s grains have been a big part of our feeding formula in bison ranching,” Carter said. “Because of the crisis in the ethanol industry, the price of distiller’s grains is going up significantly and the availability is going down.

“That means we now have ranchers who will get less for their animals when they deliver them to their processor,” he added, “but their feed costs are going up at the same time.”

He is thankful that none of the bison processing plants in the country have had to shut down entirely because of the outbreak. Unfortunately, a high number of workers have tested positive for COVID-19 and that’s made other employees hesitant to come to work. But Carter says those bison processors are doing a “great job” of caring for their workers through social distancing, through testing, and by providing Personal Protective Equipment,

Livestock producers in the pork sector have had to make the horrible decision to euthanize some of their animals as they don’t have anywhere to send their hogs for processing. Carter says the bison industry isn’t at the point yet.

“We still have enough supply chain capacity that our ranchers haven’t had to make that decision,” he said. “One reason for that is, unlike our friends in the cattle industry, we don’t have fall calving. Most of our calves are born between April and June, which meant they were weaned and already sent to other ranchers for finishing between November and February of last year.

“That means producers were already done selling their previous calf crop before COVID-19 showed up,” Carter added. “A lot of the ranchers that are feeding bison will probably turn some of their animals back out to pasture and let them graze on grass, so they don’t have the extra feed expense. We can hold them longer than a lot of other livestock, so we aren’t in danger of having to euthanize them in the near future.”

April 27, 2020April 27, 2020

Farmer optimism hits an all-time low

Farmer optimism is in the dumper and there is no nice way to say it. COVID-19 and its economic impact, low commodity prices, trade wars, and weather have made life even more challenging. DTN found out that farmer optimism is at a record low. They’ve been doing a tri-annual survey of farmers for several years and this spring’s Agricultural Confidence Index hit an all-time low mark.

The baseline for their survey is 100. Everything below 100 is pessimistic, and any number above 100 is considered optimistic.

“We do our survey in the spring, just before planting,” said DTN Editor-In-Chief Greg Horstmeier. “We also do one at harvest, and then our final survey is in December, which is basically farm tax time. The drop in the index from the last time we did this in December is not a surprise, given everything that’s going on.

“It was a record-sized drop down to an index reading of 67,” he added. “That’s a 97-point drop, which is even more remarkable because we’re hearing that agriculture is moving on as normal. Everyone is either getting ready to or heading out into the field, so that big of a damper on the survey results is surprising.”

Horstmeier said spring is typically the most optimistic time of the year for farmers. New crops are going into the ground, which automatically means a fresh start, especially if the year before was as tough as 2019. Low optimism in the spring isn’t unusual. What’s unusual about this survey is how pessimistic farmers are about the future outlook.

The future outlook is typically very optimistic during the spring survey. “This year, that index reading was 73, which means it dove hard into negative territory,” Horstmeier said. “That was the big takeaway for me. Not only does the current situation have farmers in a pessimistic state of mind, but they don’t have a lot of promise for the foreseeable future.”

Another thing that really stood out was just how prevalent the pessimism is in different sectors of agriculture. It didn’t matter what farmers grew or how big their operations were, either. Even in down years, there’s typically difference worth noting.

“We typically see at least some differences between, for example, livestock and crop producers,” Horstmeier said. “We’ve also seen regional differences, such as the Midwest may be less optimistic than farmers in the Southeast. The pessimism was across the board, regardless of location, income level, the crops they grew, and what kind of enterprises they had.”

Speaking of Midwest farmers, in this year’s survey they showed the most pessimism currently, yet they also had the most optimism for the future. Southeastern farmers were more optimistic about their current conditions (89) but felt less optimism for their future (56).

DTN also conducts a similar survey of agribusinesses. The index level came in at a just-above-neutral 104. Agribusinesses rated their current conditions at a slightly pessimistic 85. However, they were above neutral when looking at the future, coming in at 118.

Here’s the link to the DTN survey article.

April 16, 2020April 16, 2020

Hog farmers are hurting and asking for help

Hog farmers are hurting.

COVID-19 has put a serious crimp in the U.S. economy and nowhere is that more evident than in agriculture. More specifically, American hog farmers are struggling to stay on farms because they’re having trouble getting their hogs to market. Big trouble, in fact. Hogs are so far backed up on the farm that producers may have a tough decision to make in the not-too-distant future.

Those of us in the agricultural media don’t often hear the word “euthanize” in press conferences. Unfortunately, it came up multiple times during a press conference hosted by the National Pork Producers Council. As prices for hogs have plummeted, Howard ‘A.V.’ Roth, NPPC President, says things are as bad as they’ve ever been after several years of a depressed farm economy.

“We are now an ag sector in dire crisis,” Roth said to reporters. “Farmers are already exiting the business and the damage will only intensify without direct intervention from the federal government.”

Speaking as a hog producer himself, Roth says the pork industry has a list of several things it needs in order to help keep as many farmers in operation as possible. The first item on their wish list would clear out a tremendous amount of stored pork supplies as quickly as possible, plus it would get food into the hands of people who need it.

“Over $1 billion in pork purchases by USDA to clear out a backed-up meat supply, while supplementing food bank programs around the country facing increased demand for food as unemployment continues to rise,” Roth said. “These purchases should come from packaged pork that was intended for restaurants and other segments of the foodservice market.”

In all the years I’ve covered agriculture, I can tell you from firsthand experience that farmers want to make their living from the markets, not government handouts. How desperate are pork farmers to stay in business?

“We need direct payments to producers without eligibility restrictions,” Roth says.

They’re also hoping to see China remove retaliatory tariffs on U.S. pork that are still in place despite the Phase One trade agreement between the two countries. Roth points out that it’s no secret China needs a reliable source of affordable pork after their herds were decimated by the African Swine Fever virus.

“Removing those damaging tariffs would get us back on a level playing field with our international competitors,” Roth says. “Dr. Dermot Hayes, an economist with Iowa State University, says removing those tariffs would allow U.S. exports to China to more than double their current volume.”

How badly does China need pork, one of the most preferred proteins in the Asian diet? Let’s just say that Chinese pork producers, who can’t ever hope to meet their country’s domestic demand, are enjoying some pretty high prices for their products right now.

“While Chinese producers are enjoying record pork values, U.S. producers are facing a dire decision on our farms,” Roth said. “Sadly, it’s true. Without significant assistance, euthanizing is a question that’s going to begin coming up on our farms.

“Let me be the first to say, as a pork producer, we care about our animals,” he added. “The last thing we ever want to do is euthanize even one animal. We’re going to do everything in our power to make sure that doesn’t happen.”

Producers may be able to at least push that decision back somewhat, thanks to a recent decision by the Environmental Protection Agency. Michael Formica, Assistant Vice President of Domestic Affairs and Counsel at NPPC, says hog housing restrictions have been temporarily relaxed.

“We reached out to EPA to ensure that if we were ever in a situation like the one we face now, producers would have an option to hold animals on their farm,” Formica said. “All of the farms are permitted to hold a certain number of animals. If they exceed those numbers, they have to go through new permitting.

“We asked EPA for a temporary waiver of the thresholds during the crisis we’re facing,” Formica said, “and thankfully, they granted that request a couple of weeks ago. That’s a tool that many farmers can use to hold animals on their farms while additional animals come through the pipeline.”

He says it’s important to point out that’s an advantage for farmers only if they have adequate additional space. If the backup continues indefinitely, they will run out of space and that’s when they have to start culling otherwise healthy animals from their herds, simply because there won’t be enough space to take care of them.

Why is it all piling up on hog farmers so quickly? Nick Giordano, Vice President of Global Government Affairs and Counsel for NPPC, says hog producers were the first to be hit hard by the trade war with China.

“Hog farmers were there at the tip of the Chinese retaliation spear,” he said. “Trade retaliation from two key markets, Mexico and China, in 2018 and 2019, took $20 off the prices that producers received for every hog.

‘Unlike a lot of the other segments in our economy that came into the COVID-19 outbreak with record profits and a full head of steam, our producers were already hurting. This has made a bad financial situation infinitely worse.”

How far have things fallen across the industry? Iowa State’s Dr. Hayes says in just one month, from March 10 to April 10, the pork industry has lost $5 billion in value. Something has to change.

April 10, 2020April 10, 2020

Mill ruins explore in Hastings, Minnesota

Mill ruins are so much fun to explore. Minnesota seems to have its share of these old buildings scattered around the state. Time to Explore Minnesota. We’ve all seen or heard the commercials from time to time, haven’t we?

Well, as I’ve unfortunately had a little more free time lately (thanks COVID-19), I’ve taken that commercial a little more to heart than I have in the past. And yes, I’m keeping socially distant. Instead of feet, my distance between me and other carbon-based lifeforms stretches for miles, okay?

After exploring an abandoned farm that didn’t have much left to it, I was off to Hastings next to see their Old Mill Park. That kind of thing is even more interesting to me after spending a couple days poking around Mill Ruins Park in the Twin Cities. While this one wasn’t as big as Mill Ruins Park, the history was just as interesting.

It turns out this is all that’s left of the old Ramsey Mill in Hastings, built back in the mid-1800s. My first thought as I was walking down the path to the old structures was “man they’re tall!” And I was more right than I first knew. The old mill was no less than four stories tall. Alexander Ramsey and Dr. Thomas Foster built it right next to the Vermillion River.

The big structure was called a “grist” mill. What that means is it ground cereal grains into flour and what were called “middlings.” Those are the parts that aren’t flour. Middlings are a good source of protein, fiber, phosphorus, and other nutrients. People use them to produce foods like pasta, breakfast cereals, puddings, and couscous for humans, as well as fodder for livestock and pets. How about that? You and I learned something today. I didn’t know what middlings were either.

It’s interesting that Ramsey actually sold his interest in the business in 1877 but the place still retained his name. The mill would operate for another two decades before a fire broke out in late 1894. A Wiki article says it unfortunately may have been arson. It was really too bad because the mill had just cranked up its production to 125 barrels a day, higher than it had ever done before.

The Ramsey Mill was hit by a fire in 1894. While there isn’t much of the physical structure left, there’s still a lot of history there. (Photo by Chad Smith)

I don’t actually know when it shut down officially. The oldest photo I could find online was in 1902, when folks in Hastings were already calling it the “Ramsey Mill Ruins.”

As I was leaving the Old Mill Park, I glanced off to the right and saw the most remarkable little tree that seems to be growing right out of the end of the overhang. Those trees can grow in the strangest places, can’t they?

February 2, 2020February 2, 2020

Coronavirus and Possible Effects on Commodity Markets

Coronavirus. As it continues to make headlines, commodity experts are wondering what kind of effect the spread of the virus will have on markets. Joe Vaclavik, President of Standard Grains in Chicago, says the outbreak will have some effect, but it’s hard to tell what kind or for how long.

“It’s not a positive. I don’t know that it’s the biggest negative in the world. It could be, and that’s why you’re seeing liquidation in some of these markets, like the stock market, and that’s why you’re seeing the grain markets soften up. Nobody wants to be long in this stuff. The Coronavirus probably goes the way of SARS, or some of these other similar types of outbreaks that we’ve last a month, maybe two months, maybe the better part of a year. Then, it probably makes its way out of the headline.”

He says the possibility of a significant impact on markets has likely grown over the past couple of weeks.

“There’s always that risk that it turns into something much bigger. It could eventually disrupt the flow of trade. Maybe there’s a country out there that decides to throw up trade barriers and says ‘hey, we don’t want corn from the U.S. because they’ve got too much of that virus going around. There’s always that sort of risk on the table.”

Mike Zuzolo, President of Global Commodity Analytics in Kansas, says the virus will likely have a significant impact on China’s poultry flocks. Separate reports have millions of chickens “on the edge of death.” But they aren’t necessarily sick with Coronavirus.

“Animal feed suppliers cannot get their shipments through, raw materials can’t get through, and this also corresponds with another article from the South China Morning Post that said hedging is not being done, soy meal is not being hedged, so soybeans are not being bought. I think what you’re looking at is probably pent-up demand for the livestock industry and that 300-million chickens die because of not being fed because of Coronavirus. That number of pounds of protein, you’re going to have to replace, eventually.”

There is a long-term buying potential for commodities, but only if the virus outbreak doesn’t last longer than reports are suggesting.

“If China and the scientists are correct and we see a peak in the maximum pressure of this virus, outbreaks of this virus, and, in the next 7-10 days, the price action we’re seeing right now will not last. It will set up a long-term buying potential for commodities.”

Again, that’s Mike Zuzolo of Global Commodity Analytics, as well as Joe Vaclavik of Standard Grains.

December 28, 2019December 28, 2019

Meat Sector Looking for 2020 Rebound

Here’s the complete podcast with Mike Zuzolo. You can play it here or download it by clicking on the three dots on the right side of the player.

“Meat, the redder, the better.” Words of wisdom from the grill master (me). However, those folks who raise that red meat (which includes all types of the protein products in the meat case at your local grocery store), for the most part, had a difficult year.

The U.S. ag sector has to be happy to see the end of the calendar year 2019. It was rough, which might be the understatement of the century so far. I’ve been doing a series of interviews for the National Association of Farm Broadcasting News Service (I’m the assistant editor/reporter) that looks back at 2019 and peeks ahead to next year. I caught up with Mike Zuzolo, President of Global Commodity Analytics in Atchison, Kansas.

2019 was not good for most sectors of the U.S. ag economy, including the protein sector. “No, it wasn’t,” Zuzolo says. “Given the packer break-evens being in the hundreds of dollars for much of the year in cattle, and given the cash prices of hogs struggling to get above $50 live prices, as well as seeing that African Swine Fever was decimating half of the world’s hog herd, I’d say 2019 was a very big disappointment to the cattle and hog industry.”

He said the challenges didn’t just include the trade troubles that dominated headlines throughout the year, they also included a major fire at a Cargill plant in Holcomb, Kansas. Zuzolo said that shot cattle prices sharply lower.

“Prices went below break-evens and they didn’t recover for several weeks,” he recalled. “In my opinion as a livestock analyst, it really shouldn’t have hit the markets quite that hard. The market saw cash prices for cattle collapse from around $120 to $100 for several weeks. At the same time, ground beef and boxed beef prices shot sharply higher because of expectations for tighter supplies.”

Cattle producers took a major hit at that time. The good news is I want to leave you is that Zuzolo sees potential for several bright spots ahead for the protein sector in 2020.

You can find Mike’s website at https://globalanalytics.wpcomstaging.com/

December 18, 2019December 18, 2019

Dairy Assistance Program Enrollment Reopened

The Minnesota Department of Agriculture (MDA) is reopening enrollment in its Dairy Assistance, Investment, and Relief Initiative (DAIRI) program for eligible milk producers through the end of the year.

Producers who have locked in five years of coverage through the USDA Farm Service Agency’s Dairy Margin Coverage (DMC) program and who have not already successfully enrolled in the Dairy Assistance program can apply.

The MDA has already issued $3.4 million to about 1,800 producers representing more than 1,550 farms in Minnesota through the program in its first round of payments.

Producers not yet successfully enrolled will not receive the first round of payment, but may receive a check for the second round of dairy assistance, which will be determined after all new enrollments have been received.

In order to qualify, farmers must have produced less than 160,000 cwt (hundredweight) of milk in 2018. They will be paid based on production levels, up to 50,000 cwt of milk produced in 2018.

An application form, an IRS Form W-9, a copy of their DMC enrollment form, and a statement from their processor(s) detailing the amount of milk produced in 2018 are required to complete an application. All materials must be postmarked by December 31, 2019.

Producers who are already successfully enrolled and have received their first check do not need to take any action. They will automatically receive a second payment. However, producers who submitted incomplete applications and have not received a check must return any requested information by December 31, 2019, to be eligible for the second payment.

For additional information and the application form, visit the DAIRI program page of the MDA website.