WeeklyAg News – May 16, 2017

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Q1 Ag Economy Update: Farm Income, Land Values, Agricultural Credit

David Oppedahl, Senior Business Economist at the Chicago Fed, explained yesterday in The AgLetter that, “District farmland values were unchanged in the first quarter of 2017 relative to both the first and fourth quarters of 2016.

Yesterday’s update from the Chicago Fed added that, “Survey respondents anticipated agricultural land values to remain stable in the second quarter of 2017: 69 percent of responding bankers expected farmland values to be steady, 29 percent expected a decline, and a few Iowa bankers expected an increase.”

Recall that last month, in the Fed’s Beige Book, the Chicago District pointed out that, “Expectations of low incomes for 2017 led to lower farmland values and cash rents for cropland compared with last year. However, land values for higher quality ground and recreational tracts were steady on balance.”

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USDA Reorganization Proposal

Last Thursday, Secretary Perdue released a proposal to reorganize the Department of Agriculture. The 2014 farm bill required USDA to send to Congress a reorganization proposal that creates an Under Secretary for Trade and Foreign Agricultural Affairs. Secretary Vilsack had not done so during his tenure. The Department has a limited number of Under Secretary slots, so creating a new one required the department to eliminate one.

The reorganization proposal eliminates the Under Secretary for Rural Development. Rural Development agencies would report directly to the Secretary The proposal also creates a new Under Secretary for Farm Production and Conservation; basically the existing Under Secretary of Farm and Foreign Affairs which was composed of FSA, RMA and FAS (Foreign Affairs Service) loses the FAS and gains the Natural Resource Conservation Service (NRCS). It does make some sense organizationally to house NRCS and FSA under the same Under Secretary since both share field office locations.

Congress must approve the proposal before it becomes effective. One would expect the FY 2018 budget request from the Trump Administration will reflect the proposal. That budget request is expected to be transmitted to Congress the week of May 22nd.

Read the Proposal

FY 2017 Appropriation Bill Completed

Congress passed and the President signed an omnibus appropriations bill providing funding for FY 2017. The federal government had been operating under a continuing resolution (CR) since October 1, 2016. The fix to make cottonseed eligible for ARC and PLC payments was dropped in the final bill. This is a significant omission and could have major implications for the next farm bill as the cotton industry seeks relief from low commodity prices.

The omnibus bill provides $74.829 million for the RMA S&E, the identical amount RMA received in FY 2016. In contrast, the Farm Service Agency (FSA) received $1.523 billion for its S&E, a small increase compared to $1.515 billion in FY 2016.

Representative Kind Introduces Bill to Kill Crop Insurance Program

Congressman Ron Kind (D-WI) reintroduced his bill to basically kill the crop insurance program as we know it. Senator Flake also introduced the same bill in the Senate. The bill known as Assisting Family Farmers through Insurance Reform Measures Act (AFFIRM) would apply a $250,00 adjusted gross income (AGI) test such that no premium assistance could be paid to farmers with an AGI greater than $250,000. It would also cap premium assistance at $40,000 per farmer, cap total administrative and operating payments at $900 million per year (currently set at $1.3 billion), cap expected underwriting gains at 8.9% (currently at 14.5%), prohibit premium assistance for revenue policies, and require the disclosure of premium assistance by farmer to the public.

Anyone of these provisions would significantly impact the crop insurance program, but the combination of all of them essentially kills crop insurance as we know it today. Obviously we will be working to make sure the AFFIRM act goes nowhere in Congress and is not included in any form in the next farm bill.

Read the Bill

The Climate Corporation Buys Hyrdobio

The Climate Corporation, a Monsanto subsidiary, has bought HydroBio, an agriculture software company based in Denver, Colorado. The HydroBio team will join The Climate Corporation in delivering digital to farmers worldwide.

“HydroBio has unique irrigation-focused data analytics capabilities, and as global water use for crop production increases, efficient irrigation is becoming even more important to the future of sustainable agriculture,” said Mike Stern, chief executive officer for The Climate Corporation, in a news release. “HydroBio has built a successful business, and their tools will complement our Climate FieldView digital agriculture platform offerings in the future.”

HydroBio uses a combination of satellite imagery, soil data, and hyper-local weather data to deliver irrigation insights for farmers to help improve crop water-use efficiency and maximize yields, said officials for the companies in a news release. Its data-driven irrigation-management platform turns satellite images into actionable information, builds custom irrigation prescriptions for optimized water application, and provides crop health monitoring throughout the growing season for enhanced productivity, stated company officials in a news release.

More on the Deal

Senate Agriculture Committee Holds Second Farm Bill Field Hearing in Michigan

The Senate Agriculture Committee’s second farm bill field hearing was held on May 6 at the Saginaw Valley Research Center in Frankenmuth, Michigan. There were 16 witnesses and the hearing ran nearly 3 hours long. The eight grower witnesses offered strong support for the crop insurance program.

Watch the Hearing  [Note the witness testimony begins around the 50th minute]

Trade Takes Center Stage in Perdue’s USDA Reorganization

Opening markets for U.S. corn, soybeans and other farm goods would get more attention under a major reorganization proposal Thursday from U.S. Ag Secretary Sonny Perdue, who wants to create a new undersecretary for trade.

With the farm downturn entering a fourth year, ag groups lauded the move.

“In this farm economy, trade is more important than ever to farmers’ incomes,” said Wesley Spurluck, president of the National Corn Growers Association.

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2017-18 U.S. Cotton Crop Could be Biggest in 11 Years

The 2017-18 U.S. cotton crop could reach 19.2 million bales, according to a USDA World Agricultural Supply and Demand Estimates report based on a planted acreage forecast of 12.2 million and the outlook for favorable moisture conditions this spring.

The 19.2-million-bale estimate, released as part of USDA’s May 10 WASDE report, would mean the 2017-18 crop would be the largest since 2006 when U.S. growers harvested 21.6 million bales of cotton on 12.8 million acres.

In the report, USDA also increased its export forecast for the 2016-17 (Aug. 1 – July 31) marketing year to 14.5 million bales. USDA economists said the new number reflected higher-than-anticipated exports sales to date. Ending stocks were reduced to 3.2 million bales as a result of the increase in exports.

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NASS Survey of Almond Growers Suggests 2017 Crop at 2.2 Billion Pounds

The California subjective almond forecast is out with what some call a “surprising” number because of relatively poor weather conditions through a long bloom period.

The 2017 California Almond Forecast, better known as the “subjective forecast” by the National Agricultural Statistics Service (NASS), is the first public peek into what the upcoming California almond crop could be and is based solely on a telephone survey of growers conducted between April 25 and May 4.

Based on those phone calls, the early estimate for the 2017 almond crop is 2.2 billion pounds, slightly higher than the 2016 record crop, that looks to be over 2.14 billion pounds. The final 2016 harvest tally will not be known until after July.

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Opinion: Farmer Friendly Government

Congratulations to new Agriculture Secretary Sonny Perdue. USDA will be in good hands for development of the next Farm Bill. And I trust Secretary Perdue will carefully review agency programs and operations in the months ahead to identify strategies to save money and make government programs more farmer friendly.

In January, we looked at regulatory rollbacks and suggested the new Administration look more deeply at how agricultural programs actually work and how they are administered as well as the rules that govern them. Getting farm programs right to make them farmer friendly involves simplifying applications and finding ways to share information within USDA so landowners don’t have to repeatedly provide the same data to various agencies they work with. Taking a fresh look at the processes agricultural agencies follow to run programs could enable them to streamline and speed things along to benefit the farmers and ranchers served. Too often the cost of partnering with government is too high. It’s just more trouble in time and paperwork than it’s worth. Maybe we can’t have applications that will fit on a postcard, but for smaller, more specific NRCS contracts, for instance, could we have a simpler, less-detailed application, conservation plan and contract? This has been done on certain Rural Development programs; could it be done for NRCS, FSA and AMS offerings as well?

Looking more broadly, however, to really benefit program participants and taxpayers, it will take more than eliminating minor hassles, removing regulatory roadblocks, or ditching 11th hour rules promulgated by the previous Administration. There are a range of ideas which should be explored if we are seeking meaningful change that will improve conservation efforts for all concerned.

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For Sale: When Oregon Farm and Ranch Land Changes Hands

Diane Daggett remembers the conversation with the woman who had just purchased the Daggett family’s 440-acre cattle ranch in Northeast Oregon’s Wallowa County, land that had been in the family for four generations.

The buyer said she had called her husband, who was aboard their yacht in the Cayman Islands, to share the news. “Honey,” the woman said she’d told him, “I just bought the most amazing birthday gift for you.”

And the land, sold by Daggett’s step-mother for what Daggett figures was three times what it could generate as a cattle ranch, slipped from the family’s grasp. Now it lies behind a locked gate.

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3 Pieces of Advice for Agribusinesses Wanting to Keep Up with Innovation

When it comes to innovation, traditional agriculture companies are all about stability. They follow time-tested methods that just plain work. But how can they make the leap to the next level if their focus is on what has worked well for them in the past? To achieve a true step-change in productivity, they need to have both the right processes, and the right culture, in place.

Open innovation can be an effective way for tradition-bound companies to look ahead, instead of to the past—something we as an industry must do if we are to deliver the innovative products growers need to step up food production to meet the demands of a growing world population. Open innovation is a way of driving new thinking by posting business challenges online to engage a broad community to develop an effective solution.

For open innovation or “crowdsourcing” to deliver useful, innovative solutions, it may require an internal employee mindset change for acceptance. Here are three tips that can help in that process.

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Ray Brownfield Named Recipient of the 2016 Land REALTOR® of America Award

May 2017 – Recently at the REALTORS® Land Institute National Land Conference, held at Charlotte, North Carolina, Ray Brownfield was the sole recipient of the 2016 Land REALTOR® of America Award. This prestigious award is bestowed upon a REALTORS® Land Institute member who has achieved the Accredited Land Consultant designation, excelling in extremely high levels of real estate transaction competency, displaying above reproach ethics, leadership and professional standards.

Ray is the managing broker and owner of Land Pro LLC, located in Oswego, Illinois. He is also an Accredited Farm Manager through the American Society of Farm Managers and Rural Appraisers. Ray and his staff provide professional land real estate brokerage in Illinois and farm management services throughout Illinois, parts of Indiana, Iowa and Nebraska. In 2016 Ray was the real estate broker for over $20M in real estate sales and managed over 7,000 acres of farmland. He is a native of Iroquois County Illinois, and thoroughly enjoys his family farm at Thawville. He and his wife Patty live in Naperville.

In Memory

Waverly Scott - Smith Center, KS

ASFMRA was honored and pleased to welcome Waverly Scott into the membership in 1999. He joined as an Associate member and maintained his membership with the Society. Waverly made many friends through his association with ASFMRA who will miss him greatly. Our thoughts and prayers are with his family.  

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Donald D. Zimmerman – Harvel, IL

ASFMRA was honored and pleased to welcome Donald D. Zimmerman into the membership in 1990. He joined as an Associate member. In 1996, Don advanced his membership to the Professional membership classification. He maintained his Professional membership until he transferred to Retired in 2010. Don, along with his wife Martha, made many friends through their association with the Society. Don will be missed by many. Our thoughts and prayers are with Martha and her family. 

See More on Don’s Life