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ASFMRA Ag News - December 7, 2021

By ASFMRA Press posted 12-06-2021 07:16 PM


Investors Are Buying up Rural Arizona Farmland to Sell the Water to Urban Homebuilders

In fields on the Arizona-California border, farmers draw water from the nearby Colorado River to grow alfalfa, irrigating crops as they have for decades.

That could change soon. An investment company has purchased nearly 500 acres of farmland and wants to strip it of its water and send it 200 miles across the desert to a Phoenix suburb, where developers plan to build thousands of new houses.

Similar deals could follow as the demand for water in the growing Southwest outpaces the dwindling supply. Investors have begun buying thousands of acres of farmland to acquire the water, which they view as an increasingly valuable asset.

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Farm Input Costs Are Rapidly Rising for 2022

Farmers in many areas of the United States, including several portions of southern Minnesota, are having a very good profit year in 2021. In the latest estimate, the U.S. Department of Agriculture's Economic Research Service, or ERS, is projecting total U.S. net farm income for 2021 at $113 billion, which is at the highest level since 2013.

The higher levels of net farm income in 2021 are the result of better-than-average crop yields in many locations and the highest corn and soybean commodity prices since 2013, along with some extra government program payments early in the year.

However, as we end the year, rapidly rising crop input costs for 2022 will likely increase crop breakeven costs, which could lead to much lower net farm income levels next year.

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‘Unimaginable’: Mount Vernon Dairy Farmers Reeling From Flood Devastation

The Baumgardner family knows the risks of flooding well.

Their sprawling Baumgardner Dairy Farm sits just south of the Skagit River, which is so routinely swollen by rainwater and snowmelt that the nearby city of Mount Vernon built a floodwall. So as the rain kept falling hard the night of Nov. 14 and the Baumgardners herded their cows to fenced “critter pads” on higher ground, everything looked wet but normal, said Jordan Baumgardner, who helps manage the dairy farm owned by his father, David Baumgardner.

But the resulting flood proved to be unlike any other the family had experienced at the farm. The flooding claimed the lives of 44 cows the family had nurtured and watch grow up, and left behind extensive damage they are still trying to assess.

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Smoke-Tainted California Grapes Find New Life as Vodka

As wildfires covered California’s wine country skies in smoke in 2020, Nicolas Quille feared the worst for his grapes.

He remembered how the smoke gave his wine "ashtray" aromas after the 2017 fires so he rushed to harvest his merlot and malbec grapes at Pine Ridge Vineyards in Napa County.

But he was too late and the grapes already had been damaged by smoke taint, which can alter the fruit’s chemistry and ultimately its taste. But rather than pouring the wine down the drain, the group partnered with Hangar 1 Vodka, which turned the wine made from smoke-tainted grapes into vodka.

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USDA Allows More Leeway on Cover Crops

Four months after it announced a temporary rule change, the USDA said on Wednesday that it would alter crop insurance rules permanently so farmers can hay, graze, or chop cover crops at any time and still be eligible for a full prevented planting payment.

Until now, the payments were reduced by 65% if growers touched them before Nov. 1.

“This change builds on the advanced research and identified benefits cover crops have supporting healthy soils and cropland sustainability efforts,” said the USDA’s Risk Management Agency (RMA). “Cover crops are especially important on fields prevented from being planted because they cover ground that would otherwise be left bare, which helps reduce soil erosion, boost soil health, and increase soil carbon sequestration.”

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[Watch] SD Department of Labor, SDSU Working to Help Future Real Estate Appraisers

Utilizing federal money, the Department of Labor (DOL) has been working behind the scenes with South Dakota State University (SDSU) to create a process that would help student appraisers satisfy the requirements necessary to enter the appraisal profession.

“By providing grant funds to South Dakota, they are setting up a program to provide a supervisor to trainees. They’re working with South Dakota State University to provide this training to get around that significant barrier of entry,” said Park.

“There’s no other university that’s really tackled this issue and I think having SDSU on the forefront of looking at it and trying to make a difference and make it better was phenomenal,” said ASFMRA member Ryan McKnight, who is helping to build out the new program.

The concept of providing appraisers-in-training with a supervisor, rather than requiring students to find their own, could send ripple effects across the nation.

Watch the Video Here

ASFMRA Government Relations Update

Shutdown Avoided, Government Funded Through February 18th, 2022

The House and Senate returned to Washington D.C. last week and reached a compromise to avoid a government shutdown. Last Thursday the House and Senate passed a continuing resolution (CR) to fund the government for Fiscal Year (FY) 2022 through February 18th, 2022. The previous CR was set to expire on December 3rd. Republicans and Democrats remain divided about the aggregate level of funding for FY 2022 and absent an agreement another CR is the only way to avoid a government wide shut down.

No deadlines loom this week, but Congress must deal with debt ceiling by mid-week next week. Treasury Secretary Yellen has previously stated the government will reach its borrowing authority limit by December 15th. Additionally, Senate Democrats will continue to push the Build Back Better (BBB) bill which has passed the House. Senator Manchin’s (D-WV) vote remains elusive.

2021 Net Farm Income Forecast Up

The Economic Research Service forecast U.S. net farm income to reach $116.8 billion in 2021, up $22.0 billion (23.2 percent) from 2020 with the 2020 level up $15.7 billion (19.9 percent) from 2019. The forecast shows higher crop receipts which increase forecast income to the highest level since 2013. However, a dramatic fall in government payments is forecast as well as rising input costs threaten 2022 income levels.

RMA Announces Policy Changes for 2022

Coming in at the wire, the Risk Management Agency published a final rule on the last day possible, November 30, to make changes for 2022 crops (most spring crops) with a November 30 contract change date. For all other crops, the changes will be implemented in 2023.

RMA is making permanent the provision that allows producers to hay, graze, or chop cover crops on prevent plant acres and still receive a full prevented planting payment. RMA is also increasing flexibility related to the prevented planting “1 in 4” requirement, as well as aligning crop insurance definitions with USDA’s National Organic Program.

The final rule also provides an option for producers to delay measurement of farm-stored production for 180-days through the Special Provisions like flexibilities already available to grain crop producers. Finally, the final rule added earlage and snaplage as an acceptable method of harvest for coarse grains. During the 2020 Derecho, many producers salvaged their damaged corn crop by harvesting as earlage or snaplage instead of grain or silage. You can read the press release here.

USDA Announces Final Pandemic Payouts for Timber Harvesters and Haulers

The USDA will begin issuing final pandemic assistance payments to timber harvesters and timber hauling businesses through the Pandemic Assistance for Timber Harvesters and Haulers (PATHH) program starting next week. In total, $200 million will be provided to loggers and log trucking businesses who experienced a gross revenue loss of at least 10% during the period of Jan. 1 through Dec. 1, 2020, compared to the period of Jan. 1 through Dec. 1, 2019. This support is part of USDA’s broader Pandemic Assistance for Producers initiative.

In Memory: Donald L. Threadgold - Artesian, South Dakota

The ASFMRA was honored and pleased to welcome Donald L. Threadgold, AFM into the membership in 2010. Don joined the ASFMRA as an Associate and quickly obtained his Accredited Farm Manager (AFM) designation in 2013. He maintained his Accredited membership with the Society. Don served as the South Dakota Chapter Alternate Director from October 2018 to September 2019. He passed away in his home due to natural causes on Sunday, November 21, 2021. He made many friends through his association with the Society who will miss him greatly. Our thoughts and prayers are with his wife Kathleen and his family. To ready more on Don’s life, click here.