FAPRI's new baseline

 

University of Missouri Senior Writer Duane Dailey delivers the specifics on FAPRI’s new baseline, which will color how Congress approaches upcoming farm legislation...

United States net farm income is projected at $95 billion for 2012, down from $98 billion in 2011, by a report to Congress today from the Food and Agricultural Policy Research Institute (FAPRI).

"While net farm income may fall a little short of last year, we expect 2012 to be another good year for most producers," said Pat Westhoff, director of FAPRI at the University of Missouri-Columbia.

Corn yields dropped below trend line the last two years, reducing carryover stocks and pushing up prices. "With normal weather, a bigger crop in 2012 may lead to lower prices this fall," Westhoff said. "Other crop prices tend to follow corn."

The annual MU FAPRI baseline was presented today (March 5) to the U.S. Congress. The baseline, extending 10 years, provides a measure for analyzing proposed changes in farm policy.

Trend-line yield for 2011 season was 160 bushels per acre; however, actual production was 148 bushels.

"Crop prices would be a lot lower today if we had not had back-to-back years of below-trend corn yields," Westhoff said.

FAPRI projects planted corn acres this year at 93.5 million acres, up from 91.9 million last year. An assumed normal yield in 2012 reduces per-bushel price to $4.81, down from $5.96 for 2011-12 market year.

Ethanol production is projected to remain at 2011-12 levels after years of rapid growth. An end of the 45 cents per gallon tax credit, high corn prices and constraints on ethanol used in conventional 10-percent blends contribute to slower growth.

Soybean prices for 2012 remain over $11 per bushel, after averaging an estimated $11.61 for 2011-12. "Soybeans must remain strong to be competitive with corn for acreage," Westhoff said.

"Given current tight corn supplies, markets will be sensitive to news about 2012 supply-and-demand prospects," Westhoff said. "Prices could fall if favorable weather increases crop production."

Even with good weather and higher yields, demand should stay strong enough to keep crop prices above pre-2007 levels, Westhoff said. "Weather remains the major variable, affecting grain production and livestock grazing."

Volatility can be expected. "Many of the factors that caused recent price swings remain in flux," Westhoff said.

Crop insurance accounts for a larger share of public support to farms than in the past, Westhoff said. High crop prices reduced expenditures on traditional farm programs.

The consumer price index for food rose 3.7 percent in 2011 and could grow a similar rate in 2012. However, in the following years of the baseline, food price growth follows general inflation rates.

Meats will show the highest inflation in 2012, as they did in 2011.

Beef cow numbers fell sharply in 2011, despite the highest cow-calf net return since 2005. Drought in major beef states kept ranchers from responding to demand signals.

Beef exports remain strong, particularly for high-quality beef, helping sustain prices.

The 2012 price of feeder steers, the most common product from Missouri herds, rises to $154 per hundredweight for 600- to 650-pound calves at Oklahoma City. That's up from an average of $139 for 2011 and $102 in the recession year of 2009.

"While beef export growth since 2005 gained much media attention, the drop in imports in that period almost matched the export gains," Westhoff said. "The relatively weak dollar and tight beef supplies worldwide place the U.S. in position to gain markets for the next decade."

Corn and feedstuffs prices will affect feedlot profitability as they bid for a shrinking supply of calves. Domestic meat supply dropped an unprecedented 22 pounds per person between 2005 and 2011.

If feed prices moderate as projected, per capita meat availability should stabilize and then grow after 2013.

While farm income increased, production costs grew $36 billion, almost 12 percent, in 2011. Feed, fertilizer and fuel led increases. Feed should drop; however, fertilizer and fuel remain high.

The MU FAPRI baseline assumes normal weather and continuation of current farm polices. While the 2008 farm bill expires this year, analysts assume current law prevails through the 10 years, for comparison of policy alternatives.

Macroeconomics on interest rates and inflation are provided FAPRI by IHS Global Insight. Economists at the Agricultural and Food Policy Center, Texas A&M, provide the economic impact of the baseline on representative farms across the country.

The MU College of Agriculture, Food and Natural Resources supports MU FAPRI.

When delivered to Congress, the 64-page report will be posted on the Internet athttp://www.fapri.missouri.edu/.

 

 

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Grants for high tunnels

The trouble with being a town-marooned farm boy is the green thumb throbs this time of year with no real outlet. I've been flirting with finding an out-of-the-way spot on the home place to build some tunnel houses just so the kids can get a little field-to-table experience, and, if their heart is in it, maybe a side enterprise. The itch arrives about the same time seed catalogs, longer days and daffodils—too late in the season to really get it going given all the rest of a modern family's activities. 

And yet—there's money in those hoops. Got a release today from the NRCS that says Missouri is tops in grant funding for something called the High Tunnel Initiative. Looks like the funds are directed toward historically underserved and beginning farmers and you can get $2.57 or $3.08 per square foot in cost share for the structure. Apply by March 30.

Details are below if you're interested. 

 

NRCS offers financial assistance, $2.57 per square foot or $3.08 per square foot for beginning or historically underserved farmers, for high tunnels up to 2,178 square feet through the Environmental quality Incentives Program (EQIP).  Landowners may construct larger high tunnels, but any square footage greater than 2,178 is at the landowner's expense.  Since 2010, 162 Missouri producers have installed high tunnels through EQIP. NRCS has paid $715,000 to those producers. 
 
Applications for seasonal high tunnels are being accepted on a continuous basis although three application period cutoffs have been established to evaluate and approve those received to date.  The dates for the remaining two application periods are March 30 and June 1.  Those interested in applying for a seasonal high tunnel may submit an application to their local NRCS service center.  NRCS can be found in the phone book under "U.S. Government, Department of Agriculture," or online at http://offices.sc.egov.usda.gov/locator/app. 
 
Under the High Tunnel Loan Program, Missouri producers who have been approved by NRCS through either the USDA NRCS EQIP Season High Tunnel Initiative or the EQIP Organic Initiative for a seasonal high tunnel reimbursement may be eligible for a short term loan from the Missouri Agricultural and Small Business Development Authority.  Loans are available at a fixed rate of 7.5 percent interest for the amount obligated to the producer by USDA NRCS for a term of up to one year.  Contact the Missouri Department of Agriculture for more information at 573-751-2129.
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Organic Seed Growers Trade Association case against Monsanto dismissed

There was a distinct rumbling on from the organic side of the field as this case approached the courtroom. The "Occupy" movement even attended in meager numbers. But we confess to not having the background to comment with much insight. Printed below is the press release from Monsanto verbatim. Scroll past that for links to reaction from various points of view. 


 

The U.S. District Court for the Southern District of New York has officially dismissed a lawsuit brought by The Organic Seed Growers and Trade Association (OSGATA) and dozens of other plaintiff growers and organizations against Monsanto Company.

OSGATA and plaintiffs in the case alleged that they did not want to grow crops containingMonsanto's biotechnology traits but feared a patent-infringement lawsuit in the event the company's traits happened to enter their fields inadvertently through, for example, cross-pollination. However, the court rejected the lawsuit finding that OSGATA and plaintiffs had engaged in a "transparent effort to create a controversy where none exists."  The Court also held that there was no "case or controversy" on the matter as Monsanto had not taken any action or even suggested to take any action against any of the plaintiffs.

In its ruling, the court cited Monsanto's long-standing public commitment that "it has never been, nor will it be, Monsanto policy to exercise its patent rights where trace amounts of our patented seeds or traits are present in a farmer's fields as a result of inadvertent means."

"This decision is a win for all farmers as it underscores that agricultural practices such as ag biotechnology, organic and conventional systems do and will continue to effectively coexist in the agricultural marketplace," said David F. Snively, Monsanto's Executive Vice President, Secretary and General Counsel. "Importantly, this ruling tore down a historic myth which is commonly perpetuated against our business by these plaintiffs and other parties through the internet, noting that not only were such claims unsubstantiated but, more importantly, they were unjustified."

The ruling makes it clear that there was neither a history of behavior nor a reasonable likelihood that Monsanto would pursue patent infringement matters against farmers who have no interest in using the company's patented seed products.

U.S. District Judge Naomi Buchwald found that plaintiffs' allegations were "unsubstantiated ... given that not one single plaintiff claims to have been so threatened."  The ruling also found that the plaintiffs had "overstate[d] the magnitude of [Monsanto's] patent enforcement," noting thatMonsanto'saverage of roughly 13 lawsuits per year "is hardly significant when compared to the number of farms in the United States, approximately two million."

Snively noted that the company's position on this matter and its support of all agriculture production practices has been clear since the beginning of this case.Monsanto believes that all farmers should have the opportunity to select the production method of their choice – whether that be organic, conventional or the improved seeds developed using biotechnology. All three production systems contribute to meeting the needs of consumers.

The case is Organic Seed Growers and Trade Association et al. v. Monsanto Company et al., No. 1:11-cv-2163-NRB (S.D.N.Y.).

And for the reaction: 

LA Times

Bloomberg

Reuters

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