August 29, 2008
The Kernels of Truth display at the fair has been a big hit -- with lots of positive comments and learning going on. If you plan to make it to Lincoln for the fair this Labor Day weekend, be sure to stop by - it's in Ag Hall.
Jon Holzfaster of Paxton was re-elected chairman, Dennis Gengenbach of Smithfield was elected as vice-chairman and Alan Tiemann of Seward was re-elected to serve as secretary/treasurer.
Holzfaster raises corn, wheat, soybeans and operates a background feed yard on the family farm based in Perkins County. Gengenbach produces corn and soybeans and operates a cow-calf business and Tiemann raises corn and soybeans on a combination of irrigated and dry land.
For a list of all the Corn Board's directors -- click here.
August 28, 2008
Joe F. Sanderson Jr., chairman and chief executive officer, said the company's results reflect "difficult market conditions for our industry," and even though retail and export demand for chicken was strong during the quarter, "casual dining and food service customers have been affected by a significant decline in restaurant traffic due to weak economic conditions and higher fuel prices."
This acknowledgment, that high fuel costs impact the dollars consumers have to spend, is important and very correct.
Yes, Sanderson also noted that its feed costs are up, but he didn't blame biofuels or government policies supporting them. He just said the higher costs and the imbalance between domestic supply and demand in the food service markets "resulted in much lower margins."
He concluded by saying: ...having been through volatile cycles, we remain confident that the fundamental rules of supply and demand will work to maintain industry profitability over the long term.
Sanderson's talk of restaurants reminded me of a blog entry by DTN's Chris Clayton. He wrote about the world's largest food distributor: Sysco. In a Wall Street Journal article about the company, it said that higher costs for "fruit, vegetables and dairy products have been the main drivers of inflation in the sector," and not "center of the plate meat products."
"Meat producers have not been the biggest contributors to inflation," the article quoted Dick Schnieders, Sysco's chairman and CEO. Schnieders added that his company was working with customers, which are largely the nation's restaurant industry, to lower costs -- by redesigning menus and using cheaper ingredients.
Schneiders said that some restaurant chains had not raised menu prices for seven or eight years!
Chris Clayton observed: Of course, it also raises the question of whether these restaurants got by for seven or eight years without raising prices because they were able to live on flat-priced commodities for nearly a decade as well.
The Nebraska Corn Board's Kelly Brunkhorst provided the following:
The latest National Ag Statistics Service's Cattle on Feed figures show that as of August 1, Nebraska’s cattle on feed numbers are up 1 percent from last year, while the balance of the other top 5 states is down. Although this is usually a seasonal low time for COF numbers, is the tide changing?
A recent presentation by Dr. Darrell Mark (from the University of Nebraska) titled "The Best Place to Feed Cattle: The Economics of Feeding Cattle in the Northern Plains," outlines that we are seeing changes in the economics and gains in the northern plains that have traditionally been held by the southern plains. For example, corn is lower priced in the northern plains compared to Kansas, and interestingly enough, death loss has also been lower (information taken from KSU’s Focus on Feedlot Survey and Land O’Lakes).
One of the additional factors that we believes gives the advantage to the northern plains is ethanol co-products. With higher energy values than corn and currently priced around 75-80% the value of corn on a dry matter basis, these co-products have become a very widely used product in today’s ration. And with continued research from UNL, we will continue to see adoption of usage and advantages in the northern plains.
August 27, 2008
On Sunday, though, a Welcome Festival includes campus organizations, local vendors and giveaways. The Nebraska Corn Board has supported the Welcome Festival for several years -- promoting corn and ethanol with the Fueling the Power of Red campaign. This year, the Corn Board distributed to students Cornhusker red cinch sacks printed with the Fueling the Power of Red message.
They also parked the corn van on-site - promoting corn and E85.
Schafer said he supports and applauds the Environmental Protection Agency’s decision to deny Texas’ waiver request for the current Renewable Fuels Standard (RFS). EPA’s decision was announced earlier this month.
He noted that “renewable energy is a tremendous American success story” and that the U.S. is the world leader in biofuels.
He sets the record straight on greenhouse gas emissions and noted that ethanol is lowering gas prices by 20 cents to 35 cents per gallon. (In 2007, consumers in Texas saved between $2.5 billion and $4.5 billion at the pump thanks to ethanol - that's not chicken feed! For more Texas-sized facts, check out TexasPriceCheck.)
He acknowledged that there are ripple effects, but that the sharp rise in global grain prices is driven by:
- Soaring energy costs
- Improved diets in rapidly developing nations
- Two years of bad weather in some countries
- New export restrictions in several nations.
Importantly, Shafer said diversifying away from oil imports and reducing the nation's carbon footprint are "critically important objectives" -- and that "this is a time to sustain our efforts, not to retreat from the goal."
August 25, 2008
The crew will spend time on the Alan and Lori Tiemann farm near Seward and also at Lori’s off-farm job at a local bank. Alan is a member of the Nebraska Corn Board.
Earlier this summer, the Tiemann’s took a trip to Taiwan and China to film other segments that will be part of the episode, which Alan said focuses on foreign markets for corn, distillers grains and PLA, the corn-based material made in Blair that is used in everything from plastic ware to clothing. “Since all of these items come from Nebraska, the show’s producers decided to work with a farm family here," Alan said.
The photo above was taken "on location" at a research dairy farm in China.
Nationally, 26 percent is dented, versus the average of 47 percent, while 68 percent had reached the dough stage, versus the average of 82 percent.
As for crop conditions, USDA said 75 percent of Nebraska's crop was in good to excellent condition, off a point from last week. Nationally, 64 percent of the crop was in good to excellent condition, down 3 points from last week but still 5 points ahead of last year.
For the full report, click here.
August 22, 2008
The U.S. Department of Agriculture’s estimate this month predicted production at 12.29 billion bushels with a yield of 155 bushels per acre.
Concerns for the corn crop include a shortage of nitrogen, dryness in parts of the Corn Belt, late development and shallow roots.
Although Pro Farmer's estimate is marginally smaller than USDA's, it would still be the second-largest crop on record and quite a turnaround from May and June when the worst was expected. Nevertheless, traders seem to feel that USDA is overly optimistic in its estimate and believe a smaller crop is out there.
August 21, 2008
Kernels of Truth includes a series of messages designed to explain the value of corn in common products at the grocery store. Messages also include the farmer value of those specific products. The booth is interactive, allowing you to guess the value of corn in a product and then guess how much money the farmer gets.
Since the Corn Board and Growers put out a news release with answers to one product -- Kernel of Truth Milk -- I'll include the answer here: When corn is $5 a bushel, there’s only 16 cents of corn in a gallon of milk, while the dairy farmer only receives $1.55 for the same gallon that’s sold in the store for about $4.00.
For Kernel of Truth eggs, soda, corn flakes and meat, you'll have to visit the display in Ag Hall.
Do you know how much the diesel costs to bring a box of cereal to the store? Come to the State Fair and find out! (Hint: It's triple the cost of corn in the cereal.)
August 20, 2008
That got me thinking.
The defendants' attorney could argue: E10 fuel burns cleaner than regular gas. And it has a higher octane rating than regular gas. Therefore, ethanol blended gas is a premium fuel and should command a higher price. The station owner and distributor are ahead of their time!
Then the judge could say: Yes, ethanol blended fuel is better -- for cars, the environment and this country. But thanks to the hard work of corn growers and ethanol producers it is produced at a lower cost than regular gas. But you were selling this premium fuel as REGULAR, OLD-FASHIONED, POLLUTING PETROLEUM. Now how do you plead?
Karol Aure-Flynn then went on to say, “But, the fallacy of the headline is that there is a direct competition between the two; that it's either or. The reality is that strong global economic growth has changed the demand equation for U.S. commodities.”
Aure-Flynn made those comments in a podcast, which you can download here.
The search for alternative fuels is often blamed for the high cost of food but, according the podcast, it is just one of many factors. In the podcast, analysts with the banking giant say depreciation of the U.S. dollar, soaring energy costs and changing trade policies also contributing to the cost of commodities, which in turn is raising the cost of food -- it's not just fuel, it's a combination of all of these factors.
Here’s a good line from Aure-Flynn: Farmers' profitability doesn't change retail prices. And farmers' profitability isn't guaranteed by high grain prices. The same factors that are lifting grain prices are lifting production costs. So, yes, the farm price index is at 162 percent of what it was 1990-1992, but at the same time the price index measuring what farmers pay -- for services, farm wages -- is 189 percent of base.
The U.S. Department of Agriculture's Federal Crop Insurance Corp. has expanded the number of seed technologies it will accept for reduced crop insurance premiums beginning with the 2009 season. It also expanded the number of eligible states -- and includes both irrigated and non-irrigated acres in Nebraska. For details, click here.
The Biotech Yield Endorsement Program (BYE Program) includes technology from Pioneer, Monsanto, Dow AgroSciences and Syngenta and applies to approved corn hybrids that contain specific biotech traits -- those that offer protection against above-ground lepidopteron pests and below-ground corn rootworm damage, and provide tolerance to certain herbicides.
In Nebraska, however, it appears that only technologies from Monsanto (for irrigated and non-irrigated acres) and Syngenta (non-irrigated) have been given approval. Syngenta traits that are eligible include Agrisure CB and RW stacked and Agrisure 3000GT. Traits from Monsanto include YieldGard Plus with Roundup Ready Corn 2, YieldGard VT Triple and YieldGard VT Triple PRO.
The program is an expansion of the 2008 pilot BYE Program, of which Monsanto seeds were the only ones approved. According to Monsanto, growers in Illinois, Indiana, Iowa and Minnesota in 2008 saved nearly $25 million the pilot program. The company said growers saved an average of $3 per acre on insurance premiums.
August 19, 2008
"Even though Nebraska has one of the lowest corn checkoff rates in the country, Nebraska corn producers put more resources into promoting the livestock industry than any other state,"according to Jon Holzfaster, chairman of the Nebraska Corn Board. Holzfaster noted that corn grower's support of the U.S. Meat Export Federation and promotions of Nebraska beef and pork around the world "are a testament of our partnership with the livestock industry."
Efforts by corn producers to grow the livestock industry and expand markets for beef and pork around the world are sometimes overlooked or under appreciated. But it seems corn growers are dedicated to delivering the most value-added opportunities based on "commodity" corn. Feeding corn to livestock is one way, but so is producing ethanol and then feeding the ethanol co-product distillers grain to livestock.
In fact, ethanol production adds another layer of value to that original corn, multiplying the economic benefits across rural communities, the state and the country as a whole.
The article explains how much money Big Oil has spent in D.C. lobbying Congress so far this year.
The Big Spender award goes to Exxon, which has passed $8 million in lobbying. That sounds like a lot, but when you have $11.68 billion in profits in one quarter (in three months!), a mere $8 million gets rounded off. In fact, $8 million is only 0.068% of the company's second-quarter profits, an unnoticeable blip on someone's line-item (paid for at the pump by you and I).
August 18, 2008
Nebraska corn that was dented reached 19 percent, compared to the average of 30 percent. With 76 percent of the state’s crop in good to excellent condition, however, Nebraska’s crop looks generally outstanding although a bit behind. Crop conditions remain equal to or ahead of last year in Nebraska and across the entire Corn Belt.
For more details on Nebraska’s crop conditions be sure to visit the Nebraska Corn Board’s Crop Progress Update page.
Nationally, 49 percent of the crop is in dough stage, versus the five-year average of 68 percent; 14 percent is dented, versus the average of 30 percent; and 67 percent of the crop is in good to excellent condition, compared to 54 percent last year. Here's this weeks info from USDA.
The photo below was provided by the Imperial FFA Chapter. It shows storm clouds rolling across a field, from a unique viewpoint on the top of a center pivot.
He and others told Sens. Tom Harkin (D-Iowa) and Ben Nelson (D-Neb.) that corn producers in will continue to supply enough corn for food, feed and fuel -- and that ethanol is good for the United States. For a copy of Recker’s written comments, click here.
In a news release (click here to view), Jon Holzfaster, chairman of the Nebraska Corn Board, said, “It is important for members of the Senate to hear from corn growers and others about the importance of ethanol to rural communities, how it is lowering prices at the pump and helping to lessen our dependence on foreign oil.” Holzfaster is a corn and cattle producer from Paxton.
“The world has a growing demand for both protein and petroleum, and we firmly believe that American corn producers can help satisfy both by producing energy from ethanol and protein from corn-fed meat and poultry,” he said.
Nebraska Ethanol Board chairman Jim Jenkins also testified. Jenkins is a rancher and restaurant owner, and he gave some insight into how higher energy and grain prices on his own businesses. “Record diesel prices impact the cost of food more than anything else. I know this for a fact,” he said.
He also noted that $2 corn isn’t good for anybody, even livestock producers.
Besides an examination of the current ethanol situation, the hearing included testimony on second generation biofuels, which Sen. Nelson noted wouldn't be possible without today's corn ethanol industry. To see Sen. Nelson's opening remarks, click here.
August 15, 2008
When USDA came out with its 12.3 billion bushel corn production estimate Tuesday, it also increased the amount of corn projected for ethanol use by 150 million bushels to 4.1 billion bushels, and the amount for livestock feed by 100 million bushels to 5.3 billion, making livestock and poultry feed the #1 consumer of corn.
But wait! Those projections don't include the amount of livestock feed that comes from the same corn that goes into ethanol. When you calculate that, you get an additional equivalent of 1 billion bushels of livestock feed derived from the corn for ethanol. This comes from the 25.3 million metric tons of distiller grains, 2.6 million tons of corn gluten feed and 500,000 tons of corn gluten meal.
"When you take into account the use of co-products, and shift a billion bushels of corn from the ethanol to the feed category, you get a better sense of where the corn is really going," said NCGA president Ron Litterer. "Actual ethanol production – as projected by the USDA for 2008 – will consume approximately 22 percent of the total 2008-09 corn supply of 13.9 billion bushels."
August 14, 2008
There are now 11 counties certified as Livestock Friendly in the state, with Sheridan, Box Butte and Lincoln counties joining Adams, Dawes, Garden, Hitchcock, Keith, Morrill, Wayne and Webster counties.
"In seeking this designation, these counties officials have demonstrated their commitment to rural economic development and agriculture," Heineman said. "The Livestock Friendly program recognizes the positive economic impact the livestock industry has on communities across our state. ... [and] is a sign that counties are ready to pursue new opportunities in agribusiness."
He noted that the state's livestock producers represent approximately 65 percent of agricultural receipts in Nebraska.
The Livestock Friendly program is coordinated by the Nebraska Department of Agriculture.
August 13, 2008
Brooke Coleman, a FoodPriceTruth.org spokesperson and founder of the New Fuels Alliance, said food corporations would “rather spend millions of dollars on an ethanol smear campaign than explain to consumers why their food prices are so high."
Here are a few highlights:
- Kellogg's Q2 net earnings (30 July) were $312 million, a 4% increase over last year's. Kellogg's stated in their own press release that: "Results were driven by strong execution, innovation and price realization..."
- Sara Lee, which earned $242 million in the Q3 of fiscal 2008, $150 million more than the same quarter last year -- which is an increase of 61.2% -- also attributed higher profits to raising their prices. From their press release announcing their Q3 profits: "Net sales up 10.5%, driven by higher unit volumes, price increases and the strong euro..."
For the full report, click here (.pdf file).
“We’ve got a good story to tell,” Litterer said. “In dealing with a wet spring and Midwest flooding, corn growers have worked hard and smart to bring up what is shaping to be the second-highest crop ever with a yield above and beyond last year’s number.”
Interviews covered many Corn Belt radio stations, but importantly reached listeners non-Corn Belt stations in New York, Massachusetts, Connecticut, Georgia, Florida and Arizona. Litterer fielded questions about the high costs of farming, the benefits of corn ethanol, the importance of biotechnology and long-term forecasts for agriculture.
August 12, 2008
ACE executive VP Brian Jennings said ACE is the "grassroots voice" of the industry and that it is "expanding its board to better represent the industry as a whole by adding two leading companies and two grassroots organizations."
In the announcement, Sneller said having grassroots representation for the U.S. ethanol industry "is key at both the state and federal levels, and I'm pleased to have the opportunity to represent Nebraska ethanol on the ACE board of directors."
Other new board members include Ron Fagen of Fagen Inc, Greg Krissek of ICM and Missouri Corn Growers Association CEO Gary Marshall.
You can read more at the ACE's new blog, which will be updated regularly during it's Ethanol Conference in Omaha this week.
Cooper concluded that slashing ethanol production, as requested by Texas but denied by the Environmental Protection Agency, would "increase gasoline prices substantially." Cooper's analysis was filed in response to a study prepared for the state of Texas by two oil economists, "who erroneously claimed increasing demand for gasoline and crude oil would lower prices."
Cooper criticized the claim made by economists that by reducing ethanol production, gasoline and diesel prices would fall as refineries increased processing of crude oil: The suggestion that increasing demand for oil will lower oil and gasoline prices is not only contrary to Economics 101 and what independent analysis by Wall Street firms, government agencies and academic institutions have concluded, but the study's authors do not provide one shred of evidence to support their strange argument.
To check out the full post -- and a link to Cooper's report -- click here.
Nebraska Corn Kernels mentioned this research here.
Although planted acreage dropped 300 million to 87.0 million, harvested acres increased 400 million to 79.3 million. When you add in a yield estimate of 155 bushels per acre, that means we'll see a 12.3 billion bushel crop this year -- if realized, that would be the second largest crop on record, behind last year’s 13.1 billion.
Ending stocks were pegged at 1.1 billion bushels -- even though USDA increased corn use for feed (to 5.3 billion) and ethanol (to 4.1 billion). In the past, USDA has over estimated corn for ethanol so that number may shrink.
Nebraska Corn Board executive director Don Hutchens said in a news release that despite a less than favorable spring, producers have seen excellent growing weather this summer, which led to these near-record estimates.
“Corn farmers continue to respond to increased demand for corn by using technology, good management and hard work to meet all food, feed and fuel demands – and these numbers back that up," he said.
In Nebraska, USDA put yields at 163 bushels per acre -- the record is 166. When multiplied by 8.75 million harvested acres, Nebraska corn producers are looking at a 1.43 billion bushel corn crop this year, off just a bit from last year’s record 1.47 billion bushel crop. USDA said 9.0 million acres were planted in Nebraska, off about 4 percent from last year.
That's quite a change from what folks thought would happen about six weeks ago -- and shows what growers can do when given the opportunity. Considering that corn futures have dropped like a rock the last six weeks is this a good time for end users to lock in prices?
For USDA's August 2008 crop production report, click here; for its supply/demand report, click here.
August 11, 2008
Here are this week's numbers from USDA:
Nebraska: 76 percent of the corn crop is in good to excellent condition. That leaves 19 percent of the crop in average condition and 5 percent poor to very poor. 36 percent of the crop has reached the dough stage, compared to 58 percent over the five-year average. 3 percent of the crop is dented, compared to 12 percent for the average.
Nationally: 67 percent of the crop is in good to excellent condition, up 1 point from last week. A year ago 56 percent of the crop was good to excellent. That leaves 23 percent of this year's crop in fair condition and 10 percent poor to very poor. 30 percent has reached the dough stage, off from 50 percent for the five-year average. 6 percent is dented, compared to 16 percent for the five-year average.
The big crop news for the week comes out tomorrow morning - when USDA releases it's first crop production report of the season, complete with updated planted and harvested acre estimates.
August 8, 2008
The source for the information is Kevin Lindemer of Global Insight's energy group. He said the food industry should be prepared "to see a continuation of high energy prices," and although prices may come down, they "will continue at a much higher level than what we grew up with."
The 20-cents per food dollar transportation figure is considerably higher than what USDA has generally published, which you can see here. Although maybe the 20-cent figure includes some other energy costs -- and those have certainly skyrocketed.
It's also a penny more than the farmer share of the food dollar - which stands at 19 cents. In 1950, the farmer share of the food dollar was 40 cents, so U.S. farmers have gotten considerably more efficient over the last 58 years!
If you're looking for more good information on the farmer's share of food costs, check out the Thank a Chicken website for the real cost of food and more. You can also check out the latest CornsTalk from the Nebraska Corn Board.
August 7, 2008
Tolman held many such interviews back in May, when he spent time in Lincoln defending corn and ethanol in relation to food prices. Tolman came to Lincoln in May the day after testifying before Congress on the issue.
Corn growers have welcomed the news -- and are likely relieved that this debate has come to an end for now. Here's a joint news release from the Nebraska Corn Board and Nebraska Corn Growers Association.
Randy Uhrmacher, president of the Nebraska Corn Growers Association and a corn producer from Juniata, noted that the "system worked and determined that there is no crisis being driven by corn-based ethanol.” He said corn producers are glad EPA concluded that granting the RFS waiver was not the solution to higher food and feed costs.
Jon Holzfaster, chairman of the Nebraska Corn Board and a corn and cattle producer from Paxton, said reducing the RFS would send the wrong signal to ethanol producers and investors, and in the end the waiver would not have significantly lowered food prices because high petroleum prices are the main driver in today’s food costs. “EPA’s decision was right on, and it keeps us on the path to a more diversified fuel supply," he said.
Perry filed the request back in April - ignoring a study from Texas A&M and claiming that the RFS was pushing up feed and food prices and causing harm to citizens and businesses in Texas. EPA decided this was not the case and that granting the waiver would not significantly lower feed or food prices -- despite Perry's last ditch effort with a 55-page letter he sent yesterday to EPA Administrator Stephen Johnson.
Other reports indicate similar expectations.
The announcement is expected at noon (Central).
Texas Gov. Rick Perry requested a waiver for half of the Renewable Fuels Standard (RFS) back in April. The announcement from EPA was expected a few weeks ago, but EPA put off the decision to further analyze data and comments.
Separately, the Consumer Federation of America said today that reducing the RFS, as requested by Perry, would increase gasoline prices substantially. Dr. Mark Cooper, CFA’s Director of Research, said research indicates the price of gasoline would rise by almost 50 cents per gallon. CFA's analysis was submitted to EPA in its official comments.
August 6, 2008
The decision was first expected in July, Johnson put off the decision in order give it more thought.
Originally, the thinking was he would wait until after next Tuesday's crop production report to make the call. Also interesting is that the announcement is coming at high noon -- while the corn markets are still open. Usually announcements that could have an important market impact are made before markets open or after they close.
August 5, 2008
Overall crop progress, however, is about five days behind average. Silking, at 92 percent, is only 3 points behind the five year average, but corn in the dough stage is at 20 percent, behind the average of 33 percent.
Nebraska’s crop faced several hot and mostly dry conditions over the past week, with many locations reporting temperatures in the triple digits. For details on Nebraska’s crop conditions, including photos, be sure to visit the Nebraska Corn Board’s Crop Progress Update page.
ProFarmer editors -- on agweb.com -- published today crop production estimates from Informa Economics and FC Stone. Informa is said to have pegged the U.S. average corn yield at 155.4 bu. per acre, with a total crop of 12.3 billion bushels. FC Stone had a yield estimate of 154.5 and a total corn crop of 12.2 billion bushels.
The University of Illinois' Darrel Good said if current crop condition ratings hold, corn yields would be projected to be 155.7 bushels per acre, which is well above the long-term trend yield of 150.7 bushels. Good noted, though, the the lateness of this year's crop makes it difficult to judge yield potential. (USDA's July WASDE report had a yield of 148.4 bushels plugged in, which gave a total crop of 11.7 billion bushels.)
Allandale said the ranges of guesstimates for corn yields are from a low of 151 bushels per acre to as high as 160 bushels.
USDA's first official crop production estimate comes out next Tuesday.
August 4, 2008
ASA said it is important for people o understand the global facors behind the present situation and that, all things considered, the demand for biofuels has played a relatively small role in rising food prices.
Instead, the group notes:
Higher energy prices have greatly added to the costs of transporting, processing, manufacturing, storing and distributing the food we eat. Higher energy prices also have dramatically increased the prices U.S. farmers are paying for the inputs they need to plant, grow and harvest their crops. Compared to just two years ago, farmers today are paying twice as much for the diesel fuel they need to run their tractors, combines and grain trucks. Fertilizer, which requires a great deal of energy to produce, has quadrupled in price.
They also note that biofuels like ethanol and biodiesel are making a contribution to the world’s fuel supply, which is holding gasoline and diesel prices lower at the pump for consumers.
Click here to review the report.