Corn Commentary

What to Expect When You’re Expecting (Next Year’s Crop)

BabyCornCorn farmers might be wise to take a cue from a certain sector of their counterparts in traditional business sectors and learn the value of expectations management.

In 2012, farmers felt the brunt of their own success as, after years of continually pushing the boundaries of how much they could grow using fewer resources, a massive drought hit the Corn Belt hard. Fields of young corn plants, the beginning of what many anticipated to be a record corn crop, withered in the relentlessly dry heat. Corn production powerhouses, including Illinois, Iowa and Indiana, found their crop would not meet initial projections.

For their inability to (literally) make it rain, these farmers faced massive cries from media outlets’ sensationalized stories. Ever vigilant in their quest for higher ratings, many journalists eschewed responsible research in favor of “commonsense” commentary, crying over and over that consumers would be shocked when they saw their grocery bills come fall.

From their self-claimed moral high ground, media mercenaries lobbed a frenzied attack. Will Americans starve to feed their cars? Should draconian rationing measures be instituted? Were the Mayans right?

With the USDA’s annual crop reports released, a clearer picture of the 2012 crop is forming. Corn farmers, who faced a serious adversary in Mother Nature, managed to grow 10.8 billion bushels of corn. No, the crop did not break all previous records, but it made the top ten lists.

Despite the worst drought since the Dust Bowl, farmers raised the eighth-largest corn crop since the United States started keeping records. Through better seed varieties, developed through biotechnology, improved practices and cutting-edge technology, our nation’s corn farmers fought back against Mother Nature’s assault.

They struck major blows at key times. Iowa took the front despite the drought, growing 1.87 billion bushels of corn. Minnesota and Nebraska stepped up production and buttressed the crop, growing 1.37 and 1.29 billion bushels respectively. Even Illinois, who saw their normally chart topping yields shrivel in the sun, made a major contribution to the nation’s overall totals, producing 1.28 billion bushels.

The lesson therein? Corn farmers fell victim to their own success in 2012. While striving to produce even more bounty year after year, their achievements became commonplace. Thus, when these over-achievers faced a natural disaster, their efforts were met with backlash instead of understanding support. When their fields suffer, farmers suffer. Yet, this fact was largely ignored.

The eighth-largest corn crop on record does not generate the sort of excitement that a record-breaking harvest may have. It does show the strength and reliability of U.S. farmers. Even in the face of a drought that would have decimated the crop only decades ago, they succeeded in providing a top ten crop. Expectations placed upon America’s farmers have obfuscated the triumphs of 2012.

Sadly, it is a story that deserves telling. Though neither glamorous nor sensational, U.S. corn farmers can provide a dependable abundance that Americans can count on for food, feed, fuel and fiber. Maybe this does not make a headline, but it does provide for a secure tomorrow. That’s an expectation farmers are proud to meet.

2012 Was Officially the Hottest Ever

drought-cornIt is now official that 2012 was the hottest year on record, according to the latest National Oceanic and Atmospheric Administration (NOAA) State of the Climate report.

2012 marked the warmest year on record for the contiguous United States with the year consisting of a record warm spring, second warmest summer, fourth warmest winter and a warmer-than-average autumn. The average temperature for 2012 was 55.3°F, 3.2°F above the 20th century average, and 1.0°F above 1998, the previous warmest year.

According to NOAA, 2012 was record setting for 19 states, including several in the corn belt such as Illinois, Missouri, Nebraska and South Dakota.

While it was the hottest year on record, it was only the 15th driest year, with an average of 26.57 inches of precipitation nationwide. “At its peak in July, the drought of 2012 engulfed 61 percent of the nation with the Mountain West, Great Plains, and Midwest experiencing the most intense drought conditions.”

The drought is continuing over into the new year, with USDA this week designating nearly 600 counties in 14 states as primary natural disaster areas due to drought and heat, making all qualified farm operators in the areas eligible for low-interest emergency loans. In 2012, USDA designated 2,245 counties in 39 states as disaster areas due to drought, or 71 percent of the United States.

Bottom line – we still need lots of rain and some cooler temps would be nice too.

First Crop Reports of New Year at New Time

This Friday, January 11, marks the start of a new release time for some USDA agricultural statistics reports.

The National Agricultural Statistics Service (NASS) and World Agricultural Outlook Board (WAOB) will begin this year issuing several major reports at noon Eastern time, including World Agricultural Supply and Demand Estimates (WASDE), Acreage, Crop Production, Grain Stocks, Prospective Plantings, and Small Grains Summary.

nafb12-nass-bass“That’s at the request of data users across the country and the world,” said Bob Bass, Director of National Operations for the USDA’s National Agricultural Statistics Service (NASS). “It’s a global economy now in the trading of commodities and everybody thought that noon would be a better time in order for people to get access to the information, digest it, understand what it says and then be on a level playing field.”

Bass says it is the first time in a while since the release time for these market-sensitive reports was changed. “Everything used to be at 3 pm Eastern, but many years ago just the crop and the crop products were moved to 8:30 am so traders could see the report and trade that day,” he said. “But anymore, trading is non-stop.”

The first reports of the new year to be released at the new time on Friday include the annual crop production report and the grain stocks report.

Farm Groups Disappointed in Farm Bill Extension

fps12-ncga-pamPretty much every farm organization has expressed disappointment over the nine-month farm bill extension included in the New Year’s Day fiscal cliff package, with the hope that Congress will do better in 2013.

“We don’t support an extension of the 2008 farm bill, we worked very hard to see reform,” said National Corn Growers Association president Pam Johnson, noting that the farm bill passed by the Senate in 2012 would have helped to reduce federal spending. “It would have saved $23 billion,” she said. “That’s what makes it so disappointing for us.”

Listen to my interview with Pam here: Interview with Pam Johnson

While it was the prospect of the so-called “dairy cliff” that led lawmakers to even think about a farm bill, it’s ironic that the National Milk Producers Federation is among the most unhappy with the outcome. National Milk Producers Federation (NMPF) President and CEO Jerry Kozak called the extension a “devastating blow to the nation’s dairy farmers” that amounts to “shoving farmers over the dairy cliff without providing any safety net below.” He says that the dairy industry will continue to push the 113th Congress to pass a five year farm bill that includes the Dairy Security Act, which eliminates the dairy product price support program, direct payments, and export subsidies, and establishes a voluntary risk management tool for farmers which would cost taxpayers less.

Other groups including the American Farm Bureau, National Farmers Union, and American Soybean Association had similar “disappointed but optimistic” statements. Even Secretary of Agriculture Tom Vilsack said he was “disappointed Congress has been unable to pass a multi-year reauthorization of the Food, Farm and Jobs bill to give rural America the long-term certainty they need and deserve” and that he will continue to work with Congress to pass a new bill.

At the same time, ag groups are pleased with some other parts of the fiscal cliff package, like the estate tax provisions and extension of alternative energy tax incentives. The estate tax was permanently set through the legislation at a rate of 40 percent on estates valued at $5 million, or $10 million per couple – better than the 55% on $1 million or more that was scheduled to become law.

The theme set by all is to continue working with the new Congress and hope that the nine month extension doesn’t mean it will be delayed and down to the wire – or past it – again at the end of 2013.

What Will 2013 Bring for Farmers?

2013-cornWe survived a devastating drought and even the end of the world in 2012, only to be thrown off the fiscal cliff at the start of 2013 while lawmakers stalled on a short term fix that would also include an extension of the current farm bill for nine months. Starting the new year off with this kind of uncertainty makes it hard to make predictions, but USDA Chief Economist Joe Glauber gave it a try.

“Everyone’s anticipating a large amount of corn to be planted this year. No reason why we wouldn’t see similar levels to last year, if not a little higher,” said Glauber, who adds that he still expects to see lots of soybeans planted as well. Assuming “more return to normal yields” and similar plantings to 2012, “certainly would allow us to rebuild stocks in a hurry,” he said.

Of course, that is assuming more normal weather – which is exactly what everyone was expecting this time last year. Still Glauber is optimistic about farm income for 2013, even though he expects moderation in crop prices which should help livestock producers. “We’re still expecting strong prices for beef, pork, poultry and dairy and moderating feed prices should help a lot,” said Glauber.

Again – that is going on the assumption that the weather in 2013 has to be better than what it was in 2012. Normal would be good.

Census of Agriculture Time Again

Along with the Christmas presents and cards, Santa delivered 2012 Census of Agriculture forms to some three million farmers and ranchers last week – but this one definitely needs to be returned.

“We are asking that they complete it by mail or over the Internet and have it back to us by February 4 of 2013,” said Renee Picanso, Director of the USDA’s Census and Survey Division, who adds that the capability to respond by Internet is new this time around. “If you go on the Internet it skips through the questions, so it’s really easier to fill out.”

There will also be some new questions this year, including renewable energy and biomass production. “We’re asking for more detail on whether farmers are using solar or wind, what type of energy, and on biomass, some of the crops they are growing to produce biomass,” Picanso said. Other new questions this year address agroforestry, Internet use and horses.

Response to the Census is required by law, but Picanso says there are many other good reasons for producers to respond. “So many decisions are based on this data,” she said. “It serves as a base for formulating farm policy, USDA programs and services are based on the data, rural communities use it in planning efforts, and agribusinesses use it when planning where to place transportation, grain storage and processing plants.”

Picanso urges farmers and ranchers to send back the forms or fill them out on the Internet as soon as possible to avoid USDA having to follow up, which just takes more time and taxpayer dollars. Normal initial response is about half of all forms, with the majority returning them at least after the second mailing. “But in some cases we end up having to go out and actually hunt people down to get them to respond, and of course that is expensive and time consuming,” she joked.

Even in the computer age, it still takes time to tabulate and analyze all of the responses to the Census, so it will be February 2013 before results are finalized. The Census of Agriculture is done every five years, the last one being in 2007.

I interviewed Renee about the Census during the NAFB Trade Talk in November: Interview with Renee Picanso

Spread Holiday Cheer with a Renewable Message

If you are looking for a cheery holiday message for your friends and family members, let them know how much you care with a Fuels America e-Card.

The holidays are upon us.

That means parties, gift giving, and finding that perfect card to send to your loved ones.

Send your friends and family a Fuels America holiday e-card to spread the joy and holiday spirit this season:

Whether young or old, everyone’s life can be improved by renewable fuel, especially during the holidays. Just this past Thanksgiving — the busiest travel time of the year — ethanol helped American families reduce their gasoline usage by an average of $29.13.

That reduction in gasoline usage means more money to spend on gifts for your friends and your loved ones this season.

So don’t just spread holiday cheer — spread the word about the benefits of renewable fuel at the same time. Send a Fuels America e-card now.

Happy Holidays,

Fuels America

World Corn Supply and Ethanol Demand

USDA’s World Agricultural Supply and Demand Estimate (WASDE) out this week reported a big increase in the Chinese corn crop, raising total global grain production this year to nearly 2706 million metric tons, the second-largest on record.

Global 2012/13 corn production is raised 9.4 million tons with China corn output up 8.0 million tons based on recent estimates from the National Bureau of Statistics. Strong price incentives to expand corn plantings and favorable summer rainfall, particularly in the northeast provinces, support increases in area and yields raising them to new records. Corn production for Canada is raised 1.5 million tons this month to a new record on higher yields and a record area as reported by Statistics Canada. Russia corn production is raised 1.0 million tons, also a new record.

There were offsets to those increases, particularly in Argentina and Ukraine, so global ending stocks are still expected to be lower and USDA maintained corn ending stocks in the U.S. for the marketing year at a tight 647 million bushels.”The drought reduced production by four billion bushels from what we thought earlier this year,” said USDA Chief Economist Joe Glauber. “No question that’s rationed demand and we’ve seen a really tight stock situation.”

The new forecast lowered the season average corn price estimate by 20 cents to $7.40 per bushel, which Glauber says has tightened margins for ethanol producers this year. “If you look at ethanol production, it’s been below 13 billion gallons on an annualized basis, if you look at weekly production numbers, and that reflects the lower margins for sure,” he said. Corn use for ethanol is forecast at 4.5 billion bushels, 10% lower than last year.

However, if you consider the fact that ethanol production returns about a third of that corn in the form of distillers grains to the livestock market, the Renewable Fuels Association (RFA), notes that the U.S. ethanol industry is projected to use only 78.9 million metric tons of grain or less than three percent of the world grain supply – the lowest rate in five years. “Further, more grain will be available for non-ethanol use than any other time in history with the single exception of last year,” said RFA Vice President, Research and Analysis Geoff Cooper. “In fact, grain available for non-ethanol use in 2012/13 will be 15% higher than 10 years ago in 2003/04.”

This is all important because it illustrates several important points:
1. Farmers are more productive than ever, despite weather challenges.
2. Markets respond to higher prices by rationing demand and increasing production.
3. The world is producing enough corn for food, feed, and fuel demands.

Biotech Anniversary Triggering Accord

An important milestone for biotechnology is nearing, which will mean the beginning of a new era for genetically modified traits.

In 2015, patents for the very first ag biotech “events,” as they are called, will be expiring and becoming “generic.” Like pharmaceutical drugs are less expensive when they can be offered in a generic form, one benefit to the expiring patents may be lower seed prices and greater opportunities for the industry. However, also like drugs, International Seed Federation (ISF) president Tim Johnson of Illinois Foundation Seeds says these “events” are highly regulated. “We do not want biotechnology to disrupt markets,” he said, noting that the seed industry has been working on a framework to ensure access to the technology while addressing international trade concerns.

The initial step was announced recently by the American Seed Trade Association (ASTA) and the Biotechnology Industry Organization (BIO) in “The Accord” – which has already been signed by most of the major companies involved in the biotech business for agriculture. “The Accord is a framework that we developed to provide a mechanism for that transition from proprietary biotech events to off-patent or generic biotech events,” says ASTA Vice President for Science and International Affairs Bernice Slutsky. “We view it as an opportunity for our broader membership to utilize events when they go off patent to provide farmers with a wide array of product.”

Interview with Bernice Slutsky

It’s amazing to think that the first biotech events aren’t even old enough to drink yet. That includes Bt corn and cotton, and Roundup Ready soybeans, as well as canola with modified oil composition and bromoxynil resistant cotton. “Biotechnology’s in its teenage years,” said Johnson, giving credit to Monsanto’s Hugh Grant for the analogy. “We’ve learned a tremendous amount over the last 15-20 years in biotechnology.”

If biotech is only a teenager, it’s achieved Justin Bieber-like popularity in that time. Between 90 and 95% of the U.S. canola, corn, cotton and soybean crops are genetically modified today – up from zero in 1994, when Justin Bieber was born.

“It’s important for us to find pathways that respect all technologies and all genetics to move forward on behalf of society,” Johnson says. “The accord lays that foundation down for us.”

Interview with Tim Johnson

Find out more about The Accord at

A Growing Problem

Does anyone remember the scientific method? In elementary school across the country, children learn this process by which scientists investigate phenomena, acquire new knowledge or correct what had been considered knowledge until that point. Following these simple steps, the testing of ideas remains unbiased and analysis stringent. It provides data which, if the tests are constructed properly, can be considered somewhat credible upon scrutiny.

Unfortunately, some scientists have become so focused on promoting personal agendas that they have tossed their dedication to conducting the type of rigorous studies that generate new knowledge to the wayside.

Take, for example, the recent study alleging a link between HFCS consumption in particular and diabetes. Looking broadly at the study, structural flaws nearly blind those who look with an unbiased eye.

Comparing massive groups while controlling for only a few factors, the study finds that countries with high rates of HFCS consumption have higher rates of type 2 diabetes. Immediately making a massive leap of logic, jaundiced journalists grab into the veritable treasure-trove of debunked metabolism myths for a conclusion.

What do these pseudoscientists ignore? A ton of reasons people are packing on the pounds.

In addition to HFCS consumption, Canada, the United States and Japan, some of the countries with the highest rates, have many other dietary and lifestyle similarities which certainly warrant consideration. Economically developed and, by global standards, prosperous, citizens of these nations are less likely to engage in physical labor and more likely to have an abundance of food.

Basically, the stage is set for us to be fat regardless of our choice of sugar, be it corn, cane or beet.

While some developing nations make it onto the “low consumption, low diabetes” list, developed nations certainly placed also. With countries such as France and Ireland facing much lower levels of diabetes, the anti-HFCS activists claim it must be related to the lack of this single ingredient.

Obviously, factors such as higher levels of physical activity and differing attitudes towards diet in general play no role.

Maybe, what everyone needs is a trip back to elementary school. The goal of science is enhancing our knowledge base. To do so, one must remain objective and analytical. One must control for outside factors. The study must be sound if the results are to be trusted.

It isn’t that children know more about sugar, although their love of it may be impressive. It is that many have lost perspective, becoming blinded by bias.

Our society needs the best possible research into the causes of this epidemic. Shoddy science detracts from efforts with merit. As a nation, we need to lose our appetite for sensational pseudoscience and push our mental heavy weights to help us deal with our heavy weights.

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