Sunday 18 December 2016

TRUMP, TRADE AND ETHANOL.

Over the years, I’ve fielded many questions from people asking me about the ramifications with a new president.

The latest, of course, is, “What does the Trump administration look like, and how might it affect agriculture?” My general response is usually something along the lines of, “It’s hard to outguess what politicians are going to do.” Therefore, the key, as with anything, is to be prepared for most anything.

As we look ahead, however, our best guess suggests change is at hand. Whether this change is positive or negative for agriculture, only time will tell. One of the bigger concerns is how potential change affects the U.S.’ largest agriculture trade partners: China, Mexico, and Canada. Will new relationships with these countries be greatly changed in the future? Again, only time will tell. However, in the very near-term, we doubt there will be significant (if even minor) changes.

Ethanol is a big topic. Yet, ethanol is a viable and necessary industry for the same reasons it was more than 10 years ago. It helps to curb dependency on foreign oil, in addition to providing support to the agricultural community and broad-based employment.

We doubt there will be any significant changes in the near-term. Energy prices are on the rise, and farmer incomes on the decline.

As far as other concerns, President-elect Trump has seemed to voice additional concerns with China and, of course, Mexico. Yet, from a buyer’s perspective, China has a ravenous appetite for protein products.

With a growing middle class and need for feed, we don’t see any change in China’s purchasing of soybean and soybean meal. In fact, we have to logically make the argument that, if China decided to buy only South American beans, it would be nearly impossible to garner enough supply. U.S. prices would still benefit. The bottom line is that the supply of beans, whether they be Northern or Southern Hemisphere, will both either directly or indirectly help to feed the world.
 
As for trade pacts, this may be the wild card. President-elect Trump has seemed adamant in suggesting that the U.S. has not received the better end of recent deals. There again, only time will tell what might really happen. Perhaps stronger positioning for American agriculture will occur. There are many who doubt this, yet there were many who thought the stock market would suffer a huge setback if he won the election. Just the opposite has occurred. The stock market has moved into new highs almost daily on expectations and hopes that things in Washington will change for the better.

There’s always a honeymoon stage with a new president. The key will likely be the people that President-elect Trump surrounds himself with, and how they help to steer him (as well as Congress) into decision-making processes. For now, it’s anybody’s guess, and we remain hopeful. It is possible this president will ignore polls and do what he believes to be the right thing, regardless of popular sentiment.
If you have questions or comments, or would like help in creating a balanced strategy for your operation, contact Bryan at Top Farmer Intelligence (800-TOP-FARM, ext. 129).

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HOW GENE EDITING WILL CHANGE AGRICULTURE.

For thousands of years, farmers have been choosing which traits their crops and livestock carry by using selective breeding. The first genetically modified crops were commercialized in the 1990s. In 2012, a huge scientific breakthrough changed what is possible yet again.
Gene editing, led by the discovery of CRISPR-Cas, promises widespread, accelerated, and targeted discoveries. Areas of the genome linked to specific traits can now be precisely edited. Cut and paste, so to speak. Gene editing could eventually provide a catalog of options for farmers to order exactly what they need. Think of it like customizing a tractor. Don’t need a front-end loader? Remove it. Need dual rear wheels? Add them.
With gene editing, the ability to pick livestock traits will be just as easy. Don’t want to have to dehorn your dairy cattle? There’s an option for that.
In crops, the technology has the potential to improve drought tolerance, eliminate diseases, increase yields, and much more. The possibilities are endless.

Not Your Old GMOs

Gene editing allows scientists to genetically engineer organisms without inserting foreign (transgenic) DNA. This makes it different from GMOs and means it may not be regulated the same. In fact, the USDA has already ruled that certain uses of CRISPR-Cas technology, such as keeping mushrooms from turning brown, will not be regulated as GMOs. (CRISPR is the guide that controls the precise gene editing. Cas represents the molecular scissors that do the cutting.)
When GMO crops first came into widespread use in agriculture in the 1990s, the initial information from companies using the technology was vague, assuming the public would both understand and accept the technology. Today, those companies realize they need strategic plans to educate both farmers and consumers about the benefits of this technology. While few people question the use of GMOs to produce medicine (insulin-producing bacteria, for example), someone whose life depends on regular insulin injections might reject GMO crops.

Animal Welfare 

People may be open to genetically engineered animals if it means more humane treatment, such as dairy calves that no longer require painful dehorning. Randall Prather, distinguished professor of animal sciences at the University of Missouri and director of the National Swine Resource and Research Center, helped develop pigs resistant to the deadly PRRS virus using CRISPR technology.“This could have a significant impact on animal welfare,” says Prather. “Nobody likes to see animals suffer.

“There are physiological and emotional costs of these diseases, as well as economic, when they hit family farms,” he explains. “When I give talks about PRRS, I look out in the audience and see a wife pulling close to her husband, leaning in and tearing up. When I see that, I know those people know exactly what I’m talking about because it happened to them.”
Scientists at the University of Edinburgh’s Roslin Institute are taking genes from warthogs resistant to African swine fever and inserting them into domesticated swine in an attempt to eventually eliminate this catastrophic disease from the earth. “That’s food security,” says Prather. Consumer acceptance is the main obstacle, he says. “It’s a hard thing to sell. People don’t understand it. When computers first came out, a lot of people were afraid of them because they didn’t understand them. Now, everybody runs around with smartphones without giving them a second thought.”

Using genetically engineered animal organs to save lives in humans (xenotransplantation) is the Holy Grail. Prather’s pigs are used to study cystic fibrosis, retinitis pigmentosa, diabetes, cardiovascular disease, cancer, phenylketonuria, and more.
“There are so many things we could do,” says Prather. “You are truly limited by your imagination. If there’s a biological way to do it in nature, we can probably do it.”

Not Sci-Fi 

One of the early innovators in gene editing is Recombinetics in St. Paul, Minnesota. The company develops swine models that replicate human diseases, including heart disease, diabetes, and cancer. This fall, Recombinetics was awarded a grant from the National Institutes of Health to create a humanized swine model of Alzheimer’s disease.
For agriculture, the company creates desirable animal health and productivity traits to sell to producers for use in breeding programs. The discoveries include the world’s first gene-edited polled cows, heat-tolerant cattle, foot-and-mouth disease resistance, genetic castration, meat quality, and more.
“This is not science fiction,” says Tad Sonstegard, chief scientific officer for Acceligen, the food application arm of Recombinetics. “You can bring any trait into your favorite livestock breed without doing cross breeding. You can make an elite dairy animal polled.”One benefit for society, he says, is sustainability. Animals with better feed conversions help the planet. “If every animal is 10% more productive, you can feed 10% more people with 10% fewer inputs. If you are concerned about animal welfare and earth welfare, you should be pro gene editing.”

For example, with the technology, you can raise heat-tolerant productive dairy cows in Sub-Saharan Africa, he says. “You change a single gene that allows the cow to thermoregulate better in heat. It is precision breeding.”
You engineer the tool for specific situations, he explains. “You put your scissors at the spot responsible for that trait, knock it out (or put in instructions for a one-base deletion), the repair happens, and now you’ve introduced a Senegal gene into an Angus.”
Farmers are astute and will accept the technology, predicts Sonstegard.
“It’s just another type of breeding. We are selecting and using genetics already in the species. It’s different than GMO, which pulls genes from one species into another. ”

Start-Ups

CRISPR is not the only game in town for gene editing. Cibus, for example, is one of many molecular plant biology start-ups trying to release products and secure patents for genome-editing technologies. Cibus already has a crop on the market, a herbicide-tolerant canola.
Cibus’s core proprietary technology is the Rapid Trait Development System (RTDS). The focus is on weed control, disease control, healthier oil profiles, and more.
“Farmers will have the opportunity to obtain these traits quickly and affordably,” says Greg Gocal, chief science officer with Cibus, based in San Diego.
Effectively, RTDS tells a plant cell to rewrite part of its own DNA. The changes are made without directly adding foreign DNA (as with GMOs). The effect is not exactly the same as CRISPR, but it is similar. Many start-ups steer clear of CRISPR because of ensuing patent and licensing disputes with the technology.
“Cibus will bring traits and products to farmers in more crops faster and with less cost than CRISPR,” says Gocal. “Our goal is to have traits in every major crop within the next decade. We already have herbicide-tolerant SU Canola. We will see a release in the 2019-2021 time frame of glyphosate-resistant flax, herbicide-resistant rice, and numerous others.”When GMO crops first came out, the technology was focused on a small number of traits, says Gocal. Gene editing covers more traits and more crops. Hopefully, he says, the public will accept it.

“The keys for us are to remain transparent and to keep educating people on the benefits of these new gene-editing technologies,” he says. Getting it to Farmers
Designing gene-edited crops and livestock is the first step. Getting the products onto farms is next. The PRRS-resistant pig may be commercialized by PIC within five years if the company receives the necessary regulatory approvals, says Matt Culbertson, director of global product development for PIC, the world’s largest swine breeding stock company (a division of Genus).
“We’ve been an early investor in gene editing as a way to create new and beneficial genetic variation,” says Culbertson. Besides diseases, PIC is funding work on animal well-being, productivity, and sustainability.
“When Prather and his team started working on this a long time ago, it seemed like blue-sky type of science,” says Culbertson. Now the science is here, and the challenge is marketing.
“We need to introduce it to the marketplace domestically and around the globe in a positive manner so there isn’t an impact on exports.”
In the end, says Culbertson, gene editing “can revolutionize the output and efficiency of livestock production. The technology can influence items like animal well-being, sustainability of the industry, feed efficiency, mortality and morbidity, and meat quality. It offers huge opportunity to genetically change the landscape of livestock production.”
One unknown is how the licensing of the CRISPR technology will play out. At some point, any company using this technology will have to pay either Berkeley or MIT, depending on the results of the patent lawsuit (see below). Historically, companies in the GMO arena have been extremely guarded when it comes to their seeds. Once farmers have gene-edited pigs or cows, will they be allowed to breed them in their herds? Stay tuned.

What is CRISPR?

CRISPR stands for clustered regularly interspaced short palindromic repeats. These repeats were discovered in the genomes of bacteria. In bacteria, CRISPR acts as an adaptive immune system. It uses RNA to guide molecular scissors (Cas) to cut up invading viruses. 

Using these same molecular tools, scientists reprogrammed the molecular scissors to cut and edit, or correct specific spots in DNA. CRISPR-Cas tools can now be engineered to cut out the DNA at the exact site of a mutation for a disease in a pig, for example.
The original discovery of CRISPR dates back to the 1980s. In 2012, Jennifer Doudna at the University of California, Berkeley, with Emmanuelle Charpentier from UmeƄ University in Sweden demonstrated that CRISPR can be made to specifically edit a genome.
In 2013, Feng Zhang at MIT successfully adapted CRISPR for genome editing in cells. (There is a patent dispute over the discovery.)
Researchers at other universities have now reported similar findings, and the technology has taken off. BY BETSY FREESE.

CORN, SOYABEANS, CLOSE HIGHER AS INVESTORS FOCUS ON DEMAND.

Corn and soybean futures closed higher on Friday as investors focus on strong demand for U.S. inventories.
Exporters sold more than 1.5 million metric tons of corn and 2 million metric tons of soybeans in the week that ended December 8, the Department of Agriculture said in a report on Thursday. Since the start of the marketing year on September 1, sales of corn are up almost 80% year-over-year, and soybean sales have gained almost 30%, the USDA said.
Overseas buyers have been snapping up U.S. supplies due to low prices amid a glut of both crops. Growers this year harvested a record 15.2 billion bushels of corn and 4.36 billion bushels, according to the government.
Corn futures for March delivery rose ¾¢ to $3.57¼ a bushel on the Chicago Board of Trade.
Soybean futures for January delivery added 7¾¢ to $10.36¾ a bushel. Soy meal added $2.60 to $316.60 a short ton, and soy oil gained 0.05¢ to 36.79¢ a pound.
Wheat futures rebounded, turning higher late in the afternoon after being down much of the session. Chicago wheat added 1¾¢ to $4.11 a bushel. Kansas City futures for March delivery added 2¾¢ to $4.15½ a bushel.  BY successful farming staff.

FERTILIZER

The good news is that seed prices have remained fairly steady from 2016 going into 2017.
The bad news, though, is that steady doesn’t match the decline of corn and soybeans prices from last summer’s spike.
“The price of some products has gone up, some prices have gone down, but, overall, we are pretty flat from where we were in the past year,” says Jeff Hartz, director of marketing for Wyffels Hybrids
The decline in commodity prices has prompted farmers to economy-shop for seed.
“We have started to see growers become more sensitive to the price of seed and to trade down,” says Ponsi Trivisvavet, president of Syngenta Seeds. “They are choosing hybrids that have a lower number of traits. Within the same trait class, we have also seen a trend of growers move into picking the lowest-priced hybrids.”
These also tend to be older ones, she adds.
This year’s trend isn’t deterring Syngenta from research and investment in seed and traits, though. “We are in it for the long term,” she says.
Be Careful
Cutting traits is a way to save money. Remember, though, that pests such as corn rootworm and European corn borer (ECB) still lurk.
“Farmers have to be careful that they don’t get into a situation that can backfire,” says Hartz. “They are still there. We saw some fields in eastern Iowa that were non-GMO that had an issue. We saw that in 2015, too, where corn borer cost farmers 30 to 40 bushels per acre in yield.”
Fertilizer
There’s good news on the fertilizer front.
Prices for the big three —nitrogen (N), phosphorus (P), and potassium (K) – had plunged to around their lowest levels since 2007 two to three months ago, says David Asbridge, president and senior economist for NPK Fertilizer Advisory Services.
“We have had way too much capacity across the board with N, P, and K, but they (manufacturers) are beginning to manage it somewhat,” he says. “China is a big factor in this. The country shut down a lot of its nitrogen and phosphate plants—not completely, but it helped the market a bit.”
For the most part, prices will likely remain steady through winter, but they will start rising in March through the end of spring. This coincides with heavy fertilizer use during and shortly after planting. Prices will then drift lower before again rising (albeit at a lower level than in spring) in the fall.
“At this point, because of overwhelming capacity, we don’t see any big price hike,” he says.
Except . . .
One factor that’s changing the N market is the opening of three large-scale plants in the U.S. “They are the first ones like this built in the U.S. since the 1960s,” says Asbridge.
Last year, CF Industries Holdings, Inc. opened a ammonia/urea/urea ammonium nitrate (UAN) plant in Donaldsonville, Louisiana. This firm has also built a $2 billion expansion for a new ammonia plant, followed by a urea synthesis and granulation plant at Port Neal, Iowa. It wasn’t open at press time, but it is expected to open any day. Iowa Fertilizer is also building a new ammonia/urea/UAN plant in Wever in southeastern Iowa.
“That one they have been pushing back on, saying it will be up and running by mid-February,” says Asbridge.
If the Iowa plants don’t open, price spikes – particularly urea and UAN – could occur, as markets have been anticipating their opening. That’s why Asbridge is recommending to clients to lock in about 40% to 45% of anticipated urea and UAN needs soon.
“If, for whatever reason, Wever doesn’t open up in mid February, there could be issues with procurement, particularly urea and also UAN,” he says. Anhydrous ammonia supplies should be adequate, he adds.
K and P
Industry overexpansion has throttled down the potash market, with about one half of the Canadian industry shut down, says Asbridge. This – along with a fall run on potash – helped perk up K prices a bit.
However, the fall run will take some of the pressure off the spring market, he says.
“Phosphate is the same way,” he says. “Mosaic is the biggest phosphate producer in the U.S. It has throttled back in the last few months, but production is picking up a bit now. This, combined with new phosphate plants being built and opening in Morocco, is keeping a cap on phosphate prices.”
To head off any upticks during the heavy spring-use season, Asbridge is recommending his clients lock up one third of their phosphate and potash needs by the end of January. BY GIL GULLICKSON.

CROP INSURANCE

Crop insurance is the centerpiece of the farm safety net, a victory for farm groups who made a strong insurance program their top priority for the 2014 farm law. Now, a year after that success, the federally supported program is in the bull’s eye for budget cuts on Capitol Hill, ranging from tighter rules on prevented planting to higher premiums for big operators.
The fight won’t be decided for months to come. It’s pointed at operations in 2016, so it would not affect policies for this year’s crops.
At the first House Agriculture Committee hearing of the year, chairman Mike Conaway of Texas told Agriculture Secretary Tom Vilsack that cuts are unacceptable. “Now is precisely the wrong time to weaken crop insurance,” Conaway said, pointing to USDA forecasts that farm income will fall by one third this year. “The ag economy has been turned on its head.”
Farm groups and crop insurers, with their allies in Congress, are working strenuously to prevent cuts. Senate Agriculture Committee chairman Pat Roberts says he would “protect, preserve, and improve the number one risk-management tool available to farmers.” Growers insured 294 million acres last year.
With the program projected to cost nearly $9 billion a year – more than conservation or traditional crop subsidies – it is an inevitable target in the drive to cut federal spending.
“Make no mistake, crop insurance’s days of flying under the radar are done,” said
industry executive Tim Weber at a crop insurance convention.
The Obama administration proposed a 17% cut in insurance costs by:
Reducing the premium subsidy by 10 percentage points for revenue policies with the harvest price option that insures the price at harvest and
Adjusting payment rates for prevented planting. 
“The safety net is solid and still there,” said Vilsack, if Congress agrees to the reforms.
Senator Jeff Flake (R-AZ), a frequent farm program critic, tried during the farm bill debate to eliminate the harvest price option and now has filed a bill to carry out the White House proposal.
Senators Jeanne Shaheen (D-NH) and Patrick Toomey (R-PA) have filed a bill to cap premium subsidies at $50,000 per farm, which would affect the largest 2.5% of farmers. Vilsack warned that the approach “could potentially impact participation” – quiet words of opposition.
Of the proposed reforms, the harvest price option would save the most, an average $1.4 billion a year. Reformers have talked as well of other ways to reduce costs, such as cutting off or sharply reducing premium subsidies to the wealthiest farmers. BY CHUCK ABBOTT.