MEXICO BUYS CHEAPER BRAZIL CORN AS NAFTA TALKS LOOM-OFFICIAL.

MEXICO CITY, May 17 (Reuters) - Mexico expects to import a record amount of yellow corn from Brazil this year after its livestock producers secured lower prices in deals with suppliers on a recent visit to South America as NAFTA talks loom, a Mexican official said Thursday.

Alejandro Vazquez, a government official who was part of a Mexican delegation that visited Brazil and Argentina last week, said Mexican livestock companies on the trip had negotiated directly with suppliers and cut out commodities traders such as Cargill Inc and Louis Dreyfus that normally arrange shipments.

Following repeated threats by U.S. President Donald Trump to pull out of the North American Free Trade Agreement, Mexico, a net grains importer, has been eager to show the United States that it has options to trade elsewhere.

It has touted an upcoming visit to China and trade talks under way with the European Union, Brazil and Argentina , while looking for new suppliers for the U.S. grains that make up most of its imports of corn, wheat and soybeans.

The Trump administration launched the process for opening NAFTA for revisions on Thursday and will likely face pressures from the politically connected U.S. corn industry to maintain market access to Mexico, one of its biggest customers.

Higher costs and longer shipping times have in the past limited Mexican imports from South America. Before the trip, yellow corn from Brazil cost about $15 per tonne more for Mexico than U.S. corn.

But Mexican companies signed deals in Brazil for two shipments of 30,000 tonnes each for delivery in August that were only $3 to $5 per tonne higher, part of the 300,000-tonne total they plan to import between August and October at roughly the same price, Vazquez said.

"If prices become even more attractive, they could import even more," Vasquez said, adding that bigger deals could cut margins further. "And in some regions of Brazil, yellow corn is even cheaper than in the U.S." for Mexico.

Vazquez, the head of Aserca, an agency in the Agriculture Ministry that promotes Mexican products, said the livestock companies chose to pay more for Brazilian yellow corn as an investment in case NAFTA unravels and disrupts the cheap access to U.S. corn they use for animal feed.
"For them, it's not an option to be closing their plants," Vazquez said.

The 300,000 tonnes of yellow corn from Brazil this year would be a tiny fraction of the 12.75 million tonnes that Mexico imported from the United States last year. But it would be nearly five times more than it imported from Brazil last year and a record, Vazquez said.

Vazquez said Mexico should have shopped around for alternatives to U.S. grains long ago.
"Mexico was in a comfort zone," he said. "We didn't need to go and seek these opportunities that we're finding now." (Reporting By Mitra Taj; Editing by Bill Trott). BY MITRA TAJ.

SF SPECIAL: WHEN A FAMILY OWNED ELEVATOR GOES BELLY UP.

When the Porter Elevator locked its doors to customers in December 2015, the relationship it had built as a trusted business partner was shattered. In this four-part series, we examine what happened when the Minnesota elevator went under.
As the tallest building in Porter, Minnesota, the Porter Elevator Feed Mill has played a critical role in the growth of the community. As a wholesale feed dealer, the company buys and sells grain, stores grain, hauls feed and grain, and processes and sells feed. Built in the 1930s, local farmers have looked to its owners as a trusted business partner for decades.

“I grew up in this area and have lived here my whole life,” says Leon VanDerostyne, who farms with his brother, Jim. “For more than 30 years, I’ve been storing and marketing my grain through the Porter Elevator. In all that time, I never had a problem getting paid.”

That all changed on December 10, 2015. At noon that day, Bruce Tetrick, president of the elevator, locked the doors to his customers for the last time. Within 15 minutes of folding, the rumors began to circulate.
“My brother Jim, as well as our brother, Gary, who also farms and did business with the elevator, called to tell me they’d heard the elevator had closed down,” says VanDerostyne.
While those conversations were unsettling, a phone call to his bank, the First Security Bank - Sleepy Eye, a day later was even more disheartening.
“I had gone into the elevator on December 9 to sell 34,800 bushels of corn I had in storage,” he says. “Bruce handed me a check for $111,229. I deposited it in my account that same day. When I heard the elevator closed, I was worried about that check and called my bank Friday morning. That was when the bank told me the check was no good.”

VanDerostyne also had 1,235 bushels of spring wheat and 14,144 bushels of soybeans in open storage, 231.5 bushels of corn in the grain bank, and 1,000 bushels of soybeans on a deferred payment contract.

Building a better system

In this rural farming community, few were untouched by what happened that fateful day. As the reality of the situation started to unfold, farmers understandably had questions.
“Nobody knew what to do,” says VanDerostyne.

“Before the Porter Elevator, the state of Minnesota hadn’t dealt with a situation like this for 10 years or so,” says Kevin Stroup, an attorney with Stoneberg, Giles and Stroup in Marshall, Minnesota. “The calls started coming into our office shortly after noon the day the elevator closed. A number of them were from farmers who all had similar questions.”
Based on the suggestion of another grain elevator it represents, the firm decided to hold an informational meeting as a courtesy to farmers.
“What we found was that there was no good central location for these folks to get answers. There were a lot of rumors, and we wanted to quell as many as we could,” he says.

More than 100 people showed up for the meeting, which included farmers as well as several of the area’s main ag lenders. The majority of questions centered around what the path would be going forward, especially since it was likely that Tetrick would file for bankruptcy.

“We shared what we knew, what we didn’t know, and how the process works because it appeared that he was going to file for bankruptcy,” says Stroup.

Ultimately, the privately held elevator filed for Chapter 7 on December 23, 2015. At the time of the filing, court documents showed total assets of $3.6 million and liabilities of $4.2 million. More than $1 million of those liabilities were in unsecured claims including VanDerostyne’s bounced grain check and the grain he had delayed payment on.

Classifying Claims

According to Stroup, the nearly 90 farmers affected by the closure fell into three buckets.

Bucket 1: You had grain in storage.

“If you stored grain at the elevator, you still own that grain,” says Stroup.
Because the grain was still owned by the farmers, it was rumored that they had the right to reclaim their commodity.  

“A farmer does have state law reclamation rights relating to the sale of goods (grain) under the Uniform Commercial Code,” says Greg Bucher, who is also an attorney with Stoneberg, Giles and Stroup. “That said, once an elevator files for bankruptcy, and the automatic stay imposed, the exercise of the state law right of reclamation, and any litigation over that issue, occurs under the oversight of the bankruptcy court.”

Ned Bergman, USDA’s chief of the examination branch, says in theory farmers could have taken back their grain. “In reality, there are a lot of weaknesses in allowing them to do that,” he notes.
“For instance, if a farmer was to take redelivery, who would pay for the costs, like transportation, associated with taking that grain back? The farmer would,” says Carie Pintado, USDA’s chief of the licensing branch.

It’s also about quality and quantity.
“When you do a liquidation, you are never quite sure of the quality of the grain,” Bergman notes. “You can make basic determinations, but you don’t know what you’ve got until you empty those bins.”
“Plus, until you clean out an elevator, you really don’t know how much grain is actually there,” Stroup adds. “You can measure it to your heart’s content and usually that’s accurate, but you’re not 100% sure.”

Once the USDA knew what they were dealing with and ownership of the grain was established, the agency then went out into the marketplace to find companies willing to work with them to liquidate the stored grain, which included corn, soybeans, wheat, and oats. Farmer’s Cooperative Elevator in Hanley Falls was awarded the bid and sold the commodities at an established benchmark.

“What we have to do is, on a particular day, say this is the benchmark and legally establish what the fair market price is,” explains Bergman. “When the liquidation is complete, the proceeds are placed in a grain fund, which is mandated by the U.S. Warehouse Act. Affected farmers are issued checks from this fund, and all funds have to be distributed on a pro-rata basis.”

As with any situation like this, the USDA hopes to recover 100% in the sales. If they don’t, a $230,000 federal bond the elevator had kicks in to make up the difference. “If necessary, we work with the bonding company to recoup any losses and include them in the distribution,” he notes.
According to court documents, the proceeds of the sale totaled a little over $3 million – more than enough to cover the $2.8 million owed farmers after subtracting storage fees. Payments were distributed to farmers in installments. Farmers received the last approximately 9% owed to them the week of April 10, 2017. Any excess funds from the sale are used to pay secured creditors like banks.
“Everybody who had grain stored at the Porter Elevator had to be treated the same because grain was all stored essentially on a comingled basis,” says Bergman.

While some may not agree, he says liquidating that grain and then issuing checks to farmers at the liquidation price was the cleanest and most efficient way to take care of the problem. “In the end, it was probably the most beneficial way to handle it for the farmer as well,” he notes.
Bucket 2: You sold grain and received a check from the elevator.

“For instance, if a farmer was to take redelivery, who would pay for the costs, like transportation, associated with taking that grain back? The farmer would,” says Carie Pintado, USDA’s chief of the licensing branch.
It’s also about quality and quantity.
“When you do a liquidation, you are never quite sure of the quality of the grain,” Bergman notes. “You can make basic determinations, but you don’t know what you’ve got until you empty those bins.”
“Plus, until you clean out an elevator, you really don’t know how much grain is actually there,” Stroup adds. “You can measure it to your heart’s content and usually that’s accurate, but you’re not 100% sure.”
Once the USDA knew what they were dealing with and ownership of the grain was established, the agency then went out into the marketplace to find companies willing to work with them to liquidate the stored grain, which included corn, soybeans, wheat, and oats. Farmer’s Cooperative Elevator in Hanley Falls was awarded the bid and sold the commodities at an established benchmark.
“What we have to do is, on a particular day, say this is the benchmark and legally establish what the fair market price is,” explains Bergman. “When the liquidation is complete, the proceeds are placed in a grain fund, which is mandated by the U.S. Warehouse Act. Affected farmers are issued checks from this fund, and all funds have to be distributed on a pro-rata basis.”

As with any situation like this, the USDA hopes to recover 100% in the sales. If they don’t, a $230,000 federal bond the elevator had kicks in to make up the difference. “If necessary, we work with the bonding company to recoup any losses and include them in the distribution,” he notes.

According to court documents, the proceeds of the sale totaled a little over $3 million – more than enough to cover the $2.8 million owed farmers after subtracting storage fees. Payments were distributed to farmers in installments. Farmers received the last approximately 9% owed to them the week of April 10, 2017. Any excess funds from the sale are used to pay secured creditors like banks.
“Everybody who had grain stored at the Porter Elevator had to be treated the same because grain was all stored essentially on a comingled basis,” says Bergman.

While some may not agree, he says liquidating that grain and then issuing checks to farmers at the liquidation price was the cleanest and most efficient way to take care of the problem. “In the end, it was probably the most beneficial way to handle it for the farmer as well,” he notes.
Bucket 2: You sold grain and received a check from the elevator.

If you sold your grain and received a check, whether it was good or not, you are considered an unsecured creditor,” explains Stroup. “The title to that grain was transferred to and is held by the elevator with that sale.”

“Since the check bounced, I posted a letter on the elevator’s door requesting to reclaim my grain,” says VanDerostyne. “Even though I knew my corn was still in the elevator, I was told it no longer belonged to me because I sold it. I was now considered a creditor. My grain was basically taken away from me and the proceeds were given to the bank once it was sold.”
As an unsecured creditor, VanDerostyne and others who fell into this bucket could apply for compensation through a bond the elevator had with the state of Minnesota. According to Nick Milanowski, the Minnesota Department of Agriculture (MDA) received $2,001,042.45 in claims from 12 producers.
“All submitted claims, associated paperwork, internal documents, and records from inspector visits were reviewed to determine which claims were valid and which were not,” says Milanowski, the MDA Fruit, Vegetable & Grain Unit supervisor, plant protection division. “Once final determinations were made, 11 producers who had filed $1,106,435.17 in total claims were found to be valid. In the case of multiple claims, a pro rata share is calculated and dispersed.”
However, the bond would only cover $125,000.
“Almost a year after the elevator closed, I received a check for approximately $13,000, which was around 12% of what I was originally owed on the grain check that bounced,” says VanDerostyne.
Had he left his corn where it was, his story would have been much different.
“If my grain was in storage, I would have received the full amount owed to me,” says VanDerostyne. “I’d have been a thousand times better off if Bruce hadn’t given me a check that day. If this would have happened to me when I first started farming, I’d have been finished.”
The only reason he sold grain that day was because there was a piece of farmland up for sale he had planned to bid on the following week.
“Not only did I lose out on that investment, I lost out on years of revenue I could have had from the crops grown on that land,” says VanDerostyne.
Bucket 3: You sold grain and delayed payment.
“If a farmer sold his grain and deferred the payment, that grain now belongs to the elevator. In this instance, he is again seen as an unsecured creditor,” Stroup says.
When the MDA reviewed the documents, it found that some of the claims against the bond represented signed contracts.

“The voluntary extension of credit contracts (VECC) or deferred payment contracts are not covered by the bond,” says Milanowski.

However, VECCs that were not signed presented a challenge … and a loophole.
“Contracts that are not signed by the seller are covered by the bond because the seller has not signed acknowledging the additional risk the contract presents,” he explains. “Due to that, there were some contracts that were included in the bond disbursement.”

The Other Painful Truth
The next harsh reality came when the elevator’s assets were liquidated to settle outstanding debt.
“When the equipment was auctioned off, it was grouped together, and just the big-ticket items were sold,” says VanDerostyne. “I don’t feel they maximized the amount of money they could have gotten for this stuff, which put the farmer further back in line to get some of the money owed him that wasn’t covered by the state bond.”

“It wasn’t made clear to farmers that it didn’t matter how those assets were sold,” says Stroup. “They were never going to get any money out of the liquidation of the equipment or the real estate because there was no equity in either one.”

“If there were any excess funds after the liquidation, secured creditors like banks get paid first in the bankruptcy process,” says Bucher.

A Sense of Betrayal
As if losing a six-figure paycheck isn’t maddening enough, the difficult part comes in trying to understand how one of your own could do this to you.

“I went to school with Bruce. He was a member of our community,” says VanDerostyne. “I trusted him.”

“This was a family-owned operation and had been for a number of years,” says Stroup. “It’s why people were so comfortable with them.”

Attempts to reach Tetrick for comment were unsuccessful.
Like VanDerostyne, Austin Muhl knew Tetrick as well as his son, Jacob, who also worked at the elevator for years.

“I considered them friends,” says the young farmer. “They were reasonable and fair. If there were ever a time when there wasn’t much work, they would usually find work to keep you busy. They were actually the best guys to do business with.”

Muhl was a farmer who not only purchased feed from the elevator, but also hauled grain for the business. As a customer, he had an outstanding feed bill when the elevator went on lockdown. As a vendor, he was also owed money.

In the second installment of this four-part series, the First Security Bank – Sleepy Eye takes a handful of Minnesota farmers to court, including Muhl, to try to recoup some of its losses after the elevator files for bankruptcy. Part two will come out Thursday, May 25.

HOW WE REPORTED THE STORY

Laurie Bedord, Advanced Technology Editor, first learned about the Porter Elevator bankruptcy in February 2016. At the time, farmers were hesitant to talk because the investigation was ongoing and it was still a very sensitive subject in the community. Nine months later, she began contacting farmers who did business with the elevator, a vendor hired by the elevator, two attorneys who offered legal advice to some of the parties affected, as well as a representative from the Minnesota Department of Agriculture and USDA officials involved in the case.

Bedord also interviewed a Minnesota state representative working to change the legislation affecting elevator insolvencies. In addition, she spoke with the North Dakota Public Service Commission to compare the legislation it has in place with Minnesota to protect farmers in an elevator bankruptcy situation.

Hundreds of pages of court documents provided detailed information on the financial situation of the family-owned elevator as well as the names of the numerous farmers, suppliers, and vendors affected by the bankruptcy.

Attempts to reach the president of the Porter Elevator for comment were unsuccessful. BY LAURIE BEDORD.

TRUMP ADMINISTRATION TO START NAFTA RENEGOTIATION.

WASHINGTON, May 18, 2017 – The Trump administration today informed Congress that it intends to officially begin renegotiating the North American Free Trade Agreement with Mexico and Canada.
The much-anticipated notification gives Congress a 90-day window to work with the Office of the U.S. Trade Representative, the Commerce Department and other agencies to help develop priorities in overhauling the pact with two of our largest trading partners.

Commerce Secretary Wilbur Ross, in a statement, blamed NAFTA for the downturn in U.S. manufacturing and promised that President Donald Trump would turn that around. “I look forward working with the President, Ambassador Lighthizer, and our counterparts from Mexico and Canada, to find a solution that is both fair and beneficial for all parties.”

USTR Robert Lighthizer said in a letter to Senate Finance Committee Chairman Orrin Hatch that the primary goal is to improve the 23-year old trade pact to include things like protections for digital trade and intellectual property rights, but many farm groups are concerned about protecting the trade advantages they have gained under NAFTA.

“Exports are one pillar of a strong farm economy, accounting for 31 percent of farmer income. Nowhere is the importance of trade stronger than right here in North America,” National Corn Growers Association President Wesley Spurlock said in a statement. “Since NAFTA was implemented, U.S. agricultural exports to Canada and Mexico have tripled and quintupled, respectively. We export billions of dollars of corn and corn products to these countries each year.”
Much of that success is because under NAFTA, most tariffs on U.S. agricultural exports have dropped to zero, a situation that farm groups like NCGA want to maintain.

The U.S. exported about $35 million worth of corn to Mexico in 1993, the year before NAFTA went into force, according to USDA data. Last year the U.S. sold $2.6 billion worth of corn to Mexico.
Wheat farmers also want to protect the gains they've made under the trade deal.

“If the administration intends on renegotiating NAFTA, it must guarantee growers that new terms won’t reverse the significant benefits for U.S. wheat farmers, like duty free access,” said David Schemm, president of the North American Wheat Growers. “Despite the risks, there’s an opportunity here to get better trade rules in place that will set the gold standard for trade agreements going forward, without hurting wheat farmers and their importing customers.”

But it’s not just U.S. farm groups asking the Trump administration to protect agricultural trade during renegotiations. The Canadian Cattlemen’s Association and Mexico’s Confederación Nacional de Organizaciones Ganaderas joined the U.S. National Cattlemen’s Beef Association in defending gains under NAFTA.

“We urge you not to jeopardize the success of the men, women and families engaged in the cattle and beef industries of each of our countries, who depend on the success that market access provides under NAFTA,” leaders of major cattle-ranching groups in the U.S., Mexico and Canada said in a joint letter to Trump, Canadian Prime Minister Justin Trudeau and Mexican President Enrique Pena Nieto. “Recent statements about the possible dissolution of NAFTA or potential renegotiation of NAFTA are deeply concerning to us because of the unnecessary risk it places on our producers,”

Lighthizer, during his March 15 confirmation hearing before the Senate Finance Committee, said he would do his best to protect what farmers have gained under NAFTA under any renegotiation.
“We have to be careful not to lose what we gained … I do believe it can be done,” he told lawmakers at the hearing. “I’m not suggesting that it will be easy, but I do believe it can be done.” BY AGRI-PULSE COMMUNICATION.

3 BIG THINGS TODAY, MAY19TH

1. Corn, Soybeans Rebound on Bargain Hunting After Thursday’s Decline
Corn, soybeans and wheat all rose in overnight trading, bouncing back from yesterday’s losses as bargain hunters come looking for deals.

Corn closed down 5 ½ cents, soybeans dropped 31 cents and wheat was down just over a penny on Thursday. That left an opening for investors who wanted to buy into the market at low prices.
Prices yesterday plunged as the Brazilian real tanked amid a bribery scandal involving the country’s president. A weaker real makes Brazil’s agricultural products more attractive to overseas buyers, which in turn curbs demand for U.S. corn, soybeans and wheat, pushing down prices.

The currency on Thursday fell to the lowest level since December. It has since steadied while the dollar declined, once again making U.S. goods more favorable to overseas importers.

Soybean futures for July delivery rose 7 cents to $9.51 ¾ a bushel overnight on the Chicago Board of Trade. Soymeal added $2.20 to $309.70 a short ton and soy oil futures gained 0.16 cent to 32.60 cents a pound.
Corn futures gained 2 cents to $3.68 a bushel in overnight trading.

Wheat for July delivery rose 4 cents to $4.29 ¾ a bushel, while Kansas futures added 5 ¼ cents to $4.31 ¼ a bushel.
2. Export Sales of Grains, Soybeans All Rise Week-Over-Week
Weekly sales of corn, soybeans and wheat all rose in the seven days that ended on May 11, according to the U.S. Department of Agriculture.

Corn sales for delivery in the marketing year that ends on Aug. 31 totaled 705,300 metric tons, up noticeably from the prior week and 1% from the previous four-week average, according to the U.S. Department of Agriculture.
Japan was the biggest buyer, taking 152,800 metric tons, followed by Mexico at 113,000 tons and Spain’s 96,600 tons. Taiwan bought 92,400 tons. The total would’ve been more impressive if not for a cancellation of 283,100 tons by unknown buyers, the USDA said.

For the 2017-2018 marketing year, sales totaled 168,000 tons as unknown buyers and Japan bought from U.S. inventories.

Soybean sales of 355,300 metric tons were up 10% from the prior week, according to the USDA. Still, sales were down 6% from the previous average.

China was the biggest buyer at 124,000 metric tons, Bangladesh bought 57,700 tons, Germany also bought 57,700 tons, Mexico was in for 26,500 tons and Indonesia purchased 20,300 tons. For the 2017-2018 marketing year that starts on Sept. 1, sales came in at 41,500 tons.

Wheat sales for the marketing year that ends on May 31 were up considerably from last week at 247,600 metric tons. The biggest buyer was China at 69,000 tons, followed by Nigeria at 51,000 tons. Vietnam purchased 48,000 tons, Japan bought 47,600 tons and Kenya was in for 36,800 tons.
Unknown buyers cancelled purchases of 131,500 tons, according to the USDA.

For the year that starts on June 1, sales totaled 393,100 tons with Japan, Mexico and Philippines making purchases.

Get today’s news sent to your inbox by signing up for Successful Farming newsletters.
3. More Storms Expected as Flash Floods, Severe Weather Forecast Through Saturday
The rainfall just doesn’t want to give way to summer weather as more storms are forecast a stretch from the southern Plains to the Ohio Valley.

Flood warnings and flash flood watches are in effect for all of eastern Kansas and most of eastern Oklahoma, stretching into western Missouri and Arkansas, according to the National Weather Service.

Just east in eastern Missouri and western Illinois, severe thunderstorms, flash floods and other severe weather are expected today. Springfield, Mo., is in a severe thunderstorm warning and under a flash flood warning this morning, according to the NWS.

“The threat of heavy rain and flooding will continue through the weekend from the lower Gulf Coast to the lower Great Lakes” the NWS said.

Scattered thunderstorms are possible in parts of Indiana that could drop large hail and spawn “damaging winds” on Friday, according to the agency. 
Get involved in the discussion in Marketing Talk. BY TONY DREIBUS

MINNESOTA PORK PRODUCER SCHWARTZ FARMSPUTS FAMILY FIRST.

On a gravel road west of Sleepy Eye, Minnesota, is a well-kept yet unassuming farmstead. The farmhouse has been remodeled into an office, but there are no signs to tell you this is the headquarters of Schwartz Farms, Inc.

The plain, hardworking surroundings are by design. Inside the office, John Schwartz admits, “We like to keep a low profile.”

He would be the last to nominate himself as a top farmer, but Schwartz and his brother, Joe, are two of the most respected independent pork producers in the U.S. Their family-owned company owns 62,000 sows and finishes all the pigs produced. Another brother, Mark, and many other family members are involved in the business, as well.

The growth of the farm has been slow and measured. Schwartz Farms was founded by John and Joe in 1978 as a crop farm. Originally, the brothers wanted to remain on the dairy farm where they grew up.

“Joe and I wanted to start farming. We discussed our wishes with Dad to expand the dairy. He said we were better off doing something on our own,” explains Schwartz. “It was a hard decision to make, but in hindsight it was the best thing that happened.”

In 1981, John and Joe purchased a 700-head finishing barn to diversify their corn and soybean operation. That was their entry into the pork industry.

Contract growers are key ingredient

In the early 1990s, they pioneered the first farrow-to-wean contract in the state of Minnesota. Schwartz credits their contract growers with much of the company’s success.

“When I started going out to sign up contract growers in the early 1990s, I would lay awake at night worrying about the risk,” says Schwartz. “I felt a tremendous amount of responsibility toward those people. They would ask me, what’s this barn going to be worth in 10 years? I didn’t know. Now we know if was a good deal. Those barns held their value and are still going today. It was a success story. That has been rewarding.

“I know the hog industry has had its controversies, but it’s been a real success story from the standpoint of making equity. Even in terrible economic cycles, the assets really held their value. Back in the early 1990s, people didn’t know the value of manure, but that value is accepted now.”

Today, about two-thirds of Schwartz Farms pigs are housed and fed by more than 125 independent family farm contactors. Schwartz would like the number to be even higher, but many contract growers are aging and don’t have children coming back to the farm.

“We have to put our labor in the facilities because of the aging demographics. It’s not like the hog industry 20 years ago. But our first choice is to work with independent family contractors. They are hard to beat.”

Conservative growth

By purchasing, not building, sow farms, Schwartz Farms grew to 25,000 sows by 2003 and 50,000 sows in 2015. Today, the company owns sows in Minnesota, Iowa, Nebraska, and South Dakota.
Schwartz sells hogs to most of the packers in the Midwest. The family is not involved in the packing industry. Yet.

“We’ve been on the short end of the stick for past 24 to 36 months because we are not integrated,” says Schwartz. “The percent of the cutout pork producers have been receiving has been historically low during this time frame.”

He hopes when the new Seaboard-Triumph Foods plant in Sioux City, Iowa, gets a second shift and the new Prestage Foods plant opens in Iowa there will be a better balance between the supply of hogs and slaughter capacity. “It’s been a challenge for those of us that aren’t integrated.
“It has always been my hope that being a live producer and supplier to a packing plant can be a viable business model. However, the last 24 months have definitely challenged that in my mind,” says Schwartz. “We are looking at all options and not ruling anything out.

“We’re good at raising pigs, and they are good at packing, but we may have to go our own direction to get an equitable share of the cutout.”

Market discovery needed

Schwartz Farms negotiates 7% to 10% of its hogs on the open market. The goal is to keep the Iowa and Southern Minnesota negotiated hog market alive for the sake of market discovery.

“If we don’t keep it alive, the only thing we have is the cutout,” says Schwartz. “There is no producer participation in the cutout; it’s all the packer and retailer. Price discovery needs to be competitive and transparent. This has been a concern of mine for years. I encourage producers to negotiate more pigs. If they are not comfortable negotiating, there are firms available that will negotiate for them.”

He says the company has strategically aligned itself with some of the best employees, contractors, meat processors, and consultants in the industry. His parents, Jim (now deceased) and Irene Schwartz, instilled in their children five main values that still guide them today: integrity, respect, excellence, innovation, and adaptability.

“It’s been an interesting ride,” says Schwartz. “We are proud of our legacy and remain confident in the future.” BY BETSY FREESE.

ILLINOIS FARMER DOUG MARTIN IS ALWAYS HUNTING FOR FARMING OPPORTUNITIES.

In 1997, Doug Martin graduated from college and started farming with his dad, Jeff Martin. With only 150 acres of his own, Doug knew that he would have to be on the hunt to grow the operation to make a career of it.

At the same time, he worked alongside his dad on the family farm near Mt. Pulaski, Illinois.
Between the two of them, they have now grown their operation by 250%, in the last 20 years.

“We had a gradual growth, for a while,” Martin says. “But in the last 10 years, we have doubled the size of our operation. So, with that growth and Dad contemplating his retirement, Derrick (my brother) has returned to the operation to farm with us.”

Over the years, the Martins have used unique strategies to stay competitive in acquiring land by purchasing and leasing.

For instance, several years ago, the Martins started a conservation tree and grass business. Also, they have developed biological products to improve soil health to boost yields, all while balancing relationships with several different landlords.

“It takes a lot of communication and attention to detail, keeping everyone informed and working together to be able to remain successful,” Martin says.

He adds, “We pay attention to what we are doing and remembering the reason we are out here farming. Not too many people have the opportunity to do what we do. While it’s a challenge to be successful, it’s an enjoyable challenge.”

Staying connected to the landlords is a key factor in being successful. To do that, the Martins have used today’s internet technology to their advantage.

“Whether it’s a simple text message, email, phone call, or our activity on social media, there is just a whole array of ways we keep in touch with landlords, nowadays,” Martin says.

The Martin family started a website and Facebook page to post photos of planting, crop growth, and harvesting for landlords to see.

“The way we communicate is landlord-specific. Some want to hear from you through a phone call once in a while, some want to know about everything going on, others text a few times a week to stay in contact, and others enjoy the website we created to display our progress on their land,” Martin says.

After writing a weekly blog on the family farm’s website, Martin has shifted more of his social network reporting to platforms such as Facebook and Twitter.

“We can give our landlords quick updates more often than through the weekly blog,” Martin says. “The landlords feel like it is so easy to stay in touch this way, even though they might be on the other side of the country.”

Going forward, Martin and his brother plan to double the size of their operation in the next 10 years.
“We want to grow with land that is geographically and economically feasible. We don’t want to have to travel the whole state of Illinois just to be able to grow,” Martin says.

On The Hunt

So, the hunt is on for more land. And the Martins know all about hunting. It has been a family passion for decades.

“Our family have been outdoorsmen for several generations. My kids are getting old enough now to get them involved in hunting,” Martin says. “We’ve always felt that hunting and farming go hand-in-hand.”


Martin adds, “My great-grandpa, grandpa, and father all enjoyed hunting and have passed the passion down to my brothers and I. And we consider ourselves conservation farmers with a lot of land in the conservation reserve program and places to enhance wildlife habitat. So we take advantage of that during the hunting season.” BY MIKE MCGINNIS.

SOYABEANS CLOSE 11C HGHER TUESDAY.

DES MOINES, Iowa -- On Tuesday, the CME Group’s soybean market felt the support of buyers, to end the day on a double-digit rally.

At mid-session, the July corn futures are 2¢ lower at $3.65, while December futures are 1 3/4¢ lower at $3.83.

July soybean futures are 2 3/4¢ higher at $9.68, November soybean futures are 1/4¢ lower at $9.60.
July wheat futures are 3¢ lower at $4.20.
July soy meal futures are $0.50 per short ton higher at $313.00. July soy oil futures are $0.04 higher at 33.06¢ per pound.

In the outside markets, the Brent crude oil market is $0.01 per barrel lower, the U.S. dollar is lower, and the Dow Jones Industrials are 15 points higher.

Deanna Hawthorne-Lahre, StatFutures co-founder and trader, says this market is just so flatline.
“The damage done in the hard red winter wheat areas was marginal, and the wheat market is eroding as we head into harvest,” Hawthorne-Lahre says. “Investors are looking for areas to take a shot from the long side, but volality indicates there is no hurry, as do the spreads.”

She adds, “The corn market should be checked for a pulse. Haven't seen a market this dead since 2002 or 1985. And soybeans got a freckle of life with some business, Tuesday from China. But, it feels iffy to me at the moment.”

The July/November soybean futures spread will be an indicator if this market comes alive again, she says.

“With plantings moving along, in spite of some weather issues, and of course very little drought around, this could be a long year in a trading range,” Hawthorne-Lahre says.

Monday’s Grain Market Review

On Monday, the CME Group’s farm markets sold off strength in soybeans, while corn remained in negative territory.
At the close, the July corn futures settled 3½¢ lower at $3.67½, and December futures closed 3¾¢ lower at $3.85.

July soybean futures finished 2¾¢ higher at $9.65¾; November soybean futures finished 1¼¢ higher at $9.61.

July wheat futures finished 9¾¢ lower at $4.23.
July soy meal futures closed 90¢ per short ton lower at $312.40. July soy oil futures settled 0.25¢ higher at 33.09¢ per pound.

In the outside markets, the Brent crude oil market is 99¢ per barrel higher, the U.S. dollar is lower, and the Dow Jones Industrials are 93 points higher.

Dustin Johnson, EHedger LLC grain analyst, says weather and rumors about China are moving the market.

“All we have heard is that China was rumored to be buying U.S. beans. No confirmations on the Chinese buying and very little weather to support the market one way or another are the factors that the investors are using to place bets,” Johnson says.
“There is still high conviction that soybeans are overpriced to corn and the market may be working some of those position holders out,” he adds. BY MIKE MCGINNIS.

BRAZIL ACTS TO PROTECT ETHANOL PRODUCERS AS U.S IMPOTS JUMP.

SAO PAULO, May 15 (Reuters) - Brazil is toughening requirements for ethanol importers to protect domestic producers from an incoming surge of U.S. corn ethanol, a minister said on Monday, adding that he opposed the idea of new tariffs that could trigger costly retaliation.

Buyers of foreign ethanol will now have to follow a rule applied to Brazilian ethanol producers regarding minimum stocks to guarantee supplies in the market, according to a government decision published in the official gazette on Monday.

Energy Minister Fernando Coelho said the measure aims at giving "fair treatment" to importers and producers in the face of a "violent" increase in shipments from the United States.

Brazil is the main market for U.S. exports of corn ethanol, which have swelled in recent months to fill a gap left by falling domestic output. Brazilian mills have diverted more cane to sugar production because of better returns for the sweetener.

Ethanol imports from the United States increased fivefold to a record 720 million liters in the first quarter, worth some $363 million, according to Brazil's trade ministry.

Local mills currently need to have ethanol stocks equivalent to at least 8 percent of their total sales in the prior year by March 31 each year. The rule was created to guarantee enough ethanol between Brazil's cane harvests in the main center-south producing region. That period runs from December to the end of March.

"This measure means that an importer will have to invest in infrastructure. It will probably take out of the market those smaller traders who do opportunistic deals," said a local ethanol trader who declined to be named.

Coelho said Brazil needs to protect its ethanol industry from U.S. corn ethanol with measures other than import tariffs, which could trigger a U.S. response. "I think tariffs could cost us even more in retaliation," he said.

Reuters reported on April 27 that Agriculture Minister Blairo Maggi had asked Brazilian trade authority Camex to impose tariffs on U.S. ethanol imports. The cane industry in northeast Brazil, the main point of entry for ethanol imports, is leading calls for a 20 percent tariff.
The Camex executive committee held off deciding the matter at a meeting this month to consider the broader implications of a tariff. It is expected to make a decision at a meeting in early June. (Reporting by Luciano Costa; Additional reporting by Anthony Boadle in Brasilia and Marcelo Teixeira in Sao Paulo; Writing by Bruno Federowski; Editing by Brad Haynes and Paul Simao). BY LUCIANO COSTA.

FARM GROUPS OPPOSE END TO USDA'S RURAL DEVELOPMENT OFFICE.

Fearing the demotion of rural economic concerns and harm to their communities, a coalition of rural and farm groups urged leaders of the House and Senate Agriculture Committees to oppose the USDA’s plan to eliminate the Office of Under Secretary for Rural Development.

Last week, Secretary of Agriculture Sonny Perdue announced a reorganization of the USDA that would eliminate the rural undersecretary office and transfer the duties to a special assistant.
“Rural America is much more than production agriculture,” said National Farmers Union president Roger Johnson, one of the participants in the group. “Family farmers and ranchers need vibrant rural communities because they provide desirable amenities and jobs. Underfunding, understaffing, or demoting the Rural Development Mission Area within USDA would cause real harm to programs that benefit farming and rural communities.”

Rural families, businesses, and cooperatives need strong, healthy communities with efficient transportation infrastructure, high-speed broadband, affordable housing and water, quality schools, and public safety, the group’s letter to Congress said. “We support and encourage the efforts to strengthen agricultural trade, but our underserved rural communities also need a robust RD program to be competitive in the national and global market.”

They pointed out that rural development is currently overseen by an undersecretary who is part of the USDA subcabinet. The reassignment would end direct congressional oversight on the office’s work, the letter said.

They viewed elimination of the office as part of a series of events “causing concern” in rural areas. The group cited the White House’s recent budget proposal that eliminates rural utilities and business programs, the Community Development Block Grant program, and the entire portfolio of Rural Business Cooperative Service programs and the Rural Water Wastewater Program. BY CHUCK ABBOTT.

THE 9 BEST SITES TO BUY HIGH END MEAT ONLINE , ACCORDING TO CHEFS.

Not everyone has a corner butcher they can count on. But thanks to the Internet, you don't need a local meat market to get the best cuts of beef, pork or even chicken. But where in the world-wide-web are the best slabs of meat to be found? Here are nine excellent places to start, according to the chefs who use these sites themselves.

Meats by Linz

Meats by Linz is for member's only, but Jason Hall, chef de cuisine of Jane Q at The Kimpton Everly Hotel in Hollywood, Calif., says you won't regret your membership, or the mail-order program a membership includes. The site offers veal, pork, lamb, and angus beef from farms near to its Chicago location. Hall recommends ordering the site's New York strip steak. "It's cheap, but really high quality," Hall says.

Foods in Season

If you're searching for, say, wild game straight from Scotland and a side of sea beans from the Washington coast, Foods in Season can be your one-stop online shop, says RJ Cooper, chef of Henley in Nashville, Tenn. "This website is great because they not only have high-end meat they also offer all kinds of other goods," he explains. In fact, he says, "Foods In Season carries so much variety it's hard to choose just one item." foodsinseason.com

Debragga

This New York City-based meat supplier comes with very high praise from Fabio Capparelli: "This is the only recommendation you will need," the executive chef of The Main in Norfolk, Va., promises. You'll could spend a pretty penny (or thousands of pennies) on Debragga's site, Capparelli warns. "But it's well worth it if you are a meat lover. All the top steakhouses in New York City use it," Capparelli says. debragga.com

Meat the Butchers

Novice and serious cooks alike will appreciate Meat the Butchers, says Chris Crary, executive chef of Farmspoke in West Hollywood, Calif. Why? Its website is packed with beautiful photos of every cut. "Sometimes people aren't great with the names of the cuts, so the pictures really help," Crary admits. Crary cruises this site for ribeye. "It's tender but not too tender," he says, "and has loads of flavor." meatthebutchers.com

D'Artagnan

The meat you can purchase through D'Artagnan comes from free-range animals who were humanely raised and harvested, making this the right site for a conscientious meat-buyer, says Stefan Bowers, chef of Battalion in San Antonio, Texas. What to get? "They have a porcelet baby pig that's been milk-fed," recommends Bowers. "It's the pork-equivalent of veal and it's just so tender and amazing." dartagnan.com

44 Farms

Another ideal stop for shoppers who care deeply for the welfare of the animals they eat is 44 Farms, says Peter Laufer, executive chef of Willard in Washington, D.C. On this site, consumers can read about its Right Way program, a 12-step protocol that ensures each animal's welfare. And the fair treatment of their animals seems to pay off. "Their beef is so tender and flavorful that you didn't need anything stronger than a plastic fork and knife to cut it," Laufer says. "It practically melts in your mouth." 44farms.com

Ham Cheese Wine Corporation

"When I'm buying high-end meat products, I want to see quality, authenticity and customer service," says Wendy Lopez, executive chef of Tapa Toro in Orlando, Fla. And she says she finds just that at Ham Cheese Wine Corporation. "I buy jamón ibérico, jamón Serrano, and chorizo on a weekly basis [from the website]." she says, adding that not only does the site offer a wide selection of rare and imported meats, but is capable of shipping "large quantities on short notice." ham-cheese-wine.com

Lone Mountain Wagyu

Real Wagyu beef can be hard to find-and that tough search is what makes this site stand out. "Lone Mountain Wagyu is one of the few 100 percent full blood-and not cross bred-Wagyu producers in the states," says chef Jess Pryles. When you shop the site, Pryles recommends adding the ribeye to your cart. "The quality is so superb it's always guaranteed to cook well and be a luxurious treat," she explains. lonemountainwagyu.com

Marx Foods

You'll find everything from beef to yak steaks, bison, elk, guinea fowl, and even pheasant on this online market. Marx Food is well-known for its owner Justin Marx's talent for finding rare, quality eats-think: pansies-and reasonable prices. marxfoods.com