PERDUE: WE WONT LET YOU GO HUNGRY BUT THEY ARE LIMITS

Agriculture Secretary Sonny Perdue, who runs the federal farm subsidy and public nutrition programs, told a Montana audience that “my goal is to have a safety net for all American citizens, producers, but also those who cannot afford (food) … It is not in the heart of America to want to see anyone go hungry.”

Speaking at the Montana Ag Summit in Great Falls, Perdue said spending cuts are necessary to get the federal debt under control. For the coming fiscal year, President Trump has proposed a $193 billion cut – 25% – in food stamp spending over 10 years, a 36% cut in crop insurance, elimination of the major U.S. food aid program, a scaling back of land stewardship programs, and the elimination of many rural development programs.

Neither farm subsidies nor food stamps are intended as a permanent support, said Perdue. “Just as we don’t want everybody on a permanent status on food stamps, we don’t want to become dependent,” said Perdue to the farm conference.

“It is not in the heart of America to want to see anyone go hungry. And we don’t want to see that happen,” Perdue said a few minutes into a 16-minute speech. “Americans are compassionate, and the USDA will be compassionate as we administer that program (food stamps). You know, on the other hand, I don’t think it ought to be a permanent lifestyle, either. It ought to be a hand up and a help out to do that,” said Perdue to applause from his listeners.

Perdue’s remarks about Americans not wanting their neighbors to go hungry were a contrast to Representative Adrian Smith, who represents a largely rural district in Nebraska. During an NPR interview, the Republican replied nutrition “is very important” when asked, “Is every American entitled to eat?” Along with food stamps, “there are a number of ways that we could address that,” said Smith. He did not respond directly to a question if he would vote for a budget that cut food stamps. “I look for there to be a lot of changes made in the House and Senate to the president’s budget,” said the sixth-term lawmaker.

Trump’s proposed budget for the fiscal year opening on October 1 would cut food stamps “through a massive cost shift to states, cutting eligibility for millions of households, and reducing benefits for hundreds of thousands more,” said the think tank Center on Budget and Policy Priorities. “The unemployed, the elderly, and low-income working families with children would bear the brunt of the cuts.”

The proposed budget would tighten the time limit on food stamps for able-bodied adults without dependents and would deny food stamps to many households, now eligible due to a welfare-reform provision, who have larger assets than usually allowed but also high housing and child care expenses. The Center on Budget and Policy Priorities said 1 million people would be affected by the stricter time limit, and an estimated 1 million households would be affected by the change in so-called categorical eligibility. The Trump budget would require states to pay 25% of benefits but also allow them to reduce the benefit per person.
Some 42.3 million people received food stamps at latest count.

The Trump budget also would limit the availability of federal subsidies to lower the cost of crop insurance. The government pays an average 62¢ of each $1 in premium at present. There would be no premium subsidies for revenue policies that include the harvest price option, popular among farmers. This option pays indemnities at the harvesttime price for a crop if it is higher than the guarantee offered when policies were purchased in the spring. Critics say the option can result in windfall payments.

“Insurance is insurance. Crop insurance is a safety net,” said Perdue, to offset flood, hail, disease, or catastrophically low prices, rather than a routine source of revenue.

In saying that federal spending must be cut, Perdue, born to a Georgia farm family, said farmers are skilled in adjusting to the boom-and-bust cycle of agriculture. “I would trust the U.S. farming community better than anyone else to absorb what our needs are budgetarially … We’re going to make sure it’s a budget we can live with but also one that contributes to the vitality, economic prosperity of not only our generation but also generations to come.”

During a panel discussion with Senate Agriculture chairman Pat Roberts and Montana Senator Steve Daines, Perdue listed a handful of trade issues with China, including delays in approval of new strains of GE crops. Eight requests are pending. Without Chinese approval, crops grown from those seeds cannot be sold to China.

“The president is very, very serious about evening up the balance of trade,” said Perdue. “We think China needs to buy more.” China is the No. 1 market for U.S. farm exports, forecast to buy $22.3 billion of U.S. products this fiscal year while shipping $4.3 million of its ag exports to U.S. buyers. Overall, China runs a large trade surplus with the U.S. BY CHUCK ABBOTT.

WHEAT FUTURE LITTLE CHANGED OVERNIGHT, ETHANOL PRODUCTION BACK UP AS USGC TOUTS BIOFUEL.

1. Wheat Little Changed as Investors Weigh Favorable U.S., Wet Canada Weather
Wheat was little changed in overnight trading, along with corn and beans, as investors weigh dry weather in the U.S. that will aid harvest of winter varieties in the U.S. against wet weather in Canada that’s slowing planting of spring crops.

Dry weather is expected to continue in much of the Southern Plains and eastern Midwest as growers begin to harvest in parts of Texas and Oklahoma, where 100% of winter wheat is headed. That’s weighing on prices as traders know a lot of wheat is about to hit the market.

In Canada, however, spring wheat planting may be delayed due to inclement weather, according to Commodity Weather Group.

Wheat futures for July delivery fell ½¢ to $4.28½ a bushel overnight on the Chicago Board of Trade. Kansas City wheat added ¼¢ to $4.31 a bushel in Chicago.

Corn futures for July delivery was unchanged at $3.70½ a bushel overnight.
Soybeans rose ¾¢ to $9.13 a bushel in Chicago. Soy meal gained 80¢ to $298.30 a short ton, and soy oil lost 0.19¢ to 31.09¢ a pound.
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2. Ethanol Production, Stockpiles Rise Slightly Last Week; Grains Council Touts U.S. Biofuel

Ethanol production in the U.S. bumped back up, albeit only slightly, and inventories of the biofuel rose in the week that ended on May 26, according to the Energy Information Administration.
Output has been pretty steady the past few weeks, hovering just above 1 million barrels a day, on average, for the past four weeks. Production last week totaled 1.02 million barrels, nearing the highest level since March set two weeks ago and up from 1.01 million the prior week, the EIA said in a report.

Inventories, meanwhile, rose to 22.763 million barrels, up from 22.684 million a week earlier, according to the government.

As with production, stockpiles of the biofuel have been basically unchanged for the past several weeks, not fluctuating much since the start of the year.

The U.S. Grains Council (USGC) earlier this week noted that it’s put on two events to provide information about ethanol to other countries. The USGC  put on a workshop in South Korea to outline the global ethanol market and to tout the benefits of the biofuel including improved air quality and lower greenhouse gas emissions.

South Korea has imported 49.1 million gallons of ethanol so far this year.

The USGC also put on an event in Vietnam, which is set to implement an E5 blending rate for the country’s most widely used fuel grade, the agency said. It will move to E10 by 2020.
While Vietnam expects to source much of its ethanol from local sources, the Grains Council encouraged those in attendance at the event to take a look at U.S. ethanol.

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3. Scattered Thunderstorms Expected to Roll Across Midwest, Though Rain Will Be Isolated

Scattered thunderstorms are expected to make their way across eastern Nebraska into western Iowa today, but it’s unlikely any will be severe, according to the National Weather Service.

Thunderstorms are also possible Saturday as a cold front moves into the area, the NWS said.
In parts of central and eastern Iowa, there’s a slight chance of isolated or scattered thunderstorms in much of the region, though the odds of rainfall are slim in most areas, according to the agency.
Moving east, it’s much of the same with “limited” thunderstorm risk for the weekend, the weather service said.

The biggest issue right now is continued flooding along the Mississippi River and its tributaries stretching from northern Missouri all the way into Louisiana. The river is receding in many areas, but it still remains above its banks in some lower-lying areas. BY TONY DREIBUS.

WHEN A FAMILY OWNED ELEVATOR GOES BELLY UP:BUILDING A BETTER SAFETY NET.

In part three of this four-part series, we look at efforts to update Minnesota legislation in the aftermath of the 2015 Porter Elevator bankruptcy.

It’s not an issue until it affects you. It’s a harsh reality that a number of Minnesota farmers have come to realize with the recent folding of the Porter Elevator in Porter, Minnesota.

As unsecured creditors, farmers who delayed payment or received a bad check for grain sold to the elevator were last on the list when it came time to collect what they were owed.

Leon VanDerostyne, one of the nearly 90 farmers affected, not only received a bad check for his corn but had also delayed payment on his soybeans. While he could make a claim against the $125,000 state bond the elevator had, it didn’t come close to covering the almost $150,000 he was due. When all was said and done, VanDerostyne was only able to recoup about 20% of what his original paycheck should have been for those commodities.

“As we saw with the Porter Elevator bankruptcy, there is serious concern that farmers may be left in limbo without any confirmation they would receive payment for grain sold or credited to the elevator,” says Chris Swedzinski, a Minnesota state representative. “As a farmer myself, I understand the problem that the Porter incident presents.”

Under the current legislation, Minnesota state bonds are calculated based on the gross revenue of an elevator. Because the Porter Elevator’s annual revenue was between $12 million and $24 million, it was only required to have a $125,000 bond (Minnesota statute 223.17).

According to Nick Milanowski, the Minnesota Department of Agriculture (MDA) received $2,001,042.45 in claims against the bond 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 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.”

The Legislation History

Minnesota’s first legislation regulating the relationship between elevators and farmers was enacted in the late 1800s. Its main purpose was to try to offset a farmer’s loss should an elevator become insolvent. While there have been changes to the legislation through the years, many believe it has failed to keep up with modern agriculture.

“The statutes were passed when we had small elevators and grain markets didn’t move very much,” says Kevin Stroup, an attorney with Stoneberg, Giles and Stroup, in Marshall, Minnesota. “Today, we have large elevators handling huge dollar amounts and markets that move in much bigger swings. The current system is not set up to cover all of the gyrations and risk.”

This isn’t the first time the legislation has come under fire. A paper written in 1987 by Todd Gillingham, Mitchell Hamline School of Law, cited the increasing number of elevator bankruptcies and outlined the magnitude of the problem. During the 1980s farm crisis, when farmers were struggling to stay solvent, they also had to worry about their local elevator going under, he stated.
His argument for change mirrors what is being heard today. “While some modifications have been made to the legislation through the years, the statutes have failed to keep pace with modern agriculture and its accompanying financial problems,” writes Gillingham.

USDA’s Ned Bergman says that from around 2005 to 2012, when commodity prices were generally good, issues like this were few and far between. In fact, their records show that no elevators licensed under the USDA’s Warehouse Act filed for bankruptcy from 2007 to 2012. Today, the department sees one about every 18 months. Other recent bankruptcy and liquidations include:

• In 2014, Texoma Peanut Company in Madill, Oklahoma
• In 2013, G&R Feed & Grain Co. in Portsmouth, Iowa   

“An elevator going bankrupt is obviously something you don’t have to worry about when the ag economy is good, but it is something you have to be aware of when times are bad,” says Swedzinski.

A Call for Change

In an effort to better protect farmers, Swedzinski introduced House File 3186 on March 16, 2016. The bill was coauthored by six other members of the House of Representatives. Senator Gary Dahms authored a companion bill, Senate File 3161, which was heard on March 23, 2016.
House File 3186 would do the following:

1. Repeal the sales tax on grain bins beginning in 2019.
2. Establish a grain credit indemnity program that would compensate farmers if a grain elevator files for bankruptcy and is unable to pay for outstanding payments to farmers. The indemnity program is funded using a portion of the sales tax on grain bins.
3. Direct the commissioner of agriculture to implement a gross receipts sales tax on grain bins in future years – after the sales tax is eliminated in 2019 – if the grain credit indemnity program account is anticipated to be less than $2,000,000. The gross receipts tax turns off if the account will be above $6,000,000. A farmer would get paid up to 80% of what he is owed up to $280,000.
4. Increase bond amounts for licensed grain buyers, particularly for those who purchase larger amounts of grain. For example, the bond amount for an elevator that had revenue similar to the Porter Elevator would increase from $125,000 to $500,000.

A retroactive date of January 1, 2015, was also included in the bill. This would allow farmers impacted by the closing of the Porter Elevator to receive payments that were due in January 2016.
“The proposed legislation is modeled after a program in North Dakota,” Swedzinski notes.
In general, states have either indemnity funds or bonding programs. North Dakota has both.
“Several years ago, there was an elevator insolvency where the vast majority of claimants were credit sales,” says Konrad Crockford, director of compliance, North Dakota Public Service Commission. “Once a farmer converts a scale ticket into a credit sale contract, he no longer has any protection under the elevator’s bond. The legislature decided to put some protection in place to help offset any future losses.”

Its bond program has two parts: the grain warehouse licensing and bonding program and the grain buyer licensing and bonding program.

“North Dakota licenses warehouses (country elevators) for storage and requires bonding, with a minimum bond of $50,000 up to a maximum of $2 million. The minimum-bond requirements are assessed from a bond schedule based on storage capacity,” he explains. “We also take into account a facility’s throughput. If the annual throughout is seven times the actual physical capacity, we require an additional amount on top of the normal bonding amount.”

In addition, a facility that has been licensed for less than seven years requires a larger bond because it’s seen as high risk. For example, he says a facility licensed for less than seven years that has a million-bushel capacity would require a $455,000 bond. A facility licensed for more than seven years with the same capacity would need a $350,000 bond.

A grain buyer license can be either facility based or issued to a roving grain buyer. The bond amount depends on average sales over the last three years for facility-based and projected annual purchases for the roving grain buyer license. “A facility-based grain buyer would be a grain warehouse that has a federal license but is required to have a state license so it can buy grain,” says Crockford.
The second program is the credit sale contract indemnity fund.

“This fund was established in 2003 to cover credit sale contracts, which is any contract where payment is made more than 30 days from delivery,” says Crockford. “It pays 80% of a claim, up to a maximum of $280,000 per farmer.”

The fund is financed by farmers who are assessed $2 per $1,000 on a credit sale contract sale. Originally, the fund had a $10 million cap. At that point, the assessment stopped until the fund fell to $6 million. In 2007, the maximum was lowered to $6 million, and the minimum was dropped to $3 million.
“We haven’t been collecting that assessment since 2008,” he says. “When that fund gets down to $3 million, it will turn back on.”Ultimately, Minnesota’s proposed bill didn’t pass.

“If it works in North Dakota, I don’t understand why it wouldn’t work in Minnesota,” says VanDerostyne. “If it’s a question of cost, I believe the basis would be widened to offset the cost of the indemnity fund, which would ultimately come back to the farmer.”

“There’s not an easy fix when you’re dealing with trying to create accounts that are going to cover a farmer’s losses in situations like this. We got a lot of resistance on both the indemnity fund and raising the bond amounts,” Swedzinski says. “We’re going to work with stakeholders to come up with a better funding mechanism and will reintroduce it later this year.”

To see what type of producer protection your state has in place, visit The Association of Grain Regulatory Officials’.
Bob Zelenka, Minnesota Grain and Feed Association, says one thing people need to understand is that bonding is not insurance.

“Bonding is a screening mechanism,” he explains. “Essentially, the third party that is providing the bond is the one that’s doing the in-depth analysis of a facility and determining if that risk is manageable. Ultimately, it’s how it is determined whether to provide a bond or not. If everybody does their job correctly, there shouldn’t be any losses.”

Raising the bond amount, says Al Kluis, will not solve the underlying issue.
“All that raising the bond does is pass the increase on to legitimate elevators,” says the grain commodity trader and market analyst. “These elevators are dealing with big numbers. Whoever was auditing the Porter Elevator should have realized there was an issue. Why have audits and pay fees if a problem like this is not caught? Auditing, to me, is where the buck stops.”

“If you’re a publicly traded organization, your books are made public and you can see what kind of condition the company is in,” Swedzinski says. “When you’re privately held, like Porter was, you only have to show what you want people to see. You can paint an awfully rosy picture when in reality, you’ve got some deep, dark secrets to hide.”

As a federally licensed warehouse, the elevator was required to submit an audit or review level financial statement annually to the deputy administrator for commodity operations (DACO), and it must correspond with the warehouse’s fiscal year-end. In addition, a warehouse has 120 days from fiscal year-end to submit the statement. As the FSA designee, the DACO is responsible for administering the provisions and regulations of the U.S. Warehouse Act to elevators. This includes the acceptance of applications such as financial statements, the issuance of warehouse licenses, and conducting warehouse examinations for compliance purposes.
According to the licensing agreement for grain and rice warehouse operators, those financial statements, at the very least, must include (1) a balance sheet; (2) a statement of income (profit and loss); (3) a statement of retained earnings; (4) a statement of cash flow; and (5) notes to the financial statement. A detailed list of company-owned inventories, including unpaid grain must be included in the notes. 

In addition, those required documents had to be reviewed or audited by a certified public accountant or an independent public accountant, as approved by the DACO.
The operator of the elevator also had to certify, under penalty of perjury, that the statements submitted, as prepared, accurately reflected the financial condition of the elevator.

The review of financial statements is done by commodity operations financial reviewers located in FSA’s office in Kansas City, Missouri. The reviewers are trained specialists and technical experts. A USDA spokesman says the Porter Elevator’s fiscal year-end was August 31, and the business has 120 days from that date to submit the statement. The last statement it submitted was reviewed by FSA financial reviewers in November 2014, which reflected close of business as of August 31, 2014. Because the elevator was licensed under the Warehouse Act, its financial statements are considered confidential and are not available from the USDA as a public record.

In addition, warehouse examinations are performed by warehouse examiners who conduct inventories and assessments of grain in storage, review grain records, compare inventory results to book records, review operating procedures, and randomly test records of the licensed warehouse. They do not review the financial statement of the licensed warehouse because of the specialized technical skill required and the time required to assemble a factual statement that is prepared according to generally accepted accounting practices (GAAP). According to the USDA spokesperson, the last FSA warehouse examination took place on February 12, 2014.

At the state level, the Porter Elevator was not required to file annual statements with the Department of Agriculture.

“The federal license is solely executed by the USDA, and has no coordination with the state or its required documents,” says Milanowski. “Statute 223.17 states that the commissioner may require financial statements, and if they are requested, then outline the standards it must meet.”
It was, however, subject to inspections.

“The last exam from a state examiner was on November 5, 2015. The elevator’s obligations were evaluated as it relates to its grain buying license,” he says. “At the time of inspection there was no indication, based on its daily position report and other requested documents, that the Porter Elevator could not meet its grain buying obligations.”

With what seemed like solid checks and balances in place, many were left scratching their heads over what went wrong.

“This is not the old days where grain moved 5¢ in a year and there’s not much risk. Today, grain markets are moving $2 up, $2 down,” says Greg Bucher, an attorney with Stoneberg, Giles and Stroup. “If somebody sells high and doesn’t hedge, they’re not capitalized to cover these losses. Grain elevators are operating on a fairly thin margin. They don’t make enough money to cover unhedged positions if there’s a big movement in the market.”
It also begs the question – were there signs?

“The financial troubles brewing at the Porter Elevator were well hidden,” says Kluis, who works with farmers who did business with the elevator. “I’ve been in business for 40 years. I’ve heard rumors in the past that a company was going to go under and then it went under. There were no rumors with the Porter Elevator. They were just done.”

“When it went down and we started making calls, it was clear from comments by creditors that they’d been in serious financial trouble for a long time,” says Stroup.

“I think there were some farmers who could have and should have seen the signs, but they chose to stick with it because of the history they had with the owners,” says Zelenka.

“How are farmers expected to see the signs when an audit didn’t show that something was wrong?” questions VanDerostyne.

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

Unfortunately, they were too comfortable. But hindsight is 20/20. What matters most going forward is ensuring that farmers do their due diligence.

“Farmers need to have a good sense about who they’re doing business with and understand that business as best they can because you can only do so much with regulations and legislation,” says Zelenka.
In the final installment of this four-part series, experts share insights on ways farmers can be proactive in protecting their paychecks. Part four will be posted on Thursday, June 8. 

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. BY LAURIE BERDORD.

CORN, SOYABEAN PRICES CLOSE LOWER THURSDAY, WHEAT IS LOWER.

DES MOINES, Iowa -- On Thursday, the CME Group’s farm markets finished off a few cents after the soybean market started the session stronger.

At the close, the July corn futures settled 1½¢ lower at $3.70½; December futures ended 1¾¢ lower at $3.89¼.

July soybean futures ended 3¾¢ lower at $9.12¼, and November soybean futures closed ½¢ lower at $9.17¾.
July wheat futures ended ¼¢ lower at $4.29.

July soy meal futures finished $0.60 per short ton lower at $297.50. July soy oil futures finished 0.09¢ lower at 31.25¢ per pound.

In the outside markets, the Brent crude oil market is $0.11 per barrel lower, the U.S. dollar is higher, and the Dow Jones Industrials are 105 points higher.

Due to the Memorial Day Holiday, the USDA Weekly Export Sales Report will be released on Friday.

Deanna Hawthorne-Lahre, StatFutures cofounder and trader, says that the market sees little change in the big picture.

“There is a whisper of wheat protein level worries in the Minneapolis wheat market working its way into my equations. Kansas wheat quality is what the wheat pros are looking at now,” Hawthorne-Lahre says.

She added, “The soybean market feels horrible, with continued pressure in spite of king hippo-size export business. We blew through a support level at $9.20 per bushel like it wasn’t even there.
For corn, it’s looking like Brazil’s safhrina crop is going to be a beast, she says.

“I’m hearing cash corn numbers out of Brazil that are unbelievably low, so doing some digging,” Hawthorne-Lahre says.

Wheat and corn prices are most likely ‘basing,’ she says. “But I see modest upside and see the markets remaining in trading range unlike the peanut gallery. The jury is still out on beans, but I have a bad feeling about them,” she says.

Wednesday’s Grain Market Review

On Wednesday, the CME Group’s corn market kept its strength, from the first bell, rallying off of yesterday’s Crop Progress Report that indicated a weaker good/excellent rating.

At the close, the July corn futures settled 5¢ higher at $3.72, and December futures finished 5¼¢ higher at $3.91.

July soybean futures closed 3¼¢ higher at $9.16; November soybean futures finished 1½¢ lower at $9.18.

July wheat futures closed ¼¢ lower at $4.29¼.
July soy meal futures finished $0.50 per short ton higher at $298.10. July soy oil futures finished 0.08¢ lower at 31.34¢ per pound.

In the outside markets, the Brent crude oil market is $1.51 per barrel lower, the U.S. dollar is lower, and the Dow Jones Industrials are 47 points lower.

Jason Roose, U.S. Commodities grain analyst, says that the higher trade today is attributed to the USDA’s first crop rating.

“It was disappointing to the corn market. Corn crop ratings were 5% to 7% under trade estimates due to the cool, wet spring, adding premium to prices today. Also, the weak dollar is giving support short term,” Roose says.

Tuesday’s Grain Market Review

On Tuesday, the CME Group’s soybean market closed double digits lower, with the products dropping sharply too.

Investors await this afternoon’s delayed USDA Crop Progress Report.
At the close, the July corn futures finished 7¼¢ lower at $3.67, while December futures closed 6¾¢ lower at $3.85.

July soybean futures finished 13¾¢ lower at $9.12; November soybean futures finished 9½¢ lower at $9.19¾.

July wheat futures finished 8¾¢ lower at $4.29½.
July soy meal futures closed $4.20 per short ton lower at $297.60. July soy oil futures closed $0.18 lower at 31.42¢ per pound.

In the outside markets, the Brent crude oil market is 8¢ per barrel lower, the U.S. dollar is lower, and the Dow Jones Industrials are 43 points lower.

Jack Scoville, The PRICE Futures Group’s senior market analyst, says the markets are reacting to the weather turning drier and less crop-threatening.

“So, we are selling everything off today. Forecasts for more rain at the end of the week, but crops in many areas are looking good and have emerged. The soybeans are not all up, but corn plants are up,” Scoville says.

Al Kuis, Kluis Commodities, says the markets will keep a close eye on this afternon’s USDA Crop Progress Report.

“The USDA Crop Progress Report Tuesday afternoon will have the first crop conditions report. That is likely to show conditions at 67% good to excellent compared with 72% to 74% good to excellent the last two years. Watch these four key states: Ohio, Indiana, Illinois, and Michigan,” Kluis stated in a daily note to customers.

Meanwhile, eastern Corn Belt farmers continue to report more rain, delaying replant efforts to their cornfields and delays in spraying fields for weed infestations.
On the demand side, the USDA announced fresh sales Tuesday.
Private exporters reported to the U.S. Department of Agriculture export sales of 130,000 metric tons of soybeans for delivery to unknown destinations during the 2016/2017 marketing year.
The marketing year for soybeans began September 1. BY MIKE MCGINNIS.

BPI AND ABC NEWS GO TO COURT OVER PINK SLIME.

Jury selection starts this week for a lawsuit filed by Dakota Dunes-based Beef Products Inc. in 2012 against ABC News and correspondent Jim Avila over pink slime. BPI is seeking $1 billion in defamation charges, claiming that ABC made its product — beef that has had the fat removed and then ammonia gas added to kill bacteria — seem unsafe to consume.


The company claims the effects of ABC’s coverage led to the closure of three plants and the letting go of at roughly 700 employees, as demand went from about 5 million pounds per week to fewer than 2 million pounds per week.


To win, “BPI must show that ABC and Avila made defamatory implications or statements, and that they either knew the statements were false or acted with reckless disregard for the truth. The company also must prove that ABC hurt BPI,” says Argus Leader.


But ABC has refused to back down from its reporting, saying it never suggested that the product wasn’t safe to consume or an actual beef product. “ABC’s attorneys have also argued that the term ‘pink slime’ accurately describes the texture and color of lean, finely textured beef,” says Argus Leader.

The case is expected to last through July. BY CHUCK ABBOTT.

TOP 10 CONCERNS OF YOUNG FARMERS.

At any roundtable of young and beginning farmers, a few common themes seem to bubble to the surface as folks share stories and concerns. Here are 10 of the biggest top-of-mind challenges, along with some ideas on how to deal with them.

1. when land is not available

An important lesson for beginning farmers is this: “Sometimes you’re trying to solve the wrong challenge,” says Carl Horne, vice president of customer solutions for Farm Credit Services of America/Frontier Farm Credit. “The land issue is outside of your control, let alone facing the obstacles of starting an operation.” Feel like you can’t compete on price? Fortunately, there are many more factors for landowners to consider, says Horne. “Determine what you can bring to the market. What makes you competitive?” Do you maintain clean, cared-for equipment? Are you a professional presence in the community and well respected? Are you fair and trustworthy? Point out that you will care for the land, maintain the property, make improvements, and keep clean, healthy fields. “Outline the real value proposition you bring to a business deal,” says Horne. “At some point, price comes in to factor, but if you’ve done your homework, you are bringing much more than dollars to the table.”

2. when Access to capital is limited

Establish a viable business plan first, says Horne. “This is the first thing within your control. Simple business planning, combined with careful financial forecasting of how that business plan plays out, will open up options for financing.”

3. when speaking with landowners is difficult

You must be transparent about the financial performance of the business deal and willing to be fair in negotiations, says Horne. “It is equally important to learn about what is important to the potential business partner. This doesn’t have to be a stealthy research operation. Just ask, ‘What is important to you?’ Or say, ‘Tell me how you envision our communication will work.’ ” Be consistent in your style and frequency of communication and how you keep the landowner up to date and informed.

4. when you get no help from USDA

With budget cutbacks and staff shortages at USDA offices, this probably won’t get better. Many beginning farmers are growing alternative crops and producing food for direct sale to consumers, grocery stores, or restaurants. Look for expertise from other farmers, Extension, and private consultants. Attend meetings to learn about direct marketing from farmers who are making a living at it. Use social media to reach out to the ag community with questions.

5. when finances are a struggle to manage

Align your financial management with your farm strategy. “This comes back to business planning and strategy development,” says Horne. “Do that first, every time. Everything should be aligned off of that. Your financials are the result of every decision you make.”
Whether the change was in your control or not (e.g., commodity market movement), the choices you’ve made and the risks/rewards you have exposed your operation to are reflected in your balance sheet and income statement, he says. If you have goals, dreams, and hopes, those require capital or cash flow, says Horne. “Make sure your daily decisions are aligned with those goals.” If a future goal in your strategy (like buying ground) depends on having a certain amount of financial strength to be able to execute, then you need to manage for that.

6. when you’re not well connected

The ability to make good decisions, consistently and over time, is a skill that separates successful farmers from the rest of the pack, says Horne. “The challenge for young farmers is to use their network to help offset their lack of experience.” Leverage that expertise to help you make better decisions. Speak up and be aggressive in making connections. “Your voice matters in local, regional, and even national issues,” says Horne.

7. when you don’t have any time off

Everyone needs vacations and time off – and more than just a weekend, counsels the Beginning Farmer Center at Iowa State University (extension.iastate.edu/bfc). Families should decide each year how much time off is to be provided. Try to keep personal lifestyles out of the farm operation and separate business from social life. Participate in off-farm activities that don’t involve other family members.

8. when you’re taking over the farm but don’t have the same goals as your parents

All parties involved must share a common vision. “It is important to start the transition plans early and not wait until the last minute,” says Charles Brown, farm management specialist, Iowa State University Extension & Outreach. It can take two to four years and maybe longer to develop and implement a successful transition plan, he says. “Too many times the plans are rushed into and then fail because of improper planning. The main key is communication.” For example, the younger generation wants to expand the farm, but the parents’ goal is to eliminate all farm debt. Set a time each month to discuss business affairs, goals, and objectives.
The University of Minnesota Center for Farm Financial Management (cffm.umn.edu) has two web-based programs, Ag Plan and Ag Transitions, that can help beginning farmers and retiring farmers develop business and transition plans.

9. when Dad won’t get out of the way

If Dad’s goal is to take things easier, this may mean you do the physical labor while Dad continues to make the decisions, and friction develops. The key is to develop your management ability while protecting your parents’ interests. One approach is to make Dad the general manager. That way, you are involved in major decisions, but final authority rests with the general manager. Another approach is to give each party an equal voice with disagreements settled by outside counsel.

10. when you don’t have all the skills you need

Everyone has individual interests and skills. Determine your strengths, such as marketing, finance, or production. You might love record keeping and financial management, but not marketing. Hire a marketing consultant. BY BETSY FREESE.

OYO STATE EMBRACES FARMING TO STAVE OFF ECONOMIC CRISIS.

As a result of the persisting economic woes facing the country, the Oyo State Government has decided to diversify its economy into farming and mining with a view to improving the financial status of the state. To ensure a successful diversification of process, the government recently organised an Agriculture Initiative Stakeholders’ Consultative Forum, held at the House of Chiefs, Parliament Building, Ibadan, during which the state governor, Senator Abiola Ajimobi, attributed the pervading economic woes to the country’s failure to save for a rainy day during the oil boom, worsened by neglect of agriculture. He disclosed that the forum was aimed at getting stakeholders in his administration to diversify the economy of the state through the exploration of aggressive, all-inclusive and sustainable agricultural value chain.


According to him, the dwindling allocation from the federation account owing to the fall in the price of crude oil in the international market had called for massive investment in farming.
“We did not save for the raining day when there was oil boom in the country. We relied heavily on income from oil. But we have all been jolted into reality now that a barrel sells for an all-time low of $30. Nigeria has depended so much on oil which has now lost its value at the international market. So we have to look for alternative sources of revenue through aggressive investment in agriculture.
“The fall in oil price has done more good than harm as it has opened our eyes to the effectiveness of mechanised farming as our saving grace,” he said. NEWS FROM AROUND THE WORLD.

HOW DOES LAND TENURE AFFECT AGRICULTURAL PRODUCTIVITY? A SYSTEMATIC REVIEW.

A lot of us who may come from the West assume that land rights certification, registration or titling are important attributes of any kind of land tenure or property rights system. We think of formal recording of land rights as essential to assuring farmers that they have land tenure security, an important enabling condition to agricultural development.

Economic theory and common sense tell us that if a family is going to invest in their property, they need to have a clear expectation that, far into the future, the kinds of sacrifices, investments of labor, capital, materials, into that land, and the benefits that come from those investments, will accrue to them. There’s a very simple relationship between land tenure security, property rights security, and investment: Theory predicts positive outcomes, and these are often observed practice, where people have clear tenure security.

However, in many developing countries, the kind of formal certification, property rights and titling systems that we are familiar with in wealthy countries often do not exist. A lot of farmers farm on land owned by the state. In Africa particularly, a lot of farming—up to 90 percent—is done on land held under customary tenure regimes, where land rights are not certified formally. Under customary tenure, people gain access to land as a social right, granted by virtue of their membership in a community.

THE QUESTION

So in 2013, the UK Department for International Development (DFID) asked me and a group of scholars to pull together a team of other researchers and graduate students to do a systematic review on the effects of efforts to “formalize” land rights through certification or titling on changes in agricultural investment and productivity in the developing world. Theory would predict that where farm land was previously unregistered, levels of investment and productivity would increase markedly after certification or titling.

Part of the development discourse over the past 30 to 40 years has been that African agriculture will not take off unless people have clear tenure security, and there’s an underlying assumption that this is delivered through land-rights certification or titling, as in Latin America and parts of Asia. So, in light of the fact that over the past 30 to 40 years there have been a number of efforts to convert non-formally tenured regimes into formally tenured regimes, based on certification by the state, the question that DFID asked us to look into was, What have been the effects with respect to the expected increases following land-rights certification and investment in productivity? In farmer incomes? In flow of credit?

That was the topic of our systematic review. Our inclusion criteria was limited to studies that were based on randomized control trials—randomized samples of farming households in an area that had received a treatment, which was, for example, land-rights certification, in comparison to a community where we were able to control all other factors apart from the fact that the community had not received land-rights certification. We wanted to look at, empirically, the effects of the certification intervention on investment, productivity of agriculture, farmer family incomes, and access to credit.

THE FINDINGS

Those who have conducted systematic reviews know the pain. The graduate students looked at 25,000 titles on this subject and reduced that to a review of 1,000 abstracts, which yielded 100 papers that we looked at in detail. Only 20 studies met our inclusion criteria. This is a huge question for the development world, for economic theory, a whole host of issues—and only 20 studies met a rigorous standard of empirical research design.

The 20 studies fell in nine countries: five in Latin America, five in Asia, and 10 in Africa.
In the Latin American and Asia cases, after certification or titling, there were significant gains to productivity of between 50 and 100 percent, and strongly positive gains to investment and income following tenure recognition, typically titling. However, in the Africa cases, there were weak or modest gains to productivity—between zero and 10 percent gains to productivity—and in investment and income following certification (though in most cases there were still positive gains)
Another important finding was there was no or weak discernible credit effects anywhere. Most studies—and we were looking very carefully through a gender lens with respect to differential effects on men and women—failed to aggregate effects of tenure recognition on women, except for two quantitative studies that identified positive effects (in Ethiopia and in Rwanda).

WHY DID RESULTS DIFFER?

So then the question becomes, Why are these significant gains in Latin America and Asia, and these relatively weak or modest gains in Africa? We have three hypotheses that we’re exploring through further research.

The first hypothesis is what we’re calling the role of pre-existing institutions—in Africa specifically, customary tenure. Customary tenure systems provide access to land as a social right by virtue of one’s membership in the community. An indicator of the security of the tenure is that land can often be inherited by other family members, but it can’t be sold, typically. Customary tenure often provides high levels of tenure security.

Customary tenure systems generally provide poor people in Africa access to land, free of charge, and once again as a social right; this is a pervasive institution in Africa. The designers of certification and titling programs, we hypothesized, were likely underestimating the tenure security of people who held those lands. And so when those land rights were certified, the kind of productivity gains or investment gains that would have been projected, assuming prior tenure insecurity, didn’t happen. Those assumptions were misplaced.

Another factor is what we’re calling the wealth effect: Household resources and income in Africa are much lower among poor farmers in comparison to poor farmers in Latin America and in Asia. So, if you’re going to do something with your land, it’s just not about land as an asset. It’s about labor, capital, having the income to invest in your farming enterprise, and the generally low levels of income among African farmers constrain their ability to make better use of their land. That’s hypothesis number two.

The third hypothesis is what we’re calling the effects of complementary public investments. Programs to secure land rights are best treated as one element in comprehensive agrarian reform programs. Effective reform is not about providing secure land rights to people. It’s also about providing affordable access to farming inputs and markets, and investment in roads, cooperatives, farming training, and so on; investments that enable farmers to capitalize on their secure land rights. Levels of public investment in rural areas in Africa are, we believe, much lower than they are in Latin America and Asia.

One of our arguments is that, when talking about land-rights certification or formalization in Africa, you really have to approach it as a package of investments, and you have to account for this wealth effect.
Our plan is to explore more deeply what might explain the weaker responses in Africa. We believe the hypotheses I’ve noted provide a good starting point. BY STEVEN LAWRY.

GOV. DICKSON ON AGRICULTURAL DEVELOPMENT IN BAYELSA

Bayelsa State has comparative advantage in large-scale production of rice, palm produce, aquaculture, banana, plantain, cassava and vegetables. The state has invested in mega aquaculture projects with two Israeli companies, which are presently under construction to produce 3,000 tons of fish annually. Our vegetation is suitable for three cycles of rice production. We have major rice farms of our own which produces the Restoration brand of Rice.


Currently, we have 4,000 hectares of rice farm at Peremabiri, 5,000 hectares at Isampor and 2,000 hectares at Kolo. We have the capacity to grow and produce rice that will feed the entire Bayelsa State, Nigeria, West Africa and for export oversea.


We have established in conjunction with Ostertrade Engineering & Manufacturing KFT/DPP International APS, a Hungarian/Danish consortium a cassava starch processing plant with a capacity to produce 600 tons of industrial starch per annum and an out growers scheme of 600 hectares cassava farm. We have concluded a seed multiplication farm on a 40 hectares at Ebedbiri for this cassava farm.
The state has a palm plantation of 1,200 hectares with a potential to grow the palm plantation to 2,000 hectares at the current location. Similar opportunities abound across the state to increase the palm production capacity. Bayelsa has the capacity to be like Malaysia and Indonesia in oil palm production.

We therefore invite investors to partner with us in the Agriculture sector.In addition, Bayelsa is the natural home of organic banana and vegetables in Nigeria. That is why we are building the Cargo International Airport to prepare the state for the export market. From Bayelsa to anywhere in Europe is less than six hours in flight time.With the airport in place and the harnessing of all the state’s agricultural potentials, Bayelsa will be able to feed Nigeria, Africa and indeed, the rest of the world. BY SAINT MENPANO.

CORN, BEANS LOWER OVERNIGHT: TRADERS WAIT TO SEE IF DEMAND SHIFTS TO SOUTH AMERICA.

1. Corn, Soybeans Lower Overnight as Dry Weather Allows Farmers in Fields

Corn and soybean prices were lower on speculation that a round of dry weather this week will allow farmers to continue planting.

Little rain is expected in much of the Midwest this week where only slight chances of precipitation are expected, according to the National Weather Service.

That should allow growers to get into fields and accelerate seeding. The Department of Agriculture will release its Crop Progress Report today, one day later than usual due to the Memorial Day holiday.

As of last week, however, about 84% of corn was planted, only slightly behind the five-year average pace, and 53% of soybeans was in the ground, just ahead of the average, according to the USDA.

Corn futures for July delivery fell 3½¢ to $3.70¾ a bushel overnight on the Chicago Board of Trade.
Soybeans declined 1¾¢ to $9.24¾ a bushel in Chicago. Soy meal gained 60¢ to $302.40 a short ton, and soy oil lost 0.12¢ to 31.48¢ a pound.

Wheat futures fell 3½¢ in Chicago, while Kansas City futures declined 3¾¢ to $4.33¾ a bushel.

2. All Eyes on Importers to See if They Shift Purchases to South America

Traders are starting to watch importers to see if they’re shifting to South America and away from U.S. supplies as tends to happen around this time of year.

The bad news/good news for U.S. growers is that prices are low. That’s bad in that prices are low, so obviously they won’t get as much for their crops. It’s good in that it gives U.S. supplies a fighting chance against the Brazilians/Argentinians.

Growers in Argentina are about 40% finished with their corn harvest, according to Tomm Pfitzenmaier, the president of Summit Commodities, a brokerage in Des Moines, Iowa, and it’s not like in years past when they didn’t have the infrastructure to get their grain to ports. Because that’s less of an issue these days, the corn they’ve harvested is ready (at least some of it) for export to overseas buyers.

The other bit of good news for U.S. farmers is that most of the corn that’s harvested early in the country is used domestically, so there still may be some time for U.S. exporters to fill needs.

The calendar flips to June this week, and it’s more along the late-June/early-July time frame that South American exports really start to take market share from the U.S., Pfitzenmaier said, so it’ll be interesting to see when importers start to look south – if they do.

Rest assured, overseas buyers will look south at some point, but as we all know, it’s really going to come down to price.

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3. Midwest Mostly Dry Today With Some Spotty Storms Possible From Kansas Through Illinois

Little rainfall is expected in much of the Midwest today says the National Weather Service, though there’s a small chance that storms could pop up in Missouri and Illinois.

“There is a chance of thunderstorms across much of (Illinois) this afternoon and early evening,” the NWS said in an early Tuesday report. “Isolated severe storms are possible across parts of central and southeast Missouri. The primary threats will be damaging wind gusts.”

In eastern Kansas through much of Missouri, strong storms have a chance of developing, the agency said.

Any storms will be “isolated” but severe, the NWS said.
“Activity will be spotty and brief, though strong winds and large hail are possible with any storms that may develop,” according to this morning’s weather report.
Get involved in the discussion in Marketing Talk. BY TONY DREIBUS.