Corn

Rust in the Ration: How to Combat Southern Rust’s Impact on Corn Silage

Thu, 04 Sep 2025 14:04:47 GMT

With the warm and wet conditions this season, southern rust is on the rise in Midwest corn crops. It may be time to start considering the impact that could have on corn silage and preparing to adjust rations accordingly. While southern rust is not a direct threat to herd health, it has been shown to lower the nutritional value of silage and can compromise feed quality.

Southern rust, a fast-developing fungal disease caused by Puccinia polysora, does not itself produce toxins, but it weakens the plant and provides the opportunity for other diseases to move in. These opportunists include various Furasium species, which produce mycotoxins (fumonisin and deoxynivalenol) that can be harmful in feed.

Southern Rust and Corn Silage Quality

Southern rust is known to impact corn silage quality. A study from the University of Florida showed increasing rust infestation resulted in increased dry matter and fiber fractions, but that dry matter digestibility decreased by 13%. Further, high rust silages had lower neutral detergent fiber digestibilities than medium and no rust silages. Southern rust also affected the concentrations of lactate and volatile fatty acids, causing both to decrease with increasing infestation. These results indicate decreased nutritive value.

The observed increased dry matter also reduced silo packing effectiveness. If moisture levels are too low at harvest, it is difficult to achieve adequate packing, which leads to poor fermentation and an increased risk of mold growth.

Because southern rust coverage reduces the photosynthetic area of the leaf, grain fill is often hindered, leading to a lower energy and protein content in the silage.

Southern Rust Silage Management

There are a handful of strategies producers can apply to counteract the effects of southern rust:

Adjust harvest time based on moisture content. Southern rust can cause corn to dry down faster than normal. Monitor moisture levels closely to ensure the proper fermentation of silage.
Consider a silage inoculant. Inoculants improve fermentation, and the rapid pH drop can inhibit mold and yeast growth.
Ensure good packing and storage. Pack silage well to limit oxygen exposure and prevent mold growth. Cover bunkers immediately and weigh down coverings thoroughly.

Feeding Southern Rust Silage

To counter the nutritional challenges of feeding southern rust-infected corn silage, dietary supplementation may be necessary.

Prior to inclusion, test all potentially infected silage for mycotoxins. This will allow you to determine the safety of the feed and avoid potential health issues. If mycotoxins are high, the incorporation of a mycotoxin binding agent into the ration will help reduce toxin absorption in the animal’s digestive tract. Additionally, supplementation with antioxidants, such as vitamin E and selenium, could help animals by countering oxidative stress caused by mycotoxins and supporting immune function.

If grain fill was affected and starch levels are low, you may need to incorporate an additional energy course to compensate. Further, poor grain fill could reduce the already low protein content of corn silage, and protein supplementation may be required.

When incorporating infected silage, ensure it is thoroughly mixed into the TMR to dilute potential ‘hot spots’. Inclusion levels of contaminated silage in the feed may need to be limited or removed entirely for sensitive animals, including lactating or breeding animals. Livestock should be monitored closely for symptoms of mycotoxin toxicity, such as reduced intake, weight loss, digestive issues or reproductive challenges. Be prepared to respond if issues arise.

When feeding corn silage infected with southern rust, caution is essential to protect livestock health and performance. The thoughtful use of compromised silage can help minimize risk while maintaining efficiency and animal well-being.

Your next read: Southern Rust Set To Take Big Bite Out Of Midwest Corn Crop?

Chinese Scientist Accused Of Smuggling ‘Potential Agroterrorism Weapon’ Into the U.S.

Thu, 05 Jun 2025 14:39:56 GMT

Two Chinese nationals have been charged with trying to smuggle a fungus, Fusarium graminearum, into the United States.

Yunqing Jian, 33, and Zunyong Liu, 34, citizens of the People’s Republic of China, were charged in a criminal complaint with conspiracy, smuggling goods into the U.S., false statements and visa fraud.

The charges against the pair were unsealed in the U.S. Attorney’s Office for the Eastern District of Michigan, on Tuesday.

The U.S. Attorney’s Office references Fusarium graminearum online as a “dangerous biological pathogen … which scientific literature classifies as a potential agroterrorism weapon.”

Fusarium graminearum causes significant diseases in a number of U.S.-grown food crops, including corn, wheat, barley, soybeans and rice.

Diseases caused include Fusarium head blight (scab) in wheat, and two corn diseases Gibberella ear rot and Gibberella stalk rot , which can lower yield and feed quality of silage corn, according to the Crop Protection Network, a partnership of land grant universities.

Toxins the fungus produces can cause vomiting, liver damage, reproductive defects and mycotoxin-induced immunosuppression in humans and livestock, including cattle, hogs, horses and poultry.

One Scientist Arrested, One Returned To China
The 25-page criminal complaint alleges Liu tried to smuggle the fungus through the Detroit Metropolitan Airport (DMA) in July 2024, so he could study it at a University of Michigan laboratory where his girlfriend, Yunqing Jian, worked at the time.

Jian had been living in the U.S. and working at the university laboratory since 2022.

The roots of the case involving Yunqing Jian, 33, and her boyfriend, Zunyong Liu, 34, stretch back to March 2024. That is when Liu applied for a B2 tourist visa to enter the U.S.

(The Detroit News and Sanilac County Jail)

According to the criminal complaint, Jian and Liu had both previously conducted work on the fungus in China.

Officials further allege Jian received funding from the Chinese government for her research on the pathogen in China. They also claim she is a member of the Chinese Communist Party.

Jian, who was arrested by the FBI, remains in federal custody. On Thursday, her detention hearing was adjourned until 1 p.m. June 13 to allow time for a new defense attorney to get up to speed.

Liu was sent back to China last year after changing his story during an interrogation at the Detroit airport about red plant material discovered in a wad of tissues in his backpack, the FBI says.

The U.S. does not have an extradition treaty with China, which makes Liu’s arrest unlikely unless he returns.

In a statement released on June 3, the University of Michigan said it condemns “any actions that seek to cause harm, threaten national security or undermine the university’s critical public mission.”

“It is important to note that the university has received no funding from the Chinese government in relation to research conducted by the accused individuals,” the university added. “We have and will continue to cooperate with federal law enforcement in its ongoing investigation and prosecution.”

In a statement released on June 3, the University of Michigan said it condemns “any actions that seek to cause harm, threaten national security or undermine the university’s critical public mission.”

(Michigan News Source)

Boyfriend Spills Intentions To Investigators
An article in The Detroit News said Liu told investigators during an interrogation at the Detroit airport he planned to clone the different strains and make additional samples if the experiments on the reddish plant material failed, according to the government.

“Liu stated that he intentionally hid the samples in his backpack because he knew there were restrictions on the importation of the materials,” an FBI agent wrote. “Liu confirmed that he had intentionally put the samples in a wad of tissues so CBP officers would be less likely to find and confiscate them, and he could continue his research in the United States.”

Liu told investigators he planned on using UM’s Molecular Plant-Microbe Interaction Laboratory to research the biological materials, the FBI agent wrote.

“Liu stated that, while he was in the United States, he would have free access to the laboratory at the University of Michigan on some days, and that other days his girlfriend would give him access to the laboratory to conduct his research,” The Detroit News article reported.

Before preventing Liu from entering the U.S. and sending him back to China, the investigators found messages between the couple that indicate Jian previously smuggled biological material into the U.S., the FBI agent wrote.

The messages are from August 2022 and discuss smuggling seeds into the U.S.

Lawmakers Respond To The Criminal Complaint
Attorney General Pam Bondi said in a statement that the Justice Department “has no higher mission than keeping the American people safe and protecting our nation from hostile foreign actors who would do us harm.”

“Thanks to the hard work of our excellent DOJ attorneys, this defendant — who clandestinely attempted to bring a destructive substance into the United States — will face years behind bars,” the attorney general says.

“I can confirm that the FBI arrested a Chinese national within the United States who allegedly smuggled a dangerous biological pathogen into the country,” FBI Director Kash Patel said on Tuesday.

(FBI)

FBI Director Kash Patel addressed the arrest of Jian late Tuesday on X, formerly Twitter.

“This case is a sobering reminder that the CCP (Chinese Communist Party) is working around the clock to deploy operatives and researchers to infiltrate American institutions and target our food supply, which would have grave consequences … putting American lives and our economy at serious risk.”

U.S. Custom and Border Protection, Director of Field Operations Marty C. Raybon says the criminal charges against Jian and Liu are indicative of CBP’s critical role in protecting the American people from biological threats that could devastate its agricultural economy and cause harm to humans.

“This was a complex investigation involving CBP offices from across the country, alongside our federal partners,” says Raybon in a prepared statement. “I’m grateful for their tireless efforts, ensuring our borders remain secure from all types of threats while safeguarding America’s national security interests.”

Your next read: Surveillance State: Game Wardens Sued for Secret Private Land Intrusions in Alabama

Congress Approves CR, Includes $31 Billion in Farmer, Disaster Aid and Farm Bill Extension

Mon, 23 Dec 2024 16:49:35 GMT

With little if any drama like the House, the Senate easily cleared the 118-page continuing resolution (CR) early Saturday morning with a vote of 85-11 (four members did not vote). The measure funds the government through March 14. The CR includes nearly $110 billion in disaster and farmer aid ($21 billion ag disaster and $10 billion in farmer aid), and a one-year extension of the 2018 Farm Bill.

The Senate vote came hours after the House passed the measure on a 366-34 vote, well above the two-thirds majority threshold required under that chamber’s suspension of the rules procedure, with no Democrats voting no along with 34 Republicans. Texas Dem Rep. Jasmine Crockett voted “present”.

Debt Ceiling

GOP leaders dropped a two-year suspension of the statutory debt ceiling that was in a previous CR version and that helped push the bill through both chambers. Democrats opposed inclusion of the debt limit provision, arguing it would make it easier on Republicans next year to cut taxes and ram through other partisan priorities. Cutting the debt limit language was enough to convince Democrats to go along with the stripped-down bill, even though it excluded their priorities contained in an i nitial 1,547-page bipartisan measure .

One ag sector lobbyist said, “Ag groups need to start playing the game… those who always vote no on everything… why not actively oppose them… they don’t support farm bills anyhow.”

Breaking Down the Votes

Here is the list of House Republicans who voted no on the CR that contained $31 billion in ag sector assistance:

House no votes on CR

(House of Representatives)

Some notable representatives who voted against the CR include Nancy Mace (South Carolina), Thomas Massie (Kentucky), and Chip Roy (Texas). The reasons for voting against the CR varied among representatives, with some citing concerns about high levels of spending, lack of reforms, or opposition to giving the current administration additional funding.

Here is the list of Senate Democrats who voted no:

Senate no votes on CR

(U.S. Senate)

Farmer Aid in the CR

This is a breakdown of the $31 billion in farmer assistance via the CR:

Farmer aid breakdown

(House Ag Committee)

Possible Payment Amounts to Farmers

The farmer aid should be available 90 days after the legislation’s enactment. Farm CPA Paul Neiffer estimated per acre payment amounts via the Economic Loss Assistance program based on his knowledge of the provisions.

Possible payments as calculated by Farm CPA Paul Neiffer

(Lindsey Pound )

While USDA will make the final calculations, based on Neiffer’s estimates, producer payments look like this per acre, using the following calculation: (USDA’s Projected Cost of the Crop – National Projected Returns) x Eligible Acres x 26% = Total Payment.

Corn: $43.80
Soybeans: $30.61
Wheat: $31.80
Cotton: $84.70
Rice: $69.66

Neiffer says there is a payment limit of $125,000 dollars, which is down from the $175,00 originally proposed in the FARM Act. He says it’s also key to note with the updated relief, if 75% of your total gross income comes from farming, which includes wages and interest and dividends, then you qualify for the double payment.

Related Story: Poll Results: 71% of Farmers Say Congress Should Approve Economic Aid Before Year-End

House Ag Committee Fact Sheet Details Payments

The House Ag Committee released a fact sheet on the farmer economic assistance that is provided in the current Continuing Resolution (CR), modeled off of Rep. Trent Kelly’s (R-Miss.) FARM Act (HR 10045). There is a list of eligible commodities, a payment formula, administrative provisions, and estimated payment rates.

House Ag panel staffers say please keep in mind that the payment rates in this document are estimates and “almost certain to change slightly once implemented. These rates are the best approximation based on the data cited in text. This does incorporate the minimum payment rate provision. You’ll see that those crops receiving payments via the minimum payment provision have an asterisk.”

The House Ag panel had the Agricultural and Food Policy Center at Texas A&M analyze the impact of the economic assistance provided through this provision. Their findings suggest that the funds will improve ending cash position on their Representative Farm system by nearly 20% by the end of 2025.

Farmer aid

(House Ag Committee)

Your Next Reads:

Poll Results: 71% of Farmers Say Congress Should Approve Economic Aid Before Year-End

Ag Gets Potential Christmas Gift from Congress: Continuing Resolution Includes $31 Billion in Aid for Producers

Get a Rare Look Inside Iowa State University's Advanced Kent Feed Mill and Grain Science Complex

Thu, 10 Oct 2024 20:20:59 GMT

Take a tour through Iowa State University’s Kent Feed Mill and Grain Science Complex, and you’ll encounter state-of-the-art technology advancing the feed industry.

“This is our thermal processing treatment. Our feed is mixed in batches and undergoes heat treatment. The high heat and extended retention time help eliminate salmonella and E.coli, improving feed quality and nutrition,” explains Lexi Lambros, a master’s student in agricultural engineering.

The facility is not a commercial feed mill, but rather a teaching facility located at the edge of Iowa State’s Ames campus.

“We aim to increase student awareness of career opportunities in the broader feed and grain industry. This project is designed to drive that,” says Dirk Maier, Director of the ISU Kent Feed Mill Grain Science Complex.

Valued at $35 million, the project began in 2015 and has since developed into a fully automated system, providing students with hands-on experience, while also being precisely placed.

In 2023, Iowa ranked as the top corn producing state in the country, churning out 2.5 billion bushels of corn. What happens with all the crop harvested, and how it’s processed, is something they take seriously at Iowa State. September marked the one-year anniversary of ISU opening the Kent Feed Mill Grain Science Complex, a state-of-the-art teaching, research and extension grain facility, which is truly one-of-a-kind.

Automation and Scale at the Facility

“When you sum it all up, we have around 3,000 input-output points. These include sensors that control gates, motors, valves, and detect temperature and vibrations,” Maier states.

The size of the feed mill is comparable to commercial operations, though it runs on a smaller scale. Instead of processing 100 tons per hour, it handles five tons per hour, mirroring industry operations to train students effectively.

Current Capacity and Expansion Plans

With a monthly processing capacity of 1,000 tons, the facility is currently processing 200 tons weekly.

“We’re getting close to achieving our goal of processing 1,000 tons per month, and we’re on the verge of reaching that capacity,” Lambros says.

Iowa’s Prime Location

Situated in central Iowa, the facility is located in one of the world’s largest food production regions.

“If Iowa were a country, it would rank as the fourth largest corn producer globally,” Maier explains.

The facility supports the industry’s demand for future employees, training students for roles in feed mills, livestock, and poultry facilities.

Hands-On Learning for the Next Generation

The facility doesn’t focus on feed formulation, but students learn how to program different rations for various animals.

“We ensure the right ingredients are in place for the correct rations, following the instructions of animal nutritionists,” Maier adds.

As part of both the College of Agriculture and Life Sciences and the College of Engineering, students get to apply classroom lessons in a practical setting at the grain complex.

A Unique Educational Opportunity

“There are few institutions offering this kind of hands-on learning in feed science and technology, particularly in management and animal nutrition,” Maier emphasizes.

For Lambros, the facility offered a personal journey. As a second-year master’s student in agricultural engineering, her interest in food science shifted her focus.

“With my engineering background, I’m passionate about food science on a large scale, and I want to contribute to feeding the future by designing and producing food products,” she says.

After earning a bachelor’s degree in chemical engineering, Lambros sought a new challenge in agriculture, which she found through this program.

Expanding Opportunities for Students Across Disciplines

The facility opens doors for students from diverse backgrounds, from those new to agriculture to those who always knew this was their path.

“This facility offers great opportunities to bring together majors like animal science, nutritional science, agribusiness, and various engineering fields—mechanical, electrical, chemical, and agricultural,” Maier says.

Your Next Read: An Idea Out of This World: University of Nebraska Researchers Work to Launch Agriculture in Space

High Production Costs Could Weigh on the Ag Economy Through 2024, New Survey of Economists Finds

Wed, 28 Jun 2023 19:15:23 GMT

Stronger cattle prices combined with the recent run-up in crop prices aren’t enough to outweigh concerns about the impact high input prices will have on farmers this year and into 2024. While most economists agree the next 12 months could produce more financial challenges for agriculture, views vary on how much financial pressure producers will see and offer differing opinions on the U.S. crop production picture and commodity/feed prices.

The results are part of the June Ag Economists’ Monthly Monitor, a new survey of nearly 50 agricultural economists from across the country. It’s the first survey of its kind, collecting insights from economists who represent both the private and public sectors. The economists represent the ag sector across a wide geography and also have expertise in grains, livestock and policy.

The survey is conducted anonymously to allow the highly respected agricultural economists to speak more openly about their economic and production forecasts since their responses won’t be attributed to the university, company or organization they represent. The Ag Economists’ Monthly Monitor is a joint effort between the University of Missouri and Farm Journal . The university conducts the survey, collects and crunches the data while Farm Journal distributes the results.

Main Takeaways from the June Survey

Highlights from the first Ag Economists’ Monthly Monitor include:

The perceived financial health of U.S. agriculture is trending lower and is expected to continue to decline over the next 12 months.
Production costs, global competition, geopolitical risks, drought and demand headwinds are among the main drivers.
The majority of agricultural economists expect farm income to drift lower, with some expecting levels to land closer to the five-year average in 2024.
High production expenses are the biggest obstacle in 2023.
2023 crop yield estimates vary widely among the economists surveyed.
Economists expect crop prices to drift lower in 2023 and 2024.
Beef cow supplies are forecast to continue to decline this year.

A Current and Future Snapshot of the Agriculture Economy

The monitor shows the perceived financial health of U.S. agriculture has moved slightly lower over the past year, and economists expect that trend to continue over the next 12 months.

(Farm Journal)

The main drivers of the waning outlook include production costs, global competition, geopolitical risks, drought and domestic demand for agricultural commodities.

“I think what’s most surprising is that, on average, those more than 40 economists are in alignment with the more general perception of where agriculture is heading,” says Scott Brown, an agricultural economist with the University of Missouri, who helps author the survey. “What surprised me is the amount of volatility around that average estimate. It just reminds me there’s so many issues at play today, and when trying to predict or suggest the future, even these economists have a wide opinion in terms of where we’re headed in different commodities.”

Falling Net Farm Income

The Monthly Monitor shows all respondents expect farm income to decline from the record level of 2022 for 2023 and 2024. The range of survey responses is what produced the most volatility, with responses varying by as much as $51 billion from the highest to the lowest estimate.

Some economists are projecting farm income levels to return to the 2017-21 average in 2024. The main driver for 2023 forecasts is the expectation for higher production expenses. The biggest factor for the waning outlook in 2024 is the outlook for lower commodity prices.

“It seemed like cattle was the most optimistic commodity out of the mix,” Brown says. “I think there was still some expectation that corn and soybean prices could stay on the higher end, but generally there’s less optimism than coming off the records we would have seen back in 2022. That’s when farm income was a little north of $160 billion, and when you look at some of the forecasts for 2024 in our survey, it’s closer to $120 billion on average. Some are even suggesting farm income levels could fall back to where we were pre-2020, so pre-COVID.”

(Farm Journal)

Wide Range of Yield Estimates

Ahead of USDA’s updated look at planted acres in the June acreage report set to be released Friday, economists don’t see many big changes compared with what farmers intended to plant in March. According to the June Ag Economists’ Monthly Monitor, the average survey result was 92.05 million planted acres for corn, which is up slightly from the 92 million acres reported by USDA’s farmer survey in March. The range included 90.5 million acres on the low end and 93 million acres on the high end.

Economists think farmers planted 87.98 million acres of soybeans this spring, slightly higher than the 87.5 million acres reported in March. The highest estimate was 89 million acres of soybeans, with the lowest estimate of 87 million acres.

In March, USDA reported farmers intended to plant 11.26 million acres of cotton. The survey showed economists think with the weather challenges in areas such as Texas, cotton farmers actually planted 11.24 million acres, with the maximum response of 11.9 million and 10.95 million on the low end.

Brown points out the yield variation largely depends on upcoming weather, but the dry weather is creating a wide range of yield estimates this year. According to respondents in June, the average estimate for yield includes:

Corn: 178.68 bu. per acre versus 181.5 bu. per acre (USDA’s current estimate)
Soybeans: 51.06 bu. per acre versus 52 bu. per acre
Wheat: 44.47 bu. per acre versus 44.9 bu. per acre
Sorghum: 68.17 bu. per acre versus 69.2 bu. per acre
Cotton: 855.18 pounds versus 841 pounds

“I think when you look at both corn and soybean acres, there wasn’t a lot of deviation from the Prospective Plantings report USDA came out with a few months ago, so we didn’t see a big change there,” Brown says. “On the yield side, there are certainly some differences. The average yield estimate, on the corn side from the survey was a little more than 178 bu. per acre, with a downside of 175 bu. Likewise on soybeans, that came in at about 51 bu. per acre. Both corn and soybeans are below where USDA currently sees yields. I will say those are going to change quickly as we look at weather and what’s occurred since the survey would have gone out roughly a week ago now.”

(Farm Journal)

Economists also expect crop prices to decline this year and next; however, there is a wide range in estimates signaling volatility will continue.

The average corn price is estimated to hit $4.99 per bushel for the current crop year and $4.74 for 2024/2025. The high range of the estimate for this year is $6 per bushel, with a low of $4.25 per bushel. Soybeans are also expected to trend lower, with an average estimate of $12.52 per bushel this year. The high came in at $14 per bushel. The low estimate was $10.85 per bushel. The average estimate for 2024/2025 is $11.90 per bushel.

Wheat prices are estimated to average $7.63 per bushel this year, with a low of $7 and a high of $8.49. The average estimate for wheat prices in 2024/2025 is $7.10 per bushel, with a high of $8 and a low of $6.49.

(Farm Journal)

Mixed Outlook on Livestock

The June Ag Economists’ Monthly Monitor also asked economists to provide estimates about beef cow inventory as of July 1, which is a report USDA will release on July 21. Economists who responded expect cow inventory to fall to 30 million head, which represents a decline of 1.2%.

Respondents also see fed cattle prices in 2024 trending to over $181 per hundredweight. But responses also produced high volatility, with one economist even thinking fed cattle prices will average above $195 per hundredweight in 2024.

Most everyone expects a contraction,” Brown says. “With the dry weather we’ve had in cattle country, Oklahoma, Kansas, Nebraska, Missouri, to name a few, I think we will continue to see fewer beef cows when we get that report out in mid-July. There were some who are even calling for larger declines than the nearly 30 million head. It reminds me we’re going to get tighter, and we’re not done talking about record cattle prices if these forecasts hold true.”

(Farm Journal)

Economists are less optimistic about hog prices and milk prices producers will receive this year.

Ahead of the next Hogs and Pigs report from USDA later this week, economists think the breeding hog inventory will be 99.27%, compared to 100.5% one year ago. Economists are more bullish when it comes to exports, but not enough to improve their outlook on hog prices.

“They weren’t as optimistic on cattle or dairy,” says Brown. “When you look at what they were saying for 2024 hog prices, still, the average was below $61. Which if costs stay where they are today, that means red ink continues into 2024. Likewise, the projected all milk price for 2024 is $20.50 in our survey. That probably also makes red ink in 2024.”

The Likelihood of a U.S. Recession

Another major economic indicator for livestock producers is the general economy, as it historically has a direct impact on domestic demand. Of those surveyed, economists expect interest rates to move up 2% over the next six months.

“Although there was a wide range of responses, most economists felt the U.S. economy is not currently in a recession and will not enter one during 2023,” Brown says. “I will point out, though, there appears to be continued uncertainty about the expected general economy health for 2023, given survey responses.”

The majority of economists “somewhat disagree” the U.S. will enter into a recession this year. While at least eight economists say they “somewhat agree” a recession is looming yet this year.

(Farm Journal)

Looking Ahead to July

The June Ag Economists’ Monthly Monitor survey is a current snapshot of economists’ views. The survey will be sent to participating economists just days after USDA releases its WASDE report each month. Less than two weeks later, the results will be released.

“It is fairly current, but I’ll just say weather matters a lot, as we talked about, especially with yields. We’ll see how this changes, being able to now come back to the same group and ask what they expect corn and soybean yields to be in another few weeks. We’ll also have the first survey under our belt, and it will be interesting to watch those changes,” Brown says.

Looking to the second survey, Brown says he’s interested in watching changes to the crop-yield side of the equation. Longer-term, he thinks the monthly monitor will reveal bigger trends about the general economic health across all of agriculture and how those forecasts change from month to month.

“I’m really curious to watch [the general economic health] as we get more observations, and see what July looks like relative to June in terms of overall economic health,” he says. “I’m curious to watch as this group of experts continues to digest what’s happening in agriculture.”

No Home Runs For Ag In 2019, But A Better Outlook Than 2018

Fri, 20 Nov 2020 05:24:02 GMT

Debt-to-asset ratios are on the rise, working capital is eroding and farmers’ sentiments are on the decline. Despite the negativity surrounding prices and outlooks, Famer Mac is providing a voice of optimism. In the an early exclusive of the quarterly edition of Farmer Mac’s “The Feed,” economists say they are more optimistic about 2019. However, Farmer Mac economist Jackson Takach cautions it won’t be a “home-run” year for most producers.

“It’s not going to be the best year in agriculture,” said Takach. “It’s going to be another sort of level-level year in terms of profitability.”

(Farm Journal)

Farmer Mac releases its favorability chart per commodity in each edition of “The Feed.” Takach thinks profitability this year will depend on region and will vary widely depending on the crop a person grows or the livestock they produce.

Overall, USDA currently projects net farm income will rise by 10 percent, while net cash income is forecast to increase by 4.7 percent. Despite that increase, USDA is still projecting the farm sector’s working capital will decline and debt-to-asset ratio will trend higher.

Farmer Mac says in recent years, higher yields for many crops and increased animal production have helped buoy farmers’ income amidst a period of lower prices. The USDA projects that the higher quantities available for sale will continue to increase revenues for many commodities in 2019. However, an improving commodity price environment is expected to play a larger role in raising prices.

(Farm Journal)

Economists like Takach know if prices don’t improve in some sectors, 2019 could be a very painful, difficult year for some operators.

“Some producers are probably going to have a better-than-expected year, but, overall, I agree that the USDA’s farm income and profitability picture will probably be fairly level and maybe up a little bit compared to 2018,” he said.

As commodity prices remain below break-even for some operators, while barely budging the break-even level for others, Takach said the best way to describe the current situation is as “a grinder.” He said it’s a term several economists are using, and one that holds true.

“We’re in a profitability level that’s sort of taking working capital little by little and grinding it away,” said Takach. “What’s going to give is going to have to come on the expense side.”

Takach said since most agricultural producers are price takers, many in the industry can’t do much about the price they receive for the product they grow, whether it be pork or corn.

“What gives is on the expense side,” he said. “If some folks were able to negotiate seed prices down or negotiate better rents, that’s where we can see the cost of production come down and start to give a little bit more room for that profitability.”

Takach acknowledges the negotiating input prices piece of the business is difficult, and it could take years before some of that is accomplished in areas like Illinois and Iowa.

“It takes time for farmers to negotiate those prices down, but it is happening, so give it a few more years,” said Takach. “It doesn’t help you this year, but in a few more years you start to look at those expense items you can maybe increase scale here and there or drop the poor performing acreage and convert that into something else.”

Takach said there are success stories of farmers who went from being “price takers” to “price makers.” One example is a farmer who was losing money growing corn and soybeans, so he switched to growing yellow peas in order to quench the appetite of a new, growing demand sector.

“There’s a new type of milk out there, milk that’s growing in popularity, called ‘pea milk,’ and they found incredible profitability growing peas instead of corn,” said Takach. “Maybe there are more stories like that out there, where low commodity prices caused some producers to switch acres to something else. When corn was $6 dollars, every acre was profitable, and now at $3.50, it’s just not the case.”

USDA’s latest net farm income forecast showed a brighter picture for livestock. While Takach agrees this year will be a better year overall for livestock, he understands livestock prices were starting from a very low level in 2019.

“I like to put things into context and last year a down year for most livestock producers,” said Takach. “We’re looking to rebound a little bit on that, and there’s been a lot of global changes in milk production, which is going to help our producers sell more milk overseas despite some of the trade issues that we’re facing.”

While there also is hope that pork producers will continue to see a rebound in pork exports, Takach points out there are still barriers standing in the way.

“It’s going to be hard to sell more pork overseas,” said Takach. “We’re facing a lot of headwinds in overseas markets. We’ve just increased capacity for hog production – in the U.S. and other countries – so we have to find an outlet for all the pork.”

Takach said margins for cow-calf operators also look more promising in 2019. All of those factors support an improvement in livestock and dairy prices this year; however, he thinks it’s not going to be a record-breaking year for those sectors. Instead, his forecast is more in line with the profitability producers saw in 2014.