USDA: '09 Net Cash Farm Income Seen Down 30% vs. 2008

Net cash income for farmers is now forecast to be down 30% from 2008 and net farm income forecast down 38%, USDA's Economic Research Service said in its update on Farm Income and Costs.  Net cash income, at $68.2 billion, is forecast down $29.4 billion (30%) from 2008, and $3 billion below its 10-year average of $71.2 billion. Net cash income is projected to decline less than net farm income primarily because net cash income reflects the sale of $1.8 billion in carryover stocks from 2008. Net farm income reflects only the earnings from production that occurred in the current year.  Net farm income is forecast to be $54.0 billion in 2009, down $33.2 billion (38%) from the preliminary estimate of $87.2 billion for 2008. The 2009 forecast is $9 billion below the average of $63.2 billion in net farm income earned in the previous 10 years.

Other highlights from USDA's updated income outlook:
After reaching record or near record levels in 2008, all three measures of farm sector earnings are forecast to decline in 2009.
    * - Net cash income is expected to fall 30 percent to a level below its previous 10-year average.
    * - Net value added is expected to fall from a record $135.8 billion in 2008, but remain near its 10-year average because the drop in expenditures for purchased inputs offset some of the decline in value of production.
    * - Net farm income, which was a near record 87.2 billion in 2008, is expected to be $9 billion below its 10-year average in 2009 as a result of reduced net value added and increased payments to stakeholders.

Total expenses are forecast to decline for the first time since 2002.
    * - The 2007 and 2008 increases in farm expenses, at $34.8 billion and $22.5 billion, were the largest year-over-year absolute changes on record.
    * - The $9.2-billion decline in expenses projected for 2009 would still leave farm expenses 5 percent higher than in 2007.

The 2009 forecast is for a $40.3-billion decline in cash receipts.
    * - This $40-billion decline still represents less than half the combined increase of $83 billion that occurred over 2007 and 2008.
    * - Crop receipts would be the second highest on record in 2009, despite an $18-billion drop to $165 billion, following gains of more than 20 percent in each of the last 2 years.
    * - Livestock receipts are expected to decline $22.2 billion (15.7 percent) in 2009.

Government payments are forecast to be essentially unchanged in 2009.
    * The projected decline from 2008 in ad hoc and emergency assistance payments is offset by increases in Milk Income Loss and countercyclical payments.

The record net farm income in 2008 was driven by a large increase in the value of crop production that was only partially offset by rising costs of production for the farm sector. The value of crop production exceeded its previous record (set in 2007) by $31 billion, a 21-percent increase. Prices of major crops (corn, soybeans, wheat) trended upward in late 2007 and continued doing so in the first part of 2008 as the remainder of the 2007 harvest was marketed. These prices declined in the latter months as the 2008 harvests occurred, but remained high by historic standards.

    Exports were strong as a weak dollar relative to other currencies made U.S. commodities more competitive in international markets, and ending-year stocks of many commodities were low. Commodity prices trended downward late in 2008 as the national and world economies softened.

In 2009, however, USDA noted that crop prices have continued to decline and prices for livestock animals and products have experienced sharp declines. With economic conditions deteriorating worldwide, demand for exports has tailed off, with few options available to expand marketing elsewhere. Sharply declining demand in 2009 has forced farmers to accept prices that are lower than were expected earlier in the year when production plans were made.

As for livestock producers, USDA said exceptionally high prices for feed crops in 2008 were pinching livestock producers. Rising costs cause livestock producers to eliminate their least productive animals and cut back in less profitable areas of their operations. However, in 2009, softening world economies resulted in lower demand for the better cuts of meat, resulting in declining revenues that more than offset declining feed costs.



Estimated Weekly Meat Production Under Federal Inspection
 
Total red meat production under Federal inspection for the week ending Saturday, Aug. 29, 2009 was estimated at 959.5 million lbs. according to the U.S. Department of Agriculture's Marketing Service.  This was 0.4 percent lower than a week ago and 1.1 percent lower than a year ago.  Cumulative meat production for the year to date was 3.3 percent lower compared to the previous year.



Milk Production and Global Economy Slow Demand for U.S. Dairy Exports

After a record-setting year for U.S. dairy exports in 2008, sluggish world demand caused by the global economic crisis and increased milk production helped to create a much different export situation during the first half of 2009.  The total volume of non-fluid dairy products traded through June was approximately 1.2 billion pounds, a 26.4 percent decline compared to the first half of 2008. Lower world dairy product prices and lower export volumes pushed the total value of exports through June down to 985.4 million. That's a 51.5 percent decline compared to this time last year.

The United States still maintains a positive export volume trade balance, exporting 448.6 million more pounds than it imported during the first half of 2009. But that didn't help the dollar trade balance for U.S. dairy products, which went from a positive $644.3 million in 2008 to a negative $221.8 million in 2009.

Dry whey and related products constituted the largest volume export share, overtaking nonfat dry milk. During the first half of the year, dry whey and related products exports totaled 374.3 million pounds, up 0.9 percent over year-ago levels. Even though nonfat dry milk export volume was down 53.5 percent over year-ago levels, it was still the second most-exported dairy product, with 240.1 million pounds traded. Lactose was the third most-exported dairy product during the first half of the year, with 227.8 million pounds exported (6.4 percent more than last year).

Another important dairy export category, cheese and curd, experienced a 29 percent decline in total export volume over year-ago levels, with 110.8 million pounds exported in 2009.

The total export value of nonfat dry milk also declined, falling 74.6 percent during the first half of 2009 when compared to year-ago levels, but it still represents the largest U.S. export category in terms of value ($220.2 million). Cheese and curd ($199.3 million), dry whey and related products ($184 million) and lactose ($56.3 million) also declined in export value compared to last year. Butter and milkfat exports, included in the list of top five export earners last year, went from $158.9 million in the first half of 2008 to only $29.6 million in 2009, an 81.4 percent decline.

Mexico and Canada continue to be the largest importers of U.S. dairy products. Mexico imported $313.7 million worth of U.S. dairy products in the first half a 2009, a 37.5 percent decline compared to the same period in 2008. Exports to Canada totaled $162.1 million, declining 2.3 percent over year-ago levels. The main dairy exports to these countries were nonfat dry milk, cheese and curd, and whey. Japan imported $64.1 million in dairy products, followed very closely by China at $61.1 million. South Korea rounded out the top five, importing $33.7 million worth of U.S. dairy products. Compared to last year, export revenues to these three Pacific Rim countries were close to 40 percent less than year-ago levels.



Alternative Fuel Trade Alliance to Receive $1.6 Million from DOE to Expand Alternative Fuel Education

The Alternative Fuel Trade Alliance today welcomed the Department of Energy's announcement of a grant up to $1.6 million to raise public awareness and foster understanding of alternative fuels and advanced vehicle technologies. The grant will provide support for a targeted educational plan aimed at Clean Cities Coordinators and related stakeholders.

The Alliance, which includes the Renewable Fuels Association, the National Biodiesel Foundation, the Propane Education & Research Council, the Clean Vehicle Education Foundation and ASG Renaissance, stated, "We are looking forward to working with the Department of Energy to increase the understanding of the importance of cleaner alternative fuels and vehicles to our national effort to reduce oil dependence and cut carbon emissions. It is vital to educate and train Clean Cities Coordinators who are and will be at the forefront of communicating what our fuels and vehicle technologies mean as engines of economic growth and environmental sustainability."

Bob Dinneen, President and CEO of the Renewable Fuels Association, commented, "This DOE grant will supplement our individual and joint efforts to work with and train coordinators, stakeholders, and others at the national and regional level to enhance their knowledge and expertise on the latest developments and applications for alternative fuels and advanced vehicle technologies which include ethanol, biodiesel, propane, and natural gas fuels as well as hybrid/electric technologies and idle reduction strategies to improve fuel economy."

Joe Jobe, CEO of the National Biodiesel Board, said "This program unites the mainstream alternative fuel organizations in working collaboratively towards a common goal: educating America on all aspects of alternative fuels, and increasing their use. This will benefit our air quality, our energy independence and our economy."

According to the Alliance proposal, the grant funds will also be used to:
    * Train coordinators as high-level public spokespeople;
    * Increase awareness of sustainability as it pertains to the stated technologies;
    * Increase the number of states that enforce fuel quality standards;
    * Train key stakeholders on fire safety issues;
    * Increase OEM technician/mechanic training and advanced technology acceptance;
    * Provide a forum for students interested in alternative fuels on college campuses nationwide; and
    * Increase the availability and consumption of domestic alternative fuels.

The Alliance partners proposed to conduct more than 45 workshops, author a minimum of 20 educational pieces, and participate in a minimum of 64 collective independent stakeholder events, as well as manage two conferences and four press events to increase knowledge about alternative fuels and advanced vehicle technologies.





ASA Urges Activism to Safeguard Biodiesel Demand

The American Soybean Association (ASA) is encouraging all U.S. soybean producers, and their family members, neighbors and friends, to voice concerns with the Environmental Protection Agency’s (EPA) proposed rule on the implementation of the expanded Renewable Fuel Standard (RFS-2). With the future of the U.S. biodiesel industry at stake, ASA is issuing a national Call-to-Action for grassroots activism regarding the proposed rule.

"The EPA’s proposed rule on RFS-2 implementation is significantly flawed and would do unnecessary harm to the competitive position of the U.S. soy biodiesel industry," said ASA President Johnny Dodson, a soybean producer from Halls, Tenn. "A loss of the domestic biodiesel market would significantly decrease prices paid to U.S. farmers for their soybeans."

For soybean farmers, the vital flaws and concerns with the RFS-2 proposed rule include flawed and immature assumptions and methodology utilized to measure the indirect land use impacts of U.S. soy biodiesel production; unnecessary and onerous feedstock certification requirements; a methodology that contains a major error pertaining to the direct emission calculations for nitrogen in soybean production; a lack of accounting for glycerine as a co-product; inaccurate assessment of the energy balance of biodiesel; a proposed pathway of using a 52-48 feedstock ratio of biodiesel feedstocks that is not workable in practice; a lack of accounting for improved agriculture yields and efficiency; and a baseline analysis that compares estimated, future direct and indirect GHG emissions for biodiesel to only direct emissions for petroleum.

"Soybean farmers have a great interest in the implementation of the RFS-2," Dodson said. "Unless the flaws in EPA’s proposed rule are corrected, soy-based biodiesel effectively will be excluded from the meeting the renewable energy targets established under RFS-2. Soybean farmers would lose a source of demand for soybean oil, biodiesel manufacturers would be left without sufficient feedstock supply, jobs would be lost, and our nation would not decrease its dependence on imported oil. None of these outcomes are what Congress intended. That’s why ASA is providing detailed comments to the EPA, and why ASA is asking farmers and the agricultural community to contact EPA as well."

ASA is providing an easy to use online form where people can read the letter, add personal contact information, and submit comments with the click of a button. Family members, friends and neighbors are also encouraged to use this form.

Go to http://www.soygrowers.com/policy/RFS2.htm to access the online form, which includes the letter and links to additional background information.



USDA Announces $650 Million Additional Credit Guarantees for Key Markets.

On August 20, USDA announced $650 million in new credit guarantee authorizations (GSM-102), bringing the total announcements close to the $5.5 billion limit authorized by Congress. According to the U.S. Grains Council, the GSM-102 program is an important tool for enhancing U.S. market share around the world. “GSM-102 is not extending credit to foreign banks, but rather increasing the confidence of U.S. banks to give out loans. This, in turn, provides many countries with credit options in times when credit is tight and encourages importing countries to buy more U.S. agricultural products, including grains,” said Erick Erickson, USGC special assistant for planning, evaluation and projects.

The recent announcements increased the ceiling to the markets that have been most active in utilizing the program. The $650 million are allocated to the following countries:
- South Korea by $100 million, bringing the total allocated funds to $1.3 billion;
- Mexico, $75 million, ($300 million);
- South America, $75 million, ($850 million);
- Africa and the Middle East, $100 million, ($200 million);
- Caribbean, $50 million, ($425 million);
- Central America, $75 million, ($750 million);
- China and Hong Kong, $100 million, ($350 million);
- Turkey, $50 million, ($500 million); and
- Southeast Asia, $25 million, ($525 million).

The Council works with USDA to help direct GSM-102 credit guarantees toward important feed grains markets around the world by showing overseas buyers how to use the program. “Our export customers are able to obtain the credit necessary to provide food and fiber for their people while U.S. farmers benefit from having a guaranteed buyer,” said Erickson. “These announcements are great news for U.S. farmers.”



Credit Conditions lower in parts of the Midwest

Some parts of the Midwest farm sector face a looming financial crisis unless dairy and livestock prices improve, according to a survey of agricultural lenders conducted by the Chicago Federal Reserve.  The problems are most acute in the Wisconsin dairy sector, where producers are struggling with milk prices down 41% from a year ago.  The Fed's quarterly review of farm credit conditions revealed that the number of loans classified as having "major" or "severe" repayment problems doubled to 4% in the quarter from a year earlier.

More farmers are seeking renewals and extensions of loans, said the Fed, and there is an increasing reliance on government funding sources.  "The tone of comments by respondents communicated deep concerns for agricultural producers, especially if livestock and dairy prices do not increase soon and losses continue to mount," Fed business economist David Oppedahl said in the report.  Credit conditions have deteriorated in the wake of falling commodity prices, while a decline in farm values also is making it tougher for farmers to borrow as the value of their collateral declines.

Land values in the district - which includes Illinois, Indiana, Iowa, Michigan and Wisconsin - fell 3% in the second quarter from a year earlier.



Identifying and managing Sudden Death Syndrome in soybean fields

Sudden Death Syndrome (SDS) is showing up in many soybean fields in Iowa. It can significantly reduce yield and has been a problem since the 1970s. However, it has become a bigger threat in recent years, and according to Dr. Alison Robertson, extension plant pathologist at Iowa State University, some studies suggest it may have to do with the weather, as it is dependent on environmental conditions.

             “When we look back over the last three or four growing seasons, it has been wetter and cooler than normal, particularly at planting time and also somewhat later in the season,” Robertson says. “Cool, wet temperatures favor infection by the fungus and development of the disease. That’s why I believe we have seen an upsurge in disease development over the last few years.”

            While there’s not a lot growers can do about SDS this far into the season, Robertson says producers still need to get out in the field to determine if they have an SDS problem.

            “As you look across your field, you’re going to see these yellow patches,” Robertson says. “And a lot of times, these yellow patches might be in more compacted areas of the field.  Then when you look at the leaves, in between the veins, the leaf tissue is yellow and then it becomes brown and it dies and falls off, leaving like skeletons of leaves.”

            Robertson suggests inspecting soybean leaves and stems closely because it could be a different infection.

            “There’s another disease called Brown Stem Rot, which causes very similar leaf symptoms,” Robertson says.  “To tell the difference, you will need to split the stems of many plants, and if the pith (center) of the stem is brown, it means you have Brown Stem Rot in that field. However, if it is pith is white and you have quite a bit of root rot as well, you may be looking at SDS.”

            Robertson says identifying SDS is the first step to managing it. Knowing which fields have SDS this season will allow soybean growers to implement proper management practices the next time soybeans are planted.

            “A grower could speak with his seed dealer because there are varieties that are more tolerant of the disease than others,” Robertson says. “Another thing we know about the disease is there is an interaction with soybean cyst nematode. The higher the population of soybean cyst nematode, the higher the risk of developing SDS, which can develop early on in the seed fill period. Managing soybean cyst nematode is very important for managing SDS.”

            Another management practice Robertson suggests is to delay planting until conditions are more ideal.

            “The other management recommendation, which is a little more difficult, is to avoid planting your soybeans if the soil is going to be cool and wet at the time of planting or anytime within that first week or so of planting.”

            SDS is caused by a soil fungus that can survive in the soil for many years. In fact, Robertson says recent research findings suggest the fungus can even survive on corn kernels, meaning a two-year rotation between soybean crops may not manage, inoculate levels or reduce the risk of SDS.”

            To hear this podcast and others, visit ISA’s production research Web site at www.iasoybeans.com/productionresearch and click on, “Identifying and managing SDS.”



Northey to Visit Red Oak, Sidney, Malvern Sept. 2

Iowa Secretary of Agriculture Bill Northey has announced that he will be visiting Montgomery, Fremont and Mills Counties on Wednesday as part of his effort to visit each of Iowa's 99 counties again in 2009 to meet with Iowans and discuss agriculture and the issues facing farmers in the state.  "I've learned from the meetings I've attended in each of the counties over the past two years and I'm sure this year will be no different," Northey said. "It's a challenging time on and off the farm and I'm excited to hear from Iowans about the issues facing agriculture."

The details of the visits follow here:
-- Montgomery County -- 10:30 a.m., Red Oak Fire Station, 1904 N. Broadway St., Red Oak
-- Fremont County -- 1:30 p.m., Farm Bureau Office, 610 Clay, Sidney
-- Mills County -- 3:30 p.m., Farm Bureau Office, 107 W. 4th St., Malvern