Terra Industries Rejects CF Industries' Latest Bid Proposal

Terra Industries Inc., Sioux City, Iowa, sent a letter to CF Industries Holdings, Inc., Deerfield, Ill., in response to CF's offer to the company.

In the letter to CF, Michael L. Bennett, president and CEO at Terra, and Henry R. Slack, Terra's chairman of the board, said their company, with the assistance of its financial and legal advisors "has carefully considered your latest proposal to combine our companies. Our Board has unanimously concluded that this most recent version of your proposal continues to run counter to Terra's strategic objectives, substantially undervalues Terra both absolutely and relative to CF, and would deliver less value to our shareholders than would owning Terra on a stand-alone basis."

The letter was sent to Stephen R. Wilson, chairman, president and CEO of CF Industries.

"Accordingly, we reject your proposal," Bennet and Slack wrote.

In response, CF Industries issued a media statement. In it, the company said it "has made a full and fair offer with an exchange ratio premium of over 35% in an all stock transaction. Terra stockholders would own nearly 50% of the combined company and would benefit from real and substantial synergies. CF Industries is confident that Terra stockholders will show their support by voting for CF Industries' nominees at Terra's annual meeting, which should have been held by now."



Nebraska Corn Board elects officers; Current board members re-appointed

Alan Tiemann of Seward has been elected to serve as chairman of the Nebraska Corn Board (NCB) for the 2009-2010 term. Tiemann is a farmer who raises corn and soybeans. In addition to serving as chairman, he will serve on NCB’s Research and Executive committees. He is also completing the second year of a two-year term on the board of directors of the U.S. Grains Council.

Dennis Gengenbach (District 6) of Smithfield was re-elected as vice-chairman of NCB. Gengenbach produces corn and soybeans and operates a cow-calf business. In addition to being vice-chairman, Gengenbach will serve on NCB’s Research and Executive committees. Gengenbach is a graduate of the University of Nebraska-Lincoln with a degree in animal science. He also has a Ph.D. in reproductive physiology from Cornell University.

Tim Scheer of St. Paul was elected to serve as secretary/treasurer. Scheer will also serve on NCB’s Government Affairs and Executive committees. Scheer raises corn and soybeans and has recently added a cattle backgrounding enterprise to his cow/calf operation. Scheer is a LEAD XXIV graduate, and he graduated with honors from the University of Nebraska Lincoln with a degree in agribusiness.

Gengenbach, along with Jon Holzfaster (District 8) from Paxton, and David Merrell (District 7) of St. Edward have been re-appointed by the Governor to serve on the Nebraska Corn Board for three-year terms from 2009 to 2012.  Holzfaster raises corn, wheat and soybeans and operates a backgrounding feed yard on the family farm based in Perkins County. Holzfaster is a LEAD XIII graduate and majored in ag economics at the University of Nebraska. In addition to serving as past-chairman, Holzfaster will serve on NCB’s Government Affairs and Executive committees. He is currently vice-chair of the National Corn Grower Association’s Ethanol Committee.  Merrell raises corn, soybeans and has a diversified livestock operation. Merrell is a LEAD XXIV graduate and majored in mechanized agriculture at the University of Nebraska. Merrell will serve on the NCB’s Market Development Committee.



Economist: Economy, Lower Commodity Prices Slowing Food Cost Growth

After a couple years of above average food price inflation, a Purdue University economist believes the inflation rate will return to normal next year.  Corinne Alexander, an agricultural economist, estimated 2010 food prices would increase between 2.5% and 3.5%, not near the records that were set in 2008 of 5.5%. The 10-year average for food-price inflation for 1997 to 2006 is about 2.5%, she said.  "One reason we're not seeing prices go up so much right now is we had a massive recession that caused people to cut back," Alexander said.
 
Alexander said that in July of this year, the cost of food purchased for the home decreased 0.9% over the same month last year, much lower than usual and lower than the September 2008 peak of 7.6%.  Food purchased away from home, such as in restaurants, increased 3.2% this past July over the same month last year. That was about average, and lower than the December 2008 high of 5%.
 
Several factors have been driving the decline in those inflationary numbers. Alexander said significantly lower commodity prices, as well as the lower cost of fuel, have been major contributors.  "Grain prices peaked last summer. We had $8 corn. We had $13 wheat," Alexander said. "We also had $147 per barrel oil."  The recession also slowed growth in developing countries, reducing the demand for meat and other food exports. That has increased the supply available in the United States, driving down the price.
 
"You just can't have rising meat prices with domestic supplies so high," Alexander said. "This year domestic demand weakened because of the recession."  Alexander warned, however, that inflation could go higher based on the economy.  "If the U.S. and world economies start growing and the recession is finished sooner than expected, that will boost inflation," she said.
 


Next Step Biofuels Manufactures Energy-Dense PowerPellets from Corn Stover

Next Step Biofuels, Inc., a Nebraska-based company that utilizes proprietary processes to convert non-food biomass into clean, renewable energy, announced the successful, commercial-scale production of PowerPellets from corn stover at Loup Valley Alfalfa's pelleting facilities in Burwell, Neb.

Next Step COO Russ Zeeck explained that the industrial-scale production of pellets from corn stover is a huge step forward in unlocking corn stover's vast potential as a reliable, affordable source of renewable energy. "Corn stover -- all the leaves, cobs and stalks leftover after the corn is harvested -- is America's most abundant source of sustainable biomass," said Zeeck. "But, converting it into a fuel that can be economically shipped and stored at scale has proven elusive. Traditional pelletizing processes don't work on corn stover, but the proprietary, patent pending processes we've developed over the past few years do."

Loup Valley Alfalfa president and CEO Jon W. Manasil said that his 65-year old pelleting and feed mill operation has long been interested in a way to pelletize corn stover, but, until testing Next Step's process last week, had not identified a suitable technology. "The Next Step solution is commercially viable," said Manasil. "It works at industrial-scale and does not require binders or additives."

"Our recent production run with Loup Valley Alfalfa exceeded all the operational parameters and product specifications we hoped to achieve," added Zeeck.

Next Step plans to sell corn stover PowerPellets to coal-fired power plants and cellulosic bio-refineries worldwide. Coal-fired power plants in the U.S. and abroad can seamlessly add PowerPellets to their current operations to comply with a wide variety of carbon-reducing laws and regulatory incentives.

"U.S. based utilities are eager for a way to meet state-level Renewable Portfolio Standards (RPS) and carbon reduction programs, as well as the imminent federal RPS and carbon cap and trade programs," explained Zeeck. "PowerPellets are the fastest, most cost-effective way for them to achieve compliance. We're in discussions with several utilities -- both here and overseas -- regarding long-term contracts to supply PowerPellets."

Next Step president Kevin Dretzka explained that a key benefit of PowerPellets is that they ship and store exactly like grain. "PowerPellets can be shipped and stored using existing infrastructure ... the very same infrastructure the world uses to ship and store billions of tons of corn, rice and wheat," said Dretzka. "By solving key shipping and storage issues, we give our customers -- utilities and bio-refiners -- confidence in an affordable, deep supply of biomass. In the case of coal-fired utilities, this confidence immediately opens up a huge market: coal-fired power plants can co-burn PowerPellets today -- with no meaningful changes to their current operations -- to realize significant and valuable reductions to their carbon footprints."

Next Step plans to complete its first PowerPellet plant by late 2010. A typical plant will produce 175,000 tons of PowerPellets annually. "We look forward to building many, many of these plants over the next decade," said Dretzka.



Farm Bureau: Health Insurance Cost Could Double for Farmers and Ranchers

The Obama Administration's proposal to mandate certain kinds of health care coverage could increase the cost of health insurance for farmers and ranchers and other self-employed individuals in Nebraska and the nation by more than100 percent, Nebraska Farm Bureau warned Monday (Aug. 17).

A large majority of food producers are self-employed and many buy their own health insurance without the benefit of being part of a group, Farm Bureau President Keith Olsen said. A 2007 survey conducted for the U.S. Department of Agriculture1 found that 46 percent of Nebraska's farmers and ranchers purchased their health insurance on an individual basis directly from an insurer. "If a farm or ranch family can obtain health insurance through a spouse's off-farm job, that's usually the route they go," Olsen said. "But that approach isn't available to everyone.

"The primary issue we continue to worry about is the affordability of health insurance," he said. Responses from Farm Bureau members surveyed online last week showed a monthly health insurance premium ranging from $500 to $1,000-plus a month for a high-deductible, family policy. Most of those surveyed had deductibles of about $5,000.

The proposals now moving through Congress include the concepts of "Guarantee Issue" and "Community Ratings," Olsen said.  Guarantee Issue requires insurers to provide health insurance coverage to anyone at any time, or forces them to renew policies they would prefer to drop. Community Rating limits premium differences across policies and requires insurers to charge uniform premiums regardless of age, health conditions, etc.

 "Requiring compulsory health insurance in the form of an individual coverage mandate or forcing insurers to cover everyone will mean higher insurance premiums," Olsen said.  Currently only New York, New Jersey and Massachusetts have both Community Rating and Guaranteed Issue laws on the books; these states have the most expensive individual insurance markets in the country, he said.  A 2008 study conducted by researchers from MIT, the Brookings Institution and Brigham Young University 2 found that implementation of Community Rating and Guarantee Issue resulted in premium increases of 108 to 227 percent for high-deductible family policies.

"While the New Jersey insurance market is quite different from ours, we can reasonably expect to see significant premium increases for Nebraskans who purchase health insurance directly from insurers," Olsen said. "If New Jersey's experience applies here, premiums for high-deductible policies could range from $1,040 to $2,080 a month, rather than the current, already-high $500 to $1,000."  Such increases would make private health insurance unaffordable for many farmers and ranchers, he said. "They can't pass cost increases on to their customers the way other businesses can.  "We share the Administration's goal of reining in health care costs, but we would rather see health care reform that improves and builds on the current health care delivery system," he said.