FRIDAY FARM PHOTO: UNPREDICTABLE

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I took this photo somewhere in rural Arkansas, many years ago, on my way to Missouri to visit my grandparents. While this picture might not be significant to others, it is to me. When I took this picture, I was still in high school and I never would have thought that I would end up in agriculture. I came from a suburban town in Alabama. I didn’t know much about farming. After a year at IL Corn, that’s not true anymore. I recently discovered this picture and it stands as a testament that sometimes you unknowingly encounter things in your life that will have a significant impact on your life in the future.

McDonald_Taylor

Taylor McDonald
Communications Assistant
IL Corn

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#TBT: SEVENTEEN YEARS LATER, NAFTA HAS HAD POSITIVE IMPACT ON AGRICULTURE

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Since President Trump’s election, there have been many questions surrounding the future of trade agreements. Already the new administration has withdrawn from the Trans-Pacific Partnership, the multi-national that President Obama would be the cornerstone of his last year in office. During the campaign, then-candidate Trump consistently spoke of TPP and other trade agreements that should be restructured or dismantled, like the North American Free Trade Agreement (NAFTA). Trade agreements are important to farmers. Exports account for a considerable amount of a farmer’s bottom line. To highlight this need, we’ll take a look at an article from 2011 that shows the importance of trade agreements like NAFTA.

[Originally published: April 7, 2011]

In honor of World Health Day, check out this post on world food trade and the positive benefits of free trade agreements from IL Corn!

The Economic Research Service of USDA has released its latest report on the effects of NAFTA on U.S. agriculture, NAFTA at 17: Full Implementation Leads to Increased Trade and Integratio. It concludes that most of North American agriculture has achieved a high degree of market integration for cross-border flows of trade and investments with the removal of almost all barriers.

For Illinois, this information is important.  Half of the Illinois corn crop is exported due to our unique position along the Mississippi River system (including the Illinois and Ohio Rivers); Illinois corn farmers continue to be interested in expanding opportunities to export their goods.

Through NAFTA, the U.S. and Mexico have eliminated all tariffs on agricultural products, unique among U.S. free trade agreements (FTA). The Canada-U.S. FTA began in 1989, but U.S. restrictions remain on imports of dairy products, peanuts, butter, and cotton, and Canadian restrictions remain on dairy products, poultry, eggs, and margarine.

U.S. exports of wheat and rice to Mexico have quadrupled in the NAFTA era, while exports of feed grains, oilseeds, and related products to Mexico have increased by 134 percent from an annual average of 8.3 million metric tons to an average of 19.5 million metric tons. These have allowed livestock and poultry producers to lower their costs of production, expand output and compete more effectively with meat imports.

U.S. livestock and meat trade is highly integrated with Mexico, but Mexican integration with the U.S. market is rated medium to low due to animal health import restrictions on pork and poultry. U.S. and Canada are highly integrated with cattle, beef, hogs and pork, but have low integration in poultry and dairy because they continue to have barriers to trade.

Illinois corn farmers look forward to this sort of growth in opportunity if the recently negotiated Colombia Free Trade Agreement passes in the House and Senate later this year.  Other Free Trade Agreements that will impact agriculture are the Korea Free Trade Agreement which would increase exports of various agricultural commodities by up to 46 percent while the Panama Free Trade Agreement could mean increased U.S. agricultural exports to Panama of more than $195 million per year by full implementation.

Read more analysis of the ERS report on NAFTA here.

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ARE FARMERS RICH IN 2017?

Before you get started, you’ll want to read these posts:

ARE FARMERS RICH? from September 2014
I WASN’T LYING, FARMERS AREN’T RICH from October 2014
ARE FARMERS RICH?  UPDATED! from June 2015

You’ll notice that I didn’t write an update to this post in 2016.  That’s because, it was just too plain depressing to write about.

But, you’re owed a realistic picture of what the farming economy looks like for farmers today.  And the truth is, we’re on the cusp of what will likely become a financial crisis.

2017 BUDGETS

img_3104In order to grow a crop, farmers must buy things like seeds, equipment, chemicals and fertilizer.  These are called input costs.  For 2017, the University of Illinois estimates farmers will pay $521 per acre to keep the lights on and put some corn in the ground.

But the crop that they are growing will be worth something, right?

The University of Illinois estimates a 200 bushels per acre yield for corn.  And in Illinois, our 2016 average yield was 197, but the U.S. average was 175, so although 200 is a good estimate compared to the trend, it could be high.  It could also be low!  That’s the fun of farming … you just never know!

So 200 bushel per acre times $3.50 per bushel which is a good average number based on the market right now equals an income of $700 per acre.

$700 – $521 = $179 per acre

LAND COSTSplanting in mirror

If you read those first articles like I asked you to, you know that many farmers don’t own all their land.  In fact, its pretty common for farmers to rent 50-75% of the ground their farming, and I’d say that it’s much more common for younger farmers to rent up to 100% because they are just starting out and haven’t purchased any farm ground yet.

Cash rent gets expensive.  The average cash rent in Illinois according to the U of I was $221.  This will vary considerably across the state.  In central Illinois where my family farms, it’s not uncommon for cash rent to be $300-$400 per acre.  In southern Illinois where the ground isn’t as good, $100 cash rent is reasonable.

But if we stick to the average $221 from 2016 …

HOW MUCH DID THIS FARMER BANK?

If she’s farming 1,500 acres, she lost $63,000.
If she’s farming 1,000 acres, she lost $42,000.
If she’s farming 500 acres, she lost $21,000.

You get the idea.

WHAT’S A FINANCIAL CRISIS?

Kids in tractorThere are farmers all over the country that are struggling to show a positive cash flow right now.  On their balance sheet, based on the predictions, the prices, the costs, the yields, they can’t make any money.  They would literally be better off to not put a crop in the ground and save the effort.

But livestock would starve.  We’d have to import more petroleum.  Fuel needs and hunger usually start wars.  No one wants that.

Still, banks are largely unwilling to loan farmers money when a basic balance sheet shows such a significant loss.  Would you loan someone money knowing they were going to lose all of it and then some!?

And of course, there’s a chance that crazy weather would lower yields over the country and impact market prices and change the entire game.  So farmers – the eternal optimists – are definitely going to plant a crop if there’s any way they can figure out how to afford it.

ARE FARMERS RICH?bag of money

Not in 2017.  Not at all.  The cool thing about farmers is that they are savers.  They’ve invested in their farms during good times, to be able to cut their costs to the bare minimum during these sorts of economic climates.

They’ll make it through.  And thanks to them, so will you.

Mitchell_Lindsay

Lindsay Mitchell
ICGA/ICMB Marketing Director

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HOW DO LOCKS & DAMS WORK?

We talk a lot about locks and dams on this blog.  We talk about how old they are.  That they are vital to agriculture and commerce.  That locks and dams and the Illinois and Mississippi Rivers are Illinois’ advantage.  That the U.S. has to fund lock and dam modernization or we’ll be left in the dust of a global market.

But how many of you actually know how a lock works?

Admittedly, I’m not an engineer or a person who understands “how stuff works” easily or quickly.  Yes, I’ve seen how a lock and dam work, but every time I need to remember that sort of information, it helps to have a refresher.

So whether you’re the first sort (that doesn’t understand how locks work at all) or the second sort (that saw how a lock works once or twice, but needs reminding), you might find this video interesting.

Locks are what make us able to tow huge barge loads of goods up and down the rivers even when the river depths are different as they get closer to the Gulf of Mexico.

Watch and see:

Mitchell_LindsayLindsay Mitchell
ICGA/ICMB Marketing Director

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FRIDAY FARM PHOTO: A GOOD SIGN

 

2-3-17goodsignDriving under a rainbow is probably a good sign.

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#TBT: GROUNDHOG DAY!

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Happy Groundhog Day!

How perfect is that Groundhog Day land on a #TBT? We feel like Bill Murray in the movie of the same name. We seem to do this every year…Then again, it’s not deja vu or a rip in the magical space-time continuum. It’s tradition.

So let’s catch up on an annual event that the people of Punxsutawney, Pennsylvania love so much that they even have their own Punxsutawney Groundhog Club (apparently you can even join!).

Here’s a short history from the official website:

Punxsutawney Phil's handler Ron Ploucha introduces the groundhog to the crowd at Gobbler's Knob in PunxsutawneyGroundhog Day, February 2nd, is a popular tradition in the United States. It is also a legend that traverses centuries, its origins clouded in the mists of time with ethnic cultures and animals awakening on specific dates. Myths such as this tie our present to the distant past when nature did, indeed, influence our lives. It is the day that the Groundhog comes out of his hole after a long winter sleep to look for his shadow.

If he sees it, he regards it as an omen of six more weeks of bad weather and returns to his hole.

If the day is cloudy and, hence, shadowless, he takes it as a sign of spring and stays above ground.

The groundhog tradition stems from similar beliefs associated with Candlemas Day and the days of early Christians in Europe, and for centuries the custom was to have the clergy bless candles and distribute them to the people. Even then, it marked a milestone in the winter and the weather that day was important.

Old English song:

If Candlemas be fair and bright,
Come, Winter, have another flight;
If Candlemas brings clouds and rain,
Go Winter, and come not again.

Although Phil is obviously not the same throughout the past hundreds of years (or is her?), many believe that the tradition is not only fun but true. So every year, the town in Pennsylvania gets together to commemorate the day and see what the prediction is.  How accurate has Phil been?

How accurate has Phil been? Not very… According to

Not very… According to LiveScience, he’s only been right about 36-39% percent of the time.

What happened this year?

This morning, Phil saw his shadow so Phil’s followers think we have another 6 weeks of winter, because, apparently we haven’t had enough yet. Let’s hope he isn’t right.

 

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WATCH A YEAR’S WORTH OF FARMING IN FOUR VIDEOS

360_durdan_shootIllinois corn farmer and current Illinois Corn Growers Association President Justin Durdan understands how consumers view farming with caution and skepticism. He understands that because of fear-based marketing, people want to know what’s in their food. Using cutting-edge 360-degree video technology, Justin gives us an all-access view of his farm and the work he does over the course of a farming season.

Illinois Corn Marketing board partnered with Illinois Farm Families to create four videos that show unique periods in farming from planning and planting to growing and harvesting. To give the videos a consumer perspective, Justin teams up with Chicago-area radio personality Patti Vasquez who asks the questions that consumers might want to know.

You find all the videos and more information here.

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