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Northwest Iowa Dairy Outlooks

A local discussion of current science and issues concerning dairying in northwest iowa

Monthly Archives: April 2010

The American Meat Institute, National Cattlemen’s Beef Association, National Chicken Council, National Pork Producers Council, National Turkey Federation issued a letter to the Committee on Ways and Means asking for an end to the 30-year-old tax credit and a protective tariff for ethanol to expire at the end of this year due to adverse impacts on their constituents.

“Although we support the need to advance renewable and alternative sources of energy, we

strongly believe that it is time that the mature corn-based ethanol industry operates on a level

playing field with other commodities that rely on corn as their major input. Favoring one

segment of agriculture at the expense of another does not benefit agriculture as a whole or the

consumers that ultimately purchase our products,” the letter’s authors stated.

The letter noted that the blender’s tax credit, coupled with the import tariff on foreign ethanol, has distorted the corn market, increased the cost of feeding animals, and squeezed production margins — resulting in job losses and bankruptcies in rural communities across America.

The U.S. Department of Agriculture estimates that corn use for ethanol production increased

from 1.603 billion bushels during the 2005-2006 marketing year to 3.677 billion bushels during

the 2008-2009 marketing year. Ethanol production is expected to absorb 4.3 billion bushels in

the 2009-2010 marketing year. Ethanol use accounted for approximately 14 percent of total corn

use in 2005-2006, and that percentage is projected to grow to more than 33 percent in 2009-

2010. Over the same period, use of corn for feed has fallen from about 55 percent to about 42

percent, with exports falling from almost 19 percent to about 15 percent.

The organizations believe that the VEETC may no longer be needed to stimulate conventional corn ethanol production because the domestic industry has matured. The report also stated that the VEETC’s annual cost to the Treasury in forgone revenues could grow from $4 billion in 2008 to $6.75 billion in 2015 for conventional corn starch ethanol.

“We support energy independence and the development of the renewable fuels industry.

However, 30 years of support has created a mature corn ethanol industry that now needs to

compete fairly in the marketplace and allow for the next generation of renewable fuels to grow.

We strongly encourage you to oppose an extension of the VEETC and the import tariff on

foreign ethanol that are set to expire this December,” concluded the authors.

the Renewable Fuels Association immediately rebutted the letter noting in their release that “Once again, corporate livestock interests are seeking to return to the days they bought corn under the price of production for the American farmer. Such practices resulted in farmers getting more income from the government than they could from the marketplace, while corporate livestock industries prospered,” noted the authors of the letter.

The RFA notes America’s commitment to ethanol and other renewable fuels has brought hundreds of thousands of jobs and increased economic opportunity to rural America like nothing before it. It is providing farmers with a fair market price for their corn, reducing the price American’s pay at the pump, and help tame America’s addiction to oil.

The RFA suggests that ethanol is not the major driving force behind corn prices, whether they are rising or falling. Oil prices, speculation, weather, and a host of other factors have far more to do with the price of corn than ethanol production. Consider that since the peak of corn prices in 2008, oil prices have fallen by half and speculation in grain markets has eased considerably. As a result, corn prices have moderated to a more sustainable level given the increase in oil prices from pre-RFS days.

“American farmers have repeatedly shown the capability to produce enough corn to meet all needs and still have bushels left over at the end of the year. To continue blaming ethanol for corn prices after such arguments have been roundly refuted is beyond misleading,” asserted the authors of the RFA letter.

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MeatingPlace editors report that Bentonville, Ark.-based Wal-Mart Stores Inc. announced today that it will require additional beef safety measures from its beef suppliers, including validating their food safety measures through specialized testing.

The new process controls standards and goals are additions to a food safety program that already requires ground beef suppliers to test for E.coli O157:H7 and achieve prevention-based certification against one of the Global Food Safety Initiative (GFSI) internationally recognized standards.

“At Walmart and Sam’s Club, our commitment to providing our customers with safe, quality foods is unparalleled,” said Vice President for Food Safety Frank Yiannas in a news release. “As part of our continuous improvement efforts, we go further than many U.S. retailers in requiring leading-edge food safety standards throughout the entire food production chain.”

“In light of recent beef recalls, we determined it was prudent to require an additional layer of protection for our customers,” he said.

The new program requires Walmart and Sam’s Club beef suppliers to implement controls that would significantly reduce potential contamination levels and validate that the measures they’ve implemented are effective through specialized testing.

Suppliers who do not operate slaughterhouses must be in compliance with the new standard by June 2011. For beef slaughterhouse suppliers, there is a two-step approach with the first step to be completed by June 2011 and the second by June 2012.

Walmart and Sam’s Club will work closely with beef suppliers to ensure that the new requirement is implemented without additional cost to customers.

The protocol has been reviewed with numerous stakeholders including consumer groups, regulators, academicians, beef suppliers, and industry associations.

James Marsden of Kansas State University stated, “Walmart has taken steps to provide its customers with the safest possible beef products. Consumers across the United States will benefit greatly from this timely food safety initiative.”

Jim Dickson, Iowa State University Professor of Animal Science, added, “Walmart is taking a progressive approach to assuring the safety of the foods they sell. This is a win for the consumers, the beef industry in general, and Walmart. The lessons learned from Walmart’s approach will be applicable to ground beef sold everywhere.”

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Starting April 26, 2010, livestock producers will have an additional tool available to help them manage risk when purchasing distillers dried grains (DDG). The Chicago Mercantile Exchange (CME) will begin trading DDG as a means for livestock producers and corn ethanol processors to lock in prices paid or received for DDG. For more information go to: http://www.extension.iastate.edu/DairyTeam/News/DDGFutures.htm.

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Timely rains boosted spring pastures and greatly improved soil moisture levels. The rains are expected to result in a good finish for wheat and provide a head start to cotton and hay crops. Cotton farmers were excited about planting in such ideal conditions. Hay producers were waiting for Bermuda grass pastures to dry out a little more before fertilizing. Many beef producers were grazing out poorer-looking wheat fields. Cattle turned out on pastures were looking good. Cows were calving with good body condition scores and producing healthier-looking calves. The pecan and fruit crop was off to a good start as well.

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American agriculture’s brief wheat revival appears to be over. Farmers in 2010 are expected to practice the old-fashioned religion of corn and soybeans, said a Purdue University agricultural economist. Chris Hurt said Wednesday’s (March 31) U.S. Department of Agriculture Prospective Plantings Report portends larger stocks of corn and soybeans. He expects prices for the two commodities to fall, leaving farmers with tighter profit margins. “There really is nothing in this report that would make us more bullish in terms of corn and soybeans,” Hurt said. “This has a tone that would suggest weaker prices until we can perhaps see lower prices begin to stimulate usage in the United States and around the world. “That stimulation of usage would take some time. We’d have to rebuild livestock numbers. Most of the livestock industry is just beginning to get back to making some money, and it is going to be very hesitant to expand.” How low could corn and soybean prices go? “Corn could well be in the lower $3 per bushel range,” Hurt said. “Soybeans certainly could drop back below the $9 per bushel mark, as we think about new crop beans especially. This begins to squeeze – given relatively high production costs – the margins for producers. “We’re reverting now a little bit back to the norm in U.S. agriculture. And the norm in U.S. agriculture has been we have more ability to produce than we have the ability to consume.” The USDA report, issued annually and based on farmer surveys, projected a 3 percent increase in corn acreage and a slight increase in soybean planted acreage from 2009 across the United States this spring. Farmers told the USDA they expect to plant 88.8 million acres of corn. National soybean acreage is projected at just over 78 million acres, a less than 1 percent increase from this past year, but an all-time U.S. high. In comparison, U.S. farmers intend to produce 5.3 million fewer acres of wheat. Indiana farmers say they intend to plant 5.7 million acres of corn and 5.5 million acres of soybeans this spring, up 100,000 acres and 50,000 acres, respectively. Farmers in Illinois expect to plant 12.6 million acres of corn (up 600,000 acres) and 9.5 million acres of soybeans (up 100,000 acres), while Ohio growers intend to plant 3.7 million acres of corn (up 350,000 acres) and 4.6 million acres of soybeans (up 50,000 acres). Those additional corn and soybean acres are coming mostly from wheat, Hurt said. “The big decline in wheat acreage is really coming from the fall-seeded crops,” he said. “Two things are going on there. One was very low returns and poor prices for wheat prospects and, secondly, extremely wet weather for the harvest season in 2009. We just didn’t get the wheat in the ground. “In Indiana we saw wheat acreage at the lowest level in recorded history – just 300,000 acres. That gave rise, then, to the ability to plant more corn and soybeans. We see a very similar pattern in neighboring states.” Just two years ago, wheat acreage was on the rise. Indiana farmers that year planted around 600,000 acres. If the USDA report is accurate, farmers should return to average income levels, Hurt said. “If we go back and look at the last five years, we really see two good crop years in terms of income – 2007 and 2008. The 2009 crop ended up being a very high-cost crop, and most producers didn’t really have strong recovery in terms of their costs. And now 2010 shapes up kind of the same way. We are going to see, maybe not a struggle, but tight margins. This is what most producers in agriculture in Indiana and around the country face most years.” The USDA report is available online at http://www.usda.gov/nass/PUBS/TODAYRPT/pspl0310.txt

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Meatingplace reported this week that UN specialists are looking at the contribution of meat production to climate change, after claims that an earlier report exaggerated the link.

A 2006 report concluded meat production was responsible for 18% of greenhouse gas emissions – more than transport.

But a new analysis, presented at a major US science meeting, says the transport comparison was flawed.

”’curbing meat production and consumption would be less beneficial for the climate than has been claimed, said Frank Mitloehner from the University of California at Davis (UCD).

“Smarter animal farming, not less farming, will equal less heat,” he told delegates to the American Chemical Society (ACS) meeting in San Francisco.

“Producing less meat and milk will only mean more hunger in poor countries.”

Leading figures in the climate change establishment, such as Intergovernmental Panel on Climate Change (IPCC) chairman Rajendra Pachauri and Lord (Nicholas) Stern, have also quoted the 18% figure as a reason why people should consider eating less meat.

The 2006 report – Livestock’s Long Shadow, published by the UN Food and Agriculture Organization (FAO) – reached the figure by totting up all greenhouse-gas emissions associated with meat production from farm to table, including fertiliser production, land clearance, methane emissions from the animals’ digestion, and vehicle use on farms.

But Dr Mitloehner pointed out that the authors had not calculated transport emissions in the same way, instead just using the IPCC’s figure, which only included fossil fuel burning.

“This lopsided ‘analysis’ is a classical apples-and-oranges analogy that truly confused the issue,” he said.

One of the authors of Livestock’s Long Shadow, FAO livestock policy officer Pierre Gerber, told BBC News he accepted Dr Mitloehner’s criticism.

“I must say honestly that he has a point – we factored in everything for meat emissions, and we didn’t do the same thing with transport, we just used the figure from the IPCC,” he said.

FAO is now working on a much more comprehensive analysis of emissions from food production, he said.

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The Meatingplace reports a new study suggests severely obese adolescents can safely lose weight with a medically supervised diet high in protein and low in carbohydrates.

The study, published in the Journal of Pediatrics, noted that only a few known safe and effective treatments for severely overweight youths exist. The research community has had safety concerns about limited carbohydrate diets in children and adolescents.

At the beginning of the study, the teenaged participants all weighed at least 175 percent more than a statistically determined ideal weight. After 13 weeks, the 18 teenagers on a high-protein diet lost more weight and kept it off longer than the 15 subjects on a low-fat and calorie-controlled diet. No serious harmful effects were observed, with adverse effects evenly distributed between the two groups. The high-protein group actually showed a greater improvement in insulin resistance.

The National Cattleman’s Beef Association and USDA provided funding for the study.

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