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Corn+Soybean Digest

Knee-High by July 4th

For generations, the standard measure for corn growth was “knee-high by July 4th”, which meant that the corn plant should be able to produce a crop for that year. Of course, most farmers a couple of generations ago had much lower yield goals for their corn than the farmers of today. Today, “waist-high” or highercorn by July 4th is a more typical, and has resulted in some very good corn yields in most areas in recent years. It would be difficult to get exceptional corn yields in Southern Minnesota if corn is only “knee-high” or smaller on July 4th. The 2009 crop year in Minnesota and Northern Iowa started out cool and dry from a weather standpoint; however, adequate rainfall in most areas, along with warmer than normal temperatures, have provided for very favorable growing conditions in the last half of June. This has allowed most corn in Southern Minnesota and Northern Iowa to be over “waist-high” by July 4th, with some early planted corn approaching “shoulder-high.”

Corn and soybean development has extended at a rapid pace during the last two weeks in June, as a result of above-normal temperatures and accumulation of growing degree units(GDUs) during that period. At the University of Minnesota Southern Minnesota Research Center, a total of 791 GDUs had been accumulated from May 1 through June 29, 2009, which is about 7%, or three days behind normal. However, much of the corn in Southern Minnesota was planted from April 15-30, and thus benefitted from some GDU accumulation prior to May 1. In early to mid-June, the accumulation of GDUs was running 12-15% below normal, so there has been dramatic improvement in the last half of June.

June rainfalls have been quite variable across the region, with most areas of South-Central and Southeast Minnesota receiving some very timely rainfalls during the last three weeks of June. Total June rainfall at the Waseca (MN) Research Center totaled 2.76 in. as of June 29, which compares to a normal June rainfall of 4.22 in. The total precipitation for 2009 through June at Waseca is now at 10.75 in., compared to a normal of 16.24 in. Some areas of Southern Minnesota received close to normal rainfall amounts in June; however, there are portions of Southwest and West Central Minnesota that remain extremely dry, and will need more rainfall as we enter the critical corn tasseling and pollinating period in mid-July. There have been some isolated areas of excessive rainfall and hail damage during severe storms in late June, especially in extreme Southern Minnesota.

The American Clean Energy and Security Act (HR-2454), or the so-called Climate Change Bill, was passed by a narrow margin in the U.S. House of Representatives on June 26. HR-2454 would cap carbon emissions at 17% below 2005 levels by 2020, 42% below by 2030, and 83% below by 2050. The Bill also creates a so-called Cap and Trade system, through which a company or business could purchase carbon allowances (credits) from other businesses and industries that reduced carbon emissions through their normal operations. The legislation also calls for 15% of electrical energy in the U.S. to come from renewable sources by 2020, such as wind and solar.

The Bill would also give the Environmental Protection Agency (EPA) primary authority for monitoring climate change and the so-called Carbon Cap and Trade system to provide payment for carbon credits, and to assess charges for excess carbon emissions. Beginning in 2012, 75% of carbon emission allowances by EPA would be provided free of charge, and 25% would need to be purchased. By 2030, 75% of required carbon emission credits would need to be purchased; however most of the free carbon emission allowances would be phased out in 10-20 years. The allowance for free carbon credits is variable, and provides more credits to businesses, such as utilities, that are serving lower income consumers and businesses.

Congressman Collin Peterson (D-MN), who is chair of the U.S. House Agriculture Committee, negotiated additions and modifications to the language in HR-2454 to make the legislation more acceptable to the agriculture industry, and for U.S. produced renewable fuels. Some of the modifications to HR-2454 in the Peterson Amendment include giving USDA more authority on carbon credits, offsets, and renewable biomass; as well as preventing the EPA from using “indirect land use” in foreign countries as part of the carbon calculations for at least five years, and only based on sound scientific evidence after that. The Peterson Amendment exempts many agricultural practices from carbon emissions requirements, and provides some assurances that farm operators will receive proper credit and payment for carbon offsets that are provided through more environmentally friendly farming practices, with this credit to producers extending back to practices implemented in 2001 and after. Peterson was also able to include some extra measures to assist rural electric co-ops.

Most farm organizations and commodity groups applauded the amendments that Congressman Peterson made to HR-2454; however, many of these groups are still quite apprehensive about the overall Climate Change Bill that passed the U.S. House. The biggest concern is what the resulting increase in cost will be for electricity for farm operators, rural businesses, and consumers, especially in the Midwestern States, where a majority of electricity is generated from coal energy, which is a major source of excess carbon, and thus would require the purchase of carbon credits. In addition to rises in electricity costs, farmers are also likely to see higher costs for fuel, fertilizer, chemicals and other inputs as a result of future carbon requirements under HR-2454. The Peterson Amendment will at least allow farm operators that utilize conservation tillage, and other USDA approved farming practices, to re-capture some value for the carbon credits that are being provided; however, increased agricultural costs of production in the future are likely to far exceed the value producers receive from carbon credits provided.

The Climate Change Bill is not yet law. It now goes to the U.S. Senate, where there are likely to be additional challenges, especially from senators representing segments of the population that will be impacted the most by the legislation. The Senate is likely to take up debate on the legislation in the Fall of 2009. President Obama supports the climate change legislation, so he is likely to sign a bill, once it passed both houses of Congress.

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