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Articles from 2016 In August

Despite heavy rain in some areas, Iowa's 2016 crops look good overall

Despite heavy rain in some areas, Iowa's 2016 crops look good overall

Unfortunately, the heavy rains that rolled through northeast Iowa last week caused significant flooding and continue to create challenges for farmers and the communities where the flooding was worst. But, in general Iowa’s 2016 corn and soybean crops continue to move towards maturity and remain in pretty good condition. USDA’s latest survey, based on conditions as of August 28, show 83% of the state’s corn and 82% of the soybeans are rated good to excellent.

EARLY MATURING BEANS: At the end of August USDA’s weekly survey shows 13% of Iowa’s 2016 soybean acres have started to turn color, 3 days ahead of last year’s pace. Soybean condition statewide rates 82% good to excellent, although there are reports of sudden death and white mold in some bean fields.

In comparison to Iowa, the U.S. corn crop is rated 75% good to excellent at the end of August. The Illinois corn crop has improved, while corn crops in Indiana and Ohio as of August 28 slipped from the previous week’s survey in those states. The nation’s soybean crop is rated 73% good to excellent, with improvements noted in Indiana and Michigan, and minor slippage in Indiana.

The complete Iowa Crop Progress and Weather Report is available on the Iowa Department of Agriculture & Land Stewardship’s website at or on USDA’s site at The report summary follows here:

CROP REPORT: Above normal rainfall resulted in just 4.1 days suitable for fieldwork across Iowa during the week ending August 28, 2016, according to USDA’s National Ag Statistics Service. Activities for the week included chopping corn for silage and planting cover crops. Producers continued to cut hay when conditions were dry enough.

Corn is starting to reach maturity, notably in southern Iowa

Topsoil moisture levels rated 1% very short, 4% short, 83% adequate and 12% surplus. Subsoil moisture levels rated 1% very short, 7% short, 82% adequate and 10% surplus. Ponding and flooding of some fields were reported in the northern two-thirds of Iowa.

The survey shows 94% of the state’s 2016 corn crop had reached the dough stage or beyond as of August 28. That’s eight days ahead of the five-year average, with 65% dented or beyond, five days ahead of both last year and normal. Corn was starting to mature, most notably in the southern third of Iowa. Corn condition rated 83% good to excellent despite some reports of crop damage from heavy rain and wind during the week. Soybeans setting pods reached 96%, four days ahead of last year.

Sudden death and white mold disease hitting some bean fields

About 13% of Iowa soybeans have started to turn color, three days ahead of last year’s pace. Soybean condition rated 82% good to excellent, although there were reports of sudden death and white mold in some soybean fields. Oats harvested for grain or seed was virtually complete.

The third cutting of alfalfa hay was 73% complete, a week ahead of last year. Pasture condition rated 64% good to excellent. Livestock conditions were normal although higher insect numbers and muddy feedlots were reported in some areas of the state.

Heavy rain and flooding took a toll in parts of northeast Iowa

IOWA PRELIMINARY WEATHER SUMMARY—for week ended Aug. 28, 2016

By Harry Hillaker, State Climatologist, Iowa Department of Agriculture & Land Stewardship

The big weather news this past week was the torrential rains and flooding over far northeast Iowa on Tuesday (Aug. 23) into Wednesday (Aug. 24) morning. Widespread rain amounts of greater than four inches were common from Worth County eastward to Allamakee County and on into southwest Wisconsin. Heaviest rains were centered in Winneshiek County where 8.46 inches fell overnight at a location five miles southeast of Decorah. Record flooding occurred along portions of the Upper Iowa and Turkey rivers.

Rainfall statewide averaged above normal, temperature normal

Rain fell nearly statewide Tuesday night but with highly variable amounts. Another, much smaller area of excessive rain, fell across east central Nebraska and edged into southwest Harrison County where De Soto Bend National Wildlife Refuge picked up 5.38 inches. Otherwise there were thunderstorms scattered across the southern one-third to one-half of Iowa on Wednesday night and over much of Iowa on Friday night (Aug. 26) night into Saturday (Aug. 27) morning. Additional thunderstorms developed over the southern one-third of the state Sunday (Aug. 28) evening but largely fell too late to be reflected in this week’s crop statistics.

Rain totals for the week varied from none over a small area extending from Onawa to just northwest of Sac City to 8.95 inches 5 miles southeast of Decorah. The statewide average precipitation was 1.19 inches, a little above the weekly normal of 0.91 inches. Temperatures for the week as a whole averaged right at normal. The warmest weather came on Sunday (Aug. 28) with highs reaching 91 degrees at Bellevue and Burlington while Monday (Aug. 22) and Friday (Aug. 26) were the coolest days. Elkader reported the week’s lowest temperature with a Monday morning low of 48 degrees.

Next "Grassroots Grazing" session to be held in central Iowa

Next "Grassroots Grazing" session to be held in central Iowa

The second session of Grassroots Grazing for young and beginning graziers, set for September 15, will provide a unique opportunity for attendees. Iowa State University Extension beef program specialist Joe Sellers says the ISU Marsden Agronomy Farm and Field Extension Education Laboratory location near Boone in central Iowa offers a firsthand look and up-to-date information. Topics to be covered include grazing, cover crops, crop rotation options, and the Marsden Farm cropping experiment.

GOOD GRAZING: Better ways to graze cows is the focus of Grassroots Grazing sessions being held by ISU Extension. Plan to attend the next field session Sept. 15 near Boone in central Iowa.

“Professor Matt Liebman of the ISU agronomy department will talk about the various characteristics of conventional and more diverse crop systems and will lead a tour of the farm,” Sellers says. “Agronomy graduate research assistant Hannah Poffenbarger will present information on financial aspects and considerations of both conventional corn-soy rotations and more diverse four-crop rotations, including the option of integration with cattle production.”

Extended grazing is a management tool to reduce feed costs

Sellers will talk about using extended grazing as a way to reduce feed costs. Erika Lundy with the Iowa Beef Center will update the group who attends this event on grazing annual cover crops. Sellers says this session is open to any cattle producer, regardless of whether they attended the earlier Grassroots Grazing series session.

The September 15 event begins at 5:30 p.m. with the farm tour, followed by a light meal in the Field Extension Education Lab (FEEL) building and a discussion about this year’s grazing season. The meeting will adjourn by 9 p.m.

No charge to attend this session, but you should preregister

“There is no fee to attend, but we encourage preregistration by September 13 to ensure adequate meal and materials count,” Sellers says. “Please contact me at 641-203-1270 or Erika Lundy at 515-294-9881 to preregister or for more information.”

The address of the farm is 1928 240th Street, Boone. Directions: From Hwy. 30, at U Avenue, turn south. (United Community School is on the northeast corner and the ISU Agronomy Farm is on the southeast corner of this intersection.) Proceed south on U avenue for one mile then turn right on 240th street. Proceed west for 0.5 miles. FEEL is on the south side of the road – the crop rotation plots are ½ mile north of FEEL. Look for a sign directing you to the plots.

The event flier has more information. Sponsors are IBC, ISU Extension, USDA Natural Resources Conservation Service, and Leopold Center for Sustainable Agriculture. The Iowa Beef Center at ISU was established in 1996 with the goal of supporting the growth and vitality of the state’s beef cattle industry. It comprises faculty and staff from ISU Extension and Outreach, College of Agriculture & Life Sciences and College of Veterinary Medicine, and works to develop and deliver the latest research-based information regarding the cattle industry. For information, visit

Sugarcane aphids on sorghum leaf
<p><strong>Sugarcane aphids on sorghum leaf.</strong></p>

Pest alert: Heavy infestation of sugarcane aphid in Arizona, California sorghum

Arizona and California sorghum growers and pest control advisers (PCAs) should be on high alert for the new invasive pest -sugarcane aphid - found in heavy numbers in some fields in central Arizona and the southern San Joaquin Valley.

Staff at the Arizona Pest Management Center (APMC) has collected and field identified several samples in the Maricopa and Stanfield areas in Pinal County. University of Arizona insect diagnostician Gene Hall confirmed the sorghum crop invader as sugarcane aphid, Melanaphis sacchari. This is a new pest report for the state.

According to the APMC, it’s likely this aphid has been in the state for longer than this year, although reports had extended only as far west as eastern New Mexico in 2015.

Some California PCAs are reporting that traditional aphid control practices are not working against the new aphid species.

The University of California will host a tailgate meeting Sept. 7 near Pixley to examine an infested field. The event starts at 10 a.m. at the corner of Avenue 104 and Road 104.

Growers and PCAs can review the UC newsletter bulletin on sugarcane aphid developed by university entomologists David Haviland, Pete Goodell, and Larry Godfrey with assistance by Jeff Dahlberg of the Kearney Agricultural Research & Extension Center.

According to the UC bulletin, the sugarcane aphid sugarcane aphid is yellow in color with black feet, and the tips of antennae and cornicles (tailpipes) point upward from the rear of the insect -a different appearance than other aphid species.

Sugarcane aphids intercept nutrients in the plant sap which develop leaves and grain heads. Heavy sugarcane aphid infestations can kill leaves, stunt growth, and reduce the size and quality of grain heads.

In addition, honeydew and sooty mold on leaves can impact photosynthesis and gum up harvest equipment.

More information on the pest, including photos of the sugarcane aphid on sorghum plants, is available via this UA link.

Click here for more information from Texas A&M Agrilife Extension and Research about identification biology, damage, sampling, and management.

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New conservation initiative launches in Illinois, Iowa and Nebraska

New conservation initiative launches in Illinois, Iowa and Nebraska

Major food and agricultural supply chain companies, along with conservation organizations, launched a partnership to improve soil health, water quality and water conservation efforts. The new initiative – the Midwest Row Crop Collaborative (MRCC) - will provide needed support for farmers in their pursuit of further conservation efforts to reduce nutrient loss and protect water supplies.

The MRCC’s goal is to reduce nutrient loss flowing into the Mississippi River Basin, which aligns with goals set forth in state Nutrient Loss Reduction Strategies, and to take pressure off the Ogallala Aquifer.

“Consumers want to know where their food came from,” says Jill Kolling, senior director of sustainability for Cargill. “We want to do a better job helping consumers understand there is a family farmer behind this (food products) and that farmers are already doing great things.”

The joint announcement at the 2016 Farm Progress Show came from founding companies and organizations including Cargill, Environmental Defense Fund, General Mills, Kellogg Company, Monsanto, PepsiCo, The Nature Conservancy, Walmart, and World Wildlife Fund.

“As an agriculture and food company, Cargill sees the collaborative as an essential way to support and accelerate the adoption of existing conservation programs designed by farmers and to recognize the good work that’s already been done,” says Jill Kolling, senior director, sustainability, Cargill. “It’s about providing solutions that make sense to farmers, the environment and the consumers.”

Kolling says the collaborative was initiated by Wal-Mart.

“We believe customers shouldn’t have to choose between food they can afford and food produced in a sustainable way,” says Ryan Irsik, director of public affairs for Wal-Mart. “This commitment starts here in the fields of Iowa, Illinois and Nebraska.”

CEOs from MRCC partnering companies gathered two years ago in Bentonville “to talk about ways to advance agriculture in the Midwest” and enhance conservation efforts. They also want consumers to understand where their food comes from and that farmers are good stewards of the land.

“Consumers want to know where their food came from,” Kolling says. “We want to do a better job helping consumers understand there is a family farmer behind this (food products) and that farmers are already doing great things.”

Those “great things” include the Soil Health Partnership, an initiative from the National Corn Growers Association, consisting of 65 farmer partners who test conservation practices such as cover crops, conservation tillage, no-till or strip-till on a field-scale. MRCC hopes to help increase participation in the partnership and expand the reach to 100 farms.

Conservation in practice

Roger Zylstra, a corn, soybean and hog farmer from Jasper County, Iowa, participates in the Soil Health Partnership. He classifies two-thirds of his land as “highly erodible” and uses no-till and conservation tillage - a practice he’s used for more than 30 years.

“I enrolled in the Soil Health Partnership program because I didn’t think continuous no-till was improving my soil health as quickly as I wanted it to,” says Zylstra. He plans to add cover crops to improve soil health and manage erosion. “I also think cover crops will help retain nutrients from fall-applied manure so it doesn’t contribute to water quality problems.”

Zylstra says part of the challenge for implementing recommended conservation strategies is that every farm is different. A farmer incorporating cover crops into a system that uses manure is different from an operation that applies chemical fertilizer. He says the goal is to identify these differences and associated costs to implement different conservation strategies, and then calculate the return on investment from the implemented practices.

Support from MRCC will go towards helping the Soil Health Partnership collect data this data and identify best practices for various environments, in hopes to fast-track conservation practice adoption on more farms.

“This funding is significant to me because we now have more support from the large food and ag companies and environmental groups pushing for change. They’re showing us we don’t have to do it alone,” says Zlystra. “Farmers are, and can be, part of the solution.”

Sorghum profits exist if producers know costs, watch for rallies

Sorghum profits exist if producers know costs, watch for rallies

Since July 1, 2015, the December 2016 corn contract has traded at or above $4.40 per bushel on 15 different trading days. For producers, these rallies represent a window during which they could have sold 2016 sorghum or corn at a profit. Producers who missed this opportunity should not kick themselves for not pulling the trigger and selling. Instead, they should resolve to gain better knowledge of their costs and be prepared to start selling when prices rally above their breakeven point.

Producers should also keep rallies in mind as they start to make 2017 cropping decisions. In this otherwise difficult economy, both sorghum and corn are one rally away from profitability. Several producers did make sales during the early June corn rally, for example, and will be profitable this fall. Many of these producers did the same during a July 2015 rally, and some made sales in summer 2014 as well. Notice a pattern?

The central plains will, in my opinion, see a significant increase in spring crop acres when planters roll in 2017–driven by the liquidity of the corn market. High frequency trading, global connectivity and solid returns have attracted billions of dollars in speculative investment to commodity markets. Many have decried this action as an unwanted intrusion of Wall Street into agriculture, but it is unlikely producers would have had the aforementioned 15 opportunities to market this year’s crop above breakeven without the liquidity speculative funds provide.

What other factors should producers consider when thinking about 2017? Why should producers stick with or increase acres of coarse grains? Although the underlying fundamentals of world grain markets are not terribly bullish, little room exists for disruptive worldwide production or geopolitical hiccups.

Yes, the last two marketing years saw the highest world corn stocks-to-use ratios since the early 2000s, and this marketing year could add to the glut. However, consumption tells a different story. In the 2015/16 marketing year, world corn consumers actually took a bite out of stocks, using almost 102 percent of the year’s production–the highest consumption-to-production ratio since the 2006/07 marketing year and well above the 10-year average of 99 percent.

I am not saying Brazil will plunge into drought or an outbreak of war will cripple the Suez Canal and roil world financial markets before producers start 2017 fieldwork. These examples are black swan events that are almost impossible to predict and this unpredictability is the key. Without slack on the world coarse grain balance sheet (no slack can be found in sorghum as the crop’s world stocks-to-use ratio is at its lowest point in 15 years with consumption at 101 percent of production), significant risk premiums must remain in the market.

What does this situation mean for sorghum and corn producers in the U.S.? Periodic rallies led by speculators trading risk and taking profits before black swans make them disappear. In other words, opportunities to lock profits in difficult years.

Producers should always keep in mind profitable marketing takes a thorough knowledge of costs. Neither the best marketer nor the best producer can survive long without knowing when profit opportunities exist. The summer rallies of the past three years demonstrate the power of this knowledge and the bright opportunity for sorghum and corn in 2017.

Cogburn writes from Abernathy,Texas. He is on Twitter @nspchris

Dairy chop from palm fronds and dates
<p><strong>Dairy chop from palm fronds and dates.</strong></p> <p> </p>

Palm hay: Coachella farmer turns fronds into economical livestock feed

Talk about a win-win-win situation. Dead fronds from palm trees are problem materials when it comes to disposal. Although organic in nature, they are hard to grind up and can take 50 years to biodegrade in a landfill.

Jim Parks, chief executive officer of Palm Silage Inc. at Thermal, Calif., decided that if lemonade can be made from lemons then making food from palm fronds also makes sense.

Parks, a veteran palm tree farmer, traveled to Tunisia where he witnessed cattle feeding on coarse fronds. After the trip, he spent years testing, chopping, and grinding large amounts of palm fronds and wasted dates. His vision was to mold the two natural ingredients together in pellet form and call it palm hay. 

“I’m just a simple farmer in the Coachella Valley growing palm trees for 16 years and this concept isn’t rocket science,” Parks says. “I’ve watched various animals eagerly eat palm fronds off the ground like it was cotton candy.”

The palm tree is from the grass family, a monocot, and is digestible. Fronds trimmed from trees in the spring are high in protein.

For years, discarded palm fronds have been a problem. Parks spent three years and $500,000 modifying grinders, adding dates to the end product, and getting the product into a silage form for baling, cubing, and pelletizing.

“We took what was basically trash and turned it into a nutritious feed,” he says. “We feel like we’ve discovered a gold mine, taking millions of tons of palm fronds currently thrown away in Coachella Valley date crops and turning it into millions of tons of (animal) feed.”

His company has partnered with the city of Phoenix to help dispose of the 34,000 tons of palm fronds discarded into landfills annually.

A two-phase palm frond diversion services contract was signed with Palm Silage Arizona LLC, Parks’ Arizona affiliate, initially leasing six acres to dry and grind the collected fronds, and then another four acres to manufacture livestock feed. The 10-year lease contract includes two, 10-year renewal options.

“They didn’t know how to get rid of the palm fronds. If you put fronds into a landfill it’s like pouring concrete into the works. It messes up their methane gas operation so they don’t want the fronds. Nobody does, except Palm Silage.”

Using their specially-designed equipment, the firm grinds fronds into a hay-like consistency and forms it in palm hay or pelletized feed.

Looking at it from the farmer’s point of view, Parks says feeding frond-based products to animals can help reduce feed costs for livestock producers.

“They can get more nutrition for less money.” Parks’ invention is worth bragging about.

“We are innovators in waste diversion and pioneers in drought-tolerant feed, and the only company in the world with pending patents on a process to convert palm fronds into a highly-nutritious livestock feed.”

He adds, “We take fresh cut palm from Coachella Valley groves and add in recycled dates. Our Sweet Date Feed has five simple ingredients - ground palm fronds, ground dates (Deglet Noor variety), canola meal, wheat middlings (millfeed), and rice bran - all natural.

“It’s the healthiest sweetener Mother Nature can give.”

A pound of Sweet Date Feed includes 91 percent dry matter with 9 percent moisture. A review by the California Department of Food and Agriculture found no toxic compounds or adulteration concerns in the feed, and recognized it as a safe feed ingredient. 

According to the online animal feed encyclopedia called Feedipedia, the development of the palm oil industry since the 1990s has caused a higher output of fibrous waste which offers an economical source of nutrition for ruminants. It’s a low-protein, high-fiber, palatable feeding material for many classes of herbivore livestock.

The product is sold as a dry pellet or dairy chop for cattle, horses, sheep, pigs, and goats. Parks received a testimonial from a Visalia, Calif. horse owner, citing “great results” from feeding the Sweet Date product with alfalfa hay.

Parks feels blessed by this discovery.

“We’re building pellet mills to manufacture our feed and keep costs down. I’m a farmer and want to help other farmers keep their costs down,” he says.

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One good thing that came out of the Dust Bowl was the Soil Conservation Service created in April 1935 just days after a horrendous dust storm now known as Black Sunday
<p>One good thing that came out of the Dust Bowl was the Soil Conservation Service, created in April, 1935, just days after a horrendous dust storm now known as Black Sunday.</p>

USDA is enhancing Conservation Stewardship Program to address soil erosion

Since President Franklin Roosevelt signed legislation back in 1935 to address the catastrophe known as the Dust Bowl, farmers and ranchers have made—literally—earth-changing production practices. That piece of legislation, says USDA Central Region Conservationist Kevin Wickey, provided programs and incentives to prevent a similar disaster.

“April 14, 1935, is remembered as ‘Black Sunday,’” says Wickey. “On April 27, Roosevelt signed legislation creating the Soil Conservation Service. Since then, we’ve developed a lot of new tools to address that environmental catastrophe,” he added in remarks to the recent joint meeting of the American Cotton Producers and the Cotton Foundation in Lubbock.

One of those tools, he explains, is the 15-year old Conservation Stewardship Program that currently includes some 70 million acres of working lands. “That’s the size of Nebraska,” Wickey says, “and is bigger than Colorado. We’re trying to make improvements that benefit landowners and managers as well as taxpayers.”

A program mission to improve stewardship on working lands differs from the Conservation Reserve Program that takes land out of production for a set period. “We’re looking at new enhancements and bundles that will advance a producer’s business goals,” Wickey says. He says the USDA goal is the same as a farmer’s—“make the land better for the next generation.”

He outlined steps USDA is making to improve the Conservation Stewardship Program, including:

  • Adding more flexibility; 
  • Responding to customer and partner feedback;
  • Advancing precision agriculture practices on conservation acreage to allow producers to employ different practices on different parts of a field; and,
  • Demonstrating conservation practice outcomes more clearly.

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“We’re redesigning some program tools to offer a clearer, more layered process that encourages stronger conservation planning and fosters greater collaboration between the applicant and the Natural Resource Conservation Service (NRCS). We’re providing more options for producers to improve conservation with enhancements, while supporting the ranch and farm business planning goals.”

He says USDA will also focus on more coordination with other programs, such as the NRCS Environmental Quality Incentive Program (EQIP).

“Enhancements will link to conservation practices,” Wickey says, “with more enhancements and better reporting tools. We want greater flexibility, so state and local offices can set priorities and make it easier for farmers and ranchers to make changes to CSP contracts.”

Those contracts will be ranked according to how they address local resource concerns. “Input from partners and stakeholders will be essential,” he adds. “We want new ideas and producer feedback.”

Deere, the Climate Corporation to contest DOJ effort to block Precision Planting acquisition

Editor’s Note: Briefing Room is where we run press releases from companies unedited, for your use.

Deere & Company and The Climate Corporation said they plan to contest legal action announced Aug. 31 by the U.S. Department of Justice (DOJ) that seeks to block Deere’s acquisition of Precision Planting.

In November, Deere and The Climate Corporation, a subsidiary of Monsanto Company, announced they had signed a definitive agreement for Deere to acquire the Precision Planting LLC equipment business, and the companies cooperated fully with DOJ’s antitrust review.

DOJ’s allegations about the competitive impacts of the transaction are misguided and the companies intend to defend the transaction vigorously against those allegations.

Deere has long been focused on helping American farmers become more efficient and productive so that they can remain globally competitive. The proposed acquisition benefits farmers by accelerating the development and delivery of new precision equipment solutions that help farmers increase yield and productivity.

Competition in precision agriculture is strong and growing in all of these channels as companies around the world continue developing new technologies. The acquisition will enable broader access to these advancements by ensuring farmers the choice to either buy new machinery or retrofit older planting equipment with the latest new innovations.

When the transaction is finalized, Deere will preserve Precision Planting’s independence in order to ensure innovation and speed-to-market and will invest in additional innovation efforts at Precision Planting to benefit customers.

Refinancing may provide needed operating capital but it also is a warning sign If cash shortfalls continue and operating note balances build again refinancing may lead to deeper problems in the future
<p>Refinancing may provide needed operating capital, but it also is a warning sign. If cash shortfalls continue and operating note balances build again, refinancing may lead to deeper problems in the future.</p>

The danger of refinancing your farming operation

Many farms have depleted working capital in the past several years. Now operating loan balances may exist that cannot be paid down with this year's cash returns from farming operations. Some farms may consider restructuring all or a portion of their operating balances as longer-termed notes.

Refinancing may provide needed operating capital, but it also is a warning sign. If cash shortfalls continue and operating note balances build again, refinancing may lead to deeper problems in the future.

During the past several years, many farmers had cash incomes from operations that were not large enough to cover all the financial obligations of the farm. These financial obligations include paying income taxes, repaying debt, purchasing capital items, and providing for family living. Because of cash shortfalls, working capital has decreased over time.

Working capital reductions include decreases in cash and other short-term marketable securities balances, reductions in grain inventory values, reductions in pre-paid expenses, and increases in operating note balances. On some farms, operating note balances may have become large so that they cannot be reduced with cash generated from farming operations.

(Schnitkey, G. "The Danger of Refinancing." farmdoc daily (6):164, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, August 30, 2016.)

At the same time, these same farms may have substantial equity positions. Farmland may be un-mortgaged and debt-to-asset ratios may be low. Farms in this situation could refinance their operating notes into longer-termed debt that is secured by farmland. Other farmers could use machinery or other longer-termed assets as collateral for a longer-termed loan.

The primary danger in refinancing is not addressing the underlying problem: The farm's operations are not generating enough funds to meet financial obligations. If cash shortfalls continue to occur, operating balances will again increase and the farm will erode its equity position over time.

For a concrete example, take a 2,000-acre farm that has 200 owned acres and 1,800 cash rented farmland. The 200 owned acres currently are valued at $10,000 per acre and are not mortgaged. There is $2,000,000 of equity in owned farmland which could be used to secure debt. This farm is projected to have $1,000,000 of operating notes that will not remain at the end of 2016. High operating note balance has occurred because cash rents on the 1,800 acres are too high. This farm could refinance this $1,000,000 taking a mortgage on the owned farmland. However, if cash rents are not reduced and commodity prices remain low, the farm will continue to generate cash shortfalls in the future. If this situation continues, eventually all equity in the farm could be exhausted and the operation would cease to be a viable entity.

Remedying cash flow shortfalls

There are many reasons why a farm has cash shortfalls. Two of the more common reasons are 1) high cash rents and 2) high family living withdrawals.

High Cash Rents: Previous farmdoc daily articles discuss the need to reduce cash rents and other non-land costs (farmdoc daily, July 26, 2016; August 16, 2016). For farms with already eroded working capital positions, budgets for cash rents should be developed that use lower commodity prices that are likely for 2017:

  • $3.50 per bushel for corn
  • $9.00 per bushel for soybeans

While below long-run prices, the above prices could persist for several years. Costs should be cut such that the operation is sustainable at the above prices.

High Family Living Withdrawals: Family living withdrawals increased from 2006 through 2012 due to higher levels of incomes during this period. Many farms also added new, younger members to the operation. Budgeting to see if the farm operation can support current levels of family living should be done.

Using refinancing to bridge to a period of higher returns

On some operations, refinancing may be thought of as a bridge to a period of higher returns. The $3.50 corn prices may increase closer to the long-run price likely above $4.00 per bushel. Predicting when corn prices could rise is difficult since the most likely event to cause a price increase is a yield shortfall someplace in the world (farmdoc daily, August 23, 2016). Price increases could occur next year, the year after, or be several years in the future.

Using refinancing to bridge to higher returns has risks because the timing of increases in prices is unknown. The rise in commodity prices could occur after the farm has exhausted equity. Budgeting to see how many years of low prices are sustainable seems prudent.

Many farms have the equity and debt-to-asset position such that refinancing remaining balances on operating notes is a possibility. However, the need to refinance is a warning sign that the farms are not generating enough cash to cover financial obligations. Before refinancing, the underlying cash flow problems should be addressed. More dire issues could be faced in the future if cash shortages are not addressed.

Bayer has a plan to beat weeds with an extensive multiproduct approach
<p>Bayer has a plan to beat weeds with an extensive multi-product approach.</p>

17,000 steps and what did I see?

We dodged the rain bullet on Day 1 at the Farm Progress Show site, which means there were field demos and the weather stayed cloudy and cool – but dry. While I'm writing this on Day 2 where sunrise was beautiful, and there's no threat of rain for the remainder of the show, I still did a fair share of walking

With a new Fitbit Blaze to track my pace I see I walked over 17,000 steps on the first day of the show to get to all my events and meetings. I prefer to walk than ride the Willie-assigned Gator, leaving that machine for writers heading to the field to cover demos and such.

With good walking shoes and a big hat I made my way around the show site to start a three-day marathon of new tech and products it'll take us a few weeks to cover on the site, offering more details and information for you to use. But here's a quick look at a few things I learned on Day 1, and stay tuned to future coverage.

Agco has a global tractor line with an innovative approach to manufacturing that will allow the Massey Ferguson brand to grow around the world. The company is also showing a new 12-row folding corn head and will even launch a 6-row head in a couple weeks.

Case IH shared their automated concept vehicle, a cab-less version, and New Holland announced their approach which keeps the cab. Also had some great conversation with a couple of key leaders at Case IH, and you'll hear more of that soon too.

At DuPont Pioneer I learned that after looking 22,000 soil samples from 9,000 fields the company found soils deficient in P and K - a critical issues if you want to get the most out of these newest hybrids. And I learned that Qrome is on the way - early order details to follow.

Bayer is talking about Wipe Out Weeds – which is a fully developed crop protection program with residual preemerge products and more. And Bayer shared information about Poncho-Votivo 2.0, which is a corn-only product adding a new biological that provides complimentary control and higher yields. We'll have plenty of time to talk more about that since the company doesn't expect to launch it officially until 2019.

Kinze launched a new single-auger cart, it's first. It's an area that can be quite competitive and Kinze plans to play across the grain cart market – in effect doubling down by expanding the line in a soft market.

Talked about the 'right to repair' controversy with some key industry players, that's an evolving subject we'll be covering in FIN in the future too. It's also a complicated subject with some very heated issues, so stay tuned.

Visited Claas to talk Shredlage, a new forage harvester, interesting combine innovations and new balers – what I thought would be a short catchup meeting turned into a full blown press event. Keep watching.

And finally a visit to learn more about Climate View and their future sensor network. The key here is that sensors will be a growing part of your life, as long as you can do something with the data. From soil moisture, to organic matter, to rainfall, pulling that information into your future prescription writing software could be a big deal.