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USFR Weekly Recap - November 20-21, 2010

November 22, 2010

THIS WEEK ON U.S. FARM REPORT
EPISODE #1945
NOVEMBER 20-21, 2010


JOHN’S OPEN:
HELLO AND WELCOME TO U.S. FARM REPORT, I'M JOHN PHIPPS. WHEN WE TALK IN A MINUTE ABOUT LAND VALUES, PLEASE NOTICE HOW YOU REACT TO FRANKLY REMARKABLE NUMBERS WE'RE SEEING ACROSS THE CORN BELT. WHILE OUTSIDE INVESTORS ARE ACTIVE AND INFLUENTIAL IN THE LAND MARKET, FARMERS ARE CERTAINLY NOT IDLE SPECTATORS. MY INITIAL REACTION TO ALMOST EVERY LAND SALE RESULT IN THE LAST FEW YEARS WAS "THEY MUST BE CRAZY". BUT IT TURNED OUT NONE WERE FOOLISH INVESTMENTS. FARMERS HOPE THEY NEVER SELL THE GROUND, WHICH MEANS THE PURCHASE PRICE BECOMES LESS IMPORTANT AFTER JUST A FEW YEARS. LAND OWNERSHIP IS JOB SECURITY FOR FARMERS. THAT REASSURANCE IS RISING IN VALUE FASTER THAN THE ACTUAL DIRT. TIME NOW FOR THE HEADLINES.....HERE'S AL PELL

LIVESTOCK SHOW: THANK YOU JOHN. THE NORTH AMERICAN INTERNATIONAL LIVESTOCK EXPO FINISHED ITS 2010 RUN TODAY.  THE TWO WEEK EVENT IS THE LARGEST PUREBRED LIVESTOCK SHOW IN THE WORLD. ANIMALS AND EXHIBITORS FILLED LOUISVILLE, KENTUCKY'S FREEDOM HALL, FOR THE 37TH ANNUAL EVENT.  OVER TWO WEEKS MORE THAN 200,000 PEOPLE AND 22,000 ENTRIES WILL COMPETE FOR TOP HONORS. THE EXPO STARTED IN 1974 WITH FIVE BREEDS OF CATTLE TODAY IT HAS 20 BREEDS AND COVERS TEN DIFFERENT SPECIES OF ANIMALS. ORGANIZERS SAY DESPITE A TOUGH NATIONAL ECONOMY, PARTICIPATION WAS UP IN SEVERAL KEY AREAS.

GIPSA POULTRY: THE POULTRY INDUSTRY SAYS PROPOSED NEW REGULATIONS TO "GIPSA" WOULD HAVE A DEVASTATING EFFECT ON THE BROILER CHICKEN INDUSTRY. THE GRAIN INSPECTION, PACKERS AND STOCKYARDS ADMINISTRATION IS LOOKING TO CHANGE OR ADJUST MARKETING AGREEMENTS AND PRODUCTION CONTRACTS IN THE MEAT INDUSTRY. THE NATIONAL CHICKEN COUNCIL SAYS THE PROPOSED CHANGES WOULD COST THE BROILER CHICKEN INDUSTRY MORE THAN A BILLION DOLLARS OVER FIVE YEARS. THOSE LOSSES WOULD COME FROM REDUCED EFFICIENCY, HIGHER PRODUCTION COSTS AND INCREASED ADMINISTRATIVE EXPENSES. THE PUBLIC COMMENT PERIOD FOR THE PROPOSED RULES CLOSES ON MONDAY.

GIPSA BEEF: LAST WEEK THE NCBA ANNOUNCED RESULTS OF ITS ECONOMIC STUDY WHICH ESTIMATED 23,000 LOST JOBS IF GIPSA CHANGES OCCUR.

LAND VALUES: FARMLAND VALUES IN THE MIDWEST AND PLAIN STATES CONTINUE TO RISE. ON THURSDAY, THE FEDERAL RESERVE BANK IN CHICAGO RELEASED ITS LATEST SURVEY OF BANKERS. IT SHOWS FARMLAND VALUES IN THIS DISTRICT JUMPED 10% FROM A YEAR AGO. THIS DISTRICT COVERS THE BIG "EYE" STATES, WISCONSIN AND MICHIGAN. THE BIGGEST INCREASE WAS IOWA WHERE PRICES SURGED 13%. LAST WEEK, THE FED IN KANSAS CITY RELEASED ITS RESULTS. COVERING MUCH OF THE PLAINS, THE DISTRICT SAW INCREASES RANGING FOUR TO TEN PERCENT HIGHER. THAT DISTRICT COVERS COLORADO TO MISSOURI AND FROM MONTANA TO NEW MEXICO.

ROUNDTABLE: ANDY SHISSLER OF ROACH AG MARKETING, AND JIM HEMMINGER OF TOP THIRD AG MARKETING.

JOHN’S WORLD: MANY FARMERS THIS WEEK WERE ROOTING FOR THE IRISH. NOT THE NOTRE DAME FOOTBALL TEAM NECESSARILY, BUT THE "IRISH" IRISH - ESPECIALLY THEIR BANKERS. IN A SPECTACULARLY INTRICATE SEQUENCE OF WORLD EVENTS, THE ERODING POSITION OF IRISH BANKS HAD UNDERMINED CONFIDENCE IN THE FUTURE OF THE EURO, AND HOT MONEY FLEW OUT OF EUROPE AND EMBRACED THE DOLLAR, RAISING ITS VALUE UNEXPECTEDLY, AND TRIGGERING A SHARP SELLOFF IN COMMODITIES. MEANWHILE, ON THE OTHER SIDE OF THE GLOBE, CHINESE LEADERS RAISED INTERNAL INTEREST RATES TO COOL OFF INFLATION WHICH UNNERVED INVESTORS WHO WERE COUNTING ON DOUBLE-DIGIT GROWTH RATES TO LIFT THE GLOBAL ECONOMY. ONCE AGAIN COMMODITIES FROM COPPER TO COTTON WERE SLAMMED. BUT WAIT, THERE'S NEW ACTOR. THE TROUBLESOME LA NINA EVENT SUDDENLY LOOKS LIKE A MAJOR VILLAIN THAT COULD REMAIN LONGER AND STRONGER THAN USUAL, DECREASING RAINFALL IN SOUTH AMERICAN SOY AREAS AND EVEN LATER NEXT SPRING IN THE U.S. AND ALL THIS WAS JUST ONE WEEK. I HAVEN'T SEEN A PLOT SO CONFUSING SINCE THE DAYS OF COMING INTO THE HOUSE AT NOON AND TURNING ON THE LAST FEW MINUTES OF "THE YOUNG AND THE RESTLESS" BEFORE THE LOCAL NEWS. THE DRAMATIC TWISTS, HEATED CONFLICT, AND CONFUSING RELATIONSHIPS WERE SIMULTANEOUSLY MYSTIFYING AND CAPTIVATING. MAYBE WE DON'T HAVE A MARKETING PROBLEM, WE HAVE A SOAP OPERA ADDICTION. LET US KNOW WHAT YOU THINK.... SEND EMAILS TO INFO@U.S.FARMREPORT.COM OR CALL AND LEAVE US A VOICE MAIL.

2ND HALF:
JOHN’S OPEN:
HELLO AND WELCOME TO U.S. FARM REPORT, I'M JOHN PHIPPS. ACTION ON SEVERAL REGULATORY FRONTS ARE STARTING TO RESHAPE THE POSSIBLE FUTURE OF AGRICULTURE HERE IN THE U.S. FROM EGGS TO FERTILIZER HOW WE PRODUCE OUR OUTPUT WILL BE SUBJECT TO NEW RULES. IT'S NOT LIKE WE COULDN'T SEE THIS COMING. REMEMBER BSE, THE DEAD ZONE, THE EGG RECALL, AND SEVERAL E-COLI SCARES? WHILE I CONTINUE TO BELIEVE THE MOST EFFECTIVE ACTION FOR MANY OF THESE THREATS IS BETTER HOME KITCHEN PRACTICES, THE OBVIOUS POINT FOR FARMERS IS COMPLIANCE WITH REGULATION WILL BECOME AN INCREASINGLY IMPORTANT PART OF EVERYDAY OPERATION.  IN FACT, BECOMING GOOD AT FOLLOWING RULES COULD BE A SIGNIFICANT COMPETITIVE ADVANTAGE. LET'S GET STARTED WITH THE HEADLINES AND AL PELL....

FOOD SAFETY: THANK YOU JOHN. THE SENATE HAS VOTED TO MOVE FORWARD ON A FAR-REACHING FOOD SAFETY BILL. THE MEASURE WOULD GIVE THE FOOD AND DRUG ADMINISTRATION MORE POWER TO PREVENT FOODBORNE ILLNESSES. THE SENATE VOTED 74-TO-25 TO PROCEED WITH THE BILL. THE BILL WOULD GIVE THE FDA MORE AUTHORITY TO RECALL TAINTED PRODUCTS, INCREASE INSPECTIONS OF FOOD PROCESSORS AND REQUIRE PRODUCERS TO FOLLOW STRICTER STANDARDS FOR KEEPING FOOD SAFE. THE HOUSE PASSED A SIMILAR BILL OVER A YEAR AGO. EVEN WITH PASSAGE, IT'LL BE DIFFICULT TO RECONCILE WITH THE HOUSE BILL BEFORE THE SESSION ENDS SOMETIME AFTER THANKSGIVING.

HSUS: MEANWHILE, ANIMAL RIGHTS GROUP 'THE HUMANE SOCIETY OF THE UNITED STATES' HAS RELEASED UNDERCOVER VIDEO SHOWING WHAT IT CALLS A FOOD SAFETY THREAT AT AN EGG PRODUCTION PLANT IN TEXAS. HSUS SAYS THE OPERATION IS OWNED BY CAL-MAINE, THE LARGEST SHELL EGG PRODUCER IN THE U.S. JUST LIKE OTHER VIDEOS RELEASED BY THE ACTIVIST GROUP, HSUS SAYS THIS SHOWS ANIMAL ABUSE AND FOOD SAFETY PROBLEMS BY USING CAGES. HSUS IS PUSHING THE FOOD INDUSTRY TO ADOPT CAGE-FREE HOUSING SYSTEMS. ACCORDING TO THE CAL-MAINE WEBSITE, 19% OF ITS SHELL EGG BUSINESS IS DERIVED FROM "SPECIALITY SHELL EGGS" WHICH INCLUDES CAGE FREE AND ORGANIC EGGS. THE COMPANY SAYS EACH EMPLOYEE INOLVED IN THE HANDLING OF HENS IS REQUIRED TO SIGN A CODE OF CONDUCT REGARDING ETHICAL TREATMENT OF HENS.

FLORIDA FERTILIZER: THE ENVIRONMENTAL PROTECTION AGENCY THIS WEEK ESTABLISHED NEW NITROGEN AND PHOSPHATE LEVELS FOR THE STATE OF FLORIDA. THESE RULES WILL IMPACT FARMERS AND WASTE-WATER OPERATORS. THE FERTILIZER INSTITUTE SAYS THE STATE ALREADY HAS CRITERIA IN PLACE TO PROTECT WATERWAYS. TFI SAYS THIS IT MARKS THE FIRST TIME THAT EPA HAS ATTEMPTED TO OVERRIDE A STATE'S EFFORTS TO MANAGE NUTRIENTS. THAT'S IT FOR NEWS...TIME NOW FOR THE NATIONAL FORECAST FROM METEOROLOGIST MIKE HOFFMAN.

ULTIMATE FARM QUEST: OHIO FARMER DOUG RUPP TOOK A DIFFERENT PATH TO FARMING. WHILE MANY GUYS HIS AGE ARE THINKING ABOUT RETIREMENT, HE'S REALLY JUST RAMPING-UP, HAVING STARTED JUST 15 YEARS AGO. AS YOU MAY KNOW, DOUG AND WIFE NANCY ARE PARTICIPANTS IN THE ULTIMATE FARM QUEST. THEY WERE SELECTED TO GET CROP, BUSINESS AND MARKETING ADVICE FROM A TEAM OF FARM JOURNAL EXPERTS. AS A YOUNG MAN, DOUG WORKED IN A STEEL MILL. LATER, HE TAUGHT BUSINESS AND FINANCE AT A HIGH SCHOOL. HE BUILT-UP CAPITAL, SO HE COULD EVENTUALLY FOLLOW HIS DREAM TO FARM. HE STILL USES "LIFE LESSONS" WHEN IT COMES TO MANAGING HIS OPERATION.

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