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March 2014 Archive for PFA Pioneer Blog

RSS By: Chip Flory, Pro Farmer

This is a private blog for Pioneer.

Q&A on crop insurance provisions of new farm bill

Mar 21, 2014

Pro Farmer Extra

- From the Editors of Pro Farmer newsletter -

March 21, 2014

Today's perspective is provided by Pro Farmer associate editor Meghan Pedersen and Washington Consultant Jim Wiesemeyer

Q&A on crop insurance provisions of the new farm bill

The Risk Management Agency shared question and answers on crop-insurance provisions in the new farm bill. Here are the highlights.

What is the Supplemental Coverage Option (SCO)?

SCO is a county-level revenue or yield-based optional endorsement that covers a portion of losses not covered by the deductible of the same crop’s underlying policy. Indemnities will be payable once a 14% loss has occurred in the county, and individual payments will depend upon coverage levels selected by producers. The premium subsidy is 65%. Producers may not enroll a crop in both SCO and Agricultural Risk Coverage (ARC). However, producers may participate in both SCO and Price Loss Coverage (PLC).

What if I decide I want to enroll into the ARC program after I’ve selected SCO coverage for winter wheat?

Producers who enroll their winter wheat in SCO may withdraw from SCO prior to their acreage reporting date without any penalty or crop insurance premium charge.

Is there anything available for whole farm policy coverage?

Approval of a new whole farm policy is currently undergoing the process to attain the FCIC board approval. Pending approval, producers might be able to enroll in the spring of 2015. It would be a pilot program limited to certain geographic regions.

What is the upland cotton Stacked Income Protection Plan (STAX)?

STAX protects against county-wide revenue losses and can supplement a producer’s underlying cotton policy or be purchased as a standalone policy. Producers can elect coverage of up to 20% of expected county revenue, depending on the coverage level of their individual cotton insurance policy. STAX payments begin when county revenue falls below 90% of its expected level. The premium subsidy for this coverage is 80%. Any acres covered by a STAX policy may not be covered by a SCO optional endorsement.

Will I be able to purchase SCO or STAX for the 2015 crop year?

It depends. RMA is making every effort to offer these programs to as many producers as possible. SCO will be available for corn, grain sorghum, rice, soybeans, spring wheat and winter wheat in selected counties for the 2015 crop year. The same is true with STAX for cotton growers. Program details and eligible counties will be made available in the summer of 2014 for both programs.

How do the crop insurance provisions help new/beginning farmers?

A beginning farmer and rancher will be exempt from paying the $300 administrative fee for catastrophic coverage policies and they receive premium subsidy assistance for additional coverage policies that is 10 percentage points greater than what is otherwise available.
Also, if beginning farmers have a poor-yielding crop, they may replace the poor yield in their yield history for determining next year’s guarantee with 80% of the county T-Yield, which is 20 percentage points higher than they previously would have received.
 

Follow Pro Farmer Editorial Director Chip Flory on Twitter: @ChipFlory


To see more of what Pro Farmer has to offer, be sure to visit www.profarmer.com.

"What-if" thoughts about Ukraine-Russia

Mar 14, 2014

Pro Farmer Extra

- From the Editors of Pro Farmer newsletter -

March 14, 2014

Today's perspective is provided by Pro Farmer Editorial Director Chip Flory

With the political turmoil boiling to a head in the Crimean region of Ukraine on Sunday as the people of the region vote to potentially leave Ukraine and join Russia, the Pro Farmer editors have been brainstorming potential outcomes... not for the week ahead, but for the years ahead. There is nothing "concrete" in this post. These are just the thoughts and concerns that have emerged as the Ukraine-Russia conflict continues to escalate.

This "thought compilation" was also the base of my closing monolog on Farm Journal Media's new 1-hour daily ag market talk show, Market Rally, which I host.


Here’s the deal... Russia is an invading country. Look at history... they’ve always been an invading country.

Round-two of Putin is even more “old-school Russian” than round-one was.

He’s moving troops and military equipment around... calling it “military exercises” and basically taunting Western Europe and the U.S. into "picking sides."

In reality, Putin may be trying to expose additional "targets" by showing any pockets of citizens in the former Soviet Union -- that might be Russian sympathizers -- that Mother Russia will be there to support them.

You’ve got to admit... this is a part of the world that’s difficult -- for people that don’t live there -- to understand what’s going on. Heck, it’s even difficult for some people that live there to understand what’s going on in this part of the world.

The difference is generational. Younger people in Ukraine look at Western Europe and the United States and they want a piece of that independence... of what they see as freedom and the ability to determine what their future will be.

Older generations in the countries of the former Soviet Union may have liked being a global super power. Some may have liked the connection to Moscow. Some might like an old-school Russia.

It’s the mixing of pro-Russian under-currents and the independent thinking of the younger generation in former Soviet Union countries that’s boiling to the surface now.

Think of the leadership in the former Soviet Union. Many of them grew up in the Soviet Union and they saw what kind of things can originate from Moscow. They remember a Russia that was more concerned about accumulating land – with all the natural resources and all the agricultural resources – than it was concerned about the rights of the people.

Which adds to the intrigue of the current situation in Crimea. Vladimir Putin now says Russia has the right to protect the “Russian people” living in Crimea... and never mind the fact that Crimea is part of Ukraine. In fact, Putin now says Russia reserves the right to invade Ukraine to protect the “Russian people” of Ukraine.

What’s next? What if the independent-minded people of Moldova or Belarus decide that it’s time to get rid of pro-Russian leaders in their countries... or better yet... to get rid of pro-Russian leaders of small regions inside Moldova or Belarus or any of the other countries of the former Soviet Union. Will Putin declare that Russia has a right and a responsibility to protect the “people of Russia,” even if they are living in one of the former Soviet Union countries outside of Russia?

That’s how what’s happening in Ukraine spreads. If pro-Moscow regions in these other countries see Russia basically annex Crimea from Ukraine... what’s to stop them from communicating their desires to Putin to rebuild ties with Moscow.

Now... I’m not saying that Putin is trying to rebuild the old Soviet Union. But he doesn’t have to rebuild the old Soviet Union. What he might be interested in doing, however, is building a new Russian Union by selecting only the areas that “make sense” to bring back into the Russian fold. You know... places like one of Ukraine’s important port regions.

Which – again – brings up the question, “What’s next?” Take a look at how Russia very cheaply exports its natural gas to places like Germany, France and Italy. There is a series of pipelines running from Russia to western Europe and most of those pipelines run through Ukraine ... including the anti-Russian areas of western Ukraine. Might Putin decide those pipelines “deserve the protection of Russia?”

And, of course, there’s the agricultural resources of Ukraine. Ukraine used to be the breadbasket to the world... and farmers in the country were beginning to thrive in post-Soviet independence and in a market-driven environment. Might Putin look at Ukraine’s growing importance in global wheat and corn trade and decide that Ukraine’s farming sector “deserves the protection of Russia?”

Some observers around the world are saying that it looks like Ukraine is just sitting back and “letting it happen.” That’s not what’s happening. The Ukrainian Prime Minister has been in the U.S. trying to line up support and is working to secure support from European leaders, as well. It shouldn’t be too difficult to get support for Ukraine from European Union Members... the last thing they want is a guy like Putin flexing his muscles and running around eastern Europe and gathering up the “selected resources” that he might see as important to Russia.

That’s why this weekend is so important. The people of Crimea apparently will vote to join Russia and Russia will likely attempt to annex Crimea. The results of the votes – this is being done by paper ballot – won’t be official for some time, but don’t expect Putin to wait until the results are official before he stands up and says it’s time for Russia to protect the rights of the Russian people of Crimea.

This is a threat... it’s a real threat. And it’s a threat that will bring sanctions from the rest of the world down on Russia. But don’t expect Putin to back down. He’s feeling pretty cocky right now and he’ll push forward. The threat to the global grain market is that grain flow out of Ukraine and Russia might be disrupted.

And think about this one... what if an importing country says it is still willing to do business with Russia? What’s going to be the reaction of other countries to that importer? And it goes deeper than corn and wheat... Russia exports a lot of energy to Western Europe. What if Western Europe tries to live without Russian energy? If that much crude oil and natural gas is essentially isolated in Russia, that will no doubt have an impact on our fuel prices here in the States.

Bottom line... there’s a lot riding on what happens in Crimea this weekend.

Follow Pro Farmer Editorial Director Chip Flory on Twitter: @ChipFlory


To see more of what Pro Farmer has to offer, be sure to visit www.profarmer.com.

Tier 3 another blow to ethanol

Mar 07, 2014

Pro Farmer Extra

- From the Editors of Pro Farmer newsletter -

March 7, 2014

Today's perspective is provided by Pro Farmer Washington Consultant Jim Wiesemeyer

EPA’s Tier 3 gasoline standards are one more obstacle the ethanol industry faces for expanding the biofuel's US market. EPA’s final rule would limit the amount of ethanol in gasoline the agency certifies to 10 percent. EPA had earlier proposed to make the test fuel E15, but the final language issued this week calls for E10.

EPA’s final rule would limit the amount of ethanol in gasoline the agency certifies to 10 percent – or E10 (10 percent ethanol and 90 percent gasoline). EPA had earlier proposed to make the test fuel E15, but the final language issued this week calls for E10.

The "shift in in-use fuel is not materializing as quickly as expected, and E10 continues to be almost universal today," EPA said. The effect of the change is to relieve pressure on automakers to equip their cars to run on the higher blend.

The ethanol industry quickly criticized the EPA decision. "EPA missed the opportunity to address volatility parity with E15 and E10, missed the opportunity to provide a more equitable incentive for [flex fuel vehicles], and missed the opportunity to send a signal about future fuels by backing off the ethanol content of test fuels," said Bob Dinneen of the Renewable Fuels Association.

Of note, the initial EPA proposal also would have permitted car manufacturers to seek approval for higher fuel blends such as E30. But the final rule released Monday pared back the test fuel ethanol content to E10.

However, the oil industry hailed the EPA move, saying it better reflects the mix of fuels most commonly used. "Unlike E10, which constitutes more than 95 percent of all gasoline sold, E15 is not widely available in the market and is damaging to the majority of vehicles on the road today," said Charles Drevna of the American Fuel & Petrochemical Manufacturers in a statement. Ethanol backers dispute the contentions of damage to vehicles, pointing to EPA’s clearance of E15 as a fuel for 2000 and newer model-year cars and light trucks.

Follow Pro Farmer Editorial Director Chip Flory on Twitter: @ChipFlory


To see more of what Pro Farmer has to offer, be sure to visit www.profarmer.com.

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