Opportunities to learn at 2014 Commodity Classic
Thousands of attendees had the opportunity to learn about what’s coming next in agriculture during Commodity Classic, the largest farmer-led convention, held Feb. 26 to March 1 in San Antonio. Farmers heard policy updates, profit-driving tips from fellow farmers and game-changing technology that is on the way to a field near you.
Here are four takeaways worth noting from the 2014 Commodity Classic.
Farmers share ideas. Farmer attendees packed in to the "Ideas to Break Through Yield Barriers" learning session to hear four of their peers share their tips and tricks to increase yields and profits. The common theme threaded through the session was "embrace change."
For example, panelist Adam Watson, who farms white corn, yellow corn, seed corn and soybeans near Villa Grove, Ill., uses on-farm research to drive changes in his operation. He tests everything from new production practices to new precision equipment and even test-flies drones on his farm before going across all acres.
While it might look like a bar of soap, this device helps calibrate combine data for apples-to-apples "micro field" comparisons, says Scott Robinson, president of FarmLink.
"I’m a big proof-is-in-the-pudding guy," he says. "I have to see it to believe it and truly get a grasp on it. It’s the best way for me personally to learn. We make bad decisions, too, but I learn as much from the times I’ve failed as I do from the times I’ve succeeded."
Fellow panelist Josh Koehn, who farms corn, wheat and milo near Montezuma, Kan., says one of the most productive changes he’s made on his operation is increasing willpower during planting season to wait for optimal timing based on weather and soil conditions. Even as he sees other planters rolling, he waits until the timing is right for his fields.
"Planting shouldn’t be a race, but it can turn into one," he says. "You don’t have to be the first in the field. In fact, I’m one of the last guys out—I want warm soils and good emergence. Work within your own circumstances and plant when it’s right. You don’t want to be the first; you want to be the best."
Elsewhere around the event, farmers could get valuable information on the next wave of high-tech farming tools, from high-speed planters, one-stop farm-management software setups to a variety of unmanned aerial vehicle options. Attendees could even get a demonstration of Google Glass and see its potential as a next-generation crop-scouting tool.
Company representatives such as Scott Robinson, president of FarmLink, met with farmers to showcase new technology. FarmLink recently unveiled its "micro field" TrueHarvest benchmarking concept. Each micro field spans about 150 sq. ft. (roughly the ground that is covered during 1 second of harvest). The company has charted 500 million such fields and can match similar micro fields with their customers for benchmarking and yield-improvement purposes.
Propane price preparation. Clearly, propane users suffered a nasty price hike this winter, with average prices in late January topping $4 per gallon or higher around much of the Midwest. Since then, the initial sticker shock has worn away to concerns about whether this shift in prices was due to short-term factors or signals a longer term shift toward higher prices.
The situation has been blamed on multiple causes, including logistics/transportation issues, pipeline tie-ups, colder-than-normal winter weather—even an uptake in propane use last fall to dry corn, says Mark Leitman, director of business and marketing for the Propane Education and Research Council (PERC). The organization was at Commodity Classic to help farmers learn more about incentive programs and share methods of better planning ahead for potential future price increases.
"Communication is key so you will have a sense of the potential demand for fuel," he says. "Communicate early and often with your propane provider. Lock in prices just like you would any other essential input on the farm."
Because propane prices tend to follow oil prices, the U.S. Energy Information Administration and AmeriGas have both indicated the most likely scenario for price trends from 2010 to 2020 will be average annual price gains of about 5%, with another 1% annual price gain projected through 2035.
Leitman says that the long-term supply outlook is positive and prices are likely to stabilize, and now is the time to take advantage of certain purchase incentives while they are still available. He also encourages farmers to explore other fuel-efficient technologies that could be eligible for purchase incentives, including grain dryers, ag heaters, weed-control technology and additional irrigation engines.
Next steps for biofuels. Ethanol isn’t the only biofuel in the crosshair of current policy change—biodiesel could be greatly impacted by changes to the Renewable Fuel Standard (RFS), notes Sterling Liddell, vice president of Food and Agribusiness Research at Rabo AgriFinance. Biofuels were at record production in 2013.
According to the Rabobank U.S. Biodiesel Outlook, the U.S. biodiesel industry is expected to remain commoditized with tightening margins and periods of negative returns. The industry players best positioned for success are those focused on becoming the low-cost producers, gaining access to multiple feedstock sources and accessing adequate working capital to withstand volatile margins.
Mark Leitman with the Propane Education and Research Council says farmers can visit www.AgPropane.com to learn about incentive programs and more.
"It’s really a case-by-case, state-by-state situation for biodiesel plant profitability," Liddell adds. Rabo Agri-Finance has researched biodiesel as a potential investment and recently released a report on the renewable fuel.
A key to biodiesel’s future is the advanced biofuel component of the RFS, which is primarily fulfilled by biodiesel. While the advanced biofuel requirement could be met using sugar and sorghum-based ethanol, domestic production of both is limited, and attaining any economically competitive imports are a challenge.
Far more significant in supporting biodiesel production is the fact that future increases in the use of ethanol are "constrained as a result of infrastructure," Liddell adds.
This snag, acknowledged by the Environmental Protection Agency (EPA), is generally referred to as the "blend wall," Liddell says.
Although the EPA has signaled at this time that it will adjust its original RFS mandate levels during 2014, biodiesel will be less impacted than other categories. Increases in biodiesel production will bolster demand for soy oil, corn oil and more.
Vilsack shares USDA priorities. Secretary of Agriculture Tom Vilsack briefly discussed biofuels during his keynote address at the Commodity Classic general session, but he spent more time updating farmers on insurance and other risk-management tools that can help larger and smaller operations alike stay profitable.
Vilsack spelled out how USDA intends to address Price Loss Coverage (PLC) and Agricultural Risk Coverage (ARC) programs during the next couple of years. PLC triggers payments when a market-year average falls below a certain level, while ARC payments depend on benchmark yields to determine payouts.
USDA plans to unveil the final program and the regulations for both ARC and PLC this fall. After that, farmers will have a chance to update their information concerning yields and relocate business, if needed. The ultimate goal is that by the end of 2014 and early 2015, farmers will be in a position to be able to make election decisions, Vilsack says.
"The key here is for us to set the table for all of you to be able to make informed decisions for the 2015 crop year and many of these programs," he told farmers at the event. "We hope that reassures you that we understand the importance of getting these programs up and going as quickly as we possibly can."
Vilsack thanked farmers for giving the rest of the country freedom to pursue their own careers by providing inexpensive, safe, reliable food. Farmers and ranchers comprise just 2% of the U.S. population today.
"Let me thank you for my ability to be a lawyer," he says. "Let me thank you for my wife’s ability to be a teacher. Let me thank you for my older son’s ability to be a lawyer, and my younger son to be in the nonprofit world. None of us would’ve had that opportunity if it weren’t for you."