Production Journal: Top Producer Seminar Focuses on Ag’s Future

March 12, 2011 12:16 AM
Production Journal: Top Producer Seminar Focuses on Ag’s Future

Top Producer Seminar Focuses on Ag’s Future

The future of U.S. agriculture was under close scrutiny at the Top Producer Seminar held in Chicago in late January. More than 900 of the nation’s leading business-minded farmers
attended the annual event, which is the largest and longest-running agriculture business seminar.

Titled "Sharpen Your Competitive Edge," this year’s seminar focused on the local, national and international issues that are shaping agriculture now and will shape it in the future.

"U.S. farmers face incredible challenges given a growing world population and an increasing standard of living in developing countries, coupled with scrutiny on how food, fuel and fiber are produced," says Top Producer Editor Jeanne Bernick.

"This is happening at the same time we see unprecedented market opportunities and profit potential on farms. It’s going to take a sound strategy and business thinking to help farmers take full advantage of the opportunities in today’s market," Bernick adds. "The Top Producer Seminar agenda helped expose them to the issues that will be important to agriculture for decades."

Real commodity demand. Among the changes facing agriculture around the world is the interest level from large index funds, in both the commodity and farmland markets.

Unlike the most recent run-up in 2007–08, funds are not making a fictitious market. The demand is driven by increasing interest from China and a short crop this past year, said Jerry Gulke, Top Producer market analyst and president of the Gulke Group.

Gulke points out that for nearly two decades, the U.S. has granted China most favored nation trading status, allowing the Chinese to build up their supplies and standard of living. Meanwhile, the U.S. was busy ignoring its own food needs.

"We have no strategic reserves ourselves and China was building a demand base with a population that has as many people in the middle class as we do in the entire population. That isn’t going to go away anytime soon. Now we have food inflation and an explosion in prices. We have to be careful not to underestimate how big this demand is, too," Gulke said.

"We have to understand how the costs of raw materials cycles through. We pay maybe 12% of our income for food. In China, it’s 48%. If you raise the price of food over there, they have no money left to do anything else," he said.

Outside farmland interest. Pension funds do have money, and their interest is increasing, especially in U.S. farmland. Biff Ourso, a TIAA-CREF director in Global Private Markets, said the U.S. market provides a safe, long-term investment opportunity, despite cheaper and equally productive land in Brazil, for example.

"We focus on major grain exporting countries that will meet the global increase in demand. At the end of the day, the U.S. is our anchor market," Ourso said.

That’s where the opportunity comes in for U.S. farmers looking to expand their operations without purchasing large tracts of land. TIAA-CREF is interested in building relationships with farmers who have experience and access to capital and equipment.

Challenging growing season. Perhaps the most important issue facing agriculture is the weather. With worldwide grain shortages, this year’s weather and the need for a large U.S. corn crop is especially critical.

The outlook from Allen Motew, QT Weather meteorologist, sent reverberations through the crowd. At best, he said, it will be a challenging growing season, warning farmers of low corn and soybean yields and a season similar to the drought years of 1974 and 1988.

During the early summer months, warming temperatures in the north will create severe flooding conditions as the large amounts of snowpack in the Northern Plains melt.

In the meantime and even extending into August, Motew said, all areas of the Corn Belt will experience drought conditions and warmer than normal temperatures.

Anticipated drought will continue to influence volatility in the markets. According to Motew, during the drought periods of 1974 and 1988 futures skyrocketed, corn yields decreased 28% and bean prices shot up as yields dropped.

Motew suggests producers closely watch the weather situation and its relationship to the market. His outlook ended with a laugh as he told producers to "enjoy the growing season."

Cotton Comes Back

David Dunlow never gave up on cotton. "Cotton is what I like to grow. Now that prices have risen, I can feel good about saying that again," says the Gaston, N.C., grower.

F11134 Cotton DSC 2638Dunlow plans to increase his cotton acreage in 2011, and he’s not alone. The National Cotton Council’s (NCC) annual early season planting intentions survey indicates U.S. cotton producers will plant 12.5 million acres of cotton this spring, up 15% from 2010. Extra-long staple (ELS) cotton growers report that they intend to increase plantings by 23%, while upland cotton acreage is expected to rise by nearly 14%.

The NCC survey was mailed in mid-December and asked growers their intentions for cotton, as well as other crops. The survey responses were collected through mid-January.

Southeast growers indicate acreage expansion in all states. Dunlow says the limiting factor in North Carolina is lack of water. "We’ve always planted a little corn, but without irrigation it is less reliable than cotton. Cotton is a little more tolerant if we run into a moisture problem," Dunlow says.

All cotton-growing regions expect to see increases, but anticipated increases vary by state. In the mid-South, Tennessee leads the way with a projected 39.5% acreage increase. In the Southwest, the survey shows Kansas growers will pump up acres by 34.6%—largely at the expense of wheat and soybean acres. California farmers intend to plant 38.8% more cotton acres at the expense of specialty crops, but contingent on water costs and availability. New Mexico is reporting intentions up 42.5%.

NCC vice president Gary Adams says the cotton market is calling for more acres, but he expects final acreage decisions will be sensitive to how relative prices move between now and planting time.

Welding University Winners

Farm Journal and Miller Electric Mfg. Co. are proud to announce the winners of the 2011 Welding University contest. 

Grand-prize winners. Three farmers—Doug Dulmage, Leeds, N.D.; Duane George, Republic, Ohio; and Joe Hoffman, Osmond, Neb.—will receive an all-expenses-paid trip to Miller headquarters in Appleton, Wis. There they will meet with Miller experts, receive welding tips and
hands-on training and tour the manufacturing facilities. They will also receive their choice of a Bobcat 250 welder/generator or a combination of a Spectrum 625 X-treme plasma cutter, Millermatic 212 Auto-Set MIG welder and Spoolmate 200 Series spool gun.

First-prize winners. Congratulations to Andy Alford, Bowling Green, Ky.; Kurt Michael, Urbana, Ohio; and Grant Shaw, Winnett, Mont.; who will receive an auto-darkening helmet of their choice from the Performance Series line of Miller welding helmets.

Second-prize winners.
 Ten entrants—Roger Boyle, Weston, Ohio; Joel Dewitz, Steele, N.D.; Daniel Greet, Ten Sleep, Wyo.; John Hardebeck, Fowler, Ind.; Steve Kulzer, Buffalo, Minn.; Nicholas Pfanner, Stoutsville, Mo.; John Roth, Gibson City, Ill.; Alyn Sylte, Benson, Minn.; Ted Taylor, Moweaqua, Ill.; and Frank Zeltinger, Kenmare, N.D.— will receive a pair of Miller MIG welding gloves.

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