USFR Weekly Recap - January 14-15, 2012

January 16, 2012 09:19 AM

JANUARY 14-15, 2012

JOHN’S OPEN: Hello and welcome to U. S. Farm Report, I'm John Phipps. There is a long established principle in economics called Gresham's Law, which can be stated briefly as "bad money drives out the good". In other words, people tend to hang on to currency they trust and pass the doubtful money on to others. It's why there are more $100 bills outside the U.S. than here at home. Information may not work that way. Misinformation eventually is replaced by fact, but some bad info seems stickier. Good stories even if fictional are hard to eradicate. Washington and the cherry tree is a prime example. How fast Ag markets move past the bombshell USDA reports this week could thus be an indicator of the quality of their information. Time now for the's Al Pell.

USDA REPORTS: Thank you John. Grain prices closed limit down Thursday after the Ag Department shocked the market with a much bigger supply of corn.

GRAIN STOCKS: USDA projected corn ending stocks at 846 million bushels, 2 million bushels lower than its estimate last month, but 13% higher than what traders were expecting. Soybean ending stocks at 275 million bushels were 18 %higher than traders had been expecting.

PRODUCTION: USDA is confirming what most farmers already know - 2011 was a pretty tough growing year in many parts of the country. In its final production figures for 2011, USDA says corn for grain production is estimated at 12.4 billion bushels, that's 1% below 2010. The average yield is 147.2 bushels an acre, five bushels lower than 2010's average yield. Soybean production in 2011 totaled just over three billion bushels, down 8% from 2010. The average yield per acre is estimated at 41.5 bushels, two bushels below last year's yield.

USDA CLOSINGS: It was a busy week for the Ag Department. On Tuesday Secretary Vilsack shared plans to close or consolidate 259 offices, facilities and laboratories across the country. That move includes 131 FSA offices. It’s part of an effort to save roughly 150 million dollars a year in the Ag Department's shrinking budget. Secretary Vilsack broke the news to attendees at the National Farm Bureau gathering in Hawaii. USDA has already eliminated 90 million dollars in costs by reducing travel, supplies and conference expenses. Evaluating and consolidating its footprint was the next step. Offices with no employees, one or two employees will now be consolidated with other locations within 20 miles. Vilsack says he expects many of the reductions to be in place by mid-summer.  The Food Safety and Inspection service is also reducing its footprint by a third...going from 15 to 10 offices. However the number of employees will remain the same. That division is in charge of meat, poultry and egg product safety.

CROP WATCH: Crop watch looks at the mild winter in many regions of the country. In the upper Midwest one of our regular viewers from St. James, Minnesota sent us a photo showing anhydrous getting applied. Dean Karau says he's never farmed this late, because the fields are usually covered with snow. But the story this year is dryness. They've had some wet snow, but few days with freezing temperatures. And from Cayuga, New York, a grower says his grass is still green! This time last year they had close to 100 inches of snow. A normal season for that region is about 140 inches of snow. Meanwhile, last week's freeze in Florida is aggravating the effects of short-term dryness for some types of vegetation. State Ag officials warn about the risk of wildfires.

JOHN’S WORLD: The late author and scientist Arthur Clarke famously penned what would be called Clarke's Third Law “Any sufficiently advanced technology is indistinguishable from magic." As I look at my cell phone or engage the autosteer, it certainly rings true to me. Soon after, another wit wrote was has become known as Grey's Corollary: "Any sufficiently advanced incompetence is indistinguishable from malice." Besides being a clever play on words, I find it helpful as well. As we create business and technological systems that can enable good decisions to generate billions in revenue, we also often simultaneously create ways that idiotic actions can evaporate mountains of wealth. Now add in our hard-wired hunger for stories. We are much more inclined to believe bad things happen because bad people do evil things than a combination of chance and simple stupidity. If nothing else this tendency reassures us that humans still can control the world, even if they are the wrong humans. Grey's Corollary may be helpful right now for agriculture. We continue to learn more about the MF Global fiasco and NASS has released the highly anticipated January reports. I have no doubt many find the information enraging, prompting claims of evil-doing. While there may be pure villainy involved, i think it more likely we are witnessing institutions that are simply functioning at their competence peak. In a way, that's even more discouraging. Let us know what you think.... Send emails to or call and leave us a voice mail.

: Hello and welcome to U.S. Farm Report, I'm John Phipps. In a world of instant results, we frequently tend to overlook processes of cause and effect that play out over years or decades. Here at U.S. Farm Report, we have aired many stories about diet concerns with meat consumption, and at the same time saw little change in demand.
It could be protein prices or other factors but those curves are changing, even if only temporarily. Al will have the details momentarily. But the more important realization may be that if what we choose to eat changes very slowly, it will probably take an equivalent time to regain those lost sales. Let's get to those the headlines and Al Pell...

HARRIS RANCH OPEN: Thank you John. Authorities in Fresno County, California are investigating what appears to be a case of arson against a major beef processing firm. And it appears an animal activist group is to blame. The fire destroyed 14 cattle trucks at Harris Ranch. Containers of accelerants with timers were placed beneath a row of the trucks in a feed lot. Harris Farms is located in California's San Joaquin Valley. It is one of the largest beef ranches in the west. Company CEO John Harris says the "Animal Liberation Front" is a terrorist group intent on stopping American agriculture from producing the world's safest food supply."

EATING MEAT: It appears American's are eating less meat than they did a decade ago. USDA's December supply demand report shows Americans are expected to consume about 12% less meat this year than they did just five years ago. While chicken and turkey per capita consumption is holding steady, pork consumption has fallen slightly over the last ten years.

ORANGE JUICE FUTURES: It’s been a volatile two weeks for orange juice futures. First it was a possible freeze. Then, this week the EPA said it would ban shipments of O.J. from the world’s largest producer, Brazil. This, after concerns about fungicides ending up in the juice. Contract futures jumped on Tuesday, hitting a record high. Those fears and futures fell Wednesday after inspectors eased concerns about the fungicide ban.

HEARTLAND: We just wrapped up the holiday season - a "giving" time of year to be sure. Northern Indiana is home to an antique tractor club that combines love for their favorite green iron with a desire to help those in need. Wes Mills tells us about the Grains of Goodness. Just last week the club distributed $24,000 among several Indiana food pantries, four FFA chapters and a local cancer support group. As far as that music, we'd like to thank recording artist Bethany Zill for sharing it with us. Bethany grew-up on a North Dakota wheat farm. The song is available on her CD, entitled "Where Roots Run Deep". To order a copy, Bethany says you can email her at

BAXTER BLACK: Welcome back...time now for our bi-weekly visit from Baxter Black. This week - Baxter brings us the tale of "The Russian Dairyman". When we come back, Tractor Tales and our Country Church Salute...please stay with us.

TRACTOR TALES: Al's back with us now - what's on tap for Tractor Tales this week?
Our tractor comes from northwest Illinois. Once a valuable workhorse, this 1933 John Deere almost found its way to the scrap yard. Thanks to some dedicated young farmers, it was brought back to life. Next week, Tractor Tales visits the Meecum Auctions in southern Wisconsin. Next week, you'll meet this Oliver collector show's ready to trade-up for a new model.

CHURCH SALUTE: Today's Country Church Salute goes to the Middle Creek United Methodist Church in Redwood Falls, Minnesota. The church is celebrating 150 years of ministry. The first church was burned down during an Indian uprising in the mid 1800’s Church member Betty Syverson says it's the oldest operating church in the county. Pastor Dean Nosek currently leads the congregation. Our second salute goes to St. Mary's Catholic Church in Visalia, California. It, too, is celebrating 150 years. The first church building had a humble beginning as a stable and was converted. As such, it was once known as the "stable church of the nativity of the blessed virgin Mary". Our thanks to church members Don and Velma Espindula for sharing the history. As always we want to learn about your home church as well... Salutes can be sent to the address on the screen. Stay with us - the mailbag is next. 

MAILBAG: Time now for our weekly look inside the farm report mailbag....A viewer objected to my statements a few weeks ago about farmers making record profits last year.
"Yes, we farm, but we also have two other jobs that pay for the farming, which is why there is a "net" profit....not every farmer is a corporate farmer or a corn farmer with subsidies." Kathy Wilkins-Meyer. I realize every farm has its own economic picture, but the averages reported by the USDA are still the only way we can measure the economic status of our industry. In every year, there are sectors, like hogs, or rice and individual farms, which for any number of reasons, do much better or worse than the farm average.
In fact, this statistic is becoming less useful as farm sizes split into two widely separated groups: very large farms and small farms. Just like in the rest of the economy, a small number of operations generate the majority of the sales and profit. Consider for example, that nearly two-thirds of Americans earn income below average. This trend continues, and in agriculture we are approaching a 90/10 split, where 90% of the output is produced by 10% of the farmers. In those situations, averages tell us very little about the majority of farmers. Even so, we cannot seem to let these unhelpful yardsticks go. Large operations still cling to small farm images, and small farms do not wish to be excluded. So despite your valid point, averages will remain how we describe America’s farms. As always, we want to hear from you, send comments to or leave us a voice mail at 800-792-4329.


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