Grains

A study released by Osborn Barr reveals many challenges and opportunities on the horizon for the agriculture industry as the next generation prepares to take over the farm. The agency sent a news release explaining the results of its study, with interesting findings. The generational shift study titled "Farmers of Tomorrow: Generation Z's Future in Agriculture" is the first comprehensive study to better understand how the next generation views farming and ranching, said the release. The initial qualitative research results indicate the gap in attitudes, perceptions and intentions between "Gen Z" (18-to 22-years-olds with an immediate family member farming) and "BoomXY" (Baby Boomer, Generation X and millennial farmers age 28 to 74), the company said. O+B's Ag Advisory Council, which was created in June 2017 to examine and interpret some of agriculture's most important issues facing rural America, provided strategic guidance on the study development. Richard Fordyce, Ag Advisory Council Chairman, said this study is vital to agriculture's future and he's eager to lead more groundbreaking research. "A number of trends emerged, and their potential for impacting the industry are real," Fordyce said in the release. "It's important to consider how the next generation will shape the ag industry moving forward." The study identified four major factors shaping the future of agriculture. Here are the results, as explained by Osborn Barr: 1. Farm Succession Expectations Differ Of the sample surveyed, succession expectations differ between older farmers/ranchers and their children, many of whom plan to work in agribusiness. 71% of BoomXY farming parents believe at least one of their children may desire to take over their farming business someday, compared to 54% of the farm-raised 18-to 22-year-olds who indicate a desire to take over the family farming/ranching business some day For those 18- to 22-year-olds who don't currently plan to take over the family farming/ranching business, obtaining a degree in an ag-related field is viewed as a means of remaining involved in agriculture with the steady paycheck that farming often doesn't offer "The reason I do not choose farming as a career is because I need a more steady option and also want a career that does not have such big risk and startup costs," said one Gen Z Study respondent. 2. Gen Z Views Government Involvement More Positively Research indicates a shift with Gen Z viewing government involvement more positively than the older age group. Gen Z had an overwhelmingly positive outlook when it came to government entities (USDA, EPA, FDA), far outpacing BoomXY in regard to the FDA, in particular 64% of the farm-raised 18-to 22-year-olds view restricted immigration policy favorably compared to just 35% who oppose greater immigration restrictions "Based on this data, I believe Gen Z has more trust in government, they know the issues and they are committed to ag," said Fordyce."They are more engaged with law makers, active in policy and want to make a difference." 3. Ag Tech Tops the List for Gen Z According to the study, Gen Z is more in favor of agricultural technology. 85% of the farm-raised 18-to 22-year-olds view existing herbicide technologies positively compared to 43% of farmers 28 and older 85% of the farm-raised 18-to 22-year-olds view existing insecticide technologies positively compared to 59% of farmers 28 and older The older age group had a more balanced opinion of organic farming, while Gen Z skewed negatively and also in favor of existing bio ag technologies. In addition, genetically modified organisms (GMOs) and more advanced genetic engineering is largely perceived positively by both ag groups but even more so from Gen Z. "Gen Z seems to not be afraid of technology and even expect new advancements more than any other generation," said Fordyce. "It's a very encouraging signal for this industry, and I'm confident in our leaders of tomorrow. Gen Z Prefers Peers over Brand Names Research shows Gen Z is less brand loyal, and more peer driven when making decisions. They also are more receptive to marketing messages, as the research indicates: 78% of the farm-raised 18-to 22-year-olds consider brand names important when it comes to purchasing farm products, compared to 90% of BoomXY farmers/ranchers For ag information, Gen Z was far more receptive to information provided by their peers via social media, other farmers, network/cable TV and ag/rural radio, while the older age group favored ag print pubs, network radio and manufacturer websites Gen Z was much more inclined to pay attention to marketing messages, while BoomXY was not, unless it came from their dealer/retailer. "We know what we need on our farm and ultimately if it gets the job done the brand shouldn't matter," said one Gen Z survey respondent. This baseline data will be expanded within the next year to provide a more in depth understanding of the compelling aspects of the next generation and tomorrow's American family farm. Future key topics of exploration include ag tech adoption, food innovation and the broader issues of rural America.

In the race for acreage, corn has finally taken a step backward. USDA projects corn and soybeans will both achieve 91 million planted acres next year—the first time in years the two have been equal. Keep an eye on more than just soybean acres when it comes to predicting corn total acreage—watch wheat and cotton as well. “We’re going to lose some wheat acres and everyone I talk to in the south indicates there will be more cotton acres than in 2017—some of those acres will come out of corn and soybeans,” says Chip Flory, Farm Journal markets expert. “I think we’re going to lose corn and soybeans to spring wheat up in the Dakotas. I like 90.5 million acres on both for a 181 corn and soybean total.” Corn prices could be better next year. “Corn returns [in 2017] might not have been quite as bad as you expected them to be because we had pretty good yields,” says Pat Westhoff, director of FAPRI at the University of Missouri. “Higher prices for 2018 delivery could make the crop look better. “USDA is projecting a $3.20 per bushel average for this year and $3.30 for next year, but futures have been stronger than that,” Westhoff adds. Domestically, corn needs continue with ethanol and livestock feed driving potential growth. If you live in an area near ethanol plants or feedlots, planting corn could be the best choice. “Look at hog and cattle prices, if you’re a farmer feeder it makes a lot of sense to move that corn off the farm on the hoof rather than on the truck,” Flory says. “When you get into corn deficit areas, like Northwest Iowa, when you start looking at cash markets there is a book to be written in opportunity.” Be wary of foreign competition. Soybean returns are more promising for farmers than corn still. Keep a close eye on what happens in South America, however, higher-than-expected yields could easily soften soybean prices, making corn more appealing. “The size of the South American soybean crop this winter and early spring will have a lot to do with how U.S. soybean acres come out, which could influence corn acres,” Westhoff says. “Also watch exchange rates as they have been moving around a lot and could bring a surprise.” In addition, foreign demand for ethanol has been on the rise in recent years and the potential for uptick in demand from China could be encouraging for corn growers. Chinese officials recently announced the country intends expand ethanol use up to 10% of fuel supply, Westhoff adds. China could be a wild card when it comes to U.S. corn demand. As their domestic stocks dwindle, opportunity for U.S. growers could present itself. “The rumor is China bought 10 to 12 cargos of corn from the U.S. already and might be looking to buy even more,” Flory says. “They have a plan in place to reduce stocks with ethanol and lower price over time, but the spread between imported corn into south Chinese feed mills is at a record level right now, that’s why feed mills are turning down expensive domestic corn and saying they want to import it.”

Corn hybrids move in and out of the marketplace at a faster rate of speed than ever today. The revolving door means farmers have less time to evaluate and pick the seed best-suited for their fields. Mike McLaughlin’s solution to that challenge is to evaluate multiple hybrids in his own on-farm test plot each year. “The plot doesn’t make me an expert at picking hybrids, but it gives us a good feel for how different hybrids perform on our farm,” says McLaughlin, who farms near Le Roy, Ill., with his brother, Steve, and their partner, Cole Dooley. Farm Journal Field Agronomist Ken Ferrie notes that plots provide valuable insights that farmers can gain only by evaluating hybrids in their own fields and under their own management practices. “I’ve seen the same hybrid vary by 20 bu. to 40 bu. per acre because of different management practices used in a company test plot versus a farmer’s field,” Ferrie says. “Few farmers do plots, but the cost of seed today makes it worthwhile,” he adds. If you’re considering putting test plot on your farm this season, consider the following five tips to help make the project—and the extra work it will take—a profitable investment. Know what you want to accomplish. If you’re not sure what kind of goals to set, ask your agronomist or seed dealer for help. McLaughlin uses his plot to get a feel for how different hybrids respond to planting populations and which ones will flex during the growing season. That information, along with yield results, helps guide his hybrid placement decisions the following season. For example, on lighter soils where moisture is often a limiting factor, McLaughlin likes to plant hybrids that will flex some and that have a pendulum-style leaf structure. “They can be planted at a lower population, and the ear will compensate and be a bit bigger than if you’d planted at a high population,” he explains. Likewise, in heavy loam soils, McLaughlin plants a more fixed-ear style hybrid with an upright leaf that can utilize sunlight well, respond to higher populations, and take advantage of the soil type and moisture availability. “Doing the plots has helped me know how to evaluate leaf structure,” McLaughlin says. “I can’t really get that kind of information from going to a field day.” Pick your plot location with care. Place your plot in an area that is representative of your farm’s predominant soil type. Unlike with a show plot, you need to avoid areas on your farm that are the highest-yielding or that contain multiple soil types over a small area. Along with that, keep in mind that you’ll want easy access to the plot so you can evaluate the hybrids you’re testing on a regular basis. McLaughlin’s plot is within a few minutes of his home, allowing him to check it daily. “The hybrids are all lined up in the plot, with an alley in the middle, so it’s easy to walk through and observe each one pretty quickly,” he says. One caution Ferrie gives is to not place your plot so close to your home or the neighbors that you’re unable to aerial apply products, if needed. Keep management practices the same. Don’t alter what you do in your plot from what you do in your fields. For instance, if you apply starter fertilizer in the field, apply it in the plot. The same goes for tillage and any other agronomic practice. “I have seen farmers moldboard plow a plot or burn off the old-crop residue, even though they strip-till or no-till their fields. That makes for a good show plot, but it doesn’t yield information they can use on their farms,” Ferrie notes. Study hybrids from emergence through harvest. Ferrie says there are lessons farmers can learn from an on-farm test plot all season. Here are some examples. After emergence, take stand counts and evaluate how close the hybrid came to reaching your target population. Dig up some plants, look at the roots and evaluate your planting performance. In areas with poor stands and/or sickly plants, consider what contributed to those problems. Check for weeds, disease and insect pressure at the times you know they are likely to show up. See what hybrids insects flock to most or leave alone. “Aphids and corn borer are taster insects based on sugars in the plant. They like some hybrids better than others, so they sometimes infest one hybrid and won’t touch the one next to it,” Ferrie says. McLaughlin carries a notebook with him and takes notes on individual hybrids and anything he sees that might impact their performance every time he walks through the plot. Ferrie says detailed notes are a useful reference, especially if a hybrid yields poorly. “You don’t want to discover that one hybrid yielded 20 bu. per acre less than the others and not know why,” he explains. Evaluate hybrids prior to harvest. A couple of weeks prior to harvest, go through the plot and rate the hybrids from worst to best on stalk quality, ear shank, ear quality and ear mold. Split stalks and look for signs of disease. Give stalks the push test to see if they’re likely to fall down. Take these details into consideration as you select hybrids for the following year. For example, if a hybrid yields great but doesn’t stand well, it may end up requiring more management and inputs so you might want to limit its use or not plant it at all. Harvest the hybrids at the same moisture level you harvest fields. That means you might need to harvest the plot several times by maturity groups. For some farmers that might be a deal breaker, but not for McLaughlin. At harvest, McLaughlin harvests each hybrid when it’s ready and records the raw yield data off the scale cart. In addition, Ferrie randomly pulls 10 ears from each hybrid, takes them back to the shop, shells them and weighs them to make sure McLaughlin has precise yield data to work from. The two then discuss the results for each hybrid before McLaughlin makes selections for the following season. After three years of using on-farm test plots, McLaughlin believes the biggest payoff he’s had from them is that he’s able to pick more consistent performers for his soils. “We have some soil types that you’re not always going to hit a home run on, but because I know where to place hybrids now so much better than I used to we’re spending our seed dollars smarter.”

The world gets a new supply of soybeans every six months, as the U.S. and South America are on opposite production cycles. As a result, weather conditions are in constant focus. Back-to-back record crops, however, have resulted in the need for even more robust demand growth than what traders have grown accustom to. Therefore, without a weather event that trims production in 2018, there will be even more focus than usual on demand. Demand has been a highlight for the soybean market, which has featured year-over-year growth. But the U.S.’s share of that growth has not been on the rise recently. In its December Supply & Demand Report, USDA trimmed its 2017-18 export projection by 25 million bu. to 2.225 million bu., which still represents year-over-year growth. But as we near the end of the year, current-year export bookings are not on pace to reach USDA’s export projection. Pro Farmer Editor Brian Grete says the strong demand base continues to support soybean prices and is the key to the longer-term price outlook. But he’s concerned that USDA has still overstated exports for the current marketing year. “The U.S. share of trade with China has dropped to about 30%, while Brazil’s market share of the top market has expanded,” says Grete. “The good news for the U.S., however, is that it has made substantial gains in market share to all other markets. Continued U.S. export demand growth outside of China will be critical as production and ending stocks rise.” Doane Advisory Services Senior Economist Bill Nelson is a little more optimistic about demand and reminds that USDA analysts are “notorious” for underestimating eventual soybean demand. He currently expects 2017-18 U.S. “total disappearance” slightly better than USDA. And for 2018-19, he projects growth in crush and exports. “Over the past 18 crop years -- basically the period of time corresponding to the expansion of Chinese soybean buying -- USDA’s December U.S. use forecast has been too low 15 times. That has been the case each of the past six Decembers at an average underestimate of 152 million bushels,” points out Nelson. “It’s possible that USDA is again underestimating Chinese import demand for 2017-18. If so, that would boost U.S. exports. Another factor would be the risk for production losses in South American associated with the La Nina weather pattern reducing rainfall in key soybean-growing areas.” On a more positive note, Grete notes global stocks:use in 2017 are projected to slip slightly from a record 29.2% in the previous marketing year to 28.4%. “That’s helping support soybean prices amid what appears to be bearish fundamentals on the surface,” he says. Nelson is also optimistic about domestic demand. “Over the past few weeks, Board-derived crush margins were at their highest since 2015, with the exception of a brief period of strong crush returns in spring 2016 when the Argentine floods sent product prices temporarily soaring,” he adds. Near-steady acreage likely in 2018 The new-crop soybean/corn price ratio currently slightly favors planting soybeans over corn, suggesting soybean plantings could rise again, notes Nelson. “While price isn’t the only factor involved in planting decisions, the trend has been for more soybean acres as financial conditions tighten,” says Nelson. “Unless the corn market makes a strong push higher relative to soybeans this winter, soybean plantings will likely be steady to higher next year,” Soybeans still a market of ‘opportunity’ Bottom line, Grete says, “I believe soybeans will continue to provide producers good selling opportunities in 2018. If you plan to expand your soybean acres next spring, use winter price rallies to forward-price some of your expected 2018-crop production, especially the anticipated ‘extra’ bushels.” Nelson believes that stronger-than-expected crush, possible outperformance on Chinese soybean import demand and potentially problematic South American weather are compelling issues that may lead to better-than-expected demand into at least the start of the 2018-19 marketing year.

Last year, rural Americans who believed Donald Trump’s promises to help small farmers played a key role in putting him in the White House. Since then, the Republican administration’s Department of Agriculture moved to block an Obama-era rule that provided those farmers with a powerful tool to fight anti-competitive conduct by big agriculture. So now some of those farmers have sued. The rule in question would have helped independent farmers, such as poultry growers, to sue massive, vertically integrated meat companies that control every step of the production process. The American chicken farmer largely exists at the whim of mass producers that, under a contract, give them feed and chicks to raise in exchange for pay. Under current law, if one of those farmers has a gripe because, for example, he or she believes unhealthy chicks were sent as retaliation for a complaint about the contract, courts require a showing that the whole market—and not just the lone farmer—was hurt by the company’s actions. Under the Obama-era rule, which had yet to take effect, that standard would have changed to require only a showing of harm to the farmer claiming it. Many small farmers and groups that represent them, such as the National Farmers Union, Rural Advancement Foundation International-USA, Farm Aid, R-CALF USA, the U.S. Cattlemen’s Association and the Organization for Competitive Markets, largely supported the rule proposed by the Democratic administration. They argued that the rules would help level the playing field, making it easier for a small farmer to take on international corporations. Industry lobbying groups, such as the National Chicken Council and the North American Meat Institute, opposed the Obama rule, citing concerns that corporations would face more litigation and thus trigger higher prices for consumers. In October, the USDA and Secretary of Agriculture Sonny Perdue decided not to move forward with the Obama rule, leaving the existing, higher bar in place. The petition by the farmers was filed Dec. 14 with the U.S. Court of Appeals in St. Louis. “If they won’t support us, we’ll see if we can get somebody who will” “I’m quite disappointed in the fact that the president hasn’t followed through on promises to help the little guy, including family farmers,” said Mike Weaver, a poultry farmer in West Virginia, president of the Organization for Competitive Markets and self-proclaimed Trump voter. “If it takes legal action to accomplish things that should be done otherwise, then that’s what we’re going to do.” His organization is being represented by the Democracy Forward Foundation, a nonpartisan group that has sued a number of federal agencies this year, including the Department of Defense, the Office of Management and Budget and the Department of Education. “One of the reasons we’re really interested in this case is because it has such tremendous and direct impact on small and independent farmers to compete in the market,” said Aman George, director of legal policy at Democracy Forward. The litigation claims the withdrawal was illegal because it didn’t establish a clear record as to why it was done and was thus arbitrary and capricious. Plus, because the Obama rule was promulgated as a result of the 2008 Farm Bill, the decision to toss the regulation is unlawful, according to the complaint. The USDA declined to comment. Such a lawsuit won’t be a slam dunk. “In terms of the prospects for success, well, there’s no guarantee one way or another,” said Cary Coglianese, a law professor at the University of Pennsylvania and director of the Penn Program on Regulation. Neither theory, he said, points decisively in one direction or the other. “Both are spongy legal doctrines.” If anything, Coglianese said, he’d expect the court to rule in the government’s favor. “There’s a general degree of deference to the agencies,” he said. The better bet is probably a changed political landscape. “They definitely should be looking to mobilizing with regard to Congressional elections,” Coglianese said. Weaver isn’t ready to commit to changing his political leanings, but he’s considering it. “If we can’t get the support from the Congress or the administration that we think farmers deserve, it’s certainly going to affect the way we vote,” he said. “If they won’t support us, we’ll see if we can get somebody who will.”