NCBA Spotlights Worries of New Rule

Friday, 07/30/2010 5:18 PM

DENVER (DTN) -- Though relatively quiet compared to other groups when it comes to debating USDA's proposed new livestock competition rule, the National Cattlemen's Beef Association will come out of its summer meeting this week planning to "educate and motivate" its members to fight USDA's proposal.

Producers said the rule could lower the quality of beef produced in the countryside if packers opt not to provide pricing premiums. That translates into less desirable beef for consumers when cattle producers are searching for ways to boost demand, NCBA members said.

USDA's Grain Inspection, Packers and Stockyards Administration's proposed new livestock rule last month has only emphasized the divide among producers. Some producers think packers have too much control over the markets. Others have entered into marketing agreements with packers and think they benefit from premiums in marketing contracts. The rule also requires packers to explain differences in pricing and premiums paid to producers, as well as marketing contracts.

The proposed rule would ban packer-to-packer sales, raising concerns among cattle producers who have invested in packing operations. Further, the rule attempts to loosen language on "harm to competition" that has been an impediment to producers suing packers over treatment.

Briefing the NCBA Executive Committee on Thursday, Colin Woodall, the group's chief lobbyist, said the proposed rule goes beyond the intent of Congress by adding language defeated in the 2008 farm-bill debate. Woodall said the rule sets up the potential for a lot of legal battles.

"You have the potential of getting sued, just because somebody thinks a neighbor got more money than they did," Woodall said.

THREAT TO MARKETING AGREEMENTS

One of the bigger fears raised at NCBA's meeting was the threat to marketing agreements. NCBA argues USDA has no business trying to tell producers how to market their cattle. However, the group's members fear that if packers get scrutinized over prices, premiums and discounts, then it will convert beef cattle from a focus on branded products to an emphasis on generic cash pricing.

"This hits producers who have put the capital and intellectual property and the time and effort to build a premium into their product against producers who haven't put in much at all into their cattle," said Greg Doud, NCBA's chief economist.

USDA officials were not at the summer meeting in Denver to discuss the proposed rule or its impact on producers.

Stephen Koontz, an economist at Colorado State University, worked on a major livestock study released about four years ago for USDA that looked at marketing contracts. That study determined the loss of those marketing agreements would be about $5.4 billion to the industry in the short-term and $21.9 billion in the long-term, "if we got to more standardized pricing," Koontz said.

Missouri tried a law comparable to the GIPSA law in 2001. Hog prices in the state were generally 3 percent lower than other states and cattle prices were suppressed as well. By late 2002, the governor called in lawmakers to change the law. Koontz estimated Missouri producers lost about $19 million in the mid-term.

NO INCENTIVE TO INNOVATE

Without such marketing contracts, feeders will not have incentives to innovate and packers won't have strategies to offer premiums, Koontz said. Large packers will have incentives to standardize their pricing and determine quality later. "Buy them all and sort them out in the cooler," he said.

Bill Rishel, president of Nebraska Cattlemen from North Platte, Neb., sells premium bulls and said his customers focus on genetics to go after premiums on their fed cattle when selling to packers. Rishel said producers choose to risk this market to get paid more for seedstock.

"We elect to take the risk of discounts in the marketplace, in order to reap the benefits of premiums in the marketplace that are based on the right kind of cattle," Rishel said.

If packers have to defend every variation in price, Rishel said, he worries that it will lead to single commodity bids by packers.

"There is no doubt in my mind these rules will harm the people GIPSA and USDA think they are going to help," Rishel said.

Rick Stott, a cattle feeder from Boise, Idaho, and vice president of Agri-Beef Co., also said the rule would affect producers who own or invest in feedlots and packing operations. Stott said major packers would get their margins buying on the cash market with no premiums, but a lot of smaller packers have developed by focusing on premium markets.

SMALLER PACKERS GREW ON PREMIUMS

"We live in the area of branded programs," Stott said, adding, "It's taking out the very core of what we need to stimulate in our industry to compete local and regionally in the marketplace."

Agri-Beef owns AB Foods, a 1,400-head-a-day packing operation in Washington State. But the company also owns feeding operations in other states, including Supreme Feeders in Liberal, Kan., which would be a 1,700-mile haul if the company were required to transport cattle from Kansas to Washington because of a ban on packer-to-packer sales.

"We sell to every packer, every week," Stott said. "We're not unusual. There are lots and lots of small packers that have cattle operations."

Andy Gottschalk, of Hedgers Edge, said marketing agreements encourage producers to do more for premiums. But without such incentives, the producer unwilling to improve on genetics or feeding wins, because all pricing is equal. It's the wrong direction for an industry trying to drive demand.

"If there is no pricing differential, who benefits? It's not the best producer. He gets charged," Gottschalk said.

Allie Devine, an attorney for the Kansas Livestock Association, said the rule is vague, and if a producer reads it, the rule seems relatively benign on the surface. But the aspect of putting contract information on USDA's website will draw some producers into contract or price disputes between packers and other producers. USDA officials also then become the ones who determine what is fair and if there is a breach of contract.

"You are going to be brought into this conversation whether you want to or not," Devine said.

Understanding that rival groups plan to pack the crowd at a USDA-Department of Justice meeting on livestock competition on Aug. 27 in Fort Collins, Colo., NCBA will push as many of its people to be at the meeting and speak in the open forum as well.

Following requests from some livestock and packer groups, as well as members of Congress, USDA extended the comment period for the proposed rule until Nov. 22. The rule and information can be found at http://archive.gipsa.usda.gov/…

USDA also released a primer earlier this week to address what the department felt were misconceptions about the rule. http://archive.gipsa.usda.gov/…

Chris Clayton can be reached at chris.clayton@telventdtn.com

(ES/AG)

© Copyright 2010 DTN/The Progressive Farmer, A Telvent Brand. All rights reserved.

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No World Wheat Shortage Seen

Friday, 07/30/2010 7:51 AM

OMAHA (DTN) -- Although some wheat-growing areas in the world have had challenges, the world wheat supply outlook does not expect a shortage, thanks to weather in the U.S.

The result is a generally bearish market weather factor going into late summer.

"Production losses are being seen overseas, which is cutting into global supplies. However, stocks remain cumbersome," said DTN market analyst John Sanow.

The challenges in other countries included Canada's wheat acreage slashed from spring flooding and Russia's wheat harvest prospects diminished because of summer drought.

But the U.S. winter wheat crop harvest was large; the U.S. spring wheat harvest may match record yields; and the wheat harvest in Europe outside of Russia is going much better than some analysts had expected.

For U.S. hard red winter wheat areas, May rainfall set the tone for harvest success. In Kansas -- the top hard-red-winter-wheat-production state -- May rainfall totaled from 3 to 5 inches over most of the wheat-growing areas. June was drier than normal, which allowed wheat to ripen, and harvest to proceed with few major interruptions.

The final harvest was a good one: the Kansas Agriculture Statistics estimates the 2010 Kansas wheat crop at around 369 million bushels, with a yield of 43 bushels per acre -- the fifth-highest yield on record.

Spring wheat areas also see a good harvest shaping up. Reports from the 2010 North Dakota spring wheat crop tour indicate that yields this year may approach last year's record 39 bushels per acre.

Late-summer drought in Russia puts a bit of a crimp in world wheat supplies. Russia's drought began in April, and has been called the most serious drought since 1880, back to the days of the czars.

"I see no sign in the next two weeks of a change of more rainfall," said Telvent DTN ag meteorologist Joel Burgio. He has tracked and forecast international weather patterns for more than 20 years.

"Early July, we had the drought centered in central Russia and western Kazakhstan," he said. "Now, it looks like the hottest weather is shifting west into the Volga Valley and as far (west) as eastern Ukraine."

But, will even such a historical calamity goad the grain market into a true-blue weather-premium mode? Sanow doesn't think so -- more to the point, he said the market doesn't think so, either.

"The ending stocks-to-use ratio domestically is just shy of 50 percent (the highest level since the 1987-88 marketing year), while the world number is at a strong 28 percent," he said. "With weather remaining a factor in the Black Sea Region, the market could continue to find support, although at some point bearish fundamentals should take control once again."

Bryce Anderson can be reached at bryce.anderson@telventdtn.com

(ES/SK)

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Some Insect Numbers Down

Wednesday, 07/28/2010 3:27 PM

By Kurt Lawton
DTN Special Correspondent

EDEN PRAIRIE, Minn. (DTN) -- In many areas of the Midwest, insect populations, especially western corn rootworm and early soybean aphids, have stayed low this season.

"It's certainly true we've had a light year so far with soybean aphids, as they still haven't shown up anywhere close to economic threshold numbers in any state, so far," said Bob Wright, University of Nebraska Extension entomologist, who leads a weekly conference call with other entomologists to track pests throughout the Midwest. "And rootworm numbers are down across the Midwest."

Most Midwest entomologists agree that reduced rootworm numbers are due to the saturated soils in June and increasing use of Bt rootworm corn hybrids. "We feel it's a product of both, as a wet spring in numerous areas caused rootworm larvae to drown, combined with the additive effect of increasing market share of hybrids that resist rootworm feeding," said Christian Krupke, Purdue University entomologist. "However, we still advise growers to dig roots now to determine any levels of damage that may impact lodging, especially in non-Bt fields or in areas where they suspect damage."

REMAIN VIGILANT ON APHIDS

Most entomologists are not seeing early aphid numbers anywhere close to economic thresholds, but that can change during the usual late-July/early August aphid migration, or redistribution, period.

"There's been spotty reports of increasing aphid numbers in some areas, but based on the numbers we've seen so far, we don't expect to reach economic threshold for quite some time," Krupke said. "Aphid numbers are low in adjacent states to Indiana as well, which is a good predictor that we'll have low numbers because we often get the leftover aphids that migrate in from Minnesota and Wisconsin."

Bruce Potter, University of Minnesota Extension entomologist, reported in a July 22 newsletter that some aphid numbers are reaching economic thresholds in portions of south-central, central and west-central Minnesota. Threshold levels are when 80 percent or more of soybean plants have aphids and there is a 250-aphids-per-plant average. "Each field and geographic area is unique. If you haven't scouted, get out there. And, yes, that includes fields that had seed-applied insecticides," he advised.

WESTERN BEAN CUTWORM

"The one pest where we've seen increasing numbers across the Midwest is the western bean cutworm," Wright said. "We've been dealing with this secondary pest a long time west of the Missouri River, but in the last decade, it has pushed all the way to the East Coast."

Without good scouting, western bean cutworm can cut yields by as much as 20 percent. "The good thing about this pest is it can be controlled with scouting and timely foliar insecticide applications -- which we're seeing growers in Indiana apply with their fungicide treatment when they see high moth counts or egg masses on leaves," Krupke said.

Entomologists don't know why this secondary pest is increasing. "There are a lot of theories, ranging from less tillage and less harsh winters that are not killing off as many overwintering larvae to expanded use of Bt hybrids that don't control this pest," Wright said. Only Herculex-based Bt hybrids offer control.

For More Information:

Western Bean Cutworm Fact Sheet (Ohio State)

http://ohioline.osu.edu/…

Managing Soybean Aphids (University of Minnesota)

http://www.soybeans.umn.edu/…

(GH/SK/AG)

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Favorable Weather Ahead for Corn

Wednesday, 07/28/2010 7:44 AM

OMAHA (DTN) -- Late-summer patterns for the U.S. 2010 corn crop -- which was planted at a brisk pace to start the growing season -- are largely favorable to finish pollination and move through the dough and dent stages.

The means promising corn yields to surpass USDA's projected yield of 163.5 bushels per acre, leading the market weather impact to be mostly bearish.

Weather is just one of many factors which influence the market. However, as of July 19, almost two-thirds of the crop is silked in the Corn Belt, more than double the pace of 2009 and 18 percentage points ahead of average.

In the central Belt, 18 percent of the Illinois corn crop is in the dough stage as of July 19, compared with just 1 percent last year and only 10 percent for the average dough-stage rate. In addition, soil moisture supplies are mostly ample, given a major boost by seven days of rain from July 19 to 25, which covered almost the entire central and eastern Midwest with well over an inch of rain.

Even with some flooding in eastern Iowa, northern Illinois and Wisconsin, the net effect of this widespread rain is that crop moisture supplies are ample in the highest production areas of the Midwest going into the last third of the growing season.

This is due to a strong jet stream that has allowed the Corn Belt to largely avoid any long-lasting dry-weather periods this season, according to Telvent DTN ag meteorologist Joel Burgio.

"The jet across the northern U.S. has been unusually strong most of the summer, and this is a pattern we've been in for awhile," Burgio said. "The jet's presence does promote drier and hotter weather south of the jet stream, but up until recently, the rain-making fronts were still strong enough to push south."

The only issue for corn moving into the final few weeks of the season may be high nighttime temperatures. For example, an area from southern Iowa through Missouri and east across most of Illinois, through the Ohio Valley, had nighttime low temperatures in the July 18 to 24 period from 70 to 75 degrees Fahrenheit. Such warm temperatures can take away from the crop's performance.

"High nighttime temperatures can hurt corn yield potential by causing the plant to speed up its rate of respiration," said University of Missouri extension agronomist Wayne Flanery. "With the higher nighttime temperatures, the corn plant uses up some of its energy at night, rather than put that energy into the kernels." Flanery said that ideal temperatures for corn at night are around 64 F.

The chances for some temperature stress, along with areas of crop stress internationally, may be enough to prevent a free-fall in corn prices for now.

"With the domestic (corn) ending stocks-to-use ratio of 10.3 percent at the tightest level since the 2003 to 2004 marketing year, there remains little margin for error when it comes to production, if record-setting demand estimates prove true," said DTN analyst John Sanow. "Also, possible issues with the corn crop globally may cut into an already tight world stocks-to-use ratio."

The global competitor at the highest risk for drought affecting its corn production in late summer is Ukraine. The drought is already affecting the grain areas of Russia and Kazakhstan in central Asia.

"If that drought moves farther west from Russia into eastern Ukraine and south Russia, there's a threat to corn," said Burgio. "And there is a high chance that that's going to be the case."

Bryce Anderson can be reached at bryce.anderson@telventdtn.com

(ES/SK)

© Copyright 2010 DTN/The Progressive Farmer, A Telvent Brand. All rights reserved.

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View From the Cab

Tuesday, 07/27/2010 1:13 PM

LANGDON, Mo. (DTN) -- Everyone talks about the weather, but doing anything about it can be hard. That's never been more apparent than in the weekly reports of View from the Cab farmers Becton Bell of Wilson, Ark., and Frank Zweber of Hoven, S.D. As experienced irrigators, both Becton and Frank attest to the fact that other than pumping water onto heat-stressed fields, there's not much else to be done when weather throws farmers a curve ball.

Frank had a big curve ball thrown his way last week when hail struck some of his best dryland fields. "We got some pretty significant hail on about 20 percent of the total crop," he told DTN on Monday. Up until it stormed, rains and severe weather had been missing the farm, but all that changed on Friday. Quarter-sized hail in a mile-wide strip, propelled by wind, defoliated about 150 acres of tasseling corn and a similar amount of soybeans in full bloom.

The hail storm points out how difficult it can be to build a farm income safety net for everyone.

In Frank's area of South Dakota, hail insurance premiums may cost as much as 20 percent of the insured value of the crop. Frank sees that as prohibitive, so he includes hail coverage on his all-risk crop insurance because it's cheaper.

But with the rising cost of crop insurance, he's begun insuring his crops under production units (all yields of each crop averaged together) rather than by individual fields. That saves on premium costs, but losses on individual fields like those hit by hail are only paid if they affect overall farm production by more than Frank's deductible. Even if he lost all production from those fields, it might not be enough to exceed the deductible for a payable loss. And there's still the insurance premium to pay on top of that.

"We have ACRE (Average Crop Revenue Election) here because we have that every-fourth-year drought, but the safety net still has some holes in it," Frank said. ACRE payments are triggered by statewide losses, but only after individual farmers qualify by certifying losses of their own. Farmers who sign up for ACRE must agree to lower loan rates and reduced direct payments.

One solution for the high cost of insuring his crop adequately would be if Frank could buy a 50 percent deductible CAT (catastrophe) policy on irrigated acres supplemented by hail insurance. He would continue to insure dryland acres via all-risk insurance at a lower deductible similar to what he has now.

Current rules require the same level of insurance for every field of the same crop on a farm regardless of irrigation.

If there was a silver lining to the dark cloud over Frank's fields, it was that the rest of the farm finally received a good inch of rain after being passed over by other recent rain events. "It sure did perk things up," he said.

Frank has been keeping up with the reaction on Capitol Hill to new rules issued by GIPSA regarding the Packers and Stockyards Act. He said, in his opinion, most Congressmen don't understand the problem at all. "R-CALF and Farmers Union have tried to explain it for years," he said.

After surgery about two weeks ago to remove his gall bladder, Frank has made a quick recovery. The same is true for young Hadleigh Bell, Becton's daughter, who was being treated for infections in both ears. Becton gave the good news as he resumed irrigation on most of the fields on his farm.

"It's already 85 degrees here at 8:57 in the morning. We're starting to irrigate the soybeans with poly pipe and center pivots," Becton said. He noted a 50 percent chance of rain in the area, but with stressful temperatures forecast in the upper 90s, irrigation pumps will run until rain falls.

Most of the farm received one-half to three-fourths of an inch of rain last week, Becton said. It was needed because his soybeans are in reproductive stages ranging from R2 (full bloom) to R6 (pod fill or full seed). Water usage by soybeans in the R6 stage can be as much as one-fourth to one-third inch per day.

Cotton continues to bloom as cotton choppers move through the Bells' cotton fields to remove weeds for a second time this year. While too late to affect yield, large weeds such as pigweed can make harvest difficult. Becton said that, overall, the cotton crop is in pretty good shape. Bolls have already formed on the lower half of plants. Bolls form from blooms with white petals that turn red before dropping from the plant. As bolls dry, they open to reveal cotton inside, but not without a little help. "The bottom bolls generally open on their own," Becton explained, "but we have to spray the top bolls (with a chemical) to help them open." Bolls must be dry, and open, before harvesting can begin.

Becton said he feels that, with one more rain, dryland crops will be well finished for the year. "The last dry spell we had melted them a little," he said. But, overall, Becton said he is optimistic about yield prospects in dryland soybeans. He's hoping for 50 bushels per acre, or better.

Some rice fields are nearly ready to drain, maybe within about 10 days, while others are just now in the split boot stage with grain heads starting to emerge. The beginning of rice harvest on the earliest-planted fields is three to four weeks away, somewhere near Sept. 1. With the corn crop blacklayered and drying in the field, harvest of that crop will likely take place before rice in late August.

Hail insurance rates in the Mid-South are a far cry from what they cost in Frank's area of South Dakota. Becton says that's probably because hail is seldom a threat in the Delta. Becton carries hail coverage on his high-value crops, rice and cotton. "We've maybe had a couple of claims the last 20 years," he said.

(AG/SK)

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Audit Clears United Soybean Board

Tuesday, 07/27/2010 1:11 PM

OMAHA (DTN) -- Following an 18-month investigation of the United Soybean Board, USDA's Office of Inspector General stated this week in a letter that the agency "found insufficient evidence" to support allegations made by the American Soybean Association that the USB had misused soybean checkoff dollars.

The report by the OIG sent to the office of Sen. Charles Grassley, R-Iowa, provides an anticlimactic end to a public row between the United Soybean Board and American Soybean Association over checkoff spending and an employee who no longer works for a checkoff export group.

Leaders from the United Soybean Board were slated to hold a press conference later Tuesday to discuss the OIG findings.

The OIG did not release the actual report, but instead, USDA Inspector General Phyllis Fong provided a letter to Grassley's office because he was the lawmaker who had requested the investigation. OIG officials expect to post the report on the agency's website by late Tuesday. Grassley said he reviewed the report and considered it an independent investigation.

"I would say that the Inspector General has made that judgment," Grassley said.

"You have to accept it as an independent judgment of what (she) said that there may have been something wrong, but there's just nothing that can justify with certainty that the accusations were justified and accept (her) judgment," Grassley said.

In looking at the allegation, the OIG determined that a number of allegations were outside of the OIG's purview. That included allegations of employee misconduct. OIG stated investigators met with representatives and reviewed documents provided by ASA, USB, the U.S. Soybean Export Council, the Agricultural Marketing Service and Foreign Agricultural Service.

"Based on our review of the documents and interviews, we found insufficient evidence to support ASA's allegations," the OIG stated. "During interviews, some ASA members told us they did not have any documentary evidence that USB was engaged in inappropriate activities."

The ASA board voted unanimously in December 2008 to request the OIG investigation and financial audit of the soybean checkoff. At that time, ASA accused the checkoff of "wasteful and excessive spending" and also made allegations of improper conduct by the United States Soybean Export Council, a group originally formed by the ASA and United Soybean Board.

ASA posted a statement on its website Monday stating that the OIG had found the checkoff is operating as it should. "We are pleased we can put this issue behind our industry," ASA stated.

ASA added, "When whistleblowers presented significant allegations of abuse, the ASA Board of Directors had a fiduciary responsibility to ask that the allegations be investigated in the best interests of soybean farmers. The Secretary of Agriculture (Ed Schafer) agreed that an OIG investigation was warranted."

Further, ASA stated that there have been improvements at the Soybean Export Council with the former chief executive officer being replaced and the board of directors being restructured. "As a result of the significant leadership and management changes that have been made at USSEC, we believe soybean farmer interests are being better served."

The allegations also led to more division among soybean groups, sparking the formation of the U.S. Soybean Federation with representatives largely from Minnesota, Missouri and Mississippi.

The Soybean Federation issued a news release Tuesday citing that the OIG "fully vindicates USDA, its staff and volunteers, finding allegations against the USB were unfounded." Jerry Slocum, president of the federation and a farmer from Coldwater, Miss., added, "I wish I could say this was a good process for USB to go through, but the bottom line is we already knew that USB was acting within the letter of the law," said Slocum. "And now farmers had to spend nearly a million dollars in checkoff funds to respond to this petition. It's money that should have been used for countless better things -- from new use research to protecting domestic animal agriculture."

The checkoff is funded by one-half of 1 percent of the net value per bushel that a farmer receives at the first point of sale, according to the USB. For instance, a farmer selling 10,000 bushels Tuesday at $9.85 a bushel would pay 4.925 cents a bushel, or $492.50. State checkoff boards retain 50 percent of the collection and the United Soybean Board collects the other 50 percent.

The OIG stated that, "Based on interviews, it appears the dispute between ASA and USB began when Congress passed the legislation creating the soybean checkoff program. ASA served as the driving force behind Congress' passage of the legislation because it wanted to ensure all states contributed equally to the soybean program. ASA did not expect Congress to establish USB to oversee the soybean checkoff fund when the legislation was finally passed."

The OIG report also stated that ASA had made allegations to the OIG's hotline just months after the creation of the United States Soybean Export Council. Similar allegations were made by the ASA members in the 2008 complaint, the OIG stated.

Chris Clayton can be reached at chris.clayton@telventdtn.com

(AG/KM)

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DTN Retail Fertilizer Trends

Tuesday, 07/27/2010 1:09 PM

OMAHA (DTN) -- The summer fertilizer roller coaster ride continues.

Retail fertilizer prices tracked by DTN for the third week of July were lower for all eight major fertilizers. These lower prices come on the heels of higher prices seen last week, which some retailers thought could be the beginning of higher fertilizer prices for the upcoming fall fertilizer season.

Leading the fertilizers lower was urea, which was down 12 percent. Next was UAN28, down 9 percent, followed by 10-34-0, which decreased by 6 percent. Anhydrous, DAP, MAP, potash and UAN32 were all just slightly lower than the third week of June.

Urea had an average price of $366.48/ton, UAN28 $246.78/ton, 10-34-0 $381.65/ton, anhydrous $498.45/ton, DAP $501.39/ton, MAP $501.92/ton, potash $488.18/ton and UAN32 $286.87/ton.

While urea did move lower this week, the dry nitrogen fertilizer could move higher once it gets closer to the fall application season, said Matt Carlson, agronomy manager for the Woodworth Farmers Grain Company located in Woodworth, N.D. He said he has heard that fertilizer sheds are sitting empty in some locations, and demand for pre-bought urea is pretty high. Simple supply-and-demand economics would dictate a rise in prices, he said.

"I think we will see urea in the $380 to $400 (a ton) range come this fall," said Carlson, who sells about half his fertilizer in the urea form and the other half in MAP 11-52-0.

Carlson's area of east-central North Dakota produces mainly spring wheat and soybeans, but he also has some corn acres in the general vicinity. Farmers regularly apply some urea and MAP in October and November after the wheat is harvested and before soybeans are planted the following spring.

Despite a rapidly approaching fertilizer application season, Carlson said he hasn't really heard from many of his farmer customers.

"It has been fairly quiet concerning farmers calling to talk about fertilizer prices," he said.

Compared to one year earlier, two fertilizers are down double digits. Potash leads the way lower, down 36 percent, with 10-34-0 falling 33 percent. Urea is now 7 percent lower, while UAN32 is down 5 percent compared to the third week of July 2009.

Four fertilizers have shown an increase in price compared to last year. DAP is up 26 percent, while MAP is 11 percent higher, and anhydrous is up 10 percent from last year. UAN28 is up just slightly.

DTN Pro Grains subscribers can find current retail fertilizer prices by location on the Fertilizer page under Farm Business.

DTN collects fertilizer prices from several dozen retailers weekly. Not all fertilizer prices change each week. Prices are subject to change at any time.

DTN's average of retail fertilizer prices from the third week of the month ($ per ton)

DRY
Date Range	DAP	MAP	POTASH	UREA
July 21-24 2009	399.06	451.77	767.79	395.82
Aug 18-21 2009	381.79	406.25	668.93	383.40
Sept 15-18 2009	383.84	405.00	646.50	378.10
Oct 20-23 2009	373.11	394.97	598.72	378.83
Nov 17-20 2009	366.71	399.48	603.33	382.24
Dec 15-18 2009	393.27	401.36	563.23	395.81
Jan 19-22 2010	467.95	476.81	508.94	417.19
Feb 16-19 2010	467.22	495.50	506.79	429.07
Mar 16-19 2010	486.46	504.88	501.68	416.30
Apr 20-23 2010	501.46	516.79	505.18	419.27
May 18-21 2010	509.31	515.03	502.22	409.94
June 15-20, 2010	501.99	519.78	495.50	416.45
July 20-23, 2010	501.39	501.92	488.18	366.48
Liquid
Date Range	10-34-0	ANHYD	UAN28	UAN32
July 21-24 2009	566.14	454.78	240.94	301.75
Aug 18-21 2009	434.14	412.71	199.33	245.50
Sept 15-18 2009	398.58	414.70	217.05	250.16
Oct 20-23 2009	437.01	430.21	211.70	269.29
Nov 17-20 2009	417.39	426.85	212.00	243.50
Dec 15-18 2009	412.67	463.18	227.84	251.33
Jan 19-22 2010	390.30	471.91	235.57	276.86
Feb 16-19 2010	395.64	464.74	237.83	280.23
Mar 16-19 2010	394.93	469.91	259.28	285.30
Apr 20-23 2010	395.61	472.24	266.19	279.57
May 18-21 2010	390.95	477.09	260.28	284.00
June 15-20, 2010	406.82	500.32	272.32	296.00
July 20-23, 2010	381.65	498.45	246.78	286.87

Russ Quinn can be reached at russ.quinn@telventdtn.com

(KM/AG)

© Copyright 2010 DTN/The Progressive Farmer, A Telvent Brand. All rights reserved.

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Crop Insurers Say Cuts Will Be Felt

Thursday, 07/22/2010 5:00 PM

OMAHA (DTN) -- Groups representing crop insurance companies and agents told members of a House Agriculture Subcommittee that USDA didn't negotiate in good faith in a new Standard Reinsurance Agreement and that farmers will feel the effects of $6 billion in cuts the industry must absorb over the next 10 years.

At a hearing on Capitol Hill on Thursday, representatives from the crop-insurance industry questioned USDA's authority to demand such a steep fiscal cut and said services to farmers would end up being affected by the new contract. DTN/The Progressive Farmer watched the hearing through the House Agriculture Committee webcast.

Rep. Leonard Boswell, D-Iowa, who chairs the Subcommittee on General Farm Commodities and Risk Management, said he was concerned by the level of cuts in the SRA due to cuts already made when lawmakers chopped $3 billion from the industry and also created a timing shift that will delay up to $3 billion in payments in 2012 as well. "We also must acknowledge that the crop insurance industry is a business, and both the companies and agents need to make a profit in order to stay in the market," Boswell said.

Boswell said lawmakers do have some say in the SRA before it is final.

"It just seems like we're trying to tell them to conduct their business to the point that it's stepping too far," Boswell said.

The SRA, which all 16 crop insurance companies signed last week, spells out payment terms to the companies starting next year. The contract cuts about $600 million a year out of administrative and operating (A&O) expenses reimbursed by USDA to companies, as well as makes cuts in underwriting gains.

Rep. Frank Lucas, R-Okla., ranking member of the House Agriculture Committee, questioned why a hearing was being held a week after companies had a "take-it-or-leave-it" scenario forcing them to sign the contract. "The signing of the agreement does not imply that the company agrees to the terms," Lucas said.

Lucas also complained that the $6 billion in cuts ends up disappearing from the farm-bill baseline.

Lawmakers heard repeated criticism about the overall cuts, the cap on agent commissions and language in the contract that prevents companies or agents from suing USDA over provisions in the SRA.

Steve Rutledge, president of the Iowa-based Farmers Mutual Hail Insurance Co., said cuts in the program don't prevent more complications or requirements being placed on insurers who manage and sell policies. Companies are considering selling their lines of business, he said.

"It seems inevitable that more jobs are going to be lost and that the face of the industry will change," Rutledge said. He added, "There will likely be fewer companies, fewer agents, fewer reinsurers and fewer jobs, all likely leading to a decline in quality of service to producers."

Bob Parkerson, president of the National Crop Insurers Service, said he felt the administration had a budget-cutting target for the program "and simply staked out an extreme position to the right of it, knowing full well that, in the end, the companies had no choice but to accept the final outcome."

Stephen Frerichs of Rain and Hail LLC, speaking for the American Association of Crop Insurers, said companies had no choice but to sign the SRA or lose their business. He said USDA exceeded the intent of Congress with the cuts. So AACI recommends Congress review the renegotiation authority.

"Perhaps it should be repealed or at a minimum modified to include safeguards such as maintaining the integrity of the Agriculture budget baseline," Frerichs said.

The Obama administration plans to take $4 billion of the cuts and use that for specific reductions in federal spending. The other $2 billion will be used to prop up spending on some key conservation programs, such as rangeland programs and the Conservation Reserve Program.

Bill Murphy, administrator for USDA's Risk Management Agency, said the new SRA "provides a reasonable rate of return to the companies" while still "having no adverse impact on farmers' premium costs."

Murphy said the new SRA takes away excess and windfall profits that can come through price spikes in commodities. The new agreement limits A&O to about $1.3 billion in 2011, still 40 percent more than what companies received in 2006, but less than the $2 billion paid to the industry during the 2008 price spike.

Crop insurance has become the cornerstone of risk management for producers, most of whom buy more than the minimum coverage or policy offerings. From 1999 to 2009, "buy-up coverage" rose from 73 percent of insured acres for 10 staple crops to 92 percent. Not only has acreage rise, but the type of insurance farmers are buying has shifted to more comprehensive coverage as well, Murphy said.

Murphy said companies have been unable to curb the rise in agent commissions. The average agent commission in Iowa, Illinois, Indiana, Minnesota and Nebraska was 18.6 percent of premium, which was a higher percentage than companies received for A&O on policies. Companies have been relying on expected underwriting gains to pay more generous compensation to agents, he said.

Murphy cited the failure of Iowa-based American Growers Insurance Co. in 2002, in which he said high agent commissions "were a major contributor" to the company's collapse. Government money is still being paid to close out the books on that company, he said.

Murphy said agents in Iowa are getting as much as three times the commission as crop-insurance agents in Texas.

The new contract creates a cap on agent commissions of 100 percent of A&O on a state basis. Companies also can have a profit-sharing program as well with agents. Recognizing criticism of the commission cap, Murphy told lawmakers that agents could still collect an average of $1.1 billion annually.

Rep. Earl Pomeroy, D-N.D., said changes to the program needed to be made and the cuts taken by the crop-insurance industry should blunt any impact of federal budget cuts in the next farm bill. Pomeroy also said he was concerned about the level of A&O payments that go to agents.

"My open opinion is companies shouldn't pay more than A&O, and if they do, there's something wrong with that," Pomeroy said.

Written testimony from Thursday's hearing can be found at http://agriculture.house.gov/…

Chris Clayton can be reached at chris.clayton@telventdtn.com

(AG)

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