2009 Kansas Agriculture Outlook

Let's Play A Game

“You got to know when to hold 'em, know when to fold 'em, know when to walk away and know when to run.” These well known lyrics of Kenny Rogers, The Gambler don’t just apply to a game of cards anymore.

As producers look down the road to 2009 a lot of questions come to mind. Hold out for better prices or take the money and run? The stakes are high and the winnings are uncertain.

But every hand’s a winner and every hand’s a loser – it’s all in how you play your cards. Before laying your chips on the table, consider the inside advice of Kansas agriculture leaders.

Kansas Secretary of Agriculture, Adrian Polansky sees 2009 as a year with challenges that will push for sound decision making. “One area we really need to focus on is risk management,” Polansky said. “For production agriculture the volatility that we’ve seen on the input side whether it’s diesel fuel, fertilizer or other inputs; it appears that we are likely to continue to experience volatility. There will certainly be some market dynamics that we will have to pay attention to in order to be successful.”

Polansky also mentions the uncertainty that lies ahead with a new administration on the federal level. “There is certainly interest in some of the critical appointments, we also have much of the Farm Bill yet to be worked through and there are still many unanswered questions in regard to how the Farm Bill will be delivered, which is very significant to all producers.”

In terms of crop agriculture decisions, Polansky says that policy in terms of biofuels could have significant impact on potential profitability. “For agriculture and the rural economy it’s important that we work towards policy decisions to enhance biofuels and bio-refineries that have positive impact.”

Switching it up?

Switchgrass as an alternative crop? Not quite yet.

Cellulosic ethanol production is still in its infancy, with research increasing and only a handful of pilot plants in operation. However, biomass and cellulosic ethanol crops will drive the next wave of agricultural commodities and push producers to re-think crop selection. In time, alternative crops, such as switchgrass, could be a realistic option.

"At this time, it's grown as a cover crop on some CRP land and in some limited amount as a hay crop," says University of Nebraska-Lincoln professor Richard Perrin. "It has received attention as a potential biomass crop for the energy market, but these markets are still in the future."

Switchgrass is a warm-season perennial grass that is native to North America. Perrin says it is competitive with other grass crops in a wide variety of regions, throughout the Great Plains and the Southeast. Because of its native history, it is resistant to many pests and plant diseases and capable of producing high yields with very low applications of fertilizer.

Some fertilization may be necessary to maintain harvestable stands, says Ag Marketing Research Center specialist Dan Burden. The crop is proven to be very tolerant of poor soils, flooding and drought. Switchgrass is also a valuable soil protection cover crop - it binds loose soils and provides valuable wildlife habitat.

However, as a crop, switchgrass requires slightly uncommon management. For optimal output, it is harvested only every other year, rather than annually. Even though it's common in CRP fields, switchgrass harvested for energy generation must be a relative monoculture, meaning derived from primarily a single seed type, rather than part of a mixture of grasses. Once the grass reaches maturity in harvest years, it is swathed and baled, much like other forage crops.

Consumers Favor Biodiesel In Survey Results

Survey Shows Consumers Back Farmers and Biodiesel

A recent nationwide survey conducted by the United Soybean Board (USB) and soybean checkoff revealed that U.S. consumers strongly back U.S. soybean farmers and biodiesel.The "National Agriculture Image Survey" indicated 82% of consumers agree foreign oil-producing countries and the high cost of fuel impacting farming and processing, packaging, storing and shipping food are to blame for food price increases, not U.S. farmers.

Other key findings show:

• 77% of consumers favor the use of biodiesel as a source of energy that can meet our needs in the next 5-10 years.
• 74% of consumers were more favorable toward biodiesel after hearing it benefits the environment.
• 70% of consumers were more favorable toward biodiesel after hearing it's a new green industry that creates jobs.
• 89% of consumers expressed a favorable image of U.S. farmers. Only 7% responded unfavorably and the other 4 % had no opinion.

What's Driving Food Prices? (not ethanol)

Ag Economists Analyze High Commodity And Food Prices

In case you haven't heard, food prices are going up. Go ahead... protest, panic, point fingers. It's that evil ethanol industry that's doing this afterall, how dare they use corn to make fuel, taking away from the supply and making the grocery bill go up.

Recent studies of Purdue University ag economists show that in fact the food prices are drven by a combination of factors... not only ethanol. High oil prices, the weak dollar, world production and consumption trends all add a little 'push' to the price. But that's a side of the story less often mentioned.

The following is a excerpt from the press release from Purdue University about the findings:

--- In a Farm Foundation commissioned report, the Purdue economists - Phil Abbott, Chris Hurt and Wally Tyner - highlight key factors gleaned from examining 25 recent studies plus their own analysis. Their conclusion: a complex combination of factors is fueling agricultural commodity price increases and rising food costs.

 Tyner, an expert on energy and policy issues, said the price of oil is an important factor that has increased the demand for biofuels. "About $3 of the corn price increase is due to the higher oil price and $1 to the ethanol subsidy," he said.

 As high oil prices spur demand for biofuels, the increased corn production stimulates demand for fertilizer, diesel, propane and other agricultural inputs. Prices for these inputs have also risen due to the "demand pull" from more corn being produced and subsequently the "cost push" due to the fact that petroleum products are key ingredients in many of these inputs.