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LOOKING BACK AT 2018
DOWN BUT NOT OUT December 2018
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President Lindsay Greiner, Keota | At Large President Elect Tim Bardole, Rippey | At Large Treasurer Robb Ewoldt, Blue Grass | D6
December 2018 | Vol. 31, No. 3
Secretary Dave Walton, Wilton | D6 Executive Committee Randy Miller, Lacona | D8 Board of Directors Brent Swart, Spencer | D1 Chuck White, Spencer | D1 April Hemmes, Hampton | D2 Casey Schlichting, Clear Lake | D2 Rick Juchems, Plainfield | D3 Suzanne Shirbroun, Farmersburg | D3 LaVerne Arndt, Sac City | D4 Jeff Frank, Auburn | D4 Rolland Schnell, Newton | D5 Morey Hill, Madrid | D5 Bill Shipley, Nodaway | D7 Jeff Jorgenson, Sidney | D7 Warren Bachman, Osceola | D8 Pat Swanson, Ottumwa | D9 Tom Adam, Harper | D9 Brent Renner, Klemme | At Large Stephanie Essick, Dickens | At Large American Soybean Association Board of Directors Morey Hill, Madrid Wayne Fredericks, Osage Brian Kemp, Sibley John Heisdorffer, Keota Dean Coleman, Humboldt United Soybean Board of Directors Delbert Christensen, Audubon Larry Marek, Riverside Tom Oswald, Cleghorn April Hemmes, Hampton Staff Credits Editor | Ann Clinton Communications Director | Aaron Putze, APR Senior Creative Manager | Ashton Boles Photographer | Joseph L. Murphy Staff Writer | Matthew Wilde Staff Writer | Carol Brown Staff Writer | Lauren Houska Staff Writer | Katie Johnson Sales Director | David Larson Iowa Soybean Review is published eight times a year by: Iowa Soybean Association 1255 SW Prairie Trail Parkway, Ankeny, Iowa 50023 (515) 251-8640 | iasoybeans.com E-mail: aclinton@iasoybeans.com For advertising information in the Iowa Soybean Review, please contact Larson Ent. LLC (515) 440-2810 or Dave@LarsonentLLC.com.
20 Down But Not Out Farm economy hurting, optimism abounds.
22 Let’s Make a Trade Deal
U.S. momentum could spark deal with China.
24 Predictability Power
More information is better information in the seed selection process.
26 Soybeans on Trial ISA On-Farm Network® replicated strip trials help farmers make informed cropping decisions.
On the Cover: As the year comes to a close, take a moment to reflect on the events that made 2018 memorable. In a photo essay beginning on page 17, images captured the emotions of farmers as they navigated challenging times.
Comments and statewide news articles should be sent to the above address. Advertising space reservations must be made by the first day of the month preceding publication. In consideration of the acceptance of the advertisement, the agency and the advertiser must, in respect of the contents of the advertisement, indemnify and save the publisher harmless against any expense arising from claims or actions against the publisher because of the publication of the content of the advertisement.
DECEMBER 2018 | IASOYBEANS.COM | 3
Kirk Leeds Chief Executive Officer, Iowa Soybean Association kleeds@iasoybeans.com, Twitter@kirkleeds
The Road to Abilene
I
n 1974, management expert Jerry Harvey, wrote an article titled, “The Abilene Paradox: The Management of Agreement.” In the piece, Harvey shares a story about a man and his wife playing dominoes with the wife’s father and mother. It’s a very hot day in Coleman, Texas. As the four continue to play the game on the front porch, the mother-in-law asks about evening meal plans. The father-in-law responds that perhaps they should take the car (with no air conditioning) to Abilene for supper, which is an hour’s drive away. Not wanting to disagree with the patriarch of the family, Mom, daughter and son-in-law all respond in agreement. They proceed to drive an hour to Abilene with the windows down on hot and dusty roads. Then they suffer through a very disappointing meal at a local diner in Abilene. The family gets back in the car and takes that same hot, hourlong, return trip to Coleman. Back at home, one of them sarcastically says, “It was a great trip, wasn’t it?” Mom responds that she would have rather stayed home but only agreed because it's
4 | DECEMBER 2018 | IASOYBEANS.COM
what she thought the rest of the group wanted. Dad shared he only suggested it because he thought the others were getting bored on the porch. Daughter and son-in-law said they only agreed because they didn’t want to disagree with Dad or Mom. Long story short, nobody really wanted to go to Abilene, but they were afraid to disagree with the others in the group. Social psychologists explain this type of behavior with theories of “social conformity” and “social influence.” Doing what the rest of the group wants to do just to get going becomes a higher priority than suggesting an alternative solution. I was reminded of the Abilene Paradox during an Iowa Soybean Association (ISA) all-staff retreat earlier this fall. As a team, we worked through exercises and had discussions about this paradox. We talked about how it could impact the quality of decisions being made in group settings. More importantly, how could we make sure we didn’t end up finding ourselves on “the road to Abilene?” Lessons from the Abilene Paradox are also important for the
farmer directors of ISA as they begin a deep-dive into the current mix of projects and programs the association funds and supports using checkoff dollars and other non-checkoff resources. The global soybean market has changed dramatically over the last year. It's important the ISA board understands these changes as they consider and write a new strategic plan for the organization. Although I have rarely found an Iowa farmer unwilling to share his or her perspective on topics related to agriculture in one-on-one conversations, I have witnessed these same farmers being much less willing to do so when confronted by farmer friends who might have different perspectives. Let’s be honest, most farmers don’t want to be disagreeable with other farmers. But I would also suggest the Abilene Paradox is not just a “farmer thing.” Going along to get along is a challenge in many group dynamics, and the net result can be a decision that leads the group to take a trip on “the road to Abilene.”
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Michael Dolch Director of Public Affairs, Iowa Soybean Association MDolch@iasoybeans.com
Naked and Hungry
T
hat’s right. Without agriculture, we would walk this world naked and hungry. From the food we eat to the clothes we wear, agriculture touches everyone. I’ll go a step further and suggest that U.S. agriculture policy touches everyone. Farm policy is a fundamental building block for putting food on our tables and clothes on our backs, while helping countries achieve specific outcomes in the global marketplace. Agriculture policy is just as important to those who live on the farm as it is to those who call cities and suburbs home. Everyone who enjoys safe, affordable food and low-cost fuel and fiber benefits from sound public policy and a healthy agriculture industry. While most associate farm policy with the Farm Bill that authorizes programs related to farming, food and nutrition and rural communities, some programs and regulations are governed by standalone legislation. These are just as important and wideranging as the Farm Bill.
Like any productive seedbed, farm policy must be carefully researched, cultivated and maintained. Consider for a moment how the weather shifts without warning. The political climate and headwinds act in the same way. The constant change underscores the need for careful consideration and a unified message, along with education and outreach. In the absence of any one step or practice, policy can have a crippling effect on the industry, and ultimately, a farmer’s bottom line and ability to operate. Before November’s midterm elections, the political geography of the U.S. was forged in 2010 when Republicans emerged from the political wilderness and seized control of the U.S. House of Representatives. Earlier this year, Democrats disrupted the new normal and claimed the House majority by turning heavily populated areas blue. The election results, arguably more so than ever before, offered evidence of a widening urban-rural divide that will continue to shape
and influence policy across local, state and federal governing bodies. This split speaks to the importance of engaging lawmakers, particularly new members, early and often. Over the last month, soybean farmers have come together to review the Iowa Soybean Association’s governing policies and set legislative priorities for the upcoming year. Watching the policy development unfold for the first time deepened my respect for the process. I walked away from every diner and coffee shop in awe of the passion at which folks greeted the tedious, yet critically important process – a process that can help bridge the urban-rural divide and ensure we never go naked and hungry. The holiday season is a time when we break bread together as family, friends and neighbors, oftentimes with very different political views and opinions. This year, let's do so with patience, understanding and by telling agriculture’s bountiful story.
Editor's Note: Within this issue of the Iowa Soybean Review, expert tips have been supplied by financial analysts, industry partners and farmers. These informational boxes offer advice on cost reductions and ways to enhance margins of profitability in the upcoming year.
6 | DECEMBER 2018 | IASOYBEANS.COM
W E A R E U. S. S O Y B E A N F A R M E R S
SUSTAINABILITY NEVER GOES OUT OF SEASON C U S T O M E R S P R E F E R U . S . S O Y B E C A U S E I T ’ S S U S TA I N A B L E . But as demands for sustainability continue rising, meeting those demands remains a journey of continuous improvement. Which sustainable practices do you do now? Which ones could you adopt to improve your sustainable footprint? Show your commitment to sustainability with a free truck magnet available at unitedsoybean.org/sustainability
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Annual Research Conference Becomes Statewide Tour
T
he Iowa Soybean Association (ISA) will depart from the traditional format of one, centrally located annual research conference in favor of regional meetings to be held later this winter in Storm Lake, Ames and Cedar Rapids. Dubbed the ISA Farmer Research Tour, the discussions will provide localized soybean production data, tips for managing new and emerging pests, and strategies for optimizing soil health and fertility to boost yields. Attendees can choose from one or more of the following dates and locations: Tuesday, Feb. 5, King’s Pointe Resort, Storm Lake; Thursday, Feb. 7, Gateway Hotel, Ames; and Tuesday, Feb. 12, Hotel at Kirkwood Center, Cedar Rapids. Meetings will start at 8 a.m. and adjourn by 5 p.m. “The sharing, comparing and discussion of on-farm soybean production research data is invaluable for farmers wanting to make the most of every acre,” says Chris Gaesser,
your
an ISA member from Corning and frequent conference attendee. “While the information is always valuable, this year’s approach promises to be even more effective as farmers will benefit from research trials conducted in closer proximity to where they live and farm.” Conference registration is now open. It includes lunch and refreshments. Registration is at no cost for farmers participating in ISA research trials, $25 for ISA farmer members not participating in research trials with ISA and $50 for non-members. Continuing education credits will be available. All tour stops will feature the ISA Analytics, Environmental Programs and Services and the On-Farm Network® teams presenting results from 2018 projects. Several unique topics will also be featured during the tour. The Storm Lake tour stop will include information specific to soybean gall midge, a pest that hit soybean farmers in western
Iowa particularly hard last growing season. Leading the discussion will be Erin Hodgson, Iowa State University Extension entomologist. The morning session in Cedar Rapids will be keynoted by the city utilities director, Steve Hershner. He’ll share how Cedar Rapids is working with farmers upstream for improved water quality. Just as important as producing soybeans is finding a market for them. Al Kluis, commodity trader, chartist, author and producer of the Al Kluis Report, will keynote all conferences. He’ll offer insights to assist farmers in identifying sale opportunities during a period of volatile markets. ISA Farmer Research Tour sponsors include Asgrow, Farm Credit Services of America, Agriculture’s Clean Water Alliance and Iowa Agriculture Water Alliance. For sponsorship or registration information, contact Sue Derscheid at sderscheid@iasoybeans.com or 515-334-1063.
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The Iowa Soybean Association is coming to a town near you! ISA research experts will provide valuable information on the latest research results and management practices you can apply to your farm. Topics will be focused on your geographical area, and ISA researchers will share data relevant to your region.
King’s Pointe Resort
Gateway Hotel
Hotel at Kirkwood Center
REGISTER NOW at IASOYBEANS.COM/TOUR
All tour stops will feature the ISA Analytics, Environmental Programs and Services and the On-Farm Network® teams presenting results from 2018 projects. Registration is at no cost for farmers participating in ISA research trials, $25 for ISA farmer members not participating in research trials with ISA and $50 for non-members.
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DECEMBER 2018 | IASOYBEANS.COM | 11
THANK YOU TO OUR 2018 CORPORATE PARTNERS!
Iowa Soybean Association recognizes these industry stakeholders for their involvement and support in 2018. Their investment of time, talent and resources improves the competitiveness of Iowa soybean farmers and strengthens the association. Thank you. We look forward to continuing our important work in 2019 and beyond.
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INVESTING CHECKOFF DOLLARS
‘TIS THE
Season for Giving Pork donations go beyond the typical stocking stuffer BY KATIE JOHNSON
F
or the 360,000 Iowans who struggle with hunger — 1 in 6 being children according to Feeding America — the trade war impacting soybean and hog producers this growing season came with a silver lining. The U.S. Department of Agriculture’s (USDA) trade mitigation program includes a food purchase and distribution component. Up to $1.2 billion in commodities unfairly targeted by retaliatory tariffs will be distributed through nutrition assistance programs. Nearly $559 million of that amount is allocated for pork.
14 | DECEMBER 2018 | IASOYBEANS.COM
This means Iowans who struggle with hunger will see a large amount of pork donations at their local food pantries. “We need stable movement in pork supply in order to have a consistent demand for U.S. soybean meal,” says Grant Kimberley, director of market development at the Iowa Soybean Association (ISA). A reliable, domestic demand for soybeans is more critical than ever for sustained profitability. “From an international, national and most importantly,
Iowa, perspective, continued stabilization in the pork industry helps the soybean market,” Kimberley continues. “Twenty-five percent of all U.S. soybean meal is fed to hogs. When you consider Iowa produces more hogs than any other state, the important of that relationship becomes clear.” Iowa’s status as the nation’s leading pork producer depends on soybean farmers. According to the Iowa Pork Producers Association (IPPA) the average pig consumes nearly 2.5 bushels of soybeans in their lifetime.
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“We move a million pounds of food through our warehouse each month,” says Emily Shearer, food acquisition program manager at the Food Bank of Iowa. “We are fortunate to receive this pork and distribute it to those who need assistance.” The Food Bank of Iowa serves 55 of Iowa’s 99 counties with Shearer serving as the coordinator for these trade mitigation offers for seven Iowa food banks. While details are still being worked out for the donations, Shearer says the influx of pork donations creates some challenges for the warehouse and their partners. “Storage is always a big issue,” says Shearer. “A lot of our partner agencies have refrigerators and freezers that are residential size. The food bank has a giant freezer, but it’s not always easy for the partner agencies to handle. There aren’t any additional funds on the administrative side of these donations.” Joyce Hoppes, director of marketing at the IPPA says they are offering help where they can. “This is the largest pork donation ever,” says Hoppes. “We’re excited this donation will provide Iowans in need with nutritious meals throughout this next year.
“We understand this donation will be a major undertaking for our food banks and food pantries, especially the storage and transportation,” Hoppes continues. “The IPPA has had discussions with the Iowa Food Bank Association as to where we can provide assistance both at the state and local levels.” While Hoppes agrees these donations are a positive for Iowans in need, she says the best way to continue assisting others is through a healthy agricultural economy. Story County ISA member and hog producer, Dave Struthers, feels the same. “With the impact of tariffs being felt by both pork and soybean producers, it’s important that the administration does something to try to assist us,” says Struthers. “Pork producers always appreciate our products being distributed. A program like this benefits all involved.” While this amount in pork donations to food pantries is unprecedented, pork donations have filled proverbial Christmas stockings in the form of meals for quite a while. Hoppes says the pork industry nationwide donated 2.4 million pounds of pork last year. “What’s special about pork is that
Expert Tip On-farm storage costs would typically be lower than that of commercial storage, so if possible, limit bushels in commercial storage. Having the bushels stored on-farm can lead to more choices in determining the best cash bids and where to deliver those bushels. However, building new grain storage can use up valuable working capital and can add to future cash flow concerns.
it is versatile. A large family can make it stretch into several meals— especially a pork loin roast or ham,” says Jen Sorenson, communications director at Iowa Select Farms. “That’s good for a family who can’t afford to splurge on a protein source. You can prepare pork with minimal prep materials and end up with a great meal.” With Iowans across the state coming together for those in need, additional volunteers are always appreciated. Those wanting to assist food pantries and other nutrition programs can contact their local USDA office to learn more. An Iowa Select Farms employee gives a pork loin to a driver during Operation Christmas Meal last year at the Iowa State Fairgrounds in Des Moines. The Deb and Jeff Hansen Foundation have provided over 500,000 Christmas meals to Iowa families over the seven years of hosting Operation Christmas Meal.
Contact Katie Johnson at kjohnson@iasoybeans.com. DECEMBER 2018 | IASOYBEANS.COM | 15
T N A W U O Y IF G N I N R U T D A E R H O F S E I T E I R A V
D L E I Y E OR
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THE ANSWER IS Pioneer® brand A-Series soybeans are the answer to breakthrough yield potential. Ask your local Pioneer sales representative about A-Series varieties that can turn heads on your soybean acres.
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16 | DECEMBER 2018 | IASOYBEANS.COM
Pioneer® brand products are provided subject to the terms and conditions of purchase which are part of the labeling and purchase documents. Trademarks and service marks of Dow AgroSciences, DuPont or Pioneer, and their affiliated companies or their respective owners. © 2018 PHII. DUPPSY18035_VE2_110118_ISR
Mike Holdeman, sheep shearer from Pella
YEAR IN REVIEW It’s been quite a year. As farmers, you’ve
encountered everything from challenging planting conditions, news of a Chinese soybean tariff, plummeting commodity prices and a harvest that didn’t want to end. Iowa Soybean Review photographer, Joseph L. Murphy, captured a collection of images that evoke memories, illustrate emotions, address social issues and add clarity to our world. The following photographs are a small selection of moments captured in 2018.
Chad Green at the Guthrie Livestock Auction
For additional images, visit www.iasoybeans.com.
DECEMBER 2018 | IASOYBEANS.COM | 17
INVESTING CHECKOFF DOLLARS
A monarch butterfly lands on a prairie flower
Dennis Lindsay closes the door on his machine shed as a cold wind blows across his farmstead. Months ahead of a new planting season, farmers received news that already low commodity prices would slide to near record lows on news of Chinese tariffs on soybeans.
IMAGE RIGHT: President Donald Trump holds a rally in Council Bluffs. He spoke about renegotiating the U.S. Canada Mexico Trade Agreement and the tariff situation with China and other countries.
18 | DECEMBER 2018 | IASOYBEANS.COM
INVESTING CHECKOFF DOLLARS
IMAGE BELOW: A move for the ages — Brock Hansen, an Iowa Soybean Association member from Baxter, Randy Miller, an ISA
recently moved an old granary several miles across
director from Lacona,
frozen soybean fields to his home farm.
examines the growth of his soybeans. Miller and farmers across the state dealt with extreme weather conditions during the growing season and harvest, yet still harvested a record crop.
Bill Gill at a coffee shop near Kellogg DECEMBER 2018 | IASOYBEANS.COM | 19
INVESTING CHECKOFF DOLLARS
DOWN BUT NOT OUT Farm economy hurting, optimism abounds BY MATTHEW WILDE
F
armers are making less money, working capital is scarce and borrowing is up, according to the latest government statistics. Economists expect the disturbing trends — bolstered by a reduction in U.S. soybean exports to China due to the ongoing trade war between the nations — to continue in 2019. But there’s hope for better days ahead. “Despite the obstacles, I see opportunities,” says Arlan Suderman, chief commodities economist for INTL FCStone. The challenges are sizable this year.
20 | DECEMBER 2018 | IASOYBEANS.COM
According to the U.S. Department of Agriculture (USDA) Economic Research Service: • Net farm income, a broad measure of farm profitability, nationwide is projected at $65.7 billion. That’s 13 percent lower than 2017 and a nearly 50 percent drop in five years. • Available working capital nationwide is down 68 percent since 2012 to about $50 million. • Total farm debt is projected at a record $406.9 billion, up 3 percent from 2017. • Farm debt-to-asset ratio, on average,
is projected at 13.4 percent — the highest level since 2009 and the sixth consecutive increase. • The farm debt-service ratio is projected to increase to 27.8 percent, the highest level in 30 years. At the Agri-Pulse Ag Outlook Forum on Sept. 27 in Kansas City, Suderman rattled off three economic opportunities for farmers — expanding trade, corn supply and demand and African swine fever. All could eventually lift the sagging farm economy. “I’m a glass-half-full kind of guy,” Suderman says.
INVESTING CHECKOFF DOLLARS
Trade
corn ending stocks at 159 million metric tons (mmt) or nearly 6.3 billion bushels, Trade agreements this year with down more than 37 mmt or more than Mexico, Canada and South Korea will 1.5 billion bushels from last year. bolster U.S. ag sales, he says. Others are Suderman says that’s a 52-day in the works with the United Kingdom, supply. the European Union (EU) and the “I see more of a chance of $4 corn Philippines. But settling the trade dispute than $3 corn,” Suderman says. with China is key to rapidly improving December 2019 corn on the Chicago the financial health of farmers. Board of Trade was nearly $4 per bushel China mostly targeted U.S. ag at the end of October. products with retaliatory tariffs in July The farm economy makes Brock after the U.S. placed duties on Chinese Hansen nervous, goods to stop unfair but the Baxter trade practices. A farmer says profit 25 percent additional potential exists next tax on imported year. He was able to soybeans, which make money on a drastically reduced good portion of the sales to China, tops 2018 soybean crop the list. Prices have by selling before Brock Hansen dropped more than $2 tariffs reduced per bushel as a result. prices and he’s Chad Hart, Iowa already making 2019 corn sales. State University Extension and Outreach “If we continue to grow the bushels grain economist, believes the two largest we have in the past, 2019 corn is economies will eventually resolve their profitable,” says Hansen, an Iowa trade issues. Soybean Association member. “There’s “At least right now, it looks like 2019 an advantage having home storage if will be another year of struggles,” Hart crops are properly marketed.” says. “If you take Chinese soy purchases Hansen’s 2018 corn crop was again a off the table, there’s a long list of market record-setter, averaging 270 bushels per growth for soybeans. Mexico, the EU, acre at the top end and the 230s at the Canada, Egypt, Iran and other countries low end. Soybeans ranged from 55 to 80 are all buying more. bushels per acre. “When the Chinese trade dispute “Lately, we’ve been able to bushel is settled, they will resume purchases. our way out of lower grain markets, And, there’s a pathway to growth in but one of these years we won’t be so other markets,” he adds. “It gives me lucky,” Hansen says. longer-term optimism.” Hart says a “good chunk” of farms African swine fever are doing OK due to savvy marketing Suderman has no confidence China and business decisions. But liquidity is will be able to control African swine a concern. fever that threatens its pork industry. “We have some farmers feeling the China's pig herd is estimated at a 700 strain and stress,” Hart says. “Some will million, according to recently published have to make extreme moves to stay in reports. business.” China has instituted strict transportation and other rules to curtail Corn the spread of the deadly swine disease, Corn prices haven’t suffered which doesn’t affect humans. Reports soybean’s fate. indicate millions of hogs have been Worldwide corn demand is out culled and possibly 25 percent of its pacing production, unlike soybeans, entire herd may die or be destroyed. for the 2018-19 marketing year. Corn Pork is the most popular meat in the supplies are dwindling despite several communist country of nearly record crops. The USDA pegs global
1.4 billion people. “There are great export opportunities there,” Suderman says. “Food inflation is the No. 1 driver of social unrest and China doesn’t want that.” African swine fever is the biggest story in agriculture, according to Curt Hudnutt, executive vice president of rural banking for Rabobank North America. If China’s hog herd is reduced by 5 percent, that equals total U.S. pork exports, he says. A 10 percent reduction equals total world exports. The potential of increased U.S. pork exports are good for Iowa soybean farmers since pigs are their No.1 customer. Historically, about one-fourth of the state's beans are fed to hogs. “There’s a tremendous opportunity for the animal protein complex,” Hudnutt told farmers and industry stakeholders at the Agri-Pulse forum. “We thought U.S. pork production and prices would be under tremendous pressure in 2019. That’s changed greatly.” Contact Matthew Wilde at mwilde@iasoybeans.com.
Expert Tip Landowners and tenants need to have conversations about input costs and reasonable expectations of profit margins. Renegotiating cash rent down even $5$10 per acre can help.
DECEMBER 2018 | IASOYBEANS.COM | 21
INVESTING CHECKOFF DOLLARS
LET’S MAKE A TRADE DEAL U.S. momentum could spark deal with China BY MATTHEW WILDE
N
ew trade deals in the works between the U.S. and several countries could spur an agreement with China, according to a top U.S. Department of Agriculture (USDA) official. But farmers shouldn’t expect China to resume buying U.S. soybeans anytime soon, says Ted McKinney, USDA undersecretary for trade and foreign agricultural affairs. McKinney participated in a trade roundtable discussion with Iowa ag leaders in late November, hosted by Iowa Secretary of Agriculture Mike Naig. A press conference followed. The Trump administration is acutely aware of the financial pain the ongoing U.S.-China trade war and unfair Chinese trade practices are causing producers, McKinney told the media, especially when it comes to soybeans.
22 | DECEMBER 2018 | IASOYBEANS.COM
“Farmers have suffered as a result of some of the Chinese behaviors,” McKinney says. “I think we’re in this with China a little while longer. We’re not going to stop and restore trade without getting some of these things fixed.” The U.S. agreed to new trade pacts with Mexico, Canada and South Korea this year. The Trump administration recently announced intentions to begin negotiating free trade agreements with Japan, the European Union, the Philippines and the United Kingdom. McKinney hopes trade progress with other nations will inspire the Chinese to address issues with the U.S. to end the trade war between the two countries. “It might bring some pressure,” McKinney says. “They (Chinese leaders) understand geopolitical dynamics better than anyone. They know exactly what we want.”
A resolution, though, is far from imminent. “It won’t be days or weeks,” McKinney adds. “I hope it’s not years.” It’s not the news soybean farmers want to hear about their largest export customer after a record harvest, both state and nationwide. The USDA projects U.S. production at 4.6 billion bushels. Iowa is pegged at 576.5 million bushels. Grant Kimberley, Iowa Soybean Association market development director, stressed to McKinney that farmers are appreciative of USDA’s efforts to increase soy exports worldwide and help mitigate financial losses from trade disputes. But unprofitable prices and large stockpiles of soybeans are taking a toll on farmers. The USDA predicts ending stocks for 2018-19 at 955 million bushels, an all-time high.
INVESTING CHECKOFF DOLLARS
• China forces U.S. companies to share technology with Chinese counterparts for access to country’s consumers.
Ted McKinney, U.S. Department of Agriculture undersecretary for trade and foreign affairs, talks about the latest trade developments during a press conference this fall at the Wallace Building in Des Moines. It followed a roundtable discussion with Iowa ag leaders.
“Ultimately for soybeans, it comes down to China,” Kimberley says. “We need an agreement to significantly boost exports and prices.” China placed a 25 percent tariff on U.S. soybeans on July 6 in response to U.S. duties on its products. The move drastically reduced sales to the country. Soybean prices plummeted about $2 per bushel since the beginning of March when the U.S. put duties on steel and Gregg Doud aluminum from most countries, including $3 billion worth of Chinese imports. Since then, the U.S. has put additional tariffs on $250 billion worth of Chinese imports. China retaliated with duties on $110 billion worth of mostly U.S. agricultural products. Kimberley says the trade war needs to end soon or early next year to limit producer losses. It will likely take the leaders of both countries to find an amicable solution, he contends. President Donald Trump and Chinese President Xi Jinping met during the G-20 summit in Buenos Aires, Argentina, in late November to discuss the trade dispute.
“There are lot of big issues to work out,” Kimberley says. “Undersecretary McKinney knows the issues. He knows what’s at stake and the importance of getting trade deals done in a timely manner.” Ambassador Gregg Doud, chief ag trade negotiator for the Office of the United States Trade Representative (USTR), detailed why the U.S. placed tariffs on Chinese goods during visits to Iowa this summer and at the AgriPulse Ag Outlook Forum Sept. 27 in Kansas City. Doud provided several examples of China’s unfair trade practices: • China is pouring state resources into expanding the world’s largest aluminum plant even though there’s a glut of the metal worldwide. • China delays approvals of U.S. ag biotech events, even though Chinese citizens have been caught stealing biotech seeds from U.S. companies. • A USTR investigation shows China has stolen U.S. intellectual property valued at $50 billion. • China has violated World Trade Organization rules by over subsidizing its farmers by more than $100 billion.
“The U.S. has been having a dialogue with China for years about this. It wasn’t working,” Doud says. “We have a president who says it’s time to deal with it. “When it comes to ag subsidies, there’s no way China is playing by the rules,” he continues. “We have to help them understand they are not only costing U.S. farmers money but every farmer money.” Iowa producers are encouraged about the new U.S., Mexico, Canada Agreement and other trade deals in the works to boost exports and commodity and livestock prices, according to Ag Secretary Naig. But a resolution with China is needed soon. China purchased more than 1 billion bushels of U.S. soybeans last year and 1.4 billion in 2016-17 worth tens of billions of dollars. But it can be better, whether its soy, beef, poultry or dried distillers grain. “Folks understand China has been negatively impacting our markets for years,” Naig says. “We have a tremendous opportunity to export there at a higher level.” Contact Matthew Wilde at mwilde@iasoybeans.com.
Expert Tip Take soil tests and adopt a more targeted approach to applying nutrients. Variable rate application of nitrogen, phosphorus and potassium can save anywhere from $20 to $50 per acre.
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PREDICTABILITY P ower More information is better information in the seed selection process BY LAUREN HOUSKA
Expert Tip Take advantage of seed discounts. Dealers may offer discounts for paying upfront, or purchasing early or in volume. Price per bag, trait technology and seeding rate all have an impact on expenses. Proper seed selection and one or more discounts could save $5 to $20 per acre.
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hen it comes time to purchase seeds for next year’s growing season, weighing the pros and cons of the hundreds of available soybean varieties can be overwhelming. “Seed selection in soybean production is key to maximizing yield potential and has a large impact on profitability,” says Scott Nelson, Iowa Soybean Association (ISA) On-Farm Network® director. “It’s one of the most important management decisions farmers make each year.” With rising production costs and depressed soybean prices, risk management is paramount. In addition to selecting seed varieties that will produce high yields, farmers need to choose the right mix of varieties to minimize the risk of any individual variety. “It’s estimated soybean yields increase annually by about one-third of a bushel per acre due to genetic improvement,” Nelson says. While some new varieties may show this response, Nelson cautions, others may not yield any better than a variety currently being used. Consulting all reliable resources available will aid in the decision-making process. Farmers often have a handful of these go-to sources of information.
For Tom Oswald, a Cherokee County soybean farmer, those sources include his personal experience, seed company data, information from networking with other farmers and the Iowa Crop Performance Tests. The Iowa Crop Improvement Association (ICIA), an Iowa State University (ISU) affiliated nonprofit founded in 1902, conducts and publishes results from the Iowa Crop Performance Tests each year, funded in part by an investment from ISA. The data has provided direct comparisons among a large number of soybean varieties in many different environments for over 50 years. The association will mark its 100th year of corn testing in 2019. “I’ve been looking at the ISU data since I started farming,” Oswald, a long-time ISA member, says. “I like the unbiased nature of the report. I think it is a very important piece of information to compare across companies and varieties.”
Using data to inform decisions ICIA Executive Director Jim Rouse says there are two distinct ways to look at yield data, depending on the end goal:
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1. To understand — Look at environmental factors like weather, soil type, management practices, etc., which led to a certain variety’s success or failure that growing season. 2. To predict — Look for indicators that a certain variety will succeed with your operation, despite or in combination with the aforementioned environmental factors. Rouse reminds farmers to carefully consider the various combinations of maturities and defensive and offensive traits that are important to them in addition to high yields and yield stability. “Remember, variety selection for the upcoming year is not about identifying which lines did best over the past year — it is about predicting which lines will do best in the future,” Rouse says. While the specifics of the seed selection process may be unique for each farmer, both Rouse and Nelson offer similar advice for utilizing yield trial data to make predictive decisions:
• Yield trials do not have to be performed on your farm or under conditions exactly like your field to provide relevant data. • Data from multiple locations should be used to make predictive selection decisions. • To avoid getting hung up on insignificant differences, use the least significant difference (LSD) to help you sort entries. • Make initial selections based on yield and appropriate maturity. • Once you have a pool of contenders, sort among these to identify lines that have the desired mix of defensive traits and make sense for your operation. Oswald employs a similar approach, identifying candidates in his desired maturity zone first. “Among those candidates, some varieties may look really good at first,” Oswald explains. “But as I take a closer look to narrow down candidates, it becomes clear some won’t fit my exact needs.”
Oswald then sorts the outstanding candidates to identify lines that have defensive traits important to his operation. Resistance to certain diseases, like white mold, are big factors. As a farmer using no-till across soybeans and strip-till on corn, Oswald is also particularly interested in new varieties that could improve weed management. Trustworthy year-over-year data across multiple locations and varying conditions is hard for farmers to find, says Oswald. If more companies entered the ISU trials each year, the data could be even more useful for farmers making predictive decisions. “Farmers can make better decisions — and have peace of mind — when we have access to more information.” Contact Lauren Houska at lhouska@iasoybeans.com.
Jim Rouse, ICIA Executive Director
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SOYBEANS ON TRIAL ISA On-Farm Network® replicated strip trials help farmers make informed cropping decisions BY MATTHEW WILDE
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here are multiple ways soybean farmers can reduce costs and earn more money, and the Iowa Soybean Association’s (ISA) On-Farm Network® has the data to prove it. Enhancing the profitability of producers is the primary goal of the On-Farm Network, director Scott Nelson says. Network regional agronomists and analytics experts work with farmers and industry stakeholders statewide to conduct onfarm replicated strip trials to evaluate and validate production practices. Nelson says data from several long-term soybean trials — seed
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population, fungicide, tillage, etc. — shows farmers can save money without sacrificing yields and possibly even enhance them. As many farmers struggle to mitigate losses or stay in the black due to the ongoing U.S.-China trade war, Nelson contends production research is vital to the bottom line. “We think in terms of lowering the cost to produce a bushel of soybeans,” Nelson says. “There are two ways to do so: reduce unnecessary inputs or significantly increase yield. Farmers statewide are doing just that by participating in
On-Farm Network research trials and utilizing results.” Data from hundreds of studies dating back to 2005 is available at iasoybeans.com under ISA Research. Farmers can’t control U.S. foreign policy or end the trade war with the world’s top soybean consumer, but they will make plenty of decisions that will directly affect 2019 soybean revenue potential. Dave Lubben, an ISA member from Monticello, says he and other farmers can’t afford to spend one extra dime on soybean inputs or production practices that don’t pay.
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The grain and cattle producer has conducted several types of On-Farm Network research trials, using data to make cropping decisions. Participation is a must, he says. “I can do my own research using my soil types and management to generate reliable data — every field is a test plot,” Lubben says.
Crop protection The crop protection industry regularly promotes fungicides and insecticides to farmers as means to increase yield and revenue, Nelson says. But do the inputs pay? The answer varies, according to trial results. The ISA On-Farm Network and Analytics Department have developed a fungicide decision tool, found on the ISA website, to help farmers decide whether to apply. A fungicide application typically costs about $20 per acre. Add another $3 to $5 per acre to mix in an insecticide. With soybean prices at 10-year lows, Nelson says input decisions are vital to plant and financial health. “The fungicide tool combines locations from more than 100 different trials to help farmers make better decisions on when a fungicide would be profitable,” he says. Lubben conducted a fungicide trial with the On-Farm Network this year comparing a 5-gallon-per-acre application rate compared to 2 gallons.
His crop protection salesman suggested the increase, which would add $1 per acre to the cost, thinking it would pay during an unusually wet year. Instead of spending more over every acre, Lubben decided to test out the theory. Results were not analyzed as of early November. “We could see where leaves looked better and were more intact in the strips with the higher amount, but I didn’t see a difference on the yield monitor,” Lubben says. “Inputs better pay, or we could lose even more money.”
Seed population Seed is a significant cost in soybean production at $60 to $70 per bag, Nelson says. Farmers have conducted numerous research trials to find the optimum seeding rate without sacrificing yields. In many cases, participants found they could save thousands of dollars by planting less. By studying research data, ISA member Craig Heineman of Ogden backed off his seeding rate from 160,000 to 150,000 per acre to 140,000. “Our yields have been very good and we’re thinking of backing it off even more,” Heineman says, a long-time OnFarm Network trial participant. He’s also done nitrogen, tillage and fertilizer work. By planting 10,000 to 20,000 fewer seeds per acre, Heineman estimates a $5,000 to $10,000 annual savings. Bags contain 140,000 seeds.
Iowa Soybean Association member Dave Lubben of Monticello conducts multiple On-Farm Network replicated strip trials each year to hone cropping practices.
Expert Tip Maximizing crop pricing decisions is essential. Separate locking futures price from cash price sale. Set a target price for July ’19 soybeans around $9.30 to $9.80 per bushel.
ISA conducted trials this year studying seeding rates of 100,000, 130,000 and 160,000 seeds per acre, utilizing variable rate technology. Unofficial results show higher plant mortality at a higher seeding rate. “Not only would a farmer spend more on seed but would also lose more plants,” says Brett McArtor, ISA regional agronomist. “There’s definitely more interest in trials that can save money.”
Tillage Iowa State University research indicates that no-till soybeans yield like tilled oilseeds. Yet, many farmers will decide for various reasons to spend $20 to $30 per acre to till the ground for the 2019 crop. “The cost per bushel to produce soybeans is significantly less for farmers that don’t have to pay for tillage passes,” Nelson says. “To understand the value of tillage in Iowa soybean production, we are conducting a series of trials comparing no-till soybeans with soybeans grown under full tillage.” The average yield difference in six past tillage trials is 1.8 bushels per acre. “Even if a tillage practice out yields no-till soybeans, there’s usually a net wash to the bottom line,” says Drew Clemmensen, ISA regional agronomist. Contact Matthew Wilde at mwilde@iasoybeans.com. DECEMBER 2018 | IASOYBEANS.COM | 27
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SOURCE WATER SOLUTIONS Protecting farmland and drinking water BY CAROL BROWN
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mall towns that pull their drinking water from a public well are susceptible to groundwater contamination. Nitrates can be one of the biggest culprits. Iowa’s Source Water Protection (SWP) program, through the Iowa Department of Natural Resources (DNR), works with community leaders, farmers and landowners for water improvement before it gets to a public well. The DNR’s definition of source water is “drinking water in its original environment, either at the surface or below the ground, before being treated and distributed by a water system.” The Iowa Soybean Association (ISA) staff worked with Rebecca Ohrtman, DNR source water protection coordinator, as she began a pilot program connecting communities with
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farmers and landowners. She saw a need for a statewide SWP framework that included partnerships to secure technical and financial resources for source water protection. “Becky knew there was going to be a need to interface with agriculture at the local level, so she contacted ISA and other ag organizations,” says Anthony Seeman, ISA environmental research coordinator. “ISA worked with farmers in the well capture zones and helped monitor their operations.” The SWP is a relative of the upstream–downstream partnership concept, which connects municipalities with farmers and landowners. The implementation of conservation farming practices upstream leads to improved water quality for downstream municipal water systems.
Enacting the pilot program The majority of Iowa’s public water supplies draw from groundwater systems, Ohrtman says. “There are about 520 susceptible public water supplies and about 220 highly-susceptible public water supplies in the state,” he says. Protection for these systems was virtually non-existent before 2006. Ohrtman began assembling local teams for pilot programs in 15 communities. The goal was to develop and implement plans using best management practices in the capture zones to decrease longterm risk to municipal wells. A capture zone is an area of land from which the well draws its water, either through groundwater or surface sources. For a community of 1,500 people, a capture zone for one well is about 1,000 acres.
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Kenny Cousins, a Griswold area farmer, plants cover crops to prevent soil loss and utilize excess nutrients. He and other farm neighbors plant cover crops and only apply anhydrous in the spring on land that borders wells supplying Griswold’s drinking water.
The teams typically consisted of farmers within the capture zone, Natural Resources Conservation Service (NRCS) field staff, the municipal water operator, county supervisors, county emergency management and city council members — every community’s team was slightly different. Ohrtman says they conducted on-site groundwater assessments and identified point and non-point sources. ISA offered educational workshops on the impact of conservation farming practices and conducted nitrate soil tests with farmers and landowners in the project areas.
A wetland win One of the first projects was adding a wetland in Elliott in Montgomery County. But the citizens in the town of 350 looked beyond just fixing their water issues. The wetland was installed next to the elementary school, and it’s now an outdoor classroom. The area includes walking trails, a shelter and a pedestrian bridge. County supervisors utilized the excavated soil from the wetland location to build a road in town that frequently flooded. “The Elliott SWP team chairman, the late Steve Howell, realized the wetland would not be an immediate fix, but rather a less expensive, longterm holistic solution to reduce nitrate levels and build a better community,” Ohrtman says.
Coming through with cover crops Griswold, another SWP pilot community, is about 12 miles north of Elliott in Cass County. Farmers in the well’s capture zone planted cover crops to help reduce the nitrates in Griswold’s wells. According to the Iowa Nutrient Reduction Strategy, cover crops can reduce nitrates in waterbodies by an average of 30 percent. For improved water quality in Iowa and downstream, the strategy recommends conservation agriculture practices that reduce nitrogen and phosphorus entering Iowa waterbodies by 45 percent. “Three wells supply Griswold with water, and one of them is on our land. We’ve planted cover crops on about 120 acres near the well for five years now,” says Kenny Cousins, a farmer in the SWP program. “After four years, 75 percent of the capture zone has cover crops,” says Jeff Metheny, Griswold public works director. “The city pays for the cover crop seed and fall planting, while the farmers and landowners are responsible for their spring termination.” This fall, the city paid for 200 acres of drilled cover crops and 180 acres aerially sown. Not one farmer has opted out of the program, Metheny says.
Now that the pilot program has ended, SWP is scaling up across Iowa. This fall, farmers near Plainfield in northeast Iowa planted cover crops on 100 percent of their capture zone. Manning and Deloit are using the Conservation Reserve Program to take acres out of ag production in their capture zone. Near Sioux Center, farmers in the capture zone are using crop rotations and rotational grazing for nitrate reduction. After 15 SWP pilot projects over seven years, Ohrtman says she learned it takes great partnerships, a framework with a committed local team, farmer ingenuity, technical resources and viable planning to keep Iowa public water supplies sustainable for future generations. Contact Carol Brown at cbrown@iasoybeans.com.
Expert Tip Landowners want to keep soil and nutrients on their land, and they typically want to work with their tenants to improve these practices. Drainage improvements, cover crops and other conservation expenses should be part of lease negotiations this year. Flex leases are also an option if the base rate is low enough.
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The Last Word Editor’s Notes by Ann Clinton aclinton@iasoybeans.com
Learning From Natural Cycles
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n nature, when a tree is dying, it releases all of its remaining nutrients into the soil through its roots. This deliverance strengthens the trees around it by providing new energy for them to thrive. I like to think of this beautiful concept as the tree’s last gift, but it’s really just the cyclical rhythm of nature. Generation. Degeneration. Regeneration. Although agriculture is abundantly alive, we should learn from this example as we start thinking about the new growing season. As farmers, you are immersed in nature’s cycle every day. You have learned to work in harmony with forces you can’t control, hoping your efforts will nourish those around you. You embrace the process of planting, tending and harvesting. You look forward to doing it all again, year after year, even when it seems as if
the winds are blowing against you. As 2018 comes to a close, it’s a “natural” time to reflect on what has been and anticipate what will be. Let’s be honest, there have been a lot of interesting moments this year for soybean farmers. You’ve invested in new markets, battled pest and disease pressures, stressed about commodity prices and survived a challenging harvest. And those are just limited examples. In this edition of the Iowa Soybean Review, we highlighted some images that illustrate the year that was. We hope the pictures spur some conversations in your home about key issues facing your farming operation. (To view additional images from this series, please visit www.iasoybeans.com.) It’s important to fully understand these issues as you make future economic decisions.
Also in this magazine, we incorporated tips from experts. These special notations within the stories offer advice on cost reductions and ways to enhance margins of profitability in the upcoming year. We wanted to help you maximize every opportunity to turn a profit. Circling back to things that are cyclical in nature, we all know agricultural returns are not exempt from the pattern. You often have a few good years, followed by a few bad ones. I want to wish you and your family a wonderful holiday season. Just like the trees in the forest, we are all connected by our roots. May we all put our best out into the world this year in hopes of strengthening those around us. Until next year,
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