Food for thought. Perspectives from Wells Fargo experts on critical topics and issues in the Food & Agribusiness industry.


Disease driving hog prices higherBy Ted Tice, Wells Fargo Agribusiness Consultant When hog prices skyrocket to record levels in one month's time as they did in March 2014 because of fears about the Porcine Epidemic Diarrhea virus (PEDv), it's certain to create a buzz in the industry. Read more


When hog prices skyrocket to record levels in one month's time as they did in March 2014 because of fears about the Porcine Epidemic Diarrhea virus (PEDv), it's certain to create a buzz in the industry.Yet the subsequent correction that followed as additional information became available is assuring buyers and sellers that the world has not come to an end; however supplies will remain tight relative to demand.

USDA Weighted Average Carcass Price-pork

PEDv is a virus of unknown origin with no known vaccine. While the virus affects pigs of all ages, it causes nearly 100% mortality in pigs aged one to three weeks old, if there is no intervention. Producers have significantly reduced mortality by providing additional labor and resources to mitigate the impacts. According to the U.S. Department of Agriculture (USDA), the virus has spread to 5,500 of the 68,000 hog farms in the U.S., and outbreaks have occurred in 29 states. Data indicates that the virus only infects pigs, not humans or other livestock.

A farm can have one infected pig or the virus can infect the whole herd. Either way, the American Association of Swine Veterinarians (AASV) reports the infection as one incident. Consequently, AASV's weekly report (depicted below), that reports new incidences of the disease, is of limited value in determining the number of pigs affected. In fact, there is no precise figure on how many pigs have died because of the epidemic.

New positve PEDv Ascensions-by week through 4/17/2014
Source: American Association of Swine Veterinarians

The first case of PEDv was reported on a farm in North Carolina on May 17, 2013. The disease stayed out of the press for most of 2013. Then reports of PEDv outbreaks across farms ramped up in October 2013.

The USDA's Dec. 31, 2013, Quarterly Hogs and Pigs survey hinted at lower pig numbers, but pork buyers didn't react until late February 2014, when it became clear that slaughter numbers were going south. Shown in the chart below, slaughter for the first half of March was down 7% compared to the same period in 2013.

USDA Hog Slaughter numbers

When that happened, pork buyers began worrying about filling their orders so they bid the cash price up to record levels. Pure speculators became actively engaged in buying and selling. Additionally, with uncertainty as to the true pig supply, pork processors began to worry about future months. Some processors trimmed their operating schedules to four days due to the shortage.

A couple of forecasts surprised the industry. One firm predicted a 7% decline in slaughter for the entire 2014 calendar year, and a 12.5% decline next year. Another firm estimated losses at 11% for 2014, and 20% for 2015. These sobering estimates combined with the general uncertainty of PEDv's impact made the USDA's March 2014 Quarterly Hogs and Pigs Survey the most anticipated report in recent memory.

While most of the trade expected a bullish survey, the USDA's report was decidedly bearish. The estimates showed only a 3.3% decline in hog numbers for the quarter ended March 30, 2014. Based on this data, the USDA revised its April 10, 2014, World Agriculture Supply and Demand Estimates (WASDE) forecast of total production for 2014 to only 1.9% lower than 2013 ? a far cry from the 7% to 11% decline some predicted.

The two reports ? the Hogs and Pigs Survey and WASDE ? set the stage for the retreat in prices evidenced in the recent downturn of the prices, as seen in the 3-Year Average line in the "USDA Weighted Average Carcass Price ? Pork" chart above.

Will prices recover or continue to decline?

I have presented two possible indicators that may be helpful in forecasting prices for the remainder of 2014: The Hog Cycle and the Hog Crush Margin.

The "National Hog Prices" chart below plots hog prices since 1980. Typically, a hog cycle chart uses production in its vertical axis, but this price chart also illustrates the hog cycle. The cycle is fairly consistent, ranging from three to four years from peak to peak since 1980. The peak April 2014 price is only two years, eight months beyond the August 2011 peak in hog prices, which implies that prices may continue higher for as much as another four to 16 months before reaching a peak.

National hog prices

I have always believed that a good indicator of future prices is the futures market itself, because this is a consensus of prices as of one point in time, today. With this in mind, a look at the hog crush margin might be in order.

The hog crush margin is akin to the soybean crush margin. The term "crush" comes from the soybean processor sector where soybeans are crushed to produce meal and oil. Traders use the soybean, soybean oil, and soybean meal futures to find and manage profit opportunities as the three related markets trade months before the beans are physically processed.

Similarly, prices for hogs, weaned pigs, corn, and soybean meal can be managed by a farmer to protect a margin for a wean-to-finish producer. The following chart presents a calculation of the hog crush margin from December 2013 to March 2015. It shows a positive crush margin through the March 2015 contract. This would imply that by hedging live hogs, soybean meal, and corn, the farmer could lock in a profitable feeding margin through at least March 2015. Economic signals are still green and farmers should feel comfortable in expanding production. However, a farmer expanding today may have to do so in the face of an existing or a future PEDv infection.

Based on closing futures prices for May 7,2014 table
Source: Iowa State University

PEDv makes forecasting hog prices more difficult than usual. Predicting future price increases or declines depends greatly on the effects of PEDv on the herd. The virus seems to be worse in cold weather, possibly because cold weather stresses baby pigs and makes them more susceptible to infection. The "New Positive PEDv Ascension" chart above confirms that newly reported outbreaks are declining. This could mean that hog numbers will be down during the first half of the year, but supply will increase as pigs farrowed in the late spring and early summer come to market in the fall. While farmers aren't rid of the disease, it may become more manageable during the summer.

Although the number of new incidents is declining, we really don't know the true effect on production. The disease is not under control, but hog producers have a huge profit incentive to learn how to manage through this disease pressure. Currently, the hog cycle indicates strong prices will continue, or there may even be another run-up in prices.

Cycles may repeat themselves, but they can never be timed precisely. Normally, the hog crush would indicate that an expansion is under way, but this is clearly not the case. Because of the uncertainty about PEDv's effect on supply, farmers will likely approach expansion conservatively. If the USDA is understating PEDv's effect on supply, expect a continuation of high prices.

For producers with a clean herd, times will be good. On the other hand, those with above-average mortality rates could be looking at losses for the year.


Photo of Ted TiceTed Tice joined Wells Fargo and the Agricultural Industries Group as an agribusiness consultant in 2011 and has responsibility for a diverse range of agribusiness processors across the entire bank footprint.

He has extensive experience in ag lending and farm management. He is a graduate of Iowa State University, earning a BS in Ag Economics, and of Washington University, where he earned his MBA. While a member of the American Society of Farm Managers and Rural Appraisers, he earned his Accredited Farm Manager designation.

Lower cash flow will drive grain production business exitsBy Michael Swanson, Wells Fargo Chief Agricultural Economist California, which produces 90% of the wine made in the U.S., will report another large grape crush when the preliminary estimate is released in February 2014. Read more


For grain producers, just as for most small businesses, cash flow is paramount. All other metrics remain a distant second to availability of excess cash. Cost of production is an esoteric discussion until grain producers begin liquidating their grain inventories and preparing for the next crop cycle. If they have grain in the bin, they have access to cash. However, they can't be sure how much free cash until they swap the old crop for new. Unfortunately, grain producers are discovering that they have less free cash in 2014 than they did in 2013. And 2015 signals a severe loss of free cash which will start major realignment of growers and acres.

When calculating profitability for any crop, there are many assumptions and required decisions. The average acre of cash rent corn dropped from record profits of $377 per acre in 2012 to losses of $26 per acre in 2013, according to data from the Center for Farm Financial Management at the University of Minnesota that has tracked cash rent corn profitability in Minnesota back to 2000. This loss would have been much worse without government-subsidized crop insurance. A previous record loss of $67 per acre in 2001 included $35 per acre in government payments. In 2013, government payments dropped to $17 per acre, but crop insurance payments rose to $95 per acre from zero in 2001. Between the drop in government payments and increase in crop insurance, the average acre received $77 more in government support than in 2001. Without this increase in cash flow support, the average loss per acreage would have set a new record of $103 per acre.

Profit per acre cash rent corn - Minnesota

Things look like they are poised to worsen in the 2014-2015 crop cycle. The top four costs for cash rent corn are land rent, seed corn, fertilizer, and equipment. In 2013, these four expenses were on average approximately $670 per acre. Even using an optimistic $5 per bushel average cash price, that's equivalent to 134 bushels of corn per acre in cost equivalency. In the past five years, the average yield per acre for this group of operators was 169 bushels per acre. If the renter needs to trade away approximately 80% of the yield to cover these four expenses, there will be losses. If corn prices fall even slightly to $4.40 a bushel as it was priced in 2013, these four expenses would eat up 90% of the expected yield.

Farmers can hope for rising prices to bail them out of a bad trade between inputs and outputs. However, it looks like record per capita grain supplies will last until negative cash flow washes out marginal producers around the world. Consequently, grain producers need to understand who their competition is within the global market.

Additionally, farmers should be more cautious than optimistic about price trend and volatility. According to the U.S. Department of Agriculture's (USDA's) global database of grains, 2013 global grain production of 2,452 million metric tons of grain (including rice) set a record for gross production and per capita supply. Record-high supplies in absolute and per capita terms show the market's supply response remains strong. The USDA's global population estimate for 2013 stands at 7.06 billion. The combination of supply and population yields an estimated 347 kilograms of grains per person globally. This surpasses the previous peak per capita supply of 343 kilograms in 1984, which is a period closely associated with financial stress in the U.S. farm sector.

It would be unwise to think one number explains everything in a dynamic and global grain market. However, per capita supply does a better job balancing the supply and demand analysis than gross numbers that don't simultaneously account for both sides of the equation. Price bulls will cite higher real incomes promoting protein demand and higher biofuels usage. These factors are supportive, but supportive at what price point?

Protein demand growth has increased constantly since the 1970s, but the rate of growth has slowed rather than accelerated. Total meat production growth has slowed from the 4.5% range in the 1970s to the low 2% range in the past five years. Per capita growth has slowed from the high 2% range in the 1970s to the sub 1% in the past five years. The slowdown in growth rates should become more pronounced as the relatively high price of grains and oilseeds continue to pass through to the final consumer in the global markets.

Additionally, most of the growth in meat consumption has come from hogs and poultry, which are more efficient converters of grain and oilseeds into protein. Global protein producers continue to adopt best practices that will improve conversion rates substantially in the future. The increase in grain prices in the past seven years will only accelerate technological adoption to improve productivity. Over a five-year period, there really are no constants in the global food and agricultural markets.

Global meat consumption growth per capita

Global meat consumption

Global Meat Consumption per capita

Cash corn prices in the $4.50 per bushel to $5.00 per bushel range will severely restrict U.S. grain producers' excess cash flow. So how long does it take to get the market to respond, and who will be the producer to exit at the bottom of the cycle?

The table below shows the wide spread in market performance in south-central Minnesota for 2012 and 2013. Corn ground within south-central Minnesota represents highly competitive ground in the overall national market. Its yields and cash rents represent a competitive market with many bidders looking to expand operations. Even so, the results vary by a surprising amount within a relatively restricted geography.

In 2012, there was a $2.36 per bushel cost difference between the low-and high-cost producer. In 2013, that cost spread widened to $2.88 a bushel. Given that producers end up with a similar sales price for corn, the resulting profitability is equally wide. Combining 2012 and 2013, high cost/low profit producers lost $50 per acre (even with $282 of crop insurance payments). In the same period, the low cost/high profit producers earned $643 per acre (they received $65 in crop insurance payments). It is unlikely that 2014 will see a similar crop insurance payout to help cushion the blow for high cost/low profit producers. This will accelerate the gap in free cash flow between top and bottom.

corn on cash rent 2012 vs 2013 table

Consequently, the high cost/low profit producer will need to restrict bidding on cash rents and machinery. In many cases, this producer is already disadvantaged by lack of scale. There is a minimum scale of operations for efficiency, and many high-cost operators can't achieve that scale in terms of acreage. Bidding for additional acres will only worsen their free cash flow situation. Even if producers were able to acquire additional acres with an "average yield" profile, they could only achieve it by outbidding/overpaying their lower-cost rivals. More often than not, producers acquire more rented acres by overbidding on lower-yielding acreage, which more disciplined operators avoid. This expansion on marginal ground only accelerates their negative cash flow.

The negative feedback loop of cash flow will be pronounced in 2014 and 2015, leading to more business exits. These business exits have been postponed in the past seven years as the run-up in grain prices temporarily smoothed over problems. Yet higher costs and lower grain prices will bring these problems to the forefront in the next couple of years.


Photo of Michael SwansonMichael Swanson, Ph.D., , Wells Fargo's Chief Agricultural Economist, forecasts key agricultural commodities such as wheat, soybeans, corn, and cotton, along with livestock sectors such as cattle, dairy, and hogs. Additionally, he helps develop credit and risk strategies for Wells Fargo's customers, and performs macroeconomic and international analysis on agricultural production and agribusiness.

Michael joined Wells Fargo in 2000 as a senior economist. Prior, he worked for Land O' Lakes and supervised a portion of the supply chain for dairy products, including scheduling the production, warehousing, and distribution, and also supervised sales forecasting. Before Land O'Lakes, Michael worked for Cargill's Colombian subsidiary, Cargill Cafetera de Manizales S.A., with responsibility for grain imports and value-added sales to feed producers and flour millers. Michael started his career as a transportation analyst with Burlington Northern Railway.

Michael received undergraduate degrees in economics and business administration from the University of St. Thomas and both his master's and doctorate degrees in agricultural and applied economics from the University of Minnesota.

California tomato processors caught in case of bad timing By Kathleen Brokaw, Wells Fargo Agribusiness Consultant U.S. tomato processors may see more foreign competition this year as the California drought pushes up the cost for raw tomatoes and tomato demand increases. Read more


U.S. tomato processors may see more foreign competition this year as the California drought pushes up the cost for raw tomatoes and tomato demand increases.

Historically, the United States has dominated the tomato economy. The U.S. is the largest producer of tomatoes for processing in the world, producing one-third of the world's crop. California alone processes 95% of all U.S. tomatoes.

2013 World Production of Tomatoes for Processing
Source: World Processing Tomato Council

2014 Forecast World Production of Tomatoes for processing
Source: California League of Food Processors

Processed tomato production outpaced demand in the four years up to and including 2009-2010. Since then, consumption has outpaced production, and entering 2014-2015 stocks were drawn down to their lowest level in a decade. With minimal tomato paste inventories and increasing demand, California tomato processors want to increase production in 2014 by 11.5% from 2013 figures. To achieve this, growers must produce a record-large crop of 13.5 million tons.

U.S. Processed Tomato Production,Consumption & Stocks/Use Ratio

However, the desire to increase tomato output has emerged while California's water resources are drying up. The Golden State's governor declared a drought emergency in January 2014. State water officials say reservoirs, rainfall totals, and the snowpack remain critically low. With the state's driest months ahead, Gov. Brown issued an executive order in late April 2014 to strengthen the state's ability to manage water and habitat effectively in drought conditions, and called on all Californians to redouble their efforts to conserve water.

Growing tomatoes demands average to above average water use, requiring between 2.25 acre feet per acre to 2.5 acre feet of water per acre. Farmers primarily produce tomatoes in the Central Valley of California, where cropping patterns have been changing in recent years. Almond and pistachio acreage has exploded in traditional tomato growing areas with many growers only keeping some row crop ground for products such as tomatoes and cotton as a buffer for drought years.

Entering 2014, processors feared that tomato growers would divert precious water resources to tree crops and fallow their tomato ground, leaving them with insufficient tomato production to meet demand. To encourage growers to take the risk on tomatoes, processors increased the 2014 contract tomato base price by 18% to $83 per ton (versus $70.50 per ton for 2013), well above the $58 per ton breakeven for most tomato growers.

California processing tomato field price per ton 2004 to 2014

The increase in raw tomato price appears to have been partially successful. Recent indications are that growers are planting to produce 13 million tons, just 500 million tons short of the processors' goal.

Bulk tomato price 2009 to 2014

Bulk tomato paste price 2009 to 2014

So how will the 18% increase in California raw tomato price and short production ripple through the worldwide tomato economy?

Tomato paste is the basis of 72% of tomato-based products found on supermarket shelves and in restaurants. Paste is shipped worldwide and reconstituted to make products such as soups, spaghetti sauce, pizza sauce, and salsa. Raw tomatoes represent the single largest cost for a tomato paste processor at 60% of variable expenses and 52% of total expenses. An 18% increase in raw tomato price considered by itself translates into a 3.7 cent per pound increase in the cost of paste, and has a large impact on the wholesale paste price. U.S. paste prices average $0.40 to $0.42 per pound, up from the $0.34 to $0.36 per pound last year.

These higher U.S. prices are encouraging overseas paste production. Paste produced in the EU can compete on deliveries to the East Coast at $0.42 per pound. China, the world's largest paste exporter, is expected to increase processed tomato production 49% to 5.75 million metric tons (raw product equivalent) in 2014.

Detrimental to U.S. production, California tomato growers have been caught in a case of bad timing as tomato demand increases, opening the door for greater foreign imports.


Photo of Katie BrokawKatie Brokaw is an agricultural processor consultant in Wells Fargo's Agricultural Industries department.

She serves on the boards of the Farm Bureau of Ventura County (California) and her local mutual water company. She is also a member of the Ventura County Ag. Futures Alliance Roundtable, a group dedicated to keeping agriculture viable and sustainable in a county under urban development pressure.

Katie lives on an avocado ranch with her husband and three children.

Corn price pushes prices of peanuts and other agricultural productsBy Lon Swanson, Wells Fargo Agribusiness Consultant Corn has developed into the "currency" of agriculture, since corn prices drive nearly every other commodity and corn has turned the franchise of agriculture around in recent years. Read more


Corn has developed into the "currency" of agriculture, since corn prices drive nearly every other commodity, and corn has turned the franchise of agriculture around in recent years.

In 2007 before the Renewable Fuel Act essentially directed more than 30% of the corn crop into ethanol, prices of commodities and inputs were:

  • Corn - $2.50/bushel
  • Soybeans - $6.00/bushel
  • Wheat - $4.00/bushel
  • Peanuts - $0.20/pound
  • Ammonia - $345/ton
  • DAP - $240/ton
  • Seed - $60/acre
  • Chemicals - $20/acre

The use of corn in ethanol production coupled with the drought of 2012 impacted corn supplies and drove prices to a record level that summer, as depicted in the graph below.

No2 yellow corn

The profitability of corn also drove prices higher for other crops as they competed for acres and encouraged demand for inputs as growers were doing all they could to maximize yields.

Heading into the 2013 crop year, prices of commodities and inputs had changed dramatically and were as follows:

  • Corn - $8.00/bushel
  • Soybeans - $18.00/bushel
  • Wheat ? $8.00/bushel
  • Peanuts - $0.35/pound
  • Ammonia - $685/ton
  • DAP - $500/ton
  • Seed - $77/acre
  • Chemicals - $26/acre

The relationship of corn to peanuts

The longer-term trend with peanut prices following corn began after 2007. This would be expected due to the need for peanut processors to bid up for acres with corn prices having risen so much higher.

USDA National Peanut Prices per lb

While it appears that peanut prices track corn, when looking at more specific price points, peanut prices seem to trail corn by roughly six months. A background on the peanut loan program and option prices from processors explains why this occurs. A brief timeline of the program/pricing is shown below:

Purchase Option Program/Contracts

  • In the late winter, a processor contacts buying points and authorizes them to approach growers with a contract offer for the upcoming peanut crop. Buying points carry out the purchasing function for processors and generate income from storage, cleaning, drying, and seed sales. The buying points then approach growers with an offer. These contracts give processors the option, but not an obligation, to purchase peanuts later (from harvest to nine months post-harvest). Growers are promised some premium above the $355 per ton loan rate to entice them to sign (i.e. a premium of $145 per ton would result in $500 per ton to the grower).
  • The processor may put forth additional contract offers between the spring and harvest. The buying points handle subsequent contracts in a similar manner as described above.
  • A grower decides whether to sign a contract based on his or her interpretation of the market.
  • Regardless of whether the grower is contracted or not, he or she may still deliver peanuts to the buying point, and the peanuts are put in the government loan program where the producer receives the $355 per ton or $0.18 per pound loan rate.
  • Following harvest (after November), if the grower has un-contracted peanuts and the processor needs peanuts, the processor will authorize the buying points to approach the grower with other contract offers.

The grower then decides whether to plant peanuts or other crops based on the option premium being offered, comparing it against projected returns from the other crops.

There is no futures market for peanuts. The only way for growers to "hedge" their production is to commit to the option premium price being offered. Processors have a delayed reaction with the prices they offer because they must gauge their customer base for demand and price. Simultaneously, growers see the future prices of competing crops and expect peanut prices to follow suit. For example, high corn prices at the end of 2012 drove up the option premiums for peanuts the following spring to encourage the planting of peanuts.

Revenue Comparison

The graph below illustrates the revenue comparison between corn and peanuts in the past seven years, and expectations for 2014. The exceptional revenues in 2012 were a combination of excellent growing conditions (yields) and high prices that reflected the countrywide drought that summer.

Georgia Per acre Revenue

Comparative Crops for 2014

The table below shows the primary crops grown in Georgia and how they compared in terms of profits this spring.

2014 Net returns for irrigated peanuts
Source: A.R. Smith, N.B. Smith and W.D. Shurley, UGA Extension Economists, Department of Agricultural and Applied Economics

In 2014, it appears that peanut prices once again followed corn, but this time to lower prices and returns. The U.S. Department of Agriculture (USDA) Acreage Forecast from the end of March predicted growers would plant 1.38 million acres of peanuts in 2014, up 29% from 2013.

In Georgia, the largest peanut-producing state (and source of this information), expected planted area is up 53% from 2013. This increase is reportedly due to lower corn and soybean prices, and relative to the lower 2013 numbers. The 2013 peanut acreage was very low due to heavy carryover from 2012 production and strong competing grain prices.

Peanut Demand Drivers

U.S. peanuts are consumed domestically and in the export market, with the primary driver of consumption being price and their value relationship to other nuts. Domestic edible use is the top market for U.S. peanuts and represents between 55% and 65% of total use. Exports range from 15% to 20%. Crush for oil and meal makes up 10% to 13% percent of use. The rest of total consumption is for seed.

Domestic U.S. use of peanuts

Although price is one of the primary drivers of demand, a unique characteristic of peanuts and especially peanut butter, is that it is counter-cyclical with the economy. Peanut butter is considered an economical source of protein so sales increase in an economic downturn.

Canada is the U.S.'s largest export market for peanuts, followed by the European Union and Mexico. U.S. peanuts receive a premium and are perceived to be of superior quality because they are grown for the edible market, and they are exported into Europe which has high specifications.

Peanuts are a unique crop due to many factors such as lack of a centralized market; they receive substantial support loans through the USDA; there are variety/regional differences; and option premiums from processors encourage production. These factors must be accounted for when determining projected sales price and making acreage decisions.

On the other hand, corn is the currency of agriculture because it appears to drive prices and related planting decisions in a delayed manner.


Photo of Lon SwansonLon Swanson is a Wells Fargo Agribusiness Consultant analyzing both agricultural processing and production loan customers throughout the country.

Prior to joining Wells Fargo in 2002, he worked for Bank of America for 15 years in the Trust Department as a Farm Manager and Midwest Regional Supervisor. Lon began his professional career with Oppenheimer Industries as a Farm Manager.

Lon received a Bachelor of Science Degree in Agricultural Economics/Animal Science from the University of Nebraska and an MBA from Baker University. Professional credentials include a Certified Trust and Financial Advisor (CTFA) in 1992 and Accredited Farm Manager (AFM) in 1991. He has also maintained a Kansas Real Estate License since 1994. Lon's roots in agriculture go way back as he was raised on a crop/livestock farm in northeast Nebraska.

Wells Fargo insightsWeekly Economic Podcasts and Monthly Economic Outlook. Read more


Weekly Economic Podcasts
Listen to our weekly audio podcast on the latest economic news and its potential impact on your business.

Monthly Wells Fargo Economic Outlook
Read our monthly economic commentary and view forecast tables on U.S. and international economic conditions, including projections for the financial markets.

Watch our monthly economic forecast video. This month, Wells Fargo Global Economist, Jay Bryson, and Economist, Sarah House discuss GDP growth for the first quarter, inflation, monetary policy, and overall global growth.

Monthly Wells Fargo WASDE Report Perspectives
Gain Wells Fargo's perspective on the June USDA World Agricultural Supply and Demand Estimates (WASDE) report for corn, soybeans, and wheat.

Washington update Review a brief summary of recent U.S. government legislative activity and events that have impact on the Food and Agribusiness industry. Read more


Farm Bill Implementation

U.S. Department of Agriculture Secretary Tom Vilsack testified in a hearing of the Senate Agriculture Committee in May. A number of issues were addressed, including the timeline for program sign-up, conservation compliance and crop insurance, livestock disaster assistance, the dairy program, and trade opportunities. For a replay of the hearing click here (note: replay begins at approximately 27:00 minutes). USDA released a Farm Bill implementation update.

  • Conservation Compliance.  Regarding the new linkage of conservation compliance requirements with crop insurance, USDA Secretary Vilsack advised that details should be available this summer.  While many producers are already in compliance due to long-standing linkage with commodity and disaster assistance programs, Vilsack estimated that approximately 6,000 producers may be impacted by linkage to crop insurance.  The Secretary noted that conservation compliance became linked to crop insurance on the date of Farm Bill enactment in February 2014 and that farmers converting wetlands or breaking highly erodible land after that date will be subject to the new rules.  His advice:  if you're one of the 6,000, it's a good idea to start developing a conservation plan. While certain grace periods may apply for compliance, the producer penalty for violating the conservation compliance requirement is loss of crop insurance premium subsidy. 
  • Commodity and Dairy Decision Tools, Signup Timeline.  USDA recently announced funding awards totaling $6 million for the development of web-based decision tools.  These tools, to be developed by universities and state extension services, will help producers make decisions about the Farm Bill's farm programs, including Price Loss Coverage (PLC) and Agriculture Risk Coverage (ARC) as well as the Dairy Margin Protection Program (MPP).  According to USDA, the tools are expected to be available for use late summer, with sign-up for MPP beginning late summer and ARC and PLC selections and sign-up beginning late 2014 and early 2015.  More information about the awards and implementation timeline.
  • Conservation.  USDA has announced that it is now accepting applications for the 2014 Farm Bill's Regional Conservation Partnership Program, which encourages coordination to increase the restoration and sustainable use of soil, water, wildlife and other natural resources.  Informational webinars will be held by USDA in June. Additional information about the USDA program.

Appropriations Process Progress

After notable debates over school lunch, sugar policy, and white potatoes, the House and Senate have approved annual agricultural funding bills at both subcommittee and full committee levels. Consideration by the full House has begun and the Senate is expected to follow.  The New York Times penned a piece about the goal of lawmakers to pass bills in a timely manner this year. Over thirty agricultural organizations sent a letter to all House offices asking for protection of the 2014 Farm Bill and crop insurance in the appropriations process.

Senate Approves Ag Nominations

This month, the Senate voted to confirm three nominees for the Commodity Futures Trading Commission (CFTC ) — Timothy Massad (Chairman), Chris Giancarlo (Commissioner), and Sharon Bowen (Commissioner). Read more

Darci Vetter, currently USDA's Deputy Undersecretary for Farm and Foreign Agricultural Services, received unanimous approval of the Senate Finance Committee to serve as the Chief Agricultural Negotiator at the Office of the United States Trade Representative (USTR). Vetter's nomination will be considered by the full Senate.  More information or read Darci Vetter's USDA bio.

Final Renewable Fuel Standard Rule Expected in June

Many are eagerly anticipating the Environmental Protection Agency's release of the final rule for 2014 Renewable Fuel Volume Standards, which is expected this month. EPA recently announced an extension of certain 2013 RFS deadlines due to the lengthy rulemaking for 2014 standards, in which over 300,000 public comments were received. Representative Bob Goodlatte has called on EPA, in finalizing the rule, to consider that a bipartisan majority in the House wants reform of the Renewable Fuel Standard (RFS). Read RFS reform related press release.

President Signs Water Infrastructure Legislation

With strong support from the agricultural community, the House and Senate approved the Water Resources Reform and Development Act (WRRDA) conference report with strong bipartisan votes and the president has signed it into law.  More information can be found on the Senate Environment and Public Works site and the House Transportation and Infrastructure site.  Read association statements: National Corn Growers Association statement and American Soybean Association statement.

California Water Legislation Passed by Senate

The Senate recently approved a bill sponsored by Senators Dianne Feinstein and Barbara Boxer to provide flexibility to state and federal agencies in delivering water. Read more.
A separate measure addressing the California drought was sponsored by Representative David Valadao, and passed the House in February.

Census of Agriculture

This spring, USDA released the 2012 Census of Agriculture, which provides agricultural information at the national and state levels. Access the full report.

USA Peanut Congress June 19-23, 2014
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The 18th annual USA Peanut Congress, a joint annual meeting of the American Peanut Council and the American Peanut Shellers Association, delivers a comprehensive and informative business program with speakers from government and industry who will address current issues and topics of interest to all peanut industry segments.

When: June 19-23, 2014

Where: Omni Nashville Hotel, Nashville, TN

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American Agricultural and Applied Economics Association Annual MeetingJuly 27-29, 2014
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AAEA's Annual Meeting brings professionals and students in the field of agricultural and applied economics together to present research, learn about the latest trends, and network.

When: July 27-29, 2014

Where: Hyatt Regency, Minneapolis, MN

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American Society for Horticultural Science Annual Meeting July 28-31, 2014
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Each year, approximately 1,000 horticultural leaders and decision makers attend the annual conference to learn about cutting edge technology during a four-day event composed of networking sessions, abstract presentations, award presentations, and technical workshops.

When: July 28-31, 2014

Where: Orlando, FL

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Feed Ingredient Outlook Symposium August 18-19, 2014
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At this symposium, attendees will gain insight into the supply/ demand and external factors that will affect feed ingredient and biodiesel feedstock markets for the upcoming 2014/15 crop year. Industry experts will cover a wide array of topics, including the outlook for agricultural commodities and government policy. In addition to detailed analysis and outlooks for feed ingredients, the outlook for profitability and production in the livestock sector will be discussed. Analysts will present the outlook for the cattle, hog, poultry, and dairy industries for the remainder of 2014 and 2015.

When: August 18-19, 2014

Where: Hilton Minneapolis/St. Paul Airport, Bloomington, MN

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