Letters to the Editor
The views expressed in the pages of Town Hall are those of the individual authors and are not necessarily those of DTN, its management or employees. We welcome Letters to the Editor or other opinion pieces. Please send them to: DTN Town Hall, C/O Editor, 9110 West Dodge Road, Omaha, NE 68114. Or e-mail them to agnews@telventdtn.com, or fax them to 402-390-7187.
(Referencing the Sept. 11 Washington Insider column)
You seem inclined to think that a federal government agency tasked with navigable waters of the U.S. should be regulating every source of water in the U.S. One of the issues at play is that the EPA has lost many court cases in the last few years in trying to extend its control. Thus, the newly issued new regulations to "define" what courts have been denying them based on current law. If they want the expanded jurisdiction, they should go back to Congress and ask for it.
Second, nothing that I know of precludes state laws from regulating their own waters. In the case of Toledo, while I haven't looked it up, I suspect that the state could create some regulations that would affect a major portion of the watershed that is alleged to be the source of the problem. There are some Midwest ag practices that absolutely flabbergast me including spreading both manure and pelleted fertilizer on frozen ground. Seriously? Why in the world would a farmer do that?!! The state can prohibit it and, at least on the commercial side, include a fine for both the farmer and the applicator.
So, third, I would like to see the ag groups focused on better stewardship and management. EPA causes a "circle the wagon" effect in attitude. Those of us involved in conservation agriculture struggle for funding and the ag checkoff groups should be including conservation funding as part of the R&D budgets. The ND Corn Growers are, and I think that is great. I work with NRCS, Soil Conservation Districts, and the ManDak Zero-Till organization. There aren't very many of my neighbors involved, so yes, farmers have a long way to go, at least in some areas, to recognize the need for better conservation practices -- and to implement them. Making EPA the one to push those along will be detrimental, not helpful.
Fourth, in Ontario, and some U.S. cities, they have banned commercial lawn fertilizer. Perhaps they allow it to be spread by commercial applicators with a soil test, I'm not sure. But at any rate, they are attacking all sources and making everyone participates. That is what it will take. States and cities already have that authority -- they should use it.
The legal overreach with EPA in farm country started with the Spill Pollution Control and Containment regs. They asserted that virtually every farm fell into their jurisdiction because a spill any place could flow into a navigable water, whether because of "significant nexus" or even through subterranean hydrological transfer. Because the need to control a fuel spill made a lot of sense, and even economic sense -- who can afford to lose even $5,000 worth of fuel from a small tank leak -- farmers pretty much went along with the idea. The national Farm Bureau and Farmers Union even figured out how to make consulting fees to "bring farmers into compliance" thus making them complicit with helping to promulgate a regulation whose authority they are now fighting against with EPA's explicit definition. The definition is pretty much the same as what was in the SPCC regs and explanations! Maybe you should ask the Farm Bureau about that!
I am trying to participate with the ND Department of health in creating a voluntary set of guidelines for nutrient reduction strategies. I also teach variable rate nutrient management to take advantage of new machine technologies. It is a slow process, but in my opinion, EPA could accomplish a lot more with a good advertising campaign aimed at farm wives that has a double message -- improperly applied nutrients cost farmers money, and they can hurt the lives of families that depend that water for drinking.
Paul Overby
Lee Farms
Wolford, ND 58385
Good Morning Darin,
In response to the question you posed in your Newsom on the Market column this [Friday] morning, it's obviously not a cut-and-dried situation.
As you mentioned in your column, the market carrying structure says to store corn and sell soybeans at current futures values. The prudent thing to do, according to the market, would of course be to sell the soybeans and re-own with either January and March call options to keep upside open.
With harvest still 30-60 days away in the Corn Belt, let alone the next South American harvest, there are plenty of market movers out there. However, farmers also need to realize "the carry" isn't earned until it is sold. Just because the market is paying 67% of the cost to store, doesn't mean you'll earn that unless it is actually sold.
The difficult decision for farmers in our area, and the Northern Plains in general, comes down to basis. Given the well-covered rail-transportation woes in the Dakotas and Minnesota, basis has the potential to be as volatile as futures the next 6-months.
So the other wrinkle comes down to which commodity has the most potential for basis appreciation? In the next 3-6 months based on export commitments, it is probably soybeans. In the next 6-12 months, it is probably corn.
Both basis and potential futures upside, along with carrying charges, need to be factored into the equation to determine total yield. Also, longer-term technical objectives suggest CZ is closer to a bottom at $3.60-3.70 than are November soybeans at $10.50, but that's just reading the tea leaves.
Thanks Darin.
Tregg Cronin
Cronin Farms, Inc.
Gettysburg, SD
Reply from DTN Senior Analyst Darin Newsom:
Great analysis as always Tregg.
Just a sidenote, Tregg is one of DTN Marketing University’s key presenters, sharing his analytical skills for cash marketing with attendees. His next appearance will be at the DTN/The Progressive Farmer Ag Summit this December in Chicago. If you’d like to attend, go to http://www.dtnprogressivefarmer.com/… or call 888-576-9881 to register. I learn something new every time I have the opportunity to listen to his presentations.
Mr. Newsom,
My understanding of the ARC & PLC programs is that they are based on historical farm bases and yields. I don't think producers get paid on planted acres. Therefore, these programs would have no effect on planting decisions.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
Of course, I could be wrong.
I enjoy all the articles you write. Keep it up!!!!
Thanks,
Phil Schmidt
In response to Phil and the other readers who contacted Darin on his column. You can see their letters below Darin's response.
Title: ARC of 180 Degrees
Summary: Responses to last week's column helped me rethink my conclusion.
Let me begin by saying this: DTN has some great customers. After last week's Newsom on the Market column, "ARC of Destruction," I received numerous responses regarding my conclusion that the new government program could ultimately blow up corn's demand market. The general theme from respondents (many posted in DTN's Letters to the Editor segment) was that I had overlooked two key factors: 1) The county ARC program pays on base acres; 2) Payment caps will limit the possible impact on planting decisions.
Given that my columns are opinion based on my analysis, the responses could have turned nasty and personal. We see it all too often in other venues. But it certainly wasn't the case here. Without exception the responses were polite, complimentary, and well thought out discussions of the topic at hand. To all of you who joined the conversation, either through email or the social media site Twitter, I thank you. You have again confirmed my belief that there can be disagreement without all the ugliness. I tip my cap to you.
Those of you who are familiar with my analysis know that I'm willing to change my mind when signals start to point the other direction. As an analyst, you have to be able to do that. So to simply sum up my thoughts on last week's column: I agree with you. The two factors listed above will likely keep the ARC program from destroying corn's demand market.
Does this constitute a complete 180 on my part? It could be considered that way, which is fine. But let me add this, the bottom line of my piece was the danger that increased corn acreage holds for the corn market, a familiar theme dating back to at least 2011's column "Adequate." I still believe it is possible that by the end of the new government program, 2018 I believe, corn acres could be larger than what we saw in 2014. However, if this does indeed occur, it will likely come from market forces rather than the new government programs.
If you're interested in what should be an informative discussion of ARC and PLC, be sure to join DTN's webinar on August 21. Here is a link that that will take you to the signup page: http://bit.ly/…
Thank you all,
Darin Newsom
DTN Senior Analyst
To: Darin Newsom
Subject: ARC of Destruction
After a 10-year run in state and national commodity organization, I have long wondered when our actions in trying to "control" government policy would become a double-edged sword. The market does a very efficient job. I do not always like it, but it works best when left alone.
Mark W. Wachtman
To: Darin Newsom
Subject: DTNPF.com: Newsom on the Market
Your ARC of Destruction article was interesting, but are you remembering that the "ARC-County" option pays farmers using their "base acres" without regard to what they actually plant? In other words, I can plant the entire FSA farm number to soybeans and still collect an ARC payment on corn. Therefore farmers that enroll in ARC-County will likely base their planting decisions on actual CBOT prices versus ARC Olympic average prices/ARC guarantees.
The ARC-individual option DOES pay based on what is actually planted; however it only pays on 65% of base (versus 85% of base in ARC-CO) and blends farms and commodities together for revenue purposes, so has some drawbacks that will probably deter many from choosing this option.
Thanks for your articles -- I always enjoy reading them.
Gary Yoch
To: Darin Newsom
Hello Darin,
I don't want you to take my thoughts and opinion the wrong way. I value and respect your market commentary and opinions on other topics of discussion.
I just wanted to give you a little feedback on the idea of ARC destroying the corn market.
I don't see how it could happen. First of all, if payments are triggered it will be based on base acres for each farmer. The base acres should be set by the planted acres from the previous five years and will not change drastically from year to year. Therefore shouldn't affect decisions made by farmers on what they will plant in the ensuing years.
I still believe farmers who are attempting to produce a crop will base their decisions off of current year market prices and supply and demand, as well as inputs and revenue on the crops they produce.
Correct me if I'm wrong about this, maybe I need to learn more about the stipulations of our farm commodities programs.
Excuse my brevity as I'm mobile this afternoon.
Thank You,
Chandler Preston
To: Darin Newsom
Subject: ARC
I just read your article on ARC on dtn.com. I agree with your analysis, however one thing that will temper those conclusions is that there is an $125,000 per individual payment limitation. For smaller farmers this will not be a big deal. However, for larger producers they will bump up to this limit with maybe 1,500 corn acres.
I always enjoy reading your columns on DTN and I help Marcia out at times on some articles. I am a partner of Andy Biebl. Also, I have probably posted at least 10 or 15 times on our blog www.farmcpatoday.com on ARC/PLC.
Thanks,
Paul Neiffer
To: Darin Newsom
Subject: Worthless corn - bean
I follow your column (Newsom on the Market) and find it interesting and on target. Now with this last one I have a small problem (ARC of Destruction).
For one thing, I am leaning toward not signing up for the new farm bill. From what I have been able to learn and work out, IT'S A LOSER. Too much paperwork and rules. Very little money. (I have my name with the rest of the guys at EWG.org.) I think going back to being a ghost is best.
So, yes, ARC will pay from one egghead's guess $30.00 to $90.00 [per] acre. Add to that the harvest price of $2.50 this fall. I can see that even my math doesn't work. That little amount of money from ARC or PLC isn't even a good down payment on the seed corn to get us to the 16 billion bushel crop.
Now here is where it gets interesting. You now have all of these large farms 1,000 acres and up. They have all of these bins full of gold, but the market is telling them that they were fools for growing [it]. Because they can't afford the diesel fuel to haul it to market. In some places they can't haul it because the elevator is full because no one will buy it or get a train there to haul that worthless gold away.
My guess is -- and I do my surveys at 55 mph -- is that if you can get 70 million acres of corn in the ground next year [it] will take great effort and some "found" diesel fuel to get the big toys out one more time. Color me crazy but the guys around here really HATE it when I am right.
I am looking at the cracks already and saw more at Empire Farm Days. Sales people were hiding and not talking. The mood was dark. Those bins of gold could still be full of this year's crop next year.
I learned this lesson this last winter when I ran out of money. You cannot help anyone if you are too poor yourself. You just sit and wait.
I am a very small operator. I do other things off farm, but the big guys, they can't leave. If they do leave it is with ... auction and they are gone forever. That is way it has been around here all my life. Run out of money you are gone. Friends left before all that.
Keep up the good work. It is going to be one hell of a ride coming up.
Crawford McFetridge
Finger Lakes area
(ADG)