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Outlining farming’s challenges

By Staff | Feb 27, 2016

IOWA SECRETARY OF AGRICULTURE Bill Northey recaps a year of challenges in the 2015 production year, while encouraging producers to hang tough in the year ahead during the Northwest Iowa Ag Outlook Feb. 16 in Spencer.

SPENCER – Iowa produces so much corn, that only the U.S. as a whole, China and Brazil grows more. Even the European Union matches Iowa’s corn production.

Speaking at the Feb. 16 Northwest Iowa Ag Outlook in Spencer, Iowa Secretary of Agriculture Bill Northey congratulated Iowa’s grain producers for their record corn production this past year while at the same time cautiously encouraged them about the softer markets ahead.

Northey said Iowa farmers will be challenged to not only remain in farming, but to farm responsibly, keeping government regulators from dictating how farming will be done.

Record yields

“For 37 of the last 38 years Iowa has been the No. 1 corn-producing state in the country,” Northey said. “We averaged 192 bushels per acre all across the state.”

Northey said Iowa has held its own as the No. 1 soybean producing state for 20 of the last 25 years as well, with its best competition coming from Illinois.

He said the U.S., Brazil, Argentina and China used to produce more soybeans than the state of Iowa, but today Iowa produces more soybeans than China.

Northey added pork and beef production in Iowa have grown, especially finishing sites and cow/calf operations (with access to more distiller’s dried grains), and that only the U.S. and Brazil produce more ethanol than Iowa does.

Iowa is generally the largest-producing biodiesel state as well, according to Northey, who also said the 2002 ag census showed total ag sales (crops and livestock) from Iowa farms was $12 billion. By 2007 it was $20 billion and by 2012 it was $30 billion, where it remains today.

With markets now in a downward trend, Northey said he expects that number to be closer to $25 billion this year.

“There were operating notes this year that needed to be refinanced,” Northey said, “but when you look at where the general ag economy is, we’ve built equity these last few years and we have good strong balance sheets.”

“We’re not looking at 1983 – we’re looking at good, solid economics, but there are a handful of folks that haven’t had a chance to build that economic base to be able to fall back on,” he added. “There are struggles out there.”

Northey said land prices and cash rent have both declined, but still have a ways to go in order to make today’s markets pay out. Record production in corn, beans and wheat around the world, he said, contributes to a huge grain surplus and low market prices.

But a weather event such as a drought or flood could help change the markets.

Northey said the nation produces nearly 15 billion gallons of ethanol annually, using more than 5 billion bushels of corn in order to produce it at the 10 percent level.

Higher blends of ethanol are needed to help the demand for ethanol, but it’s a struggle.

“Ethanol – even with low prices of crude oil – is still being sold on the wholesale market for less than the price of gasoline, so it’s hugely efficient and we should be seeing that grow, but it’s not happening,” Northey said, adding the RFS initiatives are fledgling now.

Extra grain goes to exports, Northey said, with China purchasing 60 percent of all soybeans traded on the international market, while Japan purchases 10 percent of U.S. soybeans.

Northey said China’s economy is beginning to flatten, and those effects are felt in the U.S.

Illustrating China’s need for soybeans, he said there are 450 million hogs to feed in China, compared to 66 million hogs in the U.S.

“(China and international soybeans) will be the most important demand creator for awhile,” Northey said. “We have to keep finding that demand.”

DMWW lawsuit

Northey touched briefly on the Des Moines Water Works lawsuit, saying it was filed just over a year ago and is scheduled to be heard Aug. 16.

He said a judge has separated the case into 10 counts and eight have been sent to the Iowa Supreme Court, which has not yet responded on how it might rule.

“One of the questions is, ‘Can a drainage district be sued for damages?’ The law says ‘no,’ precedence says ‘no,’ but it’s one of the things they are trying to do,” Northey said, for having more than 10 parts per million in nitrates coming out of the drainage tiles 180 miles from the Des Moines River.

“I think it’s a heavy legal lift for the Des Moines Water Works to get what they want,” Northey said, adding that the nitrate problems don’t stem solely from agriculture.

He said this will be an ongoing lawsuit for years, and that farmers must continue to be proactive in seeking ways to protect water quality and prevent run-off.

Northey encouraged producers to use buffer strips and new technologies to maintain soil health, protect water quality and prevent water runoff issues, referring back to the $1.5 million the Des Moines Water Works said it spent last year in treating water for 500,000 customers.

Animal diseases

Northey said the H5N2 avian influenza affected 77 Iowa bird operations, with most of the affected birds being egg-layers.

More than 30 million turkeys and chickens were euthanized, creating what the United States Department of Agriculture called the “largest animal health emergency in the nation’s history.”

He said producers have learned how to handle such a crisis from this epidemic, if it should happen again.

“We have lots of international problems (with the spread of animal health issues), so we are in lots of conversation about how we (could react) if something like that were to hit our beef or pork industries,” Northey said.

Ag heritage

Northey said there were 366 Century Farms recognized last year, making more than 18.000 Century Farms in the state since the program began.

Iowa Farm Bureau began recognizing Heritage Farms – farms which have been in the same family for 150 years or more – 10 years ago.

There were 101 Heritage Farms recognized last year.

Northey concluded by saying Iowa farmers have their challenges, but he thinks those challenges can and will be overcome by those who find ways to keep going.

“We’ve had avian influenza and declining grain prices,” he said. “We have other issues out there, but it’s important to step back and say, ‘We have an amazing agriculture heritage, and amazing culture here.'”

“We’ve got to get from today to tomorrow and do all we can to help ourselves,” he added, “so the government does not tell us what we can and cannot do.”

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