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Midwest Digest, Jan. 11, 2023

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The government releases an inflation report tomorrow.

How much as the U.S. cattle herd declined? A report in three weeks will offer insight, and will set the tone for 2023. Experts forecast it to be down 4+ percent.

Beer prices are up, and drinkers are responding by buying less and cheaper beer.

The Oscar Meyer Weinermobiles are looking for drivers.


Farm Progress America, January 12, 2023

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Max Armstrong recalls a discussion of the potential impact of rising interest rates on farmers that he picked up last year at the Farm Futures Summit, which kicks off again on Jan. 19. But that year-old discussion of higher interest rates was shown to be even more relevant in a recent report on Farmdoc Daily at the University of Illinois. Max shares some new stats on the impact of interest rates, and how high they may stay for at least the near term.

Max Armstrong's Farm Progress America is a daily look at key issues in agriculture. It is produced and presented by Max Armstrong, veteran farm broadcaster and host of This Week in Agribusiness.

Photo: Matthias Kulka

Filling big shoes

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What a way to ring in the new year! After surviving the Christmas blizzard that hit most of the country, I kicked off 2023 with a new title and a new job — editor of The Farmer.

Paula Mohr retired at the end of 2022 after 18 years with Farm Progress, and I know that these will be big shoes to fill, but I am up to the challenge.

I come to The Farmer from our neighbors to the west — Dakota Farmer and Nebraska Farmer — where I have been senior staff writer for the past couple of years. I joined the Farm Progress team in 2014 as senior staff writer for National Hog Farmer magazine. My ag journalism career goes back to 1990, when I started with a publication outside of the Farm Progress family covering Minnesota agriculture. So, I am coming home, so to speak.

As a farm kid of the ’80s, I was encouraged to get a college degree and then maybe come back to the farm. That college degree, in ag journalism no less, took me to a very brief stint working for an Iowa newspaper. I then returned to my native state to work for a couple of southern Minnesota newspapers as a general news reporter, before focusing solely on agriculture for the past 33 years. Though it never worked to return to the family farm, I have remained close, helping in the fall as my schedule allowed until my brother’s retirement in 2016.

I have been very fortunate that for other than that short stint in Iowa, I have been able to call Minnesota “home” for my working career. I did attend college at South Dakota State University — and the Jackrabbits are still near and dear to my heart — but Minnesota is my home.

History with The Farmer

My connection to The Farmer goes back further than my journey down the journalism road.

Growing up on a corn, soybean and hog farm in south-central Minnesota, The Farmer always had a place in our mail pile and was thoroughly read. Little did I know way back when that I would one day be the editor of this fine magazine.

Our Farm Progress family has a herd of talented writers and editors across the country, many of whom have contributed to The Farmer over the years. Paula has been gracious enough to print some of the articles penned by yours truly from time to time — mostly the “Hog Outlook” column that I started providing for the Farm Progress magazines over the past year.

I look forward to meeting new faces, and also rekindling old friendships in the Minnesota agriculture circle.

I also look forward to continuing the legacy that Paula Mohr carried on from those who came before her. Editors and writers do what we do for you, the reader. With that in mind, I feel it is my duty to give you what you want to see in your magazine.

Please feel free to drop me a line at kevin.schulz@farmprogress.com to offer story ideas, or just comments about what you would like to see more or less of in The Farmer.

Rail delays put California farms at risk

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Millions of chickens have gone unfed as rail disruptions delay corn shipments to a California poultry farm, according to documents that provide unique details of how one shipper has suffered from poor rail service. 

Foster Farms, which processes about 1 million chickens and 12,000 turkeys every day, has said it’s had to pause some operations because of delays from Union Pacific Corp., the second-largest freight railroad in North America. 

The supply issues also forced the company to shut down a plant that processes raw corn into animal feed to sell, it said in federal filings. That meant cutting off its dairy farm customers from corn meal and giving priority to its chickens, which start killing each other when they go hungry.

After a flurry of correspondence that offers unfiltered insight into shippers’ problems with rail service, the U.S. Surface Transportations Board ordered Union Pacific on Dec. 30 to deliver more corn-laden trains to Foster Farms.

This is the second time in the past year Foster Farms has asked the rail regulator to intervene directly because of Union Pacific’s failure to deliver animal-feed trains on time. It’s also the latest in a long-simmering tussle between shippers and railroads, which have seen profits rise even as carloads dwindle.

“These service failures, which began in February 2022, have resulted in numerous instances where Foster Farms has suspended its production and distribution of feed for tens of thousands of dairy cattle and tens of millions of chickens and turkeys,” the company said in a letter to the regulatory agency.

Foster Farms chicken for sale in San Francisco.

Suppliers like Foster Farms complain they have no viable alternative to using rail and can be captive to one carrier. Disturbances to these operations could potentially risk supplies for major food retailers including Costco Wholesale Corp. and Walmart Inc., which stock Foster Farms products.

The Livingston, California-based processor, which is owned by Atlas Holdings LLC, says it is the largest chicken grower in the Western US, with about $3 billion of annual sales. It said it resorted to hauling supplies by truck, but couldn’t find enough capacity and faced soaring costs. It takes 400 trucks to handle the same amount of grain as one 100-car train.

Foster Farms declined to comment beyond statements in public filings.

“Union Pacific is working closely with Foster Farms, providing daily updates and delivering the trains addressed in the order,” the railroad said in an emailed statement. “We continue to experience significant weather delays, including washouts in California, blizzards in the Midwest and rockslides in Nevada.”

Michael Booth, an STB spokesperson, said: “The Board is reviewing all relevant information and determining if further action is necessary.”

Service breakdown

Union Pacific has been at the forefront of a recent nationwide rail service breakdown that has plagued all carriers including Warren Buffett’s BNSF Railway Co., its closest competitor in the West, and CSX Corp. and Norfolk Southern Corp. in the East. Railroads have pointed to difficulties hiring train crews since the pandemic hit, along with usual disruptions such as weather and derailments. 

Shippers and unions say the problems began with an industrywide cost-cutting push about five years ago that slashed workforces, closed switching yards and parked locomotives. The five largest U.S.-based rails had a 7% drop in carloads versus a decade ago. Under an efficiency strategy known as Precision Scheduled Railroading introduced in the US in 2017, the railroads revamped customer schedules and slashed costs.

“You can only cut so far and they’ve already cut more than they should have, especially as far as employees,” said Daniel Elliott, a principal with GKG Law and a former chairman of the Surface Transportation Board. 

graph showing decline in rail car volumes

The decline in carloads over the last decade coincided with a windfall for the railroads. Net income for the five largest carriers jumped by 75% over the past 10 years. Adjusted operating profit margins rose to a record 41% in 2021 from less than 16% two decades ago.

After successful deregulation legislation in 1980 that rescued railroads from the brink of bankruptcy, carriers became more productive and improved service, allowing profits to rise as shipping rates fell. A wave of consolidation that also followed reduced the large railroads operating in the US to seven from about 40, transforming the competitive landscape.

rail company profit increases

The railroads’ power to affect service to its customers makes shippers hesitant to publicly criticize rail companies, according to trade groups. The American Fuel and Petrochemical Manufacturers said in a Dec. 15 written testimony that its members are “fearful of potential backlash” and one declined to provide service information for the STB’s hearing on Union Pacific “since such testimony could be linked back to their company leaving them vulnerable to retaliation or other subtler recourse from UP.”

The Surface Transportation Board is seeking to correct the imbalance, but has limited power. In December, it called on Union Pacific to explain a spike of service-limit notices designed to alleviate network congestion.

“It’ll be interesting to watch what happens over these next couple of years and see if the railroads do take a little bit of a turn” in their strategy, Elliott said.

‘Every minute now counts’

December was the second time last year Foster Farms ran so critically short on corn supplies that it turned to the board for help. In June, the company filed a petition for emergency service after months of struggling to get enough trains. Desperation began to creep into the communication between the railroad and its customer as animals went unfed. 

“We are about to kill millions of chickens,” said Phil Greene, vice president of Foster Farms, in a June 14 email to a Union Pacific executive. “Every minute now counts as we try to save lives. You have never put us in this situation 5 days late with no inventory and 40 to 50 million chickens to feed.”

The next day, Foster Farms filed its petition for an emergency service order. The railroad replied to the petition by accepting blame for poor service and proposed a plan to divert locomotives and crews to increase the trains. Chief Executive Officer Lance Fritz weighed in to spur action.

A Union Pacific locomotive at a rail terminal in California.

“Foster Farms is a vitally important Union Pacific customer. However, we have failed to provide adequate service to Foster Farms,” Fritz said in a June 16 letter to the regulator. “I am writing to convey Union Pacific’s firm and clear commitment to providing Foster Farms the service it deserves and the service we expect to provide.”

On June 17, the board unanimously granted Foster Farms’ petition, directing Union Pacific to supply the required trains and report on their status for 30 days. After the 30-day period, the board declined to extend the order. By October, Union Pacific again wasn’t providing enough trains to keep corn stocks fully replenished, Foster Farms said.

The winter storms in December exacerbated the problem and Foster Farms again had to truck in grain in attempt to feed its and customers’ livestock. This time Union Pacific blamed the weather. The board on Dec. 30 ordered the railroad to deliver five grain trains that Union Pacific said would arrive by Jan. 3.

“With the exception of one train, UP did not deliver the five trains on the schedule it represented to the Board and to Foster Farms,” the poultry producer said in a Jan. 4 letter.

© 2023 Bloomberg L.P.

7 ag stories you might have missed

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Did you miss some news this week? We’ve got you covered. Here’s a collection of the top headlines in agriculture.

Bullish WASDE report surprises markets

Grain prices faced a mixed reaction following the release of USDA’s latest World Agricultural Supply and Demand Estimates report on Thursday. Corn prices saw a modest improvement after the agency slashed production estimates by 200 million bushels. Soybean prices were also firm following a 69-million-bushel production reduction. Read the full report recap. – Farm Futures

John Deere signs right-to-repair agreement

The American Farm Bureau Federation announced a new memorandum of understanding with John Deere during the group’s annual convention. Under the agreement, John Deere will ensure that farmers have electronic access to its tools, specialty tools, software and documentation. Farmers and independent repair facilities will also be able to access and obtain those items on “fair and reasonable” terms. – Farm Industry News

Vilsack announces more funding for ag programs

Agriculture Secretary Tom Vilsack announced several new programs for farmers intended to keep their operations profitable. Funding includes 21 projects to increase fertilizer production, $12 million in grants under the Meat and Poultry Processing Program, additional disaster aid, and more. – Farm Progress

Planet Labs, NASA Harvest partner for food security

A new partnership will combine Planet’s satellite data with the analytics expertise of the NASA Harvest team to create a tool to anticipate and avoid food shortages and famines. The work was piloted in 2022 to monitor fields in Ukraine and assess the impact of war on crop production.

Rail delays stall crucial feed shipments

Foster Farms, which processes about 1 million chickens and 12,000 turkeys every day, says it’s had to pause some operations because of delays from Union Pacific Corp. Correspondence in December marked the second time in the past year Foster Farms asked the U.S. Surface Transportation Board to intervene directly because of Union Pacific’s failure to deliver animal-feed trains on time. – Bloomberg

Alphabet launches ag ‘moonshot’ subsidiary

X, the moonshot factory, has graduated its ag innovation project, “Mineral,” as a subsidiary of Alphabet aimed at boosting global farm sustainability. Mineral’s analysis tools will be licensed to industry partners and used on everything from 10,000-acre row crop operations to half-acre smallholder farms. Learn more about the new technology for agriculture. – Farm Progress

2023 farm dog of the year

The winner of the 2023 Farm Bureau Farm Dog of the Year award is Tough, a border collie owned by Kansas Farm Bureau members Denny and Donna Ashcraft. The American Farm Bureau Federation, with support from Nestlé Purina PetCare, recognized Tough, four regional runners-up and a people’s choice pup at its convention in Puerto Rico. – American Farm Bureau

 

Farm Progress America, January 13, 2023

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Max Armstrong shares a look at different ways that grain gets moved from covered hopper cars to day, to box cars in the past. There is also the work by the DeLong Company in Wisconsin to put grain in shipping containers, a first for the industry. The days of using box cars to load grain may be over, thanks to those hoppers, but shipping containers are still used today to move product overseas.

Max Armstrong's Farm Progress America is a daily look at key issues in agriculture. It is produced and presented by Max Armstrong, veteran farm broadcaster and host of This Week in Agribusiness.

Photo: Litebox Productions/AgStock

Here’s how you can boost your farm’s success

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Farming isn’t easy, because as farmers know if it was more people would do it. But for those living the dream of farming, can’t do it alone. But how do you get a leg up on the challenges you face? Engaging the winter learning season at events that can help make a difference on your farm.

Mike Wilson, executive editor, Farm Futures, got an idea for an event more than 15 years ago focused on helping farmers keep getting better. The idea came from experts like Dr. David Kohl, who saw the need for a workshop environment where farmers could hear top speakers, but also interact in new ways to maintain a focus on lifelong learning. That’s the Farm Futures Summit, and a few years after it started, the Farm Futures Ag Finance Bootcamp was added. That one-day event is designed to fill a growing need for a deeper understanding of the financial forces at work in this business.

In this episode of Around Farm Progress, we dig into the meeting, what’s on tap for the 2023 edition and get some insight into why Mike Wilson accepts the challenge every year to put this event together. Give it a listen.

Related:Ukrainian farmers risk their lives to plant, harvest crops

If this is the first time you've listened to the podcast, please ‘like’ and ‘subscribe.’ If you want to use another podcast source you can listen (and subscribe) on Apple, Amazon Music and Spotify.

More podcasts and coverage

Beyond Around Farm Progress we've got more podcasts to share. Check out all our podcast links at FarmProgress.com/farm-progress-podcasts to keep up on not only Around Farm Progress but daily updates from Max Armstrong, and more.

And if you want quick access to top news from Farm Progress, sign up for our mobile text service by texting FARM to 20505. Note that there may be a text or data cost for using the service.

Farmers are getting their information in new ways. Farm Progress is a leader in reaching them as needed. From top magazines around the country to one of the first agriculture-focused mobile apps from Farm Futures, to the leading television presence with This Week in Agribusiness, the company covers all media for agriculture.

Comments or questions? Just send a note to willie.vogt@farmprogress.com.

Midwest Digest, Jan. 13, 2022

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EF1 tornados touched down in Illinois and Kentucky.

Grains continue to climb after the USDA report releases yesterday.

Balancing hours in the day and priorities is a tough task for farmers, and Max will moderate a panel about it at Farm Futures Summit next week. Learn more about FFSummit 23: www.farmfuturessummit.com.

It's Friday the 13th, and the superstition dates back to Jesus' death.


FFA Tribute: Mackenna Clifton

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The FFA Tribute goes to Mackenna Clifton, National FFA Southern Region vice president. 

Mackenna represents southern states and joined FFA because it felt like home and offered an opportunity for leadership. She’s spent time educating the public about ag, as well as working on Discover Ag Day, an event for elementary students in her county. 

 

The weekly FFA Chapter Tribute is an opportunity to shine a spotlight on the good work of your local chapter. Tell us about what you're doing, give us some history from your group and tell our viewers of the work you do in the community. FFA chapters across the country deserve recognition for the work they do, make sure we include yours. 

To have your chapter considered for this weekly feature, send along information about your group by e-mail to Max Armstrong at max@agbizweek.com. They'll get your group on the list of those that will be covered in the future. It's a chance to share your story beyond the local community. Drop Orion or Max a "line" soon. 

The National FFA Organization, formerly known as Future Farmers of America, is a national youth organization of about 650,000 student members as part of 7,757 local FFA chapters. The National FFA Organization remains committed to the individual student, providing a path to achievement in premier leadership, personal growth and career success through agricultural education. For more, visit the National FFA Organization online www.ffa.org, on Facebook at facebook.com/nationalffa, on Twitter at twitter.com/nationalffa

This Week in Agribusiness, Jan. 14, 2023

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Farmers across the country were in Puerto Rico for the American Farm Bureau Association annual meeting, and Mike shares highlights. 

Mike is joined by Dr. Matt Roberts, senior grain and oilseed analyst, Terrain, to talk markets, including USDA reports; South American estimates; wheat acreage and conditions; and soybean cuts, exports and prospects. 

In the ag tech segment, Chad Colby shares more finds from CES, from John Deere tech, wearable tech and several robots. 

Ray Brownfield, Land Pro LLC, joins Max at the desk to talk about the impact of interest rates on assets and farmland, as well as risk and farmland quality. 

Mike talks with Ron Hays, Radio Oklahoma Network, to talk about the recent Cattlemen’s Congress, industry economics, herd liquidation and producer sentiment. 

Willie Vogt, Farm Progress, joins the broadcast to visit with Max about the upcoming Farm Futures Summit

Greg Soulje is in with a weather forecast for the week, and an outlook. 

There’s a Silo Farmall in Max’s Tractor Shed. 

Mark Stock shares the lineup for BigIron Auctions. 

The FFA Tribute goes to Mackenna Clifton, National FFA Southern Region vice president. 

Mike shares the Farm Dog of the Year award from the American Farm Bureau. The winner this year is Tough and belongs to Denny and Donna Ashcraft in Kansas. 

 

This Week in Agribusiness features market news, ag technology, weather and farm management and equipment information and opinions. This leading ag news program airs weekly on RFD-TV, and can be found each week on FarmProgress.com.  





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