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Positive Ag Trends for 2016

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Albany, GA (Growing America, April 12, 2016):  It's spring, the season of renewal and hope, but it feels like the news in agriculture circles lately has been anything but hopeful. With commodity prices tanking and leading to massive crop surpluses, we were still able to find some good news to report that should leave you feeling a little more in control of your destiny this year.

A recent post from The Agricultural Economic Insights' Blog (David Widmar and Brent Gloy) detailed a nice crop of positive trends for 2016. Not just gut feelings; these silver linings are based on facts and figures. We've highlighted the key words to help you identify which areas have good news to report.

One you may have already noticed is a lowering of fertilizer prices, a pleasant surprise for 2016 crop budgets. Widmar and Gloy cited the largest price reduction seen was for potassium (potash), with last month's price tag actually 25% lower than the same time last year. The same goes for nitrogen (20% lower depending on the source), and phosphate prices, which have adjusted down by more than 15%.

As an example of what growers are keeping in their pocket, the blog noted a savings for corn production of around $32 per acre for a fertilizer mix of 175-70-70. Expect that and more in the coming months.

Also trending toward the positive side—farm fuel prices. Since 2014, they've fallen 50%, and in a recent check, were holding at their lowest levels since 2010. While farm fuel may not be high on everyone's list of things worth cheering about, especially if you're a no-till operation, many growers still use diesel fuel for irrigation or crop drying.

Record Growth in US Organic Products

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Washington, DC (US Department of Agriculture, April 6, 2016):  The U.S. Department of Agriculture this week announced a significant increase in the number of certified organic operations, continuing the trend of double digit growth in the organic sector. According to new data released Monday, there are now 21,781 certified organic operations in the United States and 31,160 around the world.

"Organic food is one of the fasting growing segments of American agriculture," said Agriculture Secretary Tom Vilsack. "As consumer demand for organic products continues to grow, the USDA organic seal has become a leading global standard. The increasing number of organic operations shows that USDA's strong support for the vibrant organic sector is helping to create jobs and opportunities in rural communities."

According to data released by the Agricultural Marketing Service's (AMS) National Organic Program (NOP), the number of domestic certified organic operations increased by almost 12 percent between 2014 and 2015, representing the highest growth rate since 2008 and an increase of nearly 300 percent since the count began in 2002. The total retail market for organic products is now valued at more than $39 billion in the United States and over $75 billion worldwide.

Along with consumer demand for organics, increasingly they are asking for local foods. Under Secretary Vilsack, USDA has supported providing consumers a stronger connection to their food with more than $1 billion in investments to over 40,000 local and regional food businesses and infrastructure projects since between 2009. Industry data estimates that U.S. local food sales totaled at least $12 billion in 2014, up from $5 billion in 2008. More information on how USDA investments are connecting producers with consumers and expanding rural economic opportunities is available in Chapter IV of USDA Results on Medium published Monday.

USDA has strengthened programs that support organic operations over the past seven years, helping to make organic certification more accessible, attainable, and affordable through a "Sound and Sensible" approach. This initiative includes streamlining the certification process, focusing on enforcement and working with farmers and processors to correct small issues before they become larger ones.

USDA has also established a number of resources to help organics producers find technical and financial resources to help them grow domestically and abroad. The site www.usda.gov/organic creates a one-stop-shop for operators, and USDA has made market and pricing information for approximately 250 organic products available free of charge through USDA's Market News. In 2015, USDA made more than $11.5 million available to assist organic operations with their certification costs.

The NOP maintains the list of organic operations and leads activities that support organic integrity and market growth. In addition, USDA helps organic stakeholders access programs that support conservation, provide access to loans and grants, fund organic research and education, and mitigate threats from pests and diseases. USDA also administers organic certification cost-share programs that offset the costs of organic certification for U.S. producers and handlers.

The data announced Monday are publicly available as part of the recently launched Organic Integrity Database, a modernized system for tracking certified organic operations. In the past, USDA published an updated list of certified organic operations once each year. With the new database, made possible by the 2014 Farm Bill, organic certifiers can add new operations and report changes to existing operations at any time, allowing USDA to report updated counts of certified organic operations throughout the year. The modernized system will provide data for market research, enable stakeholders to identify market opportunities and make supply chain connections, support international verification of operator status to facilitate trade, and establish technology connections with certifiers to share more accurate and timely data.

Animal Ag Continues to Add Meat

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St. Louis, MO (United Soybean Board, March 29, 2016):  The animals that feed us are also feeding our economy, according to a new soy-checkoff-funded study. The analysis shows animal ag increased gross national product by $123 billion in economic output, improved household earnings by over $21 billion and added 645,629 jobs from 2004-2014.

According to the Economic Analysis of Animal Agriculture, during 2014 alone, U.S. animal agriculture's support of the national economy included:

  • $440.7 billion in economic output
  • 2,363,477 jobs
  • $76.7 billion in earnings
  • $19.6 billion in income taxes

Those figures all increased from 2013. Visit http://unitedsoybean.org/article/animal-ag-continues-to-add-meat-to-national-economy/ to read entire article.

Planting More Corn Despite Plenty

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New York (Bloomsburg Reports, April 6, 2016):  Illinois farmer David Erickson admits that what he and many U.S. farmers are about to do doesn't seem to make much sense. With bulging stockpiles of corn and soybeans left over from last year's harvest, they're planting more in 2016 -- even though the crops probably won't be profitable.

"It's hard to get your head around the idea of doing something that you know will lose money, but I don't have much choice," said Erickson, who plans to sow 1,740 acres of soybeans on his farm near Galesburg, up from 1,590 last year. He can't afford to leave land fallow and needs revenue to pay bills.

After record prices in 2012 sparked a boom in output, corn and soybeans in the Midwest now fetch less than the cost to produce them, and U.S. farm income is headed for a 14-year low. While the market has improved in recent months, researcher AgResource Co. still estimates a $50 loss for every acre sown on average. As they seed more, growers have cut spending and hope better-than-normal yields will help them at least break even.

Increase Farm Equipment in 2017

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Albany, GA (Growing American, April 6, 2016):  Commodity prices are expected to stabilize over the next 5 years to near break-even levels, according to a report just released by Rabobank.

The report, prepared by analysts, Kenneth Zuckerberg and Sterling Liddell, predicts large crop growers will be conserving cash and reducing spending on fertilizer, chemical, and seed.

Also expected to slow down to a trickle are farm equipment purchases. This has farm equipment manufacturers and other suppliers pondering ways to deliver more value to increasingly cost-conscious customers.

The stabilization of commodity prices may also force smaller farmers to merge in order to cut input costs over the next few years.

Input costs are generally set before planting begins, so they typically lag behind commodity price changes. That said, with commodity prices stabilizing, input costs will likely level out over the next few years.

A leveling out in 2016

So what is causing commodity prices to even out?

3 Mega Trends in Packaged Food

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Rockville, MD (Packaged Facts, March 31, 2016): For the U.S. retail food sector, the children aren't just the future, they are very much the present. Parents may earn the money to make necessary household purchases, but more often than not when it comes to grocery shopping parents acquiesce to the demands and preferences of their children. Whether its brand of cereal, candy, soda, and anything beyond or in between, it's clear that kids as much as word of mouth from other parents, advertisements, or the internet influence consumer awareness of food and beverage products. In fact, more than a quarter of parents (26%) learn about a new product as a request from their child, according to market research publisher Packaged Facts in the brand-new report, Kids Food and Beverage Market in the U.S., 8th Edition.

Kids age six and older are a particularly important demographic to marketers. Life-long dietary habits are established during this time period and brand loyalty begins. This suggests industry players should focus on product development designed to capture younger kids and gain allegiance from parents earlier to keep them involved with the brand throughout childhood and beyond.

"It's the circle of retail life. Child demands product, parent learns about product through child, household begins using product, child ideally grows up to encourage his or her own household to use said product—at least until their own kids start making requests," says David Sprinkle, research director, Packaged Facts.

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