News Update
Jan. 30, 2009

TODAY on 4cattlemen.com …

Online coverage of the 2009 Cattle Industry Convention in Phoenix, Ariz., continues today, including the following summaries. Visit www.4cattlemen.com for other summaries, audio, photos and complete coverage provided by Angus Productions Inc. (API) and Biozyme.

South Carolina Angus Breeder Wins Environmental Stewardship Title

PHOENIX, Ariz. (Jan. 29, 2009) — Yon Family Farms of Ridge Spring, S.C., was named the national Environmental Stewardship Award Program (ESAP) winner during an award ceremony Thursday, Jan. 29, at the 2009 Cattle Industry Convention in Phoenix, Ariz. Seven regional winners were finalists for the prestigious award, which honors cattle producers for their commitment to conservation and stewardship on the land.

The award program is administered by the National Cattlemen’s Foundation and sponsored by Dow AgroSciences LLC, USDA’s Natural Resources Conservation Service (NRCS) and the U.S. Fish & Wildlife Service.

Established in 1996, the Yon operation is family-owned and operated by Kevin and Lydia Yon and their three children. The farm includes 1,500 acres of cropland, hay and pastureland for the family’s diversified Angus seedstock operation. The farm also earns income from the sale of seed and feed for livestock, freezer beef and sweet corn sales.

Partnering with USDA-NRCS and the Saluda Soil and Water Conservation District, the Yon’s have utilized technical and financial assistance to install practices and easement through the Environmental Quality Incentives Program (EQIP), Forestry Incentives Program (FIP), Conservation Security Program (CSP), and Grassland Reserve Program (GRP).

Through these programs the Yons have implemented no-till practices, rotational crop planting sequences, nutrient and pest management, and forage and soil sampling. Over the years, they have installed 28 water troughs, 55,352 feet of cross-fencing, and 34,616 square feet of heavy materials to protect from erosion. These efforts have allowed the operation to become economically sustainable and environmentally friendly.

Lydia Yon stated that they recognize the need to take care of the soil in order to produce quality grass — and ultimately quality beef.

Yon Family Farms is also passionate about informing and educating others about conservation and the beef industry. They regularly host producer tours, educational studies, conservation programs and internship programs.

The other regional award winners recognized for their commitment to conservation included:

• Sennett Cattle Co, Waynetown, Indiana
  
• Guge Family Farm, Estherville, Iowa
  
• Bradley 3 Ranch, Memphis, Texas
  
• Veseth Cattle Co, Malta, Montana 
  
• Babacomari Ranch, Sonoita, Arizona
  
• Hovde Ranch, Alexander, North Dakota

The 19th Annual Environmental Stewardship Award officially has opened its nomination season for 2009, with an entry deadline of Feb. 25, 2009. Nominations can be submitted by any organization, group, or individual on behalf of a U.S. cattle producer. Go online to download a nomination packet or contact the National Cattlemen’s Foundation to request a copy of the application at 303-694-0305.

– by Kindra Gordon

Association Structure Discussed in Leadership Forum

PHOENIX, Ariz. (Jan. 29, 2009) — Potential changes to the National Cattlemen’s Beef Association (NCBA) governance structure were discussed during the 2009 Cattle Industry Convention in Phoenix, Ariz. A year ago, NCBA members shared concerns related to the association structure with members of a Governance Task Force co-chaired by past presidents Jan Lyons and John Queen. Presented at this year’s Leadership Forum were results of an analysis of NCBA structure by a professional consulting firm.

OPIS LLC, which specializes in association management issues, was engaged to assist the task force with identifying shortcomings of the current association structure and developing solutions.

According to Michael Gallery of OPIS, the current NCBA structure is cumbersome and may even perpetuate divisiveness among the membership. Gallery referred specifically to the separatist nature of association’s Policy Division, which deals with legislative issues, and Federation of State Beef Councils, which develops and implements beef promotion programs funded by beef checkoff funds provided by the Cattlemen’s Beef Promotion and Research Board.

Originally, the purpose of the two separate divisions was to maintain a “firewall” to ensure that lobbying efforts directed by the Policy Division were funded only through membership dues, while checkoff dollars were used only to fund programs for beef promotion and research. Legislation that authorized the mandatory dollar-a-head checkoff prohibits use of collections for lobbying efforts.

“We believe the current governance creates a firewall to communication,” Gallery stated. “We’re not suggesting you should relax the required separation of dollars, but there are other ways to do it than the way you are trying to do it now.”

OPIS will assist the Task Force in identifying specific problems with the current governance structure and development of solution alternatives. Pending approval by the NCBA Board of Directors, the Task Force will then propose a plan, including timelines, for implementing a new structure. The plan will be brought before the membership for final approval.

“The devil is in the details,” said Task Force co-chair Jan Lyons, of Manhattan, Kan. “We want and expect members to provide input to help direct this process.”

– by Troy Smith

Declining Supplies of Cattle and Beef

PHOENIX, Ariz. (Jan. 29, 2009) — The economic depression might be dampening America’s spirit, but cattle producers have cause to expect better market prices in the not-too-distant future. During the 2009 Cattle Industry Convention, a Cattle-Fax market analyst said declining cattle numbers and reduced beef production should contribute to a positive long-term price trend.

During his segment of the Cattle-Fax Outlook presentation, Kevin Good said, “In terms of supply, the signs are extremely bullish.”

Good said recent challenges to profitability have created the promise of improvement. With drought reducing carrying capacity in various parts of cow country, and the combined effect of rising input costs and lower calf prices during the last three years, cow-calf producers found themselves in a margin squeeze. In response, they have reduced total cow numbers.

“The total beef cow inventory is down 2% (more than 600,000 head). The decline might slow during 2009 but it’s still going down,” Good said, noting high levels of commercial cow slaughter and lower levels of replacement heifer retention.

The associated smaller calf crop and a predicted reduction in feeder-cattle imports means fewer calves and feeder cattle will be available for feedlot placement. Though it will be offset slightly by an expected increase in carcass weights, total beef production is predicted to decline by 450 million pounds (lb.). In 2009, declining U.S. beef production and growth in beef exports is forecast to outweigh a projected increase in beef imports, putting net beef supplies at 26.6 billion lb. — down by 600 million lb.

Production of competing meats is also declining. The forecast calls for 2009 pork production to drop by 2%, while poultry production dips by 2% to 3%.

In the long run, reduced meat supplies should have a positive effect on cattle prices. In the near term, Good said cattle feeders can expect continued pain, with some relief coming later in the year. He called the profit picture positive for stocker/backgrounder operations, with opportunity for marginal profits in the cow-calf sector.

– by Troy Smith

2009 CattleFax Outlook: Tough, Volatile and Hard to Come By

With a slowing economy and consumers keeping a closer eye on their spending, some of the dynamics in the beef industry are shifting in 2009. Cattlemen attending the annual CattleFax Outlook Seminar in Phoenix, Ariz., heard that cattlemen face softer beef demand to start 2009, but that could change if the financial markets begin to stabilize. CattleFax is a Denver, Colo., -based, market analysis and information firm.

As in previous years where market volatility was prevalent, risk management will be an important strategy this year. “Know basis,” says Randy Blach, executive vice president for CattleFax. “It needs to become second nature. We’ve got to learn to understand risk.”

Consumer are making more meals at home and eating out less at nicer restaurants. That has lowered the value of the higher-priced middle meats like the rib and loin. At the same time, the chuck and round are claiming a larger share of carcass value (21% vs. 19%) compared to a year ago.

Overall cattle supplies are expected to decline in 2009, following a 1.5% dip in 2008. Beef cow numbers have declined 600,000 head to 31.9 million in response to drought in some areas and marginal profitability elsewhere. Beef cow slaughter is projected to be at a liquidation pace in 2009. As a result, the calf crop for 2009 and 2010 is projected to shrink by 2%.

A decline in cattle inventory means a smaller beef supply, and that could bump beef imports to 2.7 billion pounds (lb.) for 2009, also encouraged by a stronger dollar that makes the U.S. market more attractive than it was a year ago. Supplies of competing meats also are projected to be lower in 2009, marking the first time in decades that all the major protein supplies have declined. This is happening partly as a result of higher feeding costs in the livestock industry.

Even with softening domestic demand for beef, worldwide demand for protein is increasing, says Brett Stuart, a CattleFax analyst specializing in exports. While the credit crunch will limit exports to some top markets, U.S. beef exports should post some growth, led by gains in the South Korean market as Mexico continues to be the No. 1 export destination for U.S. beef. For the year, CattleFax projects that beef exports will reach 2.3 billion lb. That figure taken with net imports represents an improvement in the beef trade gap as U.S. exports continue to rebuild from the 2003 BSE (bovine spongiform encephalopathy) incident.

Increased production costs for corn, estimated to be as much as 30% to 40% more than 2008, will affect planting decisions. The current crop is forecast at 12.5 billion bushels (bu.), and increased production is needed to meet ethanol demands, although that market is softening. U.S. and world stock levels remain historically low, which tends to support prices.

“You better have a disciplined approach to how you manage risk or you will not like the results,” Blach says.

During the last two years the average price of a bushel of corn has increased $2.70. CattleFax projects that the overall U.S. price for a bushel of corn in 2009 will be lower than 2008, $4.25 vs. $5.30.

“Economic conditions and credit availability, especially in foreign markets, are going to affect us a lot this year,” Blach says. “We’ll get through this and those who do a better job of managing their risk will get through a little better than the rest of us.”

2009 Price Projections:

• Calf prices – 550-pound (lb.) steer prices will average near $110 cwt.
  Watch this: Producers will need to monitor the basis environment the market is trading in at selling time.
• Feeder cattle prices – average near $100 cwt. 
  Watch this: Producers should monitor the basis levels of the feeder cattle and live cattle futures market. The record large premiums in the 2008 live cattle futures likely will not repeat in 2009.
• Fed cattle prices – in the low $90s
  

Watch this: After posting tough losses in 2008, some profitability could come back to this sector. The key to the market will be the margin above cattle feeders.

For information about CattleFax services, call 303-694-0323.

— Release provided by CattleFax.

TB Buyout Program Ends

Producers participating in the state’s bovine tuberculosis (TB) buyout program loaded the last of their animals today, marking the completion of a nearly year long effort to reduce cattle numbers in the bovine TB Management Zone. The Minnesota Board of Animal Health received 46 herd buyout contracts from area producers, who agreed to remove or slaughter approximately 6,200 head of cattle by Jan. 31, 2009.

Additional information is available by visiting the Bovine TB website at www.mntbfree.com or by calling the Bovine TB Hotline at 1-877-MN TB FREE (668-2373).

Pork Producers Sue EPA

The National Pork Producers Council (NPPC) said Jan. 19 that it has sued the Environmental Protection Agency (EPA) for requiring that livestock farms inform communities about estimated emissions, according to The Associated Press (AP).

The rule mandates that livestock producers inform emergency response authorities of estimated air emissions, then file written reports of those estimates. Failure to comply can result in penalties of up to $25,000 per day, the article notes.

The lawsuit was filed through an after-hours system in the U.S. Court of Appeals for the District of Columbia Circuit, an NPPC official said.

According AP, pork producers are challenging EPA’s decision to exclude livestock operations from an agriculture exemption under the Emergency Planning and Community Right To Know Act.

The NPPC also alleges that the rule violates farmers' due process rights because the EPA failed to develop an adequate system to accept the reports, “making compliance with the law impossible.” It asks the federal court to enjoin the agency from enforcing the rule until it develops a proper compliance system.

The NPPC says the EPA did not issue guidance for complying with the rule by Jan. 16 — the last business day before the new law takes effect. The organization also accuses the federal agency of telling state officials not to accept reports and claims the agency “provided on its website false and out-of-date information on filing reports.”

NPPC President Bryan Black, a pork producer from Canal Winchester, Ohio, called it “an unworkable rule” for the county’s 67,000 pork producers and hundreds of thousands of other livestock farmers.

“(The) EPA not only failed to provide any guidance to farmers on compliance with the new regulation or develop an adequate system to handle the volume of reports that would be filed, but it actively engaged in efforts that undermined the ability of farmers to comply with this new, stringent rule," he said in a statement.

George Pettus, who oversees environmental compliance at some hog-producing facilities in North Carolina and Indiana, said he started trying to comply with the new law last week, but found incorrect contacts for state officials and misinformation on the EPA website.

“There was no way to fulfill the obligation that we were under,” he said during a telephone interview from Goldsboro, N.C., on Jan. 19. He added that EPA officials who could help were out of the office for the weekend and the federal holiday.

“It was extremely frustrating,” he said.

KFMA Services Available to All Kansas Farmers, Ranchers

A roller-coaster economy, plus volatile commodity, fuel and fertilizer markets are making business planning for agricultural producers especially difficult. Help for Kansas farmers and ranchers is available in the form of membership in the Kansas Farm Management Association (KFMA), based in Kansas State University’s (K-State’s) Department of Agricultural Economics.

Each KFMA member has an assigned agricultural economist who works with his or her business to develop a sound accounting system and other activities critical for the long-term growth of any operation, said Kevin Herbel, KFMA administrator.

“We specialize in profitability analysis and planning and in income tax planning and preparation — all in one shop,” Herbel said. The association also maintains a database with facts from more than 1,500 farms across the state — while maintaining the strictest anonymity for all, he said. This allows each member to see how well his or her business is performing, when compared with similar operations.

“Included in each farm’s analysis are the three- and five-year trends of the individual member’s business information,” Herbel said. “Producers can see if their operation is really progressing over time. The trends also help members identify strengths and weaknesses in their businesses for longer-term planning.”

The association offers four visits a year with their KFMA agricultural economist; proven accounting systems; whole-farm and enterprise accrual-basis analyses; financial benchmarks for comparing performance with similar farms; year-end tax planning, marketing and asset investment strategies; assistance with estate planning; guidance for business entity and structure planning; and a monthly newsletter.

More information about membership in the KFMA program is available at www.agmanager.info/kfma.

— Release provided by K-State Research and Extension

— compiled by Crystal Albers, associate editor, Angus Productions Inc.