News Update
March 31, 2011

Several Factors Should Play Role in Pasture Rental Rates

For those who have not yet negotiated pasture rental rates for this year, Kansas State University (K-State) agricultural economist Kevin Dhuyvetter reminds that there are several factors that landowners and livestock producers should consider as they negotiate rates.

Numerous factors influence the rental rate for any tract of land, such as forage quality, stocking rate, size of pasture, water availability and more, but there are three primary factors that explain much of the variability in average rental rates over time, said Dhuyvetter, who is a farm management specialist with K-State Research and Extension.

“First, rates trend up over time and so are expected to increase from year to year, all else being equal,” he said. “Second, rates are positively related to cattle prices. For example, rental rates tend to increase more when cattle prices are high compared to when cattle prices are low. Third, rental rates are positively related to corn prices, suggesting that producers will pay more to rent grass when feed prices are high.”

Dhuyvetter and a team of economists built those relationships into a tool that can help pasture owners and livestock producers as they negotiate rental agreements. The tool and related resources can be found online at http://www.agmanager.info/farmmgt/land/lease/.

The tool might prove especially handy now that Kansas Agricultural Statistics is no longer publishing Bluestem Pasture Release because of budget issues, the agricultural economist said.

When it comes to this year, Dhuyvetter noted that while rates will vary depending on cattle type and grazing program, various factors generally suggest an increase in rental rates of 6%-10% from last year’s rates.

“The percentage change for the previous 30 years has averaged roughly 1.5% to 2% per year, so this suggests pasture rates in 2011 are expected to increase more than average due to this year’s historically high cattle and corn prices,” Dhuyvetter said. “It is important for landowners to recognize that while the current economic conditions (high corn and cattle prices) reflect conditions that suggest pasture rental rates likely will increase more than average, rates also may need to decrease if and when conditions go the other direction.”

If cattle or feed prices change significantly in the next month or two, producers and landowners may want to plug those values into the model to see how the changed values impact projected rental rates, he said.

— Release by K-State Research & Extension.

USDA Predicts 5% Increase in Planted Corn Acres for 2011

Today’s Prospective Plantings report released by the U.S. Department of Agriculture (USDA) shows an increase in corn acres, the National Corn Growers Association (NCGA) said. The report, based on a survey of actual farmer intentions in March, states farmers intend to plant 92.2 million corn acres in 2011. This is a 5% increase from 2010 and up 7% from 2009. If realized, it will be the second-highest corn planting in the United States since 1944. This is just behind the 93.5 million acres planted in 2007.

“Even after a difficult growing season last year, farmers produced the third-largest crop, and it initially shows they will produce another record crop this year,” NCGA President Bart Schott said. “This report shows that the innovative American farmer understands the increasing global demands of corn for food, feed, fuel and fiber and that they see the importance of meeting those needs.”

The USDA’s estimate for 2011 is for 92.2 million acres to be planted in field corn. Assuming a 91.7% harvest rate and the USDA’s projected yield of 162 bushels (bu.) per acre, farmers will grow 13.7 billion bu. on 84.5 million harvested acres. 

Acreage increases of 250,000 or more are expected in Iowa, Kansas, Nebraska, North Dakota, Ohio and South Dakota. The largest decrease is expected in Texas, down 150,000 acres, which saw a 10% increase in cotton acreage. The actual number of planted acres will be released in USDA’s June 30 report.

In the Grain Stocks report, also released this morning, USDA shows corn stocks in all positions stood at 6.52 billion bu. The slight drop likely reflects stronger-than-anticipated demand from livestock. In total, USDA shows 3.534 billion bu. of disappearance between December and February. Ethanol production through the first three months of the year has remained relatively steady at 900,000 barrels per day, or 13.78 billion gallons annualized. USDA will adjust usage projections in the April 8 WASDE report.

In the report, USDA also estimated:

• Soybean producers intend to plant 76.6 million acres, down 1% from last year.
• Wheat planted intentions are estimated at 58.0 million acres, up 8% from 2010.
• Cotton plantings for 2011 are expected to total 12.6 million acres, 15% above last year.

— Release by NCGA.

GIPSA Cases Resolved

The USDA Grain Inspection, Packers and Stockyards Administration (GIPSA) enforcement rules provide a mechanism to quickly resolve violations of the Packers and Stockyards (P&S) Act.

• On March 15, 2011, the USDA-GIPSA issued a default decision against Apna Bazaar International Inc. (Apna), doing business as Ali Meat Industries, Orlando, Fla. Apna has been ordered to cease and desist from failing to pay, when due, the full purchase price for livestock purchases. Apna has also been assessed a civil penalty in the amount of $10,000.
  GIPSA may offer an alleged violator the option of waiving their right to a hearing and entering into a stipulation agreement to quickly resolve alleged violations.
• Kyle Hendricks and O.G. Hendricks, doing business as Hendricks Livestock, Buffalo, Mo., waived their right to a hearing, entered into a stipulation agreement, and paid a civil penalty of $6,500 after GIPSA found that they failed to comply with the registration and bonding requirements under the P&S Act.
• Tyler D. Gillum, Plainville Livestock Commission Inc., Plainville, Kan., waived his right to a hearing, entered into a stipulation agreement, and paid a civil penalty of $3,000 after GIPSA found that he had custodial account shortages and had misused his custodial account.

The P&S Act is a fair trade practice and payment protection law that promotes fair and competitive marketing environments for the livestock, meat and poultry industries.

— Release by GIPSA.

— Compiled by Shauna Rose Hermel, editor, Angus Productions Inc.