Michigan Farm News 1-=1 January 30, 1993 Vol. 70, No.2 ~ Overall Economic AFBF Convention Delegates Oppose Tax Increases I Outlook for 1993 Delegates to the American Farm Bureau . Lester V. Manderscheid, MSU Ag. Econ Dept. Federation's 74th annual meeting in Ana- ) Officially, the 1990-91 recession ended in the heim, Calif., approved policies calling for spring of 1991. Economic recovery has been growth-oriented economic measures that very slow, much slower than is typical of recov- reject tax increases, the adoption of the ery periods. The University of Michigan survey, North American Free Trade Agreement of consumer attitudes found confidence in eco- nomic policy at an all-time low in rnid-1992. with "transitional safeguards" for sensitive agricultural commodities, and protection A new administration brings uncertainty con- for private property rights in the enforce- cerning economic policy. Investments in equip- ment of environmental laws. ment may be postponed until there is a clear sig- nal on legislation concerning investment tax Asserting that the nation's economy is their credit. However, consumer spending increased overriding concern, the farmer delegates in December, indicating a rebound in consumer approved recommendations to be sent to confidence in the future of the economy. President Clinton. "The delegates had a I The economy currently is not under major stresses. Unemployment is still above 7 percent, which means that workers are available to in- crease output. Inventories are relatively low, and • credit is generally available. Economic growth in 1993 is expected to be 3 percent after correct- long discussion about the growing federal deficit and national debt, and debated at some length whether tax increases should be used to reduce the deficit," said Al Almy, director of public affairs for Michi- gan Farm Bureau. "When the debate ended, Above, MFB President Jack Laurie introduces a policy amendment that called for a balanced federal budget achieved through spending restraints and spending l ing for inflation. Business firms will use low in- cutbacks, without tax increases. After considerable discussion, the Michigan the delegates adopted a very clear policy terest rates and investment tax credit to modern- amendment won approval by the 250 voting delegates. that calls for a balanced federal budget ize equipment and improve productivity. achieved through spending restraints and debt. I think one of the real concerns of the Turning to international trade, the dele- Michigan will continue to experience the impact spending cutbacks. They opposed all tax delegates that led them to oppose tax in- gates endorsed NAFT A as signed by Pres- of plant closings in the auto industry. The good increases, and reaffirmed this as a top pri- creases is the fact that Congress and the ident Bush. They said the implementing news is that the average age of automobiles and ority for Farm Bureau in the coming year" federal government have a very dismal re- legislation that Congress will begin writing light trucks in the U. S. is eight years compared (see ~elated remarks in '''president's col- cord when it comes to using tax increases soon ~hould include temporary safeguards to six years in about 1970. Some 20 percent of umn. ). to actually reduce the deficit and national for commodities that will be hurt by im- ~ the fleet is over 12 years of age. Increased auto debt. Instead, the increased revenue from sales could help blunt the effect of plant clos- ports from Mexi~o. AFBF President Dean Almy said that Farm Bureau's policy stand previous tax increases has been used to Kleckner said the delegates expressed ings. However, Michigan's unemployment will against tax increases will be very important remain above the national rate throughout 1993. finance new programs and more spending. " "overwhelming" support for NAFf A and in the 1993 budget debate. "We believe "strong" support for the ongoing world in this issue.... there will be many efforts by members of The Farm Bureau policies also include re- trade negotiations. MSU Ag.' Econ. Outlook Congress, some members of the new ad- instatement of capital gains treatment and ministration and by outside private interest the investment tax credit, which Clinton has In several policy statements, the delegates Fruits page 4 groups who will be opposed to any cut- called for; a line- item veto for the president; expressed their concern that private prop- Hogs & Cattle page 5 backs or restraint on federal spending," he and a constitutional amendment requiring a said. "They will suggest tax increases as a balanced federal budget. See "AFBF Annual" Eggs & Poultry page 5 way of reducing the deficit and national continued on page 3 Wheat & Feedgrains page 6 Farm Land Values page 8 MSU Extension Special Radio Broadcast Feb. 6 to Management Tips page 9 Focus on Michigan's Corn Problem and Alternatives Production Inputs page 9 Coping with Michigan's com problem The number farmers should call be- Representatives from Michigan Farm Bu- Income Prospects page 10 will be the focus of a special broadcast at 8 tween 8 a.m. and 9 p.m. is: reau, the Soil Conservation Service, Agri- a.m. to 9 a.m., Feb. 6, on 12 Michigan radio (517) 355-0117. cultural Stabilization and Conservation Ag Credit Availability page 11 stations. No collect calls will be taken. If the number Service and Michigan Department of Agri- Sugar Outlook page 1,1 indicates busy, farmers are encouraged to culture will also be available to answer The program will be heard live on the fol- redial. The phone line can handle up to five questions during the program. PolicyfTrade Issues page 12 lowing stations: callers at any given time. Dairy Price Prospects page 16 WTGV (97.7 FM) Sandusky A cassette copy ofthe broadcast will be sent WKYO (1360 AM) Caro The broadcast will feature Extension spe- to all local county MSU Extension offices Special thanks to MSU's Ag. Econ. De- WMLM (1540 AM) St. Louis cialists in animal science, agronomy, ento- and to Michigan Farm Bureau's 69 county partment staff and coordinator Jim Hilker W JIM (1240 AM) Lansing mology, plant pathology, agricultural eco- Farm Bureau offices by Feb. 9. WBCH (1220 AM) Hastings nomics and agricultural engineering. WPZA (1050 AM) Ann Arbor WDOW (1140 AM) Dowagiac An all too familiar part of Michigan's winter scenery, the 1992 corn harvest was WLKM (1510 AM) Three Rivers reported as only 75 percent complete as of mid-January. WTVB (1590 AM) Coldwater WCSR (1340 AM) Hillsdale W ABJ (1490 AM) .Adrian WLEW (1340 AM) in Bad Axe will tape delay the program by one hour. That broad- cast will be from 9 a.m. to 10 a.m. The broadcast, to be moderated by the Michigan Farm Radio Network, is being paid for by the Michigan State University Cooperative Extension Service. Originating from MSU's Agriculture Hall, the program is intended to answer questions farmers have about harvesting, marketing, handling and feeding corn. Farmers can call in during the show to pose questions to a panel of resource people. Michigan Corn Information Exchange - Page 15 Michigan Farm News Classifieds - Page 14 Michigan Farm News rs January 30,1993 a Holding Back the Tax In Brief... USDA Responds to MFB Corn Disaster Request • Michigan Farm Bureau had asked USDA to allow grade standards to be included in the eligibility requirements used to qualify Michigan corn producers for disaster assistance. MFB had stated in a letter to USDA that if grade standards were used to determine Increase Tidal eligibility, producers who are suffering devastating ecnomic losses due to extremely poor quality corn could qualify for assistance. What follows is the repsonse from USDA. Wave Mr. Laurie: Many thanks for your letter regarding administration of the disaster provisions of the Food, Agriculture, Conservation, and Trade Act of 1990 as amended. Sec- tion 2245 of the 1990 Act provides discretionary authority for making additional di- The nearly 150 Michigan Farm Bureau members at the American Farm Bureau Federation saster payments to producers who suffer losses resulting from the reduced quality annual meeting Jan. 10-14 in Anaheim searched in vain for sunshine during one of the of their crops which was caused by damaging weather or related conditions. Much rainiest weeks in southern California history. There's no doubt that the downpour was consideration was given to section 2245 of the 1990 Act. However, because of concerns regarding potential costs and subjective eligibility criteria, it was deter- welcomed by California agriculture, which has suffered through several years of severe mined that the crop quality reduction payments provision in section 2245 would drought. But the rain fell so fast and furious that much of it went to waste. The saturated not be implemented. ground could not soak up all the water and the reservoirs were filled to overflowing so, Producers are eligible for assistance in accordance with the 1990 Act with unfortunately, a good portion of the moisture drained away into the ocean. respect to unharvested corn if their loss is in excess of 40 percent (35 percent for producers who had obtained crop insurance coverage) of the farm program pay- Just as California farmers have been waiting and hoping for rain, various special interest ment yield established for the farm. County Agricultural Stabilization and Conser- groups around the nation have been anticipating a downpour of government spending from vation committees are not authorized to consider quality when assigning yields in the new Clinton administration. Farmers, to their credit, make productive use of rainfall. But these cases. special interests, I fear, are looking forward to soaking Uncle Sam for their pet projects without Sincerely, much benefit to the rest of us. Robert Randall Green, Acting Under Secretary for Commodity Programs MFB continues to seek out other regulatory and legislative alternatives to address disaster The issue of government spending and taxation generated a very spirited debate during the assistance for Michigan farmers hard hit by the immature corn crop. AFBF resolutions session. For several years, AFBFpolicy has consistently called for cuts in spending, rather than an increase in taxes, as a way to bring the federal deficit under control. But this year's proposed AFBF policy, in the views of our Michigan delegates, would have USDA to Permit Planting of 1993 Crop Soybeans on watered-down this "no new taxes" philosophy. So our farmers argued vigorously in support Optional Flexible Acres of the Michigan Farm Bureau national policy recommendation, approved at our state annual meeting, that calls for a continuation of AFBF's traditional opposition to tax increases. Former, Secretary of Agriculture Edward Madigan announced that soybeans may be planted on optional flexible acreage as allowed by the 1993 price support and production I'm proud to report that the efforts of your Michigan delegates were successful, and 1993 adjustment programs. Producers may plant designated crops on acreage, known as "flexi- AFBF policy stands firmly against tax hikes. This policy will be critically important as we begin ble" acreage, that does not exceed 25 percent of each crop acreage base enrolled in these the new Clinton administration. Already, there has been widespread publicity about the programs, and the crops planted can be credited as "considered planted" to the program projected size of the federal deficit. Administration appointees have been widely quoted crop. The first 15 percent is called "normal flexible acreage" and the other 10 percent is about the need for a gasoline tax hike, a consumption tax or some other kind of revenue called "optional flexible acreage". enhancement as the only "realistic" way to reduce the deficit. Deficiency payments won't be made to optional flexible acreage planted to a crop other But, in fact, as Farm Bureau has pointed out time and time again, the reason we have a than the crop for which acreage base has been established. However, producers who plant deficit is not too little revenue - it's too much spending! Over the past decade, federal tax program crops or oilseeds on optional flexible acres may receive price support. The receipts as a percentage of Gross Domestic Product have remained stable, while federal secretary is required to prohibit the planting of soybeans on optional flexible acres if on expenditures have soared. Jan. 1 the estimated price of 1993 - crop soybeans was below 105 percent of the 1993 loan rate. On Nov. 16 the national average price support loan level of $5.02 per bushel was The tax hikes signed into law in 1990 by President Bush did not cut the deficit, and tax hikes announced for the 1993 crop of soybeans. Since the price of soybeans is projected to be being proposed for President Clinton's term of office won't cut the deficit either. There's no greater than $5.27 a bushel (105-percent of the price support loan rate), soybeans may be doubt that the deficit must be brought under control. But the solution lies in controlling planted on optional flexible acres, Madigan said. spending and promoting economic growth, not burdening us with more taxes. Farmers need to take the time to remind the new Clinton adminstration and Congress that Michigan December Farm Prices Higher raising taxes and sending more money to our nation's capitol will simply be a repeat of what has already been proven to be ineffective at reducing our deficit and balancing the budget. The Index of Price Received by Farmers in Michigan for all products, as of Dec. 15, was 131 percent of its 1977 base, according to the Michigan Agricultural Statistics Service. The December index is 1 percent over the November index of 130 percent, and 6 percent over December 1991's level of 124. M iCUUA^/ U Jack Laurie, President Michigan Farm Bureau The price index for all crops in Michigan rose 2 percent from its November level. Feed grains led the increase with hay prices rising 6 percent from last month. Potatoes, soybeans, and winter wheat prices all rose 1 percent while corn prices fell 1 percent from November. Dry beans and sugar beet prices were virtually unchanged. Is This Your Last Issue of the Michigan Farm News? The livestock products index fell 1 percent from November. The decline was led by egg It could be if your Michigan Farm Bureau membership dues have not yet been renewed. and milk prices, which dropped 8 and 2 percent respectively. Meat animals partially offset According to MFB Member Services Department Manager, Doug Fleming, just over 6,600 the fall by rising 3 percent from last month. Calves rose 10 percent, while hogs rose 5 out of 45,450 regular (farm) members, had not renewed their dues as of presstime. Effective percent from a month ago. Feb. 15, all unpaid members will no longer receive the Michigan Farm News until their membership dues are current. Fleming reported that nearly 38,400 regular members and Michigan Wheat Seedings Down another 47,000 associate members had renewed their dues thus far. A total of 9,525 new members have been written thus far, putting MFB's membership at 76.5 percent of goal Fall seedings of winter wheat in Michigan for harvest in 1993 were estimated at 600,000 (total membership), and at 85.34 percent of target (farmer membership). Be sure to watch acres, according to the Federal/State Michigan Agricultural Statistics Service. This is down your mail for a membership renewal notice if your dues haven't been paid, and checkout the member service ads in this issue to make sure you're getting the full benefit of your 8 percent from the previous year, but 5 percent above two years ago. The combination of a Farm Bureau membership. cool summer that delayed crops maturities, and a wet fall that hampered harvest of many crops, prevented some acres of winter wheat from being planted. About two thirds of the Michigan wheat acreage was planted by mid-October. Condition of the wheat crop as it headed into the winter season was about 55 percent good to excellent. Early planted wheat was in better condition than late planted wheat acreage. Rye seedings totaled 80,000 acres, down 17 percent from last year. This is the lowest seeded acreage since KJTroup Purchasing records of planted acres began in 1931. Nationally, fall seeded acreage for the 1993 winter wheat crop is estimated at 51.5 million acres, up 1 percent from 1992. 1992-93 EARLY WINTER STEEL SALE The MICHIGAN FARM NEWS (ISSN:0743-9962) is published semi-monthly except in the months of November. December, June, and Jury when only one issue is printed, as a service to regular members, by Michigan Farm High Quality Steel Replacement Parts Bureau. 7373 West Saginaw Highway. Lansing, Ml 48917. Member subscription price of $1.50 included in annual dues of Michigan Farm Bureau regular members. Additional subscription fees required for mailing Michigan Farm News to non-members and outside the continental U.S.A. Second-Class Postage paid at Lansing, Ml and Dependable Performance additional mailing offices. Letters to the editor and statewide news articles should be sent to: Editor, Michigan Farm News. P.O. Box 30960. Lansing, Ml 48909-8460. POSTMASTER: Send address changes to: Michigan Farm News, P.O. Box 30960, Lansing. Ml 48909-8460. Group Purchasing SAVINGS! - Sale Ends February 20 - •d* w Editorial: Dennis Rudat, Editor and Business Manager. Staff Contributors: Mike Rogers; Connie Turbin; Donna Wilber; Henry Huisjen. Officers: President, Jack Laurie, Cass City; Vice President, Wayne Wood, Marlette; Administrative Director, Chuck Burkett; Treasurer and Chief Financial Officer, Tom Parker; Secretary, William S. Wilkinson. Directors: District 1, Quality • Dependability • Savings Jim Miller, Coloma; District 2. Blaine VanSickle, Marshall; District 3, Diane Horning, Manchester; District 4, Tom Guthrie, Delton; District 5, Mark Smuts. Charlotte; District 6. Wayne Wood. Marlette; District 7, Larry Snider, Hart; District 8, Richard Leach, Saginaw; District 9, Joshua Wunsch, Traverse City; District 10, Margaret Kartes. West Contact Your County Office for Local Vendor Information or Branch; District 11, Robert Wahmhoff, Baraga. At-Large: Douglas Darling, Maybee; Jack Laurie, Cass City; Faye Adam, Snover; Jan Vosburg, Climax. Promotion and Education, Paul Swartzendruber, Pigeon; Young Farmers. Call 1-800-292-2680 ext 2015 Kurt Inman, Sturgis Michigan Farm News AFBF Annual Meeting Highlights Continued ... •• January 30, 1993 II .. suits and pursuit of innovations in MFB Young Farmers were represented well at the annual by James Wagner of erty nghts are under ass.ault from en~lron- medical care, such as individual medi- Cass County, who competed in the Distinguished Young Farmer competition. men~allaws and regulatIOns. They saId the cal savings accounts. Below, Robert Sollman (left) of Eaton County also represented Michigan well in the rewnte of the Clean Water Act should rely first three rounds of the Young Farmer Discussion Meet Contest. on voluntary actions by farmers, with in- 0 Oppose the introduction of wildlife centives from state and federal programs, that prey on livestock. to remedy problems with non-point source pollution (agricultural runoff). o provisions Support strong intellectual property • under the Plant Variety Pro- Delegates supported pollution permit trad- tection Act to allow farm producers to ing in the reauthorized Clean Water Act. retain seed for their own personal use. They said farmers should be compensated for restrictions resulting from Endangered D Support humane treatment of animals Species Act measures that put the burden of while opposing the elevation of ani- protecting plants and animals on landown- mals to the same status as people. ers. The package addressed estate tax issues, D Support production and use of agricul- tural-based fuels such as ethanol, bio- calling for eventual repeal of the federal mass fuels and bio-diesel. estate tax, with an interim increase in the exemption to $1 million from the present $600,000. Delegates opposed taxing capi- o Support exemptions from commercial dri ver' s license requirements for farm- tal gains at death. They also called for in- ers who transport pesticides and fertil- dexing of capital gains to negate inflation's izers on farm vehicles. impact. In addi tion to setting the organization's pol- AFBF President Dean Kleckner said, in a icy for the year, delegates re-elected MFB post-convention news conference, "With a President Jack Laurie to the AFBF Board of new administration and a Congress that is Directors. one-quarter new, we have the opportunity to present our ideas on economic policy". Kleckner also stressed the delegates' sense that they are facing "regulatory overkill." President-elect Clinton, he said, "must ad- dress the issue of over-regulation. If not, his Come to the National Farm Machinery Show and plan for a growing economy will fall in DISCOVER ... shambles." Delegates also called for the elimination of federal agricultural disaster programs in favor of federal or private crop insurance programs. They said crop disaster pro- grams and crop insurance should be com- bined into a single program and designed to encourage widespread participation. Rawson ZONE- TILL™ In other actions, the delegates voted to: D Oppose additional delays in revisions to the wetlands manual and support Combining The Best Of All Management Systems the exemption of prior-converted cropland and any land that has been Wednesday, Thursday and Friday, February 10-12 at 10:00 a.m. cropped from wetlands provisions of the Clean Water Act. and 2:00 p.m. in the Upstairs Ballroom, main entrance of the D Oppose the imposition of new gas or Kentucky Fair and Expo Center. carbon taxes or the use of gas tax reve- D nues for other programs. Support environmental regulations based on scientific data with a require- R ay Rawson, farmer and innovator, will be discussing Zone Tillage and how it works on his farm operation and many others across the nation. Rawson and his family have spent the last 28 years perfecting this system and will share their experiences in developing ment that scientific studies undergo this total management practice. Rawson's own family farm operation covers more than replication and peer review. 5,500 acres of com, soybeans and wheat where he has been able to achieve yields twice that D Support immediate legislative solu- of the county average using the Zone-Till system. tions to ensure the availability of minor-use pesticide. The all-new Rawson Zone-Till Cart, Rawson Coulters and other innovative products will D Support efforts to improve the present be on display at booths WW 5066 & WW 5055. If you're investigating the switch to no-till health care system based on minimal government intervention, tort reform or ridge-till, you'll see the Zone-Till makes sense, without the yield reduction associated dealing with medical malpractice law- with other forms of reduced tillage. MFB's Promotion and Education Committee in attendance at the AFBF annual, encour- aged young and old alike to "Discover the ,f you miss this presentation at the National Farm Machinery Show, Ray will also Treasures of Promotion and Education. " be discussing this system at the following farm shows: February 21-23 National Corn Grower's Association, San Antonio, TX March 9 &10 Triumph of Agriculture, Omaha, NE Sponsored by Rawson National Zone-Till Association and Un Manufacturing Company, Inc. P.O.Box 357 • Kalida, Ohio 45853 e (419) 532-3121 • FAX (419) 532-2468 1-800-322-6301 Michigan Farm News Expect Above Normal Temps and Normal Precipitation ,,- January 30, 1993 Milder than nonnal conditions persisted over nearly all of Mich- igan during the past 30 days, with departures from normal ranging Michigan Weather Summary as high as 5-7 degrees F above the 30-year normals in the southern 12/15/92 Temperature Precipitation section. An active southern branch of the jetstream brought sev- to 1/15/93 Observed Dev. From Actual Normal eral weather systems into the state (the same mechanism respon- Mean Normal (inch.) linch) sible for all the precipitation in the southwestern U.S.), resulting 1.74 Alpena 23.8 + 2.5 1.48 in above normal precipitation amounts, especially in southern 1.59 Bad Axe 26.7 + 2.6 3.43 sections of the Lower Peninsula, where rain and snow totaled in 3.94 1.87 Detroit 31.6 + 7.3 excess of 200 percent of normal for the period. 0.97 1.83 Escanaba 20.7 + 1.3 Flint 29.5 + 5.4 3.03 1.87 While keeping or bringing soil moisture levels at or near field 5.28 2.41 Grand Rapids 28.3 + 5.5 capacity, the precipitation, some of which fell in the form of heavy 16.4 - 0.9 2.80 1.96 Houghton wet snow, caused further corn harvest delays and likely induced 23.5 + 2.8 2.09 1.74 Houghton Lake lodging in some areas. Jackson 28.3 + 3.0 .70 1.74 Lansing 28.8 + 5.2 3.83 1.74 The latest National Weather Service 30-day outlook calls for little Marquette 16.3 + 3.3 2.21 1.96 change in the general weather pattern that has persisted in the Muskegon 28.2 + 2.5 2.78 2.21 Great Lakes region for the past several weeks. The outlook for Pellston 22.1 + 3.1 1.86 1.89 mid-January through mid-February calls for above normal tem- Saginaw 27.6 + 3.6 4.27 1.59 peratures statewide, with near normal precipitation in the north Sault Ste. Marie 18.0 + 1.9 2.66 1.83 and above normal amounts in the south. South Bend 29.5 + 4.1 4.40 2.41 Traverse City 24.8 + 1.0 2.97 1.89 In contrast, the 90-day National Weather Service outlook calls for Vestaburg 26.5 + 2.5 4.94 1.73 drier than normal conditions statewide for the January through March period, with temperatures expected to average above nor- Normals are based on district averages. mal in the western half of the Upper Peninsula and near normal elsewhere. Jeff Andresen, Ag Meteorologist, MSU Michigan Fruit Outlook - Expansion Underway Donald Ricks, MSU Ag. Econ Dept. gan could soon produce as many as 30 cherry customers; substantial sur- million bushels in a year with favorable pluses in the large-crop years; and Apples weather, and might well have produced that overp1antings that can result in exces- Michigan and Major Commodity Area After an average-sized crop in 1991 of 22.1 much in 1992 if the late May freeze had not sive producing acreage. Extended Weather Outlook million bushels, which was accompanied occurred. T - Temp. P - Precio. 1/30 T 2/15 P 1/30 T 3/31 P by higher prices, Michigan's 1992 apple o Effective industry structure and pric- Michigan N A A B crop was large despite a substantial crop-re- With the prospects for larger crops in future ing arrangements for realistic prices W. Corn Belt A N N NIB ducing freeze in late May. Industry esti- years, the apple industry will need to gear with supply and demand conditions. E. Corn Belt A N1A N/B B mates indicate the 1992 crop may be as up to handle and market the expected larger Wint. Wheat Belt N N1A N N large as 24 million bushels. The largest production. Further market expansion for Blueberries Spr. Wheat Belt A B A N Michigan crop in recent years has been fresh and processed apples as well as more Blueberry industry acreage, production and Pac. NW Wheat A N A NIB 25-26 million bushels. bin-boxes and additional storage capacity market supplies have demonstrated a strong Delta N1A A B NIB Southeast N N B N willlikel y be needed. upward trend for more than a decade. The San Joaquin N N A N Preliminary data from the 1991 Michigan successful blueberry demand growth per- orchard survey indicate that the state's total Tart Cherries formance has occurred for both processing A-Above Average, B-Below Average, N-Nor- apple acreage is down slightly at 59,000 The nation's 1992 tart cherry crop, which is and fresh markets and has included export mal, MA-Much Above, MB-Much Below, NP- acres from 61 ,700 acres in 1986. Apple tree heavily influenced by Michigan's produc- expansion and domestic market growth. No Precip. Source: National Weather Office numbers, acres of bearing age and yields tion, turned out to be large. With larger per acre are all trending upward, however. supplies in 1992, market prices dropped In future years, blueberry acreage and pro- Many in the industry estimate that Michi- considerably from new pack opening duction are expected to increase, including prices. The low prices in 1992 were in no- further expansion in Michigan, in the U.S. table contrast to 1991 crop prices which as a whole, and in Canada. Total blueberry (tMFRN RADIO NE1WORK Serving Michigan Farm Families is Our Only Business were the highest since 1983. Conditions in the tart cherry industry during 1991- 92 illustrate several industry needs for strong cherry marketing including: production may increase to as much as 340 million pounds by the end of the century in comparison to an average of 251 million pounds produced during recent years. Blueberry markets are expected to continue Since its beginning in 1971, Michigan Farm Radio Network's only objective o Strong cherry demand expansion for to grow in future years. This is expected to has been to serve Michigan's farm families. This dedication to serve agricul- both domestic and export markets. include growth in fresh and processed mar- ture is shared by 29 local radio stations in Michigan. Through these sta- kets and in further expansion of exports. tions, Michigan Farm Radio Network provides the latest in market analysis, o Some type of supply management ca- With the projected substantial expansion in pability so that the industry can avoid supplies, the overall expansion in blueberry weather and news to Farm Bureau members daily on the following stations: severe shortages, which curtail the markets may, however, involve some Station City Frequency Morning Farm Noon Farm building of long-run markets with downward pressure on prices. WABJ Adrian 1490 5:45 am 12:15 pm WATZ Alpena 1450 5:30 am 12:15 pm WPZA Ann Arbor 1050 6:15 am 12:05 pm Fill your planter or drill WLEW Bad Axe 1340 6:30 am 12:50 pm WHFB Benton Harbor 1060 • 12:30 pm from a gravity box ... WKYO Caro 1360 6:15 am 12:45 pm WTVB Coldwater 1590 5:45 am ... WDOW Dowagiac 1440 6:15 am 12:15 pm WACY Fenton 1160 6:15am 12:15 pm WGHN Grand Haven 1370/92.1 5:45 am 12:15 pm WPLB Greenville 1380 6:15 am 12:45 pm WBCH Hastings 1220 6:15 am . 12:30 pm WCSR Hillsdale 1340 6:45 am 12:45 pm WHTC Holland 1450 12:15 pm WKZO Kalamazoo 590 •• 12:15 pm WJIM Lansing 1250 5:05 am 12:15 pm WWGZ Lapeer 1530 • 12:15 pm WNBY Newberry 92.5 12:15 pm WOAP Owosso 1080 6:15 am 12:30 pm Clay Seed-Veyor WHAK Rogers City 960 7:10 am 12:15 pm Ideal unit for unloading bulk soybeans from your gravity WSJ St. Johns 1580 6:15 am 12:15 pm box to planter or grain drill. WMLM St. Louis 1540 6:06 am 12:20 pm WSGW Saginaw 790 5:55 am 12:15 pm ", Easily mounted on gravity wagon WMIC Sandusky 660 6:15 am 12:45 pm ", Efficient hydraulic motor power, variable speed ", PVC belt with rubber paddles to minimize seed WKZC Scottville 95.9 5:45 am 12:30 pm damage WCSY South Haven 940 12:15 pm ", Galvanized steel construction WKJC Tawas City 104.7 12:45 pm ", Unit swings back against wagon for transport WLKM Three Rivers 1510/95.96:15 am 12:15 pm ", Available in 12' and 16' lengths WTCM Traverse City 580 5:55 am 12:40 pm Call for details ... 1-800-383-2529 * Station signs on at different times during the year. Morning farm times change with sigfH)n times. ~ Clay Equipment Corporation ** Station airs various farm reports between 5:50 and 6:20 pm. ~ 101 Uncoln Street Cedar Falls, IA 50613 *** Station airs various farm reports between 12:00 and 1:00 pm. Some stations carry additional market reports throughout the market day. Michigan Farm News January 30,1993 1993 Outlook for Hogs Less Than Ideal Jim Hilker, MSU Ag. Econ Dept. ruary period than last and will farrow 1 1 he outlook through 1994 does not look percent more in the March-May period in very rosy for hog farmers due to an ex- 1993 compared to 1992. These numbers pected growing supply of pork, which is would indicate slaughter numbers will be coming at the same time as expected in- up 1 -3 percent over the last two quarters of creases in beef and poultry production. the 1994. However, if the demand stays strong, we As a general rule of thumb, prices will move could do better than the production figures in the opposite direction of the change in would indicate. The best information we production by twice the amount. For exam- have to forecast pork production through ple, if production increases 1 percent, we 1994 is the December Hogs and Pigs Re- would expect prices to decrease by 2 per- port we discussed in the last issue. The low cent, all other factors constant. The follow- corn prices are likely to keep the slaughter ing projections are a combination of this weights in the same range as last year to rule, adjusted for other factors such as in- slightly higher. come and competition from other meats. In order to project winter quarter produc- Hog prices in the first quarter are expected tion, we will consider summer farrowing to be $38-$42 per cwt. Prices in the second and hogs weighing between 60-179 pounds quarter are expected to run counter-cyclical Dec. 1, 1992. Summer farrowings were up and increase to the $42-$45 per cwt. range. 2 percent and, due to large litter numbers, 3 percent and pigs under 60 pounds were according to the report. This number seems Third quarter prices are projected to aver- market hogs were up 3-4 percent in the listed as up 5 percent. Again, farrowing a little high according to those who watch age $43-$47 per cwt. Fourth quarter hog relevant weight classes. However, weekly conditions were good and pigs saved per gilt retention. Producers reported they will prices are estimated at $39-$43 per cwt. slaughter up through the middle of January litter was high. Production is projected to farrow 3 percent more this December-Feb- has been up 0-3 percent and we appear to be up 2-4 percent. As you can see, I am be current based on slaughter weights. somewhat suspect of the high numbers. Therefore, first quarter production is ex- pected to be up 1 -3 percent. Third and fourth quarter production can be approximated by winter and spring farrow- Second quarter production is likely to fol- ing intentions and breeding herd size. The low fall farrowings and pigs under 60 breeding herd was up 2 percent this past pounds last Dec. 1. Fall farrowings were up Dec. 1 compared to the previous Dec. 1, 1993 Cattle Prices Relatively Strong Jim Hilker, MSU Ag. Econ Dept. $80's other than perhaps for a while this fall. Calf prices will continue to bring the 1 he cattle price outlook for 1993 looks cow-calf operations excellent returns fairly strong through most of the first quar- through summer, but this fall could fall into ter. But given the placement numbers last the upper $80' s or low $90's. This is still summer and fall, I would expect a drop-off good, but not as exciting as the last several towards the end of the first quarter through years. early fall. Steer prices in the second quarter are expected to fall back into the mid-$70 We have not had much new fundamental range. news in the way of numbers for some time now. However, two important reports will Steer prices are projected to be in the lower be released concerning cattle about the time half of the $70 range the second half of the you receive this issue. On Jan. 29, the quar- year. Demand has been stronger than ex- terly 13-State Cattle-On-Feed Report will pected over the last six months; I suspect be released. the economic recovery will have to con- tinue for the strong demand to continue. This report is important because it gives weights as well as numbers. On Feb. 5, the Feeder prices are expected to follow the annual Jan. 1 Cattle Inventory Report will same pattern with perhaps a little stronger be released. This report will give us an showing continuing into the second quar- indication of where we are in herd expan- ter. Yearling steer prices should stay in the sion and calf numbers. Outlook for Eggs and Poultry - Steady Allan Rahn and Henry Larzelere, MSU Ag. Econ. Dept. Table Eggs Turkeys Prices of Grade A large white, cartoned Turkey producers are expected to increase eggs to retailers in New York during 1993 turkey meat output in 1993 by around 2 are projected to average in the 72 to 74 cent percent and wholesale prices (8-16 pound price range. These price levels would be young, frozen hens, Eastern Region) are about 8 cents higher than the 65.4 cent expected to average 1 to 2 cents per pound average received in 1992, but 4 cents lower above the 59.9 cents realized during 1992. than the 77.5 cents per dozen realized dur- ing 1991. Production was up almost 5 percent in 1992, but storage holdings have been burdensome In contrast to the 2 percent table egg pro- with negative net returns for many produc- duction increase in 1992, production during ers and the industry is in a retrenchment 1993 is expected to be almost 1 percent phase. Per capita turkey consumption (re- lower than the previous year. The demand tail-weight basis) during 1993 is projected for eggs during 1992 remained strong and at 18.2 pounds compared with 17.9 and 18 the number of eggs broken for use "out of pounds in 1992 and 1991, respectively. the shell" expanded another 8 percent. Broilers There is potential for the table eggs market Broiler prices in 1993 are expected to aver- to be stronger than anticipated this year as age around the 52.6 cents per pound, 12-city the number of pullets previously hatched average, realized last year. Young chicken and now being raised for flock replacement meat production is likely to continue on its purposes is lower. Lower induced molting upward annual record setting trend and in- rates and shortened lay cycles could reduce crease another 3 to 4 percent. the flock size more than anticipated, thereby cutting egg production and boost- Net returns to broiler producers have tight- ing marketing clearing egg price levels. ened, but favorable domestic consumer de- mand trends and additional export opportu- Plentiful corn supplies are expected to help nities for poultry related products should keep feed costs below year ago levels sustain these price levels. Per capita broiler throughout most of the year. Per capita egg consumption (retail-weight basis) during consumption during 1993 is projected to be 1993 is projected at 69 pounds compared 232 eggs compared with 235 eggs and 233 with 67 and 63.9 pounds in 1992 and 1991, eggs in 1992 and 1991, respectively. respectively. I -. Michigan Farm News January 30, 1993 •••••••• Wheat and Feed Grains 1993 Outlook Mixed ....... ••••••• •••••~.'I ••••••• r. 1• . ~~ •••• '1••• •••• ,j ••• .r•••••• E~RM Dr. Jim Hilker, Dept. of Agricultural Corn Economics, MSU .'~ J...:::.. •••• The "final" USDA Production Report for a sharp decline in former Soyiet Union im- Wheat •••••••• •••••••• the 1992 corn crop listed the average U.S. ports. corn yield at 131.4 bushels per acre. This is 2.1 bushels higher than the November esti- mate and 11.6 bushels higher than the pre- With all of these increases in disappearance added up, expected 1992-93 total use The biggest factor in the 1993 wheat out- look is the yield for the 1993 wheat crop. BUSINESS should be a whopping 420 million bushels. With wheat being a storable crop, what we vious record set in 1987. This led to record corn production of nearly 9.5 billion bush- els, smashing the old record set in 1985 of However, that's not nearly enough to offset the 1,566 million bushel increase in total expect to harvest this spring and summer will be the biggest variable in this winter's OUTLOOK nearly 8.9 billion bushels. supply, and thus, the lower corn prices. prices. And, of course, that will be deter- being known much earlier in the year. As Ending stocks for 1992-93 are expected to mined by the weather. Also, production will you surely recall, we had most of our wheat Michigan's yield was set at 105 bushels per be 2.25 billion bushels or 27 percent of use. be the main factor in determining the price sold before we discovered our 1991 spring acre. At first glance, that does not look real In other words, for every bushel we use, we for the 1993-94 marketing year which be- wheat crop was poor and the former Soviet bad when placed next to a three-year aver- will have one left over. This puts the aver- gins June 1. Union countries were having a poor crop as age of 112.6 or a five-year average of 101 age annual weighted U.S. price at about well. bushels per acre. The problem in Michigan $2.10 per bushel, and that would put the On Jan. 12 the USDA released its estimate this year is that most of the corn is of poor poor quality Michigan average corn price of winter wheat plantings. There were 51.5 Given the small increase in winter wheat quality and was harvested at high-moisture considerably below that. million acres of winter wheat planted. This plantings and the likely small increase in levels and, therefore, after the extra drying is only .4 million more than last year despite spring wheat plantings, 1993 total plantings and discounts are netted out, it has a very It is not too early to begin looking at the set-aside being lowered from 5 percent to are not likely to increase much. Yield is low value. expectations for the 1993-94 corn crop year zero. It was about 2 million acres lower than expected to be about the same in 1993, for several reasons. Corn is a storable crop, trade expectations. Michigan's planted although winter wheat yields are likely to On Jan. 12 the USDA released an updated which means next year's expectations af- winter wheat acreage for 1993 is 600,000 be higher and spring wheat yields are likely SupplylDemand Report and the first quar- fect this year's prices. Soon we will have to acres, down from last year's 650,000 acres. to be lower than last year's record yields. terly Stocks Report. Table 1 below shows be making planting decisions and relative This puts 1993 production just slightly the USDA numbers for 1991-92 and projec- price forecasts are needed in that decision Table 2 below shows both the USDA's higher than 1992. And, with slightly higher tions for 1992-93, and shows my estimates process. It also helps in making forward projections for 1992-93 and my estimates carry-in and slightly higher production, you for the 1993-94 crop year. These are the pricing decisions. In the third column of for 1993-94 for the wheat supply/demand have slightly higher total supply. primary numbers I use in estimating corn Table I, I make some forecasts for 1993-94 situation. Being this late in the 1992-93 prices through the remainder of 1994. corn marketing year. marketing year, the supply numbers are As shown in Table 2, use levels are not fairly well known and the final use numbers expected to change much either, other than Feed use is expected to be at record levels The increase in set-aside from 5 to 10 per- are likely to be very close to the projections. feed use. With relatively high wheat prices in 1992-93 following record levels in 1991- cent will decrease planted acreage. Food use increased, feed use (most of which and low corn prices expected this summer, 92. Feed use is determined by primarily two Whether or not the decrease in acreage occurs in the first summer quarter) is down feed use is likely to be on the low side of items - the number of grain consuming an- equals the increase in set-aside is deter- slightly and exports are up. historical use levels. This all adds up to imal units (GCAU) and the price of grain. mined by several factors with flex acreage expected 1993-94 ending stocks being up For 1992-93 we expect an increase in use being a primary one. Trend yield for This puts projected ending stocks at 486 about 65-70 million bushels, 15 percent, GCAU's of at least 2.5 percent and a de- next year, if we look back 30 years, would million, 19.4 percent of use, not much dif- and prices being down some, but still crease in corn prices of 10-20 percent, both be about 121 bushels a year. The resulting ferent than the previous year. This would over the $3.00 level. A lot can happen relati ve to 1991-92. production, if added to expected beginning put the average 1992-93 price at about between now and then, but this is a level stocks, and 1993-94 total supply will be $3.30 per bushel. I~is higher than the 1991- you can use as a base when making your Feed, seed and industrial use is expected to close to this year. This means any improve- 92 price due to.t~e supply/demand-situation forward pricing decisions. grow about 4 percent in 1992-93, following ment has to come on the demand side. a 5 percent gain last year. About half of the Soybeans' gain is due to an increase in corn used to Animal numbers are not expected to in- produce fuel alcohol. This increase is crease much, grain quality is expected to 5peaking of records, soybeans did not want bushels in 1991 and a 35.4 bushel per acre mainly attributed to parts of the Clean Air be better, and prices may be slightly to be completely outdone. The U.S. aver- five-year average. Act that went into effect Nov. 1, 1992. higher next year, which would indicate age yield for 1992 was 37.6 bushels per Significant year-to-year increases are ex- feed use at about the same level as this acre, 3.3 bushels higher than the record Total supply is up for the 1992-93 soybean pected to continue as implementation of the year. Food, seed and industrial use is 1991 yield. Total production was put at 2.2 marketing year due to the increased pro- act takes place over the next several years. expected to increase on a trend as dis- billion bushels, only slightly below the duction, despite beginning stocks being cussed and exports are expected to be 1979 record level of 2.26 billion bushels. down. Projected crushings and seed and As shown in Table 1, exports are expected slightly higher if the world economy re- But the 1992 crop was produced on only feed use are up slightly. But the main item to grow in 1992-93. Growth is mostly due bounds. Therefore, I expect ending 58.1 million acres versus 70.3 million acres holding soybean prices from being very to other countries exporting less and low stocks to be down slightly and prices up in 1979. Michigan's 1992 soybean yield U.S. prices. In fact, world coarse grain trade slightly. was put at 33 bushels per acre versus 38 See uSoybean Out/ooku ... Page 7 is expected to drop 6 percent, mostly due to Table 1 Table 2 Table 3 Supply/Demand Supply/Demand Supply/Demand Balance Sheet For Balance Sheet For Balance Sheet For CORN WHEAT SOYBEANS USDA Hilker USDA Hilker USDA Hilker Proj. Proj. Proj. Proj. Proj. Proj. 1991-92 92-93 93-94 1991-92 92-93 93-94 1991-92 92-93 93-94 Corn Acreage (Million Acres) Wheat Acreage (Million Acres) Soybean Acreage (Million Acres) Acres Set-Aside and Acres Set-Aside and Acres ,Planted 59.1 59.1 59.1 Diverted 4.7 3.5 7.0 Diverted 10.0 3.5 0.0 Acres Harvested 58.0 58.1 58.1 Acres Planted 76.0 79.3 75.8 Acres Planted 69.9 72.3 73.5 Bu./Harvested Acre 34.3 37.6 35.0 Acres Harvested 68.8 72.2 68.7 Acres Harvested 58.1 63.1 64.0 BulA. Harvested 108.6 131.4 121.0 BulA. Harvested 34.1 39.0 39.0 Stocks (Million Bushels) Beg. Stocks 329 278 355 Stocks (Million Bushels) Stocks (Million Bushels) Production 1987 2197 2033 Beg. Stocks 1521 1100 2247 Beg. Stocks 866 472 486 Imports 3 2 2 Production 7474 9479 8313 Production 1981 2459 2496 Total Supply 2319 24n 2390 Imports 20 3 5 Imports 38 55 48 Use: Total Supply 9016 10,582 10,565 Total Supply 2885 2986 3030 Crushings 1254 1265 1250 Use: Use: Exports 685 745 740 Feed 4897 5200 5200 Food 785 830 850 Seed, Feed and Food/Seed 1434 1485 1535 Seed 94 95 100 Residuals 102 112 100 Total Domestic 6331 6685 6735 Feed 259 225 175 Total Use 2040 2122 2090 Exports 1584 1650 1700 Total Domestic 1137 1150 1125 Ending Stocks 278 355 300 Total Use 7915 8335 8435 Exports 1275 1350 1350 Ending Stocks, Ending Stocks 1100 2247 2130 Total Use 2413 2500 2475 Percent of Use 13.6% 16.7% 14.4% Ending Stocks Ending Stocks 472 486 555 Percent of Use 13.9% 27.0% 25.3% Regular Loan Rate $5.02 $5.02 5.02 Ending Stocks Regular Loan Rate $1.62 $1.72 $1.72 Percent of Use 19.6% 23.8% 22.4% Regular Loan Rate $2.04 $2.21 $2.45 U.S. Season Average U.S. Season Average Farm Price. S/Bu. 55.60 55.40 55.60 Farm Price. S1Bu. 52.37 52.10 52.15 U.S. Season Average Source: USDA & Hilker Source: USDA &Hilker Farm Price. SlBu. 53.00 $3.30 53.10 Source: USDA & Hilker Michigan Farm News Making Farm Records Work for You •• January 30, 1993 John D. Jones, Telfarm director and dis- and then make important decisions without health of a business. Many lenders have The payroll software is for farmers who trict Extension farm management agent, reliable information. staggered the net worth statement dates want the ease'and accuracy that only a com- . Michigan State University when processing loans to spread out their puter-generated payroll program can pro- Most business managers choose to comply work load, but often these dates are not vide. The payroll program can generate: A business records system needs to be with the Internal Revenue Service and pro- vide a record of their income and expenses. correlated with the accounting period for the income statement. The result is chaos o Payroll checks that are calculated and designed to deliver both tax accounting and management information. Tax accounting The alternative is jail and penalties under in the analysis process when the income printed to meet all labor department information is needed to file legally re- Willful Failure to File laws. This would be and cash flow statements are not correlated regulations quired reports and returns. Management in- too high of a cost to pay in most people's with net worth. formation is used in the control and plan- estimation, so they comply with IRS and o Optional payroll deductions ning functions of the business operation. produce the tax return. Historically, lenders and farmers have re- Information for these two purposes overlap For the business manager, it is his respon- lied heavily on physical observation and let large errors through the cracks of the loan o Automatic withholding calculations and can come up with what looks like con- flicting results. sibility to design the record keeping system processing procedure and the profit ap- o Worker compensation divisions that delivers needed information for the praisal of the operation. Operations are A quality records system will provide for business at an affordable cost. Many times growing beyond the point where seat-of- o Hourly, salaried, and piece-rate pay- these functions for tax accounting and farm income tax filing is considered the most the-pants observations alone will give cor- rolls or any combinations management information including: important purpose of the record system. rect answers and often neither the farmer nor the lender will recognize it until serious o W-2 forms preparation or magnetic o Income tax return preparation This is not the most important need in busi- ness management, as many farmers found problems arise. media o Labor reports to the Michigan Em- out during 1980s with the dropping com- modity and asset values and increasing op- One quality program that will provide ad- o Payroll summary reports on employee ployment Security Commission equate accounting and management re- information, enterprise costs, and erating costs. The business manager must cords is the Telfarm program offered by piece rate amounts o W-2 form preparation also answer these questions: What informa- tion do I need to manage my business? Michigan State University through the Ex- tension Service. Telfarm is a flexible and The Telfarm program traces its roots to the o Workers Compensation records and When do I need it? In what form? And where do I get it? simple, yet very complete accounting sys- tem. This computer records program is de- MSU farm records program that started in 1928. Since then, the Telfarm records pro- reports signed to take a minimal amount of infor- gram has changed as farmers' needs have o Any other legally required reports Aiding in the success and survival of the business is the most important role of a mation about your farm business and pro- duce accurate and valuable accounting changed and is committed to providing for the farmers' needs in the future. For more o Accrual income statement, net worth records system. If the business does not survive difficult times, there will not be any statements, tax schedules and management reports. information, contact your local Coopera- tive Extension Service office. statement and cash flow statement need to keep records for income tax pur- o Enterprise reports for cost of produc- poses. Tel farm also has two optional software programs. MicroTel Accounting and tion information, bonuses and special accounting needs Take a look at your record system. Will it MicroTel Payroll, developed as an addition communicate the true accrual profit gener- to the Telfarm records program. The ac- o Labor management records ated by the business? Are you making counting software can generate: WIRELESS DRIVEWAY enough profit to meet all of your business ALARMS o Projected budget compared to an oper- and family goals or are you living off de- D Detailed "on-farm" operating Let's you know any time ating statement preciation from previous capital purchases? statements Are you holding enough liquid funds, or someone walks or drives into o Information for the lender and debt working capital, to meet the next year's o Cash reconciliation statements your place! management commitments? Will your lender be confi- dent that you understand your business fi- D Printed checks • Easy Installation o Production records on each business nancial matters to manage the money that is being loaned to you? D Enterprise cost accounting reports Calf or write for free brochures. enterprise Paxton Enterprises o Purchase, sales and inventory control It is very easy for a business to become over o Transaction listings sorted by any 48E 600N information extended in today's environment, espe- choice of vendor, account, date, Fortville, IN 46040 cially when making long term purchases enterprise and eleven other criteria o Comparison with business and family and commitments related to expansion and financed by large amounts of debt. Moni- o Asset and liability histories Phone or FAX goals and industry standards toring your business health is vitally im- 800-872-9866 or 317-326-2838 o Other information needed in the day- portant when debt is used to finance the o Easy transaction correction to-day business management acquisition of assets used in the business. Agricultural lending has been central to the Business management requires records. dramatic growth in agriculture. Loan losses Whether the above functions are formally had remained very low, when compared to provided for in a system or not, the needs non-agriculture loans, until recent years when plunging asset values forced agricul- exist and differ in importance with the type ture lenders to absorb large losses and put Morton ... i.diqgs is Having a Very Special of business. The business manager must weigh the cost and effort of accumulating many farmers out of agriculture. and processing data with the probable ben- efits when designing a records system. Proper use of a coordinated set of financial Even not keeping records is a choice of a statements, including an accrual income records system in which managers must statement, a net worth statement and a rec- rely on memory and assorted slips of paper, onciled cash flow statement to the check book balance, can be used to monitor the Soybean Outlook Continued ... low dispite huge production is the strong exports. Soybean exports are projected to be up nearly 9 percent as can be seen in the USDA projection for 1992-93 shown in Table 3. Ending stocks are expected to be 355 million bushels, or 16.7 percent of use. This points to an annual average weighted price of about $5.40 per bushel. If you are holding soybeans when prices are much above this, like now, you should either consider selling a large percentage of them or have a "good" reason why not to, not just "I want prices to go higher." Also, the basis has narrowed a lot since harvest, and it is unlikely that the basis will narrow enough more from this point on to pay storage. If you really want to stay in the market, consider a basis contract, a minimum price contract, or selling cash and buying a call option versus storing cash soybeans. We're Opening Our Doors Bright & Early for February 18, 19 & 20, 1993 'III 7:11I am ID &:III pm My estimates for the 1993-94 soybean marketing year shown in Table 3, third column, do Watch for special price ads in your area or not show a dramatic change in the situation. Acreage is likely to be about the same. Yields contact your local sales office for a free are likely to be lower. This would put production down about 164 million bushels. However, informative flyer with pricing examples. Special beginning stocks will be higher so that total supply is only likely to drop about 87 million bushels. prices available during this sale. All buildings will reflect special sale pricing. Expected use is projected to be about the same in 1993-94. The biggest variable here is Sale ends February 20, 1993.Call Now! soybean demand. South America is expected to have a larger crop this spring than last year. The question is, will world demand increase enough to keep our exports level and still find Call your local office today! a home for the expected increase in the South American crop? One positive factor is a Adrian, MI (517) 263{)541 800-447-7436 probable decrease in EC oilseed production. Brown City, MI (313) 346-2702 Given the scenario shown in Table 3, stock levels are likely to drop in the next marketing Kalkaska, MI (616) 258-2580 Rockford, MI (616)874-6400 ~T~MORTON year which should and is helping prices. I expect the annual average price for 1993-94 will be in the $5.60 range, although we could see more beans on corn flex acres if the relative Three Rivers, MI (616) 279-5271 aa. BUILDINGS prices of corn and soys tilt much more towards soys. Keep an eye on forward pricing opportunities for your 1993 soybean crop. Michigan Farm News : -:w .-. Preparedness is Your Responsibility •• January 30, 1993 Because farm families often live far from o Post emergency numbers on or near o Install fire extinguishers in your home medical, police, fire, and rescue services, all phones--doctor, emergency medi- and outbuildings, and learn how to they must take special care to prevent po- cal service, fire and police, poison use them. Have water available for tentially disastrous accidents and fires--and control center, and reliable neighbors firefighters to use. they must also learn to deal effectively with who would be willing and able to .. emergencies until help arrives. help. Have exact directions to your D Pay attention to weather forecasts and 'i place posted and ready to read to help be ready to respond accordingly. Take Here are steps you can take to protect your emergency personnel get there as appropriate refuge if a tornado threat- family and workers: quickly as possible. Be sure your ens or flooding is likely. house number is clearly visible from D Prepare an emergency plan that in- the road. volves everyone who lives and works From Farm Bureau Insurance on your farm. Be sure everyone o If a family member or worker has a knows how to follow it. healtli problem, be sure you and oth- ers on the farm know what to do if o Use a good first-aid manual. Take a that person becomes ill. Michigan Land Values Struggle first-aid course and a CPR class. o Know what to do if you are the first Steven D. Hanson and Ralph E. Hepp land values. Likewise, a Michigan State o Have a well-stocked medicine chest. on the scene of an accident. Everyone MSU Ag. Econ. Dept. University survey conducted last spring Check it periodically to remove old should know how to shut off an en- found high quality corn-soybean-hay (C- outdated materials and leftover pre- gine and electrical power. Land prices in Michigan continued their SB-H) land averaged $984 per acre, up 2.5 scription medicines. gradual upward trend through the first part percent from.the previous year, while low D Have operating smoke detectors. De- of 1992. USDA estimates show aggregate quality C-SB-H land averaged $662 per D Keep first-aid kits in your shop and velop and rehearse a home fire escape values of farmland and service buildings in acre, up 1.6 percent from the previous year. barn, on your tractor and combine, plan, including ways to evacuate Michigan averaged $1,105 per acre in Jan- Sugarbeet and irrigated land averaged and in your truck. those who cannot get out on their uary 1992, up about 1 percent from the $1,441 and $1,070, respectively, with sug- own. Make sure children know what previous year's value. During the same pe- arbeet land increasing 3 percent and irri- they should do. riod, the Federal Reserve Bank of Chicago gated land increasing 3.4 percent from the showed a 2 percent increase in Michigan previous year. A NEW MONEY SAVINGHEALtfI. 'pLAN:": Since the first quarter of 1992, land value surveys conducted by the Federal Reserve Bank of Chicago found that Michigan land values fell 1 percent during second quarter and 2 percent during the third quarter of 1992. This decline in land values can be attributed to a number of factors. A record U.S. corn harvest and the largest soybean crop in 10 years caused downward pressure on crop prices while, at the same time, Michigan farmers were facing both a cool, wet summer and problems harvesting low quality field crops. Even when the com crop is harvested, low test weights, high drying costs and quality discounts are caus- ing losses for Michigan crop producers. In addition, projected increases in produc- FAMILY HKAI:rn INS\iRANC£. tion weakens the outlook for livestock PROI'OSAL FARl\l OWNERS/OPERATORS prices next year. To make matters worse, the weak domestic market is expected to receive little help on the export front in the near future. The struggling state economy has also reduced the nonfarm demand for land near urban areas. Assoc !:i.Y'CM:'-12;tJ Ll CJ CMM,l)l' C~I;\ll/ll!l} A maj,?r fa~tor that should be supporting land pnces IS the low current returns avail- able to investors on alternative investments and the relatively low cost of mortgage funds available to finance land purchases. Record common stock prices have lowered Current Health Insunwr.e the current return on stocks to below that available from land investments. ~\:W F:"1'111 Uur\:au Grollp Pr()gr~~. /"'" In addition, the low rates of return available ~Ieml){' • u\'ings from bank savings accounts and money market accounts make the current return from farmland look attractive to investors. Land investors who plan to mortgage a large portion of the investment should be cautious from a .cash flow standpoint because the current return to farmland based on rental rates (6-8 percent) is still below the cost of In these tough economic times all business owners are looking for ways to improve their bottom line. mortgage funds (around 9 percent). Now Farm Bureau can help with a new money saving group Heai!h Plan from Blue Cross Blue Shjeld~of Michigan. ~ 1. In the short-run, look for relatively few land • ~ .. ~ ~ OL .. t Thase new plans are guaranteed iss~e ni)'matter what your health history, locally s8Niced by {Jur 69 county offices. and 400 agents.s~at~wide, transactions and land prices to drop slightly and competitively priced to save' farm Qwners and operators' hundreds or even thousands otdollars off their health insurance bilL during the first half of the year. Cash flow So, if you're a sole proprietor or if you have one or more emgloyees, you should call Farm Bureau today for benefit and rate information. problems for cash crop operations will de- . - ~ ~ ,,- cre~se the demand for farmland through the .. FOR A FREE, NO OBLIGATION , IT'" RATE QUOTE - _ .. /tIICHI.GAN f"A'1/t1 BUREAU FILL OUT THE COUPON BELOW OR CALL DIRECT 1-800-292-2680, · .. , EXT. 3239 OR 3240. sprIng. If weather and crop conditions improve through planting and into the fall, land prices may stabilize and perhaps increase Please mail to: Michigan Farm Bureau slightly in current dollars. Even stable Membership Services P.O. Box 30960 prices will result in a decrease in the real Lansing, MI 48909 value of land after accounting for inflation Please Print in other areas of the economy. Name Current Health Insurance In the longer-run, the big unknown is what Address Number of Full Time Employees o Sale proprietor to expect on the international scene. In- creased export demand for agricultural (1 person groupl prod~ct~ would help improve farm incomes Phone o 2~4 0 5-9 and IndIrectly support land prices. How- County o 10-24 0 25 and over ever, weaker export demand or increased competition in the export market (a likely Type of Farm/Business eve~t) ~ill hurt ~arm incomes, thereby re- IMFNf sultIng III a negatIve effect on land prices. Michigan Farm News January 30, 1993 Financial Management Implications for Crop Producers Ralph E. Hepp, MSU Ag. Econ. Dept. Meet with creditors to arrange for the oper- The gradual improvement in financial po- ating credit needs for next year and a plan sition of crop businesses during the last few to repay any loan delinquencies from 1992. years has hit the skids, again. The cool, wet Meet with lenders as soon as possible, so summer and the resulting poor quality of financial plans can be finalized and inputs field crops is causing serious cash flow purchased for 1993. problems for many operators. The extent of the financial difficulties depends on the Continue to follow best management prac- amount of losses from 1992, the level of tices in applying production inputs, negoti- debts, availability of credit reserves and the ating land rental agreements and finding the amount of government assistance. Many best prices for crop supplies. Apply produc- operations will be unable to completely tion inputs that are required for maximum repay the 1992 operating credit, and will profits, but don't over-apply them. need larger amounts of operating credit this year because spring crop inventory sales Monitor the cash flow during the year and will be down. proceed cautiously with new investments until more information is known about next The first activity is to check the financial year's crop yields and prices, and the ability position of the business. How serious is the of the business to make down payments and - cash flow problem? This starts with sum- service debts on new machinery or land. 1993 Outlook for Production Inputs marizing the 1992 records into financial reports--a balance sheet, income statement Residual returns and cash flows will be Chris Peterson, MSU Ag. Econ Dept. and cash flow statement. Next, develop a constrained on most crop farms. Evaluate from chemicals and fertilizers on the mix of projected cash flow for 1993, using average all alternative farm enterprises and non- Fertilizer equipment purchased by farmers. "Smart" yields and prices. Revise the plans based on farm uses for family resources during the National, Midwest and Michigan sources application equipment and site-specific the projected cash flow constraints and next few years so cash flows can be en- all indicate that fertilizer supplies will be practices will make significant changes in flexibility to make capital improvements if hanced. Non-farm employment for some of more than ad~quate in 1993. Demand will the nature and cost of equipment demanded the business has cash reserves. the family members may"be the best option be sluggish. USDA predicts that total acre- by producers. for many crop producers. age of major crops will decline in 1993. Fertilizer demand will fall accordingly. This year's sluggish demand for commodi- ties and the difficult harvest season will put Michigan farm incomes down in 1992. In turn, this will have an adverse affect on the demand for purchased inputs generally in 1993 and for fertilizer in particular. With adequate supply and sluggish demand, prices should fall. However, USDA pre- dicts that surges in natural gas prices may actually cause price increases in spite of demand conditions. Chemicals Chemical demand and prices will be af- fected by many of the same factors affecting fertilizer. Supplies will be adequate. De- mand will be down due to reduced acreage and weakened farm incomes in Michigan. This should put downward pressure on chemical prices locally. In contrast to this, Compare the interest rates. The interest rate on the MemberLine VISA USDA predicts price increases nationally, and Gold MasterCard is just 15.9 % A.P. R. - one of the lowest interest rates even as much as 4 to 6 percent. Their fore- available. In addition, you pay I/Oil//eres/on new credit card purchases when cast is based on petroleum feed stock price your full balance is paid by the due date. increases, increased research and develop- ment costs for pesticide manufacturers, and Compare the fees. The MemberLine VISA has no annual fees, no mem- reregistration costs for older products. bership fees and no application fee. The annual fee for the Gold MasterCard is $20 - far lower than the fee charged for most gold cards. For added Seeds savings, the $20 fee is rebated every year that you make $3,000 or more in net purchases. Seed supplies should mostly be adequate with some shortages possible in early matu- rity varieties of seed com. Michigan agri- The Farm Bureau MemberLinesM VISA & Compare the premiums. Both the MemberLine VISA and the Gold rvlasterCard offer a wide array of complimentary features and options for business sources layout the following sce- nario. With the late, partial harvest this fall, Gold MasterCard. Two good reasons your protection and peace of mind. And when you carry a Gold MasterCard, fall plowing is down and some crops will why it pays to compare before you you'll enjoy the added advantages of a higher credit line, executive travel privileges, emergency road assistance, purchase protection insurance and a still be standing in the spring. Both of these apply for a credit card.,. warranry extension program - valuable "extras" you and your family can factors, plus producer memories of this depend on. year's growing season, will put a high de- mand on early maturity com with weak Easy to apply for. Simply remove this page from the magazine and fill out demand for late maturity. Prices should rise the application on the reverse side. Letterfold and staple the form with the for early maturity, fall for late. These same mailing address on the outside. No postage necessary! factors may lead to a decline in com acreage in favor of later crops, such as dry edible ... /tI'I:H'GAN beans. This will impact supplies and prices differently for different seeds. Nationally, , .. FAR/tl BUREAU o FI~Of AME{ICA.Bank. USDA predicts very little change in seed prices overall. Energy The Department of Energy forecasts a 6.6 percent increase in imported crude oil No Postage Necessary prices for 1993. Gasoline is expected to rise II I If Mailed Within by 3 cents a gallon over the next year while The United States diesel fuel will increase by 5 cents a gallon. Business Reply Mail Equipment First Class Permit No. 2334 Kalamazoo, MI The lowest interest rates in many years, higher farm asset values, and lower debt/eq- Postage will be paid by addressee uity ratios should make this an ideal time for farm capital expenditures. Even with these reasons for optimism, the psychology of the general economic recession and the FIRST OF AMERICA BANK problems stemming from Michigan's 1992 REVOLVING CREDIT DIVISION growing season will probably keep demand ATTN: FARM BUREAU MEMBER SERVICES for new equipment low. USDA predicts that price increases will likely continue at a 3 to P.O. BOX 2349 5 percent rate in 1993 despite sluggish de- KALAMAZOO, MI 49003-9917 mand. In the longer term, one of the more interesting trends to watch will be the im- pact of changing tillage practices along with demands for reduced environmental impact 1.1 1111.1 •• 11••• 11," •• 11.1.1 •• 1.1" ••• 111••• 111.1.1 I Michigan Farm News I 1m Michigan Farm Income - Good News/Bad News •• January 30,1993 Jake Ferris, MSU Ag. Econ. Dept. higher in 1992 than in 1991 because of the Based on recent estimates of the Michigan larger crop and stable prices. Higher prices Agricultural Statistics Service (MASS) and on hay more than offset a smaller crop Table 1 the U.S. Department of Agriculture, Mich- resulting in increased receipts in 1992. Sug- igan farmers grossed $3,425 million in arbeet receipts were off, attributed to lower Cash Farm Income in Michigan, 1987-93 1991, of which $1,793 million were from prices and the small 1991 crop. Receipts (Million $) crops and $1 ,288 million from livestock and from most other crops in calendar year 1987 1988 1989 1990 1991 1992* 1993* livestock products (see Table I, "Cash Farm 1992 were about the same as in 1991, al- Gross Cash Income Income in Michigan"). Government pay- though full assessment of a drop in corn Farm Marketings ments amounted to $124 million and other sales from the 1992 crop has not been com- Crops 1,346 1,546 1,625 1,720 1,793 1,809 1,851 farm related income $221 million. Deduct- pleted. Livestock 1,282 1,210 1,311 1,407 1,288 1,309 1,319 ing cash expenses (estimated at $2,300 mil- Goverment Payments 391 303 262 169 124 133 175 lion) from the gross left $1,125 million as Increased gross from livestock in 1992 can Other Farm Income 155 170 201 204 221 237 253 net ~ farm income. Net cash income does be traced to both increased production and not include capital consumption (deprecia- higher prices on milk. Receipts to Michigan Total 3,175 3,229 3,399 3,500 3,425 3,488 3,597 tion) nor inventory change. dairy producers increased about $75 mil- lion in 1992 over 1991. This more than Cash Expenses 2,063 2,080 2,168 2,232 2,300 2,321 2,418 1992 In Review offset declines in sales of cattle and calves, Net Cash Income Official estimates on 1992 income will not hogs and eggs. Actual 1,112 1,149 1,232 1,268 1,125 1,167 1,179 be available until December of 1993. Using 1992 Equivalent $ 1 374 1 364 1 395 1 363 1 160 1 167 1 144 existing MASS and USDA data on crop and Receipts from turkeys continued upward. livestock production and prices for 1992, Disaster payments offset lower deficiency Source: Michigan Agricultural Statistics Service, Michigan Department of Agriculture and ERS, USDA for 1987-1991 preliminary estimates were generated on payments to raise government payments gross income from farm marketings for cal- modestly. Slightly higher costs were regis- * Estimated for 1992 and forecast for 1993 endar year 1992. Crop sales represent mar- tered leaving net cash farm income at about Full impact of 1992 fall corn harvest problems were not fully measured or known. ketings from both 1991 and 1992 harvests. $1,167 million, 3 to 4 percent higher than Receipts from wheat were substantially in 1991. 1993 - - A Look Ahead Mixed trends will shape the outlook for APPLY NOW cash receipts in 1993. Receipts from com SM for a Farm Bureau MemberLine VISA or Gold MasterCard will be down noticeably because of both a smaller crop, harvesting problems and lower prices. A large 1992 sugarbeet crop FARII BUREAU IIEIiBERLlNE- APPLICATION will add to receipts. A small 1992 dry bean FnlName Midde ~ last Name I Social Sea.ily tbnber crop is being offset by higher prices which, Tme at Prvsenl Adchss 1Dal8 01 BirIh in combination with the anticipated 1993 VIS. Mos. crop, should raise total receipts in calendar Home Telephone tUnber (Irdlde Area Code) ) year 1993. Receipts from hay should in- I&. Previous Adlhss fd less than two years at presenI address) Stale crease for the same reason. Little change is -' projected in gross returns from wheat and ~ Presenl~ Income !rom aimony, chid support, or mai1tenance payments need not be I1MIaIed soybeans in 1993. a: ~ you do not wish to haw • as a basis for repayiIg lIis obligation. ~ ~ En,lIoyer's ( TeIephcne tbnber ) I~ ITme at Present I VIS. ~ Mos. Gross Income from EIJllIoymenl o 0 MonlhIy Vearly Livestock sales should follow the trends of City, Slate, ~ Code o Monthly 1992. Stable prices and some further ex- 0Iher Income OVearly Source of 0Iher Income pansion in production should elevate total Previous ~ fd less than two years at present employer) Tme at Previous Employer I VIS. Mos. receipts from milk in 1993. Increased pro- duction and stable to higher prices should Nearesl Relative (nol /iving with you) I~ eIephcne ) also boost the gross from turkeys. On the FIISt Name Last Name I Social Security Number other hand, some further erosion in receipts c from cattle and calves, hogs and eggs is 5 Present Street Adcress Tme at Present Address I Date of Birth projected. u u VIS. Mas. I co City, Stale Home Telephone Number =C "0 PreY10US . Address fd less than two years at present mess) City (Include Area Code) ( ) State Zip Lower com prices on the 1992 crop will result in higher final deficiency payments (made in 1993) than on the 1991 crop. ~ Present Employer Income from alimony, child support, or maintenance payments need not be revealed c( d you do not wish to haw it as a basis for repaying this obligation. Some increase in CRP and disaster pay- o ments are anticipated in 1993, bringing T :::i Employer's Telephone Number TITTleat Present Employment 0 Monthly ~~ ( ) VIS. Mos. Gross Income from Employment D Vearly total government payments up to about c( City, State, Zip Code D Monthly 6 Other Income D Vearly Source of Other Income $175 million. o Previous Employer (d less than two years at present employer) Time at Previous Employer o a: ~ I VIS. Mos. Cash expenses will rise because of in- >- Nearest Relative (notMng with you) IMtess I Telep/lone creased purchases of feed grain by dairy II ) and livestock producers who suffered en Credit References Monthly Payments Balance Due D 0wrVBuying Home D Other DRent Monthly Payment shortfalls in their own production from the W S o 1992 crop. z S S Mortgage Holder or Landlord Mortgage Balance w S a: w Estimated Value Also short-term interest rates will be higher I&. w S $ o Checking Account (Banil Name) S a: a!1d fert~1izer and pesticides will carry .... S S Have Vou Ever D Ves higher pnce tags. Net cash farm income for o w D Savings Account (Bank Name) Declared DNa a: $ S Bankruplcy? 1?93 is projected at $1,179 million, only o slIghtly above 1992. In real terms (inflation Optional Group Credit Insurance Please check your card preference Vwe hereby certify that each of the answers on this ~ is \IUe removed), net cash farm income will be and correct. and is made lor the purpose 01 obtaining a loan or crd from (choose one design only) the BanII. IIwe certify that all debIs owed whether irOviduaI, joint or somewhat lower than in 1992 and recent The COSlIo you, the Primaty Account holder w (applicant), is $.60 per $100 for each monlh's o SCENIC VISA o o~STANDARD VISA