" " Michigan Farm News 111=1 March 15, 1994 Vol. 71, No.5 Proposal-A Farmland Definition Issue Resolved Michigan Farm Bureau Encouraging "Yes" Vote March 15 on Proposal-A Michigan farmers can breathe a little easier when they cast their vote in support of Proposal-A, thanks to a last minute agreement reached between Gov. John Engler, Michigan Farm Bureau (MFB) and le~islative leaders to clarify the definition of agncultural property. Under the agreement, the definition of farmland will follow the guidelines of P.A.116, the Farmland Preservation and Open Space Act, with the farmland qualifying for the same six mill rate as homesteads. "This is an exciting day for farmers all across Michigan," said MFB President Jack Laurie. "Farm Bureau and Michigan's agricultural industry have supported property r tax reform for years. We finally find ourselves J at a point where we can go out and aggressive- \ ly campaign in favor of Proposal-A. This is of the kind of reform that allows Michigan f agriculture to be competitive with the rest of the country." At a Lansing news conference, Gov. Engler, Senate Majority Leader Dick Pos- thumus and House Speaker Paul Hillegonds announced that they will seek the legislation necessary to ensure that virtually all farmland in Michigan will be taxed at the same rate as homesteads with the passage of Proposal-A. Gov. Engler explains the farmland definition agreement during a news conference. Calling Proposal-A an even better choice for Michigan farmers and their families with prior to the vote on March 15, farmers can rest assured it will be enacted. - I for their help in ma~ing sure that farmers get a fair deal," Engler said. "It's only fair that the new definition of farmland, Gov. Engler "I'd like to thank Michigan Farm Bureau, farmers should pay the same level of taxes on said that even if the agreement isn't enacted Senator Posthumus and Speaker Hillegonds all of their farmland. " Ballot Question - How Do We Fund Schools? Farmers to save an average "If you don't vote, or you vote 'no' on percent or the rate of inflation, whichever is Proposal-A, you are, in effect, voting for the less, until the property is sold. of $4,000 in state taxes Back-up Plan, which means your income tax • An 80 percent reduction in school operat- under Proposal-A. Not will go up to 6 percent and your property taxes ing millage. will be levied at 12 mills or 24 mills in most • Cut most homestead and farmland voting means voting for cases," Nelson explained. school op~rating millage to 6 mills from a higher income tax and 12 On the other hand, Proposal-A's six cent current statewide average of 34 mills. sales tax, combined with a reduction in or 24 mills on farmland. Michigan's income tax from 4.6 percent to • Reduce the state income tax from 4.6 percent to 4.4 percent. On March 15, Michigan voters will go to 4.4 percent and property tax reduction for • Increase the sales tax from 4 percent to the polls in a special statewide election to school operating from an average 34 mills to 6 percent. The food, medicine and farm input determine what type of school funding pro- 6 mills would make Michigan very competi- exemptions would be retained. gram they prefer. While only one question tive in all three tax categories, says Nelson. • Create a 2 percent real estate transfer fee will be on the sp'ecial ballot, two options will "You don't need to do very much number tax beginning Jan. 1, 1995 - March 31, 1995. actually be avaIlable to voters. crunching or figuring to know where you are Beginning on April 1, 1995, the rate would If voters approve Proposal-A, then today and where you would end up under decline to 3/4 of 1 percent. modifications will be made to the constitution either Proposal-A or the Statutory Back-up "With Proposal-A, farmers will pay sig- and a number of legislative changes will take Plan," Nelson said. "It quickly becomes ob- nificantly less total taxes, with the typical farm place. If, on the other hand, citizens turn vious that you'll end up with a significant saving $4,000 in state taxes per year," said Proposal-A down by voting no or not voting, reduction in property taxes under Proposal-A. Nelson. "Proposal-A also provides for a cap a second plan, referred to as the Statutory . Back-up Plan, would go into effect. Michigan will also be able to capitalize on our tourist industry's activity with the additional on assessments to 5 percent or the rate of inflation, whichever is less, until the property "Michigan voters need to realize that the 2 cent sales tax." is sold. Most importantly, the success of school funding mechanism will definitely Proposal-A would result in the following: Proposal-A depends on the active support of 1:1:> change on March 15 - business as usual will • Cap individual property assessments at 5 farmers and their vote on March 15." 01:1 ° c be over. The way m2: it was is history," ~[ said MFB's Ron t1Ddez the ballot plan, your property taxes will be UDder the ballot plan, your income taxes will be ~ 0° ~a ~~ Nelson. "The big que s t ion 0n lowC'Z than the national avcngc ...by nearly 10%1 BaIJot Proposal Provides Below Average Property Tax Per Person 7~ below the natiooal average I Ballot Proposal Provides Average Income Tax Per Person ~~cOO Co) March 15 is how ~~ do we fund g>"Tl schools in 1040 ~o ~ Michigan, while t830 D> m ~ "i keeping our tax t820 ZCD ~ ~ structure in line with other states." .10 iso According to IlSOO Ip Nelson, there's a ~ common miscon- -1' ~ ception among 1680 t5ao ~ many voters that 1570 if they don't vote $100 on March 15, the I5eO existing school ~ funding sources NIidonIII Avg. will stay in lace. Vote YES on Proposal-A March 15 Michigan Farm News -, In Brief. .. -. March 15, 1994 Turnout Low in Soybean Referendum - Passes in • "Proposal-A - Michigan by 2 to 1 Margin A Foundation It appears that a light turnout of voters decided whether the ch~ckoff on sales of soy~eans for Future will be continued to support the resear~h ~nd market promotIon pro.g~am. A~cordmg to Michigan ASCS reports, only 2,707 Mlch~gan farmers act~all.y participated 10 the vote, Prosperity" with 1,685 casting yes votes and 830 votmg no, for contmumg the producer checkoff .. program. Nationwide, preliminary figures indicate that about 85,000 farmers voted! ~epres~nting about 20 percent of the total eligible soybean growers who could have participated 10 the In this issue of the Michigan Farm News, you'll find detailed information on why approval of Feb. 9 referendum. Local ASCS offices had until Feb. 24 to count the ballots and then report Proposal-A makes extremely good sense for Michigan agriculture. But what kind of reasons t can you give your non-farm friends and neighbors for voting yes? results to their state offices by March 1. The states were to notify the USDA of their totals between March 3-4. I believe we can make a very good case for stating that the March 15 vote on Proposal-A An unofficial vote tally from other state ASCS offices indicated that 54 percent of the over boils down to this question: How do we best provide for the future prosperity of not just 86,000 soybean fanners who voted in the National Soy~ean Chec~-off referendum, favored., Michigan agriculture, but the entire state economy? Farm Bureau believes that approval of continuation of the current check-off program, accordmg to a Umted Soybean Board news Proposal-A is the answer. A careful analysis shows that all aspects of Proposal-A are clearly release. superior to the statutory plan in providing for economic growth. By levying a six-mill homestead property tax on nearly all farmland in the state, Proposal-A Earlier Release of USDA Reports Requested helps lower the overall property tax burden on our farmland. The statutory backup plan, on the other hand, provides substantially less relief by putting a 12-mill tax on the land Chicago Board of Trade President Thomas Donovan has asked Agriculture Secretary Mike contiguous/adjacent to farm homes and 24-mills on the rest of the farmland. Espy to release government reports earlier in the day to cancel out what he says is a trading advantage to foreign exchanges .• For years, high property taxes have been a drag on Michigan economic growth. Proposal-A will finally provide a significant cut in millage rates to make us more economically competitive Donovan said Espy accepts the argument that a 7:30 a.m. release time on reporting dates with farmers in other states. A robust agriculture and improved rural property values will, in would benefit futures markets by giving U.S. traders first chance to trade on USDA futures. turn, be a real benefit to rural economies. U.S. traders argue that release times after markets close allow traders on foreign exchanges to use the updated information earlier than traders on American exchanges. Proposal-A lowers the state income tax from 4.6 percent to 4.4 percent and increases the sales tax from 4 percent to 6 percent. The statutory plan leaves the sales tax at its present level but increases the state income tax from 4.6 percent to 6 percent. Admittedly, there's a tax increase of one kind or another under both alternatives. But a study from the Mackinac Center for Public Policy found that an income tax increase causes greater harm to a state's economy than a sales tax increase. Economic Advisers See Little Danger of Inflation The President's Council of Economic Advisers says the country's jobless rate is higher than it normally should be by a "significant amount." That led to its conclusion that there is little danger that inflation will constrain economic growth in the near future, according to a Knight-Ridder news report. .- . The Mackinac Center found that between 1990-93, the top 10 income tax-increasing states experienced a loss of 182,000 jobs, a 2.3 percentage point increase in unemployment and The "natural" unemployment rate is that rate to which joblessness could be reduced without a $613 real decline in personal income per family. In contrast, the top 10 sales tax-increasing causing an increase in inflation. Laura Tyson, the administration's chief economist, says , states from 1990-93 experienced a net gain of 408, 000 jobs, only a modest 0.4 percent rise the administration believes unemployment could fall to around 5.5 percent without trigger~. in unemployment and a $1,568 real increase in personal income per family. In 1992, ing a burst of inflation. according to the Mackinac Center, six of the eight states that had most recently enacted income tax hikes experienced a "significant slowdown" in the rate of growth of personal The president's economic advisers say there isn't much evidence to support contention by income. some analysts that the "natural" unemployment rate has been rising in recent years. They attribute the larger than normal pool of unemployed workers and workers who have given Proposal-A makes sense for Michigan farmers. Proposal-A also makes sense for everyone up looking for jobs to the slow rate of recovery from the recession of 1990-91. vote "yes" on March 15. a a..c-R t~ else in the state who is interested in economic growth. Urge your friends and neighbors to Farm Debt Up Slightly in 1993 •• I.~ Total farm debt rose to $141.4 billion in 1993, 1.5 percent higher than in the previous year tJack Laurie, President but still far below the 1984 peak, when recession racked the farm economy. Financial Michigan Farm Bureau institutions serving agriculture gained stability in 1993 and can look forward to continued improvement in 1994, according to a report by the USDA's Economic Research Service. MSU Extension Beef Specialist Awarded One of M5U's Highest Honors for Career Achievement The report said adequate credit is available for most users in agriculture, but beginning"", " farmers are usually considered a higher risk and may have more difficulty obtaining credit. ' Harlan D. Ritchie, Michigan State Univer- sity professor of animal science, was one of The decline in income experienced by some farmers in 1993, due to adverse weather, will increase the demand this year for some types of farm loans. The department said fann 10 given Distinguished Faculty Awards during the annual MSU Awards Convoca- lenders are helping customers in affected areas cope with loan repayment difficulties with "various types of loan servicing options." tion, Feb. 15. These awards are among the highest that 1993 Trade Gap Worst in Five Years the university makes in recognition of career achievement. A slight improvement in the December balance of trade over the previous month didn't ,. keep the U.S. negative balance of trade with other countries from soaring to $115.78 billion, Ritchie was cited as one of the world's top the worst since the 1988 deficit of $118.5 billion, according to the Commerce Department. authorities on beef cattle improvement. As such, he has traveled to numerous countries For the year, slower economies abroad, particularly in Europe and Japan, put limits on U.S. - from Europe to Australia - as a produc- export opportunities. Even though foreign sales did reach a record high for the year, our tion management consultant. imports grew more than twice as fast, ballooning the trade gap. He was raised on a grain and livestock U.S. trade imbalance with Japan hit $59.32 billion, its highest level ever. The huge gap adds' operation near Albert City, Iowa. He more pressure than ever to the Clinton administration's push for more open Japanese graduated from Iowa State University in markets to U.S. goods and services. 1957 with a bachelor's degree and com- pleted his doctorate at MSU in 1964. He The Commerce Department couldn't give much hope that the decline of the trade deficit started his MSU career as an assistant in- i~ I?~ce~ber could. be susta~ned. For one thing, it resulted almost entirely from sales of 4,000 students in nine courses during his CIVIlIanaircraft, a high value Item whose movement will not be repeated month after month. structor in 1957 and became a full professor in 1971. MSU career. Also, the weakness in imports was almost entirely the result of falling petroleum prices and not a signal of decreased purchasing power, according to one analyst. He has been praised for his ability to trans- During his career, he has conducted late technical research information so that hundreds of Extension education programs it is equally useful to a college freshman, a for Michigan beef producers and served as The MICHIGAN FARM NEWS (ISSN:0743-9962) is published semi-monthly except in the months of November, part-time farmer or a commercial cattle December, June, and J~ly wh~n only one issue is printed, as a service to regular members, by Michigan Farm an advisor to nine national livestock or- producer. Bureau, 7373 West Saginaw Highway, lansing, M148917. Member subscription price of $1.50 included in annual ganizations. dues of Michigan Farm Bureau regular members. Additional subscription fees required for mailing Michigan Farm Ritchie is the author or co-author of more Ne~ to non:~embers and outside the continental U.S.A. Second-Class Postage paid at Lansing, MI and He is the Department of Animal Science additional mailing offices. Letters to the editor and statewide news articles should be sent to: Editor, Michigan than 90 scientific or technical articles, and Extension project leader and is responsible Farm News, P.O. Box 30960, lansing, MI 48909-8460. POSTMASTER: Send address changes to: Michigan he has produced more than 100 Extension Farm News, P.O. Box 30960, lansing, MI48909-8460. ~ '~. for research and Extension education bulletins and papers and hundreds of ar- programs at the Lake City Experiment Sta- Editorial: Dennis Rudat, Editor and Business Manager. Staff Contributors: Mike Rogers; Connie Lawson; Donna tion. ticles for farm magazines and newspapers. Wilber; Henry Huisjen. Officers: President, Jack Laurie, Cass City; Vice President, Tom Guthrie, Delton; Administrative Director, Chuck He has received numerous awards, includ- His peers consider Ritchie a leader in the Burkett; Treasurer and Chief Financial Officer, Tom Parker; Secretary, Wil/iam S. Wilkinson. Directors: District 1, ing the MSU Extension Specialist Award, movement to help producers develop faster Jim ~iIIer, Colom~; ~istrict 2, Blaine VanSickle, M?rshall; District 3, Douglas Darling, Maybee; District 4, Tom the Outstanding Alumnus Award from G.uth,ne, De~ton; District 5, Mar.' New stnIcturaJ designs V' 5O-year coUIII and snow-load protection available to them. > New stnIctural capabilities (WIth 00 w_linlt) > New color combinations V' 20-year protection agMJst red rust An alternative USDA reform proposal submitted by Rep. Charlie Stenholm (D-Tex.) > New building styles survived a House Ag Committee hearing on the department reorganization, but most other > New exterior applications (iIcUIng aciI rain) amendments were lost, including a Farm Bureau-supported move to shift the Soil Conser- > New interior options V' 10-y_ wiIHoad lI'Otection III vation Service into the newly created Farm Service Agency rather than leave it in a separate > New sliding door tecmwlogy AUnaSteeI- ddIng doors (WIth 110 environmental agency. > New gutter systems weight 1inIt) > New infonnative video tapes V' 5-y_ WiIHoad protection 011 COQIIete From the perspective of the Farm Bureau, SCS should not be separated from other ASCS > New corrosion protection IIMIg (WIth 110 ..... Init) functions, such as cost-sharing payments for conservation practices. Farm Bureau will continue to work for that change to be incorporated into the reorganization as it moves on CsI)QI' Iot3 oIfIce today! through the committee system, said Rob Nooter, an AFBF director of governmental Adrian, MI (517) 263-0541 relations. Brown City, MI (313) 346-2702 800-447-7436 Kalkaska, MI (616) 258-2580 Rockford, MI (616)874-6400 ~.~MORTON ..'W Michigan Farm Bureau (517) 323-7000 Three Rivers, MI (616) 279-5271 aa. BUILDINGS ,- Michigan Farm News _ March 15, 1994 3D-Day Forecast - Average Temperatures with Below Average Precipitation Even with a mid-month warm up that brought temperatures into An ample supply of cold air remains available in far northern .~ the 40s and 50s across much of the state and significantly reduced sections of the continent. The northwest to southeast jet stream flow snow cover, average temperatures for February remained below 'pattern that has transported that cold air across the Great Lakes normal, with departure ranging from two to six degrees below region will likely persist for a significant portion of March. How- normal in most areas. Minimum temperatures occasionally fell to ever, indications are that it will not be as persistent or as strong as record low levels in the 20 to 30 below Fahrenheit range. it was during January and February. The record cold caused the frost line in the soil to sink as low as This should result in temperatures remaining near normal over most eight feet below the surface in some western Upper Peninsula of the state during the next 30 days. With a weak or non-existent locations (mainly under roads or other surfaces which were storm track, precipitation for the same period is expected to be routinely cleared of snow), resulting in extensive damage to un- below normal. derground water and plumbing systems. Unfortunately, given the relatively long lag time required for heat to flow downward In the longer term, the latest National Weather Service 90-day through the soil, these problems will likely persist for a few more outlook for March through May is for near to below normal weeks before heat supplied by warmer surface temperatures con- temperatures and near normal precipitation. ducts downward. It should be noted, however, that long range forecast skill in this Most overwintering crops were protected from injury by insulating transitional season is less than average and that forecaster con- snow cover during the most intense cold, with the possible excep- fidence in this particular outlook is considered low. tion of some fruit crops, notably peaches and grapes. 2/1/94 to 2/28/94 Axe Detroit Escanaba Flint Grand Rapids Houghton Michigan and Major Commodity Area Houghton Lake Extended Weather Outlook Jackson T - Temp. 3/15..... 3131 3/15 .5/31 P - Preclp. T .. P T E Michigan N B N N Normals are based on W. Com Belt N B N B E. Corn Belt N B NIB N Wlnt. Wheat Belt A B N N Spr. Wheat Belt A Pac. NW Wheat A Delta N B N B N/A B A N N N Weather News to Provide Grain Market Opportunity Southeast B N N N The best pricing opportunities for corn Darrel Good of the University of Illinois and soybean farmers will occur this spring Another variable is how much of the land San Joaquin A N N N Cooperative Extension Service says the tight prevented from being planted by flooding last during planting season and through the sum- supply of 1993 crops means that the market mer as a result of any unfavorable break in the spring will have to remain idle again this year. A-Above Average, B-Below Average, N-Nor- will react early and often to weather weather, according to a marketing specialist He presently looks for about 80 million acres mal, MA-Much Above, MB-Much Below, NP- problems, real or potential. He advises No Preclp. Source: National Weather Office with the University of Illinois. of corn and around 60 million of soybeans farmers to gear their marketing strategies to being planted. That would be an increase in take advantage of those opportunities. com acreage of about 7 million from last year Good says not all the crop acreage idled and not much change in soybeans, compared Michigan Farm Radio Network and in 1993 because of the acreage retirement to 1993. Michigan Farm Bureau Salute These requirement and flood problems will be Normal yields and percentages of har- planted to com and soybeans this year, but he vested acres would then turn out around 8.7 to Organizations for Supporting the FFA. looks for plantings of about 140 million acres, 9 billion bushels of corn and around 2 billion compared to the 132.7 million planted last bushels of soybeans, yielding increased year. stocks of bot~ but not to an alarming level. Quality Stores, Inc., North Muskegon Byron FFA Chapter, Byron Mason County Farm Bureau, Ludington The breakdown between corn and Good sees more downside potential for Amway Corporation, Ada CaIloun County Farm Bureau, Marshal MichigM Aora!~, Okemos soybeans will be decided by weather and new crop com than soybeans, but he doesn't Detroit Ecison Fooodation. Detroit Cass County Fcm Bureau, Cassopois MichigM Pork Producers Association, price advantage. He said current prices favor look for any significant price decline until the MABC - Select Sires, I..ansilg Central Dairy Supply, Inc., Lansilg Okemos com over soybeans, but a wet spring could market is comfortable that 1994 crops are off MichigM Farm Bureau, Lansing Michigan Sugar, Saginaw turn farmers in favor of the shorter growing to a good start. Century Manufadlrng Co., Mimeapois, Minnesota season re uired for beans. MoOSMto, Englewood Monitor Sugar, Bay City The Upjohn Company, Kalamazoo Charlotte FFA Chapter, Charlotte Montcalm Coooly Farm Bureau, Stanton Farm Credit Serkes, Lansing Gerber Compmlies Fooodation, Fremont Independent Mil< Producers, Comstock Michigan Fruit. Rochester, New York Contractor's EqUpment & Supplies, Morton SaJt. Chicago, Illinois Muskegon Coooly Farm Bureau, Muskegon ROOTS TO PROFITABILITY Grand Rapids Grand Rapids Newaygo County Farm Bureau, Kropf FrUt Company, Lowel Coruma FFA Chapter, Corunna Coruma FFA A1l1rml, Coruma Newaygo Noraoss Footwear, Inc., 1'1" "/'/ lapeer County Coop. Inc., lapeer Louisvie, Kentucky Darby Creek Ag Enterprises, Michigan Mil< Producers Mintord Center, Ohio Ottawa Comly Farm Bureau, AIendaJe Association, Novi Dare Products. Inc., BatlJe Creek PWeIi Armstrong TIe Corp., MichigM Rural Rehabitation Corp., New Haven, Connecticut Marshall Deflecta.ShIeId, Strongsvile, OH Delta Inc. of Arkansas, Presque Isle Coooly Farm Bureau, INCREASE WHEAT YIELDS WITH ACAIH MID Products, Cleveland Hawks Jonesboro, Arkansas Biggs/Gilmore Associates, Kalamazoo Region VIII FFA Chapters, Benzonia Englander Stove Company, Detroit Edison Company, Detroit Rockford Products Corporation, ACA WHEAT TEST PLOTS ERTL Company Inc., Dyersvile, Iowa Morvoe, Virginia Farmers Petroleum Cooperative Inc., Rockford 1993 MICHIGAN Hanson Cold Storage Co., Lansing Ruckers Wholesale, Bridgeport. Illinois Benton Harbor Ingham County Farm EUeau, Mason Kellogg Company, Kalamazoo FENCEmaster, Jacbon FMB F"nandaI Gr~, Holland Sanborn Manufacturing Co., Eden Prairie, Minnesota Sandusky FFA Chapter, Sandusky Results Are In! • Fremont FFA Chapter, Fremont Pioneer H-Bred International, Inc., Shiawassee Counly Soil & Water Johnston, Iowa Great Lakes Hybrids, Inc., Ovid Conservation District, 0N0ss0 1993 grower test plots yielded an average of United Coatings, Inc., Homer FFA Chapter, Homer ShIawassee Coooly Farm Bureau, 5.5 more bushels of wheat per acre Kankakee, Illinois Hopkins FFAAlumnl, Hopkils 0N0ss0 wh.ere ACA was used. The highest yield WoIoha1 llI'nber, Saginaw Hu~d Miing Co., Spartan Stores, Inc., Grand RapIds Mankato, Minnesota Increase was 9.2 bushels per acre! AgO-Fab,Inc., SuIlivan,IIinois Total Marketilg Associates, RoRing Meadows, Illinois Now is the time to treat your wheat with ACA to gain your AlO Holstein Club, Tawas City Kalamazoo Coooly Farm Bureau. Kalamazoo Union Tools, Columbus, Ohio ABegan County Farm Bureau, ADegan advantage. ACA c~n be added to, or impregnated on, KJein Fertiizers, Inc., FowIerWIe U.S. Stove Company, Alma FFA Chapter, Ama South Pittsford, Tennessee your fertilizer to boost your yields! Lansing Daiy, Inc., Lansing Alma H9l School, Ama USA FFA Chapter, Sebewaing Ambraco, Inc., DOOuque,lowa Lenawee Coooly Farm Bureau, Mian Mackenzie Seed Fcm, Breckenridge Valwine Inc., Ashland, Kentucky GET THEACA ADVANTAGE! American Power DistOOutors, Inc., Van Gilder Farms, Fowlerville Toledo, Ohio Mar.Jo-Lo Fcms, Mason • Stronger more fibrous root system. Anderson Foundation, Maumee, Ohio Barry Coooly Fcm Btxeau, Hastings Bay Coooly Fcm &.eau, Bay City Maremont Corporation, Loudon, Temessee Marshall FFA Alumni, Marshal VZ Mar1cet, Webberville WoIYerile Woridwide, Rockford Woodstream Corporation, Lititz, Pennsytvania • Plants are more vigorous and productive. • Easy and convenient to apply. • Enhanced early spring root growth. • Enhanced drought tolerance. 1111 Contact your local ~ Association of FFA. BeaI City FFA Chapter, Baal City East I..ansilg • Affordable and effective. Clean Crop Deal.r • Increased yields. or call1-80G-292-2701 _..cIIICAN .... FAR'" BIJIIEAIJ ~MF1iN) RADIO NETWORK for addltlonallnfonnatton rilE ACA ADVANTAGEI on . Michigan Farm News •• •• March 15, 1994 . Michigan Farm News ~' •• ....... March 15, 1994 •••••~.r Market Outlook .... ...... •••••••• ••••••• r. ~ . Dr. Jim Hilker, Dept. of Agricultural Economics, MSU Starting in May, the USDA will experiment Seasonal Commodity Price Trends DAIRY OUTLOOK Larry G. Hamm, Dept. of Agricultural Economics, MSU Dairy product markets are counter- E~RM .' •••• ,j••• ~ ......• =JI=='~III ..~:;.. •••••••• •••••••• .... ~ with releasing selected crop reports in the morning before the markets open instead of in the afternoon after the markets close. Wheat-" seasonally strong. That is a phase that market forecasters use to explain why ear- BUSINESS. Crop production reports and world sup- --? lier market predictions have not panned out. ply/demand reports will be put out at 8:30 a.m., Eastern Standard Time, rather than Corn Dairy markets are much stronger than an- ticipated for March. On the last trading day OUTLOOK 3:00 p.m. The idea is to end the advantage of February, both butter and cheese markets M-W is holding means that the average that the foreign exchanges now enjoy and Soybeans strengthened. Butter prices that had been producer pay price could hold up better this allow the information to be traded first on trading below the support price rose to sup- year than was earlier predicted. the U.S. exchanges. With the modem tech- Hogs port levels. niques of analysis, I do not see this change Earlier forecasts for the average gross farm as a problem. Cattle However, the news in the cheese markets is milk price (before deductions) for a range even better. Cheddar block prices increased of $12.80 to $13.10 appear solid now. The for the third consecutive week. Barrel CORN cheese jumped $.0125 cents per pound and price strength continues, the average pay prices might average even higher. is now trading $.1875 above the support Since the first of the year, the market has price. All of this market strength bodes well The market is currently being driven by the done an about face on who they want stor- The other question is how much of last for farm pay prices. lack of quantity and quality of feed for the ing the corn. This is shown in two ways. year's 10 percent set-aside will come back northern tier dairy sector. Feed quality is an One, the basis being offered is not very in with this year's 0 percent set-aside re- The February Minnesota-Wisconsin (M- issue in Michigan, but Michigan producers strong; and two, the spreads between fu- quirement. W) price will not move much from its are holding their own. New York, Wiscon- tures contracts have widened out. $12.41 (3.5 percent test) level for January. sin and Minnesota are having real problems The other report is the second quarterly Indications are that the February M-W may, with Wisconsin suffering their worst If you were already in a basis contract for Stocks Report. The USDA has projected in fact, increase slightly. Currently, the M- production decline in recent memory. say July com, this is an example of how a 1993-94 corn feed use at 500 million W is running around $1.60 per cwt. higher basis contract works better than storing bushels, 9.5 percent below 1992-93. Yet than last y~ar. cash when the basis widens out. As new feeds come on this summer, the first quarter stocks indicated continued milk supply will respond. Also, the current strong feed use. Also, cattle on feed num- Of equal importance to producers, is that prices will spur milk production expansion. At this point, if you are looking for a market bers continue to run above those of a year this is the time of year when the M-W is upswing, the market is telling you it will Prices may moderate somewhat. However, ago, and weights are up, despite the high usually falling. Drops of $.30 to $.50 per the decline will likely be tempered for 1994. pay you to store com on the farm. At this com prices. cwt. in the M-Ware not uncommon from writing, there is a 7 cent spread between the So far, 1994 is looking like a good year for December through April. The fact that the dairy producers. March and May com futures contracts. On the other side, hog slaughter is below year ago levels, but weights are about the EGGS If you feel the market is not going up and same. If this report indicates com feed use you have com, then consider a hedge-to-ar- higher than USDA projections, we could Henry Larzelere, Dept. of Agricultural rive contract. Using a put with stored com 1994 was 2 percent above a year earlier. have a nice market rally which we should Economics, MSU Total egg production was also up 2 percent is another possibility. take advantage of. Egg prices near the end of February were in January, but table egg production was up almost 5 cents a dozen above a year ago . . 1 percent. Recently, the corn market has kind of been The USDA finally announced most of the The net for egg producers was about the in the doldrums. Exports, while near expec- information about the 1994 Com Program. same as last year because feed ingredient tations, are slow and feed use is a big ques- During the April, May and June quarter, As we know, the set-aside requirement will costs were 4-5 cents per dozen eggs above egg prices are likely to be in the low 60s, tion mark. On March 3], this all may be zero, the loan rate will be raised to $1.89, February 1993. change dramatically as two important partly because Lenten demand strength will and the projected deficiency payment was USDA reports will be released. have passed. However, some strength in the pegged at 40 cents. Last year, wholesale prices in New York for egg product prices seems to be present. Grade A large eggs in cartons averaged in One of those reports is the Planting Inten- The advance deficiency payment will be 50 the mid 80s during March. This year it is tion Report. One of the biggest questions is Some moderating of egg production seems percent of the projected deficiency pay- likely that prices will be in the mid to upper how much of the water-saturated, com likely by the last quarter of 1994 with the ment. My calculations say sign-up, the 70s. ground is intended to be planted this spring, egg-type chick hatch finally turning lower. downside price risk is large and with zero given last year's flood damage. The January hatch was 2 percent below set-aside the costs are minimal. With the egg-type chick hatch in 1993 January 1993. Layer-type eggs in in- above the previous year in almost every cubators on February 1 were down 14 per- month, the number of layers on February 1, SOYBEANS cent from a year earlier. CATTLE The market story on the storage of soybeans for soybeans. There is a big question as to is different than com. The basis is fairly whether all the Delta soybean acres will be On Feb. 18, the USDA released the latest strong and the market is not providing marketed in January than two years ago. planted this year. ' 7-State Cattle-On-Feed Report. It showed 1 enough carry between futures contracts to This means we are approaching being cur- percent more cattle on feed Feb. 1 in those rent, but not there yet. The high weights of even pay on-farm storage costs. Along with these reports, the South states compared to a year ago and 11 percent market cattle also show we have a little America situation is playing a big role in more than 2 years ago. This shows that we ways to go. This means if you are pessimistic, sell, and the market. Their crops appear very good will have plenty of ready cattle through if you are optimistic, use a basis contract. and harvest has started. most of March. And if you are optimistic, but cannot accept Placements in January in the seven states much downside risk, consider selling and were down 5 percent. But placements in the How their new supplies affect our exports If you look at a new feature of the report, buying a call or a minimum price contract. 1,000+ head feedlots were up 4 percent. is critical. Market upswings from this point feedlots over 1,000 head, they are 2 percent These two are essentially the same. This means that placements in the smaller on will depend on U.S. weather scares. Be above last year. However, 87 percent of the lots was down 51 percent. watching for new crop pricing oppor- cattle on feed in the seven states are fed in The same two reports I discussed being tunities. lots over 1,000 head capacity. The lots important for com will also be important Placement have now been down several under 1,000 head in these seven states have months in a row; this should help cattle 9 percent fewer cattle on feed. price over the second half of 1994 relative WHEAT to the second half this past year. After prices Cattle marketed in January were up 6 per- work their way up into the $75-77 range for While wheat exports have been a little bet- to-arrive contract to do your forward pric- cent, but you need to remember last year's April-May, we should stay in the $73-75 ter than initially projected for most of this ing. problems marketing cattle in the high range the second half of the year. marketing year, we now seem to be running Plains. Three percent fewer cattle were into a lull in sales. I What makes it even more difficult is that the wheat basis is harder to predict than com HOGS Things will have to pick up over the next and soys basis due to the white wheat grown couple of months to meet USDA projec- in the state. I would not suggest leaving all Be watching for the next quarterly USDA It should tell us if we are continuing in a tions. We are now in the period of the year my pricing of new crop wheat until harvest. liquidation mode and how big it will be. The Hogs and Pigs Report to be released on where weather scares can be real in the March 25. Hog slaughter has run below live hog futures are giving us some pretty wheat market. Be ready to price some new The USDA finally announced most of the good forward pricing opportunities now. If expectations for the entire last quarter, al- crop on rail ies. information about the ] 994 Wheat Pro- though weights are up some. the report is bullish, consider taking ad- gram. As we know, the set-aside require- vantage of it. What to do with remaining old crop is a ment will be zero, the loan rate will be hard call. W~lile the basis is quite wide now, raised to $2.58, and the projected deficiency Whea~Agreement Eludes U.S.-Canada Negotiators which would suggest storage, the futures payment was pegged at 85 cents. There ISno agreement yet on what amount of Canadian wheat should be allowed into the market is providing no carry. I suspect it is United.States, ~c~ording t? Knight-Ridder News reports. USDA officials denied rumors that the time to get out of old crop for the few left The advance deficiency payment will be 50 figure IS 1.7 million metnc tons. The Clinton administration has not yet made a decision on a new offer to take to Canada. in it and to put pricing efforts into new crop. percent of the projected deficiency pay- ment. Again, the sign-up dates are March ] Canadian offi~ia~s have been holding out for a cap of 2.5 million tons while the V.S. has At this point, new crop basis is on the wide through April 29. My calculations say sign- asked Canada to hmlt s~les ?f wheat here to 1 million tons. One U.S. trad~ official expressed side of normal. This makes it a hard call as up, the downside price risk is large and with hope that th~ two countnes WIllreach agreement soon on a whole range of trade issues, including to whether to use a forward contract or a zero set-aside, the costs are minimal. the ~heat dispute. V.S. wheat grov.:er~have been pressuring Canada to Iimit its export of wheat to thiS country or suffer other retalIatIOnbecause of unfair pricing practices. Michigan Farm News ...11 Michigan's •• ...... March 15, 1994 ••••••••r• School Reform and Funding Changes Public Education: .... ..... ••••••• ••••••• •••••~.'I •••• " ~~ ,j ••• 1. Lynn R. Harvey, Professor and Extension Specialist Beth Moore, extension Specialist THE POLICY DEBATE Michigan ts educational system has been based on the concepts of reliance on the school finance after the passage of Senate Billl. E~RM .' ~ j~::.. •••• •••••••• •••••••• ~ Kenneth VerBurg, Professor and Extension Specialist property tax, a strong sense of local control and acknowledgement of an important role Many policymakers also perceived that this BUSINESS for the state. was an appropriate time to address school On March 15, 1994, citizens will have opportunity to vote on one specific part of funding package -- whether to increase the the the During the past 30 years, intense policy quality issues. The basic framework for the policy debate during the past few months OUTLOOK debate has focused on concern about the ~ntered on these points: sales tax. It is also important to understand the a~ount of property tax paid by Michigan broader context of the new legislation. CItlze~St the growin& di~parity in per pupil D What revenue sources could be a higher per pupil spending level spendmg between dIstncts and distrust of used annually to replace more but within available funding The funding and operation of Michigan's K-12 state government. than $6 billion in property tax resources in the state. public school system was changed substan- revenues? The challenge was to tially Dec. 24, 1993, when the state legis/ature D What could be done to significant- Since 1964, 14 proposed constitutional find revenue sources that would gave final approval to a proposed constitution- ly improve the quality of public amendments to reform school finance or be stable, be viewed as equitable a/ amendment and to a set of 24 implementing education in Michigan? For some, property taxation, or both, were placed and yield sufficient-revenue to bills. before voters; only the Headlee Amend- fund schools. the answer was to increase com- ment (November 1978) was approved. petition through establishing /n July, the Legislature approved Senate Bill 1 D How could the disparity in per "schools of choice" and "charter (P.A. 145, 1993), which specified that, begin- pupil spending between school schools;" for otherst it was target- Operating under a self-imposed deadline of ning Dec. 31, 1993, all property in the state is districts be lessened? The goals ing funds to meet special needs. Dec. 31, 1993 -- to allow school districts exempt from millage levied for local school were to avoid penalizing high adequate time to plan for the next school district operating purposes. This decision spending districts while trying to ~ear -- the Legislature had a relatively sho.rt eliminated approximately $6. 1 billion, or about tIme to restructure the state's system of bring low spending districts up to Your Vote On March 15 60 percent of the annual operating revenue for Only one question will be on the statewide K-12 public education. ballot on March 15. The central thrust of the THE POLICY DECISIONS 9uestion will be: Do you approve the increase The elimination of property taxes for K-12 In the state sales tax? If a majority of the I men.t this increaset if approved by voters, r The Legis.lature approved a comprehen- citizens voting on that question say YES, the education initiated a dramatic shift in the long- and It makes changes in other revenue sour- sIve set of bIlls and a proposed ,constitution- sales tax increase will take effect on May 1, standing debate on funding the state's primary ces to generate the needed monies for K-12 al amendment related to school finance and 1994. If a majority of the voters say NOt then and secondary schools. Legislative action in education. reform. These measures provide: the legislative plan (increasing the income tax) December brought closure to weeks of bipar- I tizan efforts to seek workable policy funding will take effect on May 1, 1994. * Two alternatives for financing public The statutory (or legislative) plan would . Under either plan, many other tax changes i options . increase the income tax and other taxes. education. Michigan citizens have an op- WIllbe implemented by legislation. There will portunity to select the mix of taxes that will Both plans would levy specified mills of be a system in place for funding public educa- The Legislature approved two different ap- property tax on homesteads and non- tion in Michigan for the 1994-95 school year, be used to pay for schools. Both approaches ." proaches to funding schools along with use a variety of revenue sources to replace homesteads. The March 15 election results whatever the outcome of the March 15 elec- decisions related to the operation of schools will determine which of the two methods tion. the monies eliminated by the passage of and the distribution of school funds. The final will be used to fund schools as well as If yoters approve the ballot question, thus Senate Bill 1. step in the process of deciding how to change provide for: changmg the state constitution, no further the way Michigan finances its public schools • A new method for distributing funds to changes can be made in the constitutional The ballot plan is a proposed constitutional will occur when voters cast their ballots at a local school districts. The state will provide provisi~n.s unless the issue again is presented amendment to increase the state sales tax. special statewide election on March 15, 1994. the monies for local districts, primarily to the CItIzenry (after approval by two-thirds Accompanying legislation would imple- of each house of the Legislature or through r. through a per pupil foundation grant. • Initiating programs to improve the quality petition referendums). The legislative decisions can be altered -- in response to constituent concerns and to meet STATE PROPOSAL of schools. This will include monies for changing fiscal situations -- by a majority vote at-risk pupils, additional funds for pre- of each house of the Legislature and approval SPECIAL ELECTION - MARCH 15, 1994 school education and opportunities for es- by the governor. tablishing public school academies. Cargill" Hybrids Deliver Top Yields PROPOSAL A A PROPOSAL TO INCREASE THE STATE SALES AND USE TAX RATES FROM 4% TO 6%, LIMIT ANNUAL INCREASES IN PROPERTY TAX ASSESSMENTS, EXEMPT SCHOOL OPERATING MILLAGES FROM UNIFORM TAXATION REQUIREMENT AND REQUIRE 3/4 VOTE OF LEGISLATURE TO EXCEED STATUTORILY ESTABUSHED In 1993 Michigan State Yield Trials. SCHOOL OPERATING MILLAGE RATES. The proposed constitutional amendment would: 2497 Second PIKe tie (out of 56 4327 Third Place (out of 64 1) Limit annual assessment increase for each property parcel to 5% or inflation rate, whichever is less. entries) in grain trial. entries) in late grain trial, When property is sold or transferred, adjust assessment to current value. with 111 ButA with 184 ButA at 28.3% at 34.2% moisture. moisture, (compat'9d to 2) Increase the sales/use tax. Dedicate additional revenue to schools. (compared to test test swrage of 158 BuIA average of 93 BuIA at 27.""" moisture). 3) Exempt school operating millages from uniform taxation requirement. at 35.6% moisture). 4) 5) Require 3/4 vote of legislature to exceed school operating millage rates. Activate laws raising additional school revenues through taxation including partial restoration of property 4277 First Place (out of 72 entries) in 177 (FOOIletti X5307) PInt Place (out of 72 entries) tax. early grain trial, with 192 ButA in late grain trial. with at 26.1 % moisture, (compared to 212 Bu/A, at 28.9% moisture 6) Nullify alternative laws raising school revenues through taxation including an increase in income tax, test average of 168BuIA at 22.9'" (compered to test average personal tax exemption increase and partial restoration of property taxes. moisture). Also flflished first in of 175 BulA at 29.~ moisture). average of Kent, Ingham and Also finished third in average of Should this proposal be adopted? Saginaw Counties. Kent. Ingham and Saginaw Counties. Yes No ~ 0 4277 firat Place (oot of 81 entries) in irrigated early trial, with 207 But A First PIKe (out of 72 entries) in Third Place (out 01 72 entries) In at 18.2% moisture. (compared to early grain tria1. with 207 ButA at 27.40)1, late grain trial. with 203 But A, test average of 172 Bul A at 20. 1... moisture. (compared to test average (compared to test average moisture). of 167 BuIA at 23.0'lb moisture). of 184 BulA). Prepared and Distributed by the Michigan Department of State Richard H. Austin, Secretary of State Why Not More Cargill OnYour Farm? More Cargill means more bushels. 1993 state conditions change. but the Cargill success yield trials proved it again. Across the state. story goes on and on. To learn more. contact several 01 our com hybrids ranked at or near your dealer or call our 800 number or one 01 the top in late and early grain trials. Growing these territory managers: Pr\ned under alIhOrity 01 PA 118 011954 eD-IOI (84.000;800;.001I) EmrTlItt Omat Robert MOISe Keoth Clar1< (517) 655-2500 Wllhamston. MI (616) 373-5495 Kalamazoo. MI @)HYBRID (517) 773-7805 Mt. Pleasant. MI • SEEDS Michigan Farm Bureau Encourages a .YES" Vote on Proposal-A Make Sure You Vote March 15 Calil-BDD-G34-B941 Michigan Farm News , .-..... March 15, 1994 ~. P.A.116 Contracts Sti/l Valuable With Proposal-A by: Deb Laurell MFB President Jack Laurie responds to questions from reporters during a Lansing news conference on the agreement of farmland's definition under Proposal-A. Contrary to popular belief, Public Act still provide financial relief for those bad crop 116 refunds will not be adversely impacted by years. "If I have a crop failure and my farm the passing of Proposal-A. According to Ron income/household income is down, P.A. 116 Nelson, Michigan Farm Bureau legislative is still there to provide a safety net in those bad counsel, P.A. 116 refunds will be smaller, but years," Nelson said. "Additionally the tax lien only because the amount of property taxes due on expiring P.A. 116 contracts will be originally paid will be substantially smaller. substantially less." AI Almy, Michigan Farm Bureau Public Nelson explains, that under Proposal-A Affairs director explained, "I don't see any the school operating portion of property taxes adverse impacts if Proposal-A passes .. .it real- would come down to 6 mills, a considerable ly does not make a lot of sense for me to pay reduction from my property the current taxes up front, average of 34 send the "...it really does not make lot of a mills. In rural money to government sense for me to pay my property taxes areas, Nelson estimates ap- and wait for up front, send the money to govern- proximately them to refund ment and wait for them to refund my 80 percent of my money to the property me. I would rather keep money to me. I would rather keep my tax bill is going to my money in money in my own pocket to begin with. II school operat- my own pock- ing, meaning et to begin farmers will see a significant reduction in their with." property taxes under Proposal-A. Currently, P.A. 116 provides refunds to According to Nelson, Proposal-A will put individuals whose property taxes exceed 7 a cap on individual assessment increases to no percent of their household income. The more than 5 percent or the rate of inflation, Furthermore, one of the primary benefits would still not be doing anything to preserve amount of your property taxes greater than 7 whichever is less. As long as farmland meets of P .A. 116, farmland preservation, will not farmland," said Almy. "The continuation of percent is refunded if enrolled in P .A. 116. the qualifications of P.A. 116, Proposal-A be diminished under Proposal-A. "Without P.A. 116 will continue to provide positive With Proposal-A, all benefits of P.A. 116 would treat farmland equitably with homes- P .A. 116, if we had lower property taxes, we benefits in preserving farmland." stay in place and according to Nelson, it will teads. Your Michigan NORTHRUP KING Seed Dealers City Dealer Phone No. Alicia Con Agra Berger & Co 517 -770-4130 Alma McClintic Farms 517 -463-1140 Alto Alto Farm Services 616-868-6030 Ann Arbor Strieter Bros 313-995- 2497 Auburn Bancroft Belding Birch Run Ittner Bean & Grain Gerald Cole Jerry Gallagher Con Agra Berger & Co 517-662-4461 517-634-5212 616-761-3243 517-624-9321 mter Blissfield M.A.C 517 -486- 2171 Breckenridge B& W Co-Op 517 -842-3104 Carson City Harvey Milling Company 517 -584-3466 Conklin Arends Farm Service 616-899-2136 Constantine Ron Weston 616-435-8219 Corunna Clyde McLosky 517-743-3633 Diamondale John Oakley .. ! 517 -646-0629 Dorr Dorr Farm Products 616-68] -9570 Dowagiac Dowagiac Harold Grabemeyer Joe Van Tuyle 616-782-8744 616-782-8275 Viking 1 Tops University Trial " % of Average Stand - Average Yield as Freeland Cort Agra Berger & Co 5] 7-695-2521 Variety S. 1993 (site-years) % of Vernal (site-years) Homer Viking I 165 (3) 123(3) Tri-County Agra Services 5] 7-542-3] 96 This strong alfalfa can handle our winters- in 3452-ML III (2) 103 (I) Lake Odessa Mark Erickson 616-374-8538 University variety trials,Viking ranked number I 5252 5262 126(6) ISO(10) 118(7) , , in stand persistence and yield. It also offersresis- 115 (24) Mason R & S Crop Service 5 17-628-2036 636 112 (25) III (79) tance to major alfalfadiseases. For winter survival, AI ine 123 (6) 117 (10) Merrill Con Agra Berger & Co 517-643-7293 longer stand life and high yields, it's tough to beat Oi r 97 (17) 112(41) Middleton M.A.C 517-236-7263 Viking 1. DK-I22 89 (15) 113 (32) Aa hi 75