Christopher Doering reported in Sunday’s Des Moines Register that, “A record number of farmers and ranchers want to participate in the government’s popular conservation program, but many are being turned away because the U.S. Department of Agriculture simply can’t accept any more land by law, Secretary Tom Vilsack said.

“The Conservation Reserve, created in 1985, pays landowners an annual rent to idle environmentally fragile land for 10 years or more. Farmers are paid for establishing long-term vegetative species, such as approved grasses or trees to control soil erosion, improve water quality and enhance wildlife habitat.  ‘There is a lot of interest in this program that is untapped simply because we have a cap,’ Vilsack said Wednesday in an interview.

“For many years, enrollment in the Conservation Reserve Program (CRP) was 30 million to 36 million acres, but Congress lowered that total in the 2014 farm bill to 24 million acres.”

The Register article explained that, “The reserve program will be ‘an important part of the forthcoming discussions over the next farm bill,’ said Sen. Joni Ernst, R-Iowa, in part because of high demand for the program from producers facing low prices and a slumping farm economy

“Sen. Chuck Grassley, R-Iowa, added that increasing the number of acres allowed in the CRP ‘will certainly be looked at’ during the next farm bill. ‘When you’re putting together a new farm bill, everything is on the table,’ he said.

“Grassley and Ernst are members of the Senate Agriculture Committee in charge of writing the farm bill.”

Currently, neither of the Senators from Illinois are on the Ag Committee.

As we noted last week, the U.S. Senate has struggled to find the right balance with respect to the GMO food labeling issue.  (Recall that the U.S. House addressed this issue in July).

Politico’s Morning Agriculture reported today that, “Congress is back in town, and it’s not a moment too soon for the food industry. There are now just 53 days until Vermont’s GMO labeling law takes effect, leaving little time for Congress to craft and pass a fix. And options for what the bill should include are also limited. An effort in March from Senate Agriculture Committee Chairman Pat Roberts that would’ve given the Grocery Manufacturers Association two years to get widespread adoption of its SmartLabel electronic labeling program failed to get enough Democrats to sign on thanks to concerns that the legislation still fell short on providing information to consumers. In the meantime, companies from General Mills to Frito-Lay have started labeling in compliance with Vermont’s law, which is set to take effect July 1.”

The Politico update noted: “Stay tuned.”

Meanwhile, and more broadly with respect to genetically modified crops, Reuters writers Tom Polansek and Karl Plume reported on Friday that, “Across the U.S. Farm Belt, top grain handlers have banned genetically modified crops that are not approved in all major overseas markets, shaking up a decades-old system that used the world’s biggest exporting country as a launchpad for new seeds from companies like Monsanto Co.

“Bold yellow signs from global trader Bunge Ltd are posted at U.S. grain elevators barring 19 varieties of GMO corn and soybeans that lack approval in important markets.

“CHS Inc, the country’s largest farm cooperative, wants companies to keep seeds with new biotech traits off the market until they have full approval from major foreign buyers, Gary Anderson, a senior vice president for CHS, told Reuters.”

The Reuters writers noted that, “The U.S. farm sector is trying to avoid a repeat of the turmoil that occurred in 2013 and 2014, when China turned away boatloads of U.S. corn containing a Syngenta AG trait called Viptera that it had not approved. Viptera corn was engineered to control insects.

“Cargill Inc [CARG.UL] and Archer Daniels Midland Co each said the rejections cost them millions of dollars, and both companies have sued Syngenta for damages. ADM is refusing GMO crops that lack global approval. Cargill did not respond to requests for comment.

“The United States is the biggest producer of GMO crops and has long been at the forefront of technology aiming to protect crops against insects or allow them to resist herbicides.”

University of Illinois agricultural economist Gary Schnitkey indicated recently at the farmdoc daily blog (“2016 Net Farm Income Projections Under Different Price Scenarios“) that, “Recent increases in corn and soybean prices have cast a more optimistic light on the potential for higher 2016 incomes. In this article, net incomes for different price scenarios are examined given that yields are at their expected levels. Even given recent increases, prices near current fall delivery bids will result in working capital deterioration on many farms. Given expected yields, prices need to be above $4.20 for corn and $10.25 for soybeans before working capital stabilizes on typical grain farms. Again all of these projections are made using expected yields. A key period for understanding 2016 net income levels will occur in August 2016 when a clearer picture of yields and prices emerges.”

The farmdoc update explained that, “At USDA’s Agricultural Outlook Conference in February, WASDE forecast 2016 prices of $3.40 for corn and $9.00 for soybeans (see Table 1). At those price levels, Agricultural Risk Coverage at the county level (ARC-CO) will make payments in Champaign County, Illinois at $56 per base acre given that 2016 yields are at trend. This $56 ARC-CO payment estimate is based on half the base acres being in corn and half in soybeans. If these 2016 ARC-CO payments occur, they will be received in the fall of 2017.”

“Given these prices and ARC-CO payment estimates, operator and land return is estimated at $187 per acre for corn and $227 per acre for soybean, both below the projected cash rent of $275 per acre (see Table 1). As a result, farmer return on cash rent farmland is negative. Projections are for a $68 loss on cash rent farmland given that 50% of farmland is in corn and 50% in soybeans (see Table 1).

“Income projections are for a 1,500-acre farm with 15% of the acres are owned, 40% of the acres are share rented, and 45% of the acres are cash rented. Percentages in each farmland control category are typical for central Illinois farms. For this farm, net farm income is projected at -$17,775 per farm, with negative incomes resulting in financial deterioration.”

Dr. Schnitkey added that, “More optimistic prices of $4.20 per bushel for corn and $10.25 per bushel for soybeans result in net income of $55,425 per farm. These prices roughly yield financial stability: farms are not losing working capital but are not building much either.

“As a guide, prices of $4.20 for corn and $10.25 for soybeans will result in financial stability given the cost structure that exists today. This price benchmark, however, depends on yield levels. If yields are below average, a $4.20 corn price and $10.25 soybean price will not result in a stable financial position.”

Also, the farmdoc update stated that, “A critical time will be in August when 2016 yields and prices come into clearer focus. If prices are below the $4.20 corn and $10.25 soybean benchmarks, cost cutting will continue to be important to avoid continuing large losses to working capital in 2017. In particular, below $4.00 corn prices and below $9.00 soybean prices will result in the extreme need to reduce costs as working capital likely will be very limited on most farms. August is particularly crucial because many of the 2017 cash rent and input decisions begin to be made.”

USDA’s National Agricultural Statistics Service (NASS) indicated last month in its April Agricultural Prices report that, “The corn price, at $3.57 per bushel, is unchanged from last month but is down 24 cents from March 2015.”

The NASS update added that, “The soybean price, at $8.56 per bushel, increased 5 cents from February but is $1.29 below March a year earlier.”

Jacob Bunge reported last week at The Wall Street Journal Online that, “Pilgrim’s Pride Corp. is planning a major push into organic chicken production, aiming to capture the segment’s fatter profits and rising sales following a tough patch for poultry firms.

“The move would make the Greeley, Colo.-based meatpacking giant one of the largest producers of organic chicken in the U.S. at a time when growth in conventional chicken is being outpaced by poultry raised without antibiotics and fed organic grain, executives said.”

The Journal article explained that, “The shift reflects how shifting consumer tastes, emphasizing sustainability and production methods regarded as more natural, are forcing change at major food companies that have built their business on large-scale, low-cost production.

“Pilgrim’s, the second-largest U.S. chicken processor in terms of birds processed, last year unveiled plans to eliminate antibiotics from a quarter of its chicken production by 2019, responding to concerns that widespread use of the drugs in animal production could hasten the spread of dangerous bacteria that antibiotics can’t kill.

“Major competitors like Perdue Farms Inc. and Tyson Foods Inc. are pursuing similar efforts, as restaurant chains like McDonald’s Corp. and Subway pledge to curb antibiotics use in their meat supplies.”

For additional information on organic livestock and poultry practices, see this update from last month- Proposed Rule for Organic Livestock and Poultry Practices.

USA Today writer Christopher Doering reported today that, “U.S. farmers and ranchers are experiencing improving conditions in agriculture but many are not optimistic the changes will significantly help them soon, according to a new survey released Tuesday by Purdue University and futures market operator CME Group.

“The Ag Economy Barometer, a nationwide measure of the health of U.S. agriculture, rose 21 points in April to 106, as higher prices for corn, soybeans and wheat and good weather for crop plantings boosted producer sentiment. Still, 76 percent of the 400 respondents expected the next 12 months to be challenging financially despite the improvement.

“A prolonged slump in commodity prices has squeezed farm income, forcing some producers to cut back on spending or turn to their banks for help. Seed and farm equipment makers, including DuPont Co., the parent of Johnston-based DuPont Pioneer, and Deere & Co. have announced job cuts and falling profits.”

Today’s article added that, “‘From a crop farmer’s perspective, things do look significantly better than they did in late winter, and I think that’s being reflected in our survey,’ said Jim Mintert, director of Purdue’s Center for Commercial Agriculture and lead investigator for the barometer. ‘The real question is, is that going to be a longer-term scenario or is that a short-term phenomenon?‘”