How you can protect your farm operation: debt reduction, food transparency, and more in our Economic Summit recap | The Spokesman Speaks Podcast, Episode 17
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Welcome to Episode 17 of The Spokesman Speaks podcast. In this episode, we chat with five speakers from our recently concluded Economic Summit. Dr. Dennis Todey (USDA) discusses the outlook on weather and gives tips on prevented planting. Jim Knuth of Farm Credit Services of America describes the traits that successful producers share, and explains how you can proactively manage your debt and working capital to keep your farm's finances healthy. Debra Bauler from Cargill walks us through exciting new trends in ag tech, particularly around food transparency and blockchain. Canadian farmer Adam Ornawka gives advice on growing hemp. Last, Dr. Art Barnaby of Kansas State University walks through crop insurance and risk management strategies.
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Narrator: Since 1934, Iowa's farmers have turned to the Iowa Farm Bureau Spokesman as their trusted news source. Now, The Spokesmen Speaks. Listen in and hear from leading experts on topics important to farmers and agriculture. Now here's your host, Laurie Johns.
Laurie Johns: Welcome to our special Economic Summit edition of The Spokesman Speaks Podcast. We're glad you joined us and I think you are going to be glad that you decided to tune in to this information packed episode as well. We hosted Iowa Farm Bureau's Economic Summit June 28th in downtown Des Moines. The daylong conference featured experts from all around the country, even one from outside the U.S., and they all showed up to share profitable opportunities and risk management strategies for farmers during this challenging farm economy. Now we can't pack an eight hour conference into a podcast episode, but we can bring you our follow-up conversations with a handful of those experts. So let's start with the weather and yield outlook from Dr. Dennis Todey of USDA's Midwest Climate Hub. Farm Bureau's Zach Bader caught up with Dr. Todey after his presentation. Let's listen in.
Zach Bader: Let's start out with the most basic thing here. How can you explain or sum up what we've been experiencing here this spring? I know you've mentioned that the back story actually goes back months. How do you sum up what we've been going through?
Dr. Dennis Todey: It's simple. It was wet. No, we've had wet conditions going all the way back to last year. So we knew coming into the season there was potential for problems and then, you know, things happened late winter, early spring that made it even wetter. Some big events, some big snow falls, that all, and then cold conditions slowed down our planting. So we knew there were some concerns coming in worse than we even thought it was going to be. So that's been, that's been our problem. And then since then, you know, we stay cold, we stayed wet and you know, when it's cold and then the cold and wet go together very, very tightly in the spring. So that's been the short answer of what's going on.
Zach Bader: So, what can farmers, we know where we're at right now, what can farmers expect for this growing season from your perspective?
Dr. Dennis Todey: Obviously our concern right now is where are we going to go for, you know, for the rest of the season standpoint? And I mentioned here we kind of almost need a goldilocks situation going on here because we have corn that is so far behind either, you know, either when it was planted, okay, it's behind on degree days or if it was planted very late. We need the right amount of heat going on and above average, cumulation of degree days going on for the rest of the season. It's hard to do at this point. We can't get much warmer than average at this time of year to accumulate additional degree days because that puts us in stressful conditions. So we need warmer than average by not too much throughout the season. Especially, you know, as we get into the August, September time period to push that along so that they can reach maturity. I'm again overall not completely concerned that we're gonna have problems with maturity issues. I think we'll probably get there in most cases. But we're going to have high moisture corn that we're going to have to be dealing with. So trying to dry that either in field waiting for it to dry in field or waiting for it, you know, and having to dry it otherwise. That's my biggest concern. Soybeans, some other things and you know, soybeans have an ability to adapt to the end of the season. So I have less concern about them unless we would have early freeze and yes, I use the term early freeze and I said we shall not talk about that because we can't say anything about it at this point. We definitely don't want even anything smacking it early at all. Even a little bit ahead of average would not be good. The overall trend on freeze dates is towards later. We're going to need that to happen this year to help allow things to reach maturity. We'll keep looking at that. You know this far out, we really can't say anything about anything more than that longer-term trend.
Zach Bader: You mentioned trends. Are we in the midst of any long-term trends and can you talk about what that might mean for farmers in the months to come here?
Dr. Dennis Todey: We are, you know, what we've seen this year is consistent with what we've seen in the longer-term change in precipitation. More precipitation and more of it occurring in the off season when we don't want that. That produces management headaches for producers with wet soils in the off season. Being able to do field applications, get things planted. That's a real problem for us. The overall trend has been towards more rainfall, bigger events and more of it occurring in the off season. That's been our real problem.
Zach Bader: We wanted to make any predictions for harvest season, whether it's weather or yields or anything like that?
Dr. Dennis Todey: The concern I have going on in the harvest season, we talked a little bit about reaching maturity. There are hints the wetness could continue into the fall.
We're a little bit far out to being able to say too much yet, but there are some concerns that way given how wet our soils are and you know, additional above average rainfall would just complicate the matter because we're going to have people leaving crops in the field for a longer period of time this fall to let them dry. If we do stay wet and we have wet soils that just makes the harvest season that much more difficult. So that's, those two things are what gives me the most heartburn right now.
Zach Bader: Any suggestions that you could offer the farmers? Obviously there's only so much you can control when it comes to weather, but you mentioned taking care of soil, things like that. Any suggestions that you would leave farmers with as you look and do your projections here?
Dr. Dennis Todey: Sure. The things, you know, if you have prevented plant acres, take care of that soil. Since it's not gonna be planted, put a cover crop, do something to manage that soil so that we don't have weed issues and we don't lose more soil with what we have going on the rest of the year. Longer term. Yes. Make sure you're managing soils, make sure you're taking care of your soils. Because that is what makes our area most productive and we don't want because of the additional rainfalls, bigger rainfalls cause problems with soils. Three, four, five, six inch rain falls. There's nothing good about soils that happens with that. But we can, how we manage our soils to try to deal with that. We can protect our soils in the longer term.
Laurie Johns: From weather we turn to another evergreen topic that's often top of mind for farmers. Interest rates and working with lenders. Jim Knuth is the Senior Vice President for Farm Credit Services of America and along with an interest rate forecast, Jim shared the attributes of farm operations that find success in this tough economy. Zach tracked down Jim after his presentation as well.
Zach Bader: Jim, tell us, starting out here some themes that you're hearing as Farm Credit Services works with farmers, the producers you're working with. What are some general themes that you're hearing from folks out in the country?
Jim Knuth: Yeah. Again, I think there's a sense between those who are really succeeding and those who are struggling and what we see in our portfolio is kind of that dividing line is really how they manage their operation from a business financial marketing perspective. These are producers who are serious about their numbers and they know their numbers. These are people that make holistic business decisions based on total working capital, total machinery equipment costs, total land costs that they have. These are people that are focused on retaining their working capital. They're also excellent marketers. They have a marketing plan, they execute a marketing plan and they're proactive. Typically they pre harvest market. I'm guessing they're selling old crop grain and selling into this rising market as we speak. But again, they're finding ways to make proactive adjustments in this environment and they're spending adequate time on the business financial marketing aspects of their operation. It tends to be the first things they do, not the last.
Zach Bader: And do you have any suggestions for producers who are looking to become better at those attributes or gain those skills? You mentioned the time and commitment to something like that. Any suggestions for those who want to advance in those areas?
Jim Knuth: Sure. A lot of this is common sense time stuff. This is not Harvard MBA math and so you can work with a lender, you can work with family members, you can get online. There's a lot of resources for you to get better at the numbers aspect, the business aspect, the marketing aspect of your operation. But you probably need some partners, some people to help you along. Take baby steps, but time invested will be time that pays off in the long run.
Zach Bader: What's Farm Credit Services? You touched briefly a little bit on interest rates and just looking ahead, forecasting those kinds of things as best you can and looking at the overall for farm economy, what are you seeing from Farm Credit Services perspective?
Jim Knuth: Yeah. Interest rates have become a real positive for agriculture. Our variable rates have leveled off. We've seen no increases in 2019. We believe there's about a 0% chance we'll see an increase. In fact, we're likely to see one, maybe two decreases of 25 basis points. So there's no upside risk really in variable rates. Long-term rates have surprisingly come down about a hundred basis points or 1% since last November. So, our long-term rates are very, very attractive. We're in a yield curve inversion moment here. Those tend to last for weeks or months, not years. So it's kind of a call to action. If you're thinking about locking in rates, reamortizing some debt, stretching that out to help your cashflow, I would do it sooner versus later. But the window of opportunity is there for long-term interest rates.
Zach Bader: So, you mentioned reamortization, what are some other opportunities that you see out there for farmers in addition to just overall improving the way that they're managing their finances? Any other opportunities that you're seeing out there?
Jim Knuth: Yeah, obviously managing your debt on your balance sheet by reamortization is just one solution. And that alone won't help you cook the whole pie. But what we see is it's not just one or two things, but it's everything. I saved $3 an acre here, $7 an acre here, $9 an acre here. So, we negotiate, we look at all of our costs and it's one thing after another frankly, and agriculture, those inches add up over time and that's making the difference between those who are succeeding in this environment and those who continue to struggle.
Zach Bader: Any final suggestions that you'd offer to producers maybe specifically in working with their lenders? You mentioned don't be a stranger with your lender, that type of thing, but any specific suggestions that you would maybe leave them with here?
Jim Knuth: Yeah, I think it's make sure and be proactive about meeting with your lender and having a relationship and communicating with your lender and having the lender and you, your business partners, making sure each one is comfortable with the other. What we see is those producers who are willing and able, and those are the key words, willing and able to make adjustments and work with their lenders. Boy, we work with them, you know, till the cows come home. The mistake that some farmers make is, boy, I'm going to avoid my lender. I'm not willing. I'm not able. I simply want my lender to loan me more money. Sometimes that's where we get to the point where that's a difficult conversation. Frankly, it's not good for the farmer and it's not good for the lender either.
Laurie Johns: Yes, great advice from Jim. I hope you heard something there that you can apply to your own farm. All right, now ready to switch things up a bit? From weather and farm lending we're moving to a couple of topics that are revolutionary in Iowa. Technology that has the potential to strengthen the connection between consumers and farmers and a new crop that you'll be no doubt seeing on Iowa's landscape in the very near future. So let's start with blockchain technology. Have you heard of it? It was certainly new to me. Blockchain helps consumers learn more about their food's journey from farm to plate, creating more traceability and transparency. You know, consumers today do want to know more about how their food was grown or raised. Debra Bauler is the Chief Information Officer for Cargill Protein and Salt. And she talked about the exciting potential of blockchain and other cutting edge technology at the Economic Summit. I spoke with Debra after her presentation, so it's time now to learn more about what Debra calls an exciting next step and agriculture's technology revolution. I liked what you had to say, that it's not about the industrial revolution, it's about the technology revolution. Talk a little bit about that.
Debra Bauler: Yeah, I think this is an exciting time and I think technology we can look at can be daunting. You know, the pace of change seems to be accelerating. We know that it won't be any slower than it is today as we look forward. And when we reflect on this, I think history books will tell us this is instead of an industrial revolution, it is the technology revolution. And what do I mean by that? The history is going to tell us that technology really changed the way the world works, changes the way ag is produced, the way we as consumers get information, the way we run our lives is really being disrupted today by technology. And it's exciting to be part of history.
Laurie Johns: It is. And we certainly know from when we have the Iowa Farm Bureau Food and Farm Index, which shows the overwhelming majority of grocery food shoppers in Iowa read labels. Paying attention to it. They want information. Is that where blockchain is coming from? Tell me more about that.
Debra Bauler: Yeah, blockchain is interesting because what we hope for a technology, and in this case it's blockchain, but any technology that helps solve problems. And so what consumers are looking for are ways to trace their food and a way to understand where their food came from. What blockchain does is it allows us to participate with other people in a distributed way to put information and data together. And then what that means is that the consumer can understand all the places along the supply chain and who contributed to the supply chain for their food. And I can say unequivocally from like a honeysuckle white turkey that it was raised by Glenn Robinson and it was raised in this farm and this is how it was raised and here's a picture of Glenn and here's some video of his farm. And so, I think it's just a great example of how we can connect farmers to consumers and allow technology to help that along the way.
Laurie Johns: Now are there questions that farmers approach you regarding privacy, big data? What's next? I mean how do they protect? There's certain things they don't want everything out there I'm sure.
Debra Bauler: Correct and I think this is an interesting part because you have consumers who want transparency, but we also have to protect the privacy of our growers, right? So in the case of our honeysuckle white turkey producers are offering specific information and make that available to others. There's also a way to protect other data and say that is not something we're going to share. An example of that might be the harvest date. While we all know is producers with a harvest date is maybe the average consumer doesn't actually want to know the death date of their birth. So I think there are ways that we can do that and then that can even translate into their personal information. And at Cargill, we take data privacy very seriously and work around the globe. There are high standards in countries like Germany and of course here in the U.S. of where we need to protect people's data and we do take that very, very seriously. We invest heavily in that. As a matter of fact.
Laurie Johns: Well, I can understand that. And I mean it is such a fast moving mark, isn't it? What consumers want and it seems to change every day. How do you stay on top of that?
Debra Bauler: Yeah, that's a lot of part of the dancing that we do in our jobs, right? It's to understand and try to project where the consumer is going to go and what might be a trend one day is not another. A great example of that is almond milk. There was a craze around almond milk and then as soon as consumers were educated more and understood the amount of water that it's taking to grow almonds and understanding the sustainability, we're seeing a shift towards oat milk. And so as soon as you get these productions set up for things that are on trend, they're pivoting already. And that's really disruptive in our agricultural-based market. So staying on trend is a lot of hard work and it's a lot about trying to predict and not always being right, but trying to stay ahead of where consumers are at. So, we do a lot of consumer-based research at Cargill.
Laurie Johns: What's the number one question you got? Not just from farmers today but in general?
Debra Bauler: Yeah, I think in general, and it actually happened today is where do you think tech is going? And boy, if I had that crystal ball, I mean. I think that would be a great ball to have and at least be able to see the future. But I do think technology is disruptive and where it disrupts us in the ag industry, we hope it's tied to innovating where it matters. That it increases efficiency, it increases sustainability, decreases safety risks that we have on production facilities or on farm. And so I just think if we invest and look at technology where it matters and where it has a purpose, I think we're going to be on the right path.
Laurie Johns: Well certainly. Anything I haven't asked you that you want to add about your presentation or about what you might think is next or?
Debra Bauler: No, I think it's a great opportunity to connect and to just have a chance to talk about where technology is disrupting. We're part of history and like I said, the pace of change isn't going to get slower, so let's figure out how we can get it to be a part of this and to help solve complex problems together.
Laurie Johns: Wow, great information from Debra. Certainly plenty to follow-up there in the future. So, I mean, are you ready for that next step in the technology revolution? Well, farmers have always been interested in staying ahead of the curve, whether that's in how they raise livestock or what crops they plant. For example, how about industrial hemp? This spring, the Iowa legislature passed a law paving the way for industrial hemp to be planted in Iowa in the near future. Now we had two experts presenting on this topic, at our Economic Summit. One, a representative from the Iowa Department of Ag and Land Stewardship, who explained that while the hemp is not legal in Iowa right now, they certainly expect it to be legal starting next year. Another expert was Adam Ornawka. He's a Canadian farmer who's had success growing industrial hemp on his farm. I sat down with Adam after his presentation to talk about the basics of growing hemp, including potential pitfalls of growing and marketing the crop. It's good advice for Iowa farmers who like to plan ahead. Listen in. This is early. This is early right now in Iowa, but it's a good time to ask these questions about industrial hemp. So what's your first advice that you start off with for farmers whenever they invariably ask you questions?
Adam Ornawka: Well I guess I caution that you need to match production with processing ability. That's probably the first step. There's not much point in growing a crop that you can't do anything with. Now that's not to say that you shouldn't grow it, it's just a matter of having some contacts within the industry. Finding a production contract. Hemp grain is pretty easy to transport, so it doesn't need to be right next door. And I guess that leads to my next point is start with the grain. It's the easiest to produce. It's easiest to handle and store. It's something we're all familiar with as grain farmers. So it's, you can take a lot of what you already know and apply it to hemp on the grain side.
Laurie Johns: And when it comes to the particular climate preferences of the plant, you know, what would be your advice there?
Adam Ornawka: Well, hemp seems to be a pretty adoptable plant. It's a resilient and hardy to many different conditions, although it does not like to have wet feet in the spring. So you're going to want to start out on well drained soils. And once you find some soil that works for you on your farming operation, you can maybe start pushing the limits a little bit and find out how far down the slope you can go before it starts to see a little bit of moisture stress and it'll tell you right away if it doesn't like it.
Laurie Johns: Yeah. Now, how do you plant it?
Adam Ornawka: You know, hemp is a pretty easy, well, it's easy to plant. It's hard to plant well I guess is a good way to put it. Up in Canada, we use everything from conventional air seeders to a row crop planting system. The main takeaway though is it definitely can't be any more than an inch deep. You'd probably want to see it around a half an inch is ideal. Just into moisture. It doesn't take much to get it going. So there's no need to chase moisture.
Laurie Johns: So that's good. Now, fertilizer?
Adam Ornawka: Fertilizer. Hemp can be a fairly demanding crop for nutrition. I like to compare it to around a high yielding wheat crop, maybe a little bit more. So we're looking at applying anywhere between 90 to 150. I mean, I know there's some research showing that you can see results up to 200 pounds an acre of nitrogen, but it being an oil crop, it's a high nitrogen user. And you'll need the appropriate amount of phosphate, potash and sulfur to go with it. So usually that's somewhere around 30, 40 pounds per acre of phosphate and potassium and sulfur, you know, according to your soil test to, you know, keep the crop going.
Laurie Johns: Now vulnerabilities, pests and diseases?
Adam Ornawka: Right. Well I'm a little outside of my area of expertise here in this part of the world, but I can share what I've learned at home. And that is if there's gophers in the area you're gonna want to deal with them because they will move in and wipe out a field before you know it. Another issue is cutworms. They seem to have a pretty good interest in hemp seedlings too. Beyond that, once it grows up a little bit it's kind of a tough naughty plant. So a lot of things tend not to bother it once it gets a little larger.
Laurie Johns: But there was a few snickers in the room because I think this has happened before. When you were talking about the harvest and you showed a picture of a flaming combine that was alarming. How does that happen?
Adam Ornawka: Well, just due to the nature of the hemp stalks there's a lot of long lignin fibers in it that, I mean that's, that's how hemp came to be grown as an agricultural crop thousands of years ago was for the fibers that, you know, once they dry out and you start working them a little bit, they turn into rope and that happens quite fast. So basically you gotta be very mindful that there's going to be hemp fibers wrapping around rotating shafts and such, and you have something rotating around something that's not, you're gonna get heat and heat leads to fire. So I know I average some sort of smoldering fire about every 40 acres, so.
Laurie Johns: You're kidding!
Adam Ornawka: Oh yeah. Yeah. It's, you usually don't smell the best by the time you're done harvesting a quarter section of hemp.
Laurie Johns: Oh my gosh. Now, was that picture of the combine on fire. Was that yours?
Adam Ornawka: No, no. Luckily hemp tends to just smolder. You gotta be pretty, if you're paying attention, you'll catch it. You'll smell it long before you get anywhere near flames.
Laurie Johns: Oh my goodness. My goodness. So, okay now how, as far as the growing season itself, is there a certain length of time? Is it a fast growing plant? I know it probably depends how you plant it and how it's spaced, and I suppose where you are, but.
Adam Ornawka: Hemp is a very fast-growing plant. Usually in the first four weeks you can expect it to be a foot tall. There's rumors out there that in some climates it'll grow four inches a day. I have never seen that personally myself, but, some of the varieties grown for fiber do get up there. Hemp is also an indeterminant growth. So it'll grow until it dies by some exterior influence such as frost, but it's also daylight sensitive, so it won't start flowering until the days start getting shorter normally. There are some variability between the different varieties. But you want it to be in the ground for about six weeks before you expect it to start flowering. So I normally plant my hemp somewhere in early May. I know there's recommendations a little earlier as you go farther south in the world and a little later as you go north. It does like to have warm soil to start with.
Laurie Johns: What's the number one question you get from farmers who are just kicking the tires on this whole thing right now?
Adam Ornawka: You know, I think the question seems to be how much money can be made from it, right? And I think my response to that tends to be, well, what are you using it for? And do you have a market for it? And I guess I can share my experience with profits and some of the people I know that grow hemp. We operate in a different climate and we have different cost structures. So I always tell people, you can expect maybe in your first year maybe around a thousand pounds an acre, 800 to a thousand pounds is what they told me when I started growing hemp. And we're looking at 50, 60 cents a pound for payment on it and the crop input costs, excluding land that's going to be pretty similar to growing a wheat crop.
Laurie Johns: So cautionary tales, anything I haven't asked you that you want to add to farmers, something to keep in mind?
Adam Ornawka: Well I can't reiterate this enough and I think it's pretty common to anyone involved in developing these markets is have a market. Seek out processors. They're out there. You might have to go a little further a field. I know there's some processors in the northern states that have been taking hemp from Canada for several years now. And even into Canada. I think some of our processors have been known to import if they can beat the prices that we're selling for in Canada. And just try and make sure you do a good job of crop establishment. Do a good job of finding a market and take it slow. It's an easy crop to grow, but it's also an easy crop to have things go wrong with.
Laurie Johns: Isn't it fascinating to learn about a crop that's opening a whole new market potential? I hope you enjoyed that conversation and heed Adam's advice when it comes to industrial hemp. It has exciting potential. Sure. But it's important to proceed with caution. Okay. Now we've reached our final interview in this special Economic Summit edition of The Spokesman Speaks Podcast. Unfortunately, there's going to be a lot of talk about crop insurance in 2019. I mean, who could have imagined the rain we've been getting this spring and summer? Dr. Art Barnaby is a Kansas State University professor and a crop insurance expert who's been studying that program for decades. Are you making the best decisions for your farm when it comes to crop insurance? Zach sat down with Dr. Barnaby after his presentation to talk about crop insurance misconceptions and opportunities. Let's listen into that conversation now.
Zach Bader: Dr. Barnaby, I mean sitting there, obviously there's a lot of extensive knowledge there when it comes to crop insurance. First, tell us where does that come from? How long has this been an area of expertise for you studying this field?
Dr. Art Barnaby: I actually started in 1980 and about 10 years later, around early 1990, I got involved with the private sector in covering some holes that were obvious to me in the crop insurance program. The first one is that the yield guarantee didn't really guarantee yield. And that showed up on an '89 drouth on Kansas wheat where the crop failed, they didn't have any bushels to sell the price went up a buck and at that time we had deficiency payments and they lost their deficiency payment and they didn't have anything to sell at the higher price. The farm program hasn't really changed a lot. The price loss coverage program works very much the same. So any state that's got a correlation between price and yield, and that would be Iowa corn, short crop price tends to go up. And that's when you need that price protection to the upside. We saw that in 2012 in Iowa. Those who canceled their harvest price probably regretted that decision.
Zach Bader: You talked a little bit about during this presentation about some common misconceptions around crop insurance. What do you think are some of those, even for folks who weren't able to attend here today, some farmers listen to this podcast, what are some of those common misconceptions that you think are most important for them to understand or dispel in their own minds?
Dr. Art Barnaby: Well, probably the one that irks me the most is that you can get paid if you don't have a loss. That's been put out by various think tanks in Washington. That's just absolutely not true. So what I did here today was take the revenue protection contract and split the indemnity payments out by cause of loss. And by cause of loss, I'm talking what part of that payment was due to yield loss and what part of that payment was due to price loss? And when you break it apart, it's obvious that in order to trigger the yield portion of that contract, you have to have at least a 15% yield loss off of your trend yield. And most farmers in Iowa are probably at 80 or 85. So it could be as much as 20% yield loss to trigger any payment from the yield side. On the price side, you need in the case of corn, you're going to need a price below $4 this year. If it's above $4, the price side of the RP coverage completely eliminated. Now you could have low yields and the yield portion would pay, but they won't be payment from price loss.
Zach Bader: If there's a mindset that farmers could take to this to use crop insurance in the most effective way, what do you think farmers should be? How should they be thinking about crop insurance to use it in the most effective?
Dr. Art Barnaby: Well, one of the things it does is as long as that harvest price is there and there's been legislation introduced to eliminate it, not currently but in the last couple of years, is that it guarantees the yield being replaced at current market value. Not a price setback on March 1, but what it is today. And of course, if you recall in 2012 it went a lot higher. And once you realize you've got those bushels guaranteed at replacement value then it really lowers the risk of forward pricing grain either via forward contract or hedge or even buying putts. And those who feed grain to hugs and other livestock, if they don't actually raise the bushels, they're going to have to go buy those in the marketplace. Particularly if they've got a breeding herd, you're not going to get rid of those genetics because the corn crop failed. Now you may, you know, call it back, but you're probably not getting rid of it. Again, you're going to need dollars to replace those bushels, so you can maintain your herd and you're going to have to pay current market price, which is much higher than what you got paid for out of crop insurance.
Zach Bader: Is there anything, I know that we're still waiting on some of the administrative details of course, of the new farm bill, but is there anything that changes in the new farm bill that's significant that you think you'd pass along in terms of crop insurance?
Dr. Art Barnaby: Well, currently the big thing at least in parts of the corn belt is the prevented planting thing. And prevented planting pays a lot less when it comes to crop insurance because number one, the harvest price does not attach that we've been talking about. So if the market is higher than $4 at harvest time, you won't necessarily get enough dollars to replace the bushels that we're in that guarantee. Secondly, it's kinda like a double deductible. First of all, you have to have a 15% yield loss, which you obviously have, you can't plant, but then you take another 40% deductible because they only pay 60% of the base coverage and that's if you bought up, if you didn't buy up, they only pay 55%. Again, I'm talking about corn, which is where most of the prevent plant was. Now today this report, I don't know when you broadcast that, but they found a bunch of new acres been planted to corn that the market wasn't expecting. So we'll see how many acres were actually end up collecting prevented planting payments. But be aware of that the harvest price did not attach. Now there is discussion that the disaster programs are going to come back and make that up. There's nothing official on that. That's, I don't know whether I'd call that a rumor. It's at least been discussed in the press that they would actually make good on the harvest price, if that does happen on prevented planted acres, that won't come from the insurance company. That will come from taxpayers. Insurance companies are gonna look at this, I've got a contract with you. I have to live up to my end of the contract and I expect you to do the same, so they're not going to add added benefits into a contract that they've already signed onto. I don't know whether that anyone will take a look at this in the future and say, well, maybe that peril ought to be added to the crop insurance contract. I guess that would be my thinking. But the argument against it would be it might encourage more farmers not to plant if they get into the situation when they have the choice. You know, once you get into the late planning period, do you take the reduction in coverage or do you plant? Well if you've got the harvest price attached to that, you might not, that might be the tipping point to cause you not to plan. So that's the concern, I'm sure.
Zach Bader: Is there any place that you'd recommend folks go if they're, obviously this is a pretty deep subject and you covered a lot of ground for our audience here today. If anybody wants to learn a little bit more about this, their best options through crop insurance, any sources that you turn to or user-friendly sources out there that they can turn to learn a little bit more about this?
Dr. Art Barnaby: Probably the one place that's probably doing more writing on crop insurance now than anyone else would be the University of Illinois on the farmdoc site. So that might be a place that could give you additional insight as new things come up.
Laurie Johns: Hey, we know you'd much rather be talking about bumper yields than crop insurance, but it is an important topic nonetheless. Especially when you find yourself needing crop insurance and after all, it has been a tough year for farmers, especially because of the weather. Well we've reached the end of our special Economic Summit edition of the podcast, but before I let you go, I want to bring your attention to three upcoming opportunities for you. The first is a live webinar on financial assistance for beginning farmers. That's July 16th. The second opportunity is a webinar with hands on strategies for coping with the stress that's been brought on by this difficult farm economy. That webinar is July 18th. The third opportunity will be a presentation on land values featuring Dr. David Muth of People's Company. Muth was scheduled to present at our Economic Summit, but because of flight delays, he couldn't make it in time. So we are glad to bring you his presentation and you'll find that on our website. We'll get that date to you very soon. You can find out more information on all of those webinars on our website, IowaFarmBureau.com. That's all for this episode of The Spokesman Speaks Podcast. We hope you'll join us for our next episode on July 29th. Until next time, thanks for reading The Spokesman. Thanks for all the great stories and inspiration, and thanks for listening to The Spokesman Speaks.
Narrator: Thank you for listening to The Spokesman Speaks, a podcast by Iowa Farm Bureau. Check out more podcasts and articles from The Spokesman at IowaFarmBureau.com/Spokesman. You can also find and subscribe to The Spokesman Speaks Podcast in the Apple Podcasts app, Google Play, and other popular podcast apps. We appreciate your ratings and reviews and welcome your feedback at Podcast@ifbf.org.
About The Spokesman Speaks Podcast
Since 1934, The Iowa Farm Bureau Spokesman has been Iowa’s leading agriculture news source, and today it is the largest circulation ag newspaper in Iowa. While the Spokesman newspaper is available exclusively to Iowa Farm Bureau members, The Spokesman Speaks podcast is available publicly, reaching farmers on-the-go with stories that matter to them. You can find episodes of the podcast here or subscribe and listen in your favorite podcast app, such as Apple Podcasts, Google Play, Spotify, iHeartRadio, Stitcher, TuneInRadio, or Radio.com.
We release new podcast episodes every other Monday. Episode 18 will be released on July 29, 2019.
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