Monthly Archives: October 2013

Department of Agricultural Economics represented by 2 of 6 candidates for the K-State Student Ambassadors

The two students representing the College of Agriculture as finalists for K-State Student Ambassadors are both from the Department of Agricultural Economics.  Elizabeth Harner, agribusiness junior from St. George advised by Andrew Barkley; and Kurt Lockwood agricultural economics junior from Caney advised by Sean Fox; are two of the six finalists.  The winners will be announced at the football game Saturday.  More information about the candidates can be found at http://www.k-state.com/s/1173/social.aspx?sid=1173&gid=1&pgid=1144.

Each year a male and a female student are elected to spend the year attending alumni and campus activities, speaking to alumni, friends, current and prospective students.

Ambassadors are elected by the student body at Homecoming and represent the student body at Alumni Association events throughout the state and at university activities. Student Ambassadors visit with prospective students and alumni at Alumni Association events throughout Kansas, attend Student Alumni Board meetings and activities, assist with Alumni Association programming on campus like class reunions, Homecoming Student Committee and other special events, as well as assist the president’s office as needed.

For more information about the student ambassador program and other homecoming activities visit: http://www.k-state.com/homecoming.

Please remember to vote to support these students. Voting will happen from 8 a.m. to 5 p.m. on Thursday, Oct. 24.

Despite shutdown, agricultural industry moves forward

The U.S. government shutdown is causing commodity traders to look to other resources for market information and, futuristically, will lead to gaps in historical data.

Uncertainty looms across the United States as to when the government shutdown will end, and this uncertainty has troubled the agricultural industry and those wanting to make trading decisions for their crops and livestock.

“I don’t know how long this will last, but context is important,” said Glynn Tonsor, associate professor and livestock economist for Kansas State University. “The sun still came up today. Feeder cattle are being sold. Corn is being harvested. Those kind of physical activities I don’t think are changing. What is changing, at least in the short term until the shutdown is resolved, is how we discover ag prices, how they’re reported, and how people make buy-sell decisions.”

The U.S. Department of Agriculture’s (USDA) entities are among those currently not functioning due to the shutdown. Even the USDA’s website is not available for use. The USDA’s Agricultural Marketing Service (AMS) is the entity responsible for facilitating the fair marketing of U.S. agricultural products and reporting price averages.

Ag commodity traders rely on those unbiased numbers from the AMS, Tonsor said. Some private companies develop cash numbers as well and might issue them for a fee, but many of those companies use AMS data to figure their numbers. Tonsor points out that even AMS data isn’t free, as the AMS is a tax-paid service. But, due to the shutdown, the most recent cash numbers available for cattle, for example, are from Sept. 27.

Tonsor said people should educate themselves about the origin of the data and the potential targeted audiences, if any, of private data companies. The AMS is viewed as an unbiased source, much like universities, he said. A private provider might show a rosier example of prices to cow-calf producers, for instance, if that’s its targeted audience.

“I don’t want to come across as an advocate for USDA, but I have made a point to try to raise awareness to ag producers that a lot of publicly gathered data gets repackaged, and folks like me and others end up bringing it to them,” Tonsor said. “Understanding where that data comes from, how it’s collected and the fact that it isn’t collected for free, is very important.”

How long the government shutdown will continue and how long commodity traders will go without base-reported prices is uncertain. Without the AMS data, it is evident that the marketplace is uneasy, but Tonsor said the typical cow-calf producer who is going to sell his or her calves is probably still going to do it.

“We’re still going to find a price that makes transactions go forward, but the cost of that price discovery system, at least in the short term, has gone up,” Tonsor said. “Everybody is adjusting to find this information somewhere else, and maybe it’s not as efficient. Not everybody has the same network. Not everybody has access to the same private data sources.”

Tonsor said in addition to using private sources to obtain data, people should consult their personal networks and do some searching online to better understand the current markets.

Another problem that has developed out of this shutdown is gaps in historical perspectives of the markets. The feeder futures market, for example, has a cash settlement index that is based on prices reported from various parts of the country. Tonsor said because no information is being collected now, there won’t be the ability to build that index for the traditional way of settling the feeder cattle contract.

“We are definitely building gaps, some of which will not be resolved even if the shutdown ended right now,” Tonsor said. “Every day, every minute that goes by, there is something that is not being captured that won’t be back-filled. Some things that are being captured won’t be back-filled because of computer systems being down. So you have gaps in the data series.”

As the shutdown continues, the agricultural industry can continue to lobby to put AMS reporters back to work, Tonsor said. He and other K-State agricultural economists will speak about the government shutdown implications on agriculture at the 2013 Agricultural Lenders Conference, hosted Oct. 8 in Garden City and Oct. 9 in Manhattan. Information from these conferences will be available online (http://www.agmanager.info/).

Story by: Katie Allen, Communications Specialist, News Media and Marketing Services – katielynn@ksu.edu or 785-532-1162

For more information: Glynn Tonsor – gtonsor@ksu.edu or 785-532-1518

Hikaru Peterson takes close look at five rural grocery stores

Study Indicates that Challenges and Attributes Differ

It’s odd to think about a lack of fresh, nutritious foods in the midst of thousands of acres of wheat, soybeans, and other food crops, but rural communities across the country are having a hard time keeping their grocery stores open.

Kansas State University agricultural economist Hikaru Peterson is taking a closer look at the problem that’s as pervasive in Kansas as it is in other states. What she’s found are significant challenges for rural grocery stores, and depending on the size of the community, the challenges can differ. She also found that some have taken innovative steps to keep stores viable, even in the smallest of communities.

Peterson’s latest work as part of the Rural Grocery Initiative was to take an in-depth look at five grocery stores in the rural Kansas communities of Cuba, Sedan, Smith Center and Minneola, and in Hebron, Neb. The study, initiated in 2012, was funded by a U.S. Department of Agriculture-Agriculture and Food Research Initiative (AFRI) grant.

Despite challenges common to many rural stores, she found that like the communities themselves, each of the five grocery stores surveyed had a unique story.

  • Cuba Cash Store in Cuba, Kan. (Republic County), which has a population of 156, is known for its Czech heritage meats and catering, and its owners own a restaurant in town, which creates a synergy effect. The owners have built working relationships with local schools, prisons, restaurants and senior centers, which helps with the grocery store’s minimum purchasing requirements from suppliers.
  • Home Town Market in Minneola, Kan. (Clark County), with a population of 745, closed at one time but reopened in 2012 as a community-owned store with a hired manager and governing board. The community sold over 4,000 shares at $50 a share.
  • Floyd’s Market in Sedan, Kan., population 1,306 (Chautauqua County seat) also developed working relationships with local institutions.
  • Gene’s Heartland Foods in Smith Center, Kan., population 1,700 (Smith County seat), has developed working relationships with local farmers, is one of 11 stores owned by one family and is locally managed.
  • Central Market in Hebron, population 1,600 (Thayer County seat) also has developed working relationships with local farmers.

“Grocers in the smallest rural communities with less than 1,000 people face different managerial challenges than those in small communities with populations of 1,000 to 2,500,” Peterson said.

Stores in the larger communities (1,000 to 2,500) were not so concerned with the minimum purchasing requirements imposed by wholesalers and believed that working with local institutions such as schools, churches and other organizations to combine orders contributed to good will in the community. They also have found ways to work with local farmers.

Conversely, stores in communities with populations of less than 1,000 felt they had to constantly monitor minimum purchasing requirements in order to get purchasing discounts. They had to work harder to actively seek out institutional accounts and did not believe they had room to work with local farmers.

The study showed that managers of stores in the 1,000 to 2,500 population category felt that having a café or deli in the store was beneficial, but not critical to absorb “shrinkage” which includes items unsold by the “sell by” date. They wanted to remain specialized in their grocery operations so that they did not take business away from other local businesses, and had a mutually beneficial relationship with local eateries.

Stores in the smaller communities (less than 1,000) viewed having a café or deli as being more important to their operations because they helped reduce shrinkage and brought in additional customers. They also viewed that part of the store as a venue for community socializing.

“Owners and managers of grocery stores in the smaller communities are serving their communities through ‘wearing many hats’,” Peterson said, in part to keep their stores in business.

All store owners and managers viewed having a custom meat counter as a trait that significantly differentiated them from big box supermarkets where meats are generally pre-packaged.  Stores in the smaller communities, in particular, featured their meat counter prominently.

Some stores are exploring whether serving shoppers by offering nutrition scores and other educational information at the point of sale could help their customers and their business at the same time.

In addition to competition from “big box” stores within 30 miles of some communities as well as smaller convenience stores often linked to gas stations, an emerging competitor for rural grocery stores – particularly in communities of 1,000 or more – are what can best be described as “dollar stores,” Peterson said.

She and her colleagues are currently tabulating the responses of a survey sent in June to all postal patrons in a five-county area of Kansas. The survey will shed light on grocery shopping behavior. Preliminary results of the survey will be available this fall.


Rural Grocery Facts and Figures

Facts about grocery stores in rural U.S. communities include:

  • The USDA defines a rural “food desert” as a census tract where 20 percent of the population is below the poverty level and 33 percent live more than 10 miles from a supermarket or large grocery store. That amounts to 2.3 million rural citizens who live in a food desert.
  • The primary challenges rural grocers face are competition from big box stores, operating costs, labor issues, government regulations, lack of community support, low sales volume, and having to meet minimum buying requirements from suppliers.
  • Rural grocery stores are an important economic driver in their communities and a primary source of nutritious foods.
  • Grocery stores are part of the social fabric of a community, sometimes providing meeting places.
  • Grocery stores hire local people, on average creating 14 jobs (five full time and nine part time).
  • Grocery stores generate local sales taxes – on average 20 percent. Locally-owned small businesses such as grocery stores have a large economic multiplier effect.

More information about the Rural Grocery Initiative is available.

Source: Rural Grocery Initiative – Center for Engagement and Community Development at Kansas State University


Rural Grocery Business Models are Numerous, Varied

MANHATTAN, Kan. When it comes to the way rural grocery businesses operate in rural communities across the country, one size does not fit all. Examples include:

  • School-based stores in Leeton, Mo.; Cody, Neb.; and Rothsay, Minn.;
  • Community-owned grocery stores in Minneapolis, Kan. and Walsh, Colo. ;
  • Public/private partnerships in Onaga, Kan. and St. Paul, Kan.;
  • Cooperative in Kiowa, Kan.
  • Sole proprietorships in Hebron, Neb. and Jetmore, Kan.; and
  • 501(c)3 in Plains, Kan. and Morland, Kan.

More information about rural grocery stores is available.

Source: Rural Grocery Initiative – Center for Engagement and Community Development at Kansas State University

Story by: Mary Lou Peter
mlpeter@ksu.edu
K-State Research & Extension News

Hikaru Peterson – 785-532-6702 or hhp@ksu.edu

K-State Master of Agribusiness offers Tour of Brazilian and Argentine Agribusinesses

Kansas State University’s Master of Agribusiness (MAB) program is offering travel to Brazil and Argentina to learn about the food and agriculture industry in South America. The trip will include professional visits to agricultural and food-related industries. Guided sightseeing tours will be arranged along with free time to explore Buenos Aires, the waterfalls at Puerto Iguazu, and Sao Paulo. The tour is scheduled for Feb. 14 – March 1, 2014 and is open to anyone with an interest in international agribusiness.

This the second time the MAB program has traveled to South America since it began hosting international agribusiness tours in 2004. Tracy Brunner, president of Cow Camp Beef in Ramona, Kan., was one of the participants on the first South America tour.

“The MAB-sponsored agricultural study tour to South America [in 2004] became even more than we expected. We saw and learned many things about crop and livestock production. We also witnessed firsthand some of the inherent strengths and challenges of agriculture in the MERCOSUR countries we visited,” Brunner said.

MERCOSUR is an agreement between several South American countries designed to promote free trade, among other efforts.

Allen Featherstone, professor of agricultural economics and director of the Master of Agribusiness program, thinks people will enjoy getting a different perspective on agriculture.

“While the MERCOSUR region is a direct competitor for U.S. agriculture, their perspective on many issues is very different than the U.S. perspective,” Featherstone said. “Understanding management challenges in a region that deals with turbulent macroeconomic conditions, no formal government support, and few formal insurance markets will provide a keen insight into one of the biggest challengers to the U.S. agricultural system. Understanding the process used by the South American livestock sector in dealing with animal traceability will also be educational.”

Previous international trips hosted by K-State’s MAB program have been to South America, Russia, Southeast Asia, Australia and New Zealand, and Europe. Travelers get a first-hand perspective of international agriculture, while building relationships with members of the group. When remembering the most recent trip to Europe, Brunner said he enjoyed the mix of the group, professional visits and sightseeing.

“I think the K-State Master of Agribusiness group assembled an excellent tour that was not only interesting and educational, but really enjoyable. One of my favorite things was getting to know the group members. There is such a great dynamic on MAB trips. We also sampled European agriculture and saw many of the world class sights of Rome, Milan, Lucerne, and Paris; few tours could ever boast so much in such a short time,” Brunner said.

K-State’s Master of Agribusiness is an award-winning, distance-education degree program that focuses on food, animal health and agribusiness management. Students and alumni work in every sector of the food and agribusiness industry and are located in 40 states within the United States and in more than 30 countries. The program has three start dates and campus session locations for the convenience of working professionals.

More information about the trip can be found at K-State Master of Agribusiness or by contacting Mary Bowen at 785-532-4435, mjbowen@ksu.edu.

Story by: Mary Bowen
K-State Research & Extension News

Glynn Tonsor to address expansion and beef economics in November 5th webinar

Believe it or not, expansion in the cattle market will be the topic of the Beef Cattle Economics Webinar, Nov. 5 from 1:30 – 2:30 p.m. (central).

Economic indicators are pointing to a rebuilding of the cattle herd, but not everywhere. Register today for an in-depth economic forecast and discussion on prospects and implications of herd expansion.

During this final installment of the Beef Cattle Economics 2013 series, Glynn Tonsor, livestock economist at Kansas State University, tackles when, where and how the herd will expand, and will address questions about the impact for stakeholders throughout the beef and cattle industry.

Tonsor joined the K-State Department of Agricultural Economics faculty as an Assistant Professor in March 2010.  He earned his Ph.D. from K-State in 2006 and was an Assistant Professor in the Department of Agricultural, Food, and Resource Economics at Michigan State University from May 2006 to March 2010.

Tonsor’s current efforts are primarily devoted to a range of integrated research and extension activities with particular focus on the cattle/beef and swine/pork industries. His broader interests include aspects throughout the meat supply chain ranging from production level supply issues to end-user consumer demand issues.

The webinar is sponsored by Merck Animal Health.  The Beef-Cattle Economics Series is a coordinated partnership between Kansas State University, Beef magazine, Drovers magazine and Meetingplace.  Click here to register and for more information.