Monthly Archives: November 2013

K-State Center for Risk Management Education and Research Announces Student Fellows

The Kansas State University Center for Risk Management Education and Research has announced its second class of student fellows.

The center seeks to enhance the understanding of economic risks inherent in our global society through world-class experiential education and research.

The 17 students selected for this class include:

  • Logan Britton, Agricultural Economics, Agricultural Communications and Journalism – Bartlett, Kan.
  • Kurtis Clawson, Agricultural Economics, Agronomy – Satanta, Kan.
  • Kassie Curran, Food Science, Agricultural Economics – Farlington, Kan.
  • William Damme-Longinaker, Agricultural Economics – Randolph, Iowa
  • Joseph Dasenbrock, Economics, Psychology – Cimarron, Kan.
  • Ethan Dhuyvetter, Marketing – Manhattan, Kan.
  • Thomas Einck, Finance – Marion, S.D.
  • MaryLynn Griebel, Industrial and Manufacturing Systems Engineering – Stockton, Kan.
  • Jonathan Higgins, Finance, Accounting – Lenexa, Kan.
  • Shelby Hill, Agricultural Economics, Animal Science and Industry, and earning a master’s degree in Agricultural Economics – Satanta, Kan.
  • Gerald Mashange, Finance and Economics – Bulawayo, Zimbabwe
  • Mario Ortez, Agribusiness, and earning a master’s degree in Agricultural Economics, Nicaragua
  • Laura Rogers, bachelor’s in and earning a master’s degree in Industrial and Manufacturing Systems Engineering – Clyde, Kan.
  • Nathan Stinson, Agricultural Economics – Allen, Kan.
  • Jason Troendle, Agricultural Economics – St. Charles, Minn.
  • Lacey Ward, Agribusiness, and earning a master’s degree in Agricultural Economics, Superior, Neb.
  • Nicholas Wineinger, Agribusiness – Lincoln, Kan.

“We had a phenomenal slate of immensely talented and diverse applicants and the selection process was difficult,” said Ted Schroeder, director of the center and professor in the Department of Agricultural Economics.  “A lot of things happen with the center including guest lectures, industry visits, student research projects, and tremendous interest from industry leaders in this program. New contacts between industry and the center occur almost daily.”

By providing students and business professionals with the information and tools necessary to identify, quantify and manage risk, the center complements K-State’s strategic plan. Additionally, the center supports the greater university mission of advancing the well-being of the state of Kansas, the U.S. and the international community.

http://www.k-state.edu/riskmanagement/
crmerstudents.wordpress.com/

Story by: Amanda Erichsen
Communications Coordinator, Agricultural Economics
aerichsen@k-state.edu

Ted Schroeder
Professor, Agricultural Economics
Director, Center for Risk Management Education and Research
785-532-4488
tcs@ksu.edu

http://www.ksre.ksu.edu/news/story/student_fellows111113.aspx

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Water Management for the Future

A K-State expert examines the effectiveness of groundwater management districts in Kansas, created to help preserve a vital natural resource.

Farmers know the importance of water. Water is a necessary component to raising the crops and livestock to feed the world, and it will continue to play a major role in production well into the future.

In western Kansas, the depletion of the Ogallala Aquifer, an underground water resource that is vital to agricultural production, has many people talking about water management. Producers in western Kansas who use water from the aquifer for crop irrigation and livestock production are looking at all possibilities to reduce water use today and extend the economic life of the aquifer, while remaining economically viable, said Bill Golden, natural resource economist for K-State Research and Extension.

Local Enhanced Management Areas, or LEMAs, are public-driven and allow irrigators and other water users in Kansas’ groundwater management districts (GMDs) to establish their own groundwater conservation policies. LEMAs were made possible by a bill passed in the Kansas Legislature last year.

“I think (LEMAs) will be the future of groundwater management in Kansas,” Golden said. “It gives producers the flexibility to say, ‘We want water for our grandkids and our great-grandkids.’”

The LEMA process, Golden said, transfers authority from the GMD to local producers. Each LEMA has to be approved by the GMD and the chief engineer, but it provides flexibility to local producers by allowing them to decide the future of the aquifer under their property.

Differences in current water policies

Because they are public-driven, LEMAs are different than another water regulation program called Intensive Groundwater Use Control Areas (IGUCAs). The 1978 Kansas Groundwater Management District Act passed by the Kansas Legislature made IGUCAs possible. IGUCAs give power to the state’s chief engineer to implement provisions if groundwater levels are declining excessively in certain areas.

Golden said IGUCAs are a top-down process for groundwater management, while local agricultural producers can define LEMAs—what the rules are and how much water use they want to reduce—and can reverse a particular LEMA if it isn’t helping the water issue.

Golden said this is why he is watching the economics of the first LEMA in Kansas, the Sheridan-Thomas County LEMA, or Sheridan 6 LEMA, in the northwest part of the state.

“We are going to track to see what kind of crop-mix changes they make,” he said. “Do they change irrigation equipment? Do they change other cultural practices?”

A look at the past

A reduction in water can result in losses to a producer in the area, Golden said, but prior case studies have shown that farmers have been able to deal with less water very well, because they are innovative and are able to figure out ways not to lose revenue.

Prior to the implementation of LEMAs, Golden examined the economic impact of IGUCAs, particularly the Walnut Creek IGUCA in Barton, Rush and Ness counties. He said producers there lost 15 to 50 percent of their water, which translated to less irrigated acres in that west-central area of Kansas.

“In west-central Kansas, we have seen a quick shift to no-till,” Golden said. “We have surprisingly seen major changes in crop mix. Producers who quit irrigating wheat and grain sorghum, which are typically viewed as low-profit crops, focused more on their corn and alfalfa acreage.”

Golden said in the more than 20 years he has looked at the impact of IGUCAs, he has seen more farmers who have used flood irrigation converting to center-pivots and making other long-term decisions to help reduce water while generating profits.

In the short term, Golden said the Walnut Creek IGUCA caused some struggle among producers, which brought significant revenue losses on crops. The problem was that the implementation of the IGUCA was so rapid.

“It was today you have your water, and tomorrow we’re restricting your water,” Golden said. “We have learned from that. The results of the study went to the state, and that is one of the reasons I believe that the state now is going to be doing more phased-in water reduction.”

Application for the future

LEMAs are helping with the phase-in, Golden said, because instead of an annual allocation, LEMAs allow for a five-year allocation. Producers are allowed to use that water anytime during that five-year period, which gives them flexibility to decide what crop-mixes and other changes they might want to try with less water availability.

With less irrigated acres, producers might think about how this would affect crop insurance programs, he said. The U.S. Department of Agriculture’s Risk Management Agency has offered a limited-irrigation crop insurance policy for corn. The Kansas Farm Service Agency also provides accounting services for producers. That financial information will be helpful as the economic assessment of the Sheridan 6 LEMA moves forward.

More information about the Sheridan 6 LEMA is available on the Kansas Department of Agriculture (KDA) website (http://agriculture.ks.gov/divisions-programs/dwr/managing-kansas-water-resources/local-enhanced-management-areas). KDA also has information online about the IGUCAs in place statewide (http://agriculture.ks.gov/divisions-programs/dwr/managing-kansas-water-resources/intensive-groundwater-use-control-areas).

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

For more information: Bill Golden – bgolden@ksu.edu or 254-644-8191

http://www.ksre.ksu.edu/news/story/water_management103113.aspx

Risk Assessed Marketing Workshops for Ag Producers Planned

Kansas State University will host two Risk Assessed Marketing Workshops to help agricultural producers navigate the uncertain business climate linked to volatile crop prices and the lack of a new Farm Bill. The workshops will be Nov. 20-21, 2013 in Manhattan and Feb. 26, 2014 in Scott City.

“The lack of a new Farm Bill leaves questions unanswered for those who operate the 2.2 million farms throughout the United States,” said Art Barnaby, agricultural economist with K-State Research and Extension. “Farmers have the risk of their Farm Service Agency safety net changing, and when we do have a new Farm Bill in place, it will likely include changes to crop insurance. The lack of certainty in the commodity programs, plus expanded bio-fuels and ethanol usage, combined with volatile crop prices is leaving many producers considering different methods for managing yield and price risk.”

The workshops are designed to introduce producers to an integrated marketing and production management approach that combines government programs, crop insurance and alternative marketing techniques. Among the topics addressed are: crop insurance, selling crop insurance-covered puts, futures, put and call options, forward contracts, marketing loans and basis contracts.

More information and online registration for the Nov. 20-21 workshop in Manhattan is available http://www.agmanager.info/events/RAM/2014/default.asp or by calling Rich Llewelyn at 785-532-1504 or rvl@ksu.edu.

More information and registration for the Feb. 26 workshop in Scott City is available by contacting John Beckman at 620-872-2930 or jbeckman@ksu.edu.

Story by: Mary Lou Peter mlpeter@ksu.edu

http://www.ksre.ksu.edu/news/story/RAM_workshops110413.aspx

The COOL Controversy Continues

Feedlots in Kansas and throughout the Midwest could be indirectly impacted by recent events surrounding the United States’ mandatory country-of-origin labeling law.

The mess is in the details, so people say. This is how Glynn Tonsor, K-State Research and Extension livestock economist, refers to the latest events surrounding the United States’ mandatory country-of-origin labeling program.

Tyson, the largest U.S. meat processor, announced mid-October that it would not accept Canadian cattle ready for slaughter due to additional costs from more stringent U.S. country-of-origin labeling regulations.

“The reality is, (COOL) is a net economic drain on different parts of the system,” Tonsor said. “Tyson’s announcement is reflecting that.”

COOL, a controversial U.S. food and agricultural labeling policy, has been in limbo since its mandatory implementation in 2009. The policy requires that most fresh foods, including meat, indicate the country or countries where the product was born, raised and slaughtered on the product’s label.

Not long after the mandatory implementation, Canada and Mexico approached the World Trade Organization (WTO) to challenge COOL, as the countries believed the law hindered trade with the United States and violated the North American Free Trade Agreement. The WTO sided with Canada and Mexico, which led to the United States revising its COOL policy last May.

The revised policy required more specific labels on beef, pork, poultry and lamb products sold in stores. This means packers have to list individually the countries where the animal was born, raised and slaughtered.

While some groups challenged this revision, a U.S. district judge upheld the revised policy in September. This ruling was broadly considered a win for advocates of mandatory COOL and a loss to U.S. meat packers and others wanting to abolish the policy, who view COOL as a low benefit, high cost scenario.

More specific labels

The revised policy, developed in May and upheld in September, had a six-month grace period for implementation. Tyson’s announcement to stop accepting Canadian slaughter cattle came just before the grace period expired, as the expiration is approaching mid-November.

Before the final rule revision, a label for a package of beef sirloin steak from a steer born and fed in Canada and processed in the United States, for example, might have read, “Product of Canada and the United States.” The revised label for that same package of beef would now be required to say, “Born and raised in Canada, and slaughtered in the United States.”

Tonsor, who has studied the COOL policy immensely as it relates to meat products, said the operating costs for Tyson facilities near the Canadian border are going up simply because they are being required to carry more labels to be compliant with the revised rule.

“I’m not speaking for Tyson, but it makes sense that if you do not see added benefits you would try to reduce some of your product flow choices to reduce the cost of carrying those different labels,” Tonsor said.

The implications of the Tyson announcement are different for cattle feeding and processing in the northwest part of the United States versus Kansas and the Midwest, Tonsor said.

“We’re not directly impacted in Kansas, but indirectly all of this is germane,” Tonsor said. “Politically, it is germane for farm bill discussions and potential trade retaliatory discussions. We all need to care about that, regardless of where we operate.”

Potential feedlot sector impact

Alberta is home to one of the major beef production areas in Canada, Tonsor said, which currently has too little processing capacity compared to feedlot capacity. Historically, that is one of the main reasons why the United States has processed Canadian cattle.

While Alberta works to expand its processing capacity, which Tonsor said is currently happening, a lurking question remains. If Tyson will not accept Canadian slaughter cattle, will there be an influx of Canadian feeder cattle coming into the United States?

Tyson’s announcement only related to finished cattle, not feeder cattle. It will continue to purchase Canadian-born cattle sent to U.S. feedlots, which could increase exports of feeder cattle into the United States.

U.S. feedlots in the southern plains might benefit, in the short term, from increase of feeder cattle, Tonsor said.

“I could paint a story where initially they would benefit,” Tonsor said. “Those are animals that could be coming farther south than they did before for two reasons. One is, they don’t have the processing capacity in Canada right now to handle them all, and a major processing facility in Pasco, Wash., is not eligible to accept slaughter cattle per this announcement (from Tyson).”

But, Tonsor said it is hard to say if U.S. feedlots would see a net gain in the long term.

“Long term, that isn’t a free adjustment,” he said. “I expect prices to adjust. I expect processing capacity in Canada to change.”

As farm bill negotiations continue in the U.S. legislature, Tonsor said, COOL is one of the topics being discussed, which could also have major implications to cattle feeding and processing in the United States.

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

http://www.ksre.ksu.edu/news/story/COOL_controversy110513.aspx

Flinchbaugh moderates six past U.S. Secretaries of Agriculture at Oct. 21 Landon Lecture

Click here to view the video of Mike Johanns, Ann Veneman, Dan Glickman, Ed Schafer, Mike Espy, and John Block.

Click here to read an article from the High Plains Journal about the event.