Category Archives: Faculty

Report from Tonsor and Schroeder finds mandatory COOL causes meat industry, consumer losses

Based on a study commissioned by the USDA, economists report that compliance leads to billions in net economic costs

Any policy that results in higher costs of compliance without a quantifiable benefit will likely have an adverse economic impact, and recent research shows mandatory country-of-origin labeling, or MCOOL, is one such policy.

The U.S. Department of Agriculture (USDA) assigned the research, based on a requirement in the 2014 Farm Bill to quantify the market impacts of MCOOL. The requirement included studying both the implementation of MCOOL in 2009 and a revision of the policy in 2013.

Agricultural economists Glynn Tonsor and Ted Schroeder from Kansas State University and Joe Parcell from the University of Missouri completed the research and issued the full report (http://www.agri-pulse.com/Uploaded/USDACOOLEconomicReport.pdf) to government officials May 1.

The researchers found no evidence of meat demand increases for MCOOL covered products—those products sold at retail locations such as supermarkets. Because general meat demand has not increased, and the meat industry as a whole has experienced lower quantities and higher costs to implement the additional labeling procedures, MCOOL has led to net economic losses.

Industry stakeholders and consumers negatively impacted

Tonsor said the research involved compiling literature from MCOOL studies and other non-peered reviewed information such as comments regarding cost impacts. The researchers used economic models to quantify price and meat quantity estimates over the next 10 years based on the 2009 and 2013 rulings. They compared those findings to 2008, which provided estimates if MCOOL had never occurred.

“We estimated the beef industry’s 2009 impact was an economic loss of $8.07 billion over 10 years,” Tonsor said. “For the pork industry, it’s a $1.31 billion loss.”

labelTonsor pointed out that approximately 16 percent of pork and about one-third of beef production is covered by MCOOL, as some products such as those sold in restaurants are not required to bear the label. MCOOL covered beef would have to see at least a 6.8 percent increase and covered pork a 5.6 percent increase in demand to avoid an adverse economic impact.

Results also showed consumers to experience net losses—$5.98 billion for beef and $1.79 billion for pork—over 10 years due to higher retail prices and lower retail quantities available every year.

The researchers had to study 2013 separately because the MCOOL policy changed. The 2009 ruling led to labels such as “Product of U.S. and Canada” showing up on a package of beef, for example. The 2013 ruling required that same package to read more specifically, “Born in Canada, Raised and Slaughtered in the U.S.”

“We added the specificity of ‘Born, Raised and Slaughtered’ stages in 2013, which means additional costs with additional precision,” Tonsor said. “But, it’s not the same level of costs as we had the first round in 2009. There’s an incremental additional cost, but it isn’t as large as the original cost to be in compliance.”

The additional impact of the 2013 rule was another $494 million loss to the beef industry and $403 million loss to the pork industry over 10 years. Demand increases would need to be at least another 0.4 percent for beef and 1.6 percent for pork on top of the 2009 estimates to avoid an adverse economic impact.

Consumer losses were another $378 million for beef and $428 million for pork based on the 2013 revision.

The poultry industry, he said, was the only one to show a gain. Those gains for 10 years were $753 million for 2009 and an incremental addition of $67 million for 2013. The gains, however, were narrow compared to the billions in losses to the beef and pork sectors that mean a total loss for the meat industry as a whole.

“The main reason is (the poultry sector) doesn’t have the same cost of compliance, so at the retail level there is some shift away from more expensive beef and pork prices over to poultry products,” Tonsor said. “That serves as a pull for more production on the poultry side, and the poultry industry benefits.”

What the future has in store

The World Trade Organization is expected to make an announcement later this month about the future of MCOOL. Some groups and political leaders believe the USDA should repeal MCOOL, while others advocate that the United States has the right to label origin on foods sold in the country.

Tonsor said another approach is to make the policy voluntary.

“Our report and the literature synthesis in it points to a voluntary approach being better,” he said. “Watching this situation, I agree that voluntary labeling would be an improvement from where we are now. It’s hard for me to say if politically that is where we will be a year from now or three years from now.”

To access the full report, visit http://www.agri-pulse.com/Uploaded/USDACOOLEconomicReport.pdf. A video interview with Tonsor is available on the K-State Research and Extension YouTube page (https://www.youtube.com/watch?v=OvXMoJk5o4o&feature=youtu.be).


Story by: Katie Allen, K-State Research and Extension – katielynn@ksu.edu or 785-532-1162

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

This news release from K-State Research and Extension is posted at http://www.ksre.ksu.edu/news/story/mandatory_COOL050615.aspx.

Advertisements

K-State’s College of Agriculture Celebrates Success and Looks Ahead to a Productive Future

Dean John Floros presented his second annual State of the College of Agriculture address March 25.
Kansas State University’s College of Agriculture aims to be a top-five agricultural college in the United States by 2025, and in collaboration with K-State Research and Extension, it intends to continue serving as a global destination for education, research and extension. Reaching this feat not only would benefit the university, but it would benefit the citizens of Kansas and beyond with immediate solutions to needs in agricultural production.

Agriculture is Kansas’ largest economic driver, as it contributes $53 billion to the Kansas economy and is the state’s largest employer, said John Floros, dean of the college and director of K-State Research and Extension.

In his third year as dean, Floros presented his second annual State of the College of Agriculture address March 25 on K-State’s Manhattan campus. He discussed celebrating successes that are getting the college closer to a top-five agricultural college, some of which include growth in the number of students, faculty and staff success, competitive funding, research expenditures, private fundraising, and the college’s national and international reputation.

On the heels of more cuts in state funding, the college has been able to counter these budget cuts and embrace change, Floros said. Aside from the amount of state funding available, all other numbers continue to go up, which is why he is optimistic that the college will continue to experience success in the future.

“K-State will remain here, but change will happen,” Floros said. “We will have to change, and if we are ahead of change and anticipate it, we are better off. Let’s anticipate budget cuts and figure out ways to counter those.”

Sean Fox Trading class

Students in Sean Fox’s class get a taste of the pit in his trading class!

Teaching and learning
K-State’s College of Agriculture has experienced steady growth in all student metrics. In 2014, the college had 2,780 undergraduate students—525 more than in 2010, which showed 2,255 undergraduates. The number of multicultural students in the college has doubled in the last five to six years, with a total of 291 in 2014. This means more than 10 percent of undergraduate students are multicultural.

Floros reported 695 undergraduate students call states other than Kansas home. These students represent 44 other states. Eighty-three undergraduates come from 19 other countries.

The college is nearly equal in the number of male and female undergraduates: males at 51 percent and females at 49 percent. Along with higher student enrollment, there has been an increase of 54 percent in scholarships provided in the last four years. Scholarships awarded in 2014-15 totaled $1.34 million.

Nearly all undergraduate students find jobs following graduation or pursue graduate degrees. The college has a 97 percent placement rate for students in jobs or a graduate education.

“It’s an exciting time to be a student in the College of Agriculture,” Floros said. “Every time I talk to our students that excitement comes through.”

Graduate students in the College of Agriculture are also on the rise. In 2014, there were 590 graduate students compared to 481 in 2010. Floros called this a huge success that helps the college meet its teaching, research and extension goals.

K-State’s Collegiate Crops Judging Team recently won its sixth straight national championship, and in fact, it has won 13 of the last 16 championships. In its first year competing, K-State’s Agronomy Forage Bowl Team won the national competition in 2015. Students are studying abroad in countries all over the world such as Argentina, Brazil, Ireland, France, India, South Africa, Spain and Japan.

Mykel Taylor 2015 Farm Bill meeting in Wichita

Mykel Taylor presents Farm Bill updates in February of 2015 in Wichita. The K-State Farm Bill Team reached more than 4,000 Kansans during 14 meetings held across the state!

Research and extension
The College of Agriculture, with K-State Research and Extension, have identified and are working toward solving five grand challenges for Kansas, which include global food systems, water, health, community vitality and developing tomorrow’s leaders. Other colleges at the university also are helping improve the livelihoods of Kansans in finding solutions to these challenges.

Floros recognized the college’s work across the state to help farmers make better management and farm policy decisions. Kansas State continues to develop the top wheat varieties used by Kansas’ farmers. A fungal genetics center that moved to K-State last fall will help the Department of Plant Pathology and wheat breeding programs continue to become more successful.

Plant Pathology is one of the several nationally ranked programs from K-State’s College of Agriculture. In fact, the Department of Plant Pathology is ranked No. 1 nationally. The agricultural economics program comes in at No. 4, interdepartmental food science at No. 9 and plant sciences at No. 10.

The animal science doctoral program for research productivity recently received a No. 5 national ranking, and the entomology doctoral program has been ranked No. 8. The Department of Grain Sciences and Industry at K-State is unique, Floros said, as there is no other department like it anywhere else.

Extramural awards for research in K-State’s College of Agriculture totaled $46.3 million in fiscal year 2014, which has increased steadily the last few years from $23.8 million in 2011. Floros said total K-State Research and Extension expenditures were at $142 million in 2014, an increase of 8 million from 2011 and 17 million from 2010.

Many faculty and students in the College of Agriculture are working with new programs funded by the U.S. Agency for International Development, or USAID. These four new Feed the Future Innovation Labs were funded in total by $102.2 million. The labs focus on research surrounding sorghum and millet, applied wheat genomics, postharvest loss reduction and sustainable intensification. Only Kansas State and the University of California-Davis have received four such new USAID labs.

Top K-State faculty members specializing in agricultural related areas continue to be recognized nationally and internationally with awards in teaching and research. Many are also selected to lead national organizations related to horticulture, weed science and entomology, as examples.

Private fundraising also was up in 2014 for the College of Agriculture and K-State Research and Extension at $14.5 million. This is more than triple the amount from 2009, which was $4.4 million. Increases in private fundraising will help meet the current and future costs for programs, research, new facilities and facility upgrades, and other needs of the college.

“The bottom line remains that we need new facilities,” Floros said. “We need new state-of-the-art labs, teaching facilities, extension facilities and distance education facilities. We have to push for this happening now. We need to prioritize our needs.”

A video of Floros’ full presentation can be found on the K-State Research and Extension Seminars website. Learn more about the College of Agriculture at www.ag.k-state.edu and K-State Research and Extension at www.ksre.ksu.edu.


Story by:Katie Allen katielynn@ksu.edu / 785-532-1162 / K-State Research and Extension

For more information: John Floros, dean, K-State College of Agriculture – floros@k-state.edu or 785-532-7137

Grants Announced to Support Economic Growth for Rural Communities

Kansas State Agricultural Economics Faculty receives $2.5 million with five projects

Funding from the U.S. Department of Agriculture’s (USDA) National Institute of Food and Agriculture (NIFA) is expected to assist communities and regions in creating self-sustaining, long-term economic development through research and strategic planning.

Nearly $14 million in grants was awarded. Three agricultural economists at Kansas State University and a fourth at Purdue University who will join the K-State department later this year, received more than $2.5 million of those grant dollars to promote rural community development, economic growth and sustainability.

“These awards will allow our department to conduct research that can impact and improve the lives of rural Kansans,” said Allen Featherstone, professor and head of the K-State Department of Agricultural Economics. “The research areas of water management, voting and buying behavior, international trade and global climate variability, and value-based supply chain production on farms have various impacts to our Kansas farmers and rural citizens. We want this research to impact their livelihood and rural communities in a way that makes them sustainable and continuously moving forward.”

The projects for Kansas State, each totaling around $500,000, include:

Aquifer depletion and water management

chatura_ariyaradne_2013The project director for this grant is Chatura B. Ariyaratne, research assistant professor. He will study how the reduced availability of irrigation water and rising pumping costs due to groundwater depletion make management decisions more critical for the sustainability of agriculture.

“The economies of large regions such as the Great Plains are dependent on groundwater availability, making aquifer depletion a much-discussed policy and research issue,” Ariyaratne said. “Greater volatility in crop and energy prices has added more uncertainty to farmers’ cropping and irrigation decisions.”

This project focuses on the role of changing prices, technology, and climate on aquifer depletion, and the performance and impacts of different water management policies in the face of these uncertain trends.

Other co-project directors from K-State’s agricultural economics department include, Jeffery Peterson, professor; Nicolas Quintana Ashwell, Ph.D. candidate and graduate research assistant; Nathan Hendricks, assistant professor; Brian Briggeman, associate professor; and Bill Golden, research assistant professor. Bridget Guerrero is a collaborator on the project and is an assistant professor of Agricultural Business and Economics in the Department of Agricultural Sciences at West Texas A&M University.

Voting and buying behavior

Tonsor-colorAccording to Glynn Tonsor, agricultural economist with K-State Research and Extension and project director for this award, the U.S. public increasingly sends mixed signals in their voting and buying behaviors resulting in ‘unfunded mandates’ that significantly add complexity to society’s challenges of feeding a growing population.

“The consumers’ mixed signals are providing a knowledge gap among our industry leaders and decision-makers,” Tonsor said. “This limits informed decision-making when it comes to key decisions in the agricultural industry that make a difference in how we are feeding our growing population.”

The long-term goal of this project is to substantially increase understanding of the existence, drivers, and implications of differences in voting behavior and consumer food buying behavior.

Co-project directors for this award are Kathleen Brooks, livestock economist and extension specialist at the University of Nebraska-Lincoln; and Bailey Norwood, professor, Oklahoma State University Department of Agricultural Economics.

Understanding and forecasting changes in consumer demand for disaggregated meat products

According to Glynn Tonsor, co-project director for this award, there is an increasing need to better understand changing consumer preferences for meat products. To date, most consumer research either uses very aggregated, nationally representative data or involves surveys at a single point in time that convey a “snap shot.” This research will further develop and build upon existing consumer tracking surveys.

Tonsor will work with collaborators at Oklahoma State University to assess how stable consumer preferences are when assessed in regular nationwide monthly surveys and compared to other more commonly available data and information sets. This research ultimately will provide more accurate and timelier information on key issues regarding consumer food preference and lead to better decisions among producers and policy makers.

Jayson Lusk, Regents professor and Willard Sparks endowed chair for Oklahoma State’s agricultural economics department, is the project director for this award.

The role of international trade in adapting U.S. agriculture to increased global climate variability

NelsonVilloria-March2015_Nelson B. Villoria, an agricultural economist at Purdue University who will join the K-State faculty later this year, was awarded monies to study how more frequent extreme weather events are expected to increase the volatility of U.S. crop yields and the income stability of agricultural sectors.

“Global trade is an important source for stabilizing markets. Our study hypothesizes that climate shocks simultaneously affecting the U.S. and other global regions during a given marketing year reduce the ability of the trade system to mitigate shortages resulting in sudden sharp price changes,” he said. “Our study seeks to understand how stockholding and international trade can help adapt U.S. agriculture to a changing climate, particularly to disruptions associated with increased variability.” 

Co-project directors for this award are from Purdue University. They include Thomas Hertel, distinguished professor of agricultural economics; Dev Niyogi, professor of regional climatology; Paul Preckel, professor of agricultural economics; and Hao Zhang, professor of statistics.

Impacts of values-based supply chains on farms

Hikaru PetersonHikaru Hanawa Peterson, project director of this grant and K-State agricultural economics professor, will study the impacts of values-based supply chains (VBSCs) on small- to medium-sized farms.

“These supply chain alliances are distinguished by two sets of values: one based on product attributes and the other based on shared ethics among participants in the chain,” Peterson said. “While there is a growing understanding of the organizational dimensions of VBSCs, very little has been documented to date about their extent or characteristics and the actual impacts for farmers.”

Researchers will work to better understand, evaluate, and improve the performance of VBSCs as profitable outlets for diverse, small and medium-sized farms. “The project outcomes include new opportunities for farms and VBSCs to build farm profitability, expand access to healthy foods for communities, and contribute to the development of more environmentally sustainable and equitable regional agrifood systems,” Peterson said.

Co-project directors for this grant include Gail Feenstra, academic coordinator with the University of California-Davis’ Agricultural Sustainability Institute; Marcy Ostrom, small farms program leader with the Washington State University Center for Sustaining Agriculture and Natural Resources; and Keiko Tanaka, associate professor of sociology at the University of Kentucky.

NIFA made the awards through the Agriculture and Food Research Initiative’s (AFRI) Foundational Program, which supports projects that sustain and enhance agricultural and related activities in rural areas and to protect the environment, enhance quality of life, and alleviate poverty. For more information, visit www.nifa.usda.gov.

A fact sheet with a complete list of awardees and project descriptions is available on the USDA website.


Story by: Elaine Edwards – elainee@ksu.edu K-State Research and Extension

For more information: Amanda Erichsen, Department of Agricultural Economics – aerichsen@k-state.edu

This news release from K-State Research and Extension is posted at http://www.ksre.ksu.edu/news/story/rural_communities032315.aspx.

Meat and Poultry Recalls: What Food Firms and Investors Should Know

A K-State study used stock market prices to determine costs of recalls to food firms and what recall factors are most impactful economically.

Food safety is top-of-mind among many consumers and producers of food. It is also a continuum, because the more a food firm spends on effective technologies and protocols to ensure safe food, the greater chance the foods are protected against contamination.

Despite a blanketed desire to keep foods safe, eventually food firms reach a price point—a limit they can spend feasibly to ensure staying in business and giving consumers an affordable product, said Ted Schroeder, professor of agricultural economics at Kansas State University.

“The more a company knows about the anticipated impact of a recall event, the better it can make a decision about adopting new food safety protocols, new technologies or new surveillance methods to reduce the probability of a food safety breach,” Schroeder said.

Schroeder, along with Veronica Pozo, assistant professor of applied economics at Utah State University, recently found that when food firms face a meat or poultry recall, several factors determine how that recall affects the firm’s bottom line. The most impactful factor is the class of the recall, which determines if a severe human health hazard is involved. Other factors include the size of the recall, size of the firm, if the firm has prior experience dealing with a recent recall and the media coverage surrounding the event.

A close look at publicly traded food firms
The researchers examined meat and poultry recalls that took place between 1994 and 2013, based on availability of recall data from the U.S. Department of Agriculture’s Food Safety and Inspection Service (FSIS). The FSIS showed more than 1,200 meat and poultry recalls happened during that time, and 163 of those recalls came from 31 different publicly traded firms.

Although 163 of more than 1,200 recalls may seem like a small number, publicly traded firms showed almost half of the total meat and poultry products recalled, said Pozo, who was a K-State doctoral student when the research was conducted. In fact, 277 million out of 638 million total recalled pounds, or 43 percent, came from publicly traded firms.

Although it’s difficult to obtain financial data from firms and measure total direct costs and losses of revenue from a recall, price reactions in the stock market surrounding a recall event tend to indirectly reflect all the private costs, Pozo said.

“Some recalls would have gotten out to the consumer, and some would not have,” she said. “Regardless, calculating the actual physical cost of a recall can be quite daunting. You have to track volume of product, determine if the product was disposed of or the firm got an alternative value for it, and the cost of all people involved, including sales losses and liability costs.”

“Our claim is all private costs—costs the company itself ends up realizing—will ultimately be reflected in the stock price through the value of the firm,” Schroeder said. “The stock market is efficient, meaning it rapidly incorporates information and embeds it into the stock values. It is a widely accepted method for evaluating event studies.”

What the stock price does ignore is public costs, he said. For example, if someone gets sick from a recall and it never resonates back to the firm, someone else likely paid for that. It wouldn’t necessarily show up in the stock price.

“Our goal was to look at individual, private firm costs, because if I’m a company that’s in the food processing or merchandising segment, I need to have a sense of what the impact of these (recall) events can be on my company,” Pozo said. “If we show firms how costly a recall can be, then they will be able to conduct a cost-benefit analysis to decide if it’s worth it to implement additional (food safety) technologies.”

In addition, Pozo said the study shows investors the importance of finding out more about a firm’s food safety protocols.

“I’ve seen publicly traded companies that went bankrupt after one recall,” she said. “And although companies do as much as they can to avoid these types of events, food safety outbreaks are still possible. Firms must have a good plan in place. Investors must find out about those plans before investing.”

Recall reflections in stock prices
The researchers found it took about four to five days, on average, for the stock price to reflect a recall. If a major health hazard was part of the recall, the stock price could take a hit earlier, potentially within one day.

Investor and firm interests often go hand-in-hand during a recall, Schroeder said. In the stock market, especially as a recall progresses, there’s uncertainty and emotion.

“Our results show investors do respond fairly quickly, within the day of the recall or as soon as the markets open after the recall,” he said. “As the recall continues to unfold, the market will adjust, and it’s either going to go down further or readjust back up if the confidence and handling of the recall is made known.”

Regardless if a health hazard was part of the recall, the researchers found the stock price returns decreased on average 0.63 percent within five days. A health hazard jumped that decrease to an average of 1.15 percent, which could translate to a loss of hundreds of millions of dollars for some firms.

A breakdown of factors that most impacted stock price reactions
Severity: Class I recalls pose a major health hazard compared to Class II and Class III. The researchers found the seriousness of the human health risk, brought on by E. coli O157:H7, salmonella or listeria as examples, would impact shareholder losses to the greatest extent.

Recall size: The larger the recall, the more financial damage the firm would face, according to the researchers. Knowing that recall sizes matter, it may behoove firms to test products in smaller lot batches to help prevent a large-scale recall, but they would need to weigh the costs to implement this practice.

Further, firms should know that combining acute health urgency in a Class I recall with a large recall size would make the most sizeable market reaction.

Firm size: Some of the financial hit from a sizeable Class I recall can be countered if the firm is large and more diverse, said the researchers. In addition to immediate private costs, insurance premiums for the firm also would likely rise.

A large firm won’t have near the stock market impact as a smaller publicly traded firm that relies heavily on that particular meat or poultry product as its main line of business. Smaller, more homogeneous firms are more apt to go bankrupt from one recall.

Firm’s experience: Say a firm experienced one recall and within a year faced an additional recall. The researchers found the impact of the second recall would still be adverse, but because the firm showed it could manage a recall situation, all the possible repercussions from the second recall didn’t have as much effect as the first.

The firm’s customers, investors and consumers are often more at ease after the firm shows it can bounce back from one recall. If a company is experiencing one of its first recalls, it might benefit from leaning on experts who know how to navigate a recall to minimize financial damages.

Media: Media has an important effect on how a processing or manufacturing firm’s customers, investors and consumers perceive the company. The larger the number of media articles about the recall event, the more damage it would likely cause the firm related to that particular recall.

Most of the media articles related to the recalls under study were informative, but they carried a negative tone, according to the researchers. Results suggest value in firms having a media plan in place if a recall were to occur.

More details about these and other recall factors are available in the full report, “Costs of Meat and Poultry Recalls to Food Firms,” which can be found on K-State’s Ag Manager website (http://www.agmanager.info/livestock/marketing/FoodSafety/Pozo_Schroeder_FactSheet_2015.pdf).

For more information, contact Veronica Pozo at veronica.pozo@usu.edu or 435-797-3863; or Ted Schroeder at tcs@ksu.edu or 785-532-4488.


Story by:  Katie Allen
katielynn@ksu.edu
785-532-1162
K-State Research and Extension

Wichita Farm Bill meeting videos now available online at AgManager.info – 4 meetings left to attend

Coverage from the 2014 Farm Bill meeting held in Wichita (Jan. 12, 2015), is now available online at http://www.agmanager.info/policy/commodity/2012/default.asp.

There are 4 videos that include Art Barnaby’s presentation, 1 video including Jody Campiche’s cotton presentation (Oklahoma State University Agricultural Economics), 1 video of Mykel Taylor’s presentation, and 1 video of Wichita’s FSA representative, Sean Rafferty.

On this page, click the link in the “download” column to view these videos in a new window.  When in the new video window, select the “info” button in the video browser to show links to more information. If you have questions about these videos or need assistance, please contact Rich Llewelyn at rvl@ksu.edu.

Remaining meetings occur:
Feb. 10 – Phillipsburg
Feb. 11 – Hays
Feb. 12 – Frankfort
Feb. 13 – Atchison
These events are free, however have been full at every location.  Reserve your seat by contacting the local county extension agent for each location, details can be found here.

I Had to Go to Guatemala to Learn to Listen: Grunewald to give Last Lecture

Grunewald lightenedIn 1978, Orlen Grunewald joined the Kansas State University Department of Agricultural Economics.

An expert in agribusiness, Grunewald will deliver his last lecture, “I had to go to Guatemala to learn to listen” on Wednesday, Feb. 4 at 3:30 p.m. in room 328 Waters Hall. Refreshments will be served.

The lecture is one of several planned as part of a “Last Lecture” series in which several K-State Department of Agricultural Economics faculty members will give one last lecture for the campus community and the public shortly after retiring.

“Dr. Grunewald had an outstanding career at Kansas State University and in the agribusiness area,” said Allen Featherstone, professor and head of the K-State Department of Agricultural Economics. “One of his lasting legacies is the initiation of the commodities trading course where students take actual market positions.

Through his career, he has studied and contributed to our understanding of commodity markets.  He and the other retiring professors that are a part of this Last Lecture series have had a great impact on thousands of students and agriculture in the state of Kansas. The Department of Agricultural Economics, College of Agriculture and the university are very grateful for their contributions and dedication to Kansas State University and agricultural economics. It is always inspirational to hear from one’s colleagues as they reflect upon their careers.  We encourage everyone to attend this series so they can reflect on their career.”

Grunewald, professor emeritus in the agricultural economics department, taught many undergraduate courses in agribusiness management, agribusiness marketing, and computer applications. He authored a textbook on food and agribusiness management for beginning students. His research activities focus on investigating the impacts of identity-preserved crops and livestock on supply chain management and agribusiness structures.

Grunewald earned his bachelor’s degree in regional planning at the University of Wisconsin-Green Bay in 1973.  He earned a master’s degree and Ph.D. in agricultural economics at the University of Kentucky in 1975 and 1980, respectively.

His research included investigating the structural efficiency of agricultural producers and agribusinesses in the supply chain; learning about entrepreneurship and integration in agri-food supply chains to understand the innovation processes that shape the supply chains; identifying key success factors in value-added enterprises; creating a series of educational modules based in applied research on value-added agriculture; and developing commercialization protocols to facilitate producer participation in wealth-creation value-adding initiatives.

He belonged to the American Agricultural Economics Association; Southern Agricultural Economics Association, serving on the editorial board for four years; and the Food Distribution Research Society.  He also served on the International Committee for the American Council on Consumer Interests in 1990.

Grunewald also was a Kansas State University Presidential Lecturer in 1986.

More information about his lecture or any in the “Last Lecture” series is available by contacting Judy Maberry at judym@k-state.edu or 785-532-4493.


 

Story by:
Elaine Edwards
elainee@ksu.edu
K-State Research and Extension, http://www.ksre.ksu.edu/

AgManager.info Update

The following is an overview of items rolling through AgManager.info.  Contact Rich Llewelyn at 785.532.1504 or rvl@ksu.edu for more information about these items.

2014 Kansas Crop Insurance Workshop, LAST CHANCE!
November 13, Salina
This is a one-day conference for farmers, crop insurance agents and ag lenders.

2014 Kansas Income Tax Institute
A two-day conference for tax professionals at 8 locations in Kansas

  • Overland Park, November 24-25
  • Wichita, December 1-2
  • Salina, December 2-3
  • Topeka, December 3-4

2014 Farm Bill Meetings
Begins January 12, 2015, in Wichita
Fifteen half-day meetings in Kansas to provide information on the decision for the 2014 Farm Bill.

Other Extension Meetings
A listing of other extension meetings taking place in Kansas, with the following coming up:

  • Garden City, November 18
  • Miltonvale, November 19
  • Salina, November 20

2015 Excel Workshops

  • Garden City, January 20
  • Emporia, February 5 

A couple of day-long workshops this winter to provide training in using Excel spreadsheets.


Updates

2014 Farm Bill Policy Page
Your guide to understanding the 2014 Farm Bill, with papers, presentations, decision tool and links.

OSU-KSU Decision Tool
An Excel spreadsheet decision tool developed by Oklahoma State University and K-State, to help make the decision between ARC and PLC from the 2014 Farm Bill.


In the last week…

Grain Outlook Radio Program
November 7, 2014
Dan O’Brien talks about what next Monday’s USDA grain production and supply-and-demand reports are likely to say, and he comments on surging soybean exports and lagging corn and wheat exports, during his weekly analysis of the grain markets.

Crop Basis Maps
November 6, 2014
GIS maps showing this week’s basis and deviation from 3 year average for corn, wheat, soybeans, and milo in the central Plains.

Updated Crop Basis Tool
November 6, 2014
Providing the weekly basis (Wednesday close) for corn, soybeans, milo and winter wheat for approximately 800 locations across Kansas, Missouri, Colorado, Oklahoma, Texas Panhandle, Nebraska, South Dakota and North Dakota.

MYA Price Estimates Updated for ARC and PLC Commodity Programs
November 5, 2014
Art Barnaby provides the MYA price estimates, updated for 2015 wheat, 2014 corn, 2014 sorghum, and 2014 soybeans.

Rumors and Errors on the Farm Bill and the Status of the OSU-KSU Decision Aid
November 5, 2014
Art Barnaby corrects some common errors and misconceptions about the Agricultural Act of 2014 (Farm Bill).

K-State Feeder Cattle Risk Management Tool
November 4, 2014
Kevin Dhuyvetter’s decision tool for feeder cattle has been updated by Glynn Tonsor to reflect recent prices in the industry.

In the Cattle Markets
November 3, 2014
“Beef Demand Update and Context …”, by Glynn Tonsor, Kansas State University.

Livestock Outlook Radio Program
Glynn Tonsor provides this week’s cattle market insight: he reviews the positive numbers from his beef demand index for the 3rd quarter, and talks about improvement in his latest cattle feeding profitability projections.

Livestock and Hay Charts
Price, basis, forecast, cattle slaughter, cattle cycle, cattle on feed, livestock feeding returns, and meat trade charts, as well as supply and demand for corn, wheat and soybeans.

Dairy MPP Program Webinar Recording
View the slides here.
Check out the 1-hour webinar presentation on the Dairy MPP Program by Robin Reid.

MAB Trip to South America
K-State’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 includes visits to agricultural and food-related industries and guided sightseeing tours with free time to explore Buenos Aires, the waterfalls at Iguazu, and Sao Paulo. The tour (February 20 – March 7, 2015) is open to anyone with an interest in international agribusiness. Contact Mary Bowen for more information: mjbowen@ksu.edu, 785-532-4435.


dhuFeatured Contributor
Kevin Herbel began serving as the Administrator of the Kansas Farm Management Association program in June of 2007. A primary focus of his work is to help Kansas farmers manage their resources efficiently. Kevin has worked for the K-State Research and Extension since 1989, most recently as an economist with the North Central Kansas Farm Management Association (1994-2003) and as Extension Assistant and Farm Analyst (2004-2007). He received his B.S. degree in 1988 and his M.S. degree in 1991, both in Agricultural Economics at K-State.


Don’t forget to follow AgManager.info on Twitter and Facebook, and subscribe to the mailing list!
Contact Rich Llewelyn at 785.532.1504 or rvl@ksu.edu for more information about these items.

Sharon Benz presented Animal Health Industry Insights at Master of Agribusiness Olathe session

Sharon Benz presented information at K-State animal health industry seminar

Significant changes on the horizon for the animal health industry are reflected in three new documents now available, according to Sharon Benz, director of the Division of Animal Feeds within the Food and Drug Administration’s Center for Veterinary Medicine.

cattle on prairieBenz, who spoke Oct. 22 at the Animal Health Industry Insights seminar hosted by the Kansas State University’s Master of Agribusiness program, said the new documents will govern the use of antibiotics and will affect those working in the animal health and companion animal industry. They are (1) Guidance 209 Judicious Use of Medically Important Antimicrobial Drugs in Food Producing Animals; (2) Guidance 213 Implementation Principles for Guidance 209; and (3) the Veterinary Feed Directive Proposed Regulations.

The seminar was held at the K-State Olathe campus.

“With the changing environment surrounding animal health, it is vital that we are knowledgeable and engaged with the agencies that provide guidance and oversight to our industry. Dr. Benz provided the opportunity for Master of Agribusiness students to become familiar with the influence that the FDA has on our business decisions,” said Justin Smith, MAB student and deputy animal health commissioner for the Kansas Department of Agriculture.

Benz gave an overview of the CVM and its responsibilities, which she said works to ensure animal drugs are safe and effective before giving approval; monitors the safety and effectiveness of current animal drugs on the market; reviews animal and pet food for safety and labeling; ensures pet food additives are safe and have utility before approval; conducts research; and helps make more animal drugs legally available for minor species, such as fish and hamsters.

“Dr. Benz was very knowledgeable with an extensive background. Since canine nutrition is my passion, it was an extremely interesting presentation for me. I learned about FDA policies and procedures I did not know about and Dr. Benz was nice enough to answer questions afterward, said Melissa Vogt, MAB student and distance learning veterinary technology Instructor at Colby Community College.

“Dr. Benz brought a wealth of knowledge to the forum by providing insight regarding the changes that the animal health industry will be experiencing when the implementation of the judicious use of antibiotics guidance 209 and guidance 213 begin,” said David Yandell, MAB student and senior associate for regulatory, surveillance and compliance with Elanco Animal Health. “Dr. Benz highlighted the need for the judicious use of antibiotics in the industry and that the FDA-CVM, an agency dedicated to the health and safety of humans and animals, is helping to ensure they are available for use in the future.”

Benz is responsible for providing direction and oversight to the division, which monitors and sets standards for contaminants, approves food additives and oversees medicated feed and pet food programs. Prior to her appointment to director in 2004, she served as the team leader for the Nutrition and Labeling Team. In preparation for her work with the FDA, she was employed by the National Academy of Sciences Board on Agriculture as the program officer for the Nutrient Requirement series bulletins on animal nutrient requirements.

Benz earned a bachelor’s degree from Penn State University and a Master’s and Ph.D. degrees from Virginia Tech. Her training is in ruminant nutrition and mineral metabolism and requirements.

K-State’s Master of Agribusiness (www.mab.ksu.edu) 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, animal health and agribusiness industry and are located in 40 states within the United States and in more than 30 countries.


Guidance 209
· Limit the use of medically important antimicrobial drugs to those uses considered necessary for assuring animal health
· Use includes veterinary involvement/consultation

Guidance 213
· Provides guidance for industry on the implementation of judicious use
· Process for updating labels to remove growth/production uses
· New therapeutic uses may be pursue

  •  Have a defined dosing duration
  • Effective therapeutic dose level
  • Be targeted as much as possible to the at-risk population
  • Include veterinary oversight

Veterinary Feed Directive (VFD)
· VFD is an order by a veterinarian that allows the feeding of approved VFD drugs to animals
· Medically necessary antimicrobial drugs will be converted from over-the-counter (OTC) to VFD drugs
· VFD regulations are being revised to improve the efficiency of the VFD process


 

CONTACT: Mary Bowen – 785.532.4435- mjbowen@ksu.edu
www.mab.ksu.edu

AgManager.info Update: Farm Bill updates and meetings galore to get in the know!

EVENTS

Dairy Margin Protection Program Webinar | October 28, 2014, 10:00 – 11:00 a.m. A 1-hour webinar by Robin Reid, covering the Dairy MPP program for the 2014 Farm Bill. This presentation will give a comprehensive look at the new Dairy Margin Protection Program and how producers might benefit from it to manage risk on their operations. The workings of the program and tools available to make the sign-up decision will be presented.

2014 Kansas Income Tax Institute |  November 4
A two-day conference for tax professionals at 8 locations in Kansas, starting with Garden City on November 4.

2014 Kansas Crop Insurance Workshop | November 13
A one-day conference for farmers, crop insurance agents, and agricultural lenders. The Kansas session will be held in Salina on November 13.

MAST: Management Analysis & Strategic Thinking | November 18-19, 2014
Management, Analysis, and Strategic Thinking (MAST) is an interactive learning program designed for agricultural producers and agribusiness professionals to enhance and strengthen their farm management skills, equipping them to create a vision for their businesses and handle the challenges of the changing agricultural landscape.2014 Farm Bill logo

2014 Farm Bill Meetings | January 12 – February 13, 2015
There will be fifteen half-day meetings in Kansas to provide information on the decision for the 2014 Farm Bill. The first will be in Wichita, on January 12, 2015.

For a listing of other extension meetings taking place in Kansas, use this link. | Coming up: Republic: October 14 | Wells: October 15 | Minneapolis: October 29 |Gypsum: November 4 |Garden City: December 11


UPDATES

2014 Farm Bill Policy Page | Your guide to understanding the 2014 Farm Bill, with papers, presentations, decision tool and links.

OSU-KSU Decision Tool | An Excel spreadsheet decision tool developed by Oklahoma State University and K-State, to help make the decision between ARC and PLC from the 2014 Farm Bill.

Grain Outlook Radio Program |  Dan O’Brien remarks on the USDA’s grain stocks report out this week, as well as the upcoming USDA row crop production report, during his weekly segment on the grain markets…he also points to a recent hike in grain export business, helping to provide a floor under otherwise bearish markets.

Connecting Livestock Producers with Recent Economic Research (CLPER) |  Glynn Tonsor provides a newsletter to enhance the dissemination of information from peer-reviewed economic research articles to livestock industry decision makers.

Grain Outlook Newsletter |  “Soybean Market Outlook in Late September 2014” and “USDA September 30th Quarterly Stocks and Small Grains Summary”, by Dan O’Brien.

Crop Basis Maps |  GIS maps showing this week’s basis and deviation from 3 year average for corn, wheat, soybeans, and milo in the central Plains.

Updated Crop Basis Tool |  Providing the weekly basis (Wednesday close) for corn, soybeans, milo and winter wheat for approximately 800 locations across Kansas, Missouri, Colorado, Oklahoma, Texas Panhandle, Nebraska, South Dakota and North Dakota.

New Farm Bill ToolRadio Interview |  Mykel Taylor announces that the decision-making tool created by Oklahoma State University and K-State for crop producers on the new farm program “safety net” options is now available for use…how to do so will be featured in a special webinar out of K-State taking place tomorrow, and she’ll have the details.

Ag Law Update– Radio Interview |  Iowa State University agricultural law specialist Roger McEowen covers several recent court decisions relevant to agricultural producers, including the ruling on a case over the validity of a farming partnership between parents and son, as perceived by the lending institution for both parties.

MYA Price Estimates Updated for ARC and PLC Commodity Programs |  Art Barnaby provides the MYA price estimates, updated for 2015 wheat, 2014 corn, 2014 sorghum, and 2014 soybeans.

USDA WASDE Quick Analysis Spreadsheet |  Dan O’Brien provides a spreadsheet with a brief look at the numbers from this week’s USDA WASDE supply and demand report.


Farm Bill Update Webinar Recording
A recording of the webinar on October 2, by Dr. Art Barnaby and Dr. Mykel Taylor the 2014 Farm Bill as well as the OSU-KSU decision tool is available now!
Mykel Taylor is an Extension Economist focused in the areas of crop marketing and food safety and labeling. She grew up on a cattle ranch in Montana and attended Montana State University majoring in Agribusiness Management. Her PhD in Economics is from North Carolina State University. Mykel has worked in extension positions at both Kansas State University and Washington State University. Some of her current research areas include measuring basis risk for cross-hedged commodities, implications of country of origin labeling on meat demand, and direct marketing strategies for urban crop and livestock farmers.Argentina farm - MAB brazilian cows

MAB Trip to South America
K-State’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 includes visits to agricultural and food-related industries and guided sightseeing tours with free time to explore Buenos Aires, the waterfalls at Iguazu, and Sao Paulo. The tour (February 20 – March 7, 2015) is open to anyone with an interest in international agribusiness.
For information, visit: www.mab.ksu.edu/Alumni/SAmerica15.html or contact Mary Bowen at 785-532-4435, mjbowen@ksu.edu.

 

 


For more information about these items or anything else related to AgManager.info, contact Rich Llewelyn at 785.532.1504 or rvl@ksu.edu.

Twitter: @AgManagerInfo  |  Facebook: www.facebook.com/AgManager.info

Report Projects Positive Outlook for Pork Producers and Consumers

Herd expansion could mean lower pork prices for consumers by the middle of next year.

The U.S. pork industry today is small by historic standards. But, signs of producers holding back more females to increase the breeding herd mean the industry is in the process of expanding, which could put more pounds of pork in grocery stores by the middle of next year.

“We continue to have historically high hog prices, as well as retail pork prices,” said Glynn Tonsor, livestock economist for K-State Research and Extension. “We also have improving production costs as grain prices are coming down. That’s sending a signal, an economic incentive, for pork producers to expand so they can sell more pigs at a positive dollar per head margin than they did last year.”

Information about the state of the U.S. pork industry was included in the quarterly Hogs and Pigs Report, released by the U.S. Department of Agriculture’s National Agricultural Statistics Service on Sept. 26. Tonsor said the report provides the best estimate of the current size of the industry and how large it will be in the future.

According to the report, the inventory of all hogs and pigs on Sept. 1, 2014 was 65.4 million head, which was 2 percent lower than a year ago but up 6 percent from June of this year. The breeding inventory was at 5.92 million head, up 2 percent from last year and up 1 percent from June. The market hog inventory was at 59.4 million head, down 3 percent from last year but 7 percent higher than it was in June.

Further, U.S. hog producers intend to have 2.89 million sows farrow, or have pigs, during the September through November 2014 quarter, which is up 4 percent from the actual farrowings during the same period in 2013 and up slightly from 2012. A projected 2.87 million sows will farrow December through February 2015, up 4 percent from 2014 and up 3 percent from 2013.

A consumer focus

What does this expansion outlook mean for pork consumers? Tonsor said most likely around the middle of next year, retailers will see an increase in pork supplies coming from this expansion. An increase in supplies likely means cheaper pork prices for consumers.

“None of this is guaranteed, but our current estimate is that we’re going to have more sows, and therefore more pigs and more pork pounds that show up starting around April 2015,” he said. “There will be some relief in high prices (consumers) have been seeing for some time now. Most of these adjustments take a long time, not quite as long of a biological lag that we have in the cattle industry, but they still take time.”

Specifically, it would take in excess of eight months from starting the process of holding back females, to breeding them, to farrowing them, to weaning their pigs and feeding them to a finished market weight.

“The reason I highlight that is the tight pork supply situation we have today is here for the rest of 2014,” Tonsor said. “Couple that with strong meat demand in general, strong pork demand in particular, we’re probably going to have historically high pork prices the rest of 2014.”

One of the greatest challenges the U.S. pork industry has faced recently is PEDv, or porcine epidemic diarrhea virus. Discovered in the United States for the first time in 2013, PEDv is a disease caused by a porcine coronavirus and can lead to vomiting and occasional diarrhea in sows and gilts and severe diarrhea and vomiting in nursing and recently weaned pigs, according to Kansas State University’s College of Veterinary Medicine (http://www.vet.k-state.edu/depts/dmp/service/news/KSVDL_PEDV_fact_sheet.pdf).

PEDv spreads quickly and can lead to severe sickness and death in pigs, although it is not a threat to food safety or humans. A Pork Checkoff report (www.pork.org/News/4678/PEDVsImapct.aspx#.VC7IH3i9Kc0) estimates the disease caused a loss of 7 million to 8 million pigs from June 2013 to April 2014.

“To the extent we have additional concerns about PEDv, that could mute some of this increase in pork production,” Tonsor said.

PEDv has reduced the amount of pigs weaned per litter, he said, and the net effect is fewer market hogs in the United States, therefore fewer pork pounds produced. In the past, the virus has hit swine herds worse from November through April. Although vaccines have been developed recently, it’s unknown if producers can battle the virus more effectively through the coming winter with use of the new vaccines.

Pork demand still high

Despite the recent and current tight supply situation caused in a large part by PEDv, Tonsor said retail pork demand has been strong. Given the pounds produced and consumed in the United States recently, the retail price realized was higher than most expected.

“The second quarter of 2014 was actually the best quarter for retail pork demand, the way I estimate it, in more than 10 years,” he said. “It’s important to recognize that’s a positive signal for the entire pork industry, because the public was willing to pay more for those reduced pork pounds than we expected.”

“The U.S. public sees more value in those (pork) products,” he continued. “Maybe the products are more convenient. Maybe the consumers were less sensitive to the price or had improving incomes. Probably some of all of the above is actually truth, which led to this positive demand story.”

Access the full Sept. 26 quarterly hogs and pigs report at http://usda.mannlib.cornell.edu/MannUsda/viewDocumentInfo.do?documentID=1086.

-30-

K-State Research and Extension is a short name for the Kansas State University Agricultural Experiment Station and Cooperative Extension Service, a program designed to generate and distribute useful knowledge for the well-being of Kansans. Supported by county, state, federal and private funds, the program has county Extension offices, experiment fields, area Extension offices and regional research centers statewide. Its headquarters is on the K-State campus, Manhattan.

Story by:

Katie Allen
katielynn@ksu.edu
785-532-1162
K-State Research and Extension

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