The Fencepost
December 2012

FEED, LEAN HOG PRICES LESSEN DROUGHT'S BLOW TO PORK PRODUCERS
By Jennifer Stewart
WEST LAFAYETTE, Ind. - An increase in lean hog prices and a decrease in feed costs have combined to reduce the drought's effect on the pork industry, a Purdue Extension agricultural economist says.

During the height of the drought, when December corn futures reached $8.49 per bushel and December soybean meal futures reached $540 per ton, markets anticipated heavy liquidation of sows. That feared liquidation dropped December lean hog futures to $70, and producers anticipated per-head losses of $50-$60, Chris Hurt said.

"A panic response might have been to cover substantial amounts of feed needs at record high prices, to forward-price lean hog futures before the outlook worsened or to just sell out altogether," he said. "Now that the damage from the 2012 drought is better known, those who did not panic are facing much smaller losses than what were feared at the height of the crisis."

In drought years, feed prices often peak at or just after the height of the drought, then decrease. That trend has continued in 2012, with December corn futures now near $7.40 per bushel and December soybean meal futures closer to $425 per ton.

According to Hurt, a $1-per-bushel reduction in corn prices and a $100-per-ton reduction in soybean meal prices lower hog production costs by about $12 per head.

"Lower feed prices are important to the reduction in anticipated losses, but improved lean hog prices have been even more significant," he said. "December lean hog futures are currently above $80, which represents at least a $10 increase over drought-induced liquidation fears in early September. A $10 increase in lean hog prices means more than a $20 reduction in anticipated losses."

The increased lean hog prices combined with lower feed costs have translated into reduced losses of about $30 per head - about 40 percent coming from the lower feed prices and 60 percent from higher lean hog futures, Hurt said.

That's not to say that sow liquidation didn't occur. Producers increased sow slaughter in early July and continued that trend through mid-October.

"During this 14-week period, sow slaughter averaged 4 percent higher than for the same weeks of 2011 and likely resulted in a national breeding herd reduction of about 2 percent," Hurt said. "In the weeks since mid-October, sow slaughter has dropped below previous-year levels as optimism for a much-improved outlook in 2013 was unfolding."

That optimism might be warranted. Hurt said a return to profitability could come as early as spring. While he estimates losses of about $15 per head will continue through the first quarter of 2013, live-hog prices are expected to reach the break-even point by early May. The second and third quarters of 2013 could bring a return to profitability of about $10 per head.

Lower feed prices could keep the pork industry profitable into fall 2013 and winter 2014, Hurt said.

But even with a projected return to profitability, he warned producers not to be hasty with thoughts of expansion.

"Some producers might want to jump the gun and get expansion started in the spring of 2013. But one glance at the current Drought Monitor tells us that normal crop yields in the U.S. for 2013 are far from assured," Hurt said. "The uncertainty should keep most producers from expansion fever until the crops are more nearly assured in late-July and August."

Hurt's full report, "Pork Producers Did Not Panic" and the accompanying podcast are available via Farmdoc Daily at http://farmdoc.illinois.edu/marketing/weekly/html/111912.html.



PURDUE PUBLICATION ANSWERS QUESTIONS ABOUT "RAW" MILK
WEST LAFAYETTE, Ind. - As consumer demand for locally grown and organic foods increases, so, too, does the interest in unpasteurized - or "raw" - milk. But is milk that comes straight from a cow safe to drink? A new Purdue Extension publication helps separate fact from fiction.

Raw Milk FAQs, Extension publication AS-612-W, is available for free download from Purdue Extension's The Education Store at https://mdc.itap.purdue.edu/item.asp?itemID=20853#.ULO69Y7_QyE. The seven-page publication was written by Mike Schutz, Purdue Extension dairy specialist, and Mike Ferree, a Purdue Extension educator from Bartholomew County.

The publication is intended to add to the public dialogue as lawmakers across the country consider whether to regulate raw milk, what a regulatory system should look like, and how best to protect both consumer choice and public health, Schutz said.

"This publication provides the scientific facts behind milk pasteurization, its benefits and the issues related to consuming raw milk," Schutz said.

Pasteurization involves heating food molecules to kill foodborne pathogens. The process was developed by Louis Pasteur and Claude Bernard in 1862. Another scientist, Franz von Soxhlet, popularized pasteurization for use on milk in 1886.

Indiana is among 20 states that don't allow the sale of raw milk for human consumption.

Legislation was introduced in the 2012 session of the Indiana General Assembly to allow the sale of raw milk from any dairy farm with 20 or fewer cows. The bill failed but could be reintroduced in the Legislature's 2013 session. Meanwhile, the Indiana Board of Animal Health is studying raw milk and will issue a report on regulatory matters to state lawmakers by early December.

Unpasteurized milk also has been debated in the U.S. Senate. An amendment was offered to the Federal Agriculture Reform and Risk Management Act of 2012 to eliminate mandatory pasteurization for all milk and milk products shipped across state lines. The amendment was left out of the bill's final draft.

Milk usually does not harbor any harmful bacteria when it leaves a cow but can become contaminated from dairy equipment, dirt, manure or if not properly stored. The incubation period for bacterial contamination is shorter than the normal time it takes most consumers to drink the milk, Schutz said.

"Diseases that can be transmitted through raw milk include listeriosis, campylobacter and streptococcus, to name a few," Schutz said. "These illnesses can be very serious or fatal. Pasteurization can reduce the pathogen load in milk to make it safer for human consumption. In fact, pasteurization probably is the one practice that has done the most to reduce the spread of tuberculosis from animals to humans."

Raw Milk FAQs answers 18 common questions related to pasteurization and unpasteurized milk. The questions include risks associated with drinking unpasteurized milk, beneficial characteristics and properties of unpasteurized milk, the effect pasteurization has on milk's nutritional value and legal ramifications of permitting raw milk sales.

The publication also provides links to other informational resources on pasteurization and raw milk.

"This is a huge issue, and ultimately it will be up to the state Legislature to decide whether permitted sales of unpasteurized milk will be made available to consumers in Indiana," Schutz said.


FOCUS ON SOYBEAN OIL
The sharp increase in soybean prices that began in June 2012 and peaked in early September 2012 was carried more by soybean meal prices than by soybean oil prices. From the June low to the September peak, January 2013 soybean futures increased by 43 percent, January soybean meal futures increased by 51 percent, and January soybean oil futures gained 20 percent. Soybean oil futures are now back to the level of early June, while soybean futures are 13 percent above the early June level and soybean meal futures are 21 percent higher.

For the 2012-13 marketing year, the USDA expects soybean oil prices to remain weak relative to soybean meal prices. The price of crude oil at Decatur, Illinois is expected to average 2.26 times the price (per pound) of 48 percent protein meal at Decatur. The ratio of average prices was 3.08 during the 2010-11 marketing year and 2.64 last year. In nominal terms, the average price of soybean oil is projected in a range of $0.51 to $0.55 per pound, compared to an average of $0.519 last year and $0.532 during the 2010-11 marketing year. On the other hand, the average prices of soybeans and soybean meal are projected to be substantially above the averages of the previous two years.


PLANS FOR FOOD HUB PLAN TO BE DETAILED AT PUBLIC MEETING
WEST LAFAYETTE, Ind. - Purdue Extension is calling on Indiana farmers to attend a meeting in Greenfield if they want to learn how a Central Indiana Food Hub can create marketing opportunities for their produce and other farm products.

The meeting will be held at 7 p.m. EST Dec. 13 at the Hancock County Public Library, 900 W. McKenzie Road.

A study was conducted over the summer on the feasibility of starting a food hub in central Indiana. The steering committee that commissioned the study is now overseeing the development of a business plan and marketing materials for such a hub designed to meet specific needs of central Indiana farmers and consumers.

A food hub is a centrally located operation with a business management structure that coordinates the collection, storage, processing, distribution and marketing of locally and regionally produced food products.

"It's really a new way to foster the connection between consumers and area farmers and keep food dollars local longer," said Roy Ballard, Extension agricultural and natural resources educator in Hancock County. "It's all about opportunity - the opportunity for farmers to remain sustainable through reaching new markets with new products, the opportunity for consumers to know the source of their food and to make purchases with convenience, and an opportunity to reduce the billions of our food dollars that flee Indiana every year when we import our food from out of state."

Farmers who produce fruits, vegetables, meat, honey, meat, flowers, herbs, eggs or a variety of other raw or value-added farm products can find efficient marketing and improved sustainability by working through a food hub, Ballard said.

The purpose of the meeting is to explain the committee's vision of how the hub would likely operate, to solicit comments from farmers regarding their interest in increasing their market access through a hub and to learn of any obstacles.

Part of the discussion will focus on the 2013 launch of a "virtual" food hub, or online farmers' market, that will offer a connection - sometimes referred to as "matchmaking" - between farmers and consumers. The system would provide customers the convenience of selecting and paying for goods from local farmers online and picking them up at a point close to home.

Anyone unable to attend but wanting to provide comments can contact Ballard by email at rballard@purdue.edu or by telephone at 317-462-1113.

The project has received financial support from the U.S. Department of Agriculture's Specialty Crop Block Grant Program, administered in Indiana by the Indiana State Department of Agriculture.


CORN AND SOYBEAN PRICES FOLLOWING SHORT-CROP PATTERN
The USDA’s November forecasts of the size of the 2012 U.S. corn and soybean crops were larger than expected, particularly for soybeans. As a result, the general downtrend in soybean prices since mid-September has accelerated, with January futures now at the lowest level since June 29. Corn prices have moved into the lower half of the trading range that has been in place since mid-September and December futures are at the lowest level since September 28. So far, prices seem to be following the classic pattern associated with small crops –peaking early in the marketing year and then declining as the year progresses.

The futures market reflects expectations that prices will continue to decline, especially into the 2013-14 marketing year. The expected rebound in South American soybean production, Argentine corn production, and U.S. corn and soybean production in 2013 all contribute to the expectation of lower prices. If those crops are as large as generally expected, prices will be even lower than currently reflected in the futures market. The USDA is forecasting record South American production of both crops. If planted acreage of corn in the U.S. in 2013 is at the same level as in 2012 and the U.S. average yield is near a trend value of 162.5 bushels, the crop would total 14.6 billion bushels, about 1.5 billion larger than the record crop and record consumption of the 2009-10 marketing year. Similarly if soybean acreage is maintained at the 2012 level and the average yield is near the trend value of 43.8 bushels, the 2013 crop would reach 3.34 billion bushels, near the record levels of 2009 and 2010. A combination of record, or near record South American and U.S. crops in 2013 would likely push prices down to or below the long term averages of about $4.75 for corn and $11.00 for soybeans.


NRCS POINTS
December 15, 2012 Deadline for 2013 Reporting of Fall Seeded Crops
All producers are reminded that the acreage reporting date for fall seeded crops has changed, beginning with the crop planted for 2013 harvest. The new acreage reporting date is December 15, 2012. This applies to all fall seeded crops including winter wheat. Please call your local FSA county office for an appointment to certify your wheat crop.

2011 Supplemental Revenue Assistance Program (SURE) Enrollment for 2011 crop losses under the SURE Program began on October 22, 2012 and will end June 7, 2013.

The SURE Program provides benefits for crop losses due to natural disasters that occurred in the 2011 crop year. This program is revenue based which accounts for losses in production quantity and quality, as well as price.

A producer’s SURE operation includes all acres of all crops in all counties (and states). To be eligible, a producer must have at least part of his or her “farm” located within a Secretarial declared county, a contiguous county, or must have suffered at least a 50% loss of actual production on the farm. To be eligible for payment, a producer must have suffered at least a 10% loss of production on at least one crop of economic significance in a declared or contiguous county.

SURE provides assistance in an amount equal to 60 percent of the difference between the SURE guarantee and a producer’s total revenue. The producer’s guarantee fluctuates depending on the amount and level of crop insurance and NAP coverage a producer carries. For additional information about the SURE guarantee and revenue calculations, visit the website www.fsa.usda.gov and click on “Disaster Assistance Programs.”

Contact the FSA county office at 812/663-8685.


BEEF 101 WORKSHOP
A Beef Workshop series will be held at the Aurora Extension Office on March 4, 5, 11 & 12.


MARKET READY WORKSHOP
There will be a market ready workshop held on January 26th at the Decatur County Extension Office for vegetable producers. See attached Flyer for registration.


GAPs FROM A TO Z
The Gaps workshop will be held at various sites around the state. Southeast Indiana site will be held at the SEPAC farm, Butlerville on February 16th. The target audience is current and prospective fruit and vegetable farmers, market gardeners, and managers of community gardens that distribute produce to the public. The workshop's goal is to present current science-based information on how to reduce risk of contamination during production of fruits and vegetables, as well as provide practical knowledge on planning and documenting food safety practices from planting through marketing. Check our website for more information.


DECEMBER HOME, YARD & GARDEN
By Rosie Lerner

HOME (Indoor plants and activities)
Check houseplant leaves for brown, dry edges, which indicate too little relative humidity in the house. Increase humidity by running a humidifier, grouping plants or using pebble trays.

Extend the lives of holiday plants, such as poinsettias and Christmas cactus, by placing them in a cool, brightly lit area that is free from warm or cold drafts.

Houseplants may not receive adequate light because days are short and gloomy. Move plants closer to windows, but avoid placing foliage against cold glass panes. Artificial lighting may be helpful.

Because growth slows or stops in winter months, most plants will require less water and little, if any, fertilizer.

If you are forcing bulbs for the holidays, bring them into warmer temperatures after they have been sufficiently pre-cooled. Bulbs require a chilling period of about 10 to 12 weeks at 40 F to initiate flower buds and establish root growth. Pre-cooled bulbs are available from many garden suppliers if you did not get yours cooled in time. Then, provide two to four weeks of warm temperature (60 F), bright light and moderately moist soil to bring on flowers.

When shopping for a Christmas tree, check for green, flexible, firmly held needles and a sticky trunk base - both indicators of freshness. Make a fresh cut, and keep the cut end under water at all times.

Evergreens, except pines and spruce, can be trimmed now for a fresh supply of holiday greenery.

YARD (Lawns, woody ornamentals, and fruits)
Prevent rabbit and rodent feeding damage by erecting physical barriers, such as metal mesh (one-fourth inch) hardware cloth. Pull mulch a few inches away from the trunk, as the mulch provides a warm winter home for rodents. Chemical repellents also are available, but their effectiveness is temporary and not foolproof.

Prevent bark-splitting of young and thin-barked trees, such as fruit and maple trees. Wrap trunks with tree wrap, or paint trunks with white latex (not oil-based) paint, particularly on the south- and southwest-facing sides.

Protect shrubs, such as junipers and arborvitae, from extensive snow loads by tying their stems together with twine. Carefully remove heavy snow loads with a broom to prevent limb breakage.

Protect broadleaves, evergreens or other tender landscape plants from excessive drying (desiccation) by winter sun and wind. Canvas, burlap or polyethylene plastic screens to the south and west protect the plants. Similarly, shield plants from salt spray on the street side.

Provide winter protection for roses by mounding soil approximately 12 inches high to insulate the graft union, after plants are dormant and temperatures are cold. Additional organic mulch, such as straw compost or chopped leaves, can be placed on top.

GARDEN (Flowers, vegetables and small fruits)
If frost hasn't taken your garden yet, continue harvesting.

To protect newly planted or tender perennials and bulbs, mulch with straw, chopped leaves or other organic material after plants become dormant.

Store leftover garden chemicals where they will stay dry, unfrozen and out of the reach of children, pets and unsuspecting adults.

Once the plants are completely dormant and temperatures are consistently below freezing, then the winter mulch can be applied to protect strawberries and other tender perennials. In most cases, 2-4 inches of organic material, such as straw, pine needles, hay or bark chips, will provide adequate protection.

Check produce and tender bulbs in storage, and discard any that show signs of decay, such as mold or softening. Shriveling indicates insufficient relative humidity.

Clean up dead plant materials, synthetic mulch and other debris in the vegetable garden, as well as in the flowerbeds, rose beds and orchards.

Order seed catalogs, and make notes for next year's garden.



Archived Newsletter(s)
November 2012
October 2012
September 2012
June/July 2012
May 2012
April 2012
March 2012
February 2012
January 2012



For more information about this newsletter please contact:
Dan Wilson
Extension Educator
AG, Natural Resources, LCD

Dan can be contacted at:
Decatur County
Extension Office
545 S CR 200 W
Greensburg IN 47240
812-663-8388
wilsondg@purdue.edu