Articles

DECEMBER 5, 2012

By Jennifer Stewart, Purdue University

A very dry Indiana November and abnormally warm start to December have sparked some nervous chatter in the agriculture community on the heels of the worst drought in decades, but the Indiana State Climate Office says it isn’t time for farmers to panic.
A cold November brought only 28% of normal rainfall to the state, but a northward shift of the jet stream and storm track are bringing warm, wet weather back to Indiana. With no definitive pattern in effect this year, such as El Niño or La Niña, that weather variability is likely to continue throughout the winter months, said Ken Scheeringa, Indiana associate state climatologist, based at Purdue.
“Our weather is going to continue to flip back and forth between dry and wet, but winter can be known for that. Don’t get too locked into one mode,” Scheeringa said. “Farmers like to look ahead to spring planting, but a lot can happen between now and April. We have four months for soils to fully recharge and our wet, early fall had already started this process.
“The combination of low winter evaporation rates and the harvest of corn and soybeans behind us means soil water demand is lower at this time of year, giving soils a chance to catch up. Even with little to no rain, soils aren’t likely to lose too much moisture.”
The lack of November rain caused parts of northern Indiana to slip back into moderate drought, according to the U.S. Drought Monitor. Sections of both northern and southern Indiana also fell back into an abnormally dry rating – a drought watch category.
That, combined with persistent drought in the western U.S., has Indiana farmers worried that the state could slip back into the same pattern. But Scheeringa said history is on our side.
“Historically, we haven’t had two significant droughts back to back, in part because of our geography directly north of the Gulf of Mexico,” he said. “The Gulf is a major source of our moisture and it’s really hard to shut off that water supply for an extended time. Our research shows the longest Indiana droughts have lasted about 18 months. The state can have frequent minor droughts, but if they happen in the colder months the impacts are less than if they happen during the growing season.”
That isn’t the case in the western part of the country. With no direct path to Gulf moisture, Scheeringa said it’s more difficult for the western states to break a drought pattern. Once western droughts take hold, they can last multiple years, or even a decade, as was the case recently.
“Indiana is in the eastern part of the country where drought years aren’t as connected,” he said.
December weather models continue to predict a wet, warmer-than-normal month around the state, although 70-degree temperatures won’t continue.
“We’ll be transitioning this week into cooler temperatures and rain, which may continue into mid-month,” Scheeringa said.

NOVEMBER 27, 2012
By: University News Release

By Steve Leer, Purdue University
The United States remains the world’s corn export king, although its empire is shrinking, says a Purdue University agricultural economist.
Foreign nations that previously relied on the U.S. for corn are growing more of their own or buying from other producing countries, said Philip Abbott. He predicted the trend will continue even if market conditions improve and U.S. corn production increases.
“The U.S. has historically been a very important part of the international corn market,” Abbott said. “Prior to the 2007-08 food crisis and spike in commodity prices, the U.S. exported well over half the amount of corn that entered international markets. Since then, the high prices have caused the rest of the world to expand their production and become more self-sufficient.
“Even if we get bigger corn crops in the future, it’s likely that the demand in foreign markets will not soon recover to the level that it once reached.”
U.S. Department of Agriculture statistics bear that out. In the 2007-08 marketing year, the U.S. exported 2.4 billion bushels of corn. The USDA estimates just 1.1 billion bushels of U.S. corn will be exported in the 2012-13 marketing year.
What has happened to U.S. corn exports, and why might the U.S. not claim 50% of future world corn markets? There are a few reasons, Abbott said.
First, ethanol. The federal Renewable Fuel Standard mandates that gasoline sold in the U.S. be blended with ethanol. This year, the law requires oil companies blend 13.2 billion gallons of ethanol with the gasoline they produce. Next year, the blending requirement increases to 13.8 billion gallons.
Corn is the primary feedstock of ethanol, and 5.5 billion bushels of U.S. corn were used for that purpose in 2011-12.
“Roughly 40% of the corn that’s produced in this country is used in ethanol, although some of it is later used as distillers grain for livestock feed,” Abbott said. “That’s up from about 10-12% five years ago. The amount of corn that makes up the increase is more than we export.”
Because the law requires that ethanol be produced, there is less corn available for other non-ethanol users, including foreign buyers and U.S. livestock producers. The high demand for corn, coupled with the partially regulated market, has pushed corn prices higher.
Secondly, the U.S. has not kept up with many other nations that have significantly increased their corn acreage. Although U.S. farmers have shifted acreage away from other crops and into corn, competing nations and customers have significantly increased their area planted.
“We haven’t expanded overall planted area like the rest of the world. Our acreage is basically flat,” Abbott said.
Since the late 1990s, South America has boosted crop acreage 53%. The nations that make up the former Soviet Union are growing crops on 24% more acres, with acreage up 13.4% in sub-Saharan Africa and Oceania. By contrast, crop acreage in the European Union is off 4%.
U.S. corn exports were further hurt by the summer drought. According to the USDA, domestic corn production is expected to be down […]

Washington consultant Jim Wiesemeyer is asked many questions during
his frequent travels around the country. These are his typical
responses to queries about upcoming elections and farm policy issues.

Q: What will happen to estate tax provisions after 2012?

A: Current language expires at the end of this year, and if it isn’t
changed, the estate tax exemption goes from the current $5.12 million
mark to $1 million — equivalent to around 150 acres of Iowa
farmland! Congress will likely extend the current language via a
lame-duck session of Congress after the Nov. 6 elections. That is
when lawmakers must deal with the expiring 2001 and 2003 tax
cuts. The unknown is how many years the estate tax language will
be extended — it will not likely be permanent. […]