News Update
March 6, 2009

Number of Farmers under Financial Stress Expected to Rise

Eighty-four percent of U.S. agricultural professionals surveyed say the probability that many producers will experience financial stress in the next three years is “high or very high.”

This from a recently completed survey of 2,300 professionals — agricultural producers, agricultural economists, consultants, educators and lenders — in all 50 states. The survey was completed in January by the Regional Risk Management Education Centers and the Center for Farm Financial Management at the University of Minnesota.

In Texas, 89% of agricultural professionals expect a sizable number of farmers to experience financial stress in the next three years, according to Jason Johnson, Texas AgriLife Extension Service economist and associate director of the Southern Region Risk Management Education Center at Stephenville.

The respondents were also asked how many agricultural producers with whom they work are currently experiencing financial stress. On a national level, 62% of the respondents said 10% of the producers they work with are currently experiencing stress. Thirty-eight percent said less than 5% were currently financially stressed.

However, “both the U.S. and Texas perspective depict an expected trend moving toward a sizable increase in the percentage of producers experiencing financial stress,” Johnson wrote in his report, titled “The Financial Condition and Sources of Financial Risk for Agriculture in 2009.”

The survey was not concerned with the type of agricultural operation — whether row crops, cattle or both or specialty crops, Johnson said.

Respondents were also asked to identify the major factors contributing to farm financial stress. The top three were price/input cost margins, price volatility, and negative cash flows.

Price volatility shouldn’t need much clarification for the lay person, Johnson said. Prices for feed grains and cattle have gone from average or low to historically high, then back to low in the past year. Input price swings have been even more volatile.

Price/input margins refer to the challenging balancing act that agriculture producers must complete successfully in order to survive, Johnson said.

Input and the commodities produced with them do not always move up and down in lock step, he said. A producer may lock in what he or she thinks to be a good selling price, only to find that increasing input costs have completely undermined expected profits. “Producers are learning that managing for profit means managing both input costs as well as the selling price for their commodities,” Johnson said. “What happens is that when margins shrink, we have increased risk but reduced potential rewards at the same time. The margin for error shrinks and the consequences of mistakes are magnified. That’s not a good recipe for prosperity.”

And shrinking margins often mean negative cash flow — more money going out to inputs than are coming in from sales.

What all this highlights, Johnson said, is that we are in a global economy.

“We’re competing on a global level — with China, for instance — for those inputs,” he said. “At the same time, we’re experiencing a global financial recession. When people have less money to spend, the demand for what we produce and the price they will pay, both here and abroad, goes down.”

Inadequate business planning was identified as the fourth contributor to financial stress. Tightening credit availability was the fifth. Declining land value was a minor contributor, the last of 13 assessment factors identified.

The full report can be found online at http://overton.tamu.edu/farmrisk2009.pdf.

— Release provided by Texas A&M University (TAMU) Agrilife.

Bozeman Struggling to Recover Following Explosion

Recovery efforts were expected to begin at daybreak today for a woman who remains missing after Thursday’s devastating explosion in downtown Bozeman, according to Montana news stations KBZK and KRTV.

Crews had hoped to enter buildings in the city’s downtown Thursday night, but those efforts were stalled when it was determined gas was still being fed into the area, Bozeman Assistant City Manager and former Fire Chief Chuck Winn told the news agencies. NorthWestern Energy spokesperson Claudia Rapkoch said the company still does not know what caused the explosion.

Crews allowed the fire to burn into Thursday night because NorthWestern Energy crews were unable to completely shut off the natural gas.

The name of the missing woman has not been released, and so far no injuries have been reported as a result of the blast.

Some 20 Montana National Guardsman on hand in Bozeman are manning nine checkpoints around the damaged area, and a portion of the city’s downtown surrounding Main Street is still closed to traffic. Officials say the blast was centered at Boodles Restaurant at 215 East Main St. at about 8:12 a.m. Thursday and that overall six businesses have been completely destroyed.

The blast was reportedly felt all the way from Montana State University to Bozeman Deaconess Hospital, and witnesses in the area reported seeing the roof of the building fly hundreds of feet into the air.

Bozeman’s city manager has declared a local emergency for the city of Bozeman, according to reports.

Unemployment Rate Reaches 8.1%

Total job losses during the last six months have risen to more than 3.3 million, bringing the unemployment rate to 8.1% — its highest level in 25 years, according to CNNMoney.com.

The government reported today that employers slashed 651,000 jobs in February, down from a revised loss of 655,000 jobs in January. December’s loss was also revised higher to a loss of 681,000 jobs, a 59-year high for losses in one month, CNN reports.

The U.S. economy has now lost 4.4 million jobs since the start of 2008, which is equal to the total number of jobs in each of the following states at the end of 2007: Georgia, Michigan and North Carolina.

Tig Gilliam, chief executive of Adecco Group North America — a unit of the world’s largest employment firm — told CNNMoney.com he expects the unemployment rate to rise to 9% within the next few months.

Webinar on Estrus Synchronization Protocols for Beef Cows and Heifers March 25

Learn more about the understanding and application of estrus synchronization protocols for beef cows and heifers. With the breeding season quickly approaching, it is not too early to start the planning process.

This webinar will focus on synchronizing protocols that are used for heifers and cows and application of those protocols. It will be presented by Glenn Selk, Oklahoma State University, and Les Anderson, University of Kentucky.

You can view this webinar from your home or office computer, or as part of a program at a local Extension office.

Join Selk and Anderson for this event March 25, from noon to 1:15 p.m., (CST). At the meeting time, simply click on the following link or copy and paste it into your browser to enter the meeting:

http://connect.extension.iastate.edu/beefcattle/

When you go to that URL you will find yourself at a login page. Simply enter your name under the “Enter as a Guest” heading. Click on “Enter Room.” The instructions that detail how to join the integrated phone audio conference will be on the screen when you join the meeting. 

Anytime before the meeting you can visit the following URL to confirm your ability to connect to the Connect server:

http://www.extension.iastate.edu/testconnect/

This webinar is being presented by the Beef Cattle Clearinghouse eXtension Community of Practice.

— Release provided by UNL.

Stimulus Package Provides Energy Efficiency Tax Credits

The American Recovery and Reinvestment Act of 2009, also known as the federal stimulus package, includes a number of provisions aimed at reducing the amount of money Americans spend on their energy usage by installing energy-efficient upgrades to existing homes.

“Homeowners who plan remodeling projects should know about the tax incentives that went into effect on Feb. 17, 2009,” North Dakota State University (NDSU) Extension Service energy educator Carl Pedersen says.

Improvements that possibly could qualify for the tax credit include replacing or installing new windows, doors, insulation, and heating, ventilating and air conditioning (HVAC) equipment. In addition, biomass stoves, solar energy systems, small wind-fuel cells and certain cars also will qualify for the tax credit.

While a large variety of energy-efficient improvements do qualify, determining which ones will qualify is not always simple, according to Pedersen. For example, while all Energy Star-labeled metal or asphalt roofs will qualify for the credit, not all Energy Star windows will qualify. Also, some heating and cooling system components will qualify, but if they are combined with nonqualified components, the entire system is not eligible for the tax credit.

Installation costs such as site preparation and wiring are included for HVAC systems, water heaters, solar panels, geothermal heat pumps, wind energy systems and fuel cells, but installation of windows, doors, insulation or roofs is not eligible.

“Since the tax credit revisions are so new, there is still some confusion as to what is covered, so for more information, consult a qualified tax adviser or an industry professional,” Pedersen advises. “It may not hurt to verify information you receive from two sources.”

To research questions you may have, go to the http://www.energystar.gov web site and click on the Tax Credits for Energy Efficiency tab. The Energy Star web site also has an FAQs (frequently asked questions) section that is regularly updated.

— Provided by NDSU Extension.

— compiled by Crystal Albers, associate editor, Angus Productions Inc.