Expect higher nitrogen prices
Nitrogen prices are directly tied to natural gas prices. Because prices for natural gas have been on an upswing since early fall, nitrogen prices also have been higher. Although natural gas prices usually go down in the spring, this year may be different. “What happens in the global context has a lot to do with this,” reports Rich Pottorff, Doanes chief economist. “This year may be different if we disrupt the energy supply. There are a lot more reasons why the weakness in natural gas prices might not happen.” Two reasons for the uncertainty are Venezuela's oil production shutdown and instability in the Middle East.
What should growers do? Pottorff recommends locking in fertilizer purchases when prices are comparable to those of a year ago.
DuPont, Bunge form business venture
DuPont and Bunge recently announced a joint venture to form a new company that will pursue the rapidly growing food protein market. Called Solae LLC, the company will first focus on offering soy ingredient products. DuPont will move its Protein Technologies food ingredients business into the venture and receive majority interest. Bunge will move its specialty food ingredients businesses into it and receive 28% interest plus about $260 million in cash. Bunge will have the right to purchase up to 40% of the venture.
Solae will be headquartered in St. Louis and is expected to generate $800 million in global sales annually.
No-till acres up
The Conservation Technology Information Center (CTIC) reports that no-till planting systems were used on more than 55 million acres in the U.S. in 2002. That surpasses mulch-till as the most popular form of conservation tillage. In the past 10 years, the number of no-till acres increased 227%. Nearly 20% of all cropland acres are now no-till. Mulch-till is used on 16%, and ridge-till is used on 1%.
CTIC's Dan Towery says use of mulch-till decreased due to weather conditions. A three-year drought in the Great Plains resulted in inadequate residue for mulch-till. A wet planting season in the eastern Corn Belt encouraged farmers there to use conventional tillage in an effort to dry out their fields.
Slow farm bill sign-up
USDA is concerned about how few growers have signed up for programs under the 2002 farm bill. The deadline for sign-up is April 1. Procrastinating growers will face long lines if the sign-up rate doesn't pick up this winter. Adding to the last-minute crunch is the time it takes the Farm Service Agency (FSA) to handle the sign-up process. It takes the agency about a half hour per farm to prepare the forms.
Gary Schnitkey, University of Illinois Extension farm management specialist, says growers need to prove yields from 1998 to 2001 in filling out the forms. Growers also need to have an idea what program and payment options they want to pursue. A grower who doesn't sign up will not receive federal farm payments.
For help, check out the options at the University of Illinois Extension's Farm Decision Outreach Central-farmdoc at www.farmdoc.uiuc.edu/manage/FarmBill/decisiontool.html.
USDA also has computer-based tools to help growers analyze the farm bill. A calculator is available on the FSA Web site www.fsa.usda.gov.
Managing crop input costs
Cargill AgHorizons is offering its customers a unique program to manage financial risk on inputs. Called Triple Play, the new program consists of three options, including one that ties the cost of crop inputs to grain prices. For every cent grain prices fall during an averaging period, the price of the product package is reduced 1%.
Another part of Triple Play is the option of two weed-control programs. The clean field option calls for Cargill AgHorizons professionals to do the spraying and weed management. The grower is guaranteed that the field meets generally accepted economic threshold standards. The other option allows growers to customize crop protection activities in consultation with Cargill and reduces by up to $5/acre any out-of-pocket costs for replanting and respraying.
The third part of Triple Play is interest-free financing to eligible farmers with payments deferred until November 1. Farmers have until May 1 to sign up for the Triple Play program at Cargill AgHorizons retail crop input locations.