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Features

State’s livestock industry must
adapt or decline, study indicates

[JULY 20, 2002]  URBANA — Opportunities for a solution to the decline of the Illinois livestock industry exist if the industry can develop models that address the demands of the modern agri-food supply chain while meeting community standards for environmental stewardship, said a University of Illinois Extension agribusiness management specialist.

"An economic impact analysis tells a complex story of an industry in decline but at the same time an industry with significant impact," said Peter Goldsmith, who is studying the industry with funding support from the Illinois Council for Food and Agricultural Research. "If the industry maintains the status quo, the negative trends will persist," he said.

Goldsmith’s comments came as he participated in an Illinois Livestock Business Development Conference, sponsored by the Illinois Coalition for Animal Agriculture. The meeting was in Bloomington earlier this month.

Livestock agriculture in Illinois has a total economic impact at the production level of more than $2.7 billion in output and more than 37,000 full-time equivalent employees. The impact is greater proportionally in some areas. For example, livestock comprises more than 25 percent of Carroll County’s economy and almost 18 percent of that county’s employment.

"When the meat and dairy processing sectors are added to the statewide economic picture, the impacts increase fivefold," said Goldsmith. "In 1999, meat and dairy processing contributed more than $15 billion in total economic impact and had a total employment impact on more than 80,000 jobs.

"Combining the livestock and meat and dairy processing sectors creates a complex that impacts more than 118,000 jobs, has total economic impact of more than $18 billion, and represents 2.32 percent of the state’s economy."

However, over the past 20 years animal agriculture has declined in the Midwest as a result of a number of factors, including population shifts, scale economies and novel business models leading to greater coordination and integration.

"The structural change in Midwest agriculture has not only resulted in a real decline in the value of Illinois livestock marketing but a relative decline as well," he noted.

"Exacerbating the situation is the heightened conflict over rural amenities. Whereas historically livestock was an integral part of the rural landscape, shifts in rural population and a trend toward enclosed livestock production have made animal agriculture a public policy issue."

Goldsmith’s research is focused on determining if livestock agriculture has a future role in rural economic growth in Illinois. If so, how must it adapt to reflect the new realities of rural life as well as the modern agri-food supply chain?

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One promising area involves linkages between livestock and upstream and downstream sectors in the food chain.

"While downstream the processing sector purchases more than $1.2 billion of Illinois livestock inputs annually, this represents only 28 percent of the livestock commodity inputs needed by meat and dairy processing," said Goldsmith. "Significant deficit commodities are beef and dairy, contributing only 20 percent and 18 percent, respectively, of local industry demand."

Livestock may also play a role in rural economic development.

"Addressing the livestock enterprise siting question is critical," he noted. "There are numerous alternative destinations, nationally and internationally, for investment capital in livestock production. Creating a more favorable business environment is essential to restoring livestock numbers and consequently the economic strength of many rural communities."

Now is the time for new thinking in the state’s livestock industry.

"It behooves the livestock sector to explore novel relationships with meat and dairy processing to access their supply-chain knowledge," he said. "In terms of local demand, markets in Chicago and St. Louis offer interesting opportunities in the retail, direct marketing and restaurant segments.

"Linkages with the grain sector also offer opportunity. Tremendous expansion of the ethanol industry is planned for the state. Marketing dried distillers’ grains will be a significant challenge, and partnering with the ethanol industry also offers interesting opportunities."

In addition to studying the economic impact and future of the state’s livestock industry, Goldsmith will soon begin a project that involves understanding community standards in order to improve siting of livestock facilities.

"The study will help the industry understand and apply the concept of ‘community standards’ as they seek to reverse the flow of investment capital in livestock production," said Goldsmith.

The full report, "Economic Impact of Illinois’ Livestock Industry: Supply Chain Linkages," will be available in August. People interested in copies are invited to contact Sue Esposito at (217) 333-5506.

[U of I news release]

Weekly outlook

Weather market

[JULY 17, 2002]  URBANA — With so much production uncertainty, it is likely that corn prices will continue to be quite volatile over the next several weeks, said a University of Illinois Extension marketing specialist.

"The crops in the drier areas of the Corn Belt have already suffered yield-reducing stress," said Darrel Good. "Perhaps the market has been too complacent about the adverse crop conditions and therefore too optimistic about yield potential for the 2002 crop.

"This week’s USDA report of crop conditions will be an important benchmark in answering that question. The market seems to be expecting stable conditions from the previous week. Any significant deviation from these expectations would likely have important price implications."

Good noted that if yield prospects continue to decline, as suggested by current crop ratings, producers will experience better pricing opportunities over the next several weeks.

Good’s comments came as he reviewed the corn market. July 2002 corn futures reached a contract low of $1.98 in early May. December 2002 futures reached a low of $2.15 at about the same time. A combination of late planting, expectations that acreage would fall short of March intentions and a period of hot, dry weather sent prices higher in May and

June. July futures moved to a high of $2.35, and December traded to $2.54 on July 2.

"While crop ratings have continued to decline, corn prices have dropped significantly since July 2," said Good. "July futures matured at $2.1425, and December futures settled at $2.3235 on July 12. The average cash price of corn in central Illinois declined from $2.25 to $2.07 during that same period.

"A number of fundamental factors have contributed to the price decline of the past two weeks. Foremost, was the USDA’s June 28 report on acreage, which indicated that corn plantings were very near March intentions. The market had anticipated a report showing a decline of about a million acres."

Second, Good added, significant rainfall in some areas and moderating temperatures in the eastern Corn Belt reduced the anxiety about yield prospects. Third, weekly export shipments continue to run well below the pace needed to reach the USDA projection for the current year. With only about seven weeks left in the 2001-02 marketing year, it appears that shipments could fall a bit short of the USDA projection. Fourth, the USDA’s July update of U.S. and world supply and consumption prospects reflected expectations of more abundant supplies.

"Finally, the market generally expects U.S. corn acreage to increase again in 2003, so that a reduction in inventory over the next year is now viewed with alarm," said Good.

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The USDA’s World Agricultural Outlook Board maintained the June projection of the U.S. average corn yield in 2002 at 135.8 bushels per acre. When coupled with the larger acreage estimate, the projected harvest grew from 9.65 billion bushels in June to 9.79 billion in July. In addition, the board reduced its forecast of 2002-03 marketing year exports by 50 million bushels. Stocks of U.S. corn are still expected to decline by the end of the next marketing year but not as dramatically as projected last month.

"In addition to a larger U.S. crop, the USDA’s July report contained a larger forecast for the Chinese corn crop," said Good. "That crop is projected at 4.92 billion bushels — 4 percent larger than projected last month, 10 percent larger than the 2001 crop and 18 percent larger than the 2000 crop.

"The USDA still expects world corn consumption to exceed production in the year ahead, for the third consecutive year, but the expected draw down in stocks is not as large as projected last month."

While the USDA’s July projections of U.S. and world production painted a picture of more abundant corn supplies, a great deal of uncertainty about production persists.

"The extremely variable weather conditions in the Midwest make it difficult to assess crop conditions," said Good. "In addition, the wide range of maturity of the crop, especially in the eastern Corn Belt, means that production uncertainty may persist for several more weeks. The market will continue to respond to the USDA’s weekly report of crop conditions and maturity, weather conditions and weather forecasts."

On Aug. 12 the USDA’s National Agricultural Statistics Service will release the first projection of the size of the 2002 U.S. corn crop. That report will reflect objective yield estimates in key production states and any acreage changes uncovered in the August survey.

"Historically, there has often been a significant difference between the August production forecast and the final production estimate," said Good. "The magnitude of that difference is obviously influenced by weather conditions following the August survey. The lateness of this year’s crop in some areas, and the fragile condition of the crop in many areas, suggests that yields will be especially dependent on August and September weather."

[U of I news release]

[JULY 16, 2002]  URBANA — The worst may be yet to come for pork producers in 2002, said a Purdue University Extension marketing specialist.

"After disappointing prices during the first half of 2002, the pork industry may still not have seen the worst, as losses are expected to mount this fall and winter," said Chris Hurt. "During the last half of 2002 and the first half of 2003, pork supplies are expected to be nearly 3 percent larger than during the same period a year earlier.

"Large supplies will keep hog prices depressed, while rising feed prices will increase costs. The period of losses is expected to span from this fall until the late spring of 2003."

Hurt’s comments came as he reviewed the present and projected state of the hog industry in the wake of USDA reports. The USDA’s June inventory report indicated that the nation’s breeding herd was only slightly larger than one year ago, but the market herd was up 2 percent. The largest numbers of market hogs were at heavier weights.

"For example, the number of pigs which will be ready for market in July were 4 percent greater, but those that will be ready for market from August to November were only 1 percent greater," said Hurt. "The recent large rate of increase in slaughter numbers should taper off into August, but market weights are expected to continue to rise about 1 percent over the next year."

The breeding herd seems to have grown in the past year in some traditional family farm states, while shrinking in some more corporate-oriented states. The breeding herd was up a surprising 10 percent in Nebraska. Other increases were 7 percent in Illinois, 6 percent in Ohio and 1 percent in Iowa.

However, some Midwestern states had decreases, including Indiana, down 6 percent; Missouri, down 3 percent; and Minnesota, down 2 percent. Two corporate-oriented states reported fewer sow numbers. Colorado, which has seen sow depopulation in recent reports, was down 12 percent and Oklahoma producers took a break from expansion, posting a 3 percent decrease in their breeding herd. Texas remained in strong expansion, with an 11 percent breeding herd rise.

"The larger-than-expected number of hogs to come to market this year is a result of a larger expansion in the breeding herd last year," said Hurt. "Pork producers responded to a period of strong profits spanning from the spring of 2000 through the summer of 2001. During this period, estimated profits averaged over $10 per live hundredweight, or about $27 per head.

"Producers report a 2 percent increase in sow farrowing intentions this summer and a 1 percent increase for this fall."

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Live hog prices are expected to average in the higher $30s this summer, with a plunge to the lower $30s as a fourth quarter average. Lows could reach the higher $20s during some weeks, most likely from mid-October through November, Hurt said.

"Prices are expected to average in a range of $31 to $35 in the first quarter of 2003 and in the mid-$30s during the second quarter," he noted. "Based on these hog price projections and current futures prices for corn and soybean meal, losses are expected to average about $20 per head this fall, $17 per head in the winter, and $12 in the spring quarter of 2003.

"Unfortunately, there is a possibility that losses could be larger."

Hurt noted that the increases in corn and soybean meal prices this summer have already added about $2 per live hundredweight to the costs of production, with current estimates of about $39 per live hundredweight. Weather over the next two months will largely determine whether feed prices continue to move higher or abate. If the crop is severely damaged by dry conditions this summer, hog production costs will be driven sharply higher.

"With $3 per bushel corn futures and $240 per ton soybean meal futures, costs of production would be pushed to $44 per hundredweight," said Hurt. "Under this situation, losses this fall would be extreme, averaging an estimated $34 per head.

"Losses of this magnitude would cause some additional liquidation of the breeding herd, further depressing hog prices from current projections. Of course, weather could also be benevolent and provide yields that approach normal."

Hurt recommended that producers consider the possibility of sharply higher feed costs and evaluate the use of call options for upside price protection. There are no opportunities to lock in profitable hog returns at the current time, so most will want to take a wait-and-see attitude with regard to forward pricing hogs.

"Low hog prices for this fall and winter have been well anticipated by the futures market, and sometimes this means that prices will not be as low as anticipated," said Hurt. "Those who cannot withstand, or are unwilling to undertake, a nine-month period of losses should evaluate the alternative of starting to liquidate or reduce their herd size now."

[U of I news release]

Pesticide container recycling available

[JULY 8, 2002]  The Illinois Department of Agriculture has arranged to offer free pesticide container recycling again this summer. Sites will begin recycling in July and continue through August. Collection sites will accept only No. 2 high-density polyethylene plastic agricultural containers that are clean and dry. Participants are also responsible for properly rinsing them and removing all caps, labels, booklets and foil seals.

Collection sites in our immediate area include Mason County Service Company at Easton on the afternoon of July 31 (contact Jim Kiel at 800-331-0548); Lincoln Land FS at Greenview on the morning of Aug. 1 (contact Mark Millburg at 217-243-6561), AgLand FS at Lincoln on the afternoon of Aug. 1 (contact Tim Bennett at 217-732-3113), and Williamsville Ag Center at Williamsville on the morning of Aug. 2 (contact Brad Jones at 217-566-3383).

The collection program is a great way to dispose of pesticide containers. It is a cooperative venture between the Illinois Department of Agriculture, Growmark, the Illinois Fertilizer and Chemical Association, Tri-Rinse, United Agri-Products, UAP Richter, the Illinois Farm Bureau and University of Illinois Extension.

Insects everywhere

It seems like this summer we have had an abundance of insect problems. The drier, warmer weather made us guess we would probably have an abundance of problems. There are plenty of insects wherever we look, whether it is around the home, in the garden or in the fields.

One of the more common insects the past three weeks or so has been the leatherwing beetle. It is also called a soldier beetle. These beetles look like lightning bugs without the lights. They are actually beneficial, as they eat other insects. When the numbers are as large as this year, they usually seek an alternate food source — pollen. These beetles have been very noticeable around linden and basswood trees the past few weeks.

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[Photos provided by John Fulton]
[Leatherwing beetle]

[Japanese beetle]

Another insect that has been causing havoc in the area is the Japanese beetle. It is beetle smaller than a June bug but gold and green in color. It can cause severe damage if beetle numbers are high. Control recommendations are generally to spray with Sevin (carbaryl) insecticide. Treatments are more effective in the morning or evening. Using diazinon insecticide would also provide some control. The other side of the Japanese beetle situation is that there is a grub stage, so control of the grub in a month or so may be beneficial to your lawn and help reduce next year’s adult population.

[John Fulton]

Honors & Awards

Logan County 4-H Shows

• 4-H Food and Nutrition Show results

• 4-H Home and Family Show results

There are some ‘treemendous’
trees in Logan County

[JULY 20, 2002]  The 2002 Treemendous Tree Contest sponsored by the Logan County Master Gardeners has determined winners by species and an overall winner. The largest tree scored was a tulip poplar owned by Hoblit Farms of Atlanta. The tree measured 129 feet tall, had a branch spread of 79 feet 7 inches, and a circumference of 16 feet 11 inches. The tree garnered a composite score of 352 points based on these measurements.

Other winners were Jim McKown with a black walnut tree with a composite score of 203 points, Hoblit Farms with a white oak earning a score of 241, Daris Knauer’s red oak with a score of 252, Stephen Miller with a score of 260 on his ash tree, Jim Sparrow’s silver maple with a score of 250, and John Fulton’s hackberry with a score of 214.

Winners will receive plaques sponsored by contest chairman Walt Ebel. The contest was promoted by Walt and the Master Gardeners to identify and preserve large trees in the Logan County area.

[John Fulton]

National FFA scholarship awarded to local student

[JULY 17, 2002]  INDIANAPOLIS, Ind. — FFA’s national organization awarded a $1,000 Valent BioSciences Corporation scholarship to Kent Leesman of Hartsburg-Emden High School. Valent BioSciences sponsors the scholarship as a special project of the National FFA Foundation. Kent plans to use the funds to pursue a degree in agronomy at University of Illinois in Urbana-Champaign.

The Valent BioSciences scholarship is one of 1,178 awarded through the FFA’s national scholarship program this year. Currently, 187 corporate sponsors generously contribute more than $1.9 million to support the program. This is the 18th year that scholarships have been made available through the National FFA Foundation by business and industry sponsors to reward and encourage excellence and enable students to pursue their educational goals.

Scholarship recipients were selected from more than 7,000 applicants from across the country. Selections were based on the applicant’s academic record, FFA and other school and community activities, supervised agricultural experience program in agricultural education, career plans and financial need.

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FFA is a national youth organization of 457,278 student members preparing for leadership and careers in the science, business and technology of agriculture. There are 7,312 local chapters in all 50 states, Puerto Rico and the Virgin Islands. FFA strives to make a positive difference in the lives of students by developing their potential for leadership, personal growth and career success through agricultural education. Visit www.ffa.org for more information.

[FFA news release]

Ag Announcements

Special baking contests at state fair

[JULY 1, 2002]  Contestants are invited to prepare gingerbread houses and Spam recipes to enter at the Illinois State Fair in August.

Awards will be given for the most creative entries in the Brer Rabbit® Molasses Gingerbread House Contest at the state fair. Both beginners and gingerbread house enthusiasts are invited to compete for cash and prizes. In 2001, judges picked winning entries ranging from traditional to elaborate, including a castle, a detailed tree house with garden and another resembling the "Old Woman in a Shoe." Any theme entry is welcome that uses Brer Rabbit molasses and is up to a foot tall, wide and deep, base not included. Entrants must also bake and enter one dozen gingerbread cookies.

Winners are selected based on appearance (50 percent), originality and creativity (40 percent), and taste (10 percent). Creators are awarded $150 for first place, $75 for second and $25 for third. People of any age may enter, with one entry per person or group. Several people may work on one entry, but one person represents the group. 

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The Illinois State Fair will be one of 70 fairs hosting the Spam® Oven Roasted Turkey Contest. Using the Spam turkey and up to nine other ingredients, contestants are to create an original main dish, appetizer, casserole, stew, stir-fry, salad sandwich or any other recipe. To focus on convenience, cooking time may not exceed 30 minutes.

Judges select winners based on taste appeal (40 percent), appearance (30 percent) and originality (30 percent). The three best entries win cash awards of $150, $50 and $25, and first-place winners advance to national judging for a $2,500 shopping spree and an all-expense-paid trip to Minneapolis.

To enter either contest, contact the entry department at the Illinois State Fair, 782-6661, by July 15. More details for the gingerbread contest are on page 90, and those for the Spam contest are on page 86 of the general premium book.

[News release]

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