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Conservation program should
focus on sloping lands

[MARCH 11, 2003]  URBANA -- A federal-state program to remove environmentally sensitive cropland from production in Illinois would operate more efficiently if it focused more on sloping lands near rivers and streams, according to a University of Illinois study. While the study finds that the Conservation Reserve Enhancement Program has been effective in the watersheds examined in Illinois, the costs have been greater than necessary.

"We wanted to examine ways to improve the targeting of land retirement programs to achieve environmental benefits at least cost, and we focused on the Conservation Reserve Enhancement Program, a federal-state partnership program to retire environmentally sensitive cropland in the Illinois River watershed," said Madhu Khanna, an associate professor of environmental economics in the Department of Agricultural and Consumer Economics.

Co-authoring the study were Rick Farnsworth and Hayri Onal, both faculty members in the department, and Wanhong Yang, a recent doctoral degree graduate.

Funding for the study came from the Illinois Council on Food and Agricultural Research.

The CREP initiative seeks to retire 232,000 acres in the watershed for periods of 15 to 35 years or permanently at a projected cost of $500 million. Landowners receive yearly payments for enrolling eligible cropland in the program. Payments vary according to the soil type in each enrolled parcel, sign-up bonuses and other one-time payments for applying specific conservation practices and protecting the land beyond the minimum 15 years.

Researchers focused on the lower Sangamon River watershed. Its 129,000 acres includes 58 percent in cropland. They evaluated the extent to which actual Conservation Reserve Enhancement Program enrollments in the area are achieving the sediment abatement goals. They also compared actual acres enrolled, program costs and sediment abated to the least cost results from a simulation model. The economic-hydrologic simulation model uses detailed spatial data about actual cropland characteristics and location in the region to identify the least cost combination of cropland parcels that achieved the program's sediment reduction goal at least cost. Payments to landowners equaled or exceeded expected returns to grain production.

"The model indicated a parcel of land should be retired if the value of the environmental benefits from retiring it was greater than the foregone profits from using it for cropping," Khanna said. "We should retire parcels that generate a large amount of sediment that gets into the river, and that would help to capture sediment before it enters the river and where the foregone profits would be low.

"We found that about 6,600 acres in this watershed had been successfully enrolled and would reduce sedimentation by 24 percent but at a higher cost than could have been achieved. It was costing about $1 million in terms of lost profits, and the same sediment abatement goal could have been achieved for about $600,000."

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The difference in actual and estimated costs can be attributed largely to the substitution of relatively flat, highly productive flood plain land with sloping, less productive, less costly land adjacent to streams.

"Ninety-six percent of the reduction in sediment loadings in the Illinois River basin could be achieved by focusing more on the 65 percent of the land that is within 900 feet of rivers, streams and waterways," said Khanna.

She believes that CREP can be made even more successful by continually adapting the program as new information becomes available. Three minor changes could substantially decrease costs and possibly contribute to the establishment of long stretches of continuous buffers along many of the streams in the Illinois River watershed.

She suggests the following: "First, the eligible zone should be restricted to a buffer area that is 300-900 feet wide and narrower than the typical flood plain along the main tributaries of the Illinois River. Second, the eligibility requirements should be modified to allow the enrollment of sloping, less productive cropland adjacent to streams.

"The requirement for enrolling 85 percent of cropland from riparian areas and only 15 percent from highly erodible areas adjacent to riparian areas works against the enrollment of sloping land," she notes.

Finally, Khanna recommends program payments tied more directly to environmental benefits. Currently, the program's payments are tied to each parcel's inherent agricultural productivity. Payments should also be tied to the environmental benefits (e.g., sediment reduction) each parcel generates. Under this scenario, sloping, less productive cropland adjacent to streams would likely receive higher payments than relatively flat, flood plain land that does not contribute much to sediment loadings in the river. The decision by landowners remains the same: Produce crops or provide an environmental service, whichever is more profitable.

[University of Illinois news release]

Deadlines for farmers loom

[MARCH 10, 2003]  With all the other concerns farmers have in their day-to-day operations this time of year, a couple of important dates loom large. The first target date is the Federal Crop Insurance deadline of March 15 for sign-up or changes.

There is an excellent set of materials on the Farm.doc website for you to use in selecting products and finding out about coverage options and cost. Go to: http://www.farmdoc.uiuc.edu/
cropins/evaluator/index_2003_IL.asp.

Federal Crop Insurance should be viewed as a tool to manage risk. It is especially important when we look at the increasing frequency and amounts of cash rent in our area.

The next deadline is for farm program sign-up at the FSA office, if you wish to prove yields. That deadline is April 1. Essentially everyone will need to prove soybean yields for the new program. If you haven't been in or made an appointment, you should do so immediately since there is only a limited amount of time left.

When you are considering options for the farm program, check out the calculator on Farm.doc to assist you. The URL is http://www.farmdoc.uiuc.edu/
manage/FarmBill/decisiontool.html.

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Extension Week

The West Central Region has designated April 7-12 as Extension Week. Logan County has had Extension since February of 1918. It began with a farm adviser named Elmer Ebersol, who sold memberships in the combined Extension and Farm Bureau system that remained in place until the 1950s.

The 4-H program began about 1920, with the first 4-H clubs focusing on specific projects of swine and corn. In 1923 a push began for clubs based on home economics, and the push was on to identify volunteer leaders.

Home economics was added to Extension a few years later with the first "home advisor." Focuses were on running a household and home food preservation.

Logan County added an aggressive Community Resource Development program in the late 1970s. This program was responsible for many of the communitywide surveys done in the early '80s. These surveys even led to removal of Lincoln's parking meters around the square and municipal parking lots.

Extension continues to evolve as needs of residents change. Major thrusts have begun in horticultural programming, family nutrition programs and non-traditional youth programs.

Continuing media releases throughout the next month will highlight some of Extension's offerings.

[John Fulton]

New rootworm-resistant corn hybrids

[MARCH 6, 2003]  URBANA -- The recent announcement that the Environmental Protection Agency had approved a transgenic corn rootworm technology developed by Monsanto for corn hybrids will likely draw strong interest from many growers in Illinois, according to Mike Gray, professor in the Department of Crop Sciences at the University of Illinois.

"This is a new tool that many producers are looking forward to using," Gray said. "It comes at time when crop rotation has not performed very well as a pest management tool in many parts of Illinois because of the development of a variant of the western corn rootworm that lays eggs in soybeans. As a result, we have seen a significant increase in insecticide use throughout much of the east-central part of the state."

He notes that the problems from this variant form of the rootworm have continued to spread into parts of northeastern and western Illinois, as well as sections of Michigan, Indiana and Ohio.

"This new technology comes at a time when soil insecticide use is very high, so growers are understandably interested in using the resistant hybrids," Gray said. "Soil insecticides generally cost about $16 per acre. If this technology can be priced competitively with soil insecticide products, I suspect there will be a lot of interest."

Gray cautions, however, that a critical concern is how European customers will react to this genetically modified product.

"Growers must have a market for what they grow," he said. "That is the primary concern out there right now. We know that groups like the Farm Bureau have asked growers to keep this issue in mind. Many grain processors are also very concerned about this issue and will undoubtedly pass on those concerns to local elevators. A lot of this still remains to be sorted out."

He advises that before making their planting decisions growers should contact their local elevators about whether or not this new genetically modified corn will be accepted.

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"It is important to understand that we have a major European corn gluten market," Gray said. "This market is especially important for many growers in the east-central part of Illinois. There are likely to be at least some elevators that will refuse to accept these transgenic hybrids. It could well turn out that much of the acreage planted to this new technology this year will be in the western Corn Belt, where most of the production is used for livestock feed."

Gray emphasizes that growers who purchase corn rootworm Yield Gard hybrids will be required to plant at least a 20 percent refuge of non-transgenic corn.

"There are some significant differences from the 20 percent refuge used with Bt corn for European corn borers," he said. "One of the most significant differences is that the refuge must be placed within the field of transgenic rootworm hybrids or directly adjacent to the field."

He points out that these tightened rules are needed because of the considerable differences in the mating behaviors of corn rootworms and European corn borers.

"Growers will be required to sign an agreement through the distributor when purchasing transgenic rootworm hybrids," Gray said. "If growers violate those rules, we could easily lose the advantages from this important new technology."

[University of Illinois news release]

Weekly outlook on hog prices

[MARCH 4, 2003]  URBANA -- A spring rally in hog prices will be enough to get producers back into a profitable environment, but a break-even year in 2003 will be of limited value in helping producers climb out of the financial hole in which they find themselves due to losses over the past 12 months, said a Purdue University Extension marketing specialist.

"Pork producers can't wait to put low hog prices behind them, but the market this year has been slow to respond," said Chris Hurt. "Help should be on the way, although the spring rally may not be as strong as many had hoped."

Hurt noted that producers are weary of losing money. In 2002, prices for 51 percent to 52 percent lean hogs averaged about $35 for the year, and estimated costs of production were $38.60 per live hundredweight. Losses reached an estimated $9.60 per hog.

"The largest losses came in the final quarter of the year, when they were over $8 per live hundredweight, or $21 per head," said Hurt. "The situation is somewhat better in the first quarter of 2003, with prices expected to average near $36 and losses trimmed to an estimated $3.50 per hundredweight."

Disappointing prices in the first two months of 2003 stem from a larger supply of hogs than had been expected based upon USDA inventory reports. Pork production in the first quarter of the year was expected to be only slightly higher than during the same period last year. However, in January and February, pork production has averaged 2.4 percent higher.

"Some moderation in slaughter rates can be expected in March, so that the number of hogs coming to market will be closer to even with year-previous levels," said Hurt. "By spring, hog supplies could be down about 2 percent, based upon last fall's farrowing numbers."

The USDA's "Monthly Hogs and Pigs" report is also providing statistical support for slaughter supplies to be lower in the spring. The size of the pig crops in October, November and December (representing spring slaughter) was down over 2 percent.

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"Hog prices should be on the verge of a spring rally that could take live hog prices from near the mid-$30s at the start of March to the lower-$40s by the end of May," said Hurt. "If supplies drop as much as 2 percent for the spring quarter, as USDA reports suggest, prices could average near $43. However, a more realistic objective right now is an average of $40 for the second quarter."

Summer supplies will be drawn from sows farrowed this winter, when producers said they would reduce numbers by 1 percent. If producers follow through, summer supplies will be only modestly lower, and prices for the summer quarter would average a bit under $40.

Data continue to point to a breeding herd that is dropping slowly. Farrowing intentions for the spring have been estimated at down 3 percent, and recent monthly reports have shown the number of females bred in November, December and January to be down by 2.7 percent, helping to confirm this magnitude of reduction. If so, pork supplies could continue to drop modestly into the final quarter of 2003, with prices averaging in the mid- to higher $30s.

"The best news for now is that losses are likely to be nearly over as the spring price rally sets in," said Hurt. "However, prices cannot be expected to be high enough through the year to provide much more than a break-even level on average.

"Production costs may drop from near $40 per hundredweight at the start of 2003 to closer to $38 with lower corn prices, assuming near-normal corn yields this fall. Hog prices, on the other hand, are expected to average about $39 for the year. After the large losses experienced last year, it appears that a break-even year in 2003 will not enable producers to recover from those losses."

[University of Illinois news release]

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