The US Farm Bill, Family Swine Production, and How to Convert Challenges into Opportunities
By Allison Bailey, Elizabeth Crowther, Lukas DeVos, Mitchell Gingerich
The focus of today’s tour was to learn about food and agricultural policy and how family farms can battle the challenges of American agriculture. More specifically this includes the farm bill, swine production, family farms in Iowa and Illinois as well as successful agricultural co-operatives. This led us to our two stops of the day, the first being a presentation by Dr. Kevin Brooks, an agricultural economist for BK solutions. Dr. Brook is a former professor for the University of Illinois, and well versed on the Farm Bill and the current policy situation in Illinois. The second spot had us tour the Whetstine Brothers’ Hog operation in Washington County, Iowa.
Current Outlook of Corn and Soybean Production in the USA: The past and future corn and soybean markets
Growing the crop is only half the challenge of running a successful farming operation, following grain markets and making the correct marketing decisions is critical. The beginning of the lecture discussed the historical and current outlook for corn and soybean markets in the United States. The 2018 harvest of corn is expected to be the 3rd largest crop ever. As the United States is the largest producer of corn, the global trends for this crop closely follow the national trends. Although this will result in a significant harvest, this production is lower than the production from the 2016 and 2017 growing season. This has resulted in the prediction that there will be a lower carry-out stock for 2018 than in previous years. Following the laws of supply and demand, the lower supply suggests that price of corn will rally and increase in the new year. He also explained that the U.S. usage of corn for feed has remained relatively constant over the past 40 years. The increase in demand for corn has been driven by the booming ethanol industry. Dr. Brooks explained to us that the ethanol industry was heavily promoted by investment from the U.S. government. This increase in demand for ethanol production was growing rapidly, but in recent years has begun to plateau. The export market for U.S. corn continues to be stable, however, there is a decrease from 2017 exports. This helped us understand how the corn and soybean markets are changing, and what we can expect for the future.
Soybeans were the next topic of conversation. Similarly, to corn, the 2018 global soybean crop is expected to be the 3rd largest on record. The U.S. market is less representative of the global trends, as Brazil and Argentina are major competitors in this market. U.S. soybeans yields, exports, acreage and usage have been steadily increasing for the past 40 years. Dr. Brook’s discussed with us the current trends in soybean prices. The recent U.S. trade war with China has had a serious impact on the price of soybeans in the United States. This conversation mirrored the one from the previous day at the Chicago Board of Trade. We learned that China is the largest global importer of soybeans, and currently sources soybeans primarily from the United States, Brazil and Argentina. The discussion of imposing tariffs on U.S. soybean imports to China puts U.S. producers at a disadvantage. Beyond this, Dr. Brooks explained the competitive advantage that Brazil and Argentina have in-terms of climate for growing soybeans. The duration of daylight in these growing regions allows for soybeans to have higher protein and oil content, in comparison to U.S. beans. Although the U.S. produces beans of a more uniform size and are cleaner, China favours the soybeans with higher protein and oil. This was a different opinion from what we were told yesterday by Steve Fried, who believed that the trade war was the primary factor detouring China from purchasing U.S. beans. Dr. Brook’s was skeptical of whether trading partners such as China will return to purchasing from the U.S. when the dispute is settled. This contrasted what was said by Steve as he thought China would return to its usual purchasing.
Overall, the learning point of this discussion was the importance of grain markets. Often, a lot of focus is placed on the agronomic decisions of a cash crop operation, but the importance of marketing is often neglected. It was shown to us that even in a historic drought year, such as 2012, the increase in prices allowed for farmers to stay profitable despite the reduced yields. Furthermore, downturns in pricing, such as those that are currently happening in the soybean markets, can have as large of an impact on operations as droughts and disease.
The U.S. Farm Bill: Trying to Stabilize Risk for The American Farmer
The topic of corn and soybean production in the United States led to details of the current US farm bill and how it benefits farmers and American citizens. Dr. Brooks discussed a general concept of the farm bill as it applies to his customers, focusing on corn and soybean production and marketing. The most recent bill was updated in 2014 when Obama was in office. Producers have three different options that one can sign up for when the farm bill is released; the price lost coverage (PLC), Agriculture risk coverage- county (ARCCO), Agriculture risk coverage- Olympic average (ARCIC). The price loss coverage makes up the difference from the national average year price and a set reference price. An example of this would be if the current price of corn is $3.00 and the reference price is $3.50, the farmer would be paid $0.50 per bushel of production. The agriculture risk coverage comes in two different forms, the ARCIC is based on yield and price risk from revenues based on the counties average and the ARCCO is based on the personal farm average.
Conservation renewal programs are also included in the Farm Bill budget. These programs give incentive to farmers to take some of their own farm land out of production, and let natural processes take place for a short period of time. Brooks predicted that conservation subsidies will be decreasing in the future farm bill renewal. The most recent farm bill decreased the funds for conservation and is an issue in Illinois in terms of environmental initiatives. One issue specific to Illinois is the lack of incentives farmers have for sustainable land practices, Brooks mentioned that approximately 75% of the land is rented and the operators often do not own the land they work on. The lack of financial incentive for the land operators can decrease long term productivity and create more costs in the future, a continuing issue within Illinois farming. Government intervention in farm markets is beneficial for many people but also has several drawbacks in terms of unfairness, complexity, and misuse, Brooks briefly mentioned some of these issues specific to Illinois farming and how it’s difficult to be perfect when everyone has different situations.
Whetstine Brothers’ Hog Farm: A Family Farm Surviving in Rural America
We visited the Whetstine Brothers’ hog farm to learn about swine farming in Iowa including the challenges regarding a family farm, and how agricultural cooperatives can be formed to achieve a common goal with neighbouring producers. When we arrived at the swine farm in Wellman, Iowa, we were introduced to the Whetstine brothers, Ed and Larry, as well as Clint, who is Larry’s son. The Farm produces approximately 11,000 hogs per year and crops about 1300 acres in addition to 75 acres being rented from a neighbour. The crop land is broken down into one third soybeans and the remaining two thirds of the land being corn, producing enough corn to feed the hogs and some soybean to provide added income. This is achieved by cropping two years of corn followed by a single year of soybean in rotation. In addition to the hogs and crops, the farm also calved 100 cows and bought additional animals to feed 200 beef cattle
Each member of the operation has separate management responsibilities. Ed focuses on the nursery while Larry manages the finishing barns. Clint is responsible for the cattle, as well as decisions regarding the management of crop land.
The Whetstine family operates as part of a cooperative called the Maple Grove Pork Company, which acts as a farrowing barn for 12 local hog producers. The cooperative operates a sow unit to produce piglets for the members to feed in the nursery and finishing barns. Since this sow unit provides service for several hog farmers in the area, it allows for improved efficiencies when providing piglets to the cooperative shareholders. The sow unit contains 2300 sows, each of which producing approximately 28 pigs per sow per year. The sow unit has been able to reduce sow numbers by 200 while remaining at the same level of production.
Swine production on the Whetstine farm makes use of a nursery barn with two groups of piglets, along with finishing barns where Larry grinds the grain to feed the hogs to a weight of 275-285 pounds before shipping. The farm ships 65-70 loads of hogs per year. A notable characteristic of the hogs shipped by the Whetstine farm, is that they are finished without the use of paline, a growth promoter, which is rewarded by a premium paid to the producer.
Above: The Whetstones nursery barn. Pigs are transferred into the nursery from the cooperative sow unit and then moved to the finishing barn.
Apart from the swine production on the farm, Clint also works together with a neighbour to improve efficiencies and lower the costs of field work. Together with a neighbour, the farm shares tillage equipment as the neighbour does fall tillage, while Clint does his tillage in the spring. Apart from tillage, the neighbour also works with Clint to inject the manure of both farmers more efficiently.
Clint tries to cover a field with manure every 4 years and he prefers to operate as a no-till and minimal-tillage system. Besides the Corn and soybean, Clint also dedicates land to hay for the cattle. Clint has had success using rye as a cover crop and using the straw as bedding as an alternative to corn stalk bedding. Aside from using cover crops, grass waterways were seen in the fields to reduce soil erosion because of the high rainfall in Iowa.
A Community Working Together for a Stronger Future: Maple Grove Pork Co-operative and Equipment Sharing
Operating as a cooperative in the farming industry has several benefits, a main factor is the ability to access desired capital for new and improved facilities that is shared by the members. There are currently 12 different members to Maple Grove Pork, each owning at least one share of the cooperative, this is how the farm sources their nursery pigs. Naturally, when working with 12 different members some issues arise and when the cooperative first started the group met every 2 weeks to discuss issues in operation and management. Operating as both a private company and a cooperative has both benefits and issues arise as assets are divided between many different people. There are strict biosecurity measures at the sow barn that include only the full-time workers go into the facility and each shower in and shower out. However, at both the nursery and finishing barns there is not, we were all allowed to enter the barn freely without changing shoes, washing, or knowing where we came from. A massive difference to swine production practices in Ontario in terms of biosecurity measures.
Farming is a business that takes large capital to get started. Often, farmers invest in very expensive new machinery that only gets used for a short period of time per year. In most other business areas, assets are purchased and used every day possible. The Whetstine Brothers’ use various approaches to combat this issue such as fixing up and using their previously owned older equipment as opposed to investing in brand new machinery. They claim new machinery does not work as well anyway. The Brothers’ also work with neighbouring farmers with similar interests by purchasing mutually essential equipment together, such as manure spreaders. In this way, they can get a better deal on equipment they only use for a few weeks a year, and benefit from each other's expertise and relationships. Finding as many ways to share and work together has helped save the Brothers’ money needed for other aspects of the business.
Succession planning is also an important issue for these farmers. The Whetstine Brothers’ encouraged students in our group who are hoping to one day take over their family farm to start the conversation with their parents/family as soon as possible. There are many things to discuss and consider when farm businesses switch hands. The Whetstine Brothers have some grandchildren that are interested in the business however, no plans are certain now. In succession planning we were told you also must be careful to not add too many business members at once, so current partners don’t lose work.
Ed, Larry and Clint put a lot of effort into improving the efficiency of their operation and lowering the cost of production in their swine and crop production, all while protecting and maintaining the health of their land. The Whetstine family works hard to improve their practices to gain efficiency and promote the profitability of their business.
Above: Ed, Larry and Clint Whetstine after receiving thank you gifts of Ontario maple syrup from Wellington County.
After our stop at the Whetstine Brothers, we passed some nearby fields with heavy weed pressure from herbicide-resistant fleabane. During the swine production tour, we were told a lot of their land goes through a soybean and corn rotation, or a two-year corn, one-year soybean rotation. We’ve learned at school about how the herbicide resistance has become a huge problem throughout both the US and Canada but is something difficult to truly comprehend until you see it first-hand. Many other fields we have passed on our journey seem to not have quite as much resistant weeds, so we can hope the problem is being more proactively controlled.