Farmers Are Urged to Adopt Conservation Measures
U.S. farmers need to wake up to adopting conservation measures, world buyers find U.S. corn carries less quality, and railroad companies brace for big crops by adding railcars.
Those were the key messages delivered here at the annual U.S. Grains Council meeting Monday.
First, the potential market-impacting thoughts of Juan Jaramillo, vice president of purchases and logistics for Solla: The Colombia, South American-based company imports 7.5 million metric tons grain for food and feed per year.
Jaramillo told a capacity crowd of U.S. Grains Council delegates that his company's nutritionist finds higher quality corn from Argentina than the U.S.
If quality was the only criteria that world buyers use to determine grain purchases, it might spell trouble for U.S. farmers. However, a recent Free Trade Agreement has made the U.S. corn less expensive to buy than Argentina's product.
In 2013, the top four origins of Colombia's imports were Argentina, U.S., Canada, and Brazil. This year, due to FTA, the U.S. has taken the top spot of grain origin for Colombia, Jaramillo says.
"We are willing to pay more for Argentina's corn because of the higher quality. But the taxes that we are burdened with from Argentina will be the deciding factor for us to continue to buy more from the U.S," Jaramillo says.
Meanwhile, the corn quality issue is rearing its ugly head with other countries, according to a Minnesota farmer attending the meeting. "We have heard the same quality story from representatives in Panama," the Minnesota farmer, requesting anonymity, says.
Up grain shipments
At this same meeting, a Union Pacific Railroad representative shared with the grain industry gathering that the company's shipments of agricultural products are up 16% from the second quarter of 2013.
"Specifically, the volume of grain that we shipped in the second quarter of 2014 is up 43% vs. a year ago," Hasan Hyder, assistant vice president of grain and grain products for Union Pacific Railroad.
Hyder pointed toward the larger 2013 crop vs. the drought-stricken 2012 crop, as the driver of the volume growth.
Looking ahead to 2014's grain shipping season, Hyder admitted that the agricultural sector is the hardest industry to forecast for rail resources.
"It is the hardest to plan for and resources for, in our business," Hyder says. "We do see an additional 1,500 grain covered hoppers available for 2014 vs. last year. By the end of the year, we will have 16,500 covered hoppers available."
Union Pacific has budgeted for $4.1 billion of capital improvements in 2014; 24% of that total will be spent on locomotives and equipment and 42% on infrastructure replacements.
"We are investing capital in a new export facility in Lake Charles, Louisiana, that will be online between September and the end of the year. Plus, we are monitoring the increased grain production in Canada and investing there as well," Hyder says.
The railroad company is getting more requests this year for additional railcars in Canada. "But, as of right now, we won't be sending more cars to Canada."
Howard Buffett, farmer, philanthropist, and author, says U.S. farmers should consider adapting to conservation practices before the government mandates measures.
"As a leader in agriculture production, we have to do a better job in conservation. We have very little participation in programs such as long-term no-till, strip-till, nutrient management, and cover crops practices," Buffett says.
Comparing adapting to conservation practices to making difficult decisions in life, Buffett reminded farmers and industry experts that a lot of hard things in life are not given up on.
"It may be scary and a financial strain to switch to conservation ag, but there are a lot of things that are hard in life, yet we don't give up."
The reality is, Buffett states, that U.S. consumer companies (Walmart) are asking for sustainable corn. "Let's don't let Wal-Mart set the standard on what is sustainable corn. We need to wake up and set the standard, as farmers," Buffett says.
Buffett adds, "It won't be long before somebody is going to be telling us how to do conservation agriculture. And half of the time, when somebody is telling you what to do, they are only half right," Buffett says.
Buffett encouraged the USDA to increase its research and development funding for incentivizing farmers to adopt to conservation practices and find a better way to measure yield, net profit, and environmental impacts of practices such as corn stover production.