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  • From Byproduct to Beef: Revolutionizing Cattle Feeding for Sustainability and Savings in the Southeast

    From Byproduct to Beef: Revolutionizing Cattle Feeding for Sustainability and Savings in the Southeast

    Supplemental feeding programs are a staple in beef cattle production systems. Something that is a constant battle is making it more economical. One sector of supplemental feeding is the use of byproduct supplemental feeds to achieve a more sustainable, yet economical way of production. Byproduct feeds are used throughout the southeastern US and include a wide variety of products. Availability of specific products is based on location. In the Southeast, some commonly used supplements include products from the processing of cotton, peanuts, soybeans, corn, ethanol and beer.         

    We surveyed beef cattle producers across the southeastern states including Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Oklahoma, Tennessee, Texas and Virginia. The survey received 142 responses. Of those responses, 99 indicated use of some type of supplementation for their grazing cattle. Furthermore, 50% of respondents who used supplementation were using byproduct feeds for supplementation while the other 50% were using commodity feeds for supplementation. The results indicated that producers use a variety of different products based on availability, storage facilities and time of year. The most common products used in the southeastern US are whole cottonseed, corn gluten feed, soybean hulls, dried distillers grain, cotton gin byproduct, and peanut hulls (Figure 1). 

    Cost is often a key difference between byproduct feed supplementation and commodity feed supplementation. Prices vary throughout the year depending on what products are being produced during that time. Current prices can be found on the USDA’s Agricultural Marketing Service’s National Grain and Oilseed Processor Feedstuff Reports. Considering the energy and protein concentration is important.  Knowing what your herd needs and finding a product that fits those needs will lead to the best results. 

    The use of byproduct feeds for cattle is a promising way to promote both sustainability and economic gain in beef cattle production. By understanding the nutritional needs of your herd and the cost differences between products, producers can make decisions to benefit their operations. Our next step in this research is to analyze fertilizer value of feeding byproduct supplements to cattle on pasture. 

     Figure 1: Survey Results of Byproduct Feed Use by Southeastern Producers

    St. Andrew, Lauren. “From Byproduct to Beef: Revolutionizing Cattle Feeding for Sustainability and Savings in the Southeast.” Southern Ag Today 4(24.2). June 11, 2024. Permalink

  • Ag Export Percentages: A Focus on Corn, Soybeans, and Wheat

    Ag Export Percentages: A Focus on Corn, Soybeans, and Wheat

    U.S. exports can be a key driver for commodity prices. U.S. production of corn, soybean, and wheat exceeds domestic use, making access to export markets crucial. Data from 2018/19 to 2022/23 shows that corn, soybean, and wheat exports are dominated by a few key countries. For corn, the United States, Brazil, Argentina, and Ukraine constitute 85% of global exports (Figure 1). For soybeans, Brazil is the largest exporter followed by the United States and Argentina; together, the three countries account for 90% of soybean exports (Figure 2) and 84% of soybean meal exports. Wheat exporting countries are more diversified, with the United States, Russia, the EU, Canada, Australia, Ukraine, and Argentina making up 84% of the market (Figure 3).

    In 2022/23 Brazil overtook the United States in corn exports and is expected to remain the largest export competitor to the United States. In the 2022/23 marketing year, Brazilian soybean exports nearly doubled those of the United States, and Brazil is projected to maintain its role as the worlds largest exporter of soybeans. In 2023/24, Brazilian exports are estimated at 50 million metric tons (MMT) of corn and 102 MMT of soybeans. Brazilian export projections for 2024/25 are at 49 MMT of corn and105 MMT of soybeans. In comparison, the United States is estimated to export slightly more corn at 55 MMT and 46 MMT of soybeans in 2023/24. 2024/25 U.S. export projections are at 56 MMT of corn and 50 MMT of soybeans. Wheat export patterns have remained relatively stable, despite geopolitical conflicts affecting some regions. The largest question for 2024/25 wheat exports pertains to Russia, which is experiencing weather-driven yield and quality issues in addition to the war with Ukraine.

    Export data is vital for commodity marketing. Weekly, the USDA Foreign Agricultural Service reports sales transactions entered into with a buyer outside the United States. In addition to the weekly reporting requirements, daily reports to USDA FAS are required for any export sales activity of quantities totaling 100,000 metric tons or more of one commodity sold in one day to one destination or 200,000 metric tons or more of one commodity sold to one destination during any reporting week. Positive U.S. export bookings support domestic commodity prices. If exports exceed projections or expectations, prices will typically rise, offering a potential opportunity for producer sales. 

    Weather events in other major exporting countries, particularly in South America, can signal support for prices and provide opportunities for increased U.S. commodity sales, especially for corn and soybeans. Wheat can be less sensitive to weather as wheat is produced on six continents in both hemispheres, so production is spread throughout the calendar year. Wheat can be strongly influenced by geopolitical and weather events, making it harder to predict specific timing for market changes. 

    Exchange rates can also affect exports. The strengthening of the USD, relative to the export competitor’s currency, can make U.S. exports relatively more expensive to an importer. A weakening USD makes U.S. exports more competitive.

    The competitiveness and small number of countries in export markets, particularly Brazil and Argentina in corn and soybeans, along with the past relative stability in wheat exports underscores the importance of monitoring both export trends and external factors to optimize commodity marketing strategies.

    Figure 1: World Corn Exports by Country, 2018/19-2022/23 Marketing Years Average (%)

    Figure 2: Soybean Exports by Country, 2018/19-2022/23 Marketing Year Average (%)

    Figure 3: World Wheat Exports by Country, 2018/19-2022/23 Marketing Year Average (%)

    References

    USDA Foreign Agricultural Service. Production, Supply and Distribution.https://apps.fas.usda.gov/psdonline/app/index.html#/app/advQuery.

    USDA Foreign Agricultural Service. Export Sales Reporting Program. https://fas.usda.gov/programs/export-sales-reporting-program and https://apps.fas.usda.gov/export-sales/esrd1.html.

    Gardner, Grant. “Ag Export Percentages: A Focus on Corn, Soybeans, and Wheat.” Southern Ag Today 4(24.1). June 10, 2024. Permalink

  • Population Change in Southern United States

    Population Change in Southern United States

    Population in the Southern region of the United States grew the fastest from 2010 to 2020, with a compound annual growth rate of 0.98%, according to the US Census Bureau. (The Pew Charitable Trusts, 2023). Between 2021 and 2022, the population in the Southern region grew by 1.08%. In contrast, the West grew modestly by 0.20%, while the Northeast and Midwest declined by 0.38% and 0.07%, respectively. 

    Texas experienced the highest growth in population (1.49%) in the South from 2010 to 2020, followed by Florida (1.37%), South Carolina (1.02%), and Georgia (1.01%). While Mississippi saw a small decline in population (-0.02%), Louisiana (0.27%), Arkansas (0.32%), and Kentucky (0.38%) experienced modest growth. All other states in the South gained population at a healthy pace. Nine of the 15 fastest growing cities are in the South according to the US Census Bureau. 

    The increase in population in the South between 2010 and 2022 was primarily due to state-to-state migration, representing on average 85% of residents who lived in a different state a year ago (see Figure below). It is noteworthy that state-to-state migration was prevalent across neighboring states. More recently, post-pandemic domestic migration gains have contributed to population growth particularly in Florida, the Carolinas, and near large metro areas such as Atlanta and Dallas (Rogers et al., 2023). 

    The average proportion of migration from foreign countries for the region was 13%. Texas, Florida, and Virginia had the highest share of total migration from foreign countries, representing on average 24%, 20% and 17%, respectively, between 2010 and 2022. Over a third of the nation’s immigrants overall live in the South (Budiman, 2020). Along with some Northern Plains states, the South generally has the highest fertility rates in the country. States such as Texas, Louisiana, Oklahoma, and Arkansas have particularly high fertility rates (CDC, 2022).

    Migration Flows in the Southern Region (2010-2022)

    Source : U.S. Census Bureau

    Notes:

    1. Other migration is the movement of persons from U.S. territories such as Puerto Rico and U.S. Islands Area.
    2. State-to-State Migration Flows were not available on the U.S. Census Bureau website for 2020.

    Summary and Implications

    Population in the Southern United States is growing, mainly in urban and sub-urban areas, compared to other regions of the country. This population shift has significant implications for land use, particularly in terms of residential housing and the provision of supporting services such as schools, libraries, hospitals, recreational facilities, and other systems. As the population move away from rural areas, the revenue and tax base may decline, requiring more resources to support these communities. To promote sustainable growth, communities need better planning, zoning, and resource management strategies to ensure a balanced approach to supporting residents while protecting natural resources and promoting environmental stewardship.  Social planners, policy makers and economic development practitioners can play a pivotal role in helping decision makers pursue higher goals by enhancing the rural-urban linkages to drive social, economic, and cultural transformation of communities.

    References:

    Biernacka-Lievestro, Joanna, and Alexandre Fall. 2023. Southern States Gain Residents the Fastest. The Pew Charitable Trusts.  https://www.pewtrusts.org/en/research-and-analysis/articles/2023/05/17/southern-states-gain-residents-the-fastest

    Blake, Suzanne. 2024. Americans are Flocking to These 3 Southern States. Newsweek. https://www.newsweek.com/americans-moving-south-top-states-1858742

    Budiman, Abby. 2020. Key Findings about U.S. Immigrants. Pew Research Center. https://www.pewresearch.org/short-reads/2020/08/20/key-findings-about-u-s-immigrants/

    Centers for Disease Control. 2022. National Center for Health Statistics. https://www.cdc.gov/nchs/pressroom/sosmap/fertility_rate/fertility_rates.htm

    Economic Research Service, USDA. 2023. Rural-Urban Continuum Codes. https://www.ers.usda.gov/data-products/rural-urban-continuum-codes/

    Karlekar, Indraneel, and Julie Laumont. 2024. The U.S. Sun Belt’s Ongoing Boom. Clarion Partners. https://www.clarionpartners.com/insights/sun-belt-apartments-multifamily

    Upendram, Sreedhar, Chrystol Thomas, and James Mingie. “Population Change in Southern United States.” Southern Ag Today 4(23.5). June 7, 2024. Permalink

  • Examining Farm Bill Base Acre Proposals

    Examining Farm Bill Base Acre Proposals

    On May 30, 2024, we compared the farm safety net features of the House Ag Committee-passed version of the 2024 Farm Bill (Farm, Food, and National Security Act of 2024) with the Senate majority proposal (Rural Prosperity and Food Security Act of 2024). In today’s article, we focus on one of those provisions: the addition of base acres. While the Senate majority proposal would provide a “limited opportunity” to update base for “underserved producers”– and it remains to be seen exactly what that would entail – the House Ag Committee-passed bill would add up to an additional 30 million acres of base for farms where planted acres exceed base acres on the farm. While base is a wonky, often overlooked provision, is has the potential to be one of the more consequential in the farm bill, particularly as proposed by the House. 

    Previous Southern Ag Today articles (for example, see here) have explored the issue of base. While a seemingly straightforward issue, it’s actually quite complicated. First, base acres were established decades ago and there have been very few opportunities to update/add base. Second, because base acres are decoupled from planting history, what a producer was planting in the mid-1980s when base was established is not necessarily reflective of what is being planted on the farm today. Third, while the 2014 Farm Bill allowed for a “reallocation” of base acres – which did provide an opportunity for the base acres to be more aligned with what was planted on the farm, on average, from 2009-2013 – that “reallocation” did not allow new base acres to be added to the farm. In fact, the last real opportunity to add base acres occurred in the 2002 Farm Bill as soybeans were being added as a covered commodity. Consequently, land with no base (or with plantings that exceed base) have had virtually no opportunity to add base in the last several decades. Fourth, there are severe data limitations preventing thorough analysis, which means it’s difficult for policymakers to know the scope of the problem. Fifth, because of those data limitations, it’s difficult to advise policymakers on the implications of various proposals to change base acres. For example, one popular option adopted by the National Corn Growers Association would be for Congress to simply mandate a base acre update to recent plantings, but ascertaining who would add/lose base is almost impossible to determine, which puts Congress in a precarious position. Despite all of these challenges, based on our collective decades of experience in working on farm policy, just about every farmer we know has land without base (or that is “under-based”) and would be very interested in being able to add new base acres. 

    It is this last point that makes the House Ag Committee proposal particularly intriguing. It is entirely optional and, apart from the 2002 Farm Bill making soybeans a covered commodity, it would represent the single largest opportunity to add base acres since their initial creation in the mid-1980s. Under the House Ag Committee proposal, a farm would be eligible for additional base acres equal to the amount by which (1) the average number of acres from 2019 through 2023 that were planted or prevented from being planted to covered commodities (including “eligible non-covered commodities”) exceeds (2) the existing base acres on the farm. In other words, if you have a farm with plantings that exceed base (including farms where you have no base at all), you can add the missing base. There are a few key limitations/provisions of which to be mindful:

    • To avoid penalizing producers who may be in a crop rotation that contains certain non-covered commodities, the number of eligible acres may include the number of acres planted or prevented from being planted to non-covered commodities (i.e., the “eligible non-covered commodities” referenced above) other than trees, bushes, vines, and pasture. The acres of non-covered commodities that can count toward the eligible acres on the farm would be limited and may not exceed 15% of the total acres on the farm.
    • New base acres added under this provision would be assigned to covered commodities using a formula like that utilized for the base reallocation opportunity in the 2014 Farm Bill. The assignment would reflect the ratio of covered commodities planted on the farm from 2019 through 2023.
    • Following sign-up, if the total number of eligible acres across the country exceeds 30 million acres, the Secretary would be required to apply a pro-rata reduction to all farms to reduce the number of eligible acres to equal 30 million. For example, if USDA receives applications to add 60 million acres of base, everyone will see a 50% factor applied to their application (i.e., 30 million divided by 60 million). Regardless, assuming there are sufficient applications, this would result in a minimum of 30 million new base acres being added to the program.

    Bottom line: this is a significant change from previous law that we expect to be extraordinarily popular among agricultural producers.

    Fischer, Bart L., and Joe Outlaw. “Examining Farm Bill Base Acre Proposals.” Southern Ag Today 4(23.4). June 6, 2024. Permalink

  • Building Equity

    Building Equity

    It may seem that barely covering expenses with little positive net farm income means a business is “treading water.” Ideally, a farm would generate revenues that exceed total expenses each year and have cash and other resources to reinvest into the business. However, agriculture can be highly variable from farm to farm and year to year. Reaching incremental financial goals can help producers hit economic targets and minimize risk. To think of financial well-being as a ladder, the bottom rung is financial loss, and the highest rung is maximum profitability. Each rung that is attained is a higher position and further away from financial harm. 

    It may not be flashy, but a farm that can generate revenues to break-even and pay down debts has indeed climbed several rungs on the financial ladder. It may not afford much extra cash or the ability to expand the operation, but the business is still making progress. To think of the equation total farm assets – total farm liabilities = farm equity, covering all variable and fixed expenses means the farms equity is continuing to grow. Over time, the owner(s) continues to own more of the business until an ownership change or business dissolution. Either way the owner has accrued increased net worth over time. 

    Of course, there are other items that impact total farm assets or total farm liabilities. Asset values can change from year to year. In some cases, they could be quite volatile depending on the valuation method. For discussion, we’ll assume an adjusted cost basis with no major adjustments. Fixed asset accounts can decrease because of depreciation, but we assume this expense is a fixed cost of the business. Liabilities are useful and, in some cases, necessary, but a farm taking on unnecessary liabilities can tip the scales away from the owner, allowing creditors to own more of the operation. Liabilities such as bank loans allow the business to leverage resources to increase production, profitability, efficiency, and other measures. If the farm incurs aliability but the increase in assets is greater than the liability + interest over time, then it will add to the farms’ equity. It’s not always possible to understand the impact of a decision right away, it may take several cycles before seeing the resulting change in farm equity. For an asset purchase with a loan, the initial impact on equity will likely be zero. $100,000 farm asset increase – $100,000 farm liability increase = $0 change in farm equity. However, the influx of cash resulting from the asset’s productivity, allowing the business to cover the depreciation of the item, interest, and debt payments, can have a positive impact on farm equity.

    It is important to consider context, too. A farm with successive losses but is now at break-even would seem to be making progress. A farm that has had big years but is now at break-even could signal a downward trend, or it could be merely a speedbump resulting in a short-term modest return.  In general, a business that is paying down debts is contributing positively to farm equity and adds financial resiliency to the business. Should the operation need to borrow again in the future, end up with a financial loss one year, or eventually sell out, the farm will be in better financial position because of the previous farm equity contributions made. 

    Burkett, Kevin. “Building Equity.” Southern Ag Today 4(23.3). June 5, 2024. Permalink.