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  • Finding a Lawyer

    Finding a Lawyer

    As a lawyer at the National Agricultural Law Center, I don’t represent clients.  While I- and my colleagues- give presentations about legal issues across the country, we’re prohibited from giving legal advice specific to one person’s situation.  But there are many cases where that’s exactly what people ask for- an attorney who can represent their legal interests for the issues they’re facing.  When I get that question, here are some suggestions I give:

    • The legal issue you’re facing is going to influence the lawyer you’re looking for.  For many things, such as real estate, contract work, zoning changes, or basic business planning, a local attorney who may not always work with farmers may still be the best person for the job.  They’ll be convenient and knowledgeable about the administrative and court systems in your area.  However, for some issues, like crop insurance claim denials, NRCS determinations or ag bankruptcy, it might be better to work with an attorney who is more familiar with the tiny details and pitfalls that make up that area of practice. 
    • In order to practice law, attorneys have to be a member of either their state bar or bar association.  Many of these have a function on their website allowing people to search for members.  Some search only by geography, so you can find lawyers close to you.  Others also allow searching by practice areas, which will help narrow your search to firms that work with real estate or contracts law, for example.  Further, some state bars have a referral service that can connect you with an attorney who practices in your area of need, while also requiring the attorney to charge a lower-cost initial consultation fee. The NALC has created a resource with links to these websites for each state. 
    • You can also search for professional organizations in the relevant area of law.  Many state bar associations have “sections,” joined by attorneys with similar practice interests. The NALC resource can also help you identify active sections.  Additionally, there are nationwide organizations that have similar goals, some with a searchable membership directory.  For example, I’m a member of the American Agricultural Law Association, which focuses on areas of law that intersect with agriculture, and a membership list is available here.  
    • If finances are a significant concern, there are a few options available.  It’s important to note, however, that these organizations are frequently overwhelmed with requests and sometimes limit their acceptance to certain legal issues, financial status or other criteria.  With that being said, many areas have Legal Aid offices that provide legal services to low-income families.  Search for your county or city name and “Legal Aid” to find one near you.  Additionally, some law schools have clinics where students work with licensed attorneys to help a limited number of individuals in certain situations, such as bankruptcy, immigration, or business formation and development.  Search for the name of the law school nearest you plus the word “clinics” to find out if that might be an option.  Finally, the American Bar Association has a service called Free Legal Answers where pro bono attorneys provide legal advice in certain subject areas.   

    Finally, don’t discount the benefits of asking your friends and neighbors if they have an attorney they work with.  If that doesn’t work, every town in the country (at least that I’ve been to!) has a small restaurant where farmers meet in the mornings, visit and exchange local “news.” Stop by, have a cup of coffee and talk with them for a bit about who they recommend.  Be sure to try the pie!

  • What’s all the Fuss about the Inflation Reduction Act?

    What’s all the Fuss about the Inflation Reduction Act?

    If you were following farm bill developments over the past year, chances are you’ve heard a lot of chatter about the Inflation Reduction Act (IRA).  The IRA—signed into law in August 2022—provided approximately $18 billion in new, additional funding for climate-smart agriculture delivered via the existing conservation programs authorized in Title 2 of the farm bill. But, what does that have to do with the farm bill reauthorization?  As it turns out, quite a lot.

    While the IRA infused $18 billion into the conservation programs, it was one-time funding. The IRA passed through Congress under a budget process known as reconciliation. While that process lowers the vote threshold in the Senate—allowing bills that might not otherwise pass to find their way through the process, typically in partisan fashion—it also requires that no spending extend beyond the 10-year budget window in the reconciliation agreement. For the IRA, that window closes in 2031. Contrast that with the farm bill, where the budget for conservation programs is assumed to continue in perpetuity.  

    While the debate over the IRA has largely involved (1) quibbling over CBO’s projections of IRA spending and (2) speculating if USDA will be able to obligate the entire $18 billion by 2031, both of these arguments miss the bigger point. Absent creative thinking, the IRA funding will be a one-time flash in the pan—gone by 2031—as noted in Figure 1.  

    Figure 1. Historic Conservation Spending with Estimated Spending under Current Law

    Sadly, like most debates in Washington, D.C., creativity often takes a backseat. The same is true of this debate.  Much of the conversation has focused on the fringe options: (1) doing absolutely nothing, despite the caution above and (2) clawing back all of the IRA funding and using it to fund deficit reduction. We don’t see either of these as viable—or likely—options. In the remainder of this article, we explore the middle ground: options that deviate from the status quo but that could result in permanent increases to conservation funding.

    As noted above, the farm bill differs from the IRA in that the budget for conservation programs in Title II of the farm bill is assumed to continue in perpetuity. The options that follow all involve reallocating the IRA funding within the context of the farm bill. It is complicated to be sure—and would require navigating arcane budget rules—but it is possible and would ensure that elevated funding levels for conservation extend beyond the life of the IRA. To illustrate the point, the gray area from Figure 1 is simply reallocated (in a nearly linear fashion) in Figure 2. A few key observations from this hypothetical reallocation: 

    • This option results in additional conservation funding beyond 2031, which is not an option under status quo;
    • By CBO’s estimates, the IRA will result in Title II outlays reaching a maximum of $9 billion in FY2027 (Figure 1), while the hypothetical reallocation option presented in Figure 2 would reach $9 billion by 2033; and
    • Perhaps most importantly when compared to status quo, this option would result in these elevated levels in perpetuity.  In other words, rather than reaching $9 billion for a single year, it’s possible to build a Title II baseline at $9 billion per year in perpetuity.

    Importantly, this example is hypothetical.  The faster USDA obligates the IRA funding, the less there is available to build long-term baseline in a farm bill. In other words, the longer this drags on, the less opportunity there is to have a long-term impact.  Regardless, while this option would trim IRA spending in the near term, it would result in permanent additional baseline to Title II of the farm bill going forward.

    Figure 2. Historical Conservation Spending and Hypothetical Reallocation of IRA Dollars

    Of course, Congress is under no obligation to follow the hypothetical allocation presented in Figure 2. The IRA was a one-time agreement strictly limited to $18 billion.  If policymakers agree to a solution that allows for a permanent increase in Title II spending—particularly those who were opposed to the IRA in the first place—then it stands to reason that compromise may be required.  For example, some of the gray area in Figure 2 could be allocated to fund other priorities in the farm bill.  While some may be naturally opposed to this option, it could still result in long-term investments to Title II that dwarf the IRA funding. 

    Where does that leave us? Supporters of status quo (i.e., those demanding that the IRA not be brought into farm bill discussions) are guaranteeing that no more than $18 billion will be added to Title II programs for carrying out climate-smart agriculture (at least not in the near term, given the political environment that appears against more spending).  While it would require some very difficult conversations about priorities and funding levels, to us this seems to present a win-win opportunity…but only if cooler heads can prevail.

    Bart L. Fischer, and Joe Outlaw. “What’s all the Fuss about the Inflation Reduction Act?” Southern Ag Today 3(50.4). December 14, 2023. Permalink

  • Two Key Productivity Measures with Profit Implications for Cow-calf Operations

    Two Key Productivity Measures with Profit Implications for Cow-calf Operations

    As we open the final month of the year, most spring-calving cow-calf operations have weaned calves and have an opportunity to assess the productivity and profitability of their herds. To that end, I wanted to quickly review two measures that I feel are of utmost importance to a cow-calf operator. Neither measure carries a dollar sign, but both have serious implications for the revenue side of the profit equation. There is no shortage of measures and indices that can be helpful for cow-calf operators, but weaning rate and pounds of weaned calf per cow are two that I think are very important, but also relatively simple to understand and calculate.

    Weaning rate is the percentage of cows exposed to a bull that wean a calf in a given year. If a farmer exposed 50 cows and weaned 45 calves, the weaning rate for that operation would be 90% (45 calves divided by 50 cows). There is a cost to maintaining and breeding cows whether they wean a calf or not, so limiting the number of cows that incur costs and fail to wean a calf is crucial. Holding all other things constant, herds with higher weaning rates will be more profitable than those with lower weaning rates. If weaning rate is an issue, farmers should work to determine if the issue is cows failing to breed, cows losing calves, or calf survival.

    An easy way to think about weaning rate is that it converts revenue per calf to revenue per cow. Table 1 below provides a simple way to illustrate this concept. If one assumes that the average calf is weaned at 550 lbs and is worth $2.30 per lb (for simplicity think steer-heifer average), then the value of each calf is $1,265 at weaning. However, when discounted for cows that were maintained but did not wean a calf, the revenue picture on a per cow basis is very different. Each 5% change in weaning rate impacts revenue per cow by more than $60. That difference expands in strong calf markets and contracts in weaker calf markets, but the fact that weaning rate significantly impacts profit is undeniable.


    The second measure that I wanted to briefly discuss is pounds of weaned calf per cow. This measure builds upon weaning rate by also including weaning weights. Pounds of weaned calf per cow can be calculated by dividing the total number of weaned lbs by the number of cows exposed to a bull or by multiplying the average weaning weight for the operation by the weaning rate. I like to think of pounds of weaned calf per cow much like a yield measure for a crop operation – production per unit. Weaned lbs are the production level, and cows are the unit. So this measures the lbs of weaned calf a cow-calf producer can potentially sell for every cow he or she maintains.

    Table 2 shows pounds of weaned calf per cow for a range of weaning rates and weaning weights. Increasing the percentage of cows that wean a calf each year and / or increasing the weaning weight of calves are two of the primary ways that cow-calf operations can see increased revenues, with calf price being an important third factor. The wide range across the table speaks to how much this measure can vary across operations. This is not to say that a higher level of lbs of weaned calf per cow is always desirable because this measure does not incorporate any additional costs associated with higher weaning weights or other considerations of the operation. But, tracking and managing that number will have profit implications for the operation over time.

    Table 1: Revenue per Cow as Weaning Rate Changes

    Assuming 550 lb calves @ $2.30: $1,265 per calf weaned
    Weaning RateRevenue per Cow
    95%$1,202.75
    90%$1,138.50
    85%$1,075.25
    80%$1,012.00
    75%$948.75

    Table 2: Pounds of Weaned Calf per Cow by Weaning Weight and Weaning Rate

     Average Weaning Weight
    Weaning Rate400 lbs450 lbs500 lbs550 lbs600 lbs
    95%380427.5475522.5570
    90%360405450495540
    85%340382.5425467.5510
    80%320360400440480
    75%300337.5375412.5450
  • Holiday Baking Gets a Boost

    Holiday Baking Gets a Boost

    Many baking recipes call for eggs. Americans love to bake, especially during the holidays. This seasonal demand typically causes a short but often sharp uptick in table egg prices around this time of year, as seen in figure 1. Egg markets also typically experience a short price spike in early Spring corresponding with the Easter holiday. These price spikes are mostly demand driven but can certainly respond to supply pressure as well. We saw this distinctly around this time of year in 2022 when the egg inventory reached a historic low as Highly Pathogenic Avian Influenza (HPAI) decimated the layer populations in the egg producing states, losing more than 43 million laying-hens and producing almost 30% fewer eggs. Concurrently, Americans were entering holiday demand. High demand with low supply almost always produces increasing prices. Prices reached as high as $5.30+ per dozen during this time. 

    A quick study of figure 2 shows that the current egg inventory (red bars) has rebounded strongly and is higher than both 2020 and 2021. Conversely, it is easy to see how the inventory shortage we suffered in 2022 contributed to the aforementioned high prices. When hen numbers rebounded, and HPAI impact subsided, egg prices went from the historic highs of 2022 to historic lows of below $0.90 per dozen after Easter 2023 and have stayed relatively low up until the current typical holiday increase began. Looking at the inventories currently on hand, consumers should reasonably expect egg prices to stay within “normal” ranges for the season and likely drop quickly back to the recent lows – all assuming HPAI does not cause the great loss of hens we saw last season. 

    Unfortunately, HPAI is resurging again in commercial and backyard flocks, with 47 U.S. states reporting impacts and 24 states having confirmed infections in the last month. So far, the massive laying-hen losses of 2022 have not occurred. Only 5,108,800 commercial laying hens have been impacted in 2023 at the time of this writing. However, harsh weather has yet to spur on the major migration of wildfowl, HPAI’s primary vector for spreading the virus. It is yet to be seen if increased bio-security measures and ever improving quarantine procedures can keep the worst impacts at bay. But so far, holiday baking season looks to be in good shape for eggs!

    Figure 1.

    Figure 2.

    Brothers, Dennis. “Holiday Baking Gets a Boost.” Southern Ag Today 3(50.2). December 12, 2023. Permalink

    Photo by Lukas: https://www.pexels.com/photo/eggs-in-tray-on-brown-surface-518538/

  • Examining Sugarcane and Sugarbeet Production Costs 

    Examining Sugarcane and Sugarbeet Production Costs 

    Sugarcane and sugarbeet production are highly specialized processes with a unique set of production costs. These crops are grown in limited geographical regions of the country with sugarcane being grown in Florida, Louisiana, and Texas and with sugarbeets being mainly cultivated in the Red River Valley, upper Midwest, Great Plains, Northwest, and in California. Sugarcane is a perennial crop often grown in cycles of between four to six years. Conversely, sugarbeets are often grown in rotation with grain, oilseed, and pulse crops, which typically limits the planting of sugarbeets to once every four years for a particular piece of land. 

    Given that the commodity program safety net for sugarcane and sugarbeet growers is mainly provided through the marketing loan program, this article evaluates sugarcane and sugarbeet production costs relative to loan rates established in the 2018 Farm Bill. Specifically, production costs of Louisiana sugarcane and that of sugarbeets grown in Minnesota and North Dakota are compared for the last several years, subject to available data. 

    In this analysis, Louisiana sugarcane production costs represent the weighted costs per acre for a five-year crop rotation with harvest through stubble, as defined by the LSU AgCenter. Cost data for sugarbeets was obtained from the University of Minnesota FINBIN database which encompasses production and cost data for many sugarbeet-producing farms in Minnesota and North Dakota (the Red River Valley). 

    Since 2018, production costs for sugarcane in Louisiana have risen substantially. The main drivers behind these increases have been mainly due to a 130% increase in the cost of fertilizer and an 82% increase in the cost of diesel fuel since 2018 (Figure 1). 

    Figure 1. Selected direct production expenses for Louisiana sugarcane per acre, 2018 to 2023. 

    For Louisiana sugarcane producers, the total cost of production has risen from $551 to $858 per acre over the period of 2018-2023. That is an increase of over $307 per acre since 2018. A unique feature of sugarcane’s cost structure is the acquisition and maintenance of highly specialized farm equipment (e.g., combine billet harvester, planting wagons). Increases in machinery costs coupled with higher interest rates have resulted in overall machinery ownership costs increasing by 55% over the past five years (Figure 2).

    Figure 2. Comparison of Louisiana sugarcane production costs, 2018 versus 2023. 

    Note: FC is defined as fixed cost of machinery ownership and OH is defined as general farm overhead expense.

    As a result of the increase in production costs, the average breakeven selling price for raw sugar has increased from 17.2 cents per pound in 2018 to 28.2 cents per pound in 2023, an increase of 64% (or 11 cents) as noted in Table 1. 

    Table 1. Cost of production for raw sugar in Louisiana, 2018 to 2023. 

    Referencing the uniqueness of the crop, sugarcane must first be processed into raw sugar and then transferred to another facility where it is converted to refined sugar. Sugarbeets omits this intermediate step because after it undergoes initial processing, the finished product is refined sugar. Because of this difference in processing techniques, the production costs for sugarcane are calculated per pound of raw sugar while the cost of sugarbeets are calculated on a per-ton basis.  

    While produced on a slightly larger area than sugarcane, the cost structure for sugarbeets can differ from that of sugarcane based on geographical differences. In the Red River Valley region, the average total cost of production per acre for sugarbeets has increased from $1,099 in 2018 to $1,350 in 2022, an increase of $250 per acre. Large drivers of the increase in production costs were chiefly attributable to a 66% increase in the price of fertilizer and a 37% increase in the price of diesel fuel (Figures 3 and 4). Like sugarcane, sugarbeets have their own set of unique costs (e.g., specialized equipment costs for carts, defoliators, and harvesters), which is reflected in the cost increase over the observed period. 

    Figure 3. Selected direct production expenses for sugarbeets Minnesota and North Dakota, 2018 to 2022. 

    Figure 4. Comparison of sugarbeet production costs in Minnesota and North Dakota , 2018 versus 2022.

    Note: FC is defined as fixed cost of machinery ownership and OH is defined as general farm overhead expense.

    Sugarbeet producers have seen their cost-per-ton estimates increase substantially from the 2018 crop year. The average direct cost per ton of sugarbeets produced has increased from $31.73 in 2018 to $42.19 per ton in 2022. However, the highest cost occurred in 2019, when the average cost of production per ton was $48.21. When comparing the lowest cost of production per ton ($31.73) to the highest ($48.21), this represents an increase of over $16 per ton (52%). Likewise, the total cost plus overhead per ton has increased from $40.07 to $60.25, an increase of greater than $20 per ton (Table 2). The increase in production cost per ton in the 2019 crop year was caused by flooding that disrupted planting followed by a freeze during the harvesting of sugarbeets. This disruption reduced3.50.1- sugarbeet yields causing production costs-per-ton to sharply increase. Since that time, sugarbeet costs have displayed precipitous peaks and valleys. 

    Table 2. Cost of production per ton for sugarbeets in all States, 2018 to 2022. 

    The 2018 Farm Bill sets the raw cane sugar loan rate at 19.75 cents per pound and the refined beet sugar loan rate at 25.38 cents per pound (USDA, 2023). This article provides information that could be useful in Farm Bill discussions regarding sugarbeet and sugarcane loan rates. Since the enactment of the 2018 Farm Bill, costs of production for sugar have drastically increased—by about 30% for sugarbeets (2018-2022) and by about 38% for sugarcane (2019-2023). 

    References 

    Deliberto, M. and B. Hilbun (2023). Projected Costs and Returns for Sugarcane in Louisiana. Louisiana State University AgCenter, Department of Agricultural Economics and Agribusiness, A.E.I.S. Report No. 362, January 2023. 

    FINBIN (2023). Center for Farm Financial Management, University of Minnesota. http://finbin.umn.edu . Date Accessed: November 10, 2023.

    USDA. (2023). Sugar Policy. https://www.ers.usda.gov/topics/crops/sugar-and-sweeteners/policy/. Date Accessed: December 1, 2023.  

    Deliberto, Michael. “Examining Sugarcane and Sugarbeet Production Costs.” Southern Ag Today 3(50.1). December 11, 2023. Permalink