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The Value of Proper Soil pH

The increased cost of fertilizers has many users asking where fertility costs can be reduced.  Soil testing has long been recommended for farmers, ranchers, and homeowners to identify fertility levels and enable them to only purchase/apply that which is needed.  In addition to replacing the right amount of nutrients, it’s important to consider the conditions which make the most efficient use of existing and applied nutrients.  One component of a fertility program (and soil testing) that should not be overlooked is identifying and correcting low pH through the application of agricultural lime.  Agricultural lime is an investment that will leverage  high-cost fertilization by providing improved nutrient utilization in row crops, forages, and most other agricultural crops we grow in the S.E. United States. .

Figure 1. How Soil pH Affects Availability of Plant Nutrients

Source: Choosing Effective Liming Materials, Alabama Cooperative Extension, March 2019, ANR-2542

Figure 1 shows the range of soil pH that provides that greatest plant utilization of the listed nutrients in the soil. If the soil pH is out of the target range, the nutrients aren’t utilized as efficiently. It should be noted that higher pH range may result in less utilization of some micronutrients.  It is important to know the major nutrient and micronutrient requirements of the selected crop or forage.

There are various materials that are used for liming, and they have different attributes. Check with your supplier about what liming materials are available. Many states have regulations or laws associated with the characteristics and efficiency of materials that can be marketed as agricultural lime.

It typically takes one to two months after an application of a liming material before it becomes effective, so plan accordingly.

Producers should check with their land grant university for soil testing related information.

Runge, Max. “The Value of Proper Soil pH“. Southern Ag Today 2(19.3). Permalink

May 4, 2022
Should Feeder Calves be PI Tested?

In recent years, Southeastern producers have asked whether testing for Persistently Infected (PI) Bovine Viral Diarrhea (BVD) virus generates a premium for feeder cattle. The answer likely depends on certain factors. For example, if a group of feeder cattle is born and raised on the same ranch (home-raised), and the producer has a good vaccination program, then the producer might not PI test them before marketing. The risk of PI’s is likely much lower for cattle coming from a closed herd. Co-mingled cattle are likely to have a higher risk of being PI-positive. Backgrounding and stocker operations commonly source calves from multiple cow-calf operations and multiple groups at auctions. However, co-mingled calves are perceived by buyers to be of higher risk than single-owner calves. So, sellers can use PI testing as a marketing tool to lower the risk perception of the cattle they are selling.

A recent University of Tennessee study examined price determinants at the Lower Middle Tennessee Cattle Association (LMTCA) Video Board Sale from 2015-2020. Figure 1 contains the annual percentage of PI tested lots sold for a for this sale. This trend has been seen in other value added sales throughout the Southeast.

Figure 1. Annual Percentage of PI Tested Lots Sold

PI tested lots were found to generate a $1.19/cwt premium. These lots included cattle that sold from North Carolina, Alabama, and Tennessee. While there were home raised lots that were tested, majority of the tested lots were co-mingled lots. On average, cattle weighed 820 pounds in the study, generating a potential premium just under $10 per head. The cost of PI-testing varies by location, volume, and test type. In general, the test costs around $4-8 per head. However, it is important to note the test cost mentioned here does not include additional time spent, facilities utilized working cattle for testing purposes, or revenue loss from the proper disposal of cattle that test positive.

While there are some costs and risks associated with testing for PI-BVD, selling a “PI tested” lot does generate a premium. It does this by letting the buyer know that the cattle are guaranteed PI free and healthy, which mitigates risk for the buyer. These advantages are especially beneficial for co-mingled lots.

Martinez, Charley. “Should Feeder Calves be PI Tested?”. Southern Ag Today 2(19.2). May 3, 2022. Permalink

May 3, 2022
U.S. Total Rice Acerage Projected at 35 Year Low

In the Prospective Plantings report released March 31^st by USDA-NASS, total planted rice acreage for 2022 was projected at 2.452 million acres, down 3% or 80,000 acres from last year. If realized, this would be the lowest acreage of rice planted in the United States since 1987. The majority of the acreage reduction is due to a 60,000 acre decrease in California, which grows medium and short grain rice. Long grain acres, the main type grown in the Southern states, is projected at 1.943 million acres, down 1.4% from last year. Arkansas remains the largest growing rice state with 1.191 million acres, accounting for 49% of all acreage. Louisiana is the only state to increase acreage, adding 20,000 acres for 440,000 acres total, while Mississippi’s 100,000 acres is the lowest since 1975.

Higher input costs played a key role in producer unwillingness to add rice acreage this year. Enterprise budgets from Mississippi State University’s Department of Agricultural Economics project rice production expenses to increase by 10% to $899/acre averaged across production practices. A large driver of this increase is fertilizer costs, which are projected up 43%. University of Arkansas budgets project similar increases, with a 47% increase in production expenses from last year. Additional supply chain uncertainty for herbicides needed in rice production makes a lower input intensive crop like soybeans more attractive to producers.

Additionally, long grain rice had to compete with a better price outlook for alternative crops, such as corn and soybeans. The chart below shows the percent change in the harvest month futures price for corn, soybeans, and rice since December 1, 2021. The November CBOT Rough Rice futures contract price has increased approximately 20% since the 1^st of December. The percent price increase of corn and soybeans though has outpaced rice at 25% for soybeans and over 35% for corn. The combination of higher input costs and a lower price relative to other crops has likely made producers take a longer-term outlook of the rice market. Lower acreage will continue to support the upward trend in rice prices seen this spring. While supplies are not necessarily tight at this point, we can expect increased price volatility due to any events that might influence production during the growing year. As of April 25^th, the USDA-NASS Crop Progress report has rice planting at 26% complete compared to the 5-year average of 47%. If plantings remain stalled, the market will begin to worry about supply and push prices higher.

Note: Contracts used: Corn- CBOT DEC ’22; Soybeans- CBOT NOV ’22; Rice – CBOT Rough Rice NOV ‘22

Maples, William E. . “U.S. Total Rice Acreage Projected at 35 Year Low“. Southern Ag Today 2(19.1). May 2, 2022. Permalink

May 2, 2022
Reliance on H-2A Workers Continues to Spike as Specialty Crop Producers Face Labor Shortages

Access to farm labor continues to be a significant challenge for specialty crop growers,¹ who face challenges filling positions with domestic workers. This is due in part to the physical and temporary nature of employment, and the ability of employers to offer salaries that are competitive against employment opportunities in other sectors. Farm wages were only 59% of the wage rate of comparable positions in other industries in 2020.²

The decline in the farm labor supply has resulted in a growing reliance on the H-2A temporary agricultural program. This program allows employers to recruit foreign workers to fill seasonal positions. During the last decade, the number of H-2A visas issued increased at an approximate average rate of 17% annually, quadrupling from 65,345 in 2012 to 257,898 in 2021 (Figure 1). This growth was stronger in the specialty crop sector. The expansion in H-2A employment is, in part, the result of an increase in the number of workers petitioned and the number of operations—including small and medium-scale—employing H-2A workers.³ The H-2A program has its challenges and can be costly for producers who must provide transportation and housing for H-2A workers and pay the state’s Adverse Effect Wage Rate, which is often higher than the local worker hourly pay.

With an aging farm labor force³, agricultural labor issues are likely to persist, posing a significant limitation to the specialty crop industry. Mechanization and immigration policies that improve the H-2A program and make it more accessible for farmers will be crucial for maintaining the competitiveness of the U.S. industry.

Data source: US Department of State. Nonimmigrant Visa Statistics. Available at: https://travel.state.gov/content/travel/en/legal/visa-law0/visa-statistics/nonimmigrant-visa-statistics.html/

References

¹ American Vegetable Grower. 2020 State of the Vegetable Industry Survey. Available online: https://www.growingproduce.com/tag/2020-state-of-the-vegetable-industry/

² US Department of Agriculture. Economic Research service. Farm Labor. Available online: https://www.ers.usda.gov/topics/farm-economy/farm-labor.aspx³ 2019 State of the Vegetable Industry Survey – American Vegetable Grower Magazine. Available online: https://www.growingproduce.com/vegetables/which-issues-have-your-attention-2019-state-of-the-vegetable-industry/

Canales, Elizabeth. “Reliance on H-2A Workers Continues to Spike as Specialty Crop Producers Face Labor Shortages“. Southern Ag Today 2(18.5). April 29, 2022. Permalink

April 29, 2022
Fed Cattle Pricing: Will Well-Intentioned Proposals Actually Reduce Cattle Prices?

While questions about market power in the meatpacking sector have been around for well over 100 years, the spike in retail beef prices following the fire at the Tyson facility in Holcomb, Kansas, in August 2019, and the COVID-19 outbreak in early 2020, brought about a renewed focus on the issue.  In response to concerns in the countryside, several legislators offered policy solutions, with the bulk focused primarily on enhancing transparency and increasing negotiated trade volumes in fed cattle markets.

With a number of legislative proposals floating around and with the Livestock Mandatory Reporting Act set to expire in September 2020, the bi-partisan leadership of the House Agriculture Committee asked the Agricultural & Food Policy Center (AFPC) at Texas A&M University to evaluate a number of issues in the cattle markets.  Given the sensitivity and regional nature of the topic, we chose to partner with several respected livestock economists from across the country.  That work ultimately culminated in the release of a book in October 2021 that cautioned against many of the proposed changes, warning that proposals to mandate a minimum amount of negotiated purchases could ultimately reduce prices to cattle producers.

Following the release of that book, Senators Grassley (R-IA), Fischer (R-NE), Tester (D-MT), and Wyden (D-OR) released a compromise bill – the Cattle Price Discovery and Transparency Act of 2021 (S. 3229) – that would, among other things, require the U.S. Secretary of Agriculture to establish a regional mandatory minimum threshold for the percentage of cattle purchased under negotiated grid or negotiated pricing terms.  Senator John Boozman, Ranking Member, Senate Committee on Agriculture, Nutrition, and Forestry asked AFPC to evaluate the bill.  Our January 2022 report found that an additional 6 million head would have to be purchased via negotiation from 2022 to 2026, with the burden (and cost) falling largely on the Southern Plains.

In April 2022, Senators Fischer (R-NE), Grassley (R-IA), Tester (D-MT), and Wyden (D-OR) released an updated version of their bill – the Cattle Price Discovery and Transparency Act of 2022 (S. 4030).  Senator Boozman again asked AFPC to weigh in on the updated bill.  Our latest report, released last Friday, found that the number of head impacted by the updated bill would likely be lower than in S. 3229, but we cautioned that the updated bill gives so much discretion to the Secretary that it was virtually impossible to assess the expected costs to the cattle industry.  When taking all of the uncertainty into account, we noted that it was conceivable that the estimated cost of the latest bill could far exceed earlier estimates.

Last week, a group of livestock economists – all of whom were involved in drafting the book noted above – independently released a report noting there is “no research evidence of any significant or persistent fed cattle price discovery problem at this time” and that proposed legislation would impose “many millions of dollars of additional cost, added risk, and lost value”  that would result in “lower feeder cattle prices and higher consumer beef prices.”  Over the course of the past two years, that is a consistent message we’ve heard from every economist we’ve consulted.

Fischer, Bart. “Fed Cattle Pricing: Will Well-Intentioned Proposals Actually Reduce Cattle Prices?“. Southern Ag Today 2(18.4). April 28, 2022. Permalink

April 28, 2022