March 1997
News & Views from the Wheat & Barley Growers
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Prairie Grains is the
official publication of
the Minnesota
Association of
Wheat Growers,
North Dakota Grain
Growers Association,
South Dakota Wheat,
Inc., and the
Minnesota Barley
Growers Association.
Stop playing politics with risk management
The Minnesota Association of Wheat Growers was thrilled when it was announced last December that much of the spring wheat growing area had been approved for Crop Revenue Coverage on wheat in the 1997 growing season.
Soon after, however, the new program became mired in squabbles of implemental procedures, questions concerning agent expense reimbursement, and other matters that almost prevented the sale of CRC to spring wheat and other crops from moving forward in 1997.
We as a wheat growers association do not favor the concept of CRC over any other crop risk management tools. What we do favor, however, is the opportunity to evaluate this product, and others. Growers will participate in a crop insurance program if it’s cost-effective, and truly beneficial in times of loss. When it comes to risk management, that’s what matters.
In the new Freedom-to-Farm era, risk management will become increasingly important for all crop producers in the United States. To do what’s best for U.S. agriculture, FCIC’s Risk Management Agency, private insurance companies, lawmakers, and others should put politics and sales turf battles aside, and be open to changes and new ideas in risk management. It’s a period of transition for everyone in U.S. agriculture, not just producers. We urge the risk management industry to develop sound risk management tools and educate growers about them. Then let the producer marketplace do the rest.
Tim Dufault, Crookston, MN
MAWG President
How are you managing the ag transition?
In the new farm bill, there is a provision which establishes a "Commission on 21st Century Production Agriculture." The commission will have 11 members, appointed by the President and the House and Senate Ag Committees. The commission will consist of at least three producers, and farm production, marketing, and finance experts.
The commission is scheduled to be appointed by Oct. 1, 1997, and have an initial review of the new farm bill completed by June 1, 1998. The commission’s initial review will be comprehensive, looking at how production flexibility contracts are working so far, how the new bill is affecting various sizes of farms and farm regions, food security, exports, taxes and regulations, and farmland values.
A subsequent report will be due by Jan. 1, 2001, which will again review the health of production ag under the new farm bill. This report will also spell out what direction U.S. farm policy should take after 2002, when the farm bill expires.
It would be prudent for us as growers to review and anticipate the effects of the new farm bill on our own operations. We cannot carry on with a business-as-usual approach, ignore the changes, or assume that the government will step in with a new program once this one ends.
Ask yourself, "what am I doing to manage the ag transition?" Should you join a farm co-op, or are you looking at risk management, such as the new crop revenue coverage? Is it a good time to rent some or all of your land out? Should you expand or reduce your farm enterprises?
The new farm bill means increased price volatility (which can be friend or foe), shorter price cycles, and fast shifts in cropping intentions. How can you capitalize on these factors? Where can you cut costs without affecting profitability?
It’s imperative that we evaluate options now, and implement strategies best suited for our farms before 2002, not after.
Lowell Berntson, Kulm, ND
NDGGA President
U.S.-Canadian border continues to fade
I find it interesting that the Minneapolis Grain Exchange and the Winnipeg Commodity Exchange are exploring the potential of a joint futures contract for durum wheat in North America. And the comment by Agri-Mark V.P. Mike Krueger at the last MN Wheat convention: "Longer term, we’re going to have a North American market. The Canadian Wheat Board will not be in the U.S. market, but instead will concentrate on other global markets."
We will always have our trade tiffs with the Canadians, but they are our largest trading partner, and down the road to freer trade I think joint ventures and trade cooperation between the U.S. and Canada will only increase. There no doubt will be opportunities to profit for those who recognize this trend.
On a separate note, I’d like to encourage Minnesota wheat producers to vote in the upcoming commodity council elections. Remember that new election procedures this year provide for mail balloting instead of walk-in voting. Producers must request a mail ballot from the MN Department of Agriculture by March 1, and return completed ballots by March 18, 1997.
Cliff Keller, Fergus Falls, MN
Chairman, MN Wheat Council