At 8:15, my breakout sessions started.  Each one last 55 minutes and were back-to-back-to-back.   I thought the last session would be the smallest, but it actually turned out to be the largest and each session had many good questions (and I think I gave good answers).

Ann Duignan of JP Morgan gave a presentation on how the global economy is affecting the farm machinery business and then its affects on our farmers.  The presentation was very informative.

Last night we had the Top Producer of the Year award dinner.  There were three finalists and based on the video presentation for all three, I could not tell who was going to win.  Each farmer has been very successful and will continue that success.  The one thing that was brought out to me by all three was each of their passion for the employees that work for them.  They are part of their family and it showed.

I think this is the first time that I have ever seen a farmer use a pink flamingo as part of their branding process.

I won’t tell you the winner here since it will be posted on the Top Producer section of www.agweb.com.

America, with the Mississippi River system and inter-coastal waterway has by far the best series of cheap river and water systems in the world.  That is why it is cheaper for an American farmer to ship his corn from Minnesota all the way to New Orleans than for a Brazilian farmer to ship his corn by truck for a hundred miles.

The only other water system that comes close to our is Argentina with three rivers that flow eventually down to Buenos Aries.  Because of this waterway system, Argentina’s standard of living in 1900 was about 90% of ours. 

There was a group panel on where the new farm bill was headed.  Consensus was a bill in 2013, but may still get one this year.  Direct payments will no longer be there and some expanded form of crop insurance is most likely to happen.

The value of peer groups was discussed in the afternoon and I believe that these have great potential value to all farmers.  It is always good to get another opinion that you value and it is much easier to held accountable by a peer.

All in all, the first day of Top Producer was very productive and I had several readers of the blog come up and say hi.  I hope to see more tomorrow and with three back-to-back presentations, I know I will be more tired tomorrow.

Most of the partnerships that developed in the 1970s and 1980s to take advantage of cost savings failed since the most important object for them was purely financial.  For Chris and his “partners”, the other non-financial considerations are more important.  That is why I think we will see more and more of these type arrangements, especially with new combines in excess of $350,000, etc.

There were several break-out sessions and I attended one on the quest for 300 bushel yields.  There are 7 key components that get you to this number and some are more important than others.  Since in our area, irrigated corn is consistently in the high 275-300 bushel range, these numbers are very realistic.

I did one break-out session today and I look forward to Thursday when I do three of them.

I will keep you posted.

The main Top Producer conference begins on Wednesday and goes through Friday morning.  I have three breakout sessions on Thursday morning from 8:15 to noon dealing with tax savings tips, etc.  At the end of the third one, I will be worn out from talking.

I look forward to the conference and please feel free to stop me at any point during the conference to discuss farm accounting, taxes and who will win the Super Bowl.

On another note, we had some technical difficulties with our site yesterday.   The company that hosts the site had an issue with their internal database for our site and many others.  I would like to say it was very nice to be able to actually call and talk to someone in technical support without being on hold for an hour and they got the issue resolved fairly timely, but we were down for most of yesterday, but everything seems to be working just fine now.  Many of these so called hi-tech sites (including Google and others like it) seem to feel that customer support does not involve telephone numbers or talking to a human being over the phone.  It is very refreshing when one does allow this.

In the 1910s, World War I ushered in the first farm boom.  In the second half of that decade, U.S. farm exports rose dramatically to meet war-time demand for food and most agricultural prices doubled.  Simultaneously, very low real interest rates allowed farmers to invest rapidly into capital improvements.  Between 1900 and 1919, farm real estate prices rose more than 70%.

The century’s second boom occured in the 1970s when farmland prices soared again.  With President Nixon’s trips to Russia and China, world demand for our farm products increased dramatically.  Even the recession in mid-decade only slowed the rapid rise in farm prices.

The end of both booms were due to two primary factors:

1. A rapid drop in world demand, and
2. An increase in interest rates

Today’s boom is very similar.  World demand for our farm goods has increased dramatically, especially from China.  Interest rates are the lowest they have been since at least the 1960s.  Real US farm income has increased dramatically with 2011 being the first year that farm net income was in excess of $100 billion.

Despite these two similarities, farm capital investment presents a striking difference from the last two booms.  In those booms, farmers took aggressive advantage of low interest rates and expanded their farm operations rapidly with more debt.  In contrast to these past farm booms, non-real-estate investments in agriculture have not soared to the highs of previous farm booms.  In addition, farmers have not used much debt to fuel their capital improvements.

During the 1970s, annual farm capital expenditures surged 71%, as farmers tripled their capital spending on tractors, farm buildings and land improvements.  Even in 1919, farmers more than tripled their spending on tractors and farm buildings as compared to the pre-WWI high.

This debt accumulation in both decades was a critical factor in the bust that happened in the succeeding decade.

As long as farmers continue to avoid the use of massive debt to fund their capital investment, this boom may continue and although we know their will be a correction, it may end up not being a bust.  We shall see.

Total 2011 agricultural exports are expected to $137 billion.  This is an all time high with 2008 in second place at $115 billion.  An interesting note is that farm imports were $93 billion which is primarily comprised of fruits, vegetables and coffee.

Of total exports, less than 40% of this is bulk products such as corn, wheat and beans.  Back in the 1970s and 1980s more than 60% were bulk grains.

Our top 5 exporting countries are China #1, Canada #2, Mexico #3, Japan #4, and the EU #5.  Canada had been number 1 for several years until China took over in 2011.

China imports almost 60% of the total world trade in soybeans and almost 40% of cotton.

The share of the US crops that is exported each year is as follows:

• Wheat – 46%
• Corn – 15%
• Rice – 53%
• Soybeans – 47%
• Cotton – 81%

The US share of total world crop exports are as follows:

• Wheat – 18%
• Corn – 53%
• Rice – 11%
• Soybeans – 39%
• Cotton – 35%

The share of livestock that is exported is as follows:

• Beef 10%
• Pork 22%
• Poultry 17%

These percentages are based upon their estimates for 2011-2020.

There is more information that I will share over the next few weeks, but I thought this was informative.  For example, only 15% of our corn crop is exported, however, this makes up about 53% of all corn exports through-out the world.  Also, almost 40% of the soybeans exports come from the US, with most of the remainder coming from South America.

Unlike hogs or chickens where the leadtime on getting a new litter or hatch is less than 4 months, cattle take at least 10 months to give birth and any changes in supply take much longer.  Unlike 2008 when feed prices were extremely high and cattle prices were lower, this time feed is high, but cattle prices are much higher.

Canadian farmers currently market all of their wheat and barley through this organization.  Federal Agricultural Minister Gerry Ritz has proposed eliminating this monopoly as early as next August.  This did not go over well with the farmers who have now voted 62% in favor of keeping the monopoly.  However, Mr. Ritz indicates this is simply a survey of farmers and is not binding on his decision.

This is headed to court and it will be interesting to see how it turns out.  Having a monopoly in the US would make things easier for marketing your grain, but it seems almost “Unamerican” to me.

Here is an article from CBCNews outlining the vote and the issue.

• Last year, I remember having multiple stops where the corn yield was over 200 bushels.  Also, I remember that at least 70% or more of the corn yields were 170 or higher.  This year, each day, we would only have one or two fields over 200 and perhaps 3 other fields in the 170 range.  All of the other fields were less than 150 each day.  However, last year, our lowest yields were substantially lower than this year.  We never had a yield under 100 bushels this year and last year, I remember having several under 100, primarily in South Dakota and North Central Nebraska.  This year, we did not cover any of that area.
• The soybeans on average looked very good this year, however, the heat and lack of rain may be getting to them.  If the beans get a couple of inches of rain in the next couple of weeks, they should yield fairly well.
• At all four of the evening stops, the farmers in attendance were not a bullish about their yields as last year.  At the same time last year, all of the crops looked very good, however, the finish to the crop was poor.  This year, most farmers expect a poor finish, but hope for better.
• There were more people on this year’s tour and more of them were not farmers.  It appears that the tour is one of the best guides for industry groups such as traders, hedge funds, farm media groups, etc. to get a good handle on where the crop is headed.
• Pro Farmer does an excellent job of putting on the tour.  From Chip and Brian leading each leg to the other staff involved in making each day and night run smoothly, I just want to reinforce how good of a job they do.

All in all, this year’s Midwest crop tour shows a lower crop than last year or the three year trend and I look forward to next year to see how it turns out.