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.

For January, the index rose to 59.8 from 59.7 in December which is the highest it has been since June 2007.

Here are some other trends from the survey:

• Bankers expect average farm input costs to rise by 7.2% in 2012
• 9 of 10 bankers do not expect the end of the blender’s tax credit to have a significant negative impact
• More than one in four bankers indicated that a decline in agriculture commodity prices is the biggest economic challenge in 2012
• Almost as many indicated a shortage of jobs and workers was the main economic challenge

After rising to a record level of 84.1 in December, the farmland price index fell almost 12% to 74.3 in January, 2012.  A recap by state is as follows:

• Colorado – Dropped from 88.5 to 78.9
• Iowa – Dropped from 77.1 to 68.2
• Minnesota – Dropped from 76.2 to 57.8
• Nebraska – Dropped from 84.6 to 73.5
• South Dakota – Dropped from 69.4 to 60.1
• Wyoming – Dropped from 84.3 to 73.9

These are healthy drops in the index, however, this drop is based on only one month of data and December can very very skewed with certain sales happening for tax purposes.  It will be interesting to see what the index numbers for February are.

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.

We were curious how many counties in the US had more than $1 billion in farm sales in 2007.  We accumulated the list as follows:

 As you see, California was the most dominant state with twelve counties exceeding $1 billion in farm sales.  California also had a couple of other counties that were very close to the billion dollar level.

Only two other states had at least two counties (1) North Carolina and (2) Washington. 

Our guess is that this list will easily double in the next census to come out later this year.  Several states had at least two to four counties there were in excess of $750 million of farm sales and with the current high prices,we would guess this will push those counties over the $1 billion mark.

We will keep you posted on how the next census numbers end up.

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.

Several of the sessions were focused on their role in the farm and management, but almost all of the topics discussed were applicable to all farms, whether managed by a man or woman.

I have two break-outs sessions on farm taxes in the morning and I look forward to the interaction with the group.