DTN Ag Headlines

OMAHA (DTN) -- The aftermath of Hurricane Ida continues to affect U.S. corn and soybean exports, causing more than a half-billion dollars in damage to Louisiana agriculture. However, fuel prices have remained steady despite refining disruptions in the Gulf of Mexico.

More than three weeks since the hurricane hit major Gulf of Mexico oil production, fuel price impacts remain minimal. Diesel prices just as the hurricane hit at the end of August averaged $3.28 a gallon. AAA this week puts the average price at $3.30 a gallon. Still, for producers using high volumes of diesel fuel at harvest, the diesel price is 88 cents higher than a year ago.

Gasoline prices this week dropped one penny to $3.18 a gallon, according to AAA, as domestic gasoline stocks rose by 3.5 million barrels last week. The price drop occurred while 15% of crude production in the Gulf of Mexico remains shuttered from Ida and Nicholas, AAA noted.

One major reason fuel prices have not jumped dramatically so far is demand has declined following Labor Day. AAA noted the Energy Information Administration reported this week that gasoline demand has fallen 8% so far in September, the lowest since the end of May.

GRAIN MOVEMENT SLOW

The Port of South Louisiana, which has jurisdiction along 54 miles of the Mississippi River, is the largest export area for U.S. grain and oilseeds. Paul Aucoin, executive director of the port, said in a Louisiana radio interview the port's biggest single warehouse complex was damaged, but repairable. The port serves as many as 68 separate industries.

"We're going to see a drop off in cargo until everybody is up and running," Aucoin said. "You have to remember that 60% of the grain that leaves the United States goes through the Port of South Louisiana. So those farmers in the Midwest, they weren't hit by the hurricane at all. So they have got to get that grain down here so they can sell it overseas."

In terms of clean up, Aucoin said one of the differences with Ida was the volume of barges that broke loose and "were scattered around the river like litter all over the place." Those barges continue to be cleared out.

"It's going to take time and we all have to be patient," Aucoin said.

Looking at export volumes, USDA said 19.1 million bushels (mb) of corn and 10.1 mb of soybeans were shipped last week, numbers still hindered by Hurricane Ida damage. To keep pace with export sales, soybean shipments need to hit about 41.6 mb per week. Corn needs to be closer to 48 mb per week.

"The corn and bean movement was better than it was the previous week, but it is still only about one-third of where we need it to be," said DTN Senior Analyst Todd Hultman. "I think that could change quickly in a few weeks. Obviously, they're not there yet."

USDA shows soybean exports were less than one-fifth of the same week a year ago. Corn exports are roughly half of last year's shipments for the same week a year ago.

At least two grain terminals were still down and reports early in the week cited more than 50 bulk vessels waiting to move from the Gulf of Mexico through the lower Mississippi River terminals.

CHS Inc. reported to DTN that its terminal near Myrtle Grove, Louisiana, the most southern terminal on the lower Mississippi River, is still dealing with tests of power and mechanical systems.

LOUISIANA DAMAGES

Experts at Louisiana State University have estimated there are at least $584 million in agricultural losses in the state from Ida. Timber losses and damages make up about half of that amount, said Kurt Guidry, an LSU economist who wrote up the report. About 168,000 acres of trees were affected, valued at more than $300 million. One parish in the state, Tangipahoa, was hit especially hard and accounts for about 50% of the timber damage.

Another 35% of losses were infrastructure such as machinery, fencing, buildings or other equipment. The sugarcane, fruit, vegetable and other crops were affected as well as livestock. About 139,000 acres of sugarcane production were affected with potential losses at about $35.4 million, or about 7% of the value.

Guidry stated the $584 million does not look at potentially reduced yields for crops in the fields that had not been harvested, or higher production costs.

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

LINCOLN, Neb. (DTN) -- Even if agricultural facilities are designed to avoid wastewater discharges, a recent EPA action to rescind Trump-era groundwater guidance could expose farmers and ranchers to Clean Water Act liability.

On Sept. 16, EPA announced it was rescinding a guidance document issued by the Trump administration on Jan. 14, 2021, following a Supreme Court ruling in the case County of Maui v. Hawaii Wildlife Fund.

The U.S. Court of Appeals for the Ninth Circuit previously ruled pollution discharges traveling through groundwater and to a navigable water require Clean Water Act (CWA) permits. The Trump administration guidance was to help regulators to apply the court's decision in the field.

Glenn E. Roper, a Pacific Legal Foundation attorney who argued the Maui case, said EPA's recent action could reduce a landowner's ability to defend against CWA violation allegations. The Trump guidance, he said, provided more protection to landowners.

"As a practical matter, that reduces a landowner's ability to defend against allegations of CWA violation by relying on the way that his facilities or system is designed," Roper told DTN.

"Under the guidance, if a system was designed to avoid discharges, and generally did so, that would weigh against a CWA violation even if there were some leaks into groundwater that eventually connected with a jurisdictional water. By eliminating the design-and-performance factor, the EPA's rescission takes away that argument or at least reduces its strength."

Roper said the EPA action may raise some concerns for farmers and ranchers because, even if they design facilities or wastewater systems to avoid discharges, "they still could face CWA liability for even small leaks of pollutants into groundwater that eventually connects to a navigable water."

FUNCTIONAL EQUIVALENT

Roper said the EPA action doesn't necessarily mean the agency will be regulating groundwater.

"Even the Obama-era WOTUS rule expressly excluded groundwater," he said. "That would be a truly extraordinary change. But I think it does indicate that the new administration will likely take a broader view than the prior administration as to when discharges into groundwater are the 'functional equivalent' of a discharge directly into a navigable water, which is the test established in the Maui County decision."

That Trump guidance stated that as part of the "functional equivalent" analysis, "the design and performance of the system or facility from which the pollutant is released" should be considered.

Roper said that means a release is less likely to be the "functional equivalent" of a discharge if it came from a facility or system that was designed not to release pollutants, but to store, contain, or treat them.

So, under the previous guidance, he said, systems that are designed to transfer, store, treat or discharge wastewater and perform that function were less likely to meet the functional-equivalent test. That would also include things like septic systems, cesspools, settling ponds, stormwater controls and green infrastructure such as infiltration or evaporation systems.

EPA SAYS GUIDANCE INCONSISTENT WITH CWA

In rescinding the guidance, EPA said in a news release the design-and-performance factor is "inconsistent with the Clean Water Act and the Supreme Court decision" in Maui.

EPA said in a news release the previous administration's guidance "reduced clean water protections by creating a new factor for determining if a discharge of pollution from a point source through groundwater that reaches a water of the United States is the 'functional equivalent' of a direct discharge to such water.

"The addition of that factor skewed the 'functional equivalent' analysis in a way that could reduce the number of discharges requiring a National Pollutant Discharge Elimination System permit."

The EPA went on to say in the news release: "The Clean Water Act and a straightforward application of the U.S. Supreme Court's decision provide important protections for the nation's waters by ensuring that discharges of pollutants to groundwater that reach surface waters are appropriately regulated. This action will help protect water quality in lakes, streams, wetlands, and other waterbodies."

The National Cattlemen's Beef Association and other agriculture groups filed an amicus brief in the Maui case, raising concerns farmers and ranchers could be subject to expanded CWA regulation.

NCBA Chief Environmental Counsel Scott Yager told DTN in 2020 the Supreme Court's opinion "leaves a lot of discretion to lower courts and the federal government" to determine which groundwater discharges fall under the Clean Water Act.

In 2012, several environmental groups sued the County of Maui, arguing the county was discharging a pollutant to navigable waters, the Pacific Ocean, without the permit required by the Clean Water Act.

A district court found effluent from the county's wells ended up in the ocean and should require a Clean Water Act permit. The court found the pollution's "path to the ocean is clearly ascertainable" from Maui's wells into groundwater and to the ocean. The Ninth Circuit affirmed the decision on Feb. 1, 2018.

The Ninth Circuit said the Clean Water Act "does not require that the point source itself convey the pollutants directly into the navigable water" and that pollutants coming from the wells were "fairly traceable."

During oral arguments before the court in November 2019, an attorney with the U.S. Department of Justice argued the EPA excludes from enforcement all pollution discharges into and through groundwater to navigable waters.

Groundwater currently is regulated at the state level and is not considered to be a pollution point source.

Read more on DTN:

"SCOTUS Vacates Maui Groundwater Case," https://www.dtnpf.com/…

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on Twitter @DTNeeley

MT. JULIET, Tenn. (DTN) -- A federally subsidized, shallow-loss crop insurance product has largely flown under the radar since it was unveiled five years ago, but one expert urges farmers to take a look, as it seems tailor-made for the current price environment.

Steve Johnson, retired Iowa State University Extension farm management specialist, told DTN that high projected prices for 2022 crops make margin protection insurance appealing, but its mechanics make it one of the trickiest to explain. Not only does it have a lot of moving parts, but it also has an unusually early price discovery period and deadline to purchase compared to more common crop insurance products.

Farmers have until Sept. 30 to purchase margin protection crop insurance, which protects against declines in operating margins and includes both revenue and input cost components, for the 2022 crop. That's right as most producers are focused on harvesting the 2021 crop and far earlier than the March 15 deadline for making decisions regarding revenue protection and other add-on products like the Supplemental Coverage Option (SCO) and Enhanced Coverage Option (ECO). (You can find more on how SCO and ECO work here: https://www.dtnpf.com/….)

"The timing is terrible," Johnson said. "But the advantage of margin protection is it uses a price discovery period of mid-August to mid-September, and that's why it's really so attractive this year because we've got such high prices offered for the 2022 crop."

The projected prices are $5.06 per bushel for corn, $12.56 per bushel for soybeans and $7.76 per bushel for spring wheat.

Margin protection is similar to private insurance products that let you pick the price discovery period, but the advantage is that it's subsidized. That's key because as an add-on product where you can purchase coverage levels from 70% to 95%, premiums can be hefty, but so can payouts.

Johnson said he did a historical review of when margin protection insurance would have had large indemnities, and the crop years that stand out are 2013 and 2014, when prices were high the previous fall but collapsed throughout the next season.

"This is the first September that we've had relatively high futures prices since this product was launched in 2017," he said. "Let's say futures prices drop 5% between now and February. That's going to make margin protection look like a good decision. At least you've got some sort of revenue protection in place should these prices start to decline."

MAKING SENSE OF MOVING PARTS

Margin protection is an area-based product, meaning it pays based on county-level yield estimates. Johnson said it makes a good addition to a revenue protection policy and will work best for farms that tend to mirror county yields.

The unique thing about margin protection insurance is that it takes input costs into the equation. It uses a county yield and the projected price to calculate revenue, then subtracts costs to calculate an expected margin.

"A lot of the confusion I'm seeing and hearing is that farmers think this is a way to protect against those higher costs," Johnson said. "Yes and no. It does, but in a real funky way."

The cost calculations are not based on the producer's costs. Rather, they're determined by the Risk Management Agency and include both variable and fixed costs. RMA says in a factsheet that fixed costs aren't specifically identified, but include seed, machinery and operating costs other than fuel. They don't include land or labor. Variable costs that are subject to change during the fall and harvest price discovery periods are diesel, urea, DAP, potash and interest. (You can read RMA's full fact sheet here: https://www.rma.usda.gov/….)

Next, the producer selects a coverage level between 70% and 95%, and that's used to estimate a deductible. The deductible is subtracted from the expected margin to generate a trigger margin.

Once RMA finalizes county yields (by June 2023), it will calculate a harvest margin. Indemnities are determined by subtracting the harvest margin from the trigger margin and then are multiplied by the protection factor, which the farmer also chooses at sign-up. The protection factor can range between 80%-120%. Higher levels of coverage and higher protection factors result in higher premiums.

If a farmer also expects a payment from a revenue protection or yield protection policy, the farmer will receive the higher payment of the two. This also generates a premium credit to reflect that indemnity payments from one policy can offset payments from the other.

MARGIN PROTECTION FOR RISK MANAGEMENT

Johnson said a lot of farmers and insurance agents get caught up on the variable cost component. But many of those costs, like fertilizer, have already risen as much as 50% over the past year. Those could keep going up into April, when RMA calculates them again, but it's not the most likely way margin protection triggers an indemnity. Payments will be most common when futures prices drop. (You can read more on the latest fertilizer price movements here: https://www.dtnpf.com/….)

"As a crop risk-management tool, it's just going to add on to revenue protection, and it's not going to be your primary coverage. It's going to be your secondary coverage," he said, comparing it to buying up coverage on your automobile insurance.

He said margin protection insurance is a good fit for growers that are larger in scale and are pretty good at marketing and managing revenue risk. It's helpful to view it as a hedge against lower futures prices.

"As a tool, the government is paying at least 44% of the premium. If I buy it, I don't have to hedge and be subject to margin calls. If I bought a put option now, I'm paying all-time value," he said, adding that an at-the-money December 2022 corn put option premium would cost $90 per acre, which is more expensive than margin protection premiums are likely to be and could still expire worthless.

Locking in some crop insurance coverage now could help growers feel more confident in making forward sales for the 2022 crop, likely using forward cash or hedge-to-arrive contracts, Johnson said.

"I think there's more risk in the '22 crop than most people want to admit. It feels like prices will never go down, but that's how they felt back in 2012 and '13," he said.

Katie Dehlinger can be reached at katie.dehlinger@dtn.com

Follow her on Twitter at @KatieD_DTN

Agribusiness giants like Archer Daniels Midland Company (ADM) understand the threat hackers pose to their operations.

"We assume we will be a target. That is the safer position to take," stressed ADM President and CEO Juan Luciano, at a Wall Street Journal Global Food Forum.

Luciano explained the company's security is built around strategies for risk management, having redundancies and providing multiple sources for customers. They have a ransomware task force, retain cybersecurity experts and work with employees to create an awareness of common ways hackers gain access to a company.

"We have been in business 119 years. We've been through wars, hurricanes and a pandemic, and we kept 800 plants running and operating," Luciano said. "We own railyards, barges, trucks, ocean-going vessels. We have multiple locations. If you can't go to one elevator, you can go to another. We can divert rail or trucking. We are not completely invulnerable, but we feel good about our level of protection."

In upcoming weeks, DTN/Progressive Farmer is posting a special series called Cybersecurity and Ag to examine the threat cyberattackers pose to agriculture and explore what farmers, ranchers and agribusinesses can do to protect themselves against these high-tech criminals.

THERE ARE NO GUARANTEES

Farmers and ranchers are increasingly sharing operation and personal data through a variety of online platforms today. What happens when an online supplier is hacked, and seed or inputs are suddenly inaccessible when they are most needed? What about markets? Transportation networks?

Redundancies and optional suppliers and buyers seem to be some of the best protections available today. Analysts stress the importance of building redundancies into every segment of an operation. In many cases, however, that's easier said than done. Because while the desire may be there to protect, the capital to do so isn't always available.

CHS' Sarah Engstrom, chief information security officer and vice president of IT security, productivity and privacy, says smaller companies especially are not always in a strong cybersecurity position often due to limited financial resources.

"In today's digital age, cybersecurity is a necessary place to invest if you are going to take a proactive or reactive posture. It's unfortunate, but many people still have a mindset that you can implement technology, set it and forget it. That is no longer an option. We have to move past that kind of thinking," she stresses.

Asked if precision agriculture and specialty-market data sharing are opening more operations up to potential attacks, Engstrom says the more interconnected we are in agriculture, the more opportunity it creates for cyberattackers.

"What a farmer or rancher can do right now to protect their operations, and their data, is to spend time and thought and have a conversation with any provider that is supposed to be securing their data. Ask if that entity is, in fact, investing in security. Ask them what attacks they can combat, how, and what's on their roadmap to continually mature. There is no going back. There is only asking the right questions and evaluating the security posture of whatever organizations we agree to do business with."

**

Editor's Note: This is the second of the stories in our special Cybersecurity and Ag series. Next in the series: Does the U.S. government offer any protections against cyberattacks on America's food supply?

You can find earlier stories in this series at:

Cybersecurity and Ag - 1

Cybercriminals Take Aim at America's Food Supply

https://www.dtnpf.com/…

Victoria Myers can be reached at vicki.myers@dtn.com

Follow her on Twitter @myersPF

WASHINGTON (DTN) -- With immigration plans thwarted by the Senate parliamentarian, Senate Agriculture Committee Chairwoman Debbie Stabenow on Wednesday urged members of the United Fresh Produce Association to emphasize the importance of immigration reform when they meet with senators on Capitol Hill this week.

Early in a speech at United Fresh's Washington conference, Stabenow, D-Mich., urged the fruit and vegetable growers to "please be loud" when discussing the importance of immigration reform.

Stabenow later returned to the topic, saying that she would like to "make headway" on immigration reform in the reconciliation bill, "But it appears we won't be able to do that."

Earlier this week, the Senate parliamentarian ruled that immigration policy could not be included in the $3.5 trillion reconciliation bill that congressional Democrats are crafting. That likely keeps any immigration bill at a stalemate in a 50-50 Senate with Republicans focusing heavily on surges of people trying to cross into the U.S. from Mexico. The parliamentarian concluded immigration reform was too broad of a policy to include in a bill meant to focus on budget issues.

Stabenow, in her speech, emphasized again to leaders in the fruit and vegetable industries that they should be "as loud as possible" in telling senators that the industry needs "a steady, reliable source of workers."

"We don't need crops rotting in the fields because there are not enough workers," Stabenow said.

"The House has passed a very good labor bill," but action is needed in the Senate, she said. Without agriculture "being focused and loud," action is unlikely to happen, she added.

In other comments, Stabenow noted that conservation programs in the reconciliation bill are needed to address climate change and the extreme weather that farmers have experienced.

Stabenow thanked United Fresh for supporting her Growing Climate Solutions bill, which she said got 92 votes, even more than the last farm bill.

Stabenow said she is now focused on the budget reconciliation bill, which includes provisions to address climate change.

Not doing anything on climate change, Stabenow said, means "paying an awful lot for not acting." The same money that is going for disaster aid could be used to address climate change.

Agriculture and forestry are responsible for about 10% of U.S. carbon emissions, but the sector could be "carbon negative," she added.

The budget bill, she said, would include money for research that would include "the unique needs of specialty crop growers" and provide money for more children to get free meals in school. The bill would mean that about 85% of children who must fill out paperwork to get free or reduced-price meals would get them automatically, she said.

"Think of all the half-cups of fruit and vegetables that would be used," she added, referring to school meal programs.

The bill would also provide EBT cards for families to buy food for children in the summer and salad bars and other equipment so that schools could prepare food from scratch, she added.

Stabenow noted that she and Sen. John Boozman, R-Ark., the Senate Agriculture Committee ranking member, are working on the reauthorization of child nutrition programs but did not mention a schedule for consideration of that bill.

The farm bill is coming up in 2023, she noted. That seems like a long time away, she said, but said it "feels just around the corner" for the committee. Before the end of the year, she said, she will be reaching out to stakeholders to find out what they want and need.

Jerry Hagstrom can be reached at jhagstrom@nationaljournal.com

Follow him on Twitter @hagstromreport

LINCOLN, Neb. (DTN) -- The confirmation of African swine fever in Haiti came as no surprise to U.S. Agriculture Secretary Tom Vilsack, who on Wednesday told state agriculture regulators USDA is doing all it can to prevent the spread of the deadly virus to the U.S. mainland.

"Our theory and our belief is it's more widespread than perhaps we know today," Vilsack said during the National Association of State Departments of Agriculture.

"So, we have to take the position, if you will, that we really need to be aggressive in both places (Haiti, Dominican Republic). So, you tighten things up in the U.S., you try to eradicate where the problem currently exists in our hemisphere and helping provide the assistance to get that done as quickly as possible."

The World Organization for Animal Health, or OIE, confirmed an outbreak of ASF in Haiti on Monday in the very-most southern city of Anse-a-Pitre, bordering the Dominican Republic.

The OIE report is the first indication the virus may have spread from the Dominican Republic where it was identified in the Western Hemisphere for the first time in decades. According to the OIE, this is the first reported case of African swine fever in Haiti since 1984. The report indicates there were 234 cases of ASF found among a backyard herd of 2,500 animals in Haiti.

Vilsack said it was important to reassure U.S. trading partners the current outbreak in the Caribbean is "regional."

"Rather than basically having a one-size-fits-all blanket approach, that if a problem occurs in one part of the country or one part of a region that impacts and affects a ban on the entire region, when in fact it's not necessarily impacting 90% of the region," Vilsack said.

"We're really trying to convey a sense that if there's a problem in terms of banning or in terms of limiting exports, you limit it to the area that is most directly affected."

The October lean hogs contract on Wednesday was at $84.05 per cwt, down around 32.5 cents, but still at a high level after a $2.60-per-cwt jump last week.

The December lean hogs contract is at $73.60 per cwt, but it has fallen more than $8.80 since the start of September.

Vilsack said the establishment of a protection zone in Puerto Rico and the U.S. Virgin Islands is "important because we can reassure our trading partners that, at this point in time, we're doing everything we possibly can" to ensure the virus doesn't enter the U.S. mainland.

"We need to be very, very vigilant about all of this," he said.

In the near term, Vilsack said he expects to see an effort to invest in additional resources through the Animal and Plant Health Inspection Service to "harden our system" in the U.S.

"The reality is the only way that we know today to deal with this is eradication," Vilsack said. "And, obviously, that's an incredibly painful thing for that to occur anywhere."

U.S. TECHNICAL ASSISTANCE

In the Dominican Republic and Haiti, in particular, he said the U.S. will need to provide technical and financial assistance to help eradicate the virus.

Vilsack said USDA is working on developing a vaccine.

"We've had some pretty good news recently in terms of the possibility of a vaccine that might work, at least against the Asian variety of African swine fever," he said, "so we want to continue that research, we want to continue to accelerate to find that secret sauce, if you will."

At the end of last week, USDA suspended the movement of all live swine, swine germplasm, swine products and swine byproducts from Puerto Rico and the U.S. Virgin Islands to the mainland U.S. in an effort to prevent the spread of African swine fever.

In a news release at the end of last week, USDA said it issued the federal order as part of establishing an animal disease protection zone in Puerto Rico and the Virgin Islands. The order was given to allow USDA to establish "sufficient mitigations" against ASF.

So far, ASF has not been detected in Puerto Rico or the U.S. Virgin Islands.

On July 28, APHIS confirmed African swine fever in the Dominican Republic. On Aug. 26, APHIS announced plans to establish a foreign animal disease protection zone around Puerto Rico and the U.S. Virgin Islands.

APHIS said that once the protection zone was established, the agency would be able to restrict movement of live swine and products out of the protection zone, conduct surveillance within the zone, conduct a public-education campaign on biosecurity on farms, prohibit the movement of live swine and products outside of the region and to contact report clinical cases to authorities.

A USDA official said earlier in August the U.S. was trying to accelerate efforts to eradicate feral hogs in Puerto Rico and to expand testing efforts in Haiti and the Dominican Republic.

ASF has no human health implications, but the disease is deadly to swine and spreads rapidly through a herd.

ASF led to rapid slaughter of millions of hogs in China in late 2018 and early 2019, cutting the world's largest swine herd down as much as 40% and leading China to basically rebuild its entire swine industry in the process. The ripple effect led to a high volume of global pork exports to China, including from the U.S., in response.

Chinese officials said in 2020 the country had gotten a handle on the disease, but USDA in April 2020 cited that underreporting of cases was now a problem in China as producers in the country were reluctant to report any new outbreaks because of fears of economic losses.

Germany was originally hit with ASF in its feral hog population last year, which effectively cut off exports from the country. German officials reported ASF had been found in at least three farms, affecting domestic pigs.

U.S. and Canadian officials have since been concerned about the potential risks for ASF landing in North America and the potential devastation it would cause. The risks are high, considering the U.S. exported a record $7.7 billion in pork in 2020 and is largely keeping close pace with that sale volume so far in 2021. The risk of a single case could effectively close U.S. export markets.

Read more on DTN:

"African Swine Fever Confirmed in Haiti," https://www.dtnpf.com/…

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on Twitter @DTNeeley

OMAHA (DTN) -- Potash prices rose significantly compared to last month, while the average retail price of DAP reached a 10-year high, according to prices tracked by DTN for the second week of September 2021.

Potash was 6% higher compared to last month. The fertilizer had an average price of $598/ton.

The remaining seven fertilizers were all just slightly higher. DTN designates a significant price increase as 5% or more.

Four fertilizers had price increases of 3% compared to last month. MAP had an average price of $776/ton, urea $572/ton, anhydrous $762/ton, and UAN28 $381/ton.

The price of UAN32 increased 2% to $428/ton.

DAP prices increased 1% to $702/ton. The average price of 10-34-0 was fractionally higher at $632/ton. DAP rose above $700/ton for the first time in nearly 10 years. The last time the phosphorus fertilizer's price was this high was the second week of Dec. 2011 when the average price was at $702/ton.

On a price per pound of nitrogen basis, the average urea price was at $0.62/lb.N, anhydrous $0.46/lb.N, UAN28 $0.68/lb.N and UAN32 $0.67/lb.N.

There's more evidence fertilizer supply shortages could be coming. Last week, two major fertilizer manufacturers announced they were shutting down European facilities due to a relatively new issue facing fertilizer production -- high natural gas prices. (You can find more on rising natural gas prices here: https://www.wsj.com/…)

On Sept. 15, CF Industries announced a halt in operations at two manufacturing facilities in the United Kingdom. Plants in Billingham and Ince, UK, are stopping production.

"The company does not have an estimate for when production will resume at the facilities," according to a CF Industries press release.

Then on Sept. 17 Yara announced it will curtail production at a at number of its European plants because record high natural gas prices in Europe are affecting ammonia production margins, according to a Yara press release.

By this week, Yara will have shut down around 40% of its European ammonia production capacity.

"Yara will continue to monitor the situation, with the objective to keep supplying customers but curtailing production where necessary," according to a press release.

Retail fertilizer prices compared to a year ago show all fertilizers have increased significantly.

10-34-0 is now 39% more expensive, urea is 59% higher, DAP is 62% more expensive, UAN32 is 69% higher, MAP is 73% more expensive, both potash and UAN28 are now 74% higher and anhydrous is 77% more expensive compared to last year.

DTN surveys more than 300 retailers, gathering roughly 1,700 fertilizer price bids, to compile the DTN Fertilizer Index each week. In addition to national averages, MyDTN subscribers can access the full DTN Fertilizer Index, which includes state averages, here: https://www.mydtn.com/….

Fertilizer manufacturer CF Industries announced they restarted ammonia plants at the Donaldsonville (Louisiana) Complex after Hurricane Ida. You can read it here: https://www.dtnpf.com/….

DRY
Date Range DAP MAP POTASH UREA
Sep 14-18 2020 434 448 344 360
Oct 12-16 2020 445 475 332 359
Nov 9-13 2020 454 486 333 358
Dec 7-11 2020 456 510 348 361
Jan 4-8 2021 482 543 369 368
Feb 1-5 2021 554 601 389 429
Mar 1-5 2021 609 673 416 474
Mar 29-Apr 2 2021 618 697 429 502
Apr 26-30 2021 629 703 433 513
May 24-28 2021 652 709 443 523
Jun 21-25 2021 670 720 469 541
Jul 19-23 2021 695 750 543 553
Aug 16-20 2021 695 755 564 556
Sep 13-17 2021 702 776 598 572
Liquid
Date Range 10-34-0 ANHYD UAN28 UAN32
Sep 14-18 2020 455 431 219 253
Oct 12-16 2020 457 424 209 249
Nov 9-13 2020 455 422 208 248
Dec 7-11 2020 464 429 210 252
Jan 4-8 2021 464 470 209 251
Feb 1-5 2021 502 507 239 272
Mar 1-5 2021 560 560 254 304
Mar 29-Apr 2 2021 599 685 340 377
Apr 26-30 2021 613 710 350 391
May 24-28 2021 619 719 361 407
Jun 21-25 2021 625 724 366 420
Jul 19-23 2021 632 736 365 419
Aug 16-20 2021 631 743 369 420
Sep 13-17 2021 632 762 381 428

Russ Quinn can be reached at russ.quinn@dtn.com

Follow him on Twitter at @RussQuinnDTN

OMAHA (DTN) -- When the House Ways and Means Committee released its plans last week to raise taxes -- saving stepped-up basis but cutting estate-tax exemptions -- the tax committee dusted off a little-used special farmland valuation tool known as Section 2032A.

Section 2032A gives farmers an alternative way to value their farmland to reduce estate taxes. Like a lot of these provisions with the IRS, it comes with some math and some caveats for families that use it. The special valuation could help heirs whose families didn't plan out an estate strategy before the primary owner dies, but Section 2032A can also lead to some financial "train wrecks" for heirs.

To help pay for their $3.5 trillion budget reconciliation bill, House Democrats propose rolling back the current asset exemption from estate taxes, going from $11.7 million to roughly $5.8 million (based on inflation). For farmers, to make up for that rollback, Ways & Means added a provision to kick up the special use valuation for farmland from $1.19 million (based on inflation) to $11.7 million.

So, what exactly does Section 2032A mean for a farmer? Its only purpose is to roll back land values for farmers subject to the estate tax.

"If you are a large farmer with an estate over $6 million, you can have a reduction in the value of your land from fair-market value or the highest and best use value for your land down to a value for estate-tax purposes to be the farm-production value," said Chris Hesse, a CPA and principal with the accounting firm CliftonLarsonAllen LLP.

Right now, Section 2032A largely has not been a major element in estate planning, Hesse said. That could change with the combination of a lower overall estate-tax exemption, combined with higher land values.

"That could become part of the estate plan, or at least a reduction of the tax," Hesse said.

HOW IT WORKS

To break down Section 2032A, let's look at a 1,500-acre farm with land values of $10,000 an acre, putting the fair market value of the land at $15 million.

The IRS calculates Section 2032A based on average cash rents and a table updated annually with regional interest rates. The IRS released an updated table on Aug. 30. For much of the Midwest, the interest rate for the calculation is 4.62%.

The average statewide cash rent in Iowa for 2021 was $232, though there are counties in Iowa with cash rent topping $300 an acre. For this example, we're going to use the $300 average, but real-estate taxes are deducted before the calculation is made. We're going to deduct $25 an acre for real-estate taxes to come down to $275.

The $275 divided by 4.62% comes to $5,952 per acre. At 1,500 acres, that's $8.93 million for the special valuation. Under current law, heirs are capped at reducing the value of the land by $1.19 million, bringing the land value in the estate from $15 million to $13.81 million.

The House bill allows a reduction of up to $11.7 million for the special valuation. So, under this example, the $15 million FMV would drop to the $8.93 million for the special valuation.

In this example, the House changes in Section 2032A would save the farm roughly $1.95 million in estate taxes by bringing down the special-use valuation from $13.81 million to $8.93 million.

"So, a very large estate would receive a substantial benefit from this, especially if, for whatever reason, that farmland is valued at a higher amount than what is its rental value," Hesse said.

SECTION 2032A SELDOM USED

With the current estate-tax exemption for everyone at $11.7 million for an individual ($23.4 million for a couple), there just has not been much of a reason to plug in the special land valuation tool, Hesse said.

For larger farmers who fall under the estate tax, Section 2032A isn't an equal tradeoff for cutting the estate-tax exemption in half.

There are also some other major caveats that can come back on the heirs. For one, Section 2032A requires family members to continue farming the land -- for 10 years. And they must be direct lineal descendants -- sons and daughters, not nephews or nieces.

The IRS also places a lien on the farmland for the amount of the estate tax that was not paid because of that lower valuation in land. That could affect an heir's ability to use the land for collateral.

"No one likes to lend to a person who has an IRS lien on their property," Hesse said. "That's going to discourage a lender from lending on this property knowing that the IRS is going to be in the first position."

And it could come back to bite the heirs if the farm economy turns bad and he or she is faced with selling the farm.

"You'd have this liability to the IRS for the estate tax, but no money because of losses, and it can be a train wreck," Hesse said. "There have been some examples of train wrecks as a result of relying on this as a tool to reduce your estate taxes."

An heir-farmer who fails to hold on to the ground for 10 years could see the IRS seek to recapture all of the tax liability that was saved when the estate was transferred.

"You need to understand your risk in adopting this provision because, if you aren't continuing to farm, or an heir doesn't continue to farm this for the full 10 years, you're going to have some additional tax to pay," Hesse said.

The 2032A valuation would largely come into play for farmers or other small businesses with real estate who haven't taken advantage of other estate-planning tools, Hesse said. Because of that, CliftonLarsonAllen doesn't have clients who have used Section 2032A, despite the large emphasis CLA has on agriculture.

"The reason we don't is because we've worked with clients to plan other means of reducing their estate taxes, so we don't have to rely on 2032. To me, it's a provision for the person who has not done any planning but has developed large farm wealth and dies young before they have had a chance to start planning their estate."

POLITICAL DEBATE CONTINUES

Potential changes in stepped-up basis, estate taxes and capital gains are still very much up in the air.

House leaders haven't said when they will bring their reconciliation bill to the floor for a vote. Any provision in the bill could change before then. The U.S. Senate would then weigh in with its potential tax plans as well.

Sen. Chuck Grassley, R-Iowa, told reporters Tuesday he plans to speak on the Senate floor sometime this week, highlighting an Iowa farmer who would explain how the Democratic tax plan would hurt his family. "The tax-and-spend proposals will be bad for small businesses, for farmers and for all Iowans," Grassley said.

"Under Democratic plans, it would take younger generations decades to pay off the land," Grassley said.

Still, at least some Democratic senators are continuing to push for changing the rules for stepped-up basis. Sen. Elizabeth Warren, D-Mass., called it "low-hanging fruit" in pushing for a "wealth tax."

"The stepped-up basis loophole lets the wealthiest Americans inherit fortunes without paying a penny in capital gains tax -- a massive subsidy that perpetuates the racial wealth gap and inequality," Warren stated on Twitter on Sunday.

Secretary of Agriculture Tom Vilsack and Sen. John Boozman, R-Ark., ranking member of the Senate Agriculture Committee, each also have gone back and forth in dueling articles in the Wall Street Journal over tax plans for family farms (https://www.wsj.com/…).

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

OMAHA (DTN) -- With harvest underway in some areas of the Corn Belt and beginning soon in others, farmers will be busy collecting and storing millions of bushels of grain. While agriculture is already a dangerous occupation, working with stored grain can be especially hazardous.

Basic safety rules and specialized equipment can be used to keep those who work around stored grain safe. While keeping grain in good condition does not assure grain bin safety, it will limit the instances of dangerous grain bridges.

ACCIDENTS CONTINUE TO HAPPEN

In 2020, 64 fatal and nonfatal cases involving agricultural confined spaces occurred, according to Purdue University Extension, which tracks these statistics (https://extension.entm.purdue.edu/…). This marked a 4.5% decrease compared to 2019.

However, the number of cases in 2020 was above the five-year average (61.2 cases/year) and above the 10-year average (60.9 cases/year).

"Regardless, the frequency of documented cases remains a concern considering the substantial resources being invested in solving the problem," the report stated.

The state of Illinois reported the most cases in 2020 with 17. This was more than double the next two reporting states, Minnesota and North Dakota.

Like any farm accident, the thought "It will never happen to me" is a common misconception, according to Emily Krekelberg, University of Minnesota Extension educator, farm safety and health.

Farmers do the same tasks over and over; often, this lulls people into a false sense of security, she said. This is when accidents happen.

"It really is a mindset which needs to be altered," Krekelberg told DTN. "You need to always be aware of the hazards and mitigate the risks."

For a personal perspective on the devasting impact of a grain bin accident, see "A Letter to Brian" at https://www.dtnpf.com/….

FOLLOW BASIC SAFETY RULES

Krekelberg said there are basic safety recommendations when working with grain bins.

The first is to utilize lock out/tag out equipment when working on grain handling facilities. This practice of physically putting a lock on the supply of power to the equipment would keep someone from starting the unloading auger, for instance, while someone else is working on it, she said.

Another basic safety rule would be not to go into a bin. If you would have to go in, Krekelberg recommends farmers use a safety harness.

Those who work with stored grain should educate themselves on the dangers of grain bins and flowing grain, she said.

Krekelberg said that, often, farmers cite the lack of available funds as an obstacle to purchasing grain bin safety equipment. There are ways around this, she said.

"The state of Minnesota has a cost-share program available to farmers to purchase bin safety equipment," she said. "I tell people the cost of safety equipment is needed to avoid the cost of a funeral or a hospital stay."

Shane Stutzman with Hynek Construction of Guide Rock, Nebraska, said he believes grain bin manufacturers are working toward more of a zero-entry policy, but those who work with stored grain know they still have to enter bins at certain times. However, there are practical safety rules that can be followed, he said.

This list includes using a safety harness, which would be tied to an anchor point in the bin, and never working alone. Other safety rules would be to have a fully charged cellphone and perhaps most importantly to know the condition of the stored grain, he said.

KEEP GRAIN IN CONDITION

When grain goes out of condition, a crust can cause an empty cavity that can collapse, which could engulf a person in a split second. Out-of-condition grain makes the situation much more dangerous, Stutzman said.

"I would encourage anyone in this circumstance to reach out and get help unloading the bin," he added.

Stutzman said there are many tools available today to closely monitor the condition of the grain. These products can even control fans to avoid the issues that cause grain bridging.

He recommends a system with a moisture cable and automatic fan control that logs the data on the cloud where it is easily accessible to keep tabs on the grain. This system would alert where the hot spots are in the bin, but more importantly, it would run the fans automatically to prevent a dangerous spoiled grain situation, Stutzman said.

If cost is a major consideration, there are different systems available at different price points.

Other factors, such as age/physical ability and the size of the grain bin also should be considered with grain bin safety.

With the average age of farmers 57.5, according to the 2017 USDA Census of Agriculture, Krekelberg said age is a factor with grain bin safety.

Older folks or those not in good physical shape may not move around as quickly as they once did. These people should ask themselves if they can still physically perform tasks such as removing grain from a bin, she said.

"Having someone else around to respond would also be a good idea," Krekelberg said.

Stutzman noted farmers are building larger grain bins compared to years ago. With more bushels in larger bins, this increases the risk of being engulfed.

Those working with larger bins need to keep in mind the unloading equipment is usually much faster, and even with grain that is in good condition, it can be easy to become submerged and engulfed, he said. The grain avalanches down to the center are much greater in larger bins compared to older bins with only about 6 to 12 feet of grain flowing.

"In a larger bin, that area of moving grain can be much deeper, so with a greater scale of grain (flowing) comes more danger," he said.

OTHER SAFETY RESOURCES

North Dakota State University Extension has a resource page on grain bin safety. You can view it here: https://www.ndsu.edu/….

The site also has figures diagraming how flowing grain can engulf a person with bridged grain, the collapse of a vertical mass of grain and how fast flowing grain makes someone helpless.

Penn State University Extension has a nearly 15-minute video on their website detailing grain bin safety. This site can be found at: https://extension.psu.edu/….

This DTN story provides several tips https://www.dtnpf.com/… and more information on the Grain Safety Coalition https://grainsafety.org/….

Read more about the movie "Silo" that brings the reality of grain entrapment to life: https://www.dtnpf.com/…

Russ Quinn can be reached at russ.quinn@dtn.com

Follow him on Twitter @RussQuinnDTN

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