Articles

    Grain merchandising and uncertain markets

     

    When dealing in the commodity markets, volatility is your friend. This observation was among the nuggets that Jeffrey Hainline, chairman of Advanced Trading Inc., and Jeremy Strubhar, Ag Risk advisor at Advanced Trading Inc., shared during their presentations at the November 13 Chicago Farmers’ meeting.

    Advanced Trading (ATI), based in Bloomington, Illinois, is a commodity trading company. It offers consulting services to people in agriculture on how to manage their enterprises, related Jeff. Additionally, ATI provides assistance for logistics, strategic planning, marketing, and research. Proprietary software and solutions to help manage commodity risks also are available through ATI. It has national and international clients.

    Some things to know in managing your commodities:

    • Jeff noted that in 2017 there have been very narrow price ranges in corn and soybeans with little movement. “Without much movement, grain companies suffer. Lack of  movement means lack of opportunity,” said Jeff.
    • He said that 2017 has the second highest corn stocks/use ratio since 2000. Jeff went on to say that 87 percent of corn is used domestically and the use is growing slowly by about two percent a year. Feed and industrial uses of corn respond to the size of the crop.
    • Jeff related that ethanol use is growing and ramping up. As a result, there will be a need for more corn. Currently, China only uses a two percent ethanol blend with gasoline. If they expand their ethanol use, there would be a dramatic increase in fuel and ethanol demand. The same situation exists in India. Brazil is a major ethanol producer, but its ethanol is made from sugar. The United States exports corn in the form of ethanol to Brazil. He said that the United States has lost the China market because it has a stockpile of corn. However, we have picked up Mexico and Turkey.
    • Ethanol companies continue to be profitable.
    • Logistics is an important consideration with stockpiles of corn. Last year’s record corn crop forced many ground piles. When there is a significant amount of corn that needs to be stored and there is no place to put it, the price goes down.
    • The forecast for this year is that there will be deficit space by 250 million bushels.
    • At one point, the United States had 74 percent of the corn market; however, exports stayed stagnant and now the United States has 34 percent of the market.
    • Regarding soybeans, it is estimated that China will import 97 million tons of beans this year. This is due to the increase in feed needed for animals because Chinese are eating more meat. South Africa, Asia, and the Middle East bean markets also are growing because they are buying more meat.
    • There is a meteoric growth in the demand for soybeans because it has become food for animals.
    • There is an incentive for farmers to plant more beans and sell them; not so for corn.
    • There is a record short position for managed money in corn.


    Jeremy discussed what the farmer can do to better manage the grain market. He noted that 2.4 billion bushels of corn were carried over from 2016-2017 and” the farmers owned it,” which resulted in a lot of storage costs.

    “You want to be hedgers,” said Jeremy. “Lock in prices. Be aware of what will hurt your operation, such as lower prices. Things outside of our control can lead to lower prices, such as political unrest and natural disasters.”

    Jeremy observed that the American farmer has become an expert in managing risks in growing the crop, much of which has improved due to technology. However, managing price risk still suffers.

    The tools that help manage prices are:

    • Put options, which give the farmer the right to sell unsold bushels; puts gain in value as the price drops.
    • Call options, which give the farmer the right to buy. It is used to replace ownership after selling bushels; calls gain in value as the market goes higher.
    • “A put is used to protect yourself against lower prices,” said Jeremy. “With a call, if prices go higher, you benefit. A call option is a way to replace grain once you sell it. It is often cheaper to own grain in a call option than to store the grain in a commercial grain elevator.”
    • He pointed out that options work best when there is volatility.
    • Puts:
      • Lock in a floor and give you a minimum price
      • Extend cash pricing window
      • Allow you to partake in higher cash prices, or increase floor
      • Make the risk know
      • Insulate you from a price drop, protect your financial balance sheet
    • Calls:
      • Gain if futures prices rally
      • Risk is known
      • Remove fear of selling too early and too low
      • Make cash sales with confidence
      • May be cheaper than paying for commercial storage


    In response to a question, Jeremy said that 5,000 bushels is the minimum amount of bushels for option strategies.

    Jeremy said, “My recommendation is to have a basic risk management plan based on protecting prices, not speculation.”

    TCF awards scholarship to Wisconsin student

    University of Wisconsin-Madison student Jack Jones received a scholarship from The Chicago Farmers. A junior at the university, Jack is majoring in Biological Systems Engineering with an emphasis in machinery systems.

    Jack is originally from Stevens Point, Wisconsin, and attended high school at Stevens Point Area Senior High (SPASH). Stevens Point’s deep agricultural roots as well as Jack’s natural interest in problem solving and a knack for math and science led him to pursue Biological Systems Engineering at U-Madison. Jack said the ability to solve complex problems in the tight-knit and time-honored agricultural community is his impetus to work hard in school and pursue a career within an agro-related business.

    He also is a chapter chair with the student chapter of the American Society of Agricultural and Biological Engineers (ASABE). When not helping the chapter organize events for the BSE Department, Jack said he is working in the UW Meat and Muscle Science Laboratory’s small butchery to produce a wide variety of meat products. At other times, he can be found with the UW Cycling and Nordic Ski clubs.

    TCF awards scholarship to Iowa State student

    A scholarship was awarded to Megan Frohwein, a junior at Iowa State University pursuing an Agricultural Business degree. Megan grew up on acreage outside the small town of Hubbard, Iowa, with her parents and younger sister. She graduated from South Hardin High School in May 2015 where she was involved in football and basketball cheerleading and several leadership groups.

    Megan said she chose an Agricultural Business degree for several reasons; the biggest reason being that her family is very involved in the agricultural field. Her father’s family owns and operates a private grain elevator, sells seed and fertilizer, and farms roughly 1,700 acres in Story and Hardin counties. She said she has grown up around the family business and is interested in agriculture. “I thought an Agricultural Business degree would be the perfect fit for me,” she said.

    During her first two years at Iowa State, Megan has been a member of the Ag Business Club and also served on the hospitality committee for Bacon Expo. Most recently she has become an ambassador for the College of Agriculture and Life Sciences. This past summer Megan had a marketing internship through Pinnacle in Iowa Falls, Iowa. During the upcoming summer she will be working as a commercial banking intern at US Bank in Des Moines.

    Following graduation, Megan plans to begin a career in agricultural finance. She said she hopes to start her journey at a large financial institution where there would be many opportunities to grow and expand her knowledge within the industry. Eventually, Megan would love to work for a bank near her hometown and become a loan officer so she could build relationships with local farmers. Megan said she was confident that her degree would help her achieve her career goals and further her passion for agriculture.

    FSA fosters successful farmers and quality environment

    Rick Graden is an enthusiastic spokesman for the Farm Service Agency (FSA) and he helped attendees at Chicago Farmers’ October 16 meeting understand why the FSA is beneficial and benefits farmland owners during his presentation.

    Stabilizing farm income, helping farmers conserve land and water resources, providing credit to new or disadvantaged farmers and ranchers, and helping farm operations recover from the effects of disaster are the missions of the U.S. Department of Agriculture’s Farm Service Agency (FSA), explained Rick, who is the acting state executive director of the agency. He noted that FSA has been a part of the U.S. Department of Agriculture since the 1930s when it became an initiative through the Agricultural Adjustment Act. While its name changed over the years, FSA has maintained its focus on ensuring that the country has safe and reliable food sources and on keeping farmers on the farm.

    Rick noted that FSA is the only U.S. government agency that works with elected county committees that are composed of farmers’ peers. “Because there is local representation, these committees make determinations based on local affairs, and agricultural conditions,” said Rick.

    FSA provides numerous programs that benefit farmers, but due to time constraints at the meeting, Rick focused on the Conservation Reserve Program (CRP). Implemented in 1985, CRP protects the environment, controls erosion and benefits wildlife, said Rick. CRP acreage is capped at 24 million acres under the current farm bill. “FSA would like to see a cap of 35 million acres,” said Rick.

    Currently, FSA is processing CRP applications that were submitted from May to September of this year. Rick urged people to be patient. He said that FSA is always adding more acreage to the CRP pot as CRPs are terminated when farms are passed on through inheritance or when people opt out of the program. Farmers can re-enroll in the CRP program, but owners might have to enhance their CRP practices to remain eligible to re-enroll. However, FSA will cost share in many instances for the enhancements.

    Rick noted that FSA has approximately 42 different CRP practices, not all practices are available in Illinois. Among them is the pollinator habitat that was implemented in 2012. A maximum of 100 acres per farm can be set aside as a pollinator habitat.

    “Seed for these habitats is expensive, but FSA will cost share with farmers for these plantings and specialists will assist in planting the areas,” said Rick. “A pollinator habitat on your property results in higher CRP cash rental rates.”

    Rick noted that FSA monitors practices and spot checks CRPs and pollinator habitats. At times, it might recommend spraying for weeds. There are 106,615 acres of pollinator habitats in Illinois and applications are no longer being taken. Rick said FSA will probably return to the pollinator habitats program because the planting of milkweed, goldenrod and blackeyed Susans are so beneficial for Monarch butterflies and honeybees. He noted that FSA hopes that pollinators could be planted along the interstates and Illinois is considering undertaking this. Iowa already is doing this.

    “CRP is the best program FSA has ever had,” Rick said. “Its provisions result in so many benefits for the environment. In my opinion, it is here to stay.”

    Longtime TCF Speaker Returns to Share His Expertise

    Dr. Gary Schnitkey, professor of Agricultural and Consumer Economics at the University of Illinois Urbana-Champaign, discussed crop farm income, cash rents and farmland prices during his presentation at the Chicago Farmers September 11, 2017 meeting. Dr. Schnitkey has been keeping TCF members well informed through his presentations since 1998. “He is a wealth of information,” said TCF President Barbara Clark.

    Dr. Schnitkey related that 2015 was a low income year, but income bounced back in 2016 with an average income of $90,000 per farm. This was due to good yields in Illinois. However, he suggested that incomes in 2017 could be less, averaging around $60,000.

    “Of course, much depends on where crop prices go as we move forward,” said Dr. Schnitkey. “Income is down because prices have not changed a lot and the yields this year are projected to be down.”

    Dr. Schnitkey said that soybean and corn yields have been above the trend in recent years, but he said that projections are down for soybeans in Illinois. He noted that 50 percent of this country’s soybeans are exported, with the vast majority going to China, which also imports soybeans from Brazil. “The hope from farmers’ perspective is that this export situation to China continues to grow so that soybeans remain in a positive situation,” said Dr. Schnitkey.

    Other information shared by Dr. Schnitkey:

    • Static prices for corn and soybeans: 2017 price per bushel for corn - $3.30, soybean - $9.50; 2018 projection: corn - $3.80, soybean - $9.50

    • ARC payments are expected to decrease and will vary by county; however, recipients should expect one-half or less of what they received last year

    • Costs are expected to be less in 2018 than they were in 2017; fertilizer costs have come down as well as fuel costs

    • Seed costs have not come down

    • For Central Illinois, soybeans are more profitable than corn; corn costs and seed costs increased more than costs for soybeans

    • Corn demand is static in comparison to soybean demand

    • There will be downward pressure on cash rents

    • Farmers and landowners should consider moving into variable cash rents

    • Little movement in farmland prices; prices have come down 10-15 percent off their peak; prices could come down another one to two percent

    • Anything that causes trade to slow in regard to NAFTA would be a negative; grain farmers want free trade

    • Regarding real estate taxes, use-valuation should be coming down

    • Projections indicate that the federal government will not do anything with ethanol; Brazil is raising a lot of corn that can be used for ethanol; the overall use of corn in ethanol is static

    • The United States could possibly begin exporting more corn, primarily to China, which now uses soybeans to feed animals

    • It doesn’t appear that water constraints will cause land to go out of production; Dr. Schnitkey thinks we will see more land coming into production due to Asian countries beginning to eat more meat: “As long as growing increases, land will be brought into production.”

    Eric Rund Named Plowman of the Year

    The Chicago Farmers presented Eric Rund with the 2017 Plowman of the Year Award for his many contributions to the organization during the September 11 meeting. Eric served two terms as president of TCF. He also served as vice-president, treasurer and as a director.

    Eric and his wife, Maria, operate their ancestral family farm that is located south of Champaign. The farm produces corn for Frito-Lay and seed beans for Pioneer using strip-till and no-till. The Runds also grow the perennial biomass crop miscanthus. It was planted for cellulosic ethanol, but today the Runds sell it for poultry and livestock bedding. “Eventually, we believe it will be used as a biomass fuel replacing LP gas,” said Eric. “To demonstrate the practicality of this, we sold and installed a multi-fuel biomass boiler at the University of Illinois’ energy farm, where anyone can see how it works.”

    He went on to say, “My years with The Chicago Farmers have been rewarding. This unique organization has given me opportunities to listen to viewpoints from the consumer side of agriculture as well as the production side and from the landowner side as well as the tenant’s side. If farmers are to be successful, we have to know what our customers want and respond to that need. If customers want abundant, safe and inexpensive food, then they must become informed consumers and learn the facts and the science behind food production. The Chicago Farmers, like no other farm organization with which I am familiar, provides these learning opportunities to its members. I have met many intelligent and influential people while attending our meetings over the years, all of whom I have learned something from and many of whom have become lifelong friends.”

    An outdoor history museum in Naperville welcomes The Chicago Farmers

    The Chicago Farmers were transported back to the mid-19th century when Summer Tour 2017 took the group to Naper Settlement in Naperville, Illinois. A perfect summer day, delicious lunch, and charming Naper Settlement staff members showed TCF what industry and agriculture were like in the area the last 180 years.

    Our hostesses for the day were Debbie Grinnell, Vice President, Advancement and Campus Development, and Donna Sack, Vice President, Community Engagement and Audience. Ms. Grinnell noted that she and Ms. Sack had attended Chicago Farmers meetings over the last year and very much they enjoyed them. They also participated in TCF’s visit to the Chicago High School for Agricultural Sciences last summer.

    “We wanted to be able to offer something in return to The Chicago Farmers and we thought a visit to our site would do that,” said Ms. Grinnell.

    She noted that Naper Settlement sits on 12 of the 212 acres donated to Naperville in the 1930s. Caroline Martin Mitchell, the daughter of George Martin, a successful 19th century businessman, deeded the acreage and the Martin family Victorian mansion that was built in 1883, to Naperville with the understanding that the property would be put to good use for the community and that the mansion would become a city museum. Hence, a hospital, schools, river walk, cemetery, municipal buildings, and Naper Settlement now sit on the property that at one time was the Martin’s farmland and rock quarry pit. Today, the Martin mansion and 30 buildings and ancillary sites features “allow Naper Settlement to tell the story of an agrarian community that transformed into a technoburb,” said Ms. Grinnell.

    And, indeed, there is an audience for the story. Thirty-five thousand teachers and students from 12 rural, suburban, and urban counties in Illinois annually visit Naper Settlement in addition to the many other visitors that are split evenly between Naperville and other suburbs.

    Naper Settlement, which serves as an outdoor history museum, operates on a $4.5 million budget; $3 million of which comes from the City of Naperville with the remaining $1.5 million raised by the Naperville Heritage Society. This fundraising arm was created in 1969 when a group formed to save St. John’s Episcopal Church in downtown Naperville from demolition. The church held its first service in 1865. The group raised enough funds to salvage the wooden Gothic Revival church and have it moved to the grounds of the Martin Mitchell Mansion. The church was renamed Century Memorial Church and has been restored to look as it did in the 1870s.

    After lunch, our group left the visitor center, which houses a temporary exhibit reflecting on the Naperville community’s agricultural roots on the first floor and a permanent exhibit on Naperville’s settlement and town development in the lower level. We then went outdoors to tour the museum and view the historic buildings that dot the Naper Settlement site. A blacksmith, the Naperville Clarion Print Shop and Paw Paw Post Office are among the first buildings that are encountered as visitors begin a leisurely stroll around the grounds. “Interpreters” educate visitors on the work of the blacksmith, relate how a newspaper of 1869 printed the news, and share details about the early days of the postal system and the fact that Naperville was a stop on the stage coach route. Young teens and children dressed in period garb can be seen around the post office playing games that children of that era would have played.

    As the walk moves on, visitors continue to be transported back in time and immersed in history. A stop at an 1830s log cabin that originally stood in Jonesboro, Illinois, allows visitors to interact with two children performing children’s tasks of the 1800s – churning butter and carding wool to prepare it for the spinning wheel. The adult “interpreter” talks about farming of the period. He noted, for example, that the 19th century farmer would produce 30 bushels of corn per acre and sell it for 30 cents a bushel, which would be $30 today. Similarly, the farmer produced about 24 bushels of wheat per acre and sold it for 80 cents per bushel, $80 in today’s terms.

    The walk along winding paths takes visitors past a Conestoga covered wagon that transported pioneers westward in the 19th century, a reconstructed one room school house from the 1840s that originally stood at Route 59 and 83rd Street, an 1843 home known as the “halfway house” because it stood halfway on the route between Naperville and Aurora, and the beautifully restored Martin Mitchell Mansion. But there is still more to see: a farm cellar, smokehouse and windmill from the 1900s, the Century Memorial Chapel, the Murray Building, which was a residence and business dating from the 1840s in downtown Naperville, and more.

    While there is much to see at Naper Settlement today, the history museum has plans for the addition of an Agricultural Interpretive Center in the near future, Ms. Sack told TCF’s group. Currently, Naper Settlement is in the process of collecting artifacts, stories and funds for the $4 million center.

    “There is a story to be told about how Naperville shifted from an agricultural base to suburbanization as it welcomed industry and a more diverse population,” said Ms. Sack. “There is so much more to tell. Our goal is to continue to focus and enhance our conversation about the importance of history, social studies and civics.”

    The 5,000 square feet Agricultural Interpretive Center addition to Naper Settlement will be located close to the half-way house and will tell the story of agriculture from 19th and 20th and centuries in the context of agriculture today. It will show agriculture’s innovation through displays of past and present farm implements, facilitate discussions about the business side of agriculture and the skills that are needed to be successful, provide an ag-science learning lab for interactive activities, experiments and experiences, and the center also will include the story of women in agriculture, Ms. Sack said.

    “We want to excite children about working in agriculture and agriculture related professions,” said Ms. Sack. “Agriculture is a huge business in Illinois and the center will show that. The center will provide data that will inform conversations about the evolving science and business of food production today, and how agriculture will feed the world’s population of tomorrow.”

    TCF member Ray Brownfield is a long-time resident of Naperville and an ardent supporter of Naper Settlement and its plans for the Agricultural Center. “I have spent time talking with representatives of Naper Settlement about agriculture and where it is going,” Ray shared with TCF’s group. “We have talked about growing crops, GMOs and organic farming. I’m a stakeholder here. I believe the Agricultural Interpretive Center can become a destination for people to learn about agriculture. It is a very exciting endeavor.”

    TCF scholarship awarded to U of I student

    The Chicago Farmers recently awarded a scholarship to Patrick Dziura, a junior at the University of Illinois at Urbana-Champaign. Currently studying Agricultural and Biological Engineering, Patrick has devoted his undergraduate career to conducting extensive research within the fields of bioenvironmental engineering, bioprocessing engineering, and nanoscale biological engineering. Within these fields Patrick said hopes to create a global impact by addressing issues such as water and air pollution through the use of algal wastewater treatment, biofuel production, and genetically modified crops. Minoring in French, Patrick hopes to bring his knowledge and research to an international level to help impact as many people as possible.

    Patrick currently serves as the Philanthropy Chair of the Alpha Zeta Morrow Chapter at the university and is also a member of Engineering Outreach Society where he volunteers at the local elementary school in an effort to pique students’ interest in science through hands-on experiments. He also serves as a member of the American Society for Agricultural and Biological Engineers (ASABE). 

    Patrick grew up in the northwestern suburbs of Chicago where he attended Glenbrook South High School. He discovered his interest and passion for agriculture through the high school's horticulture program. Competing in local, state, and national FFA Horticulture Competitions, Patrick's high school team won the 2014 FFA Illinois State Horticulture Competition and went on to do well in the national competition that same year. Patrick noted that his interest in horticulture, agriculture, and science in general has become a forefront in his life as he pursues his future career. 

    Patrick wrote in a letter to TCF, “I would like to thank the Scholarship Committee and The Chicago Farmers for providing me with this scholarship that will help me to continue and pursue my academic studies and goals. Without scholarships such as this, I would not have the opportunity to study at the University of Illinois and be able to make my professional dreams come true. It gives me great confidence and encouragement to continue to do my best academically knowing that there are organizations and people who support me and all my endeavors. I promise to keep working hard at school and make sure that the work that I am doing will one day have a positive local, national, and global impact.”

    How to plan for smooth succession planning

    The hardest part about owning a farm is how to keep the land in the family, said Paul Morf during a presentation at The Chicago Farmers’ May 8, 2017, meeting. Morf, chair of the estate planning group for Simmons Perrine Moyer Bergman, a law firm principally located in Cedar Rapids, Iowa, allowed that “taxes are hard, too.”

    Morf related that setting up an LLC is the most efficient structure for succession planning. The LLC provides:

    • Centralized management.
    • Privacy regarding the ownership of real estate.
    • Separation of ownership from control through recapitalizing the LLC into voting and non-voting ownership interests.
    • Facilitates estate planning transfers of real estate to descendants and trusts for descendants.
    • Treatment like a partnership for income tax purposes so that all income and deduction items of the LLC flow through directly to the members.
    • Distribution of funds from the LLC to the members without taxation.
    • Liability protection for all owners.
    • Restrictions on transfers and insulation of LLC assets from creditors of owners.
    • Facilitating availability of significant valuation discounts for transfer tax purposes.
    • Avoidance of partition.
    • Avoidance of ancillary probate and possibly state death taxes in Iowa or Illinois for a non-resident landowner from Florida, Texas, Arizona or other state without a death tax.
    • Smooth business succession planning.

    Morf noted there is an emotional and economic attachment to a farm and there are times when fair is not always equal. He said this situation generally occurs when a child returns to the farm to work on it and maintain it, while other siblings have chosen other paths. Decisions have to be made:

    • Should there be identical treatment for siblings?
    • Give farming son the right/option to purchase farms from the estate or other siblings?
    • Should the land be held in trust, require rental to son at fair market retail rates and distribute rent equally to siblings?
    • Sell farms to the son (or grantor trust for sons) on an installment contract during life?

    In families where the business owners or famers have few assets outside of the business/farm and there are one or more children involved, other decisions have to be made when creating estate plans:

    • Treat children equally or fair but not equal?
    • Will the equipment pass predominately to the on farm heirs? What about the land?
    • Should children be put in business together or is each given a different parcel?
    • If you give children different assets, do you equalize with life insurance or liquid assets? He noted that life insurance is subject to the death tax.
    • Should children involved in the business be given purchase options?
    • Are those children not involved in the business given put options?
    • How do you value farmland or business assets for purposes of division?
    • Are buy-outs among family members for cash, or on an installment basis:

    Morf pointed out that there are a lot of tools for shared inheritances. He encouraged people to talk with their advisers and family during these considerations. Morf suggested that premarital agreements be in place for second marriages to protect the children. He added that placing an inheritance for children in a trust is a protection against a divorce.

    Morf reviewed revocable trusts and related that the trustor, who is the initial trustee and initial beneficiary, can amend or revoke the trust at any time. The trust is not a separate taxpayer and gifts to the trust have no tax implication. Additionally:

    • With the death of the trustor, the trust continues with new beneficiaries, according to the terms of the trust, which at that point becomes a will substitute.
    • It is important that every revocable trust be backed up with a valid will. A “pour over will” provides that any property owned by the trustor (and not by the trustor’s revocable trust) at death pours into the revocable trust.

    Jeff Martin receives Distinguished Service Award

    By Andy Holstine, Past President

    Jeff Martin has been associated with the Chicago Farmers for nearly twenty years.  During this time he has been very active, serving as a director, president and in nearly every other voluntary role.  He hosted the summer picnic on his family farm in Mt. Pulaski and spent fifteen years as co-chair of the Farmland Forum.  In short, his efforts to make our organization better have been enormous. 

    But Jeff’s energy and contributions extend well beyond the Chicago Farmers and his industry leadership and service made the recognition of the “Distinguished Service to Agriculture” award well-deserved.  The Chicago Farmers first created this award in 1977 and you can find the list of past winners here.  You will find that past recipients of the award include the founder of McDonald’s, captains of agribusiness, leaders in academia and research, prominent media , and a Secretary of Agriculture.  While Mr. Martin may describe himself as “only” a farmer, the impact of his life’s work has contributed greatly to the evolution of farming practices employed across millions of acres each year.

    Jeff started farming with his father in 1976.  As he recounted when accepting the award, early in his career he watched a dust storm destroy their fields.  For Jeff, who had grown up listening to his grandfather extoll a belief that the land they lived on could provide for their family forever, this experience galvanized a belief in the importance in taking a long view valuing conservation as central to good stewardship of the land.  This mindset led him to continually examine existing farming conventions and practices, explore new technology and share techniques that improved the land and added worth. 

    Jeff was a very early adopter of no-till farming, initially building his own equipment and culminating in an award as the no-till innovator of the year and recognition in 2016 as one of 25 “no-till legends.”  After seeing the benefits of setting aside CRP acres on his farm, he started a business that has since planted more than 1,000 acres of trees and prairie grass.  He was at the vanguard of the use of cover crops and research he conducted on his fields was published in an industry magazine.  Jeff was appointed member of the Federal Reserve Agriculture Advisory Board for several years.  He has also been recognized as the Illinois wildlife landowner of the year, received the corn growers’ environmental action award, named the AgriNews farmer of the year, and his family has been featured in numerous publications over years.  Jeff has farmed with his grandfather, father, brother and now has both sons farming with him full time, maybe the greatest measure of success and a life well-lived. 

    I view Jeff as a remarkable example of doing well by doing good.  When accepting the award, he remarked that the Chicago Farmers was one of the best groups he had ever been a part of.  Speaking for the Chicago Farmers, I would like to express how fortunate we are that Jeff chose to contribute so much over the years and congratulate him again on an award truly earned.

    2016 Land REALTOR of America Award Recipient Chicago Farmers Member Ray L. Brownfield

    May 2017 - Recently at the REALTORS® Land Institute National Land Conference, held at Charlotte, North Carolina, Ray Brownfield was the sole recipient of the 2016 Land REALTOR® of America Award. This prestigious award is bestowed upon a REALTORS® Land Institute member who has achieved the Accredited Land Consultant designation, excelling in extremely high levels of real estate transaction competency, displaying above reproach ethics, leadership and professional standards.

    Ray is the managing broker and owner of Land Pro LLC, located in Oswego, Illinois. He is also an Accredited Farm Manager through the American Society of Farm Managers and Rural Appraisers. Ray and his staff provide professional land real estate brokerage in Illinois and farm management services throughout Illinois, parts of Indiana, Iowa and Nebraska. In 2016 Ray was the real estate broker for over $20M in real estate sales and managed over 7,000 acres of farmland. He is a native of Iroquois County Illinois, and thoroughly enjoys his family farm at Thawville. He and his wife Patty live in Naperville.

    Purdue student receives 2017 TCF scholarship

    Purdue University junior Merrilee York, of Monrovia, Indiana, is a recipient of a Chicago Farmers’ scholarship. Ms. York is majoring in Agronomy with a minor in Food and Argibusiness Marketing.

    Ms. York grew up in Monrovia, a small town southwest of Indianapolis. During her younger years, Ms. York showed beef cattle in 4-H shows. She has been a member of 4-H for 10 years. “Even though I grew up raising beef cattle, my passion is crops,” Ms. York wrote in a thank you letter to Chicago Farmers.

    A member of Sigma Alpha, the professional agriculture sorority, Ms. York also is a member of  Purdue’s Agronomy Club. She noted that her leadership activities, academic success and hard work have led her to obtain an internship with Monsanto this summer prior to her senior year as a seed production intern.

    Ms. York thanked Chicago Farmers for choosing her for the scholarship. “I understand that without the generosity of people like you, a college education would not be possible for students like me,” she wrote. “I have been truly touched by your decision to be so generous, and I hope to one day be fortunate enough to give back to Purdue agriculture students. Again, I would like to thank you.”

    Austrian Study Tour Sets a Record High with Traveler Count and Alpine Altitude

    By Jim Ward, Chicago Farmers Travel Chairman

    Chicago Farmers and the three generation Austrian farm family.

    Twenty-five Chicago Farmers members and guests spent the week of April 22nd to 29th learning about the diverse agriculture and historic cultural features of Austria. The group traveled 777 miles in a comfortable motor coach and a short distance by cruise ship on the Danube River with the leadership of our charming tour guide, Silvia.

    Our Austrian Airlines 777 delivered us to the Vienna airport on schedule, and Silvia and driver Tomas took us to Graz, Austria’s No. 2 city, with a lunch of pumpkin seed soup and Austrian pancakes on the way. Graz was not bombed during World War II, so historic buildings were in their original condition.

    Next morning, the group headed for Piber, the site of the famous Lippizanner stud farm and training stables. Our guide expressed the Austrian people’s gratitude to General Patton for rescuing the Spanish Riding School’s horses from the food shortage of post World War II. We saw 40 new foals with their mothers. They are born black and turn white as they age. Also on display were new riders in training.

    A short drive through Austria’s “fruit basket” area revealed that most orchards use a technique whereby trees are trained/pruned to grow on trellises, which allows high production and easy harvesting. The evening was spent at a country inn.

    In the afternoon, we drove west to the mountain area to visit an Alpine dairy farm. The Kettner family’s hillside home faced the snow-capped mountain peaks and looked over a sloping pasture. It was a perfect setting for our group photo with three generations of the family. Their modern dairy barn houses a 70 cow herd of Brown Swiss and Holsteins, with modern self-service robotic milking equipment. Haying steep mountain grassland and moving heifers to high summer pastures were part of the routine.

    Like U. S. dairy farmers, the Austrians have the problems of low milk prices and government regulations. The Kettners work with other farms, forming a cooperative to own expensive farm machinery. They also lease pasture land from a nearby church in the valley.

    By Tuesday, we had reached Salzburg and were ready to tour the “Sound of Music” city with our guide leading the bus in songs from the romantic musical. We began the day with the Mirabell gardens and moved through the various sites chosen to tell the story of the von Trapp family’s adventures. A side trip to the lake village of Mondsee allowed viewing the “wedding church” used in the movie. We had the evening on our own, and some of us chose to hear a Mozart style musical presentation with costumed singers. The setting was in an old abbey with vaulted ceilings and sparkling chandeliers.

    Wednesday was our busy day with a fruit farm visit, with our host walking us through his row-on-row blossoming orchards of pear and apple trees. Some of the trees were 300 years old dating back to Hapsburg ruler Maria Theresa, who promoted educational, commercial and agricultural reform in the late 1700s. Then to his inn’s dining room where he served us samples of a spirit he had aged and distilled from the fruit, followed by a generous luncheon.

    Next, we were on to Melk and a visit to the imposing Benedictine Monastery overlooking the Danube. It wasfilled with great art treasures and the business manager explained about their role in farming and forestry. They are one of the largest land owners in Austria and income from the property and tourist admissions sustain the maintenance of the aging structure.

    The evening was spent in a charming inn on the banks of the Danube at Emmensdorf. Thursday morning, we met with the Monastery’s business manager at his farm headquarters and inspected some of the giant equipment for row crop production (potatoes, sugar beets, soybeans, and canola) that also is used for logging the forest property. Wood chips are used to heat the Monastery and local municipal buildings.

    Next came our river cruise on the Danube, with castles on the shore and terraced vineyards on the river bank. Our guide told us they were originally built by the Romans, hundreds of year ago.

    On our way to Vienna, Austria’s capital city, we passed the golden blossoms in the rape seed fields. The crop would be harvested to produce canola oil. Friday was a bus tour past Vienna’s many attractions, including the State Opera, the Belvedere Palace, Parliament, and many museums. We had the afternoon on our own.

    As luck would have it, our drop-off point at the center of the city was near the Spanish Riding School!  Several riders had the beautiful white stallions posing for a photo shoot, so we did some photo shoots of our own and stopped in at the School’s gift shop. An afternoon of museum visiting finished off our sample of Vienna’s wonderful attractions. Austria is a well visited country; forty percent of the country’s national income is attributed to tourism.

    Our farewell dinner featured a generous serving of wiener schnitzel and sacher torte for dessert. The private dining room provided music by a local pianist. Our guide surprised us with the gift of a torte cake to take home as a remembrance, which we shared at the May 8th Chicago Farmers luncheon.

    We were up early on Saturday to board our Austrian Airline 777 and had sunshine all the way home. Another Study Tour and the improvement of our knowledge of farming around the world and a benefit for our Scholarship Fund had come to an end.

    Click here to see photos from the trip!

    Investing in farmland

    There are good reasons to invest in farmland and Douglas Hodge, District III vice president of the American Society of Farm Managers and Rural Appraisers, outlined farmland’s many investment enticements from an institutional perspective during The Chicago Farmers’ April 10 meeting. Hodge also is part of Nuveen’s APPR Services/Risk Management group.

    “Historically, from an institutional perspective, farmland is a solid investment,” said Hodge. “It provides steady income, serves as a hedge against inflation, and reacts differently than equities to outside stimuli. It is a risk alternative to other investments. Plus, they are not making more farmland in the United States.”

    Hodge did note that unlike the United States, acreage in Brazil is increasing, but at the expense of the rain forest and many green spaces in that country.

    With the acreage of farmland not increasing in the United States, how can farmland be used most effectively? Hodge said that world demands have to be considered. Agriculture has been a key to energy through ethanol. Additionally, as third world countries improve, their populations are moving away from a grain-based diet to a meat-based diet. Technology has allowed increased production to begin meeting the growing world demand for food, Hodge added.

    As an aside, Hodge related that recently he met with a delegation from China and he learned that the typical farm in China is seven to 10 acres. The Chinese want the technology and equipment that the United States has so they can grow the food they need. “China is our greatest export market, so this Chinese goal could be bad news for the United States,” Hodge remarked.

    Among other reasons to invest in farmland is the preservation of capital, said Hodge. He noted that he personally recommends investing in farmland, which can be used to feed people. Former dairy farmers, Hodge and his wife are beginning to invest in farmland.

    He noted that farmers’ financial statements are stronger now than they were in the 1980s so he does not foresee the problems that plagued that period.

    “You have to keep in mind that you have to be in a farmland investment long-term,” said Hodge. “The next closest hedge against inflation is gold or silver.”

    The growth in bio-fuel presents more opportunities for agriculture, according to Hodge. Noting that 25 percent of corn is used for fuel, Hodge said other opportunities besides corn will present themselves. He noted that sugar cane is used for bio-fuel production in Brazil.

    While returns have declined on farmland, it is not a reason to panic, said Hodge. “Remember, it is a long-term investment. The average return on farmland has been 12.5 percent over the last 20 years.”

    Nearly one-half of all farmland will transfer ownership in the next 20 years, said Hodge, so it is important to take a careful look at estate planning.

    “The average age of the American farmer is over 50,” said Hodge. “As we age, who will buy our land? It is possible that the older famer can own the land and cash rent to younger farmers.”

    He added that less than one percent of farmland in the United States is owned by institutions. It is mainly owned by farmers.

    Hodge said that Nuveen is buying farmland in the Midwest and the Pacific Northwest. He said there also are investment interests in Brazil, the eastern and western parts of Australia, Eastern and Central Europe, and Africa. Nuveen buys Class 1 farmland, he said. “More and more money is chasing this category of land.”

    Hodge shared that the Creighton Farmland Index is a good tool to use to see how values are tracking.

    What are the cons of farmland investment?

    • The risk of inflation and deflation
    • Volatility of commodity prices
    • Lack of liquidity
    • Possibility of high transaction costs
    • Geo-political risk

    Hodge pointed out that top quality land will not decline in value as less desirable land will. He noted that fundamentally, farmland is real estate and the adage, “location, location, location,” also applies to it.

    The current market indicates that farmland owners are facing lower values; however, commodity prices are stabilizing, said Hodge. On the negative side, there is a potential for higher interest rates and that has to be closely watched.

    He went on to say that cash rents are likely to decrease; there is a correlation between land values and cash rents. Hodge said there will be some harder negotiations between the farmer and the owner.

    Hodge added that investors have to be aware of what is happening in Washington regarding trade issues because it will have an impact on commodity prices.

    TCF member cited by ISU

    Chicago Farmers member Ray Brownfield, managing broker and owner of Land Pro LLC in Oswego Illinois, recently received the Illinois State University (ISU) 2017 Alumni Achievement Award at the annual Founders Day event.  Ray graduated from ISU in 1965, majoring in education. Upon graduation, he became a farm manager at The First National Bank of Peoria, and progressed to department head. This position paved the way for rapid progression in his industry to department head at Continental Illinois National Bank and Trust Company and Northern Trust Agricultural Services, leading to his position as President of Capital Agricultural Property Services (CAPS), a subsidiary of Prudential.

    During his twenty years at CAPS, Ray helped build the company into one of the largest of its kind in the United States.  After retirement from CAPS, Ray formed and is Managing Broker and President of Land Pro LLC, an agriculture real estate brokerage and farm management company located in Oswego. He is an Accredited Farm Manager (AFM) and an Accredited Land Consultant (ALC).

    Ray has received numerous awards including the Hall of Fame award from the Illinois Society of Professional Farm Managers and Rural Appraisers (ISPFMRA) and the D. Howard Doane Award from the American Society of Farm Managers and Rural Appraisers (ASFMRA). Ray served as national president of ASFMRA and the REALTORS© Land Institute. To date he is the only person to serve as president of both organizations. Ray received the prestigious Hobart Award from the ISU Agriculture Department and the highly-coveted Hall of Fame Award from the College of Applied Science and Technology.

    Ray served in the Illinois Army National Guard rising to the rank of CW-5, as the State Food Service Officer. He retired as a decorated thirty-five-year veteran in 2001.

    Ray and his family still enjoy coming to the family farm in Thawville.  He and his wife Patty live in Naperville. 

    Good soil management promotes the quality of water

    The weather forecast of several inches of snow falling on the Chicago area did not discourage a number of Chicago Farmers’ members from attending the March 13 meeting, which dealt with the relationship between agriculture and water quality. Unfortunately, travel conditions did hamper our speakers’ ability to get to Chicago. But Chicago Farmers’ member Jeff O’Connor, who had come to the meeting to provide support for the scheduled speakers, volunteered to take on the topic of “Cover Crops and Nutrient Reduction” and serve as the day’s presenter.

    O’Connor, a graduate of the University of Illinois, is a sixth generation farmer who raises soybeans, corn and wheat on 1,000 acres in Kankakee County. He also is chairman of the Kankakee County Soil & Water Conservation District and a member of the Kankakee County Farm Bureau.   In both roles he works to promote the use of cover crops and better nutrient management.

    In addressing the connection between agriculture and water quality, O’Connor explained that the two become linked through the gulf hypoxia zones. Hypoxia, or low oxygen, is an environmental phenomenon where the concentration of dissolved oxygen in the water column decreases to a level that can no longer support living aquatic organisms.

    The largest hypoxic zone currently affecting the United States, and the second largest hypoxic zone worldwide, is the northern Gulf of Mexico adjacent to the Mississippi River. O’Connor noted that there have been sedimentation studies in the gulf to determine how long the flushing of nutrients down the Mississippi has been occurring. Studies were possible through the study of two types of algae that thrive in a hypoxic zone and whose remains can be measured in the sediment on the Gulf floor.   He said that researchers have routinely been able to measure higher concentrations of these single cell organisms in the gulf area sediment dating back to the 1950s. These higher concentrations roughly coincide with the advent of modern agriculture and the introduction of commercial fertilizers.

    To control the flow of nutrients into the Mississippi River Watershed, the USEPA (United States Environmental Protection Agency) in 2011 urged states to develop strategies to reduce the outflow.  Illinois stakeholders met from August 2013 to May 2014 to develop a strategy and gave input that resulted in the release of a 10 year plan in July 2015.  Guidelines were developed and in July 2015 the official Nutrient Loss Reduction Strategy (NLRS) plan was adopted.  Several points that O’Connor made from that plan include:

    • Science assessment-the University of Illinois along with IEPA conducted research that addressed what practices could be used to control loss and at what cost.
    • Rivers that are considered impaired receive priority but non-impaired watersheds also are to be supported in the maintenance of the quality of their water. Interestingly, O’Connor noted that the Kankakee River is probably the cleanest river in the state due to the act that its primary source of water comes from Indiana through limestone and bedrock.
    • By 2025, there should be a 15 percent reduction of nitrates and a 25 percent reduction of phosphorous being flushed from fields into the Mississippi with an ultimate goal of 45 percent reduction for both. O’Connor added that studies have gone so far as to test the water run-off of golf courses and homeowners’ properties and found that they were contributing little to the problem. Agricultural lands are the main source within Illinois.

    O’Connor said that a priority of the Illinois Farm Bureau (IFB) is the education, research, implementation, and accumulation of evidence of ability to protect the quality of water. The Illinois Farm Bureau has allocated $100,000 for the Nutrient Stewardship Grant program that is funding 15 projects in 32 counties. O’Connor pointed out that it also is important to have boots in the field demonstrating what needs to be done. IFB also is offering free, confidential water testing in select counties to test for levels of nitrates in tile drained farm fields.

    To further education in the use of cover crops, O’Connor said demonstrations of new practices are necessary; there has to be a cultural change among farmers; and the appearance of innovators and early adopters of cover crops to lead the way are necessary. He noted that changes should benefit both the environment and the livelihood of agriculture.

    Among the changes that need to take place, for example, is more application of nitrogen to fields of corn in May or June, prior to when the tassels appear. O’Connor said this is the time when the corn is in most need of the nitrogen, rather than in the fall when nitrogen traditionally had been applied. “Putting nitrogen on when the crop needs it and is using it means less opportunity for it to escape in run-off,” he noted.

    Tillage patterns also need to be changed, said O’Connor. “No-till is a better system for soil health,” he said. “The worst thing you can do to discourage soil health is work the soil.”

    Regarding cover crops, O’Connor said that his use of cereal rye as a cover crop has prevented erosion of the soil through wind and water.  Any soil that leaves a field often carries with it phosphorus residue. As a result of the cover crop usage, phosphorous stayed put. The cover crop system also had no increased herbicide costs.

    O’Connor said that he found cereal rye to be a beneficial cover crop because it grows anywhere, handles cold weather well and grows early in the spring. He said his system mixes the cover crop seed with fertilizer in the fall and both are spread on fields that will be rotating to soybeans in the subsequent year.  O’Connor noted that the roots of cereal rye may inhibit the growth of corn, but not soybeans. He related that he raises his own cereal rye seed on areas of his farm where corn won’t grow profitably. O’Connor is able to raise the seed for $7 to $8 per bushel versus the commercial cost of $15 per bushel. He also sells excess seed to neighbors. O’Connor said that many producers use their fields of cover crops for grazing livestock. Winter rapeseed is another good cover crop that he is experimenting with.   Winter rapeseed can overwinter well and adds diversity to the soil fungal activity.

    Regarding cover crops’ effectiveness in removing residual nutrients, O’Connor said that he had two fields of corn in 2015, side by side. In one field, a cover crop was not used; in another, there was a cover crop. The following spring he said there was a 67 percent reduction of nitrates leaving the soil in the cover crop field versus the field with no cover crop.

    Agriculture and technology make good partners

    Does technology have a place in agriculture? The resounding answer is yes. A group of panelists, moderated by Dan Stokes, a director of Chicago Farmers, discussed Agtech at The Chicago Farmers’ February 13, 2017, meeting and offered interesting insights. Panelists included Guy Turner, a partner with Hyde Park Venture Partners; Corbett Kull, senior director engineer and head of the Chicago Office of Climate Corporation; Mark Haraburda, CEO of Barchart; and Matthew Rooda, CEO and president of SwineTech.

    How do the panelists define Agtech? Haraburda, whose Barchart company focuses on commodities and futures data, said that Agtech has made it possible to analyze large amounts of data that are cloud-based, and Rooda, of SwineTech, which creates products that reduce piglet deaths, noted, “Time is our most valuable resource and technology gives time back to people.” Kull, of Climate Corporation, which helps people and businesses adapt to climate change, remarked that the technology has to improve productivity for the farmer and/or landowner. Turner, whose Hyde Park Venture Partners focuses on high-growth technology startups in the Midwest, believes that Agtech involves genomics and chemistry.

    And who are the innovators of Agtech? “Everyone, including growers, who have been tinkering with new solutions for decades,” said Turner.

    In discussing the history of the adoption of technology in agriculture, Kull that it can be traced back 120 years and include mechanization and the use of fertilizers, chemicals and GMOs. “There appears to be a cycle every 20-25 years in agriculture,” he said. “At the front end of innovation, there are a lot of naysayers. There was a time when farmers were suspect of tractors and were reluctant to replace their field horses with these machines. Three or four years ago, I was hearing that farmers don’t use smart phones. That is not the case now.”

    Timing is everything, observed Haraburda, and noted that rooster.com came out in 2000. While it was a great idea to bring a digital marketplace to the farmer, the time was off, said Haraburda. “The platform was not there. Now we have that platform, but it is still tough to sell grain online. It won’t happen overnight, but the behavior is changing.”

    How does that platform happen? “You have to think ahead,” said Rooda. “You have to find cost-effective ways to get an advantage over your competitors.”

    Kull noted that computerization has gotten very cheap. He pointed to the ability to walk up to livestock in the field and check a fit-bit in an animal’s ear and gain a reading with an iPhone. “Affordability and pervasiveness make the technology right for right now.”

    Also noted in the discussion:

    • The consumer drives the investment in the Agtech industry. Look for what the consumer needs.  The consumer has to lead the way. They won’t buy if they don’t need it. (Rooda)
    • The grain market is a huge area of investment opportunity. There are two or three tiers of management structure on a farm, so there is opportunity to create transparency. (Turner)
    • While hog prices are low and there is an oversupply of pork, the rise of the middle class in China and its appetite for American cuts of meat could change that situation in the next few years. (Rooda)
    • Every commodity industry lives on a supply curve. (Turner)
    • A farmer is running a factory and it requires doing a better job of measuring and scaling. (Kull)
    • Immigration and tariff issues could affect Agtech’s future; however, if there is a shortage of labor, some start-up would figure out how to pick the fruits and vegetables. “Regulations present great opportunities for startups.” (Kull)
    • The demand for restaurants to serve locally grown food affects agriculture and technology. There have been advancements in storage and modifications in growing to give longer life spans to fruits and vegetables.
    • Collecting information for the famer is a problem; don’t let information die in the field.
    • Regarding tech investments or involvement in startup companies, panelists recommended gathering as much information as possible and consulting with a good legal team regarding structuring a company.
    • The bar is high for venture capital; a 20 percent return is sought.
    • Expertise in the market, tenacity, and previous experience indicate probability of success for a startup company and make it easier to raise capital.
    • In response to a question about protection of intellectual property in overseas deals, Haraburda said that Barchart has grains.com and sells grain to one or more elevators. A Brazilian grain buyer wanted a similar situation in Brazil. Barchart is licensing the technology to the group.
    • Regarding the future of land grant colleges in research and development of technology, Haraburda said that the University of Illinois tech campus is extensive and it has talent. People are being hired from this pool of talent.
    • Future of Agtech? Kull said that Climate Corporation is making investments in sensors for the field and livestock. Haraburda said he is interested in tools that are simple and affordable.

    Farm managers’ compensation and goals explored at January meeting.

    The Chicago Farmers’ January 9, 2017, meeting featured Kyle Mehmen and Gary McDonald who shared their insights about farm management with an appreciative crowd. The two men were part of a panel that was moderated by TCF Director Dan Stokes.

    Kyle owns MBS Family Farms with his family in Plainfield, Iowa. The group influences over 20,000 acres via farm management, input sales, custom work, and traditional farming. Gary is the owner of Organic Resources in Springfield, Illinois. He became a farm manager in 2010 when he was asked to assist with the management of an organic farm owned by an organic investor. From that point, the need for an organic farm manager was evident because of the consumer shift to organic, which has created a demand several times greater than supply, he said.

    In discussing compensation for farm managers, Kyle noted that his family owns a small farm management agency and the managers usually are paid a percentage of the gross revenue from the farm that ranges from five to 10 percent, depending on the services provided. He said they are moving away from this model because it may not always encourage the best behavior for the land. Kyle related that they are moving to compensation based on the asset value of the land, but this presents challenges. On the other hand, some of the clients pay on a per acre basis. This can be done on an hourly basis and ranges from $300 to $500 per hour or $5 to $7 an acre, dependent upon the task.

    Gary, who assists existing organic farmers and transitional farmers with a variety of tasks, said that compensation for conventional farm managers on a conventional farm would be two to 10 percent of the gross and $100 per hour when help with leasing is provided.

    “When I am working with an organic farmer, I am handling many things,” said Gary. “I charge 10 percent of the gross or an hourly rate of $200 plus expenses because many times I am required to travel a fair distance. Management of organic operations entails a number of added responsibilities, such as teaching and guiding.”

    Regarding other metrics for determining compensation, including the possibility of being compensated on a percentage of profits, Kyle responded, “We started down that path, but we still have many clients that we manage on a gross basis. It is difficult trying to decide what the mathematical equation should be.”

    Gary suggested that the appreciation of the assets also be considered, but that has to be quantified.

    Kyle remarked that determining the value in appreciation is difficult. “We have a baseline, we use metrics and we look at improvements and ROI, but we are far from perfecting a math equation that can be plugged in. There has to be significant trust between the manager and the client.”

    He went on to say there are variables in determining compensation. For example, a $10,000 an acre farm could have fragile soil, low fertility and an aging draining system. As Kyle’s group addresses these problems and adds their work into the equation, it has to be determined what the new value looks like after the improvements and the receipt of enhanced revenue.

    An essential aspect in managing farmland investments is working with, or being, the people doing the actual work on the farm to produce a crop and care for the soil. Consolidation and automation have not yet eliminated the role of the farmer. Dan pointed out that some farm managers and landowners have in fact expressed concern about the number of qualified farmers retiring and the need for more farm operators who are skilled working with technology and data collection and analysis. Gary noted, “The number one natural resource we are squandering is the American farmer. There is a scarcity.”

    A discussion about managing soil fertility ensued, and Dan raised the question about using soil tests as a tool for measuring progress. Basic soil tests can be misleading not only because they can vary greatly by year and location, but also because they say very little about longer-term soil health soil conservation, which is important for optimizing the value of the land asset over time. The soil horizon test and the Cornell soil health test, for example, are more advanced tests that do a better job of tracking durable fertility. Dan noted, though, that use of these tests, and ultimately how everyone manages fertility, will depend on everyone’s time horizon.

    Gary observed that true farmers work with the soil to make it “reproductive,” not just “productive.” He noted, “An operator, who can raise 200 bushels of corn organically using rotations, cover crops and livestock with very little fertility inputs, if any, has successfully worked with the creative processes of the soil.”

    “There is an art to soil testing,” said Kyle. “You have to establish a benchmark. There is a lot that goes into the process.”

    Dan observed that in the past, relatively few outside of organic farming put much stock in the idea of building soil microbes as a way to build soil fertility, opting instead for applied chemical fertilizer. Now that larger companies are researching and promoting microbes more, interest has broadened.  A lot of wisdom from organic farming is being commercialized and applied to conventional farming.”

    Regarding benchmarks, Kyle said he looked at them on an individual basis. “I am trying to add value to farms,” he said. “Sometimes, fragile areas have to be taken out of production. How do we monetize and reward management in this situation?”

    Gary pointed out that well drained soil is very important. He said he prefers Class B soil with a lower PI because often times it is lower priced lighter soil and sometimes rolling and dries out more quickly so the farmer can more easily get back into the field to perform mechanical weed control. Dan related that the USDA’s Web Soil Survey website provides satellite maps and is a “very useful resource” for discovering the various soil types and drainage issues on a property.

    Next, the conversation went to a discussion about cover crops, and Dan noted that many farmers become frustrated using cover crops because cover crops are legitimately difficult to get right. He asked Gary and Kyle how they approach farmers regarding cover crops.

    “You have to talk with the farmers,” said Gary. “They are very used to thinking about what they can get out of the soil rather than what they can put back. I work to get the biology and earthworms thriving in the soil, that’s the true wealth generating engine. We need to get the biology back to work.”

    Kyle added, “I am trying to learn all the time about cover crops. It is an art to manage cover crops, I have to continue to work at it. I would caution mandating cover crops, they might not be the best solution. But, educating yourself is the right answer. I know what does not work and, at times, that is more valuable than knowing what works.”

    Gary said, “It is a matter of faith with organics. You need more than one year to transition a conventional farm to an organic farm and produce a successful crop. It is three years before the organic crops are produced. To build the soil, one has to be willing to invest in the soil, there is no magic bullet.”

    “We share information,” said Kyle. “I manage for landowners where I farm. We have a full-time farm manager and I rent three parcels that are under the manager. I tell the tenants what we are doing and demand that they do the same on the land.”

    Regarding collection of financial data, Gary said that he is more operational and turns to experts for the numbers side of the farm.

    Kyle related that his group hired a CFO five years ago. “It is the best investment we made,” he said. “It is hard to quantify how it makes me money, but the position has been a good thing for my operations. We also use AgManager software, Quick Books, and Conservis (an analyzing tool).”

    Gary said that he finds his own markets and related, “I grow what the buyer and processors want. I intend to find the best and highest priced markets, and my goal is that the increase in revenue is more than enough to pay my fee.”

    Some thoughts that emerged during the question and answer segment:

    • Gary and Kyle said that investors and individuals comprise their client base.
    • Regarding organic farming, Gary said that he tries to mimic nature. He said he is against burning because it destroys microbes and causes the loss of too much carbon and energy, which is needed in the soil.
    • Organic does not necessarily increase the selling price of a farm, according to Gary. “When I have transitioned a farm to a certified organic farm, the much higher crop prices increases the value of the farm based on ROI; however, without a skilled operator, that is a moot point. The price of anything is based on how the buyer perceives the value,” he said.
    • Care must be taken with equipment that is used in organic farming so that there is no contamination from a conventional farm, Gary said.  It is required that all equipment be properly cleaned before being used in organic production and logs must be kept. Operators who farm both organically and conventionally sometimes will have separate equipment designated just for organics.

    Chicago Farmers member is named No-Till Legend

    National No-Tillage Conference recognizes the Top 25 Innovators.

    Chicago Farmers member and former president Jeff Martin, owner and operator of Martin Family Farms, received the title of No-Till Legend on January 12, 2017, at the 25th Anniversary National No-Tillage Conference in St. Louis, Missouri.  Martin was among the top 25 innovators in the history of no-till recognized by Frank Lessiter, No-Till Farmer editor.  Lessiter noted Martin’s passion for no-till. He related that Martin has maintained this process through the good times and the bad and has been a major contributor to no-till by reporting the results he was seeing on his fields. He not only promoted no-till, but helped to improve no-till operations over the years, Lessiter said.  Martin was unable to attend the awards dinner, but his son and business partner, Derek Martin, accepted the award on his behalf. 

    How does one achieve “No-Till Legend” status?  According to the No-Till Conference, a No-Till Legend is “a person who played a key role in the growth of no-till from 3.2 million acres in 1972 to nearly 100 million acres in 2017.” 

    Martin said that he first decided to no-till when he walked out to one of his corn fields during a dust storm and witnessed the knee high corn being cut down by the dust. Not only was precious soil being lost, but crops were being damaged.  Martin knew things had to change.  After researching viable options to improve soil quality and to prevent more soil loss, Martin finally decided on no-till. 

    Martin began to no-till in the early 1980s and still continues the practice today. He related, “No-till has many benefits that definitely outweigh the negatives. No-till promotes more earthworms, which are great facilitators. They incorporate organic matter and improve drainage and aeration; all while helping water infiltration and enhancing nutrient cycling.  No-till gives microbes a boost and allows for better cultivation of the soil. Farmers make fewer trips over their field, which saves in fuel and labor costs and sustains the soil against wind and/or rain erosion.”  

    Martin said he is happy with the results he has seen with no-till/strip-till over the last 30 years, noting the biggest benefit is better soil health, which is the key to better yields.  Martin also said he is pleased to have passed this practice on to his sons, Doug and Derek, and is eager to see what the next 30 years brings. 

    If you would like more information, please visit the farm website at martinfamilyfarms.org or email Jeff Martin at jjmartin2@frontier.com

    Governor appoints Chicago Farmers' member to the Illinois Bicentennial Commission

    Governor Rauner appointed Chicago Farmers' member, Todd Schwebel, to the Illinois Bicentennial Commission. Todd is a proud eighth-generation Illinoisan and civic leader. He is principal at The Schwebel Company, an award-winning Residential Design & Development firm based in Chicago. In addition, he manages his family's Central Illinois real estate and agricultural interests as President of Hoffer Holdings. He has chaired major events for The University of Chicago, the Art Institute of Chicago, the Rehabilitation Institute of Chicago, the Chicago Botanic Garden, and Facets Film Center. Currently, he is a Director of the Old Master's Society at the Art Institute and a member of the Chicago Botanic Garden Guild Board.

    Farming in uncertain times


    Kennedy Weighs impact of new administration on ag.

    The political uncertainty at the national level may result in significant changes to the role of government for many people.

    “For large family farmers, the reduction in inheritance tax may preserve and help protect intergenerational transfer of not just family farmers, but a way of life, as well,” said Christopher Kennedy, chairman of Joseph P. Kennedy Enterprises Inc.

    “On the other hand, a pullback in crop insurance by the federal government may leave all farmers more exposed to the volatility of nature,” Kennedy said during a presentation at the Chicago Farmers meeting.

    To read the full article by Martha Blum with AgriNews, click here

    2016 University of Illinois scholarship recipient

    Illini Ben Wiegmann received a Chicago Farmers’ scholarship. Ben is a junior at the University of Illinois studying crop sciences with a minor in ag business. He transferred to the university after studying at Kaskaskia Community College.

    Ben was raised in Breese, a small town and farming community in Southern Illinois. He lives there with his mom, dad, brother, and sister. Ben said he is seriously considering continuing his education after he receives his bachelor’s degree and pursuing a master’s degree in weed science because he plans on becoming an agronomist.

    Ben added, “If I decide to not continue my studies toward a master’s, I would like to be a salesman in a company that provides the opportunity to rise within its ranks. I eventually want to be able to return home and farm full-time with my family."

    Purdue student receives TCF scholarship

    Purdue University junior Garrett Corning is a recipient of a Chicago Farmers’ scholarship. Garrett is a junior majoring in agronomy.

    Garrett noted in a letter to The Chicago Farmers that his introduction to farming came as a young child when he would help his grandfather on his farm “every chance I got.” His grandfather’s farm in Northwest Indiana has been a part of his family since 1966 when his grandfather purchased 500 acres. The farm has since expanded through purchases and leasing to 5,000 acres in Northwest Indiana and Illinois.

    “I started out just riding on my grandfather’s armrest. Then I would do things like cut the grass, and now I help with all aspects of the farm,” Garrett wrote. He said that he drives semis hauling grain and he manages hay and straw production when he is home from school in the summer.

    Garrett said he plans to return to the farm when he graduates and help his grandfather full-time. He said that his degree in agronomy will help him increase the efficiency of production on the farm.

    “I also plan on opening my own agronomy business where I will mainly test farmers’ soils, make recommendations, and manage data in software to write custom variable rate prescriptions,” Garrett shared. “While I plan to help my grandfather on his farm, I will make this business my priority so that I can nurture and grow it. When it is stable, I will hire an employee or an intern to help with the busy times of the year so that I can focus on farming.”

    Garrett said that he is grateful for the scholarship. He said he works throughout the summer, is a teaching assistant during the school year, and picks up any side jobs he can to fill gaps in his schedule and to help pay for school.

    “With your generous donation I will be able to work a few less hours and spend more time focusing on finishing my degree,” Garrett wrote. “Again, I can’t tell you how much I appreciate your generosity.”

    Updating the farmland market


    Dr. Bruce J. Sherrick gave a highly informative presentation during Chicago Farmers’ November meeting regarding the headwinds, tailwinds and implications affecting the future of agriculture. He noted that his take on a variety of factors that affect farmland value is based strictly on his opinion. Dr. Sherrick added that he gleans valuable resource material in his role as a member of the Board of the Federal Agricultural Mortgage Association and as director of the TIAA Center for Farmland Research at the University of Illinois Urbana-Champaign campus. He is the Marjorie and Jerry Fruin Professor of Land Economics at the university.

    Among the points that Dr. Sherrick made during his presentation:

    • Farmland remains a good investment.
    • There is $3 trillion in the ag sector and 80 percent of that is in farmland; there is little debt.
    • Private equities have agrowing interest in the agriculture sector.
    • Dr. Sherrick noted that two farmland REITs that sell stock are Farmland Partners (FPI) and Gladstone Land Corp. (LAND). A Wall Street Journal article published November 24, 2015, related, “The National Council of Real Estate Investment Fiduciaries’ (NCREIF) Farmland Index had an average annual return of 12% over 20 years. That beat the NCREIF’s Commercial Property Index and the S&P 500’s return of about 9%. It also topped investment-grade corporate bonds, which had returns in the 7% range.”
    • From 1970 to 2015, farmland is the only investment that averaged a double digit rate of return. “Very few assets have that track record,” he observed.
    • 24% of the land is controlled by four percent of the farms in the United States.
    • While farmland owners are aging, this does not directly portend sales; there are multi-generational operators on many farms.
    • Farms become an asset to sell when families decide to turn the land into money to leave to heirs; however, anecdotal data tell us that the sale does not always happen because the owners can’t think of a better place to invest their money than in the land.
    • Farm sales often are triggered by the fact that generations become too far removed from the farm to have experienced time there or to have clear memories of being a part of the farm.
    • The website AcreValue.com provides free information regarding comps and appraisals, soil productivity ratings, crop mix, and parcel ownership information. “It is astounding what is available for free on line. This ability revolutionizes the cost of acquiring information,” said Dr. Sherrick. 

    RECORD NUMBER VISIT SUNNY SPAIN ON FARM AND CULTURAL STUDY TOUR

    By Jim Ward, TCF Travel Chairman

    A record breaking 25 travelers embarked on Iberian Airlines for a Study Tour of Central Spain in late September, enjoying perfect weather and a blend of farm visits and historic places. The week-long visit was capped by a “farewell dinner” at the Café de la Opera with performances by local singers during the meal.

    Our walking encyclopedic guide “Gari” took us to Toledo for our first stop. The city is known for its production of steel blades, so we toured a workshop noted for its swords and knives. The next day we moved to the country, and stopped to photograph a lineup of Don Quixote windmills. Next we went on to a Saffron Cooperative, learning about this rare crop in the group’s museum.

    By mid-morning we visited a Manchego cheese factory. The cheese has a unique flavor due to its sheep’s milk origin. For our lunch we stopped in Villa Castilla for a generous meal of local dishes. Next, back to Toledo for a walking tour of the historic city, noted for its cathedral and castles.

    Wednesday morning we were on the road again to visit the world famous Osborne winery, a 200 year old firm that is family owned, yet has an international reputation. They showed us the complete cycle of production and offered us a generous sample of their production.

    After a hearty lunch at a local restaurant, we saw one of Spain’s largest cattle ranches, visiting a Charolais beef breeder. The host’s prize bull had just returned from a Festival in Southern Spain with the runner up ribbon. The rancher’s daughter was on hand and introduced her three sons, who are learning the ropes on the ranch. The rancher also was a big game hunter and invited us to a tour of his trophy hall, a separate building housing his mounted big game trophy heads and show awards. When asked what animal was hardest to bring down, he answered, “A wild buffalo.”

    On the road again Thursday morning, the other side of the cattle business was our morning stop—a bull fighting training ranch owned by a retired (at age 35) matador and his brother. We were given a ride in a tram and driven to the pasture. One of his cowboys whistled for the herd and they came running for feed pellets as we watched from the safety of the tram. The “novice” bulls were not aggressive and some ate the pellets from the cowboy’s fingers.

    Back at the ranch complex we toured the practice bull ring and presented our host with the traditional Chicago Farmers’ cap as a souvenir of our visit.

    Nearby we stopped at a wheat, barley and rape seed farm, with most of the grain crops already harvested. The farmer was proud of his well-maintained equipment that enabled him to farm his acreage all by himself, and, he explained, “365 days a year.” He does have some extra hands during the peak seasons.

    We stayed overnight at the ancient town of Vallodolid and headed out on Friday to visit the Planasa Corporation, one of Europe’s biggest horticultural firms. Their role is to improve the quality and quantity of plant and vegetable production by supplying seeds for growers around the world. We visited their fields and vineyards and were impressed by their techniques.

    Our luncheon stop was just outside the walled village of Gomezerracin. A camera crew was shooting a TV commercial against the town’s wall and we had to pass their security to enter the restaurant! Inside we were served the unusual delicacy of roast suckling pig with flan custard for dessert.

    Next stop Segovia, noted for one of the surviving Roman Aqueducts, as well as for their ancient city wall and cathedrals. Then back to our starting place, Madrid. It is Spain’s largest city and famous for its many museums and the nation’s palace.

    On this final day of our study tour, our city guide gave us a compressed visit past the major attractions from our tour bus seats. We stopped at the Palace and saw the colorful changing of the guard ceremony. During the afternoon we toured on our own, many choosing to visit the world famous Prado Museum.

    The Café de la Opera restaurant was the place for our group picture, with a colorful mosaic wall as the background. During the four course meal we were serenaded by four local opera stars and selections from classic operas.

    On Sunday, we were off to the Madrid airport and the Iberian flight back to the United States, leaving mid-morning and arriving home mid-afternoon as we chased the sun west. It was another successful International Study Tour and a generous contribution to the Chicago Farmers Scholarship Fund.