Economic Subject Matter Meetings - PowerPoint PPT Presentation

Loading...

PPT – Economic Subject Matter Meetings PowerPoint presentation | free to download - id: 2e8e5-Yjg5O



Loading


The Adobe Flash plugin is needed to view this content

Get the plugin now

View by Category
About This Presentation
Title:

Economic Subject Matter Meetings

Description:

... blanks, spalted lumber, crotches. Building patterns. Hardwood ... Dark Fire-Cured Production vs Use. Agricultural Economics. Dark Air-Cured Production vs Use ... – PowerPoint PPT presentation

Number of Views:190
Avg rating:3.0/5.0
Slides: 179
Provided by: WSN15
Learn more at: http://www.uky.edu
Category:

less

Write a Comment
User Comments (0)
Transcript and Presenter's Notes

Title: Economic Subject Matter Meetings


1
Economic Subject Matter Meetings
October 2002
2
Departmental Update Fall 2002
  • Consolidation of KFBM
  • Search for KFBM Program Coordinator
  • Faculty Positions Frozen
  • Livestock Forages
  • Intertemporal Decision Making and Firm-Level
    Finance
  • Infanger back from 27 months in Armenia
  • Trimble left October 2 for Australian sabbatical

3
Trimbles One Year Sabbatical
  • The majority of his time will be spent studying
    the Australias beef and meat goat industries.
  • Involved in their Sustainable Grazing Systems
    project.
  • Looking at how the project has made producers
    more profitable.
  • Value to Kentucky producers.

4
Land Value Survey
  • Land Values and Rental Rates
  • Survey of Participants in Economic Subject Matter
    Meetings
  • October 2002
  • Would you please answer the following questions
    for your county? Results of this survey will be
  • used to supplement information collected and
    reported by the USDA, NASS. Thank you!
  • 1. What is the current average price of
    Agricultural Land and Buildings per acre?
    ______/Acre
  • 2. How do you expect this price to change during
    the next year? or - ________
  • //////////////////////////////////////////////////
    /// (Please circle increase or decrease)
  • 12. What is the most common crop share rental
    arrangement
  • County Reporting __________________________

5
Macro Economic Review of 2002
  • Recession Ends-Led by Consumer Spending
  • Inflation Moderate
  • 6 Trillion Wealth lost in Stock market
  • Business Confidence Weak
  • Some Interest Rates Fall to 40 Year Lows
  • Trade Deficit Large
  • 9/11/01 and War on Terrorism

6
Real Gross Domestic Product1970-2002
Source Bureau Economic Analysis
7
Consumer Price Index1985-2002
Percent
Source Bureau Labor Statistics
8
Long Term vs Short TermInterest RatesU.S.
1977-2002
Percent
30 Year Bond
3 Month Treasury
Source Federal Reserve
9
U.S. Unemployment RateAnnual, 1970-2002
Percent
Year
Source Bureau of Labor Statistics
10
U.S. Goods and Services Trade Balance, 1975-2002
Billions
Source Bureau Economic Analysis
11
U.S. Budget Deficit/Surplus1970-2002 FY
Billions
Source Congressional Budget Office
12
U.S. Macro Economic Outlook 2002Compared to 2003
  • GDP 3.5
  • Inflation 1.7
  • Unemployment 5.8
  • Interest Rates Down
  • GDP 2.75
  • Inflation 2.2
  • Unemployment 5.6
  • Interest Rates Upside Risk

13
U.S. Agriculture Gross Cash Income
14
U.S. Net Farm Income
15
Kentucky Revenue and Expenses
16
Kentucky Net Farm Income
17
U.S. Direct Government Payments
18
Kentucky Direct Government Payments
19
Kentuckys Cash Receipts
20
U.S. Farm Sector Production Expenses
21
U.S. Farm Debt 1970 to 2002
22
Debt and Equity for Kentucky
23
Agricultural Trade Situation and Forecast
24
Snapshot Forest Industry
  • 12.4 to 12.7 Million acres in Timber
  • 90 privately owned New inventory report will
    come out in 3-4 months
  • 117 Million to woodland owners

25
Snapshot KY Master Loggers
  • No. of KML graduates 5,000
  • Number of Logging Co. 1,481
  • KML Loggers/Firm 2.52
  • Website www.masterlogger.org/

26
Loggers in Insurance Squeeze
  • 4 Types of Insurance surveyed
  • Workers Comp, Equipment, Trucking and General
    Liability
  • Biggest change Equipment insurance cost jumped
    20-50.
  • 50 reducing deductibles or coverage
  • Some reported greatest increase was for Health
    Coverage.

27
SnapshotForest Products Industry
  • 30,000 employees
  • 1 out of 9 manufacturing jobs
  • Annual payroll of 602 Million
  • Value of Forest Products made in KY 4.5 - 5.3
    Billion

28
Snapshot Forest Industry
  • 530 Primary Industries (ex., Sawmills)
  • 540 Secondary Industries (ex., Pallet
    Cabinet makers)
  • Including Logging cos, 2550 firms

29
Forest Products Outlook
  • Stumpage Prices
  • Primary Industries
  • Secondary Industries
  • Non-Timber Forest Products

30
Stumpage Prices
  • Most Hardwood prices are about the same, no
    sustained changes expected.
  • Prices are down slightly from last year
  • -2 for HW Sawtimber ( 18.50/ton)
  • -6 for HW Pulpwood ( 5.00/ton)

31
(No Transcript)
32
Stumpage Trends
  • Recent species trends in sawtimber Cherry and
    Walnut up Hard Maple Ash down
  • Cabinet design market is heading back towards
    darker woods
  • 3-4 year cycle

33
Stumpage Trends
  • Hickory is gradually moving up due to Red Oak
    cost (lots of hickory in KY).
  • High silica, dulls knives but potential
    substitute for flooring (ex. Teak in Cuba)
  • Yellow-poplar still strong for moulding
    millwork markets.

34
Stumpage Trends
  • Soft maple has moved up 1/3 the past 2 years
    (Hard maple substitute, price-sensitive).

35
Stumpage Trends
  • Not a lot of information about Softwoods (ex.,
    Pines) in Kentucky
  • state (not counting Eastern red cedar).
  • Trends probably similar to more southerly states,
    pulpwood going lower.
  • Wall of Wood as plantations mature, thinnings
    problem

36
(No Transcript)
37
Stumpage Trends
  • Kentucky harvests 15-25 Million board feet (or
    more) of Eastern red cedar each year.
  • Production goes into shavings, boards and 3.5 x
    3.5 posts that compete with treated southern
    pine for mailbox posts. (50 or more of
    production!)

38
Hardwood Sawmills
  • Losing small mid-size mills, but increasing the
    volume of wood sawn
  • Factors
  • Consolidation of mills
  • Optimization of mills through technology
  • More resaws to convert cants more efficiently

39
Hardwood Sawmills
  • 1200 Portable sawmills in Kentucky
  • Ave. mill longevity is 5 to 6 years
  • 30-40 of mills sold leave the state
  • 80 of owners get out, 20 buy a bigger mill
  • Hard to make a living sawing only 1,000 board
    feet/day!

40
Hardwood Sawmills
  • Portable sawmills are good for specific markets
    or high value-added opportunities such as
  • Yellow-poplar siding
  • Restoration siding for old buildings
  • Gunstock blanks, spalted lumber, crotches
  • Building patterns

41
Hardwood Sawmills
  • Likely opportunity for sawyers in Quarter-sawn
    lumber market, but most feel its too much
    trouble

A B
Quartersawn (A) and Plainsawn (B) boards cut from
a log
42
Other Primary HW Products
  • Boards Staves
  • Consistent, good outlook
  • Distillery business getting bigger
  • CA is considering KY barrels
  • Poles
  • Pine peeler poles (SE KY) have a good market, but
    lost much pine to beetles

43
Other Primary HW Products
  • RR Crossties
  • Hot Market!
  • Big demand.
  • Prices up in last 6 months, but prices tend to
    run hot-and-cold, cant predict

44
Other Primary HW Products
  • Pallet Cants
  • 4.5 Billion board feet of HW lumber was used in
    pallets in 1995
  • (38 of total U.S. HW lumber production)
  • 48 of all KY HW lumber goes into pallets!
  • Very competitive market!

45
Other Primary HW Products
  • Pallet Cants
  • Demand is up, but the market price has stayed
    about the same!
  • KY pallet lumber is extremely cheap.
  • 10 cheaper than neighboring states!
  • Ex., 245/MBF in KY vs. 250/MBF in TN, 275/MBF
    in W. VA

46
Dry Kilns
  • Good value-added opportunity
  • Companies have continued to add dry kiln
    capacity, will likely continue to add more
    capacity.

47
Secondary Hardwood Products
  • Millwork (Residential Commercial)
  • Flooring
  • Cabinets
  • Furniture
  • Pallets

48
Millwork
  • Increasing production in last 5 years
  • More/larger moulders have been added
  • Yellow poplar supply is exceptional, best wood
    choice
  • Outlook V. good, remodeling strong

49
Flooring
  • Growing market, will continue to grow
  • Preferred over carpeting
  • Species used (in order of demand)
  • Red oak
  • White oak
  • Hickory
  • Hard maple

50
Cabinets
  • Remodeling market, wont slow down
  • Very competitive, lots of small firms and a few
    big ones (15-20 employees)
  • Most do well with custom cabinets
  • Cheaper lines coming from overseas using U.S. wood

51
Cabinets
  • Entertainment Center market is predicted to
    increase.
  • Custom Built-in market is also predicted to
    increase.
  • Upgrades of older homes
  • Maturing families mean different demands
  • Transition to Flat-screen TVs

52
Hardwood Furniture
  • Struggling!
  • Chinese have taken a bite out of the business
    with cheaper labor.
  • Higher-end companies have moved out of NC, TN, VA
    (with U.S. engineers!) to China.
  • Producing good quality furniture overseas

53
Hardwood Furniture
  • Still good opportunities for furniture that is
    expensive to ship.
  • Ex., Entertainment Centers, BR furniture
  • Designers can standardize components like panel
    size, simplify production, lower costs
  • BUT not much opportunity for most KY makers to
    take real advantage of this, too small

54
Pallets
  • KY is a real force in the pallet industry
  • Increasing number of pallet mills repair
    facilities (could be either good or bad ?)
  • SE KY pallets are a little cheaper.
  • Industry shakeout expected but hasnt occurred!

55
Pallets
  • Trend towards more leased pallets,
    standardization of specifications in the past 5
    years
  • Large demand for custom products, but industry
    doesnt market itself that way
  • Commodity Low Profits!
  • Industry needs better marketing.

56
Pallets
  • Excess capacity in KY, room to grow
  • Kentucky pallet plants are running at only 80
    capacity.
  • 75 of other states report that pallet mills run
    at 85-90 capacity.
  • KY competitive advantage is due to low wood cost
    (esp. for customers in Chicago, etc.)

57
Non-Timber Forest Products
  • Ginseng, Goldenseal, Black/Blue Cohosh
  • Mushrooms
  • Native fruits (persimmon, pawpaw)
  • Nuts (black walnut, butternut, hazelnut)
  • Christmas trees
  • Fence posts
  • Fuelwood

58
Ginseng Medicinals
  • Ginseng
  • 5 to 10 year growth needed
  • 300 or better per pound of dry root
  • Vandalism is biggest problem.
  • Goldenseal, Cohoshes
  • Lower value, but grow in shorter time
  • Goldenseal 20-50/pound of dry root
  • Less than that for Cohoshes

59
Mushrooms
  • Shiitake mushrooms are cultivated
  • 3 to 8 diameter HW stems
  • 5/pound for fresh shiitake wholesale
  • Morels
  • Mostly harvested, difficult to manage
  • Value is 30/pound fresh

60
Christmas Trees
  • Marketable crop in 5 to 7 years
  • Mostly Scots pine or white pine is grown in
    Kentucky.
  • Close to 14 ROI can be expected.

61
Acknowledgements
  • Dr. Jeff Stringer, UK Dept. of Forestry
  • Dr. Deborah Hill, UK Dept. of Forestry
  • John Cotten, KY Dept. of Agriculture
  • Dr. Billy Watson, Georgia-Pacific
  • Larry Lowe, KY Division of Forestry
  • Gene Parker, Hardwood Market Report
  • Global Wood Trade Network
  • Timber Mart South
  • Jeff McBee, Pallet Profile Weekly
  • Pallet Enterprise
  • Forest Resources Association

62
Kentuckys Tobacco Situation and Outlook
Will Snell, UK Ag Economist
63
World Burley Production
World Burley Production Declined 17 from
1997-2001, But Increased 6 in 2002 and is
Projected to Increase 5 in 2003
64
U.S. Burley Export Price vs Average U.S. Burley
Import Prices
65
U.S. Market Share of World Burley Production and
Exports
Production
Exports
66
U.S. Cigarette Production, Consumption and
Exports
67
U.S. Burley Import Market Share
68
U.S. Burley Demand
Current Demand For U.S. Burley May Be More in
the Neighborhood of 350-400 Million Pounds
69
2002 Market Outlook
  • 2002 Flue Market
  • Prices averaging 3.5 cents/lb less than 2001
  • Around 40 of auction sales going under loan
  • Over 80 Contracted
  • 7 of total marketings going under loan
  • 2002 Burley Market
  • Quality/Quantity concerns
  • Similar price support/contract price
  • 73 contracted so far
  • Limited pool intake, slightly lower prices ???
  • What about undermarketings/carryover quota???

70
2003 Quota Outlook
  • Sale of 50 million lbs of pool stocks will help
    formula
  • Currently around 70 mil lbs under loan
  • Ideal level is 50 mil lbs
  • Leaf exports up around 20 so far in 2002, but 3
    year average will not change much
  • What about purchase intentions?

71
U.S. Burley Manufacturer Purchase Intentions
???
72
U.S. Burley Basic and Effective Quota
73
Average Kentucky Burley Quota Lease Prices
74

Buyout Issues
Buyout Environment
  • 50 Drop In Quotas
  • Record Lease Prices
  • Pessimistic Outlook
  • Aging Farm Population
  • Structure
  • Price/lb
  • Base years
  • Program
  • Modified or Eliminated?
  • Funding
  • Excise Taxes
  • User Fee
  • FDA Regulation

Support for A Buyout
75
McIntyre Quota Buyout Bill
  • Quota Owner (8/lb on 1998 Quota)
  • Grower (4/lb on 2001 Marketings)
  • Payments over 5 Years/User Fee
  • Eliminate Program
  • FDA Regulation

76
Fletcher Quota Buyout Bill
  • Quota Owners (8/lb on 1998 Quota)
  • Growers (4/lb on 1998 Quota)
  • Individual Quota Owners Split Based on Share
    of 2002 Basic Quota
  • Individual Growers Split Based on Share of
    Average 2001-2002 Effective Quota and Marketings
  • 2/lb Payment for Those Exiting
  • Payments Over 5 Years/User Fee
  • Modified Program
  • Licenses
  • Safety net based on cost of production
  • No FDA Regulation

77
Helms Quota Buyout Bill
  • Quota Owners (8/lb on 1998 Quota)
  • Growers (4/lb on 2001 Effective Quota)
  • Lump Sum or Payments Over 5 Years Using 1999-2001
    Excise Tax Funds
  • New Program
  • Price supports called Investment Protection Price
    (IPP)
  • Base production levels called Historical Quota
    Production (HQP)
  • Counter Cyclical Payments when prices fall below
    IPP
  • Direct Payments (35 cent/lb on HQP)s financed by
    assessments/user fees
  • Loss of Farm Program Benefits/Fines for Excess
    Production (Burley only) and Production in
    Non-Traditional Counties
  • Advisory Board Establishes Annual IPP and HQP lbs
    Eligible for IPP
  • No FDA Regulation

78
Political Challenges
  • Unity among tobacco farmers, companies and health
    groups
  • Congressional challenges
  • Maintaining the 8/lb value of quota and
    justifying a grower payment
  • Anti-tobacco members who recall T-LAP funding and
    forgiveness on 1999 pool stocks
  • Spending on another farm program following the
    controversial farm bill
  • Tobacco farm benefits vs the benefits other
    farmers received from the farm bill
  • Other more pressing issues such as homeland
    security, war on terrorism, and budget deficit

79
Opportunities for a Buyout
  • Farm groups committed to a consensus
  • Peanut quota buyout
  • Support from health groups
  • Support from PM
  • Non-taxpayer funds used to finance most bills

80
Kentucky Tobacco Cash Receipts/Mailbox
81
U.S. Snuff and Chewing Tobacco Consumption
82
Dark Fire-Cured Production vs Use
83
Dark Air-Cured Production vs Use
84
Gregg Ibendahl
  • Farm Bill Considerations

85
Decisions
No
Participate?
Yes
No
Update Acres?
Update Yield?
Yes
No
Yes
86
Decisions
No
Participate?
Yes
2002 PFC Acres Oilseeds
98-01 Base Acres
2002 PFC Yield
2002 PFC Yield
70 Update Base Yield for CC payment only
93.5 Update Base Yield for CC payment only
Alternative A FSA Option 1, 2, 3, 5 These options
vary depending upon how soybeans are added
Alternative B FSA Option 4
Alternative D FSA Option 4
Alternative C FSA Option 4
87
Payments Under the Farm BillMarket Price Loan
Rate
Target Price
Direct
Trigger Price
CC pmt
CC pmt
Market
Market
Effective Price
Direct
88
Payments Under the Farm BillMarket Price Rate
Target Price
Direct
Trigger Price
Maximum CC pmt
Maximum CC pmt
Loan Rate
Loan Rate
Effective Price
Direct
89
Likelihood of Payment
  • Direct farmers will receive this every year
  • Counter-cyclical received if the market price
    direct is below the target price
  • LDP received if the county price is below the
    loan rate
  • Note There are more opportunities for receiving
    a LDP when you are also receiving a
    counter-cyclical payment than when you are not
    receiving a counter-cyclical payment

90
Payment Schedule Under 2002 Farm Bill
91
What Does the New Farm Bill Mean?
  • Cash flow issues
  • Size of payments
  • Effect on land values and cash rents
  • Risk effects
  • Does signup affect future planting decisions?

92
What to do next?
  • Signup runs until June of 2003
  • Farm Planning Tool
  • Analysis of farm plans with the new farm bill
  • Computer decision aids workshop in December

93
Overall Meat Situation
  • Total meat (per capita) near record 220 lbs.
  • Beef 2, Pork 2, Poultry 4
  • Trade Beef and Pork little change on a net
    basis
  • but, Chicken - exports are down 12
  • Demand seems to holding, in spite of weak
    economy
  • Retail prices all down - Beef 1, Pork 3,
    Chicken 6
  • Expenditures little change, meat
  • Marketing Margins at historically high levels
  • (60 for beef and 80
    for pork)

94
Meat Consumption (lbs. per person)
95
Kentucky Hog Prices (live weight basis)
/cwt
60.00
50.00
2001
40.00
30.00
1998
2002
20.00
10.00
0.00
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
96
Hog Slaughter the key to fall prices
  • Up 3 to 4 from 2002, but down slightly from
    1998s high per capita levels
  • Slaughter plant capacity near 1998s level
  • Hog Inventory (Sept. 1, 2002)
  • Breeding 2 Market 1
  • Farrowings, Fall -2 Winter -1
  • Prices low through early 03, recovery in summer

97
Hog Slaughter Capacity
Winter 1998 430,000/day Sept 2002 420,000/day
Head per day
98
Kentucky Hog Prices(live weight basis)
99
Futures Prices Lean Hogs contract
40 carcass 30 live wt.
100
Lean Hogs Futures Prices
101
Hog InventoryKentucky and U.S.
102
Key Issues for the Swine Enterprise
  • Short Term
  • Feed environmental costs,
  • Price/income variability
  • market access
  • Source verification
  • Humane Standards
  • Environmental Stewardship
  • Industry structure
  • Tyson selling 30,000 sows
  • 35 raised under contract (as of 9/02)
  • S. American production/ international competition

103
BeefDemand Index and Per Capita Consumption
104
Cattle on Feed
On Feed -7 Marketings n.c. Placements
n.c.
105
F. I. Cattle SlaughterDaily Average, By Month
  • 02 Production 3
  • 03 Production -2 to 5

106
Slaughter Cattle Futures Dec. 02
Contract Closing Price Oct 02 67.00 Dec
02 69.65 Feb 03 71.57 Apr 03 71.82 Jun
03 67.40 Aug 03 67.70 Oct 03 68.80
107
July 1 Feeder Cattle SuppliesResidual, Outside
Feedlots, U.S.
Supply increases are very unlikely for 2-4 years
108
Feeder Cattle Demand Factors
  • Corn Price
  • 71 impact on yearling prices
  • .50 to .75/bu. Increase in corn prices
  • Expected slaughter cattle prices
  • Futures up for next summer
  • Expected declines in beef production

109
Kentucky Feeder Cattle500-600 lbs.
  • Fall prices - little change (like 2000)
  • 2003 prices up 2 to 5/cwt

110
Feeder Cattle Futures Prices
Contract Closing Price Oct 02 79.50 Nov
02 79.20 Jan 03 78.05 Mar 03 76.02 Apr
03 75.90 May 03 76.05 Aug 03 77.90 Sep
03 77.70
As of 10/2/02
111
Feeder Cattle Futures Nov. 02
112
Backgrounding Update
  • Expect a buy/sell margin of - 9 to - 12/cwt.
  • (about 5/cwt. better than normal)
  • Feed cost/lb. of gain .22 - .25
  • With 85/cwt. for 400 lb. calf, breakeven prices
    are 65 to 70/cwt. for 700 lb. Steer
  • Returns over var. costs of 60 to 70/hd.

113
Retained Ownership Outlook
  • Slaughter cattle prices expected to rise
  • Futures trading April 71, June 67
  • Feed costs stable through early summer
  • Seasonal decline in calf prices
  • Breakeven in 68 - 72
  • Bottom Line little expected gain

114
Long Run Outlook
  • Expansion has stalled, cycle is on hold
  • ? 3 to 5 years without supply pressure on prices
  • Consider the constant heifer value guideline
  • Risk factors are
  • Economy Trade
  • Health issues Feed costs

115
Calf Prices and Cattle Inventory
116
Beef Cow SlaughterFederally Inspected, Monthly
117
Five State Beef Initiative - Update
  • Indiana, Ohio, Michigan, Illinois and Kentucky
  • Through September, 04
  • E. Cornbelt beef supply chain initiative
  • Req. include source verification, certification

118
Produce Benefits of the FSBI
  • Receive 50 Cost Sharing on EIDs and carcass
    data collection through 2003
  • Receive detailed performance and carcass data
    that can be benchmarked with other producers
  • Learn where your cattle fit in the marketplace
  • Be part of a progressive, multi-state, source
    verified beef cattle alliance

119
Requirements of the FSBI
  • Source verify - Use electronic ID tags (EIDS)
  • Health - manage calves by CPH-45 guidelines
  • Market calves trackable lots
  • (ie load lots, CHP sales, etc.)
  • Basic cow/calf production records (SPA/CHAPS)
  • FSBI producer certification training
  • Genetics, environmental and humane standards

120
Update on Participation
  • 2001
  • -2300 calves from 142 different producers
  • -Carcass data returned on over 1700
  • 2002
  • -5400 calves from 195 different producers
  • -Carcass data is still being returned

121
What have we learned thus far?
  • Kentucky feeders calves perform better than
    expected in the feedlot and on the rail
  • Uniformity still needs to be improved
  • Carcass data is not only useful to individual
    producers, it can be a marketing tool for county
    / multi-county groups
  • Cooperation can exist within the current beef
    marketing system

122
Integrated Resource Management
123
Beef IRM Programs
  • Beef Quality Assurance
  • First step of producer education
  • Over 5,600 Producers Certified
  • If you need a list of BQA Certifications in your
    county, contact KCA at (859) 278-0899

124
Beef IRM Programs
  • Master Cattleman
  • Second step of producer education
  • Divided into 10 four hour sessions and an
    optional 11th hands-on session
  • In 2002, 12 regions participated, graduating 420
    Master Cattleman
  • Regions are multi-county
  • If interested, Contact Alison Smith at (859)
    278-0899.

125
Beef IRM Programs
  • Cow College
  • Top level of education offered to producers
  • Five sessions
  • Over half of Cow College is hands-on
  • Cost 250
  • Class size limited to 30 participants
  • Registrations are already being accepted for 2003

126
CPH 45
  • Kentuckys Premium Feeder Calf
  • Management Program
  • 40 Sales Scheduled
  • Expecting 50,000 Calves in the Program
  • For a list of sale dates, locations, and vaccine
    information visit
  • http//www.uky.edu/Projects/BeefIRM/

127
CPH 45 Price Advantage
  • 2001-2002
  • Range of Premium -5.00 to 17.00/cwt
  • Average Premium 6.00 to 8.00/cwt

128
CPH 45 The Message to Producers
  • Why? -5.00/cwt
  • All 4 Groups Were
  • 4 weights
  • Light Condition
  • Lower Quality
  • Dont Bring These to the CPH-45 Sale

129
Beef IRM Record Programs
  • CHAPS
  • Production record-keeping system
  • Over 300 producers on the program
  • Cost to purchase the software 25.00
  • Custom processing available 0.50/head/year
  • Records processed at the county office are free
  • 2002 Benchmark data will be available in January

130
Beef IRM Record Programs
  • SPA
  • Financial record keeping program
  • Measures Cow/Calf Enterprise, Harvested Forages
    Enterprise, and Pasture Enterprise
  • Free Service
  • Producers complete a workbook and return it to
    IRM for processing
  • 2001 5-States Regional Summary is currently
    available

131
Changes in U.S. per capita consumption for
selected fruits and vegetables, 1991-2002
  • WINNERS ()
  • Leafy Let. (132)
  • Peppers (49)
  • Cucumbers (36)
  • Strawberries (25)
  • Carrots (23)
  • Cantaloupe (22)
  • Tomatoes (16)
  • Snap beans (15)
  • LOSERS (-)
  • Cauliflower (20)
  • Head Let. (15)
  • Apples (9)
  • Celery (8)
  • Sw Potatoes. (6)
  • Fresh FVs PCC up 10 1990-02.

132
U.S. Sweet Corn Shipping Point Prices1997-2001
and 2002
Source USDA/ERS
133
Kentucky Sweet Corn Situation
  • Marketing alliances for tray pack continuing
  • Expanding to include foodservice products
  • Growers struggled in 2001 but did better with
    2002 prices

134
U.S. Tomato f.o.b Shipping Point Prices1997-2001
and 2002
Source USDA/ERS
135
U.S. vs. Canadian Tomato Importsby Kevin
Nierman, The Packer, 2002
136
Tomato Imports Continue to Grow
137
U.S. Cantaloupe Shipping Point Prices1997-2001
and 2002
Source USDA/ERS
138
U.S. Cabbage Average Farm Price1997-2001
Source USDA/ERS
139
U.S. Bell Pepper Average Farm Price1997-2001
Source USDA/ERS
140
U.S. Fresh Market Blueberry Production
  • Southern region production increases by 9 in
    2002 BUT
  • Southern market share decreases from 23 in 2001
    due to increases in Western production
  • Source North American Blueberry Council

141
2002 Blueberry ProductionKentucky and Other
States
  • Kentucky production (40 acres) equaled
    approximately 50,000 pounds in 2002, up from
    37,000 in 1997. Production is expected to
    increase to 350,000 pounds (40 more acres) by
    2004. (UKy, USDA)

142
Atlanta Terminal Market Blackberry Prices
30.00
25.00
20.00
1999-2001
15.00
Per Dozen 6 oz or 1/2 pt. containers
2002
10.00
5.00
0.00
6-Jul
3-Aug
1-Jun
8-Jun
13-Jul
20-Jul
27-Jul
10-Aug
17-Aug
24-Aug
15-Jun
22-Jun
29-Jun
Source USDA/ERS
143
U.S. Grape Vines, 1987-2002
  • Sources 1987-97 US Ag Census
  • 2002 USDA/ERS, wineinstitute.org, CA Dept. of
    Food and Agriculture.
  • 2002 estimate includes 1,179,545 acres.

144
Approximate Grape Prices Paid By Regional
Wineries, 1997-2000/ton
Estimated KY Breakeven Price Per Ton
650-1050 Source Business Planning and
Economics of Midwestern Grape Production Bruce
Bordelon, Purdue University, http//viticulture.ho
rt.iastate.edu/wsfeb01/business.html
145
Pumpkin Situation
  • Early indication is that Fall 2002 prices are
    slightly higher than usual.
  • Good yields

146
St. Louis Terminal Market PricesIllinois Large
Howden Pumpkins
  • Production problems (disease) have resulted in
    lower yields and significantly higher pumpkin
    prices early in the 2002 season.

147
Kentucky Agricultural Diversification Funds by
County
  • 0-100,000
  • 100,000-199.999
  • 200,000 (Yellow counties)

148
Value of KY Wholesale Floriculture Sales By
Grower Size, 1993-2001
Source USDA/ERS Floriculture and Nursery Crops
Situation and Outlook Yearbook, May 2002
149
U.S. Corn Acres
150
U.S. Corn Yield
151
U.S. Corn Use
152
Corn Balance Sheet
153
U.S. Corn Stocks Prices
154
U.S. Soybean Acres and Production
155
Soybean Use
156
Brazil and Argentina Soybean Production
157
Soybean Balance Sheet
158
Soybean Stocks and Prices
159
U.S. Wheat Acres
160
Wheat Use
161
Wheat Balance Sheet
162
Marketing Decisions
  • Limited Carry in the Market
  • U.S. Global Stocks of Grains Soybeans are Low
  • South America is Assumed to Produce Another
    Record Soybean Crop
  • China Import/Exports
  • Prices are High Compared to Recent Years
  • Government Loan Rates

163
Strategies to Consider
  • Buy Puts Roll to Higher Strike Prices, if
    when, market rallies. Need to make some cash
    sales quickly when market falters.
  • Synthetic Put short the board buy calls.
    Still have to price the grain need some
    targets.
  • Price grain buy Calls need targets at which
    to offset calls.
  • LDPs not likely on corn possible on soybeans
  • Consider purchase of out-of-the-money calls on
    soybeans to protect possible LDP /or CCP.

164
Marketing Decisions
  • Limited Carry in the Market
  • U.S. Global Stocks of Grains Soybeans are Low
  • South America is Assumed to Produce Another
    Record Soybean Crop
  • China Import/Exports
  • Prices are High Compared to Recent Years
  • Government Loan Rates

165
Strategies to Consider
  • Buy Puts Roll to Higher Strike Prices, if
    when, market rallies. Need to make some cash
    sales quickly when market falters.
  • Synthetic Put short the board buy calls.
    Still have to price the grain need some
    targets.
  • Price grain buy Calls need targets at which
    to offset calls.
  • LDPs not likely on corn possible on soybeans
  • Consider purchase of out-of-the-money calls on
    soybeans to protect possible LDP /or CCP.

166
Farmer Cooperatives National Trends
167
  • Distribution of Farmer Co-ops by Type 1999

Other marketing include dry beans and peas, wool,
mohair, nuts, rice, sugar, fishery and other
miscellaneous marketing cooperatives.
168
Farmer Cooperatives National Trends
169
  • Reasons for Declining Memberships
  • Cooperative memberships dropped from 4.1 million
    in 1990 to 3.1 million in 1999. Reasons for this
    decline include
  • Decreasing number of farms and farmers in the
    U.S.
  • Most farmers belong to more than one co-op and
    each membership is counted. Retirements lead to
    double decline counts.
  • Problems in data collection.
  • Other Important National Trends (1998-99)
  • Total gross business volume handled by co-ops
    dropped 4.7 from 121 billion to 115.3 billion.
  • Total net income of 1.3 billion was down 23.8
    from 1.7 billion in 1998.
  • The number of part-time and seasonal employees
    employed by co-ops increased.

170
Cooperative Development in Kentucky
  • KCCDMission
  • KCCD Personnel in Place
  • Executive Director
  • Cooperative Development Specialist
  • Office Manager
  • KCCD Center Structure
  • Board of Directors
  • Executive Director
  • Development Specialists
  • Office Manager

171
  • KCCD Funding
  • USDA
  • Kentucky Tobacco Settlement Board
  • KDA
  • UK College of Agriculture
  • KCCD Development Activities
  • Feasibility Studies
  • Business Plans
  • Management Audits
  • Director Training
  • Managed Training
  • Drafting Legal Documents

172
The Management Audit
  • Objective
  • Identify problems and opportunities for improving
    the business
  • Make recommendations for solving existing
    problems
  • Recommend procedures for exploiting existing and
    potential opportunities that will result in more
    efficient and profitable operations.
  • Identify opportunities to provide educational and
    technical assistance to the Board and Management.

173
Audit Procedure
  • Select an Agribusiness that will benefit from
    Audit.
  • Collect relevant operating and marketing data and
    industry standards prior to the Audit.
  • Review business plans, policies, financial
    statements, and relevant firm documents.
  • Observe and analyze all physical operations and
    conduct a time and motion study.
  • Interview board, manager(s), employees and
    selected farmers to ascertain and evaluate goals,
    plans, organization structure, guidance and
    direction in the firm, coordination of business
    and operations activities, and communications
    within the firm.
  • Analyze financial data and the control system in
    the firm.

174
Audit Procedure (continued)
  • Process data from the time management study
    information from the interviews, financial
    statements, and relevant documents.
  • Compare firm performance with industry standards.
  • Identify problems and opportunities and make
    specific recommendations for improving or solving
    each entity.
  • Make preliminary oral report to the board
    immediately after the audit.
  • Write final report and submit to board and
    manager.

175
  • The Alliance of Produce Growers-Shippers
  • Overall Purpose
  • To support a unified network of produce shipping
    point facilities that will reduce the cost of
    imports while maximizing profits from products
    marketed.
  • CORE Activities
  • Purchase supplied together for cost savings
  • Conduct joint promotions of alliance members
    produce.
  • Develop fresh and processed markets for alliance
    members to cooperatively supply.
  • Transition the Alliance into an independent,
    self-funded industry marketing and promotion
    organization.

176
  • Relationship With KCCD
  • The Alliance Director will work closely with KDA
    Produce Marketing Specialist to design and carry
    out
  • Special Promotions
  • Trade Show Displays
  • Point of Purchase Materials, and
  • Create an Alliance website featuring member
    produce and facilities
  • The Alliance Director will report to the
    Executive Director of
  • KCCD who in turn shall report to KDA on progress
    made.

177
  • Future Challenges for cooperatives served by
    KCCD
  • Equity Investments
  • Financing
  • Product Quality
  • Member Loyalty
  • Quality Management
  • Strong Boards of Directors
  • Hiring and Retaining Good Managers
  • Legal Issues

178
The end!
  • This presentation was presented with the
    Agricultural Situation and Outlook, Fall 2002,
    publication
  • number ESM-28, published by the Department of
    Agricultural Economics at the University of
    Kentucky
  • with an additional contribution from Kentucky
    State University in October 2002. The entire
    publication
  • can be accessed on the WWW at http//www.uky.edu/A
    g/AgEcon/publications/esm_28.pdf.
  •  
  • This article presents information on the economic
    situation and outlook for Kentucky agriculture
    and
  • is intended to assist farmers, agribusiness
    professionals, Extension filed staff, and others
    with interest
  • in agriculture and agribusiness. Information
    presented here is based on the most recent
    information and
  • research available. However, the rapidly
    changing economic and policy conditions for
    agriculture limit
  • the usefulness and life span of conclusions and
    recommendations cited here. Decision makers
    should
  • keep these facts in mind. Feel free to use the
    information included in this publication for
    other uses,
  • but please provide professional citation about
    the source. This paper is published without
    formal review
  • and the views expressed are those of the authors
    and do not necessarily reflect the views of the
    University
  • of Kentucky, the Agricultural Experiment Station,
    or the Cooperative Extension Service.
  •  
  • If you need additional information or if you
    would like to provide comments or suggestions
    about this
  • slideshow, please contact Gregg Ibendahl at
    gibendah_at_uky.edu or Larry Jones at
    ljones_at_uky.edu.

University of Kentucky, Department of
Agricultural Economics 400 Charles E. Barnhart
Bldg., Lexington, KY 40546-0276  Phone
859-257-5762, Fax 859-323-1913 URL
http//www.uky.edu/Ag/AgEcon/
About PowerShow.com