July 7, 2000

EPA’s proposed rules for diesel may hurt agriculture
The Environmental Protection Agency (EPA) has a new proposal to reduce the current sulfur levels in diesel fuel from 500 parts per million (ppm) to 50 ppm, or even as low as 15 ppm.

The EPA draft proposal could:

• Increase supply disruptions, particularly in rural America, by effectively reducing refinery capacity.

• Force many refiners to produce more costly ultra-low diesel fuel for farm and other off-highway uses due to distribution limitations, particularly at the farm and ranch level.

• Jeopardize the economic viability of farmer-owned refineries, leading to further concentration in the petroleum industry serving rural America.

Predictions show costs for farmers and other rural consumers could range from 5 cents more per gallon if sulfur levels are set at 50 ppm, or 10 cents more per gallon if levels are set at 15 ppm.

In order to mitigate these potential problems, the American Farm Bureau Federation has recommended that EPA:

• Set an on-road diesel fuel sulfur cap of about 50 ppm, which would be a 90 percent reduction from the current level.

• Maintain a higher off-highway diesel fuel standard in order to minimize costs to farmers and provide refiners with maximum flexibility to produce diesel fuel.

The EPA proposal is currently under review at the White House Office of Management and Budget.
Source: AFBF Speedline, May 12, 2000

Cattle inventory decline continues
Cattle inventories will continue to decline through 2000, according to USDA projections, but a cyclical bottom is likely in 2001 with a modest inventory rise possible in 2002. However, production increases will be deferred until 2003, and even then the rate of increase may be fairly moderate.

Although cow slaughter remains low, heifer retention remains anemic. Record numbers of heifers continue to be placed on feed and consequently, heifer slaughter remains historically large.

Positive returns over cash costs to cow/calf operations beginning in 1999, and very strong demand for high quality beef, have created a very positive environment for expansion.

However, the inventory turnaround expected during 2001 will remain fragile and favorable cost of feedlot gain and good forage conditions will be key.

To begin expansion, producers will have to give up the opportunity to sell heifers this summer at near record prices.
Source: Livestock, Dairy and Poultry Situation Outlook, USDA, May 25, 2000

Virginia runs first state CRP
Virginia has invested $92.5 million in a new program to rent environmentally fragile farmland to keep it out of production.

The Farm Service Agency (FSA) is cooperating in the effort.

This looks like the first state-run Conservation Reserve Program (CRP).
Source: Landowner, Vol. 22, No. 12, June 19, 2000

Farmers are hiring more and paying more
There were 1.05 million hired workers on the nation’s farms and ranches the week of April 9-15, 2000, up 2 percent from a year ago.

There were 830,000 workers hired directly by farm operators. Agricultural service employees on farms and ranches made up the remaining 217,000 workers. Migrant workers accounted for 8.8 percent of the April hired workforce.

Farm operators paid their workers an average wage rate of $8.12 per hour during the April 2000 survey, up 29 cents from a year earlier.
Source: National Agricultural Statistics Service, USDA, May 2000, Farm Labor

Large packers deliver beef cheaper
Consolidation in the meat packing industry in the past two decades has resulted in four firms handling 80 percent of all steer and heifer slaughter and four firms handling more than half of all hog slaughter.

A USDA Economic Research study found the largest packers can deliver beef to buyers for a cost 3 percent less than smaller firms. For pork packers, the cost was 5 percent less.
Source: Doane’s Agricultural Report, June 2, 2000

New farm sprayer uses less chemical
Ohio State University researchers have designed a farm sprayer that uses half as much chemical as conventional sprayers.

Application rates are reduced by 50 to 75 percent and the sprayers improve pesticide performance without increasing pesticide drift.

The sprayer is designed to be retrofitted to existing hydraulic sprayers.

The new sprayer features two nozzles instead of one. One nozzle shoots a coarse spray of water. The other shoots a fine spray of pesticide. The two sprays intersect. The big drops pull the small drops along to their target, but do not carry pesticide.

Scientists say the new sprayer will boost farmers’ profits by cutting their pesticide bills with the benefit of reducing pesticide pollution in the air, soil and water.

Prototypes are being used by six Ohio farmers. Data from the research is available at this website: http://oardc.ohio-state.edu/lpcat/efficay.htm.
Source: Doane’s Agricultural Report, May 26, 2000