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Friday, April 24, 2015

Protect Backyard Chickens from Avian Flu

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Protect Backyard Chickens from Avian Flu
Chet Utterback, Poultry Research Farm Manager - University of Illinois

More people than you might think are keeping chickens in their backyards. These birds, just as those grown commercially, are at risk to the H5N2 Avian Influenza virus. Todd Gleason has more on why and what keepers of backyard flocks can do to protect their birds.

Turkeys and chickens along the Mississippi River flyway…

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Turkeys and chickens along the Mississippi River flyway in the Midwest are at risk to catching the flu every year. This year a new highly contagious version of the virus called H5N2 has developed. It’s nasty and a bird killer. This is why the U.S. government is taking so much care to control its spread. The farm manager of the University of Illinois’ poultry research facilities, Chet Utterback, says commercial flocks aren’t the only birds at risk.

Utterback :22 …where there are any water fowl what-so-ever.

Quote Summary - I would encourage everyone, whether you have two chickens or twenty chickens or two-hundred chickens, or two-hundred-thousand chickens or two-million chickens to be very, very diligent in staying away from areas where there are Canadian geese nesting, where there are any water fowl what-so-ever.
Migratory birds of all types stop along their routes at water sources. It doesn’t matter much how busy the area is, if there is a pond there are likely to be at least few Canadian Geese around. They could be carrying the flu, and it could be the H5N2 version and you could walk right through it… though that, to this point, wouldn’t be a problem for your personal health… it could be a load of problem for your birds.

Utterback :27 …with the potential to affect other birds.

Quote Summary - The biggest thing people need to be aware of is how many viruses are there. According to a microbiologist at Penn State involved with the outbreak in 2006, in one gram positive sample of manure from a wild waterfowl, about the size of a dime, there can be more than one-million flu viruses with the potential to affect other birds.
The point is bio-security measures need to be taken to protect backyard flocks as well as commercially raised birds. It’s a big word, but in this case simply means not wearing the same clothes or shoes into the coop that you might have just been wearing at the shopping center, or the pond, or any place wild waterfowl gather.

Wednesday, April 15, 2015

2014 Loss Experience for Revenue Protection Products

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2014 Loss Experience for Revenue Protection Products
Gary Schnitkey, Ag Economist - University of Illinois

The Risk Management Agency has published federal crop insurance data for 2014. Todd Gleason has more on what the information shows.

The RMA data for most of the 2014 COMBO product insurance…
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The RMA data for most of the 2014 COMBO product insurance payments is published in the agency’s Summary of Business report. It is possible to use the data to calculate the loss performance of a product. You do that by dividing the losses by total premiums collected. Revenue Protection, or R-P crop insurance, is designed to have a ratio of one. It is supposed, over time, to pay out as much as it takes in to the system says University of Illinois Ag Economist Gary Schnitkey.

Schnitkey :17 …you would expect to be on a long run basis.

Quote Summary - Some years you would expect higher than that, like 2012, and some years lower than that. Last year for corn we had a 1.04, which means we paid out $1.04 for every $1 paid in. So about where you would expect to be on a long run basis.

Of course how those dollars are paid out, or the distribution, varies from year to year… usually by region. That certainly was the case for corn and the Revenue Protection product in 2014 says Schnitkey. Not everybody received a $1.04. Central and southern Illinois farms received very few payments. Illinois’ loss ratio for corn was point four (0.4). Most of the Illinois losses were in the norther tier of counties. The largest loss ratios happened in Iowa and Minnesota.

Schnitkey :23 …and revenue is what mattes not yield alone.

Quote Summary - This is because Iowa and Minnesota had lower yields relative to their guarantee yields. Illinois, Indiana, and Missouri had very low loss ratios because their yields in those areas. Again we are looking at RP, which is revenue protection, and revenue is what mattes not yield alone.

Revenue is price times yield.

Here is that calculation. The projected price for corn was $4.62 and the actual price was $3.49. If the corn yield was at or above the farm’s guaranteed yield no payments were made. If it was below it, then a payment was received.

Iowa and Minnesota corn yields weren’t that low, by the way, but the price of corn… it was that low. So the RP insurance paid to make up the revenue short fall.

2014 Loss Experience for Revenue Protection on Corn, Soybeans, and Wheat

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2014 Loss Experience for Revenue Protection on Corn, Soybeans, and Wheat
NOTE - for your website - contact tgleason@illinois.edu

by Gary Schnitkey

Most of the 2014 insurance payments on COMBO products have been entered into Risk Management Agency’s Summary of Business, allowing us to calculate loss performance for individual products accurately. This article describes loss performance for Revenue Protection (RP), a revenue insurance plan used to insure most acres in the United States.



Corn, soybeans, and wheat had loss ratios of 1.04, .54, and 1.12, respectively. Loss ratios were above 1.0 in many counties of Iowa and Minnesota for corn and soybeans. Counties in the southern Great Plains had loss ratios above 1.0 for wheat. In Illinois, RP loss ratios were .40 for corn and .24 for soybeans.

Corn

In 2014, RP was used to insure 69.9 million acres of corn in the United States, representing 88% of total acres insured with crop insurance. Total premium on RP products was $3,350 million and total crop insurance payments were $3,484 million, giving a loss ratio of 1.04 ($3,484 in losses divided by $3,350 in total premium). A loss ratio above 1.0 means that insurance payments exceeded premiums. Over time, average loss ratios should equal near 1.0. On a per insured acre, insurance payments equaled $49.86 per acre (see Table 1).



Loss experience varied tremendously across states. For the eleven states with the most insured acres, RP’s loss rate was the highest for Minnesota at 3.01 and the lowest for Missouri at .11 (see Table 1). Iowa had a loss ratio of 2.21 while Illinois had a .40 loss ratio.

For Midwest states, the 2014 projected price was $4.62 per bushel while the harvest price was $3.49 per bushel. The harvest price was 75% of the projected price, meaning that coverage levels of 80% and 85% would have crop insurance prices if the actual yield did not exceed the guarantee yield. While much of the country had above average corn yields, there were areas of the country where yields were at or below guarantee yields. These areas included northern and central Iowa, Minnesota, and Wisconsin. As a result, RP products had high loss ratios in these areas, as illustrated in Figure 1 which shows RP loss ratio by county (see Figure 1). In most other areas of the country, loss ratios were well below 1.0. As one would expect, loss ratios were higher in areas with lower relative yields.



Soybeans

In 2014, RP was used to insure 65.2 million acres of soybeans in the United States, representing 88% of total acres insured with crop insurance. Total premiums were $2,092 million and total payments were $1,126 million (see Table 2). Total payments were far less than total premiums resulting in a loss ratio of .54. Since 2008, loss ratios for soybeans across all policies have not exceeded 1.00. On a per insured acre basis, insurance payments equaled $17.27 per acre.



Loss experience for soybeans had less range than those for corn. For the eleven states with the most insured acres, RP’s loss ratio was the highest for Minnesota at 1.25 and the lowest for South Dakota at .18. Iowa had a loss ratio of 1.07 while Illinois has a .24 loss ratio.

For Midwest states, the 2014 projected price was $11.36 per bushel while the harvest price was $9.65 per bushel. The harvest price was 85% of the projected price. Even at an 85% coverage level, farmers had to have actual yields below guarantee yields before insurance payments were made.
Most counties across the United States had loss ratios well below 1 (see Figure 2). Areas with loss ratios above 1.00 included counties in northern and central Iowa, Minnesota, northern Wisconsin, and some counties in Michigan, and New York.



Wheat

In 2014, RP was used to insured 40.8 million acres of wheat, representing 85% of total acres insured with crop insurance. Total premiums were $1,330 million and total payments were $1,490. The loss ratio was 1.12 and payments averaged $36.60 per insured acre.



Figure 3 shows a map of county loss ratios for wheat RP polices. As can be seen, many counties in Texas, Oklahoma, and Kansas had loss ratios above 1.00. Many farms in this area had low yields. Other areas of payments occurred in Washington, Wisconsin, Illinois, and along the Mississippi Delta. Large areas with low loss ratios include Montana, North Dakota, South Dakota, Virginia, North Carolina, and South Carolina.



Summary

Lower prices for corn and soybeans resulted in RP payments for corn and soybeans. These payments were made in northern and central Iowa and Minnesota. Because of above average yields, loss ratios were low in most of Illinois, Indiana, and Ohio.

LINK to FarmDocDaily Article: 2014 Loss Experience for Revenue Protection on Corn, Soybeans, and Wheat

Wednesday, April 1, 2015

The Footprint of Chinese Demand for U.S. Soybeans

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The Footprint of Chinese Demand for U.S. Soybeans
John Newton, Ag Economist - University of Illinois

One out of every four bushels of soybeans harvested by U.S. farmers last fall, if the trend continues, will be shipped to China. Todd Gleason explores how this happened and what it means.

Two University of Illinois agricultural economists…
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Two University of Illinois agricultural economists have measured the footprint of Chinese demand for soybeans. John Newton, along with Todd Kuethe (keeth-ee), say this one nation takes 13 bushels from every acre of soybeans produced in the United States.

Newton :28 …very large footprint in our soybean market.

Quote Summary - The Chinese are bringing in more than a billion bushels of soybeans a year from the United States. That’s more than the states of Illinois and Iowa produced combined. Their total needs from around the world amount to more than 60 million acres. Twenty-one million of those come from the U.S. This is more soybean acres than can be found in Illinois, Iowa, and Michigan. The Chinese have a very large footprint in the U.S. soybean market.

Large today, but twenty years ago China imported just 18 million bushels of soybeans from the United States, or 2 percent of U.S. soybean exports. Demand from this one nation grew from that meager amount to more than a billion bushels, 65 percent of the exports, because of double digit growth in its economy. This growth has slowed, and for some it is now a caution sign…but not for John Newton, yet.

Newton :42 …beans into China and crush them.

Quote Summary - The world bank is projecting the Chinese economy is going to grow at about 6.9 to 7.4 percent through 2017. This is greater than the United States. Their economy is still growing at a significant rate. They have just plateaued some in recent years. So, you look at the growth rate in the Chinese economy as one indicator. Another indicator is crushing margins in China. Part of the reason they’ve increased their consumption of U.S. soybeans is because they’ve increased crushing capacity in mainland China. So long as their crushing margins are favorable it is still possible to bring U.S. soybeans to China and crush them.

These projections support China maintaining soybean consumption at or above current levels.