Risk and Profit Conference

Breakout Sessions [Topics marked (**) are also online from August 23-27] 

In-Person Schedule, click HERE

Online Schedule, click HERE

1. Recent Trends in Non-Traditional Lending

Jenny Ifft and Luke Byers

Many producers use nontraditional finance, or financial products offered by entities outside of the Farm Credit System and commercial banks. Last year we provided an overview of nontraditional finance and existing evidence on growth of nontraditional finance and characteristics of farms that use nontraditional finance.  This presentation will cover used (1) trends in nontraditional finance in Kansas using KFMA data through 2020 and (2) equipment financing trends, using a novel dataset on all farm equipment liens files in Kansas and several other mid-western and Plains states from 2000-2020.

***2. Projections of Net Farm Income and Major Expenses for 2021 and 2022

Gregg Ibendahl

With so much uncertainty going on today, it makes planning for the future difficult. 2020 was initially expected to be a down year for producers but instead it was very profitable for many. Not many people expected that. Accurate predictions about net farm income could help many with their long term plans and help guide machinery and other input purchases. This session will attempt to predict Kansas net farm income for 2021 and 2022. KFMA farm data from the last several years is used to set a baseline and then projections about yields and prices are used to estimate revenue while projections about major expenses are used to estimate farm expenses. In addition to the overall net farm income projections, this presentation will also analyze expected changes to fertilizer and fuel and also provide more general guidance about other farm expenses.

3. Accelerated Depreciation and Machinery Investment

Allen Featherstone, Bailey Hinkle, Jenny Ifft, Elizabeth Yeager

The machinery investment decision is an important decision affecting farm profitability.  Recently, the Congress has implemented accelerated depreciation methods that effectively reduces the cost of machinery investment.  This presentation will examine machinery investment over time to estimate the effect the accelerated depreciation has on that investment.  In addition, the effect of excess machinery investment on the farm financial health will be discussed.

***4. Using Data to Think Honestly, Creatively and Strategically About Farm Management

Kevin Herbel

Why do you do the things you do? How we think influences our words and our actions. How we think can have a substantial impact on our success in farm business management and in our relationships. In this session, we will consider what it means to think honestly, creatively and strategically about the management of your farm operation. Thinking honestly involves having records, data and information to properly know and understand your resources and your financial position. Thinking creatively involves properly consider options before you, seeking new opportunities when needed and considering these options carefully. Thinking strategically involves having a planned and proactive approach rather than a reactive approach as decisions are made.  

5. Farm Income Tax Update

Clay Simons, Mark Dikeman

In 2021, there has been several legislative changes that may potentially impact agricultural producers when they file their income tax return.  This session will provide an overview of those changes with a focus on the American Rescue Plan passed in early 2021.

***6. Introduction to New Interactive Web Tools: Farmland Values (Stepped-Up Basis) Tool and Days Suitable/Long Run Machinery Planning Tool

Terry Griffin, Allan Pinto-Padilla, Robin Reid

Recently developed decision tools have embraced interactive web dashboard capability while retaining benefits of Excel spreadsheets but without the need to download files or maintain specialized software. These interactive tools are automatically updated when new or updated data are available such that the user need not be concerned about updating software. One of the common questions we receive each spring is estimating farmland values at some point in the past, presumably for stepped-up basis calculations for estimating potential tax liability. Our interactive farmland dashboard allows the user to select from any of the lower 48 states and “year of inheritance” to estimate these values.  Another interactive web tool allows users to determine how many hours or days are expected over a range of probability levels to be able to conduct fieldwork. This tool is useful in the farm management decision making process for equipping a farm or determine if an additional track of farmland would allow an existing equipment complement to remain timely.

7. Carbon Credit Markets: Current Opportunities and Future Prospects

Nathan Hendricks, Micah Cameron-Harp

Carbon credit markets present an opportunity for agriculture to generate additional revenue by implementing practices that can sequester carbon or offset emissions. This session will give an introduction to these markets and the opportunities they present. Some of the issues we will discuss include the following. Who is paying for carbon credits and why? Why are buyers demanding quality assurance for carbon credits? What are some of the current validation protocols required of producers? How big are the payments? How might these markets evolve in the future?

***8. Irrigation and Ethanol Market Effect on Land Values

Grant Gardner, Gabe Sampson

In the early 2000s, the United States federally mandated the expansion of ethanol production causing an increase in both the number of plants and plants’ yearly production capacity. We use Kansas Land transaction data from 1995 to 2017 to estimate the effect of ethanol plant proximity on land values. Corn, the main feedstock for ethanol, is highly water intensive causing ethanol plant proximity to have a different impact on irrigated and non-irrigated land values. We estimate that an irrigated (non-irrigated) parcel having one or more ethanol plants situated within 50km (~30 miles) delivers an 8.8% (6.3%) price premium relative to more distant irrigated (non-irrigated) parcels, on average. Additionally, each 10 million gallon per year increase in ethanol plant capacity results in a 4.8% (1.8%) increase in irrigated (non-irrigated) land value for parcels located within 50km of the plant.

***9. Situation and Outlook for Irrigated and Non-Irrigated Cash Rents in Kansas

Gregg Ibendahl, Dan O'Brien

This session will examine county-level Kansas irrigated and non-irrigated cropland cash rental rates.  The most recent available surveys of Kansas county cash rental rates will be presented along with projections of breakeven irrigated and non-irrigated rental rates for 2021-2022.  These breakeven projected cash rental rates will use KSU irrigated and non-irrigated corn budgets as a baseline comparison, along with projected crop prices for the 2021-2022 period.  Those attending this session will be polled for their reaction to these projected cash rental rates for the coming year, with results shared with the group and discussed in the session.

***10. Insurance Options for Cow-Calf Producers

Jenny Ifft

Cow-calf producers have several options for price and forage risk management. This presentation will provide an overview all relevant livestock products offered as a part of the Federal Crop Insurance Program.  We will then provide an in-depth assessment of Livestock Risk Protection, which offers protection against unexpected declines in market (futures) price for feeder cattle, fed cattle, swine and lamb. Recent changes to Livestock Risk Protection may make it more attractive and affordable for Kansas producers.

11. Balancing Beef Processing Efficiency and Resiliency Post-COVID-19

Justin Bina, Glynn Tonsor

During the COVID-19 pandemic, U.S. consumers witnessed changes in the volume and type of meat products available in retail and food service markets. Simultaneously, widening farm-to-wholesale price spreads elevated market concerns and fueled calls for industry change. The objective of this study is to document cattle slaughter and evaluate the structure and performance of the beef processing industry during the COVID-19 pandemic. Federally inspected steer and heifer slaughter from April 11 through May 30, 2020 was 23% to 29% lower than the same time period in 2019. This reduction was not different for regions more reliant on larger packing plants.

***12. Impact of Futures Volatility on Cash Price Discovery for Feeder Cattle

Andrew Anderson, Glynn Tonsor, Ted Schroeder, Trevor Hefley

Volatile feeder cattle futures markets over the last decade have prompted questions about potential effects of volatility on cash markets. This analysis focuses on the impact of futures volatility on price discovery at feeder cattle auction markets across the mid-western United States. We measure how volatility impacts information flows and pricing efficiency, then provide a discussion of the implications for producers, stockers, feeders, and policy formation.

13. Assessing Efficiency of Cow-Calf Operations in Kansas

Hannah Shear, Dustin Pendell, Kevin Herbel

Using Kansas Farm Management Association data along with the supplemental survey for Cow-Calf producers, this presentation will provide an overview of production efficiency of cow-calf producers in Kansas. As special focus on how production characteristics and marketing decisions impact profitability will be included along with a summary of the KFMA Cow-Calf survey results

14. Perceived Perception Gaps between Adopters and Non-Adopters of Benefits and Costs of Conservation Practice

Jason Bergtold, Calder McCollum

Farmers’ willingness to adopt conservation practices is influenced by their perceptions of the benefits and costs. Differences in perceptions point toward potential educational, outreach strategies and messages that may by employed to promote conservation adoption by non-adopters. Limited research has examined common perception gaps between different conservation practices. The purpose of this presentation is to assess the perception gap between adopters and non-adopters on the benefits and costs of four identified perceptions of intensive conservation practices. Perceptions were compared using data from a field survey in which Kansas producers self-reported perceived benefits and costs of conservation practices including for continuous no-till, crop rotation, cover crops, and variable rate application of inputs. Data was analyzed through use of descriptive statistic and means separation tests between adopters and non-adopters. Statistically significant differences in these means allowed us to extrapolate that net returns perceptions were held to be one of the common differing factors between adopters and non-adopters for each of the examined conservation practices. Impacts on crop yields were a common differing factor for continuous no-till, crop rotation, and cover crop adoption. Perceptions about other management and economic factors varied across the conservation practices examined. The results can be utilized to provide information for more targeted extension and outreach efforts to improve adoption levels of conservation practices by guiding policy decisions. Extension and outreach informational programs should share additional information to lessen these perception gaps and potentially focus on sharing of trial data showing the end net returns of those who adopt each conservation practice in turn.

15. Is Equity Actually Debt? The Curious Case of Cooperative Finance

Brian Briggeman

Cooperatives finance their business through a combination of debt and equity. A portion of the cooperative’s equity, allocated equity, is retained patronage or profits generated by members and will be paid back to the member in the future. So, is this equity actually a debt obligation? And if it is viewed that way, could that have an impact on the cooperative’s future profitability? In this presentation, Dr. Brian Briggeman will present research results that suggest some cooperatives do manage equity as debt, which hinders their future profitability.

***16. Landowners’ Willingness-to-Lease to Young Producers in Kansas

Chelsea Arnold, Mykel Taylor

Young producers are often at a disadvantage when attempting to obtain access to farmland to lease. In Spring of 2021, a survey was sent out to landowners across Kansas that asked landowners about their current leasing arrangements and preferences, but it also asked about their attitudes and preferences towards leasing to young producers. This presentation will present the findings of this survey and also discuss landowners’ preferences and willingness-to-lease to young producers that have different levels of experience.

***17. Employee Management on Farms in Kansas

Kevin Herbel, Bob Kohman, Ana Stepanovic

Agriculture is a unique industry. Those working together on the farm are often family members and the needed skill sets are very diverse. Management of relationships on the farm can be difficult. For many farms, these relationships include hiring and working together with employees. Attracting and retaining quality employees presents unique challenges that are difficult for many of us. While this session will not ask and answer all of the questions that need to be addressed, we will take a look at the results from a Kansas Farm Management Association survey examining wage and benefit packages on Kansas farms. What wage rates are being paid for different skill sets on the farm? What benefit packages are being offered by farm employers? What can be done to maintain strong working relationships on the farm, both for farm operators working together and with employees?

18. Dynamics of 2021/2022 International Grain Markets and Impacts on U.S. Exports

Guy Allen, Dan O'Brien

This session will focus on how international grain market factors have already impacted U.S. grain export markets during the 2020-2021 period to date, and prospects international grain market supply-demand trends for the remainder of 2021 into 2022.  The anticipated roles of China, Brazil, Argentina, the Black Sea region, and other areas of the world in late 2021 through 2020 U.S. domestic grain markets will be examined given current information in the market – being informed by recent government policies and 2021 weather conditions in these countries. The potential for volatile U.S. and foreign currency valuations and their impact of U.S. grain export trade and domestic cash and futures markets will also be examined.

***19. USDA Crop and Livestock Reports: What, When, and Where?

Rich Llewelyn

Generally, commodity markets are efficient. No one will consistently beat the market in most cases. But it is possible to end up behind the market if you don’t know what is going on. Focusing on USDA crop and livestock reports, this presentation will help participants understand what information is freely available and when, in order to be aware of times when a particular commodity market may be absorbing this information, causing changes in prices.

20. USDA Crop and Livestock Reports: What, When, and Where?

Vincent Amanor-Boadu, Catherine Obiribea Ofori-Bah

We explore the economic feasibility of exploiting abundant wind resources in small towns and rural (STAR) communities to enhance the profitability of agricultural production and retain the communities’ wealth creation. We draw on research being done by researchers from five universities, including the University of Kansas and Kansas State University, with funding from the National Science Foundation.  This research simulated the feasibility of alternative financing options for the production of green ammonia to replace all the ammonia consumed by the community.  We employed the Solid Oxide Electrolysis Cell (SOEC) technology for the energy-to-ammonia process. The results show that the potential for the project to produce significant economic benefits for local community investors while preventing the export of about $120 million communities’ annual ammonia expenditure. More importantly, with ammonia price decoupled from fossil fuel prices, it provided an effective ammonia price risk mitigation solution for the communities’ farmers. We conclude that a closer strategic collaboration between farmers and their communities to exploit innovative technologies and natural renewable resources offers a novel approach to ensuring the economic viability of STAR communities.