Now is the time to prepare entries for the 2010 Nebraska Master Conservationist Program which is open to adults and youth who have carried out new and traditional soil and water conservation practices in urban and rural areas.

This annual program includes categories for farm/ranch, residence/acreage, community and youth projects, according to Michael Rethwisch, UNL Extension educator.

Production agriculture entries compete in five Master Conservationist districts across Nebraska. Community-private business or public, residential and youth individual or group projects compete for five statewide awards. The residential category can range from a typical home yard to 10 or more acres with less than $1,000 in sales.

Details are outlined in the Master Conservationist brochure which is available at University of Nebraska-Lincoln Extension, Natural Resources District and USDA Natural Resources Conservation Service offices or http://www.ianr.unl.edu/ianr/mc-brochure.pdf. Applications can be made online at www.owh.com and clicking on "In the Community" link.

All entries are judged by members of the Institute of Agriculture and Natural Resources at the University of Nebraska-Lincoln, Nebraska Association of Resources Districts, Natural Resources Districts and the USDA Natural Resources Conservation Service. Master Conservationists will be recognized at the annual banquet of the Nebraska Association of Resources Districts, September 27, 2010, in the Kearney Holiday Inn.

The program is sponsored by the Institute of Agriculture and Natural Resources at UNL and the Omaha World-Herald.

By Allan Vyhnalek
UNL Extension Educator

The Average Crop Revenue Election (ACRE) program was first available to participants in the farm program starting last year. If a producer chose to be in the program, that decision continues for the rest of the farm bill (4 years). If a producer chose to not be in the program, they have another decision to make this year. Read on for more information about ACRE.

Based on the current price estimates, no ACRE payments are expected for the major Nebraska crops for 2009. While the results suggest the ACRE safety net provided no return for the foregone direct payments, it is important to consider the revenue risk protection provided by the ACRE program. The revenue guarantee of $687 in irrigated corn or $449 in dryland corn provided substantially more protection for producers than did the existing DCP safety net, which would provide counter-cyclical payments only if the national average corn price fell below $2.35 per bushel or $1.95 per bushel (national average loan rate).

For corn, soybeans and the other major Nebraska crops, the ACRE safety net in 2009 was substantially higher than the old DCP safety net. Even with the record yield levels experienced in 2009, the ACRE safety net would have triggered support payments to producers at price levels far above the old DCP price safety net. The expectation of no payments under ACRE in 2009 is largely a function of strong revenue forecasts from record yields, multiplied by price expectations that largely rallied through the harvest period from levels forecast last summer.

Looking ahead to 2010, producers not currently enrolled have another opportunity by June 1. Using trend yields and updated yield data from the last 5 years, the trigger for ACRE payments for 2010 will be around $3.39 per bushel or lower for irrigated corn and $3.55 for dryland corn.

Every situation and every farm is different, but it seems that the level of revenue insurance can be enhanced by participating in the ACRE Program. As with any insurance, if the level of revenue exceeds the insured level, payment under the program may be missed.

For more information or assistance, please contact Allan Vyhnalek, Extension Educator, University of Nebraska-Lincoln, Extension in Platte County. Phone: 402-563-4901 or e-mail AVYHNALEK2@unl.edu

LINCOLN -- The creation of a futures contract for distillers dried grain offers a new risk management tool that livestock feeders and ethanol producers should evaluate for future use, a University of Nebraska-Lincoln Extension livestock marketing specialist says.

The contracts announced in February by CME Group will provide the opportunity for both ethanol and livestock feeding industries to hedge against adverse price moves in distillers grains markets, Darrell Mark said.

"The creation of the futures contract is exciting for the industry," Mark said. "Now, both ethanol producers and livestock feeders can more effectively hedge their gross profit margins."

Not only can livestock feeders and other buyers protect against future price increases in distillers grains by using such a futures contract, but feeders also can complete a spread or "crush" hedge to protect their feeding margins, Mark said.

For example, now a cattle feeder can lock in fed cattle sales price, feeder cattle input costs, corn prices and distillers grain prices through simultaneously trading these respective futures contracts.

Similarly, the ethanol industry can lock in distillers grain prices by taking short positions in the distillers dried grains futures contract, he said. However, it also could be used to protect profit margins or the spread between ethanol fuel prices and distillers grains as revenue sources and corn and natural gas prices as major inputs.

Distillers dried grains, or DDG, are a co-product of dry-mill corn ethanol production that is used for animal feed. Nebraska is the second largest ethanol producing state in the nation as well as the second largest cattle feeding state.

Mark's research shows that more than 90 percent of the cattle on feed in Nebraska are fed some type of ethanol co-product feed.

As a result, Mark said Nebraska already offers one of the largest and most liquid cash markets for ethanol co-product feeds. This has grown over the years partly because of the emphasis that UNL has placed on research exploring ways to most efficiently and economically feed distillers grains to cattle.

That research has discovered that cattle perform better when fed the distillers grains compared to conventional corn-only diets, Mark said. UNL animal scientists also have found that rations containing wet distillers grains are even more beneficial for cattle performance than dry distillers grain rations.

"We actually feed a number of wet and dry ethanol co product feeds in Nebraska," Mark said. "While this new DDG futures contract may offer an effective risk management tool for buying and selling these products, it's important to remember that the new futures contract has dry distillers grains plus solubles as the deliverable product, not wet distillers grains or gluten feed."

Knowing how to appropriately hedge related co-product feeds into the DDG futures contract will be critical for Nebraska cattle feeders and ethanol plants who use it for hedging purposes, Mark said.

"Wet and dry distillers grain prices do trade up and down together, but not strictly on a one-to-one relationship at all times," he said. "So, it is possible to be over- or under-hedged if these relationships are not accounted for."

Mark likens such a cross-hedge as being similar to hedging grain sorghum in the corn futures market or previous use of the corn or soybean meal futures contract to hedge various ethanol co-product feeds.

"When the futures contract begins trading on April 26, we'll begin defining what these cross-hedge relationships are and what the basis risk is," Mark said.

While more research will be needed to most effectively use the DDG futures contract, this is a positive development for cattle feeders and ethanol plants, he said, noting that some ethanol plants and cattle feeders in Nebraska have had difficulty managing price risk associated with corn and feed co-products in recent years.

The potential participants in the futures contracts are expected to be ethanol producers, feed merchandisers, feed mills, marketers and livestock operations. They will allow these market participants to lock in a price for DDG up to 12 months in advance, thus hedging their price risk.

For more information on the relationship between the prices of corn and various co-products, go to Mark's Web site at http://ageconom.unl.edu/mark, then select the extension tab and go to ethanol co-products.

By Alan Vyhnalek
UNL Extension Educator

I still have contacts from tenants, but especially landlords, about what the going cash rent is for farmland. It has been interesting to have each of these conversations, and I encourage folks to call if they have any questions at all.

Early last fall, I assumed that I'd be talking about softer land rental rates for 2010. That simply isn't true. The rates are relatively flat compared to the last 4-5 years, but they don't seem to be decreasing. Coffee shop rumors, true or not, have cash rents at a very high level.

In this column, I need to remind people about listening, the first step to good communications. For instance, how people listen to the information that I give about our cash rent survey results. If the range for irrigated center pivot crop rent is from $185 to $260 per acre, with an average of $216, the landlord tends to remember the $260 number, while a few of the tenants remember the $185 number. So both parties are frustrated.

In this case, neither is really right. Both groups should start talking around the average number, then adjust up or down according to the situation. Adjustments should be made for the quality of the land, (including productivity) local market conditions, and how the irrigation system costs are divided.

The cash rent survey is reported assuming that the landlord covers all irrigation system ownership costs (repairs, depreciation, interest, taxes and insurance).

In addition, adjustments should be made if the tenant is covering other costs of maintaining the farm ground. Examples might include: maintenance of terraces, weed control, fence maintenance, and waterway mowing or maintenance. The cost of caring for these items would typically be the owner's. If the tenant is covering the costs, then the tenant should be paid, or there should be an adjustment to rent.

Good communication is the key to all of these negotiations. I usually tell everyone that it doesn't matter what the survey from UNL says, what matters is that both parties are open, honest, and come to an agreement that they both support.

As I began, tenants and landlords are very welcome to call or come to the office to visit. With historically strong land demand and price, determining a fair rent is an important step.

For more information or assistance, please contact Allan Vyhnalek, Extension Educator, University of Nebraska-Lincoln, Extension in Platte County. Phone: 402-563-4901 or e-mail AVYHNALEK2@unl.edu

Press release

 During April-May 2010, the NRD measured 493 observation wells throughout the District and then averaged the data of all these wells. Observation wells are measured in the spring of each year, allowing the water table to rebound from the previous irrigation season.
 

 Overall, the spring 2010 average measurement for the groundwater level change shows a decline of 0.07 feet from last spring. (This compares with a District-wide gain of 2.60 feet the previous Spring of 2009). The findings show that the spring 2010 average groundwater level is 5.73 feet above the "Allocation Trigger".

Through the conservation efforts of groundwater users, and because of an extended period of above average rainfall in the 1980s and 1990s, the average groundwater level in the Upper Big Blue NRD rose significantly to a level in the year 2000 that was approximately seven feet higher than the 1961 level (baseline), and fourteen feet higher than the low level of 1976 to 1981.

The District goal is to hold the average groundwater level to above the 1978 level. In 2007, the District average groundwater level reached the "Reporting Trigger" initiating groundwater users to report annual groundwater use to the District and to certify their irrigated acres. If the District average level falls below the 1978 level ("Allocation Trigger"), the use of flowmeters will be required and groundwater allocation will begin.

The Upper Big Blue NRD rules and regulations mandate that producers will be responsible for installing flowmeters on existing wells if the groundwater level hits the allocation trigger. When the allocation trigger is reached and producers and other users have not installed flowmeters by the next calendar year, then they will not be able to pump any amount of water until a flowmeter is installed. Since March 1, 2004, all new wells and replacement wells require a flowmeter.