Kansas Grain & Feed Association

KGFA Co-Hosts Brownback for Governor Fundraiser

August 11, 2010

KGFA co-hosted a reception in support of U.S. Senator Sam Brownback’s 2010 campaign for Governor of Kansas yesterday. It was a wonderful event with over 50 lobbyists and guests attending. KGFA looks forward to establishing a good working relationship with the soon-to-be Governor that will benefit the agribusiness industry in Kansas.

Watch an excerpt from Senator Sam Brownback's speech at the fundraiser
co-sponsored by and held at KGFA.

Why Have the KC Wheat Futures and Cash Prices Not Converged?
By Daniel O'Brien, KSU Extension Agricultural Economist, and Art Barnaby, Extension Specialist in Risk Management

August 11, 2010

The cash basis differential between Kansas cash wheat prices and JULY 2010 Kansas City Board of Trade (KCBT) wheat futures has widened sharply since mid June, increasing to as much as $1.20 - $1.40 per bushel under futures in western Kansas and to $1.00 - $1.20 under futures in central Kansas. These basis levels were as much as $0.55-$0.60 per bushel wider than Kansas cash wheat basis bids have been during June since at least 1998.

Wide cash basis levels have raised questions about the factors that are affecting the relationship between cash and futures markets for hard red winter (HRW) wheat. Questions have arisen about; a) the degree to which local, domestic and world wheat supply-demand factors explain the difference in local cash and futures markets, and b) how well the delivery mechanisms designed to bring about convergence between cash HRW wheat prices and KCBT futures are functioning. This article discusses issues associated with the function of the delivery process for sellers of KCBT wheat futures contracts, the impact of wide and variable cash HRW wheat basis levels on farmers and agribusiness, possible solutions to the non-convergence of cash and futures prices in the HRW market, and implications of volatile basis levels on farm marketing decisions. Read More.

Unemployment Insurance Tax Update

August 11, 2010

The Kansas Chamber of Commerce recently reported that second quarter payments made after July 31st, which are interest and penalty free for 90 days, will not be counted towards the current calendar year, which could negatively impact your experience rating and future tax rates.

According to the Chamber’s July 26 Weekly Memo, the bill that passed the House and Senate unanimously during the 2010 session was intended to provide tax relief for employers making efforts to retain employees and better manage their cash flow. However, it was not clarified during committee hearings that the 90 day grace period could actually result in impaired experience ratings and increased tax rates. They are encouraging businesses to forgo the 90 day grace period on second quarter payments to maintain your experience rating if at all possible.

KDOT Schedules Transportation Plan Workshops

July 20, 2010

With the Legislature’s passage of the Kansas Department of Transportation's (KDOT) 10-year comprehensive transportation plan or otherwise known as "T-WORKS", KDOT will host four workshops to provide information about T-WORKS and to help communities and individuals get organized for the local consult meetings, which will be held in each KDOT district this fall. They will also host a webinar on September 7 for those who are not able to attend any of the workshops. The dates and locations are:

* August 23 Wichita Holiday Inn Rock Rd. (549 Rock Rd.) 1:30-4:30 p.m.
* August 24 Dodge City Dodge House Hotel & Convention Center (2408 W. Wyatt Earp Blvd) 9:00 a.m.-noon
* September 1 Olathe Holiday Inn, (101-West 151st St.) 1:30-4:30 p.m.
* September 2 Pittsburg Lamplighter Inn, (4020 Parkview Dr.) 1:30-4:30 p.m.
* September 7 Webinar, TBD

The same information will be presented at each workshop so you may choose the date and location that will work best for you should you wish to learn about the program and provide input. The workshop information will also be made available at www.ktoc.net. KDOT reports the transportation revenue provided by T-WORKS will fully fund the state's highway preservation needs and will provide an additional $1.7 billion of revenue for highway modernization and expansion projects, along with increased funding for transit, aviation and short-line rail programs. According to KDOT, using information from the workshop, attendees will be asked to go back to their communities and regions to discuss project options and phasing. For example, are there greater regional benefits associated with building more miles of passing lanes rather than building fewer miles of a 4-lane? Can building a phase or two of a large project provide enough benefit to the region so that money from the other phases could be applied to other projects? What is the best use of funds for short-line programs?

U.S. Files Claims Against Feed Dealers in USDA Livestock Feed Assistance Initiative Fraud Case

July 20, 2010

The United States filed a False Claims Act suit against R&J Feed Co., Jerry Goodwin, Richard Carter and Carter Livestock Inc. in the U.S. District Court in Kansas City, Mo., the Justice Department announced last month. The United States alleges that the defendants violated the False Claims Act by being involved in the improper export of U.S. Department of Agriculture (USDA)-owned nonfat dry milk that was earmarked for livestock producers in designated states.

The case involves the USDA’s livestock feed assistance initiatives in 2002 and 2003. USDA created the initiatives to provide protein-enriched feed to ranchers. To that end, the U.S. Agriculture Department provided nonfat dry milk to feed dealers at little or no cost for incorporation into livestock feed. Feed dealers who participated in the program were required to certify, among other things, that the nonfat dry milk received under the program would only be used to produce feed to be fed to livestock in specifically enumerated drought stricken states within the United States. The complaint alleges the defendants falsely certified that they would abide by these use restrictions but, in fact, facilitated and profited from the export of millions of pounds of program nonfat dry milk to other countries.

"The USDA’s livestock feed assistance initiatives were intended to help ranchers in the United States," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "We will pursue those who are suspected of seeking to gain financially by ignoring the program’s rules and not honoring the certifications they make."

Historically Large Basis Spread Creates Lower Cash Price at Elevator

June 16, 2010

With summer heat upon us, Kansas wheat fields are changing color. As harvest starts in the wheat state other states are in full blown harvest and experiencing unusually large basis. Several factors are combining to create the perfect storm making it essential for producers around the state to be prepared for lower basis.

Kim Barnes, Pawnee County Coop CFO, indicated that at this time last year basis at his elevator was around ($.43); but on June 10 his basis was over twice of last year at ($1.40). Grain elevators have a lot of exposure out there. Barnes notes that several factors are contributing to this lower basis including: higher carryover and inventories of the 2009 crop, low protein for this year’s crop, and a lack of global demand for our product.

Gary Gantz, KGFA Chairman and General Manager of D.E. Bondurant Grain in Ness City, shared his thoughts on the current market climate. Gantz commented that Texas and Oklahoma are having the first good crop in the last few years. Also, he is normally able to sell grain to local millers in Kansas, but with the current crop’s lower protein, content millers are looking for other sources. Gantz advised other elevators to be careful and set their basis appropriately. “Elevators could potentially be in a losing situation if they are not careful in their marketing,” said Gantz.

The futures markets are not in line with cash for several reasons. An industry expert shared how the price to ship via rail from the interior to the gulf was around $.50 per bushel ten years ago, and now is in the $.90 cent per bushel range. This is a contributing factor to our lower basis in the interior. The same industry expert referred to the glut of wheat on the global market. “Our wheat is simply overpriced,” said this trading expert and, “there is a disconnect between the futures and cash prices.”

Justin Gilpin, Kansas Wheat CEO, encourages producers to have a strong line of communication with their local elevators and an awareness of available marketing options. “It is critical for producers to a have a great rapport with their elevators all year long. That way they can work through whatever market conditions might arise.”

Gregg Sexton, a long-time wheat producer in Chapman, Kansas had the majority of his grain marketed prior to harvest this year. He recommends all producers have a marketing plan to ensure a secured profit margin prior to harvest. Forward contracting is a critical tool to farming in today’s market conditions. “My relationship with the local elevators is a key component to the success of our family farm,” said Sexton.

The markets are designed to bring supply and demand together for a transaction and price evaluation of commodities. In looking at our current situation the industry expert interviewed had this to say, “The market ultimately works, sometimes it just takes time.”

KGFA Disagrees with Tuesday's Steckline Report

June 16, 2010

As reported in a KGFA News Alert this morning...

On Tuesday, June 15, Larry Steckline mis-portrayed current wheat market conditions during The Steckline Report that aired on Wichita's KSN television station. He even implied criminal activity among grain interests by stating, "I'm not saying there are a bunch of crooks out there...I kind of think there is, but I don't know for sure."

"It can be difficult to understand the basis situation without first understanding the fundamentals of supply and demand," Tom Tunnell, KGFA President & CEO, said. "It's clear that Steckline has used his misunderstanding of grain markets as an opportunity to lash out at the industry by making such accusations."

KGFA believes it is vital that all segments of the grain industry, from the producer to the elevator to the end user, work together during Harvest to deal with market conditions appropriately.

To help bring clarity and bring experts from different segments of the grain industry together, Tunnell along with Kansas Wheat's CEO Justin Gilpin and the Kansas Secretary of Agriculture Josh Svaty, will participate in a panel discussion on Friday that will air on WIBW's Ag AM in Kansas television show in Topeka next week.

KGFA also recently distributed a news release on this important and complicated issue and is happy to personalize one for your local paper as well. Please contact Sarah Bowser at sarah@kansasag.org to learn more.

Friends of KAW Send EPA 60 Day Notice of Intent

June 16, 2010

The Friends of KAW, an environmental activist group, filed a 60 Day Notice of Intent to sue the Environmental Protection Agency (EPA) in Kansas. The letter states that because Kansas does not have numerical or qualitative measures in place to reduce our non-point source pollution, we are in violation of Section 303. This suit has potential implications for all sectors of agriculture. Your association is working with The Fertilizer Institute, CropLife America and various state associations to engage EPA and the Kansas Department of Health and Environment on this issue to ensure agribusiness has a seat at the table as this unfolds.

Kansas State University Partners to Improve Wheat Breeding Program

June 16, 2010

A new public/private collaborative agreement is expected to result in improved wheat varieties for Kansas wheat growers. Kansas State University and Monsanto announced last week a relationship that will allow both to improve their wheat breeding programs.

“Agreements of this type benefit the Kansas wheat growers because they will have a greater selection of improved varieties from both public and private wheat breeding programs,” said Gary Pierzynski, interim dean of the K-State College of Agriculture and interim director of K-State Research and Extension. Pierzynski said both parties are free to form additional collaborative arrangements with other public or private entities.

“Specifically, Monsanto brings to the partnership technologies that will enable us to ‘genetically fingerprint’ those varieties,” Pierzynski said. “It will help us select specific genetic markers to provide improvements, such as disease and pest resistance.”

Allan Fritz, Kansas State University professor of agronomy and a wheat breeder said working with private industry will give K-State the ability to get improved varieties to market faster.

“For K-State’s program, this will provide breeders with accelerated wheat breeding processes, focusing our selection on plants that matter and targeting for critical traits,” he said.

Fritz said K-State will continue to work with other public wheat breeding programs, as it has in the past. “It is essential we continue our interaction between the wheat breeding programs at other Land-Grant universities.”

Stakeholders in the Kansas wheat industry participated and offered important input about principles that should guide such collaborations. “Kansas State University has a long history of working with wheat and in addressing stakeholder needs,” said Ernie Minton, associate director of research for K-State Research and Extension. “This relationship is beneficial for the wheat industry as the collaboration will create opportunities for the improvement of agronomic performance and grain quality characteristics.”

In addition, the 2009 survey results from the National Association of Wheat Growers called for technology investment to improve profitability of wheat as a cropping option.

K-State will continue efforts to develop and release wheat varieties with improved traits through the Kansas Wheat Alliance, Minton said. The goal is to benefit the Kansas wheat producer and the related wheat industry with improved traits.

Kirk Schulz, Kansas State University president, said, "This partnership leverages Kansas State's long-term investment in wheat breeding and increases our resources to continue this work. This type of innovative collaboration is necessary with limited state and federal resources."

Sean Gardner, Monsanto’s global commercial wheat lead, added that the collaboration is an important step for the wheat industry, as it brings together the unique and complementary breeding research of Monsanto and Kansas State University to develop better wheat varieties for growers.

“Kansas State researchers have a wealth of experience and knowledge in the field, and with our proven breeding technology experience, we see this collaboration as an excellent opportunity to produce successful new wheat varieties,” Gardner said.

Are You Ready to be Smoke Free in Kansas on July 1?

June 16, 2010

Reprinted with permission from Stinson Morrison Hecker’s Labor & Employment e-Alert on June 16, 2010:

The Kansas Indoor Clean Air Act goes into effect July 1, 2010, and imposes new obligations on employers and businesses located within the state. Passage of the Act this past legislative session makes Kansas the 28th state to institute a state-wide smoke-free law. As summarized on the Kansas Smoke-Free website, which is sponsored by the Kansas Department of Health and Environment, the purpose of the Act "is to protect the public health by reducing exposure to secondhand smoke in public places and places of employment."

Under the Act, an "employer" is defined as "any person, partnership, corporation, association or organization, including municipal or nonprofit entities, which employs one or more individual persons." In addition to this specific employer provision, the Act applies to enclosed "public places" with a few limited exceptions. A "place of employment" is broadly defined to include enclosed areas under the control of a public or private employer, expressly capturing "stairwells," "employee lounges," and "restrooms" if those areas are "used by employees during the course of employment." Under these broad definitions, it will be virtually impossible for a business to not to fall under the purview of the Act.

The Indoor Clean Air Act seeks to protect employees from exposure to secondhand smoke in a place of employment by mandating that employers:

1. Adopt and maintain a written policy which "prohibits smoking without exception in all areas of the place of employment;"
2. Communicate the policy to all current employees within one week of its adoption and to all future employees upon hire; and
3. Post a sign or signs in a conspicuous place which displays the international no smoking symbol and clearly states that smoking is prohibited by state law.

Employers also have the obligation of taking appropriate steps to ensure their employees and all outside visitors comply with the prohibition against smoking. Specific provisions also apply to daycares, hotels and certain medical facilities.

While the Act expressly applies to "enclosed areas," it further specifies that it will not apply to "the outdoor areas of any building or facility beyond the access points of such building or facility." The "access point" of a building is defined as "the area within a ten foot radius outside of any doorway, open window or air intake leading into" the covered facility. Accordingly, for those employers desiring to accommodate its smoking employees, smoking areas may be created if those areas are not enclosed and meet this geographic limitation.

Violators of the Act will face fines in an amount not to exceed $100 for the first violation, $200 for a second violation within a one-year period, and $500 per violation for each successive violation within the one-year period. In addition to smoking in a restricted area, liability may occur when a person, "who owns, manages, operates, or otherwise controls the use of any public place, or other area where smoking is prohibited" allows smoking to occur. A person is "deemed to allow smoking to occur" if: (1) the individual has knowledge that smoking is occurring; and (2) "acquiesces to the smoking under the totality of the circumstances." In determining the proper penalty, the Act further provides that a separate violation exists for "each individual allowed to smoke by a person who owns, manages, operates or otherwise controls" the property. This provision should serve as a deterrent to those employers who simply want to overlook the requirements of the Act.

Finally, the Act creates whistleblower protection for employees, applicants or customers who report or attempt "to prosecute" a violation of the Act. Employers are prohibited from discharging, refusing to hire, or "in any manner" retaliating against an employee, applicant or customer who engages in this protected activity.