Tag Archives: K-State Research and Extension

MANHATTAN, Kan. — A Kansas State University agricultural economist says that non-traditional lenders are becoming a bigger part of doing business in farm country.

Jenny Ifft spoke recently at the Risk and Profit Conference, hosted by K-State Research and Extension and the K-State Department of Agricultural Economics. Her talk highlighted a growing trend by farmers to seek alternate ways of funding their business.

“They are an important part of the financial landscape, and as far as we can tell, they are growing,” Ifft said.

Listen to an interview with Jenny Ifft by Eric Atkinson on the radio program, Agriculture Today

The majority of farmers use farm credit lenders and commercial banks to finance purchases of land, equipment, crop insurance or other expenses.

But Ifft notes three categories of lenders that producers are now turning to as alternatives, including:

  • High value, branchless lenders. These are mostly life insurance and private lenders who work with larger clients and don’t have local branches. They may know their clients well and may offer great service. Their interest rates are very competitive.
  • Vendor finance lenders.Anybody who sells goods to a farmer, sells credit too. Vendors who sell the products extend credit to producers for the cost of the goods. Financing is provided internally or through a third party.
  • Collateral-based financing. These are primarily agricultural lenders, but are not deposit-taking lenders. Their decision to provide a loan is primarily based on the value of the collateral, such as equipment or value of a crop. They typically invest in developing a relationship with their clients. Often, the interest rate is higher than traditional loans, especially higher-risk loans.

“Some of these non-traditional lenders have been in business for a long time,” Ifft said. “It’s hard to tell how much producers are using non-traditional lenders because these businesses are not always subject to public reporting of their lending activity.”

For farmers, seeking a non-traditional lender can be a matter of convenience and service, she said.

“That may be especially true with vendor financing,” Ifft said. “They make it pretty easy for people. And a lot of times these aren’t huge loans in the scope of the entire operation. It’s a relatively small loan that is easier to apply for. And some of the collateral-based and high-value lenders, as part of their marketing, also are saying they are going to make it easier on a producer than a bank.”

“Another story I’ve been hearing a lot is that we’re starting to see more of the larger, diverse farms using non-traditional lenders. They don’t have conventional business models, so in some cases, it seems like these non-traditional lenders may have more flexibility to work with these types of operations.”

Some data indicates that younger farmers, or farms that are financially-stressed, are turning to non-traditional lenders.

Ifft, who just recently joined the K-State Department of Agricultural Economics, has studied the issue from a farm policy and a farm management perspective. More information on her presentation, and summaries of all of the sessions at this year’s Risk and Profit conference, is available online.

MANHATTAN, Kan. – Kansas State University researchers have released findings of a study to identify the best-performing varieties when producers are growing wheat for grain and grazing, known as a dual-purpose system.

K-State Research and Extension wheat specialist Romulo Lollato said he and his colleagues tested 28 wheat varieties at the South Central Experiment Field near Hutchinson – simulating grazing the crop in the winter and early spring and harvesting grain in the summer – to determine how the performance of different wheat varieties compared when managed under the dual-purpose system versus a grain-only system.

Their results are now available in a publication available from the K-State Research and Extension bookstore.

“The three most important things that we need to keep in mind when selecting a wheat variety for a dual purpose system are fall forage production, the date of the first hollow stem and how varieties respond to grazing stress,” Lollato said.

The yield potential of fall forage is important because it affects the potential beef production from cattle grazing wheat in the fall, winter and spring. Lollato said approximately 100 pounds of beef can be produced for every 1,000 pounds of dry matter, wheat forage production in an acre.

The date of the first hollow stem will determine when producers should stop grazing cattle. Grazing past the first hollow stem can decrease the following spring’s wheat yield by as much as 1% to 5% per day, Lollato said.

How well wheat varieties respond to stress often shows up in its’ grain yield following grazing, as compared to the ungrazed counterparts.

“The recovery of wheat varieties from grazing is very specific to the variety,” Lollato said.

He said that one trend researchers found in their study is that wheat yields in a grain-only system might not necessarily indicate how a variety would stack up in a dual-purpose system.

“What we saw this year is typically what we see year in and year out,” Lollato said. “Sometimes in the dual purpose situation, we have different varieties showing up toward the top (of the wheat yield rankings). The potential to bounce back from grazing is showing up whenever we look at the ranking of those varieties in the dual purpose situation.”

For example, Lollato said a few varieties were among the top yielding group in both grazed and ungrazed scenarios, including Rock Star (a Polansky variety) and two Westbred varieties, WB4269 and WB4699.

“When evaluating the grazed plus grain group only, other varieties, including a few from Oklahoma State University, also appeared in the top yielding group, showing that those varieties might be better suited for the dual-purpose system,” he said.

The researchers tested several varieties grown in Kansas and the surrounding region, including varieties from Oklahoma. The new publication outlines those varieties that are expected to be the best candidates for a dual-purpose system, based on being exposed to grazing stress during the early stages of development.

Lollato also has posted the publication and other updates regarding Kansas wheat production on Twitter; search for @KSUWheat.

MANHATTAN, Kan. — The beef cattle industry has already experienced three big “shocks” this year and the effects are ongoing, but have been blunted to some extent, according to a Kansas State University agricultural economist.

The first jolt came in mid-March when the COVID-19 pandemic sparked stay-at-home orders in most states.

“That had big implications for food consumption,” said Glynn Tonsor, a livestock market specialist with K-State Research and Extension. Those implications included restaurant and school closures – two large outlets for U.S. beef. As that happened, demand for beef shifted to grocery stores which were allowed to stay open. The actions disrupted the long-established flow of the beef supply chain.

The second shock happened soon after when clusters of COVID-19 cases began cropping up among employees in meat processing facilities, forcing some to shut down temporarily to control the spread of the virus, said Tonsor, presenting his Beef Cattle Outlook at the recent virtual 2020 K-State Risk & Profit Conference.

That left market-ready cattle and other livestock in some areas with no market to go to. The effect was a bottleneck, with a backlog of market-ready animals growing for a time, but fewer processing facilities to handle them. Tonsor estimated that cattle and hog processing dropped by as much as 40% during the spring.

As that bottleneck was developing, so too were disruptions to export channels, which have become increasingly important to the beef industry in recent years. The worst of the “pinch point,” Tonsor said, was the last week in April.

Though some characterized that time as a developing meat shortage, Tonsor said that’s not accurate: “There was no shortage of animals. There was a disruption in the flow and at times the variety of products that consumers could get. But for the calendar year, we not only expect beef production to be higher, but also domestic beef consumption to be up.”

The third shock stemmed from the first two. When consumers knew they would be staying at home and limited in their movements and also learned of meat processing slowdowns, some bought up large quantities of beef and other food and goods, which was characterized as a hoarding situation.

“The shift to more at-home consumption highlighted that not all meat is equal,” Tonsor said, noting that demand for ground beef products strengthened while demand for steaks and related cuts – those normally sold to restaurants – weakened.

Despite disruptions to beef exports, overall international trade has helped temper the negative effects of the pandemic on the U.S. beef industry, Tonsor said, warning that a growing protectionism sentiment in the United States will work against the marketing of beef exports.

As of June 1, Tonsor said there were about 1 million head of cattle backed up in the supply chain because of packing plant closures and marketing chain disruptions. By Labor Day, however, he believes much of the backlog will be processed.

“We’re getting much more current,” he said, but cautioned, “these plants have been running quite hard. We can’t take labor availability for granted. I don’t anticipate another situation where we have a 40% decline in production like we did in April, but we could still have some dips.”

He shared the most recent live cattle price outlook released by the Livestock Marketing Information Center which estimated the average slaughter steer price for the third quarter this year at $99 to $102 per hundredweight (cwt), which would be down 7.1% from a year ago.

Fourth quarter prices are expected to average $108 to $112 per cwt, down 7.5% from a year earlier, partly owing to heavier cattle and more beef as a result of working through the backlog. The overall average price for 2020 was estimated at $107 to $109, a decrease of 7.5% from 2019.

LMIC projections for next year indicate an increase in prices, with first quarter 2021 steer prices averaging $113 to $118; second quarter averaging $116 to $122; third quarter at $114 to $121 and fourth quarter at $117 to $125. Prices for 2021 overall were estimated at $117-$120, which would be 9.7% higher than 2020.

Tonsor encouraged cattle market watchers to access agmanager.info and beefbasis.com for more information on the beef market.