The corn and soybean markets continue to receive a mixed bag of information. The mix of information includes U.S. weather and crop conditions, reports on the rate of consumption, Chinese soybean import decisions, and USDA supply and consumption forecasts for the year ahead.

The focus on the consumption side of the market has been on the rate of corn exports. The USDA continues to project U.S. 2003-04 marketing year corn exports at 2.05 billion bushels. However, export sales had been large and it appeared that shipments might accelerate to the needed level. To reach the projection, new sales need to exceed 21 million bushels per week. Increasingly, it appears that exports will fall short of the USDA projection.

For soybeans, the USDA expects some build-up in U.S. inventories by the end of the 2004-05 marketing year if the 2004 crop reaches its potential of 2.97 billion bushels. A large increase in year-ending stocks is projected for South America. That forecast is based on the expectation of a 7 percent increase in soybean area (mostly in Brazil) and a return to more normal average yields. The 2004-05 South American crop is initially forecast at 4.15 billion bushels, 21 percent larger than the most recent harvest and nearly 20 percent larger than the record harvest of 2002-03.

Corn prices may become a little less volatile than experienced in recent weeks, but are still expected to trade in a wide range. It appears that soybean prices will continue to be quite volatile, with the most strength in old crop prices.

(Mark you calendar for August 24, and plan to attend the Extension seed plot tour and dinner. Darrel Good will be the featured speaker, beginning about 6:00 p.m.)

- Dr Darrel Good, Extension Marketing Specialist

Soybean rust has not been reported in the continental United States as of June 2004. However, there continues to be much interest in what is known about soybean rust and how we will manage this disease in Illinois if or when it appears. As has been widely reported, soybean rust is a significant problem in parts of South America and Africa, but we do not know how much damage it could cause in Illinois. Much effort in research and Extension has been and is under way to develop and present information needed to respond to and manage soybean rust. This article provides an update on educational programs and other sources of information on risk, economic analyses, and scouting for soybean rust.

Two questions are frequently asked in relation to soybean rust: When will it arrive, and how much damage will it cause if it arrives in Illinois? Much work has been done to help answer these questions and to model and analyze the risks. The following two sources of information provide useful perspectives on the risks of soybean rust arriving in the upper Midwest soon and how much damage it may cause. One is an article written by Dr. X. B. Yang, a plant pathologist from Iowa State University who has worked on soybean rust for a number of years. In his article (ISU Integrated Crop Management, June 7, 2004), he explains why it may be unlikely that soybean rust will be a significant problem in Iowa and Illinois in 2004. The second article is an interesting, lengthy, and detailed report from the USDA Economic Research Service: "Economic and Policy Implications of Wind-Borne Entry of Asian Soybean Rust into the United States." The article is described this way in a news release: "This report examines how the economic impacts of soybean rust establishment will depend on the timing, location, spread, and severity of rust infestation and on how soybean and other crop producers, livestock producers, and consumers of agricultural commodities respond to this new pathogen." For example, the risks appear to differ in different parts of Illinois.

University of Illinois Extension staff, with input from many others who have an interest in soybeans in Illinois, have developed a short protocol for scouting for soybean rust. The protocol includes basic information for scouting fields and collecting and submitting samples for soybean rust diagnosis.

• While in soybean fields, carefully look at the lower quarter of soybean plants in addition to "top growth"; be sure to examine undersides of leaves
• If you see something that looks "suspect" for soybean rust here is what to do:
  • Collect 20 leaflets with suspect symptoms.
    • Leaflets should be flat, dry, and placed between dry paper toweling.
    • Leaflets should be packaged in two layers in zip lock plastic bags.
    • The bags should be clearly labeled with a permanent marker providing: date, host plant, collector's name, phone number, collection location within the field, location of the field, county, township & section, and nearest intersection. GPS information is helpful if available.
  • Immediately submit samples to the University of Illinois' Distance Diagnostics through Digital Imaging (DDDI) system. If the sample cannot be immediately shipped, keep refrigerated until shipment to reduce plant deterioration.
    • The Macon County Extension office at 2535 Millikin Parkway can process your sample with the DDDI system.
    • The results of your soybean rust prescreening via DDDI should be available within a few hours.
    • If the DDDI prescreening appears suspect, your plant sample will be submitted via overnight mail to the U of I Plant Clinic.

If soybean rust is detected and confirmed, fungicides should generally be applied as soon as possible.

 Any time you spot treat a problem area or spray around building it is important to be just as careful as when you spray a 80 acre field. Round Up, Prowl, Diazinon, Seven, 2,4-D and all the other pesticides on the market have to be handled with care. Pesticides can be absorbed through the skin, breathed in through the nose and mouth, or absorbed in the eye through vapor. The longer the skin contact, the higher the rate of absorption.

While you are working with the chemicals, always wear protective gear such as gloves, spray respirator (not a handkerchief or paper mask), and goggles. When you finish spraying change clothes and take a shower. Some signs of pesticide poisoning are; nausea, sweating, headache, weakness, dizziness, and vomiting. If any of these symptoms occur during the use of the chemicals or after spraying go to a medical professional. Pesticide poisoning is not something to take a chance on, if left untreated the poisoning can have affects on the brain and central nervous system.

Don't forget that if your shoes are sprayed with chemicals the leather can absorbed them and then every time you wear them you are again being exposed to the chemical, if they are not properly cleaned. Play it safe.

How Does My Farm Business Stand Financially?

The balance sheet is an essential financial tool that reports the financial condition of the farm business. Another name for a balance sheet is: Statement of Financial Condition. Typically this "snapshot" is taken (prepared) at the end of the calendar year for most producers, or at the end of the fiscal (business year) for others. However, a balance sheet can be done at anytime.

Why Do a Balance Sheet?

First, a producer should do one simply to see how the business is doing from year-to-year. If you are going backwards financially, a balance sheet is one of the areas where financial problems will show up. Financial Ratios can be calculated from the balance sheet to give the owner or investor a heads up concerning problem areas. Secondly, most good lenders require a balance sheet to ascertain what the business owns and owes before lending money. A well-prepared balance sheet can be a valuable bargaining chip to use in negotiating lower interest rates on loans.

How Do I Get Started?

A balance sheet can be constructed with a piece of paper and a pencil. However, a neat and professional looking balance sheet can easily be done with the use of a computer. Most good computer based record keeping software has a balance sheet tool. General purpose record keeping software, such as Quicken® or Money®, have good balance sheet tools, but they are not built specifically for farm operations. A farm specific record keeping software may have a balance sheet tool as well. University of Illinois provides a free Excel based balance sheet (Simple Balance Sheet) as a part of the FAST (Farm Analysis Solution Tools), that provides adequate space for detail, but is also easy to use and is free of charge. To download this tool for free, go to: www.farmdoc.uiuc.edu. Excel 97 software or newer is required.

Take an Inventory of What You Own.

What you own is called an asset. These include: land, bank accounts, retirement accounts, machinery, prepaid expenses, seed, chemicals, money owed to you (accounts receivable), livestock, marketing accounts, crop inventories, buildings, etc. Minor items of machinery can be lumped together. Major items should be individually included. A good balance sheet will allow for both the value of what the machinery is worth (market value—if sold that day) and the remaining value (cost value) that has not yet been depreciated (expensed). The next step is to write down what you owe. What you owe is called a liability. Examples of liabilities include: loans, accounts payable, outstanding accounts with vendors, accumulated interest owed, but not yet paid (accrued interest) and other items you owe for.

Check with your accountant to see how CCC loans and lease payments are handled during tax preparation. Once you have your information, construct the balance sheet. If you are using the FAST Simple Balance Sheet, simply fill in the blanks as you go. This particular sheet also has a small cash flow section, which allows the producer to take a future look down the road. Go ahead and get started now and then do one again at the end of your business year (calendar or fiscal). Diligently update your balance sheet annually.

Extension and university specialists recently met to compare notes on a wide variety of farm management issues. The primary themes were 1) agriculture continues to change, 2) bulk commodity production will get more competitive, and 3) small farmers are going to have a difficult time in the next decade. The majority of the latter presentations centered on the concept that small farmers may have to diversify their operations into higher value crops like vegetables or add value to what they currently produce.

The biggest changes will be in the southern states, where traditional tobacco subsidies are being eliminated and farmers are moving to vegetable production. Those producers are selling direct to the consumer or forming cooperatives to build their own packaging plants. The farmers then market the produce to Wal-Mart and other large chains.

A significant recurring theme in the new operations involved the use of cooperatives, whether it was vegetable production, dairy products or specialty value added products. In each enterprise, Extension, state government and farmers designed the cooperative for a specific purpose. We have come almost full circle since the days when farmers formed cooperatives to obtain needed products and resources. The only difference is the first cooperatives provided raw materials and today the cooperatives provide the markets to sell what is produced.

- Paul Mariman, Farm Business Educator

 Strained relations between the landowner and tenant farmer are often the result of poor communication. Extension receives plenty of phone calls from upset landowners wanting to know how to go about "kicking the farmer off the farm." Many of these calls are from a person that has recently gained control of managing the family farm from a deceased or ill family member. The main reason for the strained relationship is typically a perceptual misunderstanding between the contractual parties concerning their contractual obligations of a verbal contract.

Verbal contracts are legally binding. Under most circumstances, neither party wants to go to court to resolve differences. With a verbal contract, proving your point in court may be a very difficult task. Whereas a written lease contract signed by both parties can avoid most disagreements between the landowner and the tenant farmer. Spelling out duties and obligations on paper helps to sort out possible irritations between the parties. Reviewing the contract on an annual basis also further assists the communicative efforts.

You may feel that because a lease arrangement worked for the previous parties there is not a need to change. However, in recent years farming has greatly increased in complexity, increasing the need for a written contract. Also, the current farmer may offer resistance to the notion of putting a written lease in place. It is very important to have all details spelled out in writing to protect both parties' investment. When dealing with a lease involving family members, it is also very important to have details in writing to help "keep peace" in the family.

Extension can provide the framework for a written lease contract that can be tailored for your particular farm. There are documents provided for both cash rental contracts and crop-share agreements. This lease form is available in Microsoft Word or fill-in PDF. The MSWord version can be downloaded to your computer. The fill-in PDF can be completed online before printing. The lease form represents a basic model for an agricultural lease. The parties in the lease or their legal counsel may wish to consider modifications to better meet the needs of the particular landowner or tenant. Your legal representative should look over the contract before it is signed.

A well-written contract will not prevent all possible disagreements between landowners and tenants, but will help keep the relationship on sound footing.

For more information: www.farmdoc.uiuc.edu/legal/farm_lease_forms_abs.html.