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Tommy Grisafi is the main host and content creator for Ag Bull Media.
The Ag Bull Podcast showcases agriculture's top talents in a long-form video format. The Ag Bull Trading Podcast is a deeper discussion of trading with analysts and key players in agriculture nationwide.
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AG Bull
AG Squawk with Davis Michaelsen | Ben Riensche | Rent Deadlines and Hidden Forces
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We watch grains slide after the market questions yesterday’s rally, then shift into a blunt, farmer-first look at why tight margins are exposing weak links in marketing, finance, and cost control. Ben Renchi lays out the cash rent and farmland price realities most people miss, then explains why modernizing USDA NASS data matters for trust and volatility.
• Grain, soybean, and wheat weakness after crop condition updates
• A practical case for hiring professional help in marketing and strategy
• Iowa’s September 1 cash rent rollover and why it quietly sets 2027
• Why rent negotiations are relational and losing acres can be permanent
• 1031 exchanges, data centers, and step-up basis effects on land prices
• How inflated farmland values complicate young farmer entry and succession
• Rising credit use, working capital burn, and the risk of forced liquidation
• A roadmap to modernize USDA NASS with satellites, passive data, and more frequent reporting
• Survey fatigue and the push toward “one farmer, one file” to reduce duplication
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Futures Trading involves risk of loss and is not suitable for everyone. Past profits are not necessarily indicative of future results/profits.
Market Wrap And Premium Plug
SPEAKER_02Our guest on yesterday's program gave the ups in corn and soybeans the side eye, opining perhaps the crop condition report is gonna put a little pressure on corn and beans. And sure enough, here we are corn, beans, and wheat all lower. That does keep us with our goal of gathering the most insightful minds in agriculture today. Today's guest is super switched on as well, and he actually wants to talk specifically about the things that nobody is talking about. From behind the big blue bodacious microphone of Ag Bull, your pal Davis Michelson, the handsome newsman for Ag Squawk in the afternoon. Glad to have you here with us on this Tuesday afternoon, August 4. We're into August, everybody. As I said, right from the top, our guest yesterday was a little skeptical that we could hold on to the gains we had yesterday. And sure enough, we've uh we've given most of those back. We'll get to the markets in just a little bit. And I'm really excited about today's guest, Ben Renchi from Central Iowa. I've I've got a few things that I want to talk with Ben about, but he came on hot to trot. He said, you know what? No, we could talk about whether it rained on the west side of my porch. We could talk about this or talk about that. Let's talk about stuff nobody else is talking about. He gave me a few. I'm gonna dig a little deeper, see what else he's got got under the lid today that that we can talk about that that people maybe brush over, people maybe don't know about things that people aren't talking about. This is this is gonna be a great one, gang. I have no idea where the conversation is gonna go, and it's it it should be exciting. So be sure and stick around. I would like to direct you to our premium side. Now I mentioned brokerage yesterday. When I talk about our premium side, that's separate. You can be part of the premium side and get all of the lavish benefits from that. Text alerts, and you can call you know our people and talk to them and find out what's going on in the market. But that doesn't necessarily mean that you're signing up for brokerage. I want to make that clear. But you can go to agbull.com, agbull.com, or call 855-737 Farm for the details, agbull.com premium services that will keep you informed and on the front edge of information. We had a daily sale today, 132,000 metric tons of soybeans to China for 2627. And now let's get on to that crop condition report. We've got uh
Crop Conditions And Energy Shock
SPEAKER_02corn conditions falling below year ago, although maturity is is still ahead of schedule. Soybean conditions came in a point ahead of the same week last year, but blooming and podset kind of fell behind year ago. Spring wheat maturity is basically on track with last year, and condition ratings are ahead of year ago, although harvest is off to a slow start, according to USDA. Cotton conditions behind year ago, although crop development is generally ahead of schedule. Crude took another uh swing lower, as uh Secretary uh Bessent says uh we're close to a deal to open the Strait of Hormuz. Really? Okay, that makes me feel a whole lot better. Apparently, the crude oil market is buying it currently here at uh roughly two o'clock central time on Tuesday. We're we're down again into the mid-70s in the in the front end of the market there. I've got the October down $3.46 ish at $74.44. Look at the front month September at $75.81. That's down four dollars fifty-three cents. And as I said, Besson seems to think that there could be a deal today or tomorrow. I haven't seen anything yet that's been inked. And gang, we've we've talked about this, we've been around this tree before. I'm hoping for peace, as as I trust you are as well. But uh got it, it's elusive. It's elusive. It seems like there's a whole lot of, yeah, we're gonna, and then we don't. And then yeah, no, we're not gonna, and then we do. We'll have to see where this one shakes out. Maybe this time, maybe this time. Let's go to the tail of the tape. A little easier to keep our hands around. Pressure across the board in the grains from the beginning of the day session today. Corn was down a nickel at that point. Soybeans and winter wheat off double digits, cattle futures were mixed with nearby's higher, lean hog futures were mostly lower this morning. I stepped out to go to the barbershop and to vote on some local stuff here. And when I came back just ahead of the noon hour, corn and soybeans had accelerated to the downside. Wheat had stabilized, although still double digits lower. Livestock had mostly made up its mind by that point to head higher with feeder cattle leading the way upward. Now I'm watching the markets on plus 500. As you may know, we use plus 500 T4 software every day for real-time quotes and a host of different features, futures, and options, and all sorts of cool stuff. Plus 500 T4 software, plus 500. And let's look over at that plus 500 T4 software. We've got settlements here. I've got December corn closing the day at 465 and a half, down seven cents. Basically erased everything we got yesterday. Over to the Novi Beans 11.77 and
Closing Quotes Grain And Livestock
SPEAKER_02three quarters at settlement, down 14 and 12 cents. Meal was lower, soybean oil was lower. Hey, and what do you know? The winter weed markets were lower as well. I'm looking at the Chicago De's 6.57 and a quarter, down 12 cents, even the KC December wheat 7.24 and a half at settlement, down nine and one half cents. Livestocks, get me out of here. I've got the feeder cattle, the October contract, 337.15. That's up $3.45 on the day. Your October fat cattle, $227.90, up a buck seventeen and a half. And October lean hogs turns out they were a little mixed, kind of going into the close. And it looks like we we did pop up above unchanged in positive territory, at least out to the April. October lean hog futures $84.35. That's up 67 and 1 half cents. I'm just checking the the equities here. Yeah, equities are higher, looks like across the board. They seem to wow, look at the Dow go. Huh, quite the day. Higher in the equities and lower in the crude oil futures. All right. With that, I'm very excited to bring in my guest today, Mr. Mr. Ben Renchi from Central Iowa. Doug Gunnett, it's it's sure good to see you, brother. How are you?
SPEAKER_04Oh, this is a pleasure to be here.
Shady Grove Roots And 2027 Reality
SPEAKER_04This is the top of my list. This sure beats working.
SPEAKER_02Yeah, I suppose so. I suppose so. Well, I I guess I want to start Guillermo. We've got a got a picture there. Ben, you and I have kind of a family connection that goes way back before my time. When my granddad got out of the Marine Corps in World War II, he bought a little plot of ground in a little place called Shady Grove, Iowa, which, as I understand, isn't there anymore. I think the church is still there, and maybe the old blacksmith shop or or something like that. But you're down around the Jessup area in Iowa. Shady Grove, what is that? What is Shady Grove to you as a local there?
SPEAKER_04Well, Shady Grove, this is a good representative building here. Had a little country store that looked a lot like this white, white building you've got on the screen. And you know, you could uh get a few supplies there, a sandwich, cold bottle of refreshment in the afternoon, and you know, the neighbors would stop by before they had to start evening chores. It's a great little community. Now, I'm over two two miles to the further to the west. I'm in Jubilee, and so Jubilee has the church still going, went there last Sunday. Great little community. So, very good.
SPEAKER_02What happened to Shady Grove? Just got did it get absorbed by Jubilee? That's it. The Jubilee was the big town, and nobody wanted Shady Grove anymore.
SPEAKER_04Well, it's kind of a funny story. The store closed and it went through kind of you know, it kind of turned into a brownfield, and then all of a sudden, boom! Now there's about 25 houses there, so you can move back anytime. How do you like that?
SPEAKER_02I should let my dad know. He he gets very nostalgic. He he took me out there a number of times when I was a kid, just sort of looking around, and it didn't, you know. I mean, it looked like farm ground, looked like very good farm ground, actually, at the time, and but other than that, didn't look like a whole lot was going on. Yeah.
SPEAKER_04If I'm not mistaken, Davis, I farm the land that your family own now.
SPEAKER_00I think that's since 1598. So yeah, very good.
SPEAKER_02And you do pretty well, you seem to have a few things figured out. How's it going so far this year?
SPEAKER_04Oh, it's a typical Goldilocks year. It's some's too wet, some's too dry, sometimes it's too hot, sometimes it's too cold, prices are low, prices aren't high enough. You know, Goldilocks said it best. We're gonna be fine. I mean, we're not covering our costs, David. You know, uh fertilizer's gone up. Yeah, you know, that not too long ago there was a story out that that I believe Farm Bureau economists said 53% decline in profits over the past two years for the grain farmer. Much different than the cow calf producer who's getting a well-deserved bump. But you know, times are tight. And you know, another interesting study that came out came out from corn growers that what our costs as U.S. producers are versus vis-a-vis what Southern America South America producers are paying. And it looks like we pay, you know, a premium price for most of our products and maybe foot a lot of the bill for RD that they get to take advantage of. I mean, it everybody else can ground truth what they see in that, but you know, it's just it's it's it's a tough picture in grain farming right now.
SPEAKER_02Yeah, it really is. Well, and as as I understand it, their farm bureau and others aren't really expecting much of an improvement in 2027. I got on my soapbox yesterday a little bit, Ben, and I'm not asking for specifics from you or or anything like that, but I was trying to stress the importance of not just relying on the cash market to get you where you need to be, to keep you farming in business for the next couple of years.
Marketing Help When Hope Fails
SPEAKER_02I mean, there I know you've got a sizable operation, a very successful operation. Tell the good folks, you know. You am I am I way off base? Hope is not a strategy. And what when people say that, they mean you've got to put some things in place. And I was talking about hiring a professional to help you manage your strategy, to help you manage your marketing rather than just relying on the cash market and hoping that your scale tickets are are gonna are gonna pay the bills because this year they certainly aren't, are they?
SPEAKER_04Well, if that's your weak point, that's where you do need to hire a professional, Davis. I mean, I I can work out in the shop with the best of them, but there's just welding projects and repair projects that I can't handle. So I hire someone who's really good at it. Same way at accounting or your legal side or marketing. I mean, isn't that the goal? Is to get rid of the uh weakest link in the chain. So if that's where you need to hire people to help you out, go for it.
SPEAKER_02So yeah, well said, well said. Well, I I kind of pumped you up a little bit in the intro, Ben, because you mentioned you want to talk about some stuff that uh people aren't really talking about. And I I do want to get to that. And when we were we were off air getting ready for the show, you would mention the land market that an aspect that nobody's talking about. Can you can you elucidate that for us, please?
SPEAKER_04Sure. You know, I think one of the mis most misunderstood topics when when the media covers grain farming is the cash rent rental market. And
Cash Rent Deadlines Nobody Explains
SPEAKER_04most are you know, I've had several discussions about this uh in recent days as well, as picking a few fights on X. And the that most don't understand, Iowa on September 1 has a statute, has law that says that if you don't agree to different terms for the lease in the upcoming year, your present lease for the next year rolls over. So we get to September 1. If I think the rent's too high and I don't say anything to my landlord, they're locked in for the next year at the same terms we had in 2026. If the landlord would want a different rental rate, you know, more rent is the case, although I don't see how they could ask for it this year. You have to notify your tenant by September 1st, or the lease rolls over and you're at the same terms. I believe for Illinois and a number of neighboring states, that date is October one. But either case, we're down to 30 or 60 days where the rental market for 2027 will already be set. And for me, rental costs are well over a third of the cost of my production on land that I work with a landowner partner. You know, often I think that your lesser peers in the media miss this fundamental that it September one is the line in the sand for me. For other producers, it's October one, and it's not a publicly traded market. Yeah, there's some surveys, you know. Iowa State does a it's a pretty good survey, it's just a year in arrears. They they published the 2026 survey, what rental R8s are, and they're reflecting what happened last September 1st. So they're really talking about that snapshot in summer 2025. It doesn't have as much relevance to this year as you'd think. And so they miss it, and most think that it trades like a public market, like I should be able to get a quote on it, like December corn. Or gee, if you decide that the rent's out of line and you want to negotiate with the landlord, and they say we're gonna take our ball and go play with someone else. There's most farms around here rent generationally. I mean, if you lose it, you might not ever be the tenant on that land again, unless you just and and you know, it's it's a gentleman's club of sorts that you know, you don't I would never go attack someone who has an established tenant, you know, to try and get a farm away from them. I can't say that's the case with everyone, but I do not choose to do that. And if you know I lose something, I figure I've lost it for the rest of my career. I have to find something else.
SPEAKER_02Yeah how is it that more people aren't aren't aware of this?
SPEAKER_04Davis, you know, if you're not in the business, you just miss the nuance. You know, people get into I got into this business because I like driving tractors, I like making production decisions, I like managing my agronomy. I'd love being living on a farm. You obviously have your set of reasons why you became a journalist. And so that doesn't mean that you're gonna understand every nuance of farm management. I'm just pointing out that this is something that's relevant for this is August 4th. You've really got 25 days left in Iowa. Now, one thing you can do on September 1st, and um I do this sometimes. Landlord says, you know, I really like more rent. I said, I'd really like less rent. Well, let's just wait till we harvest, let's agree to talk about it later. That's uh that's a perfectly acceptable answer to me, you know, that we're just we understand we're gonna change. You can go through the formal termination process, or you uh most of the time we just spit shake, you know, and agree to revisit it, you know, in the winter months. But for the most part, I'd say nine out of ten times the lease just rolls over on September 1, and there's just no change from the prior year. And of course, I'm suggesting that in the face of high costs and modest to low prices, that maybe some of the euphoria that got priced into the market in 21-22, where we had regular size crops for the most part, and lower production expenses, and you know, generous grain prices, maybe those things got priced into the market and we're not coming back down off of it. Now, I did pay attention into my economics class. And if you've got a lot of fixed costs, you've got big tractor payments, you've got big combine payments, you've got big sprayer payments, you know, you divide them out. They're in the numerator. Your denominator is the number of acres you farm. And so you, you know, farmers are very reluctant to make the denominator smaller. So, you know, they will hang on till the last moment and probably overpay to spread fixed costs. You know, they'll cover all their variable costs, fertilizer, seed, crop care, you know, but when it gets to the insurance bills about the same size no matter what, you don't you can't adjust the combine payment down five percent because you lost five percent of your acres. So even if you get partial recovery of your fixed costs, you know, farmers are likely to stay with the farm. I think we've been there for the past three years. This is the third year of working capital burn for grain farmers, yeah. And then another confusing thing about this, and tell me if I'm going on too much, David.
SPEAKER_02No, no, go on, go on.
SPEAKER_04You know, often I had this discussion yesterday. Well, the land for sale market is not seeming to pull down. Well, the land buyers and land renters
Tax Rules Data Centers And Land Prices
SPEAKER_04are not the same, and I will point out that there is a kind of a new class of buyer in this that is causing market. Let's just use distortion, I'll think of the word later. But you know, this 1031 tax exchanges were developers, particularly if you're you know selling out to a data center. The kids in Kansas City or Minneapolis or Chicago that inherited Grandpa and Grandma's farm thought it was pretty good investment, kept going up in value, get a nice rent check, didn't sell grandpa's you know, prize asset. Well, the data center offered them five or ten times what it'd sell for as farmland, and so they get a chunk of money and or just be a fund or something like that. Well-heeled individual, they get a lot of money for their farm selling out to a data center, and you know, they're gonna pay a lot of capital gains on that. They might give a third of the money to the government, if not more. So, what do they do? If they buy more farmland, the capital gains bill goes away, and that's that's kept the price of farmland very, very firm and a very, very difficult situation for the beginning or young farmer because yeah, it's David versus Goliath, if you paid attention in Sunday school, and and Goliath has a big, big checkbook, and a 25-27-year-old farmer doesn't have a big checkbook. And I'm not I'm not saying that the capital gains exclusion via 1031 shouldn't be a vi available to everyone, but I'm just saying that it's kind of been weaponized against beginning and and young farmers. We're not getting a natural transition because of inflated land prices. No, yeah, wealthy individuals have figured out that you can use farmland to have a step-up basis, you know. When when this is why farms, I mean, this is another distortion. You know, my mother's 96 and in the nursing home. By all rights, she should sell her farm to my 27-year-old son and his wife. I mean, that just that's just the natural course of things. But the difference in her tax bill to hold that until her death, and then, you know, the farm that she and dad bought for $500 an acre that's worth $14,000 now, you know, you're looking at $13,500 per acre of taxable gains. Well, our tax code says that that gets stepped up to current market price. Well, that just keeps old ladies in nursing homes owning farms that probably should be transitioning to 27-year-old farmers with their whole life and career really ahead of them. And I'm not saying that everybody shouldn't have those things, I'm just saying that right now in the David and Goliath contest, some of these things are getting really tough for a young farmer to compete, you know, to get their foothold.
SPEAKER_02Absolutely. You know, on the I did I did want to get to succession with you, but not necessarily I didn't expect this to be the path. I can tell you from my own experience, my my grandmother that'd be my mom's mom. Now, grandpa passed clear back in '99, but she lived to be 104 years. old and needed needed care for a good long time. I know that those farmland rent payments were helping out pay for her nursing home bills there. How is how how do we go about you know how how do we how do we rectify that? Because I understand you got to get the youth in here and you you got to give them ownership and you've got to give them a sense of yes I've I've got some skin in the game here. I own some land and yet I also understand the the end of life value to like you said those grandmas who are or grandpas who are in the nursing home who've got some pretty significant monthly bills to handle. How do we how do we balance those two out responsibly?
SPEAKER_04Yeah well there's a little thing called Congress that could fix this you know but uh but no I think we've already established hope is not a strategy.
unknownOkay.
SPEAKER_04Well I don't have the exact answer but I do want to stimulate the discussion on this topic because let's just envision how it might be you know what if that elderly nursing home resident which I will tell you there's eight grandmas for every two grandpas in a nursing home it's just you know it's documented fact men just want to go for go first anyway that's supposed to be funny but but you know they ought to be able that yes there is installment method of sale and they can sell it on contract and realize the gain slowly and all that but it should should be a simpler path for that believe it or not eight or ten or twelve or fourteen thousand dollar a month nursing home bill and I hope someone fact checks me on that because that's what nursing homes really cost for full-skilled nursing care assisted care later it would be two thirds of that you know well rather than you know you can get the cash rent checks but really how long are you gonna live? Are you gonna live to be 110? Shouldn't grandma just be selling it to the grandson or the young neighbor that wants to get going and and renting to them forever isn't doesn't leave them the option of putting up that new granary or the livestock barn they want I mean these things should be transitioning much much sooner than what we've got set up yeah yeah and I I definitely agree with you on that I want to go back to the data centers just a little bit adding support to to the land market are there that many acres being sold to to data centers is it is it that pervasive that it adds support even even in a place like Iowa Davis just how many does it take when a data center decides that you're buying the farm they want is by the power grid and has the water available I mean some of these things sell for 50 70 90 000 an acre you know on farmland that's probably worth a fifth to a tenth of those values so those people you know are very good about obscuring who the money comes from and you know I I once again on a fist fight on X yesterday I got into it with a person that says well farmers are still buying the predominance of the farmland and I'm like yes but let's talk about the structure of the market I wish I could tell you how many land auctions I've been to that I've watched or participated not this year I don't have any money to buy land but I've watched and there's the the the wealthy family office wanting to own a farm so they can get step up basis and protect their wealth and that's their right but they're there and then you have the the person who builds apartment buildings at the edge of town or the data center person and they bid and they bid and they bid and finally it gets to be too low of ROI to meet their threshold it gets down around two percent and they're like well this farm in my area I'll just use the numbers in my area it's gotten to 15900 I'm not gonna bid 1600 well 16 000 won't pencil to farm it i mean at half that it's tough at six percent interest to budget it but anyway they'll bid and bid and bid and there the farmer like me sits there and I've told there's a couple times in my life I've gone to a land sale and I told the auctioneer I'm in and if I pass out don't throw the cold water on me until I own the farm you know and I woke up and I paid 155 for this farm where I built my grain facility and so you know you'll get some smarty pants tell you well the farmer bought it so it must be worth that to farm and I'm like well you know you were bidding with an 80 year old neighbor who's been driving past this since he rode his pony to you know the one room schoolhouse almost and he wants to own it he doesn't care what it costs he's got CDs or she has CDs in the bank you know they buy it they're 90 years old yes none of this makes the best sense but they want it they want it for their family they don't care about ROI and and then the statistics says yep farmer bought it so farming must just be peachy keen and you know it's not that case and it's like well did any young farmers bid no they quit four thousand dollars ago and you know so I don't think the farmland market who buys land is the same as the person who rents land yeah yeah oh that's really interesting I'm gonna make a note here to have a have a land conversation really soon again this is this is fascinating I'm kind of I'm kind of working you know you know what you know what you're gonna step in when you do that yes everybody in the auction business lives and dies by how many listings they get and so if you want listings for tractors to sell at auction or land to sell at auction what you want to do is parade the highest price you heard and that gets the listing and then your job after you get the listing either to auction it or to negotiate a buyer is to then start negotiating with the seller what's the minimum you'd really take. So you know you show them the sale in Northwest Iowa that was at $29,000 an acre because it was wedged between two dairies and you know that you can only move silage and
Auctions Incentives And Rent Sticking
SPEAKER_04manure so far. And then you bring it over to you know somewhere else in the state that kind of has its 60 miles to a good market for grain and doesn't have a livestock packer in the area maybe not the most you know prosperous area with a lot of aggressive operators and then you're like well I think my farm should be worth $29,000 an acre you know and the they will hold that out get the listing and then after that hey I I I think maybe I can find a buyer for your farm at $13,000. Right it's like well what happened to the 26 well you know and their commission their two three percent you know on twelve thirteen thousand dollar lands still a pretty good check I mean it it will take you to Lake of the Ozarks it will pay the airplane payment it'll put the wife up on the luxury shopping weekend and everything else that the auction crowd likes to do like the crop insurance crowd likes to do on for fun you know mine is go to Jessup Farmer's Day and get a cold bottle of pop and a bratwurst but or I'll I'll help the dairy producers out. I'll get a chocolate milk and a bratwurst there you go and you know but I don't have like you know luxury cars and you know weekend homes like my crop insurance agents and my auctioneer types do.
SPEAKER_01And so gosh I hope someone comes down on me like a ton of bricks or saying something well you know the other side of the point you already you already live in God's country baby what more could you possibly want?
SPEAKER_04Yeah but you know that's the oldest game in town anybody in the land trade is going to tell you how strong it is you notice they don't post up on social media like bargain of the day this farm in central Iowa sold for $8400 no it's always record price for this one year old John Deere tractor because it gets some listings. Yeah I'm marching you backwards through our conversation here to hit some high points I want to go back to cash rent really quick you talked about that September 1 deadline to renegotiate or at least to have the conversation I'm just curious given the way things are given the last couple of years here and I know that there was there was some cash there was a little bit of cushion I've I have the sense that that renters tenants have have about burned through the cushion if there was a cushion to begin with if they go to their landlord and say you know what I'm sick of paying let's just use numbers I'm sick of paying $325 an acre I want to pay $315 this year I want to pay $300 this year I want to pay less for rent if the landlord says no forget it is there somebody else out there who can afford to pay that I mean all aside once you lose a a chunk of ground it's gone be it you know at auction or be it for for lease I'm just curious is is the money out there to sustain rent levels where they are yeah well for the time being you know the past few seasons there has been there'll be a tipping point somewhere you know I'll just cite that uh last week I needed to you know because times are so tight I need all the free meals I can get and so I went to dinner with a bunch of Robobank agrofinance folks oh yeah and I and I think I I qu am quoting this correctly their average utilization on lines of credit a year ago were was around 35 to 40 percent and this year it's around 80 percent in other words farmers are using more and
Credit Utilization And Forced Liquidation
SPEAKER_04more credit to put in the crop and why is that because they don't have their own cash and so you know the market's strong until it isn't i mean you know everybody said buy bitcoin and it got to 125000 and they said buy more bitcoin well today it's worth 65 000 or somewhere thereabouts and so you know I think we'll eventually get you know if this continues with these margins there'll be a shishm i mean it won't but the the the landowners may win this time because they're just at it's only 25 days left on the clock to adjust for next year and there's no rhetoric going about time there's a little bit going out there the times are tight but I I gotta admit you have a unique journalism model most rely a lot on ad revenue and guess who pays ad revenue people who don't want to back their prices down people who sell fertilizer people who sell tractors people who you know are in the land brokerage business it's not a cool thing to say that everybody needs to tighten their belt well get what do farmers need more than anything ag supply to tighten their belt you know I mean heaven forbid they have to drive the white half ton pickup too when it's two years old I mean this is not the year they get all new pickups to drive who who out there davis is tightening their belt I mean when I listen to the equipment manufacturers they ask the same question over and over again when are times going to get better so it's like why are you just selling escalades and navigators when I need a Toyota Camry or a Ford Escape you know ask the seed people I'm sure they'll be here in a few weeks we need a three percent increase why because our costs went up well ouch I got no room to go up you know and and eventually what's gonna happen with that 80% line utilization is that the banks will shut off the credit and you know it this market isn't really gonna change until there's forced liquidation and this year by the time we get through the winter there will be people who've burnt through their working capital and it won't be your friendly local banker who shuts the tap. You know banks have to report how they're gonna give grandma her CD money back if she decides to take it out of the bank they've got auditors they've got examiners federal federal insurance you know and you know they go through the portfolio they go through the larger exposures in the bank and say gee this guy burnt through his working capital he has no margin for error you know his current liabilities almost exceed or equal his current assets there's just nothing that they could do without liquidating land or machinery to get them back with some you know working capital.
SPEAKER_02And so I think if nothing changes this is the tipping point this is the winner that banks start shutting the tap of credit I mean I've heard it when I go into my banker like you're not here to ask for money are you no not today I was gonna see you know what was on the cookie plate here as I put the deposits in it's so you know and I'm scratching my idea about getting more cash I'll tell you that because there's a lot of the finger wagging is starting well and you know that's that's kind of where we where you and I started and and why I raised the question about you know how can anyone expect to make it longer term just on the scale ticket just in the cash market without some sort of support system without some kind of structure beyond passing over the scale and hoping that the cash market giveth because the cash market will also take away when you say who's tightening their belts it's the producer who is who is forced to tighten their belts because there's there's no other choice right now.
SPEAKER_04I think that's an extremely fair point Ben I think we've done all the tightening now it's time for them to participate or it's going to be an involuntary tightening. Right.
SPEAKER_02So right right I just want to say Ben I really appreciate your your candor on this here and your insight you're a very smart guy very very wise fellow and that's why I brought you on we sort of tout ourselves as the uh the the podcast that lets people talk and you're delivering in spades for us today and I I really appreciate it. Let's switch gears just a little bit because your nation has put you on a task force to help to advise to I guess I'm not sure entirely
Modernizing USDA NASS For Trust
SPEAKER_02what your role is here but to modernize NAS is that right yeah that's right.
SPEAKER_04So the Secretary of Agriculture Brooke Rollins has and and she's at FarmFest today and made the first official announcement that there's some skepticism about the quality and and the accuracy of USDA reports like crop production the rural agriculture supply and demand and and and you know it you know it's time for a little sunlight there. Anyway everybody'd like to see a little more transparency but where this really manifests and what really lit this candle was that the last surveys the farmer surveys they sent out only it had like a 30ish response rate right I saw that too down from 80s you know you go back a decade or two and you know what is that saying farmers don't trust the system farmers don't want to share the data so how are you coming up with you know who's got what in terms of grain in storage who's got what planted and that and then you've got all these other data streams that are out there you've got the FSA data the certified acres you've got the RMA data you can ground truth to that is you know actual production of crops and you know the actual acreage of crops and there's acres that aren't crop insured but you know I bet it's a pretty static percentage of the total every year. USDA is I'm I oft criticize them they get to produce the right answer at the end of the year. Corn yield is 186 why because we said so you know I wish that would have worked with my third grade math teacher two times two is five why because I said so I'm gonna be work for the USDA NAS someday and I've been skeptical and so I got invited I went with former US ambassador to food and agriculture Kip Tom Indiana farmer and we went to the lockup they did a very nice job of showing us how when the data is released that there's equity that you know they do it in a manner that lets everybody get the data at the same time but because of technology some people can process it a lot faster. I mean if I don't know about you Davis but I don't have a big bank of computers with AI that can look at the table and make in microseconds decisions on what I should all go rhythmically trade. But there's certainly players out there that are doing that. So should they still announce them during the trade or should they go to the biscuit break in the morning when you know there'd be kind of like an hour break. I I do favor not doing it in the old days like where they released it on Friday after the trade and then you had to wait till Monday morning and look for the eruption you know of the cave in whichever the case would be so you know that's something okay why do we have such monumental blockbuster reports? I mean crop production in January I mean it's kind of like you know you're kind of waiting to go to the gallows you know like oh my god time's standing still we just need to know the number and then you know the summer WASDI reports and you know planning intentions in the spring well you know what outside of the government don't you suppose the big food companies and the trading houses and foreign governments have their own means to come up with this sort of information like satellites and digital weather models and you know other measuring tools like this and you know so how you know we're looking at how we can generate more passive data to overcome Louis survey participation. And then if you go to you know all these digital tools to augment I'm not saying replace the field surveys that are put together by the state statisticians and that but I'm saying let's start by augmenting
Satellites Passive Data And Smoother Markets
SPEAKER_04and running a comparative parallel track. If you use a satellite to do imagery to you know we have satellites that can identify corn when it's less than two inches tall after it comes out of the ground you can have acreage courts you can train a computer to count that you uh you you know can have the relative you know nutrient loss if you have heavy weather patterns or or dry weather you can start forecasting you know there's people out there that live with daily forecasts of what county by county yields are for the major crops. And then you get into some crops like some of the specialty crops like the apple industry that there's so much mistrust of the USDA NAS data that they really operate off private surveys. And you know if you go back into the ancient times when I was a very young man you know you had Conrad Leslie and Sparks and Refco release you know crop crop uh forecasts and they were looked with you know kind of the same relevance as the USDA forecasts. And so are we going to get to that if we don't modernize and so digitally you could put out reports that are annual or quarterly could be monthly or weekly and think of the reduction in market impact and yeah like we got to wait three months for this crop report and then it's gonna move them like the January last year and move it 25 corn market down 25 cents in a day what if we edged up to that and started introducing those ideas into the market as soon as the satellite spied the trend and you know maybe we have a nickel move maybe we have another nickel move but it wouldn't be this volatile sort of bet the bank on one trade sort of deal.
SPEAKER_02Yeah well and that and then at the same time you've got I mean there's there's nobody in the pits to kind of to add the the human element to it. So you've got all of that data coming in and your uh your algos trading all of that like crazy I wonder how uh how much the those two elements kind of conspire together to to put in some maybe artificial volatility into the markets.
SPEAKER_04Oh absolutely Absolutely. I think that's underestimated. And I may be going out to the Kook Fringe here and saying that, you know, that I think the market's rigged, but you know, I don't know how they would exactly monitor position limits in the new I I used to despise kind of open outcry thinking it was just a big Texas Hold'em club, you know. You know, but one thing about it, you you explain to me somebody, please. Maybe someone in your audience can tell me. If Davis, you set up a computer in Tokyo and one in the Cayman Islands, and one in Chicago, and one at your lake home, and one at your ski chalet, and all these things that you know you know, you have them all act within a quarter point of each other. In the trade, they look like they're not related, but come on, you could have eight computers trading for eight different entities. You can put together enough shadow companies that you know, ag markets are small enough that they can be that you're not trading, you're not trading, you know, uh Meta or Google or something like that, Apple that you couldn't impact. You're trading something, a market that they can put together enough capital and move the market around. And you know, it's it's it's very much needed to look into this, but back to the original subject improving NAS, modernizing. Boy, I am not indicating in any way that we're being underserved, or we don't have people in in the Witten building in in Washington, DC who aren't trying, or the South Building, which they're closing of the USDA, that ERS, but we've got multiple entities you know that predict the same thing. We've got the USDA predicts how much corn is planted, the FSA knows, the RMA knows at the end of the year, NASA has satellites because part of their work is finding out whether there's going to be enough food. And then you've got, you know, farm credit hires an economist we talked to the other day that forecasts this. You know, how many people do we have, you know, that are are handing out, you know, trying to add up the government cheese here? And maybe we could standardize, use more passive data at risk of using that term too many times, improving what we do, catching up with industry like food companies and brokerages that already have very complex, accurate models that get the data daily. And so it's I I commend the secretary on putting this initiative together. It involves a number of really good farmers. We meet right now, uh, we've been meeting at least two times a week, and there is a framework that's been put into the secretary's hands on a pathway to start using better analysis tools to improve the transparency and accuracy and long-term viability of our crop reports. And you know, there's a camp that says, Well, we don't need them, but I I hate to break the news to you. You know, the food companies, the trading companies do have these things. In fact, some of them even have trading desks set up to arbitrage when they think that they're a long ways from the USDA numbers, they'll buy that spread and trade it because they see it as another profit opportunity.
SPEAKER_03Yeah.
SPEAKER_02There once again, it it pays to to to work in a level playing field when it when it comes to information, when it when we're talking about when we're talking about farmers, when we're talking about the producers at the I hate to say it at the low end of that totem pole where they're they're at such a disadvantage. Real quick, and I'm gonna I'm gonna begin to steer us toward the exit here. I that light at the end of the tunnel, I hope it's not a train. I'm gonna steer us towards it nonetheless, but I guess I just would would bring you back to the question of surveys and the low responses that we've gotten, because I saw that too. I mean, dropped from like 85 to 30 so low 30 some percent on on people who respond to these USDA surveys. How much survey fatigue figures into that?
Survey Fatigue One Farmer One File
SPEAKER_02Because you know, I used to work at a spot that would just a survey after survey after survey, and oh, include your oh well, make sure how many how many of this do you have? And it was just too much, and people were sick of surveys. How much of that figures into to the difficulties of of getting people to respond to the USGA surveys?
SPEAKER_04I have a feeling my own response to this is kind of captures most producers. When I see that quarter-inch survey come in the envelope, and when I slit it open, it's kind of like going to the doctor's office where they hand you the clipboard and says, Davis, do you have aches, pains, sneezes? When's the last time you took an aspirin? Do you eat a good diet? Did you, you know, have you taken any foreign trips? Do your feet itch? I don't know that it's like, but I was here two days ago. Fill out the clipboard again. And that's the USDA service. There's no resident data, like update anything from the last time. You know, if we really dig into this, this is part of a bigger movement, you know, that's called One Farmer, One File. And I heard Deputy Secretary Vaden say in a meeting recently that there are over 500 data platforms and hundreds of software programs that are used to put together USDA data, and so they're one farmer, one file. Although they kind of tricked us farmers into signing up and getting online by making the bridge payments, something you had to do.
SPEAKER_03Oh, yeah.
SPEAKER_04If you wanted your money expediently, you signed up for one farmer, one file. But this is so much more than just the system for you to get this. This is a total you know, renaissance inside the USDA, as I take it, to get rid of duplicative and and uh re data entry, I suppose, and that. And the secretary on this team has you know doge cleared out, you know, ended business on July 4th. But she's got a talented young person off the Doge team that you know knows how to look for waste and duplication. And I think this is gonna move at Trump and Rollins speed. I think you're gonna see a lot of good work done really quite quick here.
SPEAKER_02Well, I'm glad to have, you know, I went out and voted in in some local election stuff just earlier today. It took a took a break from getting ready for this conversation. And I'm I'm glad that that you are among those voices who will will be heard in this restructuring thing because I do I like the idea of the one farmer, one file thing, and I think it could simplify lives for producers who are who are already under a great deal of stress. Have you got meetings coming up or what's what's the next step in that process?
SPEAKER_04Yeah, there are there's the secretary announced a series of listening sessions today at FarmFest. I'm sure those will be readily available for for folks like you to publicize if you like. And you know, like I said, she has a framework paper in her hands. I'm sure that got to her yesterday. She's got her doge assistant on this, she's got Deputy Secretary Vaden at this. I think she's got the grower organizations looking behind this. Yeah, I think there's great momentum here.
SPEAKER_02She's got Vin Renchi on this, she's got Mr. Renchi. I mean, how can you go wrong?
SPEAKER_04Even a blind squirrel finds a nut now and then, David. But you know, but uh, you know, and I'd like to talk about a couple other dimensions that we need to make this initiative interesting to more than a bunch of us disgruntled farmers because the market went down on a summer report once.
SPEAKER_03Yeah, yeah.
SPEAKER_04What we need to do is I think we need to show that there is overlap with many organizations trying to provide the same data and that we can provide substantial cost savings. And even though I like the state statisticians, people, I like the NASDAQ people, National Association of State Departments of Agriculture that have a role in this, I like the people in the USDA, but you gotta, you know, at some point you gotta say, I'm not gonna have a job at the typewriter factory forever. And and that you can do this, you can use I'm gonna say it, AI, you can use machine learning, you can use digital tools to increase the accuracy and eventually make it more efficient and transparent. You can have more frequent reports out there, but the cost savings, I mean, the cost savings. What I saw in the framework paper that went to our it's stunning the reduction in cost by using digital passive data collection methods to augment the forecast.
Cost Savings Nutrition And Transparency
SPEAKER_04So, you know, we need to make this interesting to Treasury, to Secretary Bassent, and we need to make this also let's take this another direct direction. Maha we need to make this interesting to Secretary Kennedy to RFK Jr. We need to make it interesting to Dr. Oz at Health and Human Services. We need RFK's, uh, one of his uh top big thinkers, Callie Means, to see this and think, what could we do? You know, they're all focused on improving the health of the country. You know, get us weaned off of ultra-processed foods and you know, chronic overnutrition and things that, you know, we should we should be eating more things that haven't been in a cell phane wrapper and would last till the dinosaurs come back. We need to eat more apples, drink more whole milk, more sirloin steaks, you know, stuff like that, as far as I'm concerned. Yeah, now to do this, you know, the sustainable, regenerative or buzzwords, but what if NASA NAS could tabulate kind of a score or keep track of more how much is this helping us on our regenerative path to be more planet positive? And let's let's incorporate them into NAS restructuring that the data we could get could improve help us improve the nutrition of our kids, you know. That that would be fantastic. So, you know, I would like them to address my farmer whining that crop reports usually you know hurt my markets always, they never go in my favor. No, we they you know, but I tell you, there's some weird patterns in there that I don't know. When I roll the dice, I don't get snake eyes every time, I don't get double sixes every time, but there's been a lot of patterns where that's what happened. We we guessed over five times in a row, and then we guessed under six times in a row, and that doesn't look natural to me, you know.
SPEAKER_02I'll follow you down the conspiracy path. You may be guaranteeing that the next let's see, August 12 report is gonna shoot the market higher. Limit up in corn and soybeans on August 12.
SPEAKER_04Okay, Syrah, Syrah, my friend. You know, uh you know, did I sound like Doris Day, but different there? But uh anyway, yeah. Um but I think we need to make NAS reorganization palatable to farmers, increase transparency and accuracy, puts us on level playing people field with people who have you know sophisticated models. We need to make it interesting for the nutrition of this country and the Maha folks. We need to make it interesting to Treasury and what we're spending to get the same data from six, seven sources. Yeah, absolutely. Here end of the lesson.
SPEAKER_02Well, it's been a great lesson. I think I think we're gonna we're gonna put a lid on it there, except there are just a couple of more items that I'd like you to stick around for, Ben. The first is is the weather. The National Weather Service is calling for dangerous heat to persist across the southwestern U.S. through this week, easing by next week. The heat will focus further east into the Great Plains and Mississippi
Weather Brief And Ag Bull Injustice
SPEAKER_02Valley beginning next week. It looks like uh yeah, the heat may be coming back. Elevated to locally critical fire weather conditions will persist for the Great Basin today, and poor air quality lingers for the Northwest Great Basin and Central Rockies into the plains. Now, Ben, there's there's a little bit of nonsense that I absolutely have to get to, and I appreciate you being here because I I know you're the one you're the kind of guy that thinks outside of the box. This whole conversation has been indicative of that spirit. Let's let's talk about the things that no one talks about, let's do the things that nobody does. I'm gonna try something brand new here on the show that I've never tried before, and it may be a horrible disaster. Are you are you willing to to head for the light at the end of the tunnel, even if it's a train with me right now, Ben?
SPEAKER_04I am on the cow catcher on the front of the locomotive.
SPEAKER_02All right, very good. Well, every day to my guest, I uh I commit an injustice. It's exploitive. I I know, I understand. It's the uh it's the daily Ag Bowl Injustice.
SPEAKER_01You're on it, I object.
SPEAKER_02We have a little sound uh soundbite for it and everything. That's how official it is. I usually go through some items in history. Today, I'd like to uh I'd like to play, not name that tune, but name that singer for today's Ag Bowl Injustice. Completely unfair of me to ask you this because I wouldn't have known if I hadn't have seen it on the internet getting ready for the show here. But are you are you willing to take part in today's Ag Bull Injustice?
SPEAKER_04Locked and loaded, friend.
SPEAKER_02Roger that. Okay, 1958 on this date, August 4th, 1958, Billboard Hot 100 is published for the first time with Poor Little Fool as number one by this young heartthrob. And I'd like to give you a musical clue if I could. And the question is who was this young sensation who hit the very first number one in 1958 with the song Poor Little Fool? And it goes a little something like this. Well, I played this game with other hearts, but I never thought I'd see the day when someone else would play Love's foolish game with me, poor little fool. Oh yeah. I was a fool.
SPEAKER_01Poor little fool. I was a fool, oh yeah.
SPEAKER_02This might be before your time.
SPEAKER_04I think it sounded just like that, Davis. I mean, it sounded just like that, but different.
SPEAKER_00But different, yeah, yeah. Probably probably a little better than mine. You you remember who did that one? Who did Poor Little Fool?
SPEAKER_04You did. Well, you sang it well, but not as good as Ricky Nelson.
SPEAKER_00Ricky Nelson! Ricky Nelson is correct.
SPEAKER_02All right, this was uh completely unfair.
SPEAKER_04Aside from growing corn, I'm pretty damn good at music trivia, and you get to wood stalking later. I really I I'll just murder you, Davis.
SPEAKER_02I will remember that for next time. We're gonna play. I don't know how this is gonna come out because sometimes the piano comes out sounding weird through the computer and everything, but but you're a good sport to hang in with us. Ben Renchi, I I gotta have you back. We'll we'll take smaller bites next time because there's there's so much there. I have so many questions about the things that we've talked about today and so many different avenues that we could go down. I absolutely appreciate your wisdom, your switched-on-ness, if that's a word, and and your candor with us. I know that our audience has definitely a lot of things to think about after uh after having heard you speak today. Ben Renchi, thank you so much for being on Ag Squawk this afternoon, buddy.
SPEAKER_04Thank you, Davis. Pleasure, very flattered.
SPEAKER_02We'll uh we'll we'll see if we can uh we'll see if we can work our way back into Ben's schedule again sometime soon because uh he's got a lot. He's got a lot of love to give. And uh he's a giver. He's a giver. May I also direct you to agbull.com. You can dig deeper with AgBull Intel. Take your marketing by the horns with agbull.com. Visit agbull.com or call 855-737 Farm for more details. Jed Sidwell will have the morning calls bright and early tomorrow morning. I'll touch base with Zach Hefty. We're gonna talk about Ag PhD field day. Kind of do a little, you know, we're gonna look back, see how it went for him. Zach Hefty from Hefty Seed tomorrow afternoon for Jed Joe, Lindsay, Guillermo, and for Ben Renchi. It's Davis Michelson saying thanks for being here, everybody. We'll be back tomorrow with more ag squawk.
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