ADM ‘optimistic’ despite dent from high crop bills

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By , November 1, 2011 2:10 pm

This article was first published by 14:24 UK, 1st November 2011, by Agrimoney.com and appears here in full via http://www.agrimoney.com/news/adm-optimistic-despite-dent-from-high-crop-bills–3789.html

Archer Daniels Midland said it was “optimistic” about prospects despite a drop in quarterly earnings, as elevated crop prices squeezed margins for processing into products such as sweeteners and vegetable oils.

Patricia Woertz, the Archer Daniels Midland chairman and chief executive, said that the July-to-September quarter had “presented a difficult and challenging environment”, with oilseed crush margins “generally weak” and high corn prices limiting profits for processing the grain.

The period was marked by a “generally weak oilseeds margin environment and high corn costs”, she said.

While the agribusiness giant had hedged away some of these pressure through “good management of our commodity positions”, it was unable to prevent underlying earnings falling to $0.58, on a per share basis, from $0.67 a year before.

‘Modestly improving’

However, ADM was sanguine about prospects, noting “solid” demand for crops and agricultural products, and in particular growing demand for protein meal, “driven by emerging economies”.

 Many developing countries, notably China, require extra feed for expanding livestock populations, to fulfil an increasing taste for meat.

Furthermore, the group forecast that margins on US ethanol production would be “good in the near term”, and said it was “optimistic” over prospects for the annual pricing round with customers of corn-based sweeteners such as high fructose corn syrup.

“Looking ahead, we see the margin environment modestly improving, and we are optimistic about the long term,” Ms Woertz said.

Weak Europe

In the latest quarter, ADM’s operations turning corn into sweeteners and starches showed a particular decline in operating profit, of 81% to $28m, although this reflected in part an accounting anomaly, with the benefits of hedging taken in the previous quarter.

The oilseed crushing business suffered a 61% drop in operating profit to $115m, reflecting the weaker margins highlighted last week by rival Bunge, notably in Europe, where prices of rapeseed were kept high by disappointing 2010 and 2011 crops, while demand for vegetable meals has been soft.

However, these declines were offset in part by a doubling in profits from merchandising, as ADM leveraged on its position in the Black Sea to exploit Russia’s rocketing crop exports since the country in July lifted an 11-month ban on grain shipments.

Indeed, in corn and soybeans, “more global demand will be met from non-US supply”, ADM said, adding that this would enable the group to exploit its global spread of operations.

Revenues soar 

ADM’s revenues soared 30% to $21.9m during the quarter, raised by the higher value of agricultural commodities besides higher volumes of corn processed.

Including one-off effects, earnings rose by one-third to $460m, equivalent to $0.68 a share. ADM shares fell 2.6% to $28.19 in before-the-bell trading, on a weak day for world stockmarkets.

Poison on tap

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By , March 2, 2011 3:22 pm

Arlene Nelson, who owns an organic dairy farm with her husband LaVern near Whitewater State Park, have had to dig a deeper well to try and find clean water for their cows and drinking water. She washes her hands in the tap and the reverse osmosis filter faucet at right is suppose to be for drinking water. | Photo by Brian Peterson, Star Tribune

Arlene Nelson, who owns an organic dairy farm with her husband LaVern near Whitewater State Park, have had to dig a deeper well to try and find clean water for their cows and drinking water. She washes her hands in the tap and the reverse osmosis filter faucet at right is suppose to be for drinking water. | Photo by Brian Peterson, Star Tribune

Minnesota’s voluntary guidelines on reducing farm runoff aren’t working fast enough, critics say.

By JOSEPHINE MARCOTTY, Star Tribune | Last update: February 2, 2011 – 7:34 AM

LEWISTON, MINN.

Here in the heart of southeast Minnesota farm country, everyone knows you don’t drink the water.

“It’s just not safe,” Linda Liebfried said one recent afternoon as she watched over a couple of toddlers, including her own 2-year-old daughter, at a day care center. “Every doctor will say not to drink it.”

The city’s water is contaminated with nitrates — chemicals from fertilizer that have been linked to cancer and can cause a potentially lethal blood disorder in infants. In Lewiston they come from nitrogen, applied every season on the fields that butt right up to the edge of town.

At the State Capitol and in town halls across the state, there is growing urgency to confront the problem. Thousands of private wells have been found to exceed state health limits for nitrates, and some communities have spent millions on filtration systems to clean their drinking water.

After four decades of progress against pollution from factories and cities, environmentalists say, Minnesota cannot take the next step in preserving its lakes and rivers without addressing one of the last, biggest sources of pollution: agriculture.

Unless farm runoff is vastly reduced — and soon — environmentalists say the state may never reclaim its heritage as the land of sky-blue waters.

“There are no mechanisms to curtail the huge loading of pollution, nutrients and sediment from agricultural runoff,” said Whitney Clark, executive director of the Friends of Mississippi, an advocacy group. “We have to find a new way to do that.”

Agricultural groups say farmers already are doing a lot to keep the state’s waters clean, and that farm pollution today is far less than it was decades ago.

More importantly, farmers say, it’s easy to blame agriculture in the absence of better research to identify the source of specific problems in each of Minnesota’s 81 watersheds.

“One of biggest issues is the knowledge gap,” said Warren Formo, executive director of the Minnesota Agricultural Water Resources Coalition. “What are agricultural effects on water quality, and how do we sort it out?”

A critical moment

Environmentalists say Minnesota’s water is much cleaner than it was decades ago, thanks to the 1972 federal Clean Water Act, better farm practices and more recent state laws.

Nonetheless, 40 percent of the state’s lakes and rivers are impaired, and with nearly half of the state’s land mass devoted to crops, the vast amount of chemical runoff that comes from agriculture is a major factor. Unless agriculture moves faster, they say, the $80 million a year in clean-water funds that will flow from the 2008 Legacy Amendment water could be wasted.

Because time is running out.

Earlier this month Deborah Swackhamer, a University of Minnesota water quality expert, presented the Legislature with a 150-page, 25-year plan to clean up the state’s waters. One of the primary recommendations: new laws that would require farmers to adhere to limits on pollution because the voluntary guidelines they are expected to follow now are not working fast enough.

“A lot could go downhill in the next 10 years,” she said.

Vulnerable region

For some agriculturally intensive parts of the state, including the area around Lewiston, that future is now.

Last year Jeff Broberg, a geologist and clean water activist who lives nearby, was shocked to find out he is already living “the poisoning of the rural landscape.” Broberg tested his well after the water coming out of his tap became fizzy from nitrogen gas. The results showed 19.2 parts per million of nitrates — more than twice the health limit set by state and federal regulations.

Now he and his wife drink bottled water — and “my wife is insisting we move,” he said.

Broberg can look out his window and see the cause. The farmer who rents his land grows corn, the state’s primary crop and one that demands enormous amounts of fertilizer. To make matters worse, up on the hill there’s a huge blue tank that holds manure from the 3,000-hog operation next door. Each season that manure is spread over the land, adding more nitrogen.

But he also sees below the snow-covered fields to what makes the southeast corner of the state so vulnerable to groundwater contamination: its particular geology.

Broberg’s house is smack in the middle of the state’s “driftless area,” known for its beautiful deep valleys, spring-fed streams and rich farmland.

This is where, 10,000 or more years ago, the last glacier stopped — right along a line now marked by Hwy. 52. Here, there’s no glacial “drift” — the 500-foot layer of gravel, dirt and rock that was left behind when the ice receded and that in other parts of Minnesota protects groundwater. Here, bedrock laced with fissures and sinkholes lies close the surface. It acts as a giant sieve, so that water — and pollutants — percolate down through layers of rock within hours of a rainfall and into underground aquifers.

Drilling deeper

Wells in the area’s shallowest aquifers, 80 to 150 feet down, have been banned since the 1980s because of health concerns. Broberg’s contaminated well is at 400 feet. A new one would have to be 500 feet and would cost $35,000.

Instead, he and the farmer who works his land, Bruce Gilbeck, had a talk out in the field. Broberg gave him a primer on soil and the area geology, and they came to an agreement. Gilbeck would change his practices in a way that would reduce fertilizer applications by more than a third. Gilbeck said he was following the best recommended practices for fertilizer application. Farmers, he said, don’t want to put down more than they need because it’s a waste of money. Still, cutting back on fertilizer will reduce his yields, he said.

“Nitrogen is a tough subject,” he added. “I have friends who are organic farmers. I joke all the time — if everyone went organic, there would be a lot of people starving.”

For Broberg’s well, it’s too late.

“This is not coming back,” Broberg said. “There is nothing I can do for the next generation to restore this water.”

Deeper wells are not always the answer. Lewiston drilled a deeper well 10 years ago, but now the lower rock has contaminated it with radium, a heavy metal that can cause cancer. The city is blending water from two wells to weaken both health risks and is debating whether to build a new filtration system. Meanwhile, many residents are spending $800 or more for filtering systems for their homes.

“We have to pay extra for Culligan,” said Courtney Matzek of Lewiston, who has an infant daughter and 3-year-old son. “It’s a financial burden.”

Officials from the Minnesota Pollution Control Agency say they can’t say whether the problem of nitrate contamination is getting worse, or how much of the contamination comes from agriculture, as opposed to septic tanks or other sources.

Still, long-term measurements from around the state show that, while there have been declines in agricultural contaminants such as phosphorus and bacteria, nitrate concentrations are getting worse.

A state Department of Agriculture survey of 52,000 wells found that 10 percent exceed health limits for nitrates, and the rate is higher in agricultural areas. But the estimate could be low: About half the well owners said they never tested their wells.

Taking charge

But regulation? Even some landowners with contaminated wells are doubtful that’s the answer. Two years ago, organic dairy farmers Arlene and LaVern Nelson put in a $26,000 well to protect their cows from nitrate concentrations that were nearly five times the health limit for humans.

Farmers, Arlene Nelson said, are trying to survive in an agricultural economy that rewards production over environmental stewardship. Regulations will only force the small ones out of business. The solution, she said, is to find a way they can thrive by “obeying the rules of nature instead of the rules of money.”

That kind of effort is already underway in communities around the state, including the Whitewater River Watershed district, where the Nelsons farm. Last week the watershed board started regular meetings with farmers and landowners around the middle fork of the Whitewater River and Logan Creek to figure out how reduce the overload of nitrogen and sediment.

“The main issue is to get farmers to act on this so we don’t have to have the Legislature put regulations on them,” said Rudie Spitzer, chair of the Whitewater Watershed Board, whose jurisdiction includes the river and trout streams in Whitewater State Park. “It’s coming. But if we can do the job ourselves, so much the better.”

But others, including many environmentalists, are skeptical. With rising demand and skyrocketing corn prices, the 8 million acres of Minnesota devoted to corn will only increase — as it has for the past decade.

Voluntary efforts are well and good, Broberg said.

“But I am dubious,” he added.

Tim Pawlenty: The dark horse?

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By , February 24, 2011 12:22 pm

By SCOT LEHIGH, Boston Globe | Last update: January 26, 2011 – 7:30 PM

-When Republicans around the country meet him, they tend to take notice.

Tim Pawlenty, former governor of Minnesota and probable future Republican presidential candidate, has just finished an animated pitch to the Merrimack County (New Hampshire) Republican Committee.

Now it’s time for the obvious question: What does he offer that putative front-runner Mitt Romney doesn’t?

Pawlenty sidesteps. “I don’t get into comparing myself to other candidates,” he tells me. “I just say what I stand for and what I believe and what I’ve done, and then people can make their own judgments.”

Pawlenty hails from deep in the nation’s Nice Belt, so perhaps he’s sincere about that, though I suspect what he really means is: Oh no, you’re not going to lure me into that — not at this introductory stage in the game.

Still, the crowd has clearly come to see how Pawlenty, who finished third in a weekend straw poll behind Romney and Ron Paul, stacks up against a front-runner who leaves some underwhelmed.

In a possible GOP field that includes figures whose off-putting political pasts (Newt Gingrich) or too-light, too-right profiles (Sarah Palin) would render them general election Hindenburgs, and others whose regional or religious personae (Haley Barbour, Mike Huckabee) seem unlikely to translate in flinty New Hampshire, Pawlenty deserves notice.

So let’s look at the tale of the tape. Romney was a one-term Republican governor of deep- blue Massachusetts; Pawlenty did him one better, winning a second gubernatorial term in almost-as-azure Minnesota.

Pawlenty also registers better on the all-important Reaganometer. Romney was late in accepting Ronald Reagan as his political savior, declaring in 1994 that, heresy of heresies, he was “not trying to return to Reagan-Bush.” Pawlenty gravitated Gipperward as a college student. Indeed, mere proximity to the Great Communicator at an event rendered him giddy. “I didn’t have a chance to interact with him, but it was meaningful to me just to be in his presence,” he writes in “Courage to Stand,” his new campaign book. “I left the event in awe of him and inspired.”

A brief digression: Like many current Reagan devotees, Pawlenty seems more enamored of the GOP’s romanticized political portrait than the actual historical figure. Reminded that, faced with large deficits after his tax cuts, the Gipper bit the bullet and acceded to several substantial tax increases, Pawlenty makes it clear he won’t be that Reaganesque.

“I have been very strong in saying as governor and I believe overall that we shouldn’t raise taxes,” he said.

That highlights the ironic nature of the GOP’s Reagan idolatry: Given his presidential tax hikes and the record-setting revenue increase he signed as governor of California, the real Reagan probably wouldn’t be ideologically pure enough for the party that has remade itself in his idealized, air-brushed image.

But onward. Based on my conversations with New Hampshire Republicans, Pawlenty also has an advantage in what he hasn’t done. Specifically, he didn’t engineer a state health care law that was the model for Obamacare.

One caveat: GOP efforts to mischaracterize that national law will be difficult indeed with Romney immovable as the rock of Gibraltar in insisting that no statute built on private-insurance coverage and based on individual responsibility can be fairly described as either a government takeover or socialism. (Just kidding — kidding about skittery Mitt resembling the planet’s most redoubtable rock, that is.)

Although Pawlenty has a reputation as bland, his speech recounting his gubernatorial battles on behalf of smaller government, a public pension overhaul, tort reform and performance pay for teachers was anything but. His address was lively, forceful and occasionally funny — and he seemed more comfortable in his skin than Romney usually does.

To be sure, Romney commands some distinct advantages of his own. His vast wealth imparts a large funding advantage, and having already run once, he’s got a national network, widespread name recognition, valuable experience, and perhaps an it’s-his-turn edge with those Republicans who still believe in political primogeniture. And though Pawlenty talks about the need for government to listen to the job creators, Romney’s successful business career imparts better CEO karma and private-sector credibility.

Yet I left Pawlenty’s speech impressed with his talent — and so did the Republicans I talked to afterward. He’s a candidate who could leave Romney glancing nervously over his shoulder as he tries to preserve his New Hampshire advantage.

Ag economists: Farmland values soaring, for now

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By , February 14, 2011 2:34 pm

The Land, January 21, 2011

“The act of creating more money tends to depress the value of the dollar.  That generally results in stronger commodity prices, which would then push up returns to farmland and be an added stimulant to land values.” – Chris Hurt

Much of the U.S. economy has been slow to recover from the recession.  That hasn’t been true of farmland markets, which have continued to climb, a group of Purdue University agricultural economists says.

Strong crop returns, low interest rates and a growing expectation that both might continue have had a positive influence on farmland values, said Mike Boehlje, Chris Hurt and Brent Gloy.

“Even while some residential and commercial real estate values have been falling, that has not been the case for farm real estate,” Boehlje said. “Instead, we’ve seen some high prices for farmland in recent months, even exceeding $10,000 an acre in some extreme cases.”

Boehlje, Hurt, Gloy and fellow Purdue agricultural economist Craig Dobbins examine farmland value dynamics in their paper “Farmland Values: Current and Future Prospects.”

The paper can be viewed online by going to www.agecon.purdue.edu/commercialag/progevents/landvalueswebinar.html and then clicking on the link.

Farmland values have risen steadily since 1987 but have shot up in recent years.  Between 2000 and 2010 the average price per acre of average-quality Indiana farmland – land capable of producing an average corn yield of 155 bushels – rose from about $2,300 to just over $4,400 this past June, the economists said.  Land values continued to increase even more dramatically during the last half of 2010.

“These higher prices aren’t for development purposes,” Boehlje said. “Many of the land sales in the Midwest are to farmers rather than outside investors, so it’s farmers bidding against farmers.  Not only is land demand strong but also supply is low as few families are willing to sell.  Strong demand with limited supply makes farmland a hot commodity, both for its asset value and the income it can generate.

“In addition, low interest rates are making farmland attractive, and farmland is seen as a hedge against inflation.  Farmland and real assets, whether they be land or commodities, are perceived by many to have more inflation hedge potential than financial assets.”

Higher crop prices play a major role in farmland values as they increase returns, Hurt said.  Global demand for grain is growing, brought on by higher world incomes and the increased use of crops for biofuels.

Two huge growth markets have been corn for ethanol and soybean exports to China, Hurt said.  In 2005 those two markets required 16 million acres of production.  By 2010 it took 41 million acres of the two crops to meet those market demands, he said.

“That’s a startling 25 million-acre increase in the demand for land,” Hurt said. “It represents about 10 percent of the U.S. crop base planted to major crops.  That says we’ve had a very large increase in demand for land and is thus one of the primary contributors to surging land values on the demand side.”

Crop prices also are getting an indirect boost from Federal Reserve monetary policy. Hurt said-the second round of the Fed’s buying of Treasury securities through so-called “quantitative easing” is conducive to weakening the U.S. dollar and creating inflation.

“The act of creating. more money tends to depress the value of the dollar.  That generally results in stronger commodity prices, which would then push up returns to farmland and be an added stimulant to land values,” he said.

High crop returns also affect the rental rates landowners charge farmers to use their land.

“Cash rents are higher as a result of the greater returns to the land on which crops are grown, but farmland prices have been rising more rapidly than cash rents in recent years,” Gloy said.

A 2010 Indiana farmland value survey conducted by Purdue indicated that average-quality Hoosier farmland was worth $4,419 per acre in mid-June.  Cash rents on that land averaged $161 per acre, meaning buyers were willing to pay a price for land that was about 27 times the annual rent.  By contrast, this “value-to-rent multiple” was 20 in 2000 and just 12 in 1986.

“The increased value-to-rent multiples suggest that both rising crop incomes and falling interest rates have been leading contributors to today’s land values,” Gloy said.  ”Future land values will largely be determined by the economic returns to farmland ownership, the level of interest rates and by expectations, including inflationary expectations, of both land buyers and sellers.”

This article was submitted by the Purdue University Agricultural Communications Department.

Meet the boss

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By , January 19, 2011 3:35 pm

Tom Landwehr | Photo courtesy of Landwehr.

Tom Landwehr | Photo courtesy of Landwehr.

Questions and answers with Tom Landwehr, newly appointed Minnesota DNR commissioner.

By DENNIS ANDERSON, Star Tribune | Sunday, January 9, 2011

Presiding over the state’s outdoors requires listening to opinions, the new leader said. He also spoke of the strong presence of politics and the need to better target habitat projects.

Q Did Gov. [Mark] Dayton give you marching orders as DNR commissioner?

A He said he hires people who know their jobs and shouldn’t have to give them a lot of guidance. Also, he wants the DNR to treat its constituents as customers, and doesn’t want us to be arrogant.

Q Define your leadership style.

A I like to listen. I think before a commissioner takes action, he needs to listen to a variety of opinions. I’m not a micromanager. I expect people working for me to do the right thing and do it well. We’ll have good people being held accountable.

Q The prolonged time Gov. Dayton took to name you underscores the politics that often affect conservation. Is there a way to minimize its effect on fish and wildlife management?

A I’d love to say there is. But it’s the curse and the virtue of a democracy. Everyone gets a say. These are state resources we manage, and they belong to us all. It used to be the Legislature set seasons, and the conservation community in the end said this isn’t the best way to do it. So there have been improvements. But the Legislature sets funding of the DNR, and its direction is determined by the governor. I don’t see that changing.

Q That seems fatalistic. Can’t improvements be made?

A Even in states whose DNR is managed by a citizen commission, politics exist. I have been impressed with the notion of a conservation congress, like the one in Wisconsin, because it allows for constituent input. But it wasn’t that long ago that Minnesota’s resource management was considered top-tier nationally, and I know when I started with DNR they were very well regarded. So I don’t think the model we have necessarily creates the problem. It could be the political environment we operate in.

Q Are we delivering conservation correctly in the state? Or should the DNR and other resource agencies be reformed?

A I don’t have grandiose thoughts at this time. I think we can look at all of the divisions and the structure of the DNR and see if changes should be made. More philosophically, what should the DNR’s responsibilities be and what should be decided elsewhere? That would be a great discussion, but it’s up to the Legislature. We can look at processes in DNR and the structure to see if things under the commissioner’s control should be aligned differently.

Q Did you develop your outdoor interests as a kid?

A My dad was a big outdoorsman who competed in a 400-mile canoe race for many years. As a result, I was in a canoe on the St. Croix many summers with him while he trained. I also fished and camped with my family, and hunted some.

Q Your primary interest is waterfowl and wetland wildlife management, but you worked in private-land habitat development to benefit pheasants for a number of years.

A When the pheasant stamp and fund were established in the early 1980s, I was one of four biologists who were assigned to work with private landowners. For four years I worked out of Shakopee. Then I moved to Madison, in western Minnesota, and to Owatonna.

Q Can ducks and other species rebound here, given the loss of natural habitat in the farmlands and elsewhere?

A Conservation can be accomplished by regulation or by incentive. In many cases, rural property owners believe it is their right to drain wetlands. The point I tried to make to landowners when I worked with them was that drainage projects often impact people downstream. And people don’t have the right to affect people downstream.

Q Can our wetland wildlife situation be improved by regulation?

A We have good laws on the books already. But we’ve lost 99 percent of our wetlands in some areas, and society for better or worse has decided we don’t want more regulation. So if we’re not willing to regulate, we have to do it with incentives.

Q Money is tight and more incentives seem unlikely. What hope should duck hunters have that waterfowl populations will improve?

A The effective way to improve farmland wildlife is to target habitat projects better. We need to put habitat where it will do the most good. If we can use state money — primarily from the Legacy Amendment — to leverage federal money to do habitat work, we can bring a disproportionate amount of money to Minnesota and optimize its positive effect by, as I say, targeting it more effectively.

Q What is your position on mining in northeastern Minnesota, given the concerns some people have on its possible adverse effect on the boundary waters?

A I understand a lot of rural communities depend on use of natural resources for their livelihoods. And Gov. Dayton understands that job creation is very important. The charge for the commissioner is to find the most sustainable way to use natural resources, including precious metals. I think we can find a way to do that.

Q Is there too much overlap in authority over water among the DNR, the Board of Water and Soil Resources and the Pollution Control Agency?

A We need to break down the “silos” separating the work we all do, so we’re optimally efficient. I think also we need to look at core areas in the farmlands, identifying them using satellite imagery, and in those areas strive for habitat that is at least 40 percent grass and 20 percent water. We need to connect these areas with habitat corridors, where medium-sized mammals can move from area to area.

Q Do you see an upswing for logging and the forest products industry?

A Demand for forest products is weak due to the housing decline. But loggers up north need some help, and what I’m hearing from them is we should make more timber available. We shouldn’t have procedural and bureaucratic obstacles that delay the sale of stumpage.

Q The lack of recruitment of young hunters and anglers threatens the wildlife management funding structure here and nationally. Are there remedies?

A A lot of people want information about how to get started in the outdoors but don’t know where to get it. “Becoming an Outdoors Woman” and other DNR efforts are excellent. But to succeed, the efforts will have to accelerate, and we’ll need partnerships with wildlife groups and perhaps schools to do it.

Q Management of some of the state’s hundreds of wildlife areas seems beyond the DNR’s capability, given manpower and cash shortages. Are there solutions?

A We need to get private businesses involved. Much of what needs to be done around wildlife areas is low-tech management. We need people to burn, to control weeds, to put up fences. If we could get private businesses in local communities doing that kind of work, we would be more effective and get more people invested in conservation.

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While state struggles, Legacy money flowing

By TOM MEERSMAN and LAURIE BLAKE, Star Tribune staff writers | Last update: January 16, 2011 – 11:20 PM

In the two years since Minnesota voters amended the state Constitution to dedicate millions to the environment and arts, following the money trail has been tough.

Almost $457 million in Legacy Amendment funding has been sent to Minnesota groups and agencies even while the state tackles its $6.25 billion budget shortfall. But a state-run website to help citizens follow the money is at least two months behind schedule, and not all of the money has been distributed.

Aware that legislators might be tempted to hijack Legacy funds to help with the budget, outdoors and arts groups are voicing concerns about the future even as they complete reports about how Legacy money has been spent so far, and prepare recommendations for the next round of grants.

An environmental watchdog group is expected to release a report this week about amendment spending. But enough is known since voters approved the 2008 Clean Water, Land and Legacy Amendment to provide a first comprehensive look at what people are getting for their money. Grant amounts range from as little as $275 for a local historical project to $36 million to help preserve northern Minnesota woods.

The amendment created four massive funds to collect and dispense the tax proceeds each year until 2034.

The biggest allocations to date set aside important lands and boost clean water efforts, including:

• $36 million to secure a public easement across 188,000 acres of Minnesota’s north woods, preserving a large forest that will remain open to public use, rather than be sold off in parcels.

• $32 million for the Minnesota Department of Natural Resources (DNR), working with conservation groups, to acquire and restore prairie land, and $31 million for fish, game and wildlife habitat.

• $35 million for the Minnesota Pollution Control Agency (MPCA) to step up the pace in identifying and cleaning up impaired waters.

“It really is making a difference — it’s creating a legacy,” said Mike Kilgore, outgoing chair of the Lessard Sams Outdoor Heritage Council, which has recommended projects to restore, enhance or protect about 400,000 acres of land and water.

The Outdoor Heritage Fund, one of the two largest authorized by the amendment, has received $146 million in the first two years.

Sen. Larry Pogemiller, DFL-Minneapolis and chief author of the bill that put the amendment on the ballot, called it “one of the most fascinating, incredible things we’ve done as a state, and the voters absolutely drove it.”

The measure, passed with bipartisan legislative support, received more than 1.6 million votes in the general election. It raised the sales tax three-eighths of 1 percent to fund water, land and arts initiatives.

“The idea was to fund some things that never quite made it because they were either too big or too forward-thinking for the budget cycle,” Pogemiller said.

New Republican leaders at the Legislature said at a recent outdoors forum and in interviews that Legacy money won’t be used for other purposes.

“We are not going to backfill the budget shortfall with the Legacy money,” said Rep. Denny McNamara, R- Hastings, the new chair of the House Energy and Environment Committee.

Sen. Bill Ingebrigtsen, R-Alexandria, new chairman of the Senate Environment and Natural Resources Committee, pledged to “try my hardest” to assure that Legacy money is spent appropriately.

Four buckets of money

Of the sales tax on a $100 purchase, about 12.4 cents goes into the Outdoor Heritage Fund, 12.4 cents to the Clean Water Fund, 7.4 cents to the Arts and Cultural Heritage Fund, and 5.3 cents to the Parks and Trails Fund.

Collections began on July 1, 2009, and are expected to raise $480 million by the end of June 2011. In the next two years, they’re projected to bring in more than $520 million.

In its first two years, the Parks and Trails Fund received more than $65 million. Much was directed to the Metropolitan Council and the DNR for distribution to various park systems. Much is paying for practical improvements, including deferred maintenance.

Some of the Outdoor Heritage Fund is being used for conservation easements, or to acquire prairie land, forests, wetlands and wildlife habitat in partnerships with Ducks Unlimited, Pheasants Forever, Minnesota Land Trust and the Nature Conservancy.

Longtime conservationist Dave Zentner of Duluth, who campaigned with other outdoor leaders for years to get the amendment on the ballot, said it now requires even more diligence to assure that the money is spent wisely. He said his “greatest nightmare” would be if, in 2034 when the sales tax expires, “we could fly over the state and not see a discernible difference” from Legacy money.

Ground water atlas

The Clean Water Fund received more than $152 million in the first biennium, including major grants to state agencies. Some will also fund upgrades for wastewater treatment plants. And some are being funneled to watershed organizations and other local groups that compete for funds by submitting project proposals.

Rep. Jean Wagenius, DFL-Minneapolis, called the funding of a county-by-county survey of all state ground water, which may take 20 to 25 years to complete, “the best thing we did for Minnesota.”

The Arts and Cultural Heritage Fund received $93 million, including $43 million to the Minnesota State Arts Board. About $12 million has been sent to the state’s 11 regional arts councils for local programs, and some of the other funds have been used for touring performances and exhibitions throughout the state, and to support individual artists, arts organizations, and lifelong learning in the arts.

“We know that if an individual Minnesotan looks at the list [of all Legacy-funded programs], they’ll see things they really like, and others that they’re not so sure about,” said Sue Gens, executive director of the State Arts Board. Providing a balance and complying strictly with the amendment will be an ongoing challenge, she said, but the Legacy program is off to a good start.

Recipients are required to submit annual reports detailing how money was spent, and many of those were due by Jan. 15. The law also requires a legislative commission to develop a website for citizens to see how Legacy money is being spent.

The website has 195 projects listed, but there are hundreds more to be added. Officials are working on technical problems and said the site at www.legacy.leg.mn should have much more information in about two months.

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Story on DNR gave only part of the picture

By STEVE THORNE, Star Tribune |Last update: January 17, 2011 – 7:20 PM

Commentary

While the Star Tribune’s Jan. 12 story “DNR: Millions needed for land it already has” was accurate as far as it went, it was one-sided.

It ignored large portions of the Minnesota Department of Natural Resources‘ report, which showed that the state’s public lands are an economic engine that runs on a relatively modest investment.

Nor is the funding gap as shocking or significant as the article implies, once you break it down.

The DNR budget analysis looked at the 5.5 million acres of state-owned forests, scientific and natural areas, wildlife management areas, water access sites, aquatic management areas and native prairie bank.

What the story did not report, but which the DNR prominently noted, is that these lands generate billions of dollars in economic activity annually, including:

•Fishing, hunting and wildlife watching generates $4.3 billion and supports 55,000 jobs.

•The total economic impact of watercraft and boat trip spending is $4 billion.

•The forest products industry has a total economic impact of $18 billion in sales and supports 89,500 jobs.

That’s not even mentioning the clean-water benefits, the climate-change and clean-air benefits, the value of protecting rare and endangered plants and animals, or just the plain old joy of hiking through a woods or sitting in your boat while it floats on a Minnesota lake on a peaceful July day.

The report didn’t include state parks and trails, but they are public lands, too, with a multi-billion-dollar impact on our economy.

All that money flowing in appears to come as a bargain. Using the report’s figures, current management costs are slightly more than $13 a year for each Minnesotan.

I think most would agree that is a small price to protect our public lands not only for us but for our children and grandchildren. The DNR deserves praise for being good stewards of the taxpayers’ money and public lands.

Of course, the DNR report and shortfall plays out against the state’s $6.2 billion general fund deficit. However, maintaining these public lands currently costs $52 million.

The vast majority of that comes from fees and other dedicated funds, with only 15 percent, or less than $8 million, coming from the general fund.

Put in the context of the entire state general fund budget of approximately $15 billion dollars, this has a tiny impact on the deficit. Even if all of the general fund’s environmental and natural resources spending were eliminated, the deficit would shrink less than 1 percent.

Nor is this gap between the money we have to spend on maintenance vs. the total maintenance tasks unique to public lands. There have been reports written on similar, and much larger, gaps in highway, bridge and public schools maintenance.

The Minnesota Department of Transportation‘s current policy plan acknowledges its gap and says the number of miles of road with poor pavement will nearly triple by 2018.

Still, no one should ever be cavalier about deficits and spending gaps. The DNR has taken its share of cuts and no doubt will take more. In relative terms, its general fund budget has declined and its reliance on fees and other dedicated funds have jumped significantly.

One thing that should not happen is a cutback in acquiring more land. Minnesota voters provided the money to protect land when they passed the Clean Water, Land and Legacy Amendment. Two years later, the voters’ attitudes are as strong as ever.

By a 2-to-1 margin, Minnesotans said funding from the Legacy Amendment should be used to acquire more land.

That statewide telephone poll of 701 registered voters, conducted Nov. 16-21 for the Minnesota Environmental Partnership by the bipartisan research team of Fairbank, Maslin, Maullin, Metz & Associates and Public Opinion Strategies, had a margin of error of 3.7 percentage points.

The DNR and the Legislature will have to grapple with the shortfall. But cutting expenditures on land protection would be short-sighted and counterproductive given the major economic and quality-of-life benefits of our public land heritage.

Steve Thorne is a former DNR deputy commissioner and is current president of Parks & Trails Council of Minnesota.

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