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Volume 7, Number 5 - May 2001

This Month in Ag Connection

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Foot and Mouth Disease Market Risks

Livestock markets are very sensitive to which countries have Foot and Mouth Disease (FMD). U.S. beef and pork exports have experienced rapid growth in recent years, setting new records each year. These exports have contributed to the strong meat demand and positive price outlook for the coming year. FMD in other countries potentially opens up additional export opportunities as long as the U.S. remains disease free. A U.S. FMD outbreak would immediately shut off these exports. There is no human health risk with FMD, but the perception of health concerns would negatively affect demand. The result could be sharp price declines, interruption of livestock movement and a devastating economic impact on the livestock industry.

Consideration should be given to strategies to reduce market risk. Government funds available to compensate the producer for 100 percent of market value provide some protection to producers directly affected by the disease. Government programs don't provide any market price protection for other producers, regardless of the health of their animals.

The grain markets have already experienced some of the negative impacts of FMD. Large production and increasing carry over supplies have led to low grain prices. The only bright spot in grain fundamentals has been strong demand. Anything that might reduce feed demand, such as FMD, has the potential to increase carry over supply and cause market volatility--making low grain prices even lower. On March 30, corn prices opened strong and moved higher based on reduced planting intentions. Then, news of testing North Carolina hogs for a FMD like disease sent prices sharply lower at mid-day. May corn futures prices ranged more than eleven cents for the day and closed four cents lower! Soybean prices also reacted negatively to the news.

The market loan and Loan Deficiency Payment (LDP) offer some new crop price protection. Using cash market contracts, futures hedges or buying put options would offer additional protection for new crop corn prices that are above loan prices. Remaining old crop supplies are also at risk, especially if the LDP has already been claimed. Selling old crop cash grain and re-owning on paper continues to look like the better strategy.

The threat of FMD adds marketing risk for both livestock and crop producers. While no marketing strategy is perfect for this situation, there are marketing tools that could help manage FMD associated risks. To be effective, they should be in place before an outbreak occurs. The greater the leverage in your operation, the greater the need to protect the current level of livestock prices.

(Author: Melvin Brees, Farm Management Specialist)

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Foot and Mouth Disease

Foot-and-mouth disease (FMD) is a severe, highly communicable viral disease of cattle and swine. It also affects sheep, goats, deer, and other cloven-hooved ruminants. FMD is not recognized as a zoonotic disease.

This country has been free of FMD since 1929, when the last of nine U.S. outbreaks was eradicated.

The disease is characterized by fever and blister-like lesions followed by erosions on the tongue and lips, in the mouth, on the teats, and between the hooves. Many affected animals recover, but the disease leaves them debilitated. It causes severe losses in the production of meat and milk.

Because it spreads widely and rapidly and because it has grave economic as well as clinical consequences, FMD is one of the animal diseases that livestock owners dread most.

What Causes It

The disease is caused by a virus. The virus survives in lymph nodes and bone marrow at neutral pH, but destroyed in muscle when in pH<6.0 i.e. after rigor mortis. The virus can persist in contaminated fodder and the environment for up to one month, depending on the temperature and pH conditions.

There are at least seven separate types and many subtypes of the FMD virus. Immunity to one type does not protect an animal against other types.

How It Spreads

FMD viruses can be spread by animals, people, or materials that bring the virus into physical contact with susceptible animals. An outbreak can occur when:


Vesicles (blisters) followed by erosions in the mouth or on the feet and the resulting excessive salivating or lameness are the best known signs of the disease. Often blisters may not be observed because they easily rupture, leading to erosions.

Some of these other signs may appear in affected animals during an FMD outbreak:

Meat animals do not normally regain lost weight for many months. Recovered cows seldom produce milk at their former rates. FMD can lead to myocarditis (inflammation of the muscular walls of the heart) and death, especially in newborn animals.

Confusion With Other Diseases

FMD can be confused with several similar, but less harmful, diseases, such as vesicular stomatitis, bluetongue, bovine viral diarrhea, and foot rot in cattle, vesicular exanthema of swine, and swine vesicular disease.

Whenever mouth or feet blisters or other typical signs are observed and reported, laboratory tests must be completed to determine whether the disease causing them is FMD.

Where FMD Occurs

While the disease is widespread around the world, North America, Central America, Australia, New Zealand, Chile, and some countries in Europe are considered free of FMD. Various types of FMD virus have been identified in Africa, South America, Asia, and part of Europe.

Prevention and Control

FMD is one of the most difficult animal infections to control. Because the disease occurs in many parts of the world, there is always a chance of its accidental introduction into the United States.

Animals and animal byproducts from areas known to be infected are prohibited entry into this country.

Livestock animals in this country are highly susceptible to FMD viruses. If an outbreak occurred in the United States, this disease could spread rapidly to all sections of the country by routine livestock movements unless it was detected early and eradicated immediately.

If FMD were to spread unchecked, the economic impact could reach billions of dollars in the first year. Deer and wildlife populations could become infected rapidly and could be a source for re-infection of livestock.

What You Can Do

You can support U.S. efforts against FMD by watching for excessive salivating, lameness, and other signs of FMD in your herd; and immediately reporting any unusual or suspicious signs of disease to your veterinarian, to State or Federal animal disease control officials, or to your county agricultural agent.

If FMD should appear in your animals, your report will set in motion an effective State and Federal eradication program.

Your participation is vital. Both the early recognition of disease signs and the prompt notification of veterinary officials are essential if eradication is to be carried out successfully. Your warning may prevent FMD from becoming established in the United States, or, if it does spread, reduce the time and money needed to wipe it out.

For more information about FMD, contact:

USDA, APHIS, Veterinary Services
Emergency Programs
4700 River Road, Unit 41
Riverdale, MD 20737-1231
Telephone (301) 734-8073

The APHIS Emergency Operations Center
(800) 940-6524

(This information was obtained from the USDA Animal and Plant Health Inspection Service -- APHIS).

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Taxation Tidbits: Depressed Stock Prices -- Converting a Traditional IRA to a Roth IRA

If you have a traditional IRA (Individual Retirement Arrangement) that is invested in the stock market now may be an opportune time to make a conversion to a Roth IRA. You can convert amounts from a traditional IRA to a Roth IRA if your modified adjusted gross income is not more than $100,000 and you are not a married individual filing a separate return. Modified adjusted gross income is basically your adjusted gross income, not including the income from the conversion and not including any deductions for traditional IRA contributions or student loan interest.

Distributions from a traditional IRA are taxable in the year of distribution. Thus, when you believe the stock market has bottomed, consideration should be given to converting a traditional IRA to a Roth IRA and paying the income tax on the converted amount. In general, any capital growth and accumulated earnings of the Roth IRA can be distributed at a future date without any additional income tax liability.

More detailed information relative to converting IRAs is available in the free IRS Publication 590 "Individual Retirement Arrangements'. This publication can be obtained by calling the IRS toll free number 1-800 TAX FORM.

(Author: Parman Green, Farm Business Management Specialist)

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Tractor Safety Rules Almost Everyone Violates


New tractors today are safer than ever before. Most farmers understand that operating farm equipment can be hazardous and are aware of "safety rules" that apply to equipment operation. In spite of this, there are common safety rules that are often ignored. Why? Is it because they are "silly" rules or is this a serious problem?

Wearing Seatbelts
Tractor roll-over is the leading cause of deaths using farm machinery. If seat belts aren't used, on a ROPS (roll over protection structure) equipped tractor, the operator will likely be thrown from the seat and possibly crushed in a roll over accident. An enclosed cab may reduce the risk of crushing, but serious head and body injuries can still occur. Operators are especially vulnerable doing high risk activities such as mowing road banks, mowing field edges, operating on steep slopes or near ditches and at highway road speeds. Seat belts should be used! If a tractor isn't equipped with ROPS and seatbelts, they should be added -- especially if the tractor is used for any of the above high-risk operations.

By-Pass Starting
An estimated 50-100 run-over deaths occur annually when tractors are started by "jumping the starter" instead of using the starter switch and the tractor was left in gear. By-pass starting is usually done when the starter switch, starter solenoid or safety-start switch malfunctions. The correct action is, of course, to correct the problem immediately. Remember that everyone, who ever got run over doing this, thought, "the tractor was in neutral."

No Riders
Many tragic accidents have occurred when a rider was thrown from a tractor. The rough and jerky movements that occur when operating vehicles without shock absorbing suspensions make it difficult to hold on, especially when the equipment is operated on rough terrain. There are no safe places to ride on most tractors, riders distract the operator and it is absolutely no place to entertain or baby-sit children! However, it is nearly impossible to train or supervise a new operator without the trainer riding on the tractor. Some manufacturers have finally realized this and have now provided an extra seat on some tractors to accommodate a rider. The extra person must recognize the danger and use extreme caution if they ride on the tractor. In all cases (including tractors with an extra seat), riding should be avoided unless there are no reasonable alternatives.

PTO Shields
Most farmers understand the dangers associated with the PTO and need for the shields. But PTO shields frequently need repair and it is difficult to keep track of all of them on a farm to insure that they are functioning. Parts for some are difficult or impossible to obtain making repairs expensive and time consuming. Often the problem isn't discovered until the equipment is needed and almost everyone has used a piece of equipment with defective or missing PTO shields. If someone chooses to use equipment with defective shields, they should be very careful and follow all other safety rules. Not only should the PTO be disengaged before dismounting the tractor, the engine should be shut off! Some equipment, such as an auger where working on the ground near the equipment may be necessary, should never be used without shields regardless of the circumstances. Another rule that should always be followed with stationary equipment is to walk around the tractor and implement--never step over the PTO shaft!

Shut the engine off and remove the key before dismounting.
Almost no one does this. Most would argue that if you take the key out, it will get lost or someone else will need the tractor and won't have the key. But there may be times when the key should be removed. A tractor with the key in it allows anyone, including unsupervised children, to start it. This could endanger them, someone who is servicing the tractor, by standers or other property. Removing the key also discourages theft of the tractor. Give some thought to getting extra keys, they aren't expensive. Make a key available to each operator, keep one in the shop and one in the pickup -- that should avoid some of the problems caused by removing the key.

Timeliness, economic and production decisions sometimes conflict with following safety rules. Don't ever forget that hospital stays and funerals are also expensive, prevent timeliness, affect production and have much longer lasting family impact.

(Author: Melvin Brees, Farm Management Specialist)

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Publishing Information

Ag Connection is published monthly for Central Missouri Region producers and is supported by University of Missouri Extension, the Commercial Agriculture program, the Missouri Agricultural Experiment Station and the MU College of Agriculture, Food and Natural Resources. Managing Editor: Kent Shannon.