 The community watched with the farmers, wondering what the impact
would be. Here in the Midwest, what happens to the farmer and the
local economy are inextricably linked.Midseason grazing lands
dried up early, creating an early demand for what was left of last
year's grain crops. At harvest, crop yields were down everywhere.
Both conditions increased the demand for grain and raised market
prices.
While grain yields in this year's harvest have been variable
across Logan County, like elsewhere, corn suffered most and soybeans
not so much.
To ask the hard questions, we queried a couple of local farmers
we'll call Green and Brown on how they and their neighbors responded
to the extraordinary conditions.
Corn is the favored crop for Logan County. However, for some
farmers, this was the year to have had more beans than corn. Beans
had better, closer-to-normal yields in some areas of Logan County.
Farmer Green is a grain producer who puts in a lot of acres and
always does a mix of corn and beans. "We got lucky," Green said. "We
raised a lot more soybeans this year than we normally do."
And, it "so happened" that the yields on his beans were good in
comparison with bean yields elsewhere in the county.
The reason Green put in more beans: "We had a total disaster last
year where we did corn-on-corn because it was so dry in August and
September. So, we decided we weren't going to do any more of that
this year. And that shifted some of our acres to beans that
otherwise would have been corn."
Farmer Brown raises crops and is a livestock producer. Brown
grows more crop than is needed for the livestock operation.
"It was hard to watch the clouds roll in and then pass us by
without a drop of rain. The worry was the hardest part," Brown said.
As a livestock producer, Brown's concern was that feed costs
would go up and that the grain from this year's crop would be of
poorer quality. And, as it was, Brown was correct.
Early in the season Brown pulled grain stored at the elevator
back to the farm. "We were fortunate that we still had grain in town
to sell. We could have gotten a high price for it, but you just had
to ignore that," Brown said.
One of the differences between the drought of 1988 and this year
is that the government bought, owned, stored and managed the corn in
a reserve program in '88. That year, like this year, corn was coming
in with aflatoxin. One of the measures to manage aflatoxin is to
blend it out. In '88, corn bins were half-full with the previous
year's crop. It was owned by the government, and those reserves were
used for blending.
This is Brown's third drought: 1988, 1995, 2012. "We were
fortunate in '95, but prices ran up because of drought," he said.
One measure available now to help feed livestock is the
high-protein byproduct of ethanol. Distillers dried
grains, or DDGs, are being used to supplement bean meal, and
are half the cost.
Both farmers shared similar views on other points of farm
management.
"It's a learning experience," said Brown
Farmer Green spoke about the importance of crop rotation and
doing something that sets you apart, such as having a niche crop.
Organic and non-genetically modified crops offer that type of
opportunity. These crops are more challenging, but there is a demand
and they bring higher prices. Non-GMO soybeans pulled a premium of a
little over $2 a bushel this season.
Some other specialty crops currently raised in Logan County:
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Pumpkins, squash, gourds and other farm stand products.
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Honey.
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Various vegetables and fruits for farmers markets.
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Orchard fruit.
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"U-pick" strawberries and blueberries.
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Cut and dried flowers.
Overall, Green considered two practices favorable anytime, but
under the extreme drought conditions, all the more important:
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First, this was a good year for farmers to practice some
form of tillage conservation: no-till, strip-till, any
reduced tillage conserves soil moisture.
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Second, the practice of crop rotation between beans and
corn. Usually ground should have no more than two to three
years of corn, and then a crop of beans is needed to restore
nitrogen levels.
The selection of varieties played an important role for Green, as
well. This year, Green chose a number of different varieties of
seed, some more drought-tolerant, and 10 different corns.
Inputs
Farming is not a one-year proposition, and those in it are not
looking at just the short term. "You don't necessarily get rich all
in one year," Green observed.
On the flip side, this year farmers with no insurance, or less
than full coverage, may not get enough back to pay off the costs of
the annual inputs: diesel fuel, fertilizer, herbicides, pesticides,
seed, etc. At harvest time it was a guessing game on some crops if
it would even pay the high cost of diesel to bring them in.
[to top of second column] |
"You rely on faith that you are going to have enough to pay off
one-year inputs, let alone two years. When that does happen, we just
hope it doesn't happen again the next year," Brown observed.
"But, you have that feeling every year. You can have the
best-looking crop you ever had, get a hailstorm in July and have
nothing left. That's why you carry insurance. You have to cover
yourself somehow, because everything affects whatever's sitting out
there."
Insurance premiums are expected to go up.
Ancillary agriculture businesses
Grain elevators saw an early season. Due to the presence of
aflatoxin, crops were not stored on farms but brought straight to
the elevators for drying. Grain was moist. That takes a lot of
drying time, and the elevator would make more money on that. While
yields and volume are down, market prices are up, and there is an
advantage to the early season: It gives the elevators more control
of the crop, so they can sell when market prices are highest.
Implement dealers are hearing, "I'll think I'll put that on
hold," as farmers wait on insurance.
"You know you will need to purchase equipment sooner or later,"
Green said. "So you put aside for it. In a good year you go ahead,
and in a bad year you might hold back."
Last year, Green held off on capital purchases, and he expects he
may continue to hold back some this year also, "because things might
not be so great next year."
"We've had some very good years; the past two to three were very
good and it's been when the rest of the economy has been in the
pits. That afforded businesses in agriculture the opportunity to put
money back for a rainy day. We can expect that we are going to have
some times like this," Green said.
Crop insurance was very valuable for those who needed it this
year and will keep money flowing in the industry.
Equipment purchases are something that each farmer will want to
weigh out carefully. The government has sponsored a tax reduction
program offering a tax write-off and equipment depreciation to
encourage spending in a tough economic climate. That program ends
this year. For those who can, it could be better to buy now.
As for Farmer Green, what will he be doing for capital purchases?
"I'll wait and see," he said.
On another note of importance, the farm bill did not pass in
September and is not expected to be acted on until after the
election. The bill is an ongoing resolution started in 1940 that
provides support for subsidies, insurance and land set-aside
programs.
"You don't know what will be in it, so you can't plan," Brown
said.
However, "farmers know how to cut back," he said. "Unlike the
state of Illinois, they know how to pull their belt a little bit
tighter and get by. There won't be as many new cars bought; there
won't be as much equipment traded."
The farmers agree that the yield that did come in was a surprise,
given the conditions. They attribute the newer drought-tolerant seed
and more clay in area soil. That accounted to some degree for why
some crops did have yields when there was little or no rain.
There has been some talk that crops may not have taken up as much
nitrogen this year. However, depending on soil types and how much
precipitation would fall before next season, nitrogen could still be
lost from the soil.
"Maybe people are cutting back on nitrogen. I'm not willing to do
that so much," Green said. And, Brown said the same.
Economic impact on the farmer
"If your grain farmers had federal crop insurance, they won't be
hurt as bad as livestock farmers," Brown said, and then explained:
"The livestock farmers have to contend with the poor quality of feed
and higher prices going in this year, and with no subsidies coming
back from the government.
"It's a gamble. We don't need the slot machines, we don't need
the riverboat, because you're gambling on the price, you're gambling
on the product to come in," Brown said.
For everyone, you can expect to see some economic trickle-down
effect during the coming year, right into the grocery store.
[By
JAN YOUNGQUIST]Be sure to check out all the articles
in the
Farm
Outlook Fall 2012 magazine:
-
2012 in
review
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Yields: Complicated by aflatoxin
-
Hybrids saved us
-
Insurance claims in drought
-
Impact of drought on ag loans
-
Droughts: 1988 vs. 2012
-
Roundup: A view from all sides
-
How were the
farmers markets affected?
-
Introduction: Troy Rawlings
-
An
optimistic outlook
|
