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From the Spring 2013 Logan County Farm Outlook

Farming, drought, land sales:
Getting in or getting out?

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[March 28, 2013]  The year 2012 was dry for farmers and non-farmers alike. The drought of last year will no doubt go down in history, joining 1983 and 1988 in the memories of those who made it through all three droughts.

Years such as 2012 tend to leave a question or two on everyone's mind as they come to a close. What if the next year is dry as well, or even drier than the previous season? How will this affect the farmers and the businessmen who make a living through the agriculture industry?

Here in Logan County, there are a multitude of people who can provide some insight into these questions. One of them is Rick Harbarger, an employee of Logan County Bank and a farmer as well.

Harbarger farms 650 acres, primarily corn, between Elkhart and Mount Pulaski. He has been farming since 1977.

Harbarger echoes other farmers in Logan County, saying that the drought of 2012 definitely reminds him of the drought of 1988.

However, 1988 was not simply a difficult year due to the drought. "Prices tanked in the '80s," said Harbarger. The lack of a high price for crop payout, combined with the lower yields due to the dry season, made the late 1980s very tough for farmers.

Comparing with the harvest of 2012, Harbarger says that farmers and agricultural businessmen still ended the year in relatively good financial shape due to the higher price of crops, especially corn.

The difference is rather large. In the 1988-1989 marketing year, corn sold for an average of $2.54 per bushel. Recent figures have placed corn selling around $7 per bushel.

Harbarger said that while the 1990s also proved to be challenging due to low prices, in recent years, prices have continued to rise.

"You kind of have to ask, 'How high can it go?'" said Harbarger.

Another area of farming that could be affected by such a dry season is related to land. In recent months, prices of land have increased, leading to significantly higher sale figures per acre. For example, in October of 2012, land was being sold in some areas of Illinois for nearly $15,000. In contrast, the average price before that was between $8,000 and $9,000.

After the drought of 2012, it is not hard to imagine that some farmers may want to sell their land, especially if it could be sold for such a high price. A new question arises then: What have land sales indicated?

Harbarger says that from what he has seen so far, the amount of land that has been sold really hasn't changed that much from previous years. While land prices have increased, it is not necessarily connected to drought conditions.

"Farmers still did OK this year because their crop rates were locked in so high," said Harbarger.

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Harbarger also says that from a banker's perspective, he personally has not really experienced a decrease in agricultural loans. The amount of loans he has worked with in the last few months has not really changed.

"I always look for the chance to help some new farmer get started," says Harbarger.

Harbarger works with the USDA and new farmers to purchase the land they will need to get started on their own farms. He does not think new farmers have been dissuaded by the drought of last year. Furthermore, the loans given to farmers can still be repaid with higher crop prices and crop insurance payoffs.

As to the drought itself, Harbarger, like other farmers, says the weather works in a cycle. While the next season may come with dry conditions once again, the farmers of Logan County will not let a dry spell keep them down.

In the end, while years like 2012 do rear up now and again, for people like Harbarger, the job still remains, as he put it, "hard work and a lot of fun."



Spring 2013
Logan County Farm Outlook


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