|
 But other producers across the country and across the world won
the production battle too. When everyone is a winner, prices take a
beating.
What does this mean? Even though the 2014 Logan County corn crop was
16.5% larger than the 2013 crop, here in the county it was worth
$18.5 million dollars less than the 2013 crop. This means that Logan
County farmers got less money for more bushels than they did in 2013
and much less than they got in 2012. Less dollars for more product
might be an indicator that we are losing the war. Overall, this
means there are $18.5 million dollars less in our local economy.
Even though corn is king, producers across the county seemed to make
out better on soybeans this year than they did on corn. 2014
estimates range from $15 to $100 loss per acre on corn, and small
gains on soybeans.
Since corn is hovering in that $3.50 - $4.00 range, producers across
the world in such places as Ukraine and Brazil have continued to add
corn and bean acres, thereby directly competing for export markets.
With such competition, most of the Logan County production went to
local markets in 2014: for ethanol and feed production. Growing
foreign production and lower demand in consuming nations likely
means more of the same for 2015. And these among other factors have
sent pricing into a downward spiral.
Predictions for the 2015 production year include more acreage put
into corn and bean production in this and competing countries,
lowering or plateauing production levels of ethanol due to changing
legislation, higher value of the American dollar, and continued
limits on GMOs in the EU, Japan and China. These factors lead to the
conclusion that we might have more of the same in the 2015
production year: higher production and lower prices.
With higher cash rents, obligations for machinery and buildings,
calls for higher wages, wear and tear and maintenance, continued
growth in technology, escalating cost of living, and less overall
income, Logan County producers are feeling the squeeze and some are
even upside-down. The only current uptick is that fuel prices are
lower. Careful management of cash reserves from year-to-year can
help balance the shortfalls, but other strategies for coping with
dwindling income are needed.
[to top of second column] |
Rick Harbarger, ag loan specialist from Town and Country Bank
(formerly Logan County Bank) writes:
As agriculture faces
landmark changes across the field, farmers are assessing not only
their base acreage and crop insurance but also their overall
position forward looking ahead of market adjustments. Adding to the
uncertainty are the possibility of $3.50 corn coupled with the lack
of a Renewable Fuels Standard – and the increasing likelihood that a
new RFS would call for as much as 3 billion gallons less than in
2007. Cash position and liquidity are an important component of
today’s successful farm income equation, and a strong, knowledgeable
farm lending partner can play a huge role in keeping your budget
right-side up.
Growers will start to feel a dwindling cash flow and many who are
upside down on farm budgets may start dipping into their cash
reserves to make ends meet. You can help soften that risk by working
ahead of time to make adjustments, working closely with your lender
to carefully scrutinize cash rents and input expenses. By giving
your lender an in-depth understanding of your farm, how you run your
business, and where your challenges lie, they are better able to
help you adjust to the market and identify solutions to help grow
your business. So, that by working together you can help keep your
farm finances in shape.
In this edition of Farm Outlook, we take a look at strategies for
reducing costs and raising incomes to cope with these challenging
economic times. Because, as goes the farm, so goes the community.
|
