There probably was no reason for asking the question of whether we can continue to farm with commodity prices like this. Those who know me at all will expect that I am about to say “Yes we can”.
The story then quickly moves to the next question: “How can we do it?” One advantage I have is that most people already know that I venture out of ” the box” but I will admit that I had to go farther outside the fence to make this one make sense. Be that as it may I am willing to try.
As you might expect I come up with most of these ideas after talking with growers about their positive or negative impressions. Most of the coffee shop talk these days is negative as one might expect after a drought combined with low prices.
An additional factor that plays into this story is that we are coming off a string of years during which both yields and commodity prices have been good. The result of this is that costs have risen sharply on just about every input.
We have experienced this phenomenon many times in the past, but we seem to forget how it works and fall into the same trap over and over. More land is rented for higher prices. Some of the lesser productive fields are brought into the mix. As growers acquire more land they purchase larger equipment in order to avoid hiring more people. I sometimes call it the “ratchet” effect since costs seem very capable of rising but rarely fall.
It will be impossible to get into all three of our major field crops here so let’s take soybeans and kick around some ideas. For one thing people may have to change their lifestyles in order to live within their means since profits will be smaller if they exist at all. This is nothing new in agriculture. Farmers have always had to modify their lives to fit the cycles of “good and bad years”, but lately some seem to have forgotten this most basic of principles.
Next, landowners who have purchased land with the idea of renting it to farmers may have to share in the belt-tightening. They will likely not want to hear this, but the simple fact is that farmers cannot grow crops at a loss at least not for long. And if one of the primary factors in this loss is land cost that number will have to take a hit right along with some of the other thing that are caught in the squeeze.
Farmers may have to sit out for a while rather than lose money or farm the acres they own personally until this situation corrects itself. Somehow I feel that most of the land will be farmed if there is a general understanding that this situation is real and that downward adjustment of land costs may be necessary for a while.
For those who were expecting me to talk about modifying cultural practices that goes without saying. We plant more seed than are necessary, especially in soybeans and we often fail to follow soil tests by applying too much of the wrong nutrients and not enough of the right ones. Fertilizers can be banded and applied at planting for maximum efficiency, and tillage can be dramatically reduced in most cases. Lime, the foundation of nutrient availability is often left out of the program even though soil tests recommend it.
At least fuel costs are down but how long this will last is an uncertainty for certain. I have other ideas if anyone is interested, but my guess is that few people will change their methods until it begins to pinch in the pocketbook. Economics is the driving force for all of this and few farmers will move until that factor forces them. I believe that time is rapidly approaching.
Thanks for your time.