SE Minnesota farmers have grain to sell

With the current lower commodity prices and no real significant bump in the short-term forecast, careful planning has become more important than ever for farmers to stay in business.

Balancing lower prices for products farmers produce against the fact that input costs to produce those products haven’t come down yet requires more juggling than in recent seasons. Among some of the more significant costs is land rental, which is squeezing the bottom line of renters all over Minnesota and across the country.

Farmers have grain to sell

Lisa Behnken is a crops specialist with the University of Minnesota Extension office in Rochester. (Photo from AgriNews.com)

“Boy, is that a difficult one (to control),” said Lisa Behnken, a Crops Specialist at the University of Minnesota Extension Service in Rochester. “Rents keep going up and it’s very hard to renegotiate to bring those costs back down. It’s certainly a big part of the equation.

The high costs of renting land may lead to some tough business decisions.   Farmers may shuffle some land around, or even let a particular piece of land go back and not rent it anymore.

“We’ll see if people can do that (make things balance out),” Behnken said, “or if they’re going to let land go and back away from it because they can’t afford that. You may see some land changing hands because of the cost.”

With corn and soybean prices in the tank, are there other opportunities farmers may be looking at for profit? What about small grains?

“It all goes back to where their markets are,” Behnken said. “We have a good group with Extension that do workshops on small grains here in southern Minnesota and a good group of core farmers that grow small grains. They’ve got markets that they’re working with and are locked into.”

She added, “It can be successful, but it’s not just something you’re going to jump into. We don’t have the sell-points here. You need to have convenient places where you’re going to market it to. They don’t buy at every single elevator. It doesn’t mean you can’t do it, you just have to get everything in order, from planting it to marketing it.”

Behnken, who received her Master’s Degree in Crop and Weed Sciences from North Dakota State University, said farmers don’t want to be caught with a lot of grain in their bins in the summer and nowhere to take it.

Speaking of grain stuck in bins, farmers in southeast Minnesota still have a lot of grain to move from the 2015 harvest. Low prices at harvest made farmers very reluctant to sell grain that wasn’t forward contracted.

farmers have a lot of grain to sell

While exact numbers aren’t available, Lisa Behnken of the University of Minnesota Extension office in Rochester said there is quite a bit of grain in area bins waiting to be sold. (Photo from brockgrain.com)

“There are definitely crops to be sold,” Behnken said. “Some probably go forward contracted, but farmers don’t forward contract everything. Prices were down at harvest, so farmers didn’t sell right then, so it goes straight in the bin.”

While it’s important for commodity farmers to get their books in order, it’s equally important for livestock producers to watch their costs too, thanks to a recent run of lower prices.

“Cattle prices are softer,” said Behnken, “but the good side of that is they’re feeding animals much cheaper feed. However, they’re end product has also come down in price too.”

Do lower cattle prices mean it’s time for America’s livestock farmers to start expanding the beef herd? She said it all depends on your books and cash flow that your banker sees in those books.

“It’s all about operating money,” Behnken said. “You still have to go to the bank and make this whole thing cash flow. If I’m in the market to buy some feeders, I still have to have the cash to buy those feeders. Even if a farmer is raising his own corn to feed the animals, he still has to have cash necessary to buy the feeders.”

Cash flow. It’s more important than it’s been in many years, and it’ll determine what kind of decisions farmer make this year, and whether or not they stay in business.

“For some, it’s where their debt load is at,” said Behnken. “What’s my percentage of debt? If you have a more solid equity base, that’s a little different than if you’re highly leveraged. Then, it’s a whole different ballgame.”

 

 

 

 

 

Agriculture wants Cuban trade embargo to end

Cuba-US relations thawing?

The first step in a long process that may end the 54 year old Cuban trade embargo with the US may have taken place last year. The debate over officially ending the embargo is expected to heat up soon (Photo from wptv.com)

A major market for American agricultural products lies 90 miles off the coast of Florida. However, thanks to a 54-year-old American embargo against Cuba, it’s very difficult for products to move back and forth between countries.

The first step in thawing relations between the two countries may have happened December 17 of last year. President Obama announced he would begin efforts to normalize relations with Cuba. Agriculture groups across the country took notice of a potential opportunity to expand exports to a country of 11 million people.

“What if corn exports to Cuba went from 137,000 tons to 900,000 tons?” Erick Erickson is Vice President of the US Grain Council, and said normalization would be a great opportunity for agriculture, and for Cuba as well.

“It’s got to be more cheap for Cuba to buy from America too,” said Erickson.  “You can almost pack it in grocery bags and carry it across the water because it’s so close. It’s got to be cheaper than buying from overseas.”

Erick Erickson

Erick Erickson of the US Grains Council is in favor of ending the US Trade embargo with Cuba, and feels the opportunities for agricultural trade would be a boon for US producers (Photo from grains.org

Ag groups have been working on getting the embargo lifted for a long time.

“There’s a lot of controversy about the embargo,” said Erickson. “We didn’t do it with the Soviet Union, we didn’t do it with China, and other countries we’ve had issues with.”

Said Erickson, “The position of the US Grains Council is that removing trade barriers is good. Without trying to weigh in on all the other complicating issues, actions that remove trade barriers and open up the marketplace to work are a good thing for both sides of the equation.”

One of the newer groups formed to work on this issue is the US Ag Coalition for Cuba (USACC). The group is made up of more than 25 agribusiness groups from around the country, and their goal is a simple one: to urge repeal of the 1996 law that made permanent the sanctions on Cuba.

The US Ag Coalition for Cuba held a press conference on January 8 at the National Press Club in Washington, D.C., to announce their formation.

“Through the formation of the USACC, we are re-energized,” said Devry Boughner Vorwerk, the USACC Chair. “We are re-energized to establish Cuba as a market for US food and agriculture products, and as an industry, we are re-energized to end the embargo.”

“The sanctions hurt the Cuban people, and harmful to our country,” said Vorwerk, the Director of International Relations for Cargill. “54 years of unilateral sanctions is an experiment that’s gone on too long. It’s a failed policy, and it’s time our two countries had a better option.”

US Ag Secretary Tom Vilsack spoke at the press conference. He said President Obama’s announcement represents an opportunity for Cuban residents to gain control over their own lives.

Ag Secretary Tom Vilsack

US Ag Secretary Tom Vilsack spoke at the US Ag Coalition for Cuba press conference, announcing major ag group’s intentions of pressing for the end of the US Trade Embargo with Cuba. The conference was covered by C-Span (photo from foodproductiondaily.org)

“It’s also an opportunity for America’s farmers and ranchers to sell goods in Cuba,” said Vilsack. “We’re removing some technical barriers between US and Cuban companies, and creating a far more efficient, and less burdensome, opportunity to buy US agricultural products.”

Said Vilsack, “Cuba imports roughly 80 percent of its food, which means there is significant economic potential for our producers. It’s a 1.7 billion dollar market.”

Missouri Governor Jay Nixon also spoke at the USACC press conference, and said American farmers face an uneven playing field when talking about Cuba.

“Because of current sanctions, American producers can only interact with Cuba through a complicated process that greatly limits our ability to sell goods,” said Governor Nixon. “It also stifles our ability to create jobs here, and bring more dollars home.”

Kansas Senator Jerry Moran spoke at the press conference, and said the US Sanctions haven’t worked, and it’s time for a change.

“In Kansas, we’ll try something once,” said Moran. “We don’t always expect it to be successful the first time. Kansans have enough common sense to know if you try something for 54 years, it’s time for something different.

If the goal is for the United States to change the relationship between Cuban citizens and their government, what we’ve been doing has not worked. It hasn’t worked because it’s unilateral. When we don’t trade with Cuba, it’s not that they’re not getting agricultural commodities. They’re getting them from somewhere else.”

The fight to normalize trade relations with Cuba will not be an easy one. Secretary Vilsack said the President has done all he can, and it’s time to engage Congress in the debate.

Erick Erickson, the VP of the National Grains Council, said, “The teeth of the embargo are congressionally mandated, so it’s not clear what Congress will do. Some in Congress have said this is a good idea, and some have said it’s a bad idea.”

Said Erickson, “The question is, will Congress decide they want to do anything to oppose this? Maybe they will, or maybe not. This is probably a long-term process the President has started, and it may not be done before he leaves office.”