Southeast Minnesota crops are progressing in spite of a back and forth weather pattern. It’s gone from hot to cool and dry to wet multiple times this spring, and, for the most part, the crops have gotten enough water at the right times to continue development.
Southeast Minnesota corn that didn’t need to be replanted because of wet weather is now at tasseling stage, when wet weather becomes a little more critical for continued development. (photo from cornbeanspigskids.com)
The corn crop is coming into the tasseling stage, a critical time in the crops’ development. Fillmore and Houston County Extension Agent Michael Cruse said the ten days before tasseling and the two-week period afterward are when rain becomes critical to continued development for southeast Minnesota crops.
“The corn is working on set and going through the reproductive cycle,” said Cruse, “and it’s important that we get rain. If the water gets limited by dry weather during that period, it will limit the crops’ final yield numbers.”
There is some extra water in the soil profile from rainfall this spring and early summer, which Cruse says doesn’t hurt at all. However, after talking with several farmers in the area, Cruse said several had to go into their fields when it was probably too wet. The farmers told Cruse they were concerned about compaction in their sidewalls when they were planting.
“That means the roots weren’t able to grow out and down into the soil like they typically do,” Cruse said, “so even though we do have water in the soil profile, if people had that type of compaction issue in their fields, the roots won’t get down to the water that’s there. It’s possible that water will be limited for the crop, even though there’s water in the soil profile.”
Though we did get plenty of rain at times this spring, Cruse said it messed up a lot of the timing for getting out in soybean fields and spraying herbicides. There are soybean fields in southeast Minnesota that have weed infestations that they couldn’t get into and spray. Farmers had to try and hit ragweed when it was 2 – 2.5 feet tall.
Due to wet conditions, it was tough for southeast Minnesota farmers to get out and spray soybean fields at the correct time for maximum weed control. (Photo from ottofarms.com)
“They had to put something down that not only burned the weeds but hit the soybean plant as well,” he said. “That’s okay, but all you really did was burn the leaves on the weeds. Most of the time, you won’t kill them by doing that. If you did knock the ragweed back a little, they’re greening up and shooting out more buds. They’re not really under control and still growing.”
Cruse’s extension colleagues are telling stories about soybean fields in their areas that were incorrectly sprayed. Farmers sprayed the incorrect product on soybean fields that aren’t resistant to that specific chemical. There have actually been soybean fields in Minnesota that were completely killed off.
“There were some fields that may not have been completely killed off,” Cruse added. “But beyond even that, the other concern is are we getting enough growing degree days? We’re actually pretty close to average. We may be a little behind the last couple of years, but we’re close to average.”
Similar to corn and soybeans, this year’s alfalfa crop is a mixed bag, with some good and some not-so-good results. The biggest comment that Cruse is getting from farmers is problems dealing with winterkill.
“I’ve seen plenty of it that’s down and I’ve seen plenty that’s ready,” he said. “I’ve seen people that are constantly cutting alfalfa. But, other fields are slower than others, likely due in part to winterkill. It’s all over the board.”
University of Minnesota Extension educator Michael Cruse says even though southeast MN crops are progressing, some alfalfa fields have struggled to be productive because of late season winter kill. (Photo from Michigan State Extension)
Disease pressure has been somewhat limited so far in southeast Minnesota crops, but Cruse said they’re likely going to show up in the immediate future. This is the time of year to be scouting for diseases like Northern Corn Blight.
As far as pest pressure, Cruse made an interesting point, asking, “How many mosquitoes have you seen this year?” What makes it even stranger is we’ve had plenty of the right conditions to have a lot of mosquitoes, but they just aren’t there in numbers we’re used to.
“We may have an infestation here and there,” Cruse said, “but I haven’t heard anything that’s overly concerning about southeast Minnesota crops, at least up to this point.”
It’s a debate that is guaranteed to incite emotions, both for and against. Increasing trade opportunities with Cuba is a hot button topic in Washington D.C., but it’s an important topic for agriculture. Minnesota is one state in the Union that recognizes the opportunities in Cuba. Several state officials and Ag groups took part in a recent June trade mission to our neighbors 90 miles to the south of Florida.
The timing felt a little ironic. Minnesota Lieutenant Governor Tina Smith put the trip together months ago as a follow-up to a recent state trip to Cuba last December. The Friday before the delegation arrived in Cuba on the most trade mission, President Donald Trump decided to roll back some of the Obama-era regulatory moves that opened up opportunities for the countries to do business. That made the trip a little more important in the minds of Minnesota officials and Ag groups.
Minnesota Farm Bureau President Kevin Paap was a member of the recent Minnesota delegation to travel to Cuba to talk about increasing trade opportunities between the state and the island nation 90 miles south of Cuba. (contributed photo)
“It (Trump’s announcement) didn’t change any of our goals going down there,” said Minnesota Farm Bureau President Kevin Paap, a member of the delegation, “but it certainly ratcheted up the importance of our being there. We were the first Ag trade team down there after the Trump announcement, so everybody down there was aware of it.”
Paap said it was a vital opportunity for Minnesota to highlight the importance for agriculture that the countries continue to work together to become better neighbors and trading partners. It was also an opportunity to do what they could politically to help change the situation.
That was vital because Minnesota and Cuba have been doing business for some time, dating back to 2002 when then-Governor Jesse Ventura hosted the first big trade mission to Cuba. That’s where things began to really take off with trade reaching a high water mark between Cuba and Minnesota, but things have been tailing off for the last few years. The potential is there for things to improve.
“We have to understand,” Paap said, “they aren’t the biggest market, but it is an important market and a close market. It’s important to remember when dealing with perishable goods, in terms of quality and price, distance has a negative effect on all that. We should be able to beat everyone else on quality, price, and transportation.”
Despite some of the rhetoric people may hear when talking about Cuba, it’s important to note that the people of Cuba are enthusiastic about possibly trading with America.
The opportunities are there in Cuba for commodities like corn, soy products, black beans, dried beans, and some livestock opportunities too. He said there are things Cuba just can’t produce on their own.
“They have a lot of silt in their soils with not much in the way of organic matter,” Paap said. “They really haven’t put down a lot of nutrients into the soil in the last 50 years or so. There are some tillable acres in the country but it’s just not high quality.”
It’s not just the soils. Farmers in Cuba are working with a lack of modern equipment that American farmers are used to. A Cuban farmer used a one-bottom plow and two oxen to work one of the fields Paap saw during the trip. He says it seems like the country is locked in time decades in the past.
A trade mission like this always has two goals at the top of mind. Obviously, one goal is to do business but the other, and more important, goal is to build relationships.
“When you deal with an international trade mission, it’s always about building relationships before doing business,” Paap said. “We (Americans) probably aren’t as aware of that when you talk about dealing with other countries. You have to have a relationship. There has to be a reason for doing business besides dollars and cents.”
That’s hugely important and not just in Cuba. It’s the same if you’re talking trade with Asian countries or anyplace else in the world. The trip was a big opportunity to make sure the Cuban people understood the importance America placed on the relationship in light of the Trump announcement.
“It was a chance for us to say agriculture worked hard to make sure it wasn’t affected by the Trump announcement,” Paap stressed. “When it comes to the changes by President Trump, we weren’t as affected by those as others were and we wanted the Cubans to see that as a good sign.”
It was a chance for Minnesota to also point out they have two “champions” for trade with Cuba in Senator Amy Klobuchar and Representative Tom Emmer, working in a bipartisan manner on the topic for a long time.
The delegation went face-to-face with a lot of different people while they were in the country and Paap said it ran the gamut.
One of the most interesting changes in Cuba has to do with how they deal with foreigners. As recently as the mid-1990s, Cuban farmers weren’t allowed by law to even talk to people from outside the country, even those on a trade mission. Now, everyday people in Cuba told the delegation members that they’re hoping to get some help from the USA.
It’s not the biggest market but there are opportunities there. Paap and the American delegation were walking into the Ministry of Agriculture to meet with Cuban officials and a Chinese trade delegation was walking out at the same time.
“If we’re going to choose not to be there and involved in infrastructure upgrades, that doesn’t mean it won’t happen,” Paap said. “There’s a lot of countries putting some money into the country. Even Minnesota Ag Commissioner Dave Fredrickson (who was on the first trade mission) said it was amazing how much the country had changed, even since last December.”
There’s a lot of work to do to improve the lives of the average Cuban who earns between 20 and 24 dollars a month. Paap is a farmer in Blue Earth County and his Cuban counterparts have lots of questions for the American farmers on the trip.
“I always make sure and bring along a picture book,” Paap said, “especially when there’s a language barrier. There was a lot of interest in that. They had a lot of livestock questions about pigs and what we feed them and how heavy they are. They had a lot of questions about things like rainfall and crop yields. We had a lot of great farmer-to-farmer conversations.”
Cubans understand there are things they can’t grow in their fields. Paap wants to know why wouldn’t we want to sell Ag commodities to a country that’s only 90 miles south of America. After all, farmers understand logistics and travel better than most. Farmers realized a long time ago the value of working together, and that the people you work the best with are likely those closest to you.
The biggest obstacle for agriculture to overcome in order to improve trade with Cuba is the financing mechanism. In order for America to sell agricultural products to Cuba, the buyers have to come up with all the cash up front through a third party. That’s a big disadvantage when America’s competitors are more than happy to offer financing.
“That’s where the work of Senator Klobuchar and Congressman Emmer comes in to help try to get rid of some of those requirements,” Paap says. “That would make us a more desirable trading partner as well as the closest.”
Beef prices have ridden a world-class roller coaster in recent years, making profitable cattle marketing an enormous challenge. Prices peaked in 2014, going as high as they’d been in recent memory. However, they began a downward slide in mid-2015 before tanking through most of 2016.
Troy Hadrick, pictured with wife Stacy, recently began doing things different when it came to his cattle marketing efforts. Those efforts helped him and other producers get through a recent run of the worst cattle prices the industry has seen in some time. (photo courtesy of advocatesforag.com)
Troy Hadrick is a producer from Faulkton, South Dakota, who rode the highs and lows in beef cattle prices, experiencing firsthand the challenges that low prices present. While fed cattle prices had rallied from October of 2016 into early this year, the business is cyclical and low prices will come around again. Hadrick said it is possible for beef cattle producers to make it through the down times, provided they’re willing to try new things.
There are a lot of theories as to why prices began a free-fall in 2015, falling at an unprecedented pace. Before prices got to that point, Hadrick says beef saw a perfect storm of conditions that drove prices to record highs in 2014. A large number of pigs in the U.S. had died of PED so pork production was way down. An Avian Influenza outbreak had pushed chicken and poultry production lower as well. Combine those facts with the lowest cattle numbers America had seen since the 1940s and you have the recipe for high beef prices.
“There wasn’t enough beef and protein to go around,” Hadrick said, “so our industry did what it always does. It responds and makes a bunch more of the product.”
But the number of cattle head in the herd doesn’t paint the full picture. It’s more about the pounds of product the industry produces. High prices meant producers were getting cattle as fat as possible to produce as many pounds as possible. The industry was at record carcass weight during the boom.
“We were producing carcass weights of approximately 850 pounds at that time,” he said. “Our recent carcass weights were around 814 pounds. So if we kill approximately 500,000 head a week, take that times 30 pounds a head, and look at the difference. The population stays the same as we’re killing the same number of head but the amount of product we’re producing is different.”
Needless to say, prices going from record highs to unbelievably low prices came down hard on the beef industry. There’s no doubt producers were pushed out of business as profits margins shrank to razor-thin levels. Theories ranging from oversupply to market manipulation abounded as the industry was under stress. Hadrick is very sympathetic to the plight of his fellow producers, having gone through the downturn himself. He does want to point out that if producers are willing to try new things, it’s possible to weather the downturns more efficiently.
Back in 2012, the Hadricks began changing their breeding and marketing programs for their cattle. There are different grades of beef and those grades are priced differently.
Higher quality beef demands a higher price because there’s less of it available. There’s a good demand for higher quality beef because it tastes better.
“We started shooting to produce cattle that would give us the beef that would qualify for these premium programs, such as Certified Angus Beef and USDA Prime,” he said. “If you produce cattle that fit into those categories then you get a nice premium price for your product.”
They did a couple of different things to try to speed up the process of producing premium beef. The family implemented an AI program on the ranch that covered the entire herd, using the best genetics they could find on the market to help them produce the highest quality beef. There’s a lot of data being collected on sires and they looked for the bulls that could get the job done.
So, with that as their focus, here’s where they did something different from what might be considered the ‘norm’ in beef production. Their cattle go down south to be finished but the Hadricks retain ownership.
“Those cattle are then marketed on a grid,” Troy said. “They harvest those cattle, they hang on the rail, and they’re graded by a USDA Inspector. Based off of that grade and the weight, that’s how the price we receive is calculated. We don’t know the final value of the cattle until they’re hanging on the rail as meat.”
Obviously, there’s a risk of being discounted when you market on a grid. The actual grid is just like other grids you may have seen. For example, if a particular animal graded Prime and was a Yield Grade 3, you follow those two columns and where they meet, that’s what the price was that week for that animal and that’s what we’re paid.
“We started our program with AI and then combined it with genomic testing,” Hadrick said. “We would take DNA samples from some of our cattle, get it analyzed, and that would give us an indicator as far as which cattle would perform well on the grid. We’d also keep back those females that would produce the best calves.”
Between those two technologies, Hadrick said their production went from grading 90 percent Choice, 35 percent Certified Angus Beef, and no Prime, to cattle that finished 57 percent prime, and 100 percent Choice. Hadrick said producers get really good premiums for numbers like that.
“The nice part about it is it doesn’t cost us any more money to raise those cattle,” he said. “It doesn’t cost us any more to feed them, either. Of course, we have to get them bred, but at the end of the day, they’re worth more money.”
There is an additional cost with the genomic testing, but Hadrick says it’s worth it to them because the idea is to identify the cattle that are going to make the family money and those that won’t. They sort cattle accordingly and market those cattle accordingly.
The Hadrick cattle are harvested through a cooperative called U.S. Premium Beef. It’s a rancher-owned cooperative based in Kansas that owns parts of the National Beef Packing Plants in Dodge City and Liberal, Kansas. Hadrick said some visionary people put this idea together back in the 1990s.
“They wanted to give producers the incentive to produce better beef,” Hadrick said, “and they wanted food service businesses and consumers that need beef to be able to come and know they’re getting the highest quality beef. They also wanted to reward the producers that could give them the highest quality beef consistently.”
The grid system runs off what they call plant average. Hadrick said in order to get the premiums, producers have to bring in cattle that are better than what everyone else brings in. That can be a big challenge as they’re attracting a lot of cattle that are high quality right from the start.
The plant isn’t buying cattle from the Hadricks, but instead, they’re buying carcasses. Hadrick said that makes it much harder for producers to try to sneak a bad one through the plant. There’s no hiding a poor carcass once the hide comes off.
He said the new system has advantages from the traditional way of doing business in the cow/cattle industry.
“On the farming side of things, we got into ethanol, we got into crushing soybeans, in order to get our product closer to the end point,” he said. “The closer you sell your product to the final consumer of your product, the more you’re going to get for it because you’ve added some value to it.”
He said doing business this way isn’t easy. Producers have to manage risk more, they have to have a relationship with the packer, and with the feedlots they work with. Producers also have to know their cattle because they won’t get away with trying to slip a bad one through the chain.
“If you market average cattle, you’re going to get an average price,” Hadrick said. “We’re trying to do things a little differently to do things better.”
Congratulations to Renville County, Minnesota farmers Gary Wertish, just elected as the new President of the Minnesota Farmers Union. A well-deserved honor. I spent several years as Farm Director at KLGR radio in Redwood Falls and saw on a first-hand basis that Gary tirelessly worked for farmers. He’ll do a fantastic job as the new President, taking over for the retired Doug Peterson.
Gary Wertish was elected as the new Minnesota Farmers Union President during a special election on Saturday, January 21. He replaces the recently retired Doug Peterson as the head of the organization. (photo from myklgr.com)
Minnesota Farmers Union (MFU) held a special election on Saturday, January 21, 2017 to elect a new President.
Former MFU Vice President, Gary Wertish was elected by Minnesota Farmers Union board members on Saturday to be the 10th President of Minnesota Farmers Union.
Gary has served as the Vice President of Minnesota Farmers Union since 2009, and has filled in as interim President since Peterson’s retirement.
Prior to being elected as Vice President, Gary had worked as a field representative for Farmers Union. Gary has also worked for then-Senator Mark Dayton as his Agricultural Director. He farms with one of his sons, raising corn, soybeans, and navy beans.
“Today marks a new era within the Farmers Union organization. Being elected as the new President is humbling” remarked Gary Wertish “I look forward to continue working with entire Farmers Union membership, along with other agricultural groups to enhance the economic interests of a struggling rural economy, which is just as important now as it ever has been. We will work to keep our momentum flowing and to bring new ideas to the table that will help us reach new goals within the organization, and to continue fighting and representing family farmers.”
Gary is married to his wife, Jeanne; together they have four children and live in Renville, MN.
Michael Cruse is the University of Minnesota Extension Educator in Houston and Fillmore County of southeast Minnesota, who said crop harvest results were very good in spite of big challenges. (photo from umn.edu)
People who work in agriculture are resilient by nature. They have to be. They risk so much personally in the midst of circumstances that are completely out of their immediate control. For example, you can’t control the weather. Next time a tornado is threatening to wipe our your livelihood, try to turn it off. Let me know how that works out.
Folks off-the-farm have no idea just how much money a farmer has to borrow every year just for the sake of running his or her operation. The amount of money would shock most people. The crop isn’t even in the ground at the point.
Swarms of pests, either above or below ground, can wipe out a whole season’s worth of work. Violent windstorms were very hard on the wheat stands in southeast Minnesota this year. Early season frost forced some farmers to replant their crops earlier this spring. Rain just kept coming, usually at the worst times. Farmers typically wait for the forecast to show several dry days before they knock down alfalfa. However, the rainfall didn’t always follow the predictions accurately. Alfalfa got rained on, sometimes a whole lot.
However, southeast Minnesota farmers pulled in a very good crop again this season after all was said and done. While results are never 100 percent across the board, corn, soybeans, and alfalfa yields were excellent.
I spoke with Michael Cruse, the University of Minnesota Extension Service Educator in Houston and Fillmore counties, about harvest in the area. While the final numbers are not in yet, all indications are that things went extremely well. Give a listen here on chadsmithmedia.com:
ST. PAUL, Minn. – Crop scientists at the University of Minnesota and officials at the Minnesota Department of Agriculture (MDA) urge farmers to check fields for Palmer amaranth, an aggressive weed that can put corn and soybean crops at risk. A plant detected in a native seed planting plot on a Yellow Medicine County farm was confirmed today to be Palmer amaranth. This is the first confirmation of the weed in the state.
The MDA asks possible infestations to be reported by contacting the MDA’s Arrest the Pest line by phone at 1-888-545-6684 or by email at firstname.lastname@example.org. Landowners are encouraged to email photos of suspected infestations for identification.
“We encourage landowners to scout fields now before harvest for Palmer amaranth and report any possible infestations to the Minnesota Department of Agriculture,” said Geir Friisoe, MDA’s Director of Plant Protection. “The quicker we’re able to identify and start managing this weed, the better our chances will be to minimize the impact to our ag industry.”
Palmer Amaranth has been found in Minnesota and the Department of Agriculture wants farmers to keep an eye on their fields to help nip this in the bud before an infestation can occur. (Photo by Bruce Potter)
Palmer amaranth can grow 2 to 3 inches a day, typically reaching 6 to 8 feet, or more, in height. Left uncontrolled, a single female Palmer amaranth plant typically produces 100,000 to 500,000 seeds. It is resistant to multiple herbicides.
It has been found in 28 other states, including Iowa, South Dakota, and Wisconsin.
“Palmer amaranth infestations have caused substantial yield losses and greatly increased weed management costs in cotton, soybeans, and corn in the southern states,” said Extension agronomist and crops leader Jeff Gunsolus. “This is a disconcerting, though not completely unexpected, discovery in Minnesota. We have been discussing proper identification procedures with crop consultants over the last three or more years.”
Palmer Amaranth has been found in Minnesota fields and it’s important for farmers to watch their fields in order to avoid an outbreak in farm fields across the state. (Photo by Bruce Potter)
Extension and MDA officials commend the grower and crop consultant who quickly contacted Extension after discovering a suspected Palmer amaranth plant. The weed is on MDA’s prohibited-eradicated noxious weed list, requiring all above- and below-ground parts of the plant be destroyed. Transportation, propagation or sale of the plants is prohibited.
MDA and Extension continue coordinating action steps to address the weed.
The MDA is investigating how the weed may have been introduced to the state.
I’ve got some southeast Minnesota harvest results for 2015. Southeast Minnesota corn harvest numbers look pretty good.
The 2015 corn harvest in southeast Minnesota looked good, according to the final numbers that came in this week from the National Ag Statistics Service office. (photo from southeastfarmpress.com)
Olmsted County: 184.9 bushels per acre
Dodge County: 204.0 bushels per acre (one of the top counties in Minnesota!)
Goodhue: 202.4 (also one of the top counties in the state!)
Here are some of the soybean numbers from southeast Minnesota.
Despite some battles with white mold, the soybean harvest numbers looked pretty good for 2015, as the final totals were released this week by the National Ag Statistics Service office. (Photo from www.thompsonslimited.com)
Olmsted County: 54.5 bushels per acre
Dodge: 60.6 (One of the top returns in the state!)
No soybean harvest results were turned in to USDA for both Wabasha and Houston counties.
This is a neat video of corn harvest in the Mankato, Minnesota area that was shot by using a drone camera. Take a look.
Southeast Minnesota farmers are putting the proverbial pen to paper, or more likely fingers on a keyboard, in preparation for the 2016 growing season.
The upcoming year may be a little different than what area farmers saw in 2015. Despite falling commodity prices through last year, the harvest season was generally solid across the area. Those falling commodity prices are still low, and that’s got farmers and lenders nervous as they look to spring planting in 2016.
Lisa Behnken of the University of Minnesota Extension Service in Rochester, Minnesota (Photo from from www.umn.edu)
“We’re coming out of a good growing season (in 2015),” said Lisa Behnken, University of Minnesota Extension crop specialist, based in Rochester. “We saw regular rains, nothing too extreme, and it was a season that was easy on us, in some respects.”
The corn and soybean crops were good, but the growing season wasn’t entirely free of challenges.
“There were some diseases that crept in,” Behnken said, “with some farmers having white mold in soybeans. We also had soybean aphids, which we typically have around here in early August. If you had white mold, obviously your soybeans took a hit. If you’re timing on aphid treatments wasn’t right on, you took a hit there, but overall, these challenges were nothing out of the ordinary.”
Harvest results were solid, especially in soybeans.
“With corn,” Behnken said, “we saw a lot of 180 to 220 bushels per acre, which is very good. In soybeans we saw some very good yields. We talk a lot about 45 to 55 bushels per acre as good, but we saw more 55 to 60 bushels per acre, and in some cases even higher, in 2015.”
SE Minnesota harvest 2015 was surprisingly good in some respects. Cost is going to be a big consideration for farmers as spring planting approaches in 2016. (photo from agrodaily.com)
As farmers fast forward to 2016, she said lower commodity prices are putting a big squeeze on producers’ budgets.
“Working out cash flows and getting financing for the upcoming year is the number one topic of conversation this winter,” said Behnken, a certified crop advisor. “You have to get serious about the cost of your inputs. You need to pick really good seed varieties and pay attention to soil fertility. Plus, don’t forget about weed control.”
The most important thing is to choose the top players as to what makes yields in your crops, and you have to make sure you’re spending your money wisely.
“Pay attention to which inputs give you the best return on your investment,” said Behnken. “Our message is look at the research, look at the data, because some things do not pay. You can’t afford to use things that aren’t absolutely necessary on your farms.”
However, it’s still important to spend money in the right areas to make your farm run as smoothly as possible. One example is weed control.
“If you have resistance problems,” said Behnken, “you better pay attention to a good weed control program and pay the extra money. At the very least, do what you need to do to manage those weeds, or they’re going to steal (profits) from you.”
She said when money squeeze is on, it’s important for farmers to go back to the basics, such as varieties, soil fertility, and weed control.
“That will pay the bills and keep food on the table,” Behnken said. “People are trying to figure out how to cash flow their business with lower commodity prices.”
Recent conversations at winter Extension meetings aren’t revealing much in the way of planting intentions.
“Some of our guys are looking at seed corn from the perspective of the fully stacked SmartStax corn being more expensive than single trait varieties,” Behnken said. “Some are even talking conventional varieties, with no traits at all.”
She added, “There are some prices differences, and some farmers are saying ‘if I can pay $100 less per bag for seed because I really don’t need a SmartStax as I’m in a corn/soybean rotation, then why am I spending the money for it?’”
The same price considerations go into soybeans this year too.
“We talk a lot about seed treatments,” Behnken said, “but they’re really expensive, so ask yourself if you really need them on your beans. Why not save those dollars for your weed control program?”
She said the discussion so far isn’t about reducing or increasing acres of corn and soybeans, but more about which varieties will get the job done at the best prices.
January is a time when farmers are typically doing paperwork, looking back at 2015 ahead of the upcoming tax season.
What some may find is their books don’t necessarily balance they way they want. The good news is, it’s possible to make better decisions in a difficult Ag economy if you have a clear understanding of where you’re operation is at financially.
Rob Holcomb is a University of Minnesota Extension Educator, specializing in Ag Business Management over in the Marshall regional office. (Photo from extension.umn.edu)
“What I’m seeing happening right now is people in the habit of doing a FINPACK (software from the Center for Farm Financial Management) analysis,” said Rob Holcomb, Ag Business Educator for the University of Minnesota Extension Service, “including balance sheets and income statements, are really analyzing what happened in 2015.”
He added, “A lot of people are doing analysis, and unless they’ve got some special circumstances, farm returns are due on March 1.”
Dave Bau is a University of Minnesota Extension Educator also specializing in Ag Business Management, and based in the Worthington office.
Looking ahead to 2016, Holcomb said the financial condition on farms is a mixed bag.
“We had people last year that had big trouble managing the tax bill,” Holcomb said. “What led to this challenge was the buildup of $8 per bushel corn, which caused more trouble than first thought. You hate to be negative about it, but I knew it would cause trouble down the line, and that’s what we’re finding now.”
He said certain farmers were doing a lot to avoid paying some taxes, like deferring income to the next year.
“They were also maxing out on pre-payments,” Holcomb said. “The problem is, a lot of farmers were rolling these massive deferred tax liabilities forward every year, even though they’re showing a loss. They may have a loss over the last couple years on their accrued farm income, but they still have this cash they have to deal with, because if they don’t do it, they have a monstrous tax bill.”
He said a lack of steady farm income leads to an obvious problem in that situation.
“The challenge is the recent lack of cash flow is such that they can’t afford to have that big tax bill,” Holcomb said. “In a sense, they’ve backed themselves into a corner with their tax problem.
“But that’s not everybody,” he added. “Some folks have been paying a little more as they go and didn’t have a big aversion to paying taxes, I think those folks are in much better shape.”
Holcomb said one of the big buzzwords in the Ag industry is working capital.
“It’s a current and intermediate cushion that the farmer has,” Holcomb said. “The more working capital you have, the better. Unfortunately, we’ve been burning some working capital over the last couple years. That’s probably the thing that lenders are getting the most squeamish about right now.
The lack of working capital on some farms is showing signs of getting serious.
“I got a call last week from a banker in my area that was asking about lender mediation,” Holcomb said. “That conversation can only be the result of one thing, which is a farmer out there that the bank is getting ready to pull the plug on.
“That means there are farm folks who could be in tough shape,” he added.
He’s especially worried about young farmers.
“When the $8 per bushel corn began coming down,” Holcomb said, “some of the younger guys were paying ridiculous land rental rates to try and get their hands on some acres to work. The problem is they’ve got the least ability to weather out low prices because they don’t have a lot of working capital. They have a cost structure that’s not sustainable.”
The high cost of land rental rates in farm lease contracts are putting a heavier squeeze on farmers and their financial bottom line than we’ve seen in several years. (photo from americasnewfarmers.org)
Rents are beginning to come down, but they have a ways to go to ensure profitability for both farmers and landowners.
“Rent is the largest input cost for corn and soybeans,” said Dave Bau, University of Minnesota Ag Business Management Educator in Worthington. “Rents are going down, but at current corn and bean prices, they should be around $100 to $125 an acre. Even base rents on flexible leases are still much higher than this.”
There is still pressure on farmers for land rents to remain very high for at least one more year.
“Farmers are doing more and more flexible agreements with a base rent and additional rent if prices improve,” Bau said. “With other input costs not coming down significantly, break-even prices for corn are $3.80 to $4.00 for corn, and $9.50 to $10 for soybeans.”
Bau adds, “Cash prices currently are around $3.40 for corn, and $8.25 for soybeans.”
With this much economic gloom ahead, what’s the key to surviving the downturn in 2016?
“I think the number one thing is you have to get your cost structure in line,” Holcomb said. “Land rent is one of those high costs that can be negotiated. $400 land rent won’t work right now.”
One of the best things farmers can do is figure out where they’re at financially before they make decisions on the year ahead.
“The farmers I fear for the most are the ones that aren’t doing any kind of financial analysis,” Holcomb said. “They have no idea where they’re at. It’s a sad situation when they find out they’re in trouble, and it’s their banker that tells them”
He added, “The smart producers know where they’re at, and that can alleviate a lot of trouble.”
Farmers need to do a better job of marketing their products in 2016.
“There are marketing workshops going on around the state,” Holcomb said, “and I think it’s really important to look at that.”
Lisa Behnken of the University of Minnesota Extension Service in Rochester, Minnesota (Photo from Extension website http://r.umn.edu/academics-research/extension/staff/UMR_EXTENSION_STAFF_L_BEHNKEN.html)
“Corn is looking very good across the area,” said Behnken. “That’s the crop that’s probably outstanding. The general region had good planting dates and some very timely rains in most of southeast Minnesota. It has been a little bit wet in certain areas, and some spots did see some hail. Overall, the corn crop looks good and has had a very good growing season.”
Soybeans are a different story. She said the soybeans have had a rougher go of it.
“And they may even have a rougher go between now and the end,” said Behnken. “There are some fields that look beautiful, but there are some different things happening in area fields. Some of it has to do with the amount of moisture we’ve received. In some cases, it’s been too much moisture, and that’s led to some problems for bean here in late August, into early September.”
Weeds are becoming a big challenge in area soybean fields.
“You have some fields that are very clean,” said Behnken, “with maybe a corn spear or weed here and there. On the other side of the equation, we have a lot of fields with Waterhemp coming through in soybeans. In other cases, you may see giant Ragweed, or even a mixture of weeds like Velvetleaf and Lamb’s Quarter, but the big one people are talking about here, and around the state, is Waterhemp.”
So, why is Waterhemp a problem?
“It germinates a little later in the spring,” said Behnken, “but it can germinate all through the growing season. When the canopy doesn’t close right away, the weed will keep germinating through the season.”
Behnken has a theory on why soybean canopies are closing later than they have in the past. She called it a Catch-22:
The bigger question is what a farmer did early in the season to treat fields for weed development.
“What did people do for their herbicide program,” said Behnken. “If you did not use a residual herbicide in your pre-emergence program, or in some cases, come back with a residual in your post-emergence program to keep those herbicides working all season, then Waterhemp has an opportunity to take off.”
According to Lisa Behnken of the University of Minnesota Extension Service, Waterhemp is becoming a challenge in SE MN Soybean fields. (Photo from soilcropandmore.info)
She added, “We’re also talking about resistance issue now. Waterhemp has some resistance to the ALS chemistry, and we’ve just confirmed some resistant pockets to another class of chemistry we call PPO’s.”
Area soybeans are struggling with some disease pressure as well.
“One that’s difficult to manage is white mold,” said Behnken. “I see it going east of Rochester throughout eastern Olmsted County including Winona and Wabasha and even into Fillmore County. If you notice uneven canopy development and walk out into the field, you should see some white mold. White mold likes wet conditions, and east of Rochester saw quite a bit of steady rain.”
Behnken added, “It’s a very difficult disease to treat, and while fungicides control other diseases in soybeans, there are more limited options to take care of white mold. It’s definitely going to cost some yield in certain fields.”
Bean challenges don’t stop there.
“We always wonder when aphids will hit us, and this year they hit us in August again,” she said. “The weather earlier this year kept them at bay. Toward the end of July, we saw a mass migration when aphids came in on westerly winds. Once they arrived and got established, they exploded in numbers really fast. Growers need to keep a sharp eye on their fields.”
The area’s alfalfa crop has turned out well in spite of frequent early season rains.
“We’ve put up a lot of hay this year,” said Behnken, “mostly in between rain storms. The good part of it is if you do have rain, then you have a crop. We know how to deal with hay that gets rained. We chop a lot more hay and we round bale, then you categorize it based on quality and how much rain damage there is. We’ve put up a good crop, so there’s good feed out there.”
If it’s been awhile since you’ve seen white mold in your fields, here’s a good refresher at spotting white mold in soybeans, courtesy of the University of Wisconsin Extension Service: