farming | Field 2 Field

December 4, 2023December 4, 2023

2023, the Ag Economy, and a New Year Ahead

What’s the first thing that comes to mind when I say, “Describe the year 2023 farm economy in one word?” Actually, I’m not sure one word would be adequate, especially if you live and work in rural America. The best way to describe 2023 in the agricultural community for many may be “Is it 2024 yet?”

Ag Economy, 2023 — In today’s ag economy, 2023 saw many of us pinching pennies to grow crops.

Dave Widmar is an agricultural economist with Agricultural Economic Insights in West Lafayette, Indiana, and keeps a close eye on the ag economy. We had a conversation during the last National Association of Farm Broadcasting Annual Convention in Kansas City in November, a week before Thanksgiving.

“One of the biggest stories of 2023 is declining net farm income,” Widmar says as the crowd in the Trade Talk event walked by in the background. “That’s not a big shocker to most people in rural America, but we have to put it in perspective. It’s still historically high, so we need to bring it into balance.”

Unfortunately, that income balance doesn’t apply equally to all parts of farm country. He said the Midwest and the Corn Belt did especially well during the last three years combined. In fact, he called the last three years (2021-2023) the “best three-year run” since the 1940s.

“On the other side of the narrative, commodity prices have trended lower,” he said, “especially on corn. We also had another year of below trendline yields combined with higher interest rates.”

AEI isn’t necessarily watching the interest rates the general public hears about during the evening news. Those are the short-term rates the Fed adjusts at their meetings, and, since June, the Fed has raised short-term rates 25 basis points. “On the other hand, long-term rates have increased 150 basis points,” he said.

“That may continue into 2024 as that yield curve un-inverts as we move into a different economy next year,” Widmar said. “As the Fed spent time raising rates, the curve got inverted, meaning short-term interest rates got more expensive than long-term rates. This is often thought of as an indicator that recession may be coming.”

2023 ag economy — The 2023 farm economy showed producers it’s time to keep a tight reign on how they use debt.

Now the Fed has paused interest rate hikes, the long-term interest rates have continued higher. That means the yield curve is starting to un-invert, something he’ll continue watching.

There is some good news for the economy. The unemployment rate remains low, which is a positive trend, and inflation has come down “significantly.” In his words, “the genie isn’t back in the bottle yet.” The country isn’t back to two percent inflation, and the last 150 basis points on inflation are going to be the hardest to reduce. “A lot of moving pieces in 2023,” he added.

So, what do those moving pieces possibly mean for 2024? For those looking for the economy to settle down, they may be disappointed. Widmar said “hold on.”

“The volatility is probably going to continue,” he said ruefully. “That isn’t all bad. Despite record fertilizer prices, the uncertainty around usage, demand, and inflation, the farm economy had a good run between 2011 and 2023.

“We could see some reversion to the mean,” Widmar added. “Farm incomes might be lower next year but not necessarily historically bad. What we need to realize is the last three years are not normal.”

The last three years weren’t typical in terms of government payments, commodity prices, or profitability. Widmar says it’s time to start recalibrating our expectations as to what’s normal and what we should plan on being normal in the future. Speaking of the future, what should producers be thinking about heading into next year?

“One of the big things we’re keeping an eye on is acreage distribution,” Widmar said. “There’s always at least some reallocation. One of the things that we observed in 2023 was that we had a lot of corn acres and not as many soybean acres. That’s resulted in an imbalance in ending stocks.”

That’s put corn ending stocks are above the long-run average, closer to 15 percent than the average of 13 percent. Soybeans are closer to five or six percent instead of the long-run average of eight.

“That means we may see some acreage reallocation,” Widmar said. “Producers should keep an eye on the relative price ratio and how that’s going to impact their budgets.

“They also need to keep an eye on fertilizer expenses,” he added. “Fertilizer has come down a lot recently, and that’s going to benefit corn budgets quite a bit.”

Another thing to watch for is farm debt. One of the things the economists at AEI have observed is new farm loans with different terms than in the past. Take a machinery loan, for example. The payment terms have been stretched out. How does that affect the bottom line?

“For every $1,000 of farm debt one takes on, the payments are going to be about the same as they were the last few years,” he said. “The payment hasn’t changed. What’s changed is the ‘stretching out,’ which means more payments get added to the backside. The extra interest expense is backloaded into the form of additional payments.”

Interest expenses are increasing as we go forward, and it will take more payments to maintain the same level of debt that farmers have had in the past. He said a lot of the economic challenges we face today may be getting “kicked down the road.” But there is one good sign amid some uncertainty looking to the new year and 2024 spring planting.

“Lenders are still confident and comfortable making long-term loans on things like machinery,” he said. “One of the big differences between the 1980s and today is back then, we had very high interest rates and short repayment periods. Some repayment periods lasted less than a single year.”

That created a large problem of no access to capital in the ‘80s. Today, Widmar said there’s a lot of available access to debt markets, which are very accommodating right now. But, he says, just because someone will lend to you at those terms doesn’t mean you as a farmer need to accept them. “Always be thinking about the implications of any loan terms you accept,” he added.

“Stretching the terms out has kept the payments low, but now that we’re in a high-interest environment, how are producers going to adjust,” he asked. If costs like fertilizer, electricity, or gasoline go up, Economics 101 teaches that we should be using less of each input.

“What do we do then with the higher cost of money,” he said. “Using less of an input is one particular approach. We can also shift the way we’re using money, including using more long-term debt last year and then shift it to short-term debt going forward. We always have to be evaluating how we’re using debt.”

In closing, he pointed out that agriculture hasn’t been in many rising interest rate environments in the past. The 1980s was one, and farmers and now in another. Producers need to revisit the strategies they’ve been deploying around farm finances, the use of farm debt, and their cash flow.

February 20, 2023February 20, 2023

Shipping Commodities is Near-Normal, For Now

Shipping commodities up and down America’s inland waterway system got pretty hard to do in 2022, especially along the Mississippi River. Extended drought cut water levels to almost impassable levels and resulted in shipping grinding to a halt in the river. The good news is those levels are finally beginning to rebound.

Mike Steenhoek is the executive director of the Soy Transportation Coalition, a group that keeps a sharp eye on shipping and the waterways year-round. They’re happy to see those river levels starting to rise because ships are once again carrying commodities to southern ports in the U.S.

“Meaningful precipitation has occurred over the past several months,” he said from Ankeny, Iowa. “It’s made a significant impact throughout the entire inland waterway system.”

Steenhoek offered up Memphis, Tennessee, as an example, calling it one of the “ground-zero” locations for the low-water conditions last fall. That location is currently 10-10.5 feet of water depth in relation to the gauge.

“Last year at this time, we were at 19 feet,” he recalled. “So, we’re below last year. To give that some perspective, we were just about at a negative 11 feet in late October. We’re easily more than 20 feet better than we were in October, which is a significant increase making shipping easier.”

St. Louis, Missouri, was another example of “ground zero” in the low water level picture. That location is just a bit higher than at the same time in 2022, so the area has seen a nice rebound from the low levels. He says the moral of the story is the waterways have returned to a degree of “normalcy.” But there is a catch.

“It won’t take a lot of sustained dry conditions to tip us right back into lower conditions,” Steenhoek said. “It could critically impact some of those areas like St. Louis to Cairo, Illinois.”

Shipping commodities is getting back to near-normal levels, for now. The waterways need continued rainfall in case dry weather returns. (Photo by AgFax)

Cairo (pronounced KAY-row) is a significant point in the waterway system. That’s where the Ohio River meets the Mississippi and provides a big influx of water into the system so that St. Louis to Cairo area can be very susceptible to low water conditions.

How dry did some of those areas get? The levels sank so low that ships were actually running aground and getting stuck in the Mississippi River. When that happens, one of two things usually occurs.

“Those ships sometimes had to get dug out,” he recalled. “Sometimes, they had to sit there until water levels rose to the point they could move again.

We also had sediment buildup, or ‘shoaling,’ in multiple locations,” Steenhoek said. “That resulted in shipping having to stop or significantly slow down. That meant there was a lot of dredging activity occurring last year and continuing into 2023.”

The timing for ships getting stuck last fall was awful, as that’s a time when a high percentage of U.S. exports occurs between September and February. “That’s when the U.S. soybean spigot is turned on and we supply a lot of soybeans to the world market,” he said. “Bad time for one of the main ways we move product to our ports to go down.”

Steenhoek monitors shipping in the waterways closely and says there is good movement up and down the waterways right now. U.S. export volumes are comparable to even a little higher than where they were last year.

“That’s really good news,” he said. “The reports I’m getting, particularly from the export facilities down in the New Orleans area, say they are back to a healthy degree of normalcy.

“As I mentioned, we’d love to see steady precipitation continue,” Steenhoek added. “We don’t have a lot of excess water in the tank to rely on if things go that dry again.”

September 28, 2022September 28, 2022

Ag economic conditions strong, but for how long?

Ag economic conditions are still quite strong in 2022, but how long will that last? Nate Kaufman, vice president and Omaha bank executive for the Federal Reserve Bank of Kansas City, spoke during the recent Agricultural Outlook Forum in Kansas City. He told the audience during a presentation that incomes are still in good shape.

“Economic conditions in agriculture are remarkably strong. And I want to start here because this is not something I would have said probably two-and-a-half years ago. And I think it is an important place to start just because of how significantly different conditions are today relative to what we might have said back then. Incomes are incredibly high. We’ve seen commodity prices pick up, and yes, there are very high input costs that are leading to some concerns, but generally speaking, economic conditions in agriculture, with some caveats, are quite strong.”

Land values are a good example of the strength of the ag economic conditions.

“Land values, for example, are about 25 to 30 percent higher than what we might have seen before the pandemic. That was a time that land values had been declining the first couple of months of the pandemic, and it was maybe thought that we would see further declines, but here we are a couple of years later and seeing that conditions are much stronger. Before the pandemic, we worried about gradual increases in loan defaults. We looked at bankruptcy rates, we looked at other things that we thought there was going to be more financial stress and not less going forward. And the reality is that loan delinquencies are at one of their all-time lows, working capital levels are very high, and producers are generally in a strong position. And so, we’re seeing again from a financial picture things are rather strong there too.”

Despite the current strength of the ag economy, analysts expect slower economic growth next year.

‘Six percent growth in 2021 and 2022, that number is expected to be less than one percent, and there are concerns about economic growth in 2023. The second one is inflationary pressure. For those 10 years that we spent in the longest economic expansion on record after the financial crisis, inflation was generally less than two percent. And the Federal Reserve, as many of you may know, has a goal for inflation at two percent. We’re at eight percent, and that’s significantly higher than two. There are concerns about what inflationary pressures might do concerning some of the costs that have been mentioned.”

The other significant headwind is the interest rate.

The last one that I’ll mention then is interest rates. At the end of 2020. If you were to look at some of the projections that Federal Reserve officials would have suggested would be appropriate interest rate policy for 2022, many would have indicated that rates were likely to still be approximately zero by the end of this year. Instead, we’re in a different environment. And this is in large part because of inflation, where we’re now seeing interest rates closer to four to four-and-a-half percent by the end of this year.”

The Ag Outlook Forum was sponsored by the Ag Business Council of Kansas City and Agri-Pulse.

August 10, 2022August 11, 2022

Rain Finally Shows In Farm Country Last Weekend

Rain. Finally. Last weekend saw at least some rain in parts of farm country. Had a chance to talk with John Baranick (rhymes with mechanic), ag meteorologist for DTN, who lives just down 169 from me in Jordan, Minnesota. He says while the rain benefitted the parts of rural America stuck in a drought, other areas didn’t need a lot of rainfall.

“It wasn’t just here in southern Minnesota. We also saw that it was even heavier south of the border in Iowa, with a lot more four-to-six inch amounts there. Very helpful for some areas, but not a lot of those areas needed it. It also extended down through southern Wisconsin and into Northern Illinois. A lot of those crops, again, didn’t really need it, but it’s definitely helpful wherever it hit. And that front is starting to come through the eastern half of the Corn Belt. Again, a lot of these areas are doing much better than we are out here in the West, but Illinois, Indiana, and Ohio are all seeing bouts of rain this week. They’ve had some flooding in some of these areas, but the rainfall that’s gone through is mostly favorable. It’s just those Western states that just haven’t.”

The Dakotas saw mixed results from the weekend rain.

“South Dakota got some pretty good rainfall. The eastern half of it did, but the western half didn’t, really. North Dakota has kind of been missing out on a bunch of rain lately, although their soil moisture, for the most part, and the crop conditions are still pretty good.”

The Plains States are still struggling with drought…tape

“It’s the states of Nebraska, Kansas, kind of northern Missouri that have missed out on a lot of the rainfall even with these fronts coming through, and they’ve had a lot hotter. Temperatures have been up near or eclipsing 100 degrees very consistently all summer long, so the heat has been putting on a whole lot of stress for those areas.”

There may finally be some cooler air on the way into the Plains next week and may bring at least a little rain with that front…tape

“We’re seeing late next week, maybe mid-to-late next week, a push a cooler air move through and that’s gonna come with a bit of showers too, so it’s not a whole lot of rainfall and probably on the order for most people have a half inch or less, But the temperatures are going to cool back down. Instead of seeing highs in the 90s and up near 100. It’s more like the 70s and 80s for several days, so it’s actually gonna be below-normal temperatures for a bit. That kind of occurs late next week into the following week, so it’ll be a nice relieving break for them.

Unfortunately, many parts of rural America are still stuck in a drought. We’ll talk about that more later this week.

Again, that’s DTN ag meteorologist John Baranick

February 8, 2022February 8, 2022

Planting questions in 2022

Planting questions abound here in the late stages of winter. How many acres of corn, soybeans, wheat, and other crops will get planted in 2022? The acreage battle is a hot topic of conversation in the markets and in coffee shops across rural America. This year’s acreage battle is far from over and actually began last year.

That’s the opinion of Joe Vaclavik of Standard Grain in Nashville, Tennessee. The long-time market expert says this has gone on for months for a variety of reasons, led by fertilizer issues.

“Even going back to last fall, the market was very aware of upcoming fertilizer challenges,” he said on the phone from his Nashville office. “It was widely known that fertilizer prices were rising rapidly and would have an impact on this year’s acreage mix.”

He said for a moment in time, they saw the ratios and new-crop prices seem to favor corn. It appeared the market was trying to buy corn acreage back because of the potential of losing acres due to fertilizer prices. The fact of the matter is no one has a clue what the crop rotations are going to look like.

“There are several well-respected analysts like the University of Illinois that had an estimate of 96 million corn acres,” he said. “That would be an increase near 2.5 million over last year.

“And then, Farm Futures did a customer survey and came away with an estimate of 90 million acres,” he added. “The difference between 96 million and 90 million acres in terms of pricing implications, balance sheets, and fundamentals is phenomenal. Those are two totally-different markets and totally-different worlds.”

In any given year, Vaclavik says trying to predict or estimate what the acreage will be is a near-impossible task. Occasionally, someone will predict accurate numbers, but no one is consistently accurate. There are always “curveballs,” and this year will feature more curveballs than ever.

“This uncertainty doesn’t just apply to corn and soybean acres,” he said. “You have another bunch of crops that also make money for farmers. Spring wheat makes money; oats make money; small grains make money.”

The “other piece of the pie” among the planting questions is that principle crop acreage has trended lower for the last 7-8 years. Things are in a state of flux, and he feels the unknown might actually be more supportive than not for the markets. The fertilizer question and its impact depends on where you’re located.

“I’ve talked to people who have their fertilizer needs covered, and they feel good about the situation,” Vaclavik says. “The thing is that most farmers really don’t want to change their rotations. I did a survey of my customers a while back and most said they’re rarely in favor of switching rotations, if ever.

“If they can stick to their rotations, that’s what they’ll do,” he added. “But it still could be tricky.”

Even a farmer who’s already locked in their fertilizer for the 2022 season can still run into fertilizer problems. Actually, getting the physical delivery of that product could be a different story because of serious supply chain issues.

Corn is also a more input-intensive crop, so farmers can’t have their fertilizer not show up when it’s time get moving on spring planting. While not everyone is going to struggle to get fertilizer, there is still a risk going into springtime. Consequently, fertilizer will be a major deciding factor in answering those planting questions.

Small grains could be an interesting topic in the spring. Vaclavik says he would not be surprised to see more spring grains in the acreage mix. One thing that people might not be talking about a lot is some of the northern United States and even into Canada are still experiencing drought.

“Things are still dry in the Dakotas and over the border in Canada,” Vaclavik said. “They are still in a drought, and that will be an additional factor when it comes to acreage. It all depends on what farmers are comfortable planting into the dry conditions. I know it’s not as bad as last summer, but there is still a drought in that region.

“I haven’t seen a year like this in recent memory where it’s so hard to predict the answers to the planting questions that we’re asking,” he added.

October 11, 2021October 11, 2021

Harvest 2021 deep dive shows variability

Harvest 2021 is proceeding along at a good pace. Mike Zuzolo is the Founder and President of Global Commodity Analytics in Atchison, Kansas. He took a deep dive last week into the crop progress numbers and found a lot of variability in the results.

“Comparing the pace of the corn harvest 2021 versus the pace of the soybean harvest suggests that the corn yields are indeed a little more variable than beans,” Zuzolo said. “I hate to say lowered because of the issues that we’re seeing with the yields coming in. We’re seeing very good, very top-end yields coming in down in Kansas and Nebraska.

“My business clients and subscribers say strong yields are coming in through certain parts of Illinois,” he added. “However, my question is whether they’re top-end yields. Probably 90 percent of the producers I work with throughout Nebraska and Kansas would say ‘yes,’ we have top-end corn yields, and we’re close to wrapping up. However, central Illinois and central Indiana are probably around 50 percent complete, by comparison.”

Illinois and Indiana farmers are probably close to 75 percent done with soybean harvest 2021, but recent rainfall has slowed them down a bit. His clients in both states are saying they have top0-end yields in just 25 percent of their corn, but everything else is above average.

He thinks the numbers are showing the corn yields are more variable, especially because our corn and soybeans both have low moisture content. Six of the top 18 corn-producing states are at 50 percent or greater on corn harvest. About 29 percent of the national harvest 2021 is done compared to 24 percent at the same time last year.

“Those kinds of numbers are completely upside down when it comes to the soybean harvest,” Zuzolo said. “Just two of the 18 major soybean-producing states are at 50 percent or greater on harvest pace. The national soybean harvest is at 35 percent compared to 34 percent at the same time in 2020.”

Here’s the rest of the conversation.

September 24, 2021September 24, 2021

Banks worry about funding mechanism in Infrastructure Package

Banks across America would like to let you know about a small provision in the massive 3.5 trillion-dollar infrastructure package trying to make its way through Congress and get to the president’s desk. That’s a big piece of legislation to pay for, and one way that Democrats behind the bill want to fund it involves the IRS and your bank accounts. All of the bank accounts.

Paul Merski is the Executive Vice President of Congressional Relations and Strategy for the Independent Community Bankers of America. He said one way the administration wants to foot the bill for the infrastructure legislation is “horrible.”

“They would have the IRS look into everyone’s bank account transactions,” Merski said. “The legislation will force all banks to report on any transaction going into or out of an account worth 600 dollars or more. What it means is every account in America will then get monitored by the IRS as banks are forced to send in your information.”

To generate revenue like legislators envision to help pay the cost, Merski said the IRS will basically be assuming that most everyone in America is a “tax cheat.” It’s going to involve banks across the country sending in large amounts of information to the IRS, who will then have to sort through all of it to figure out what’s happening in each account.

The accounts in question include savings accounts, checking accounts, business accounts, personal and business loans, cash transactions, and even international transactions. To find any potential infractions, the IRS would be looking for a needle in a haystack.

“What we’re fearful of is this idea is going to cause a lot of false audits, a lot of false positives, and a lot of white noise,” he said. “The IRS will then be able to subpoena additional information on people’s accounts, to freeze people’s accounts, to garnish people’s accounts if there’s a dispute with the IRS.

“It’s crazy,” Merski added. “They pretend that they are going after millionaires and billionaires, and our question is, why then, do they need everyone’s account transactions sent to the IRS? The last thing we need is to be sending more information and more data to the IRS.”

This is especially concerning for rural bankers. He points out that community banks do 80 percent of all the agricultural lending in the nation, as well as over 50 percent of all the small business lending. They want customers to know that if this goes through, those banks are going to have to report all of your financial transactions, even loan information, to the IRS.

The Independent Community Banks of America are concerned about the privacy of bank accounts across the country.

“We’re worried that our customers don’t know what’s happening with this proposal,” Merski said. “We want you to know it’s not the bank’s idea to be sending all this information to the IRS. It’s the IRS, the Treasury Department, and the administration demanding that the banks report all these transactions.”

He says the typical small business owner, farmer, or rancher has to know about this idea and understand what’s happening in Washington, D.C. They also want farmers, ranchers, and small business owners to weigh in on the topic.

“If this is something that concerns you like it concerns our community bankers, you need to contact your congressmen and senators,” Merski said. “This is overkill: This is a dragnet, and this is the IRS looking to profile people based on their transactions.

“This is a stop-and-frisk against average Americans,” he added. “It’s going to add a lot of cost and compliance burdens against both bankers and the general public.”

August 18, 2021August 18, 2021

Canadian agriculture hit hard by drought

Canadian agriculture has something big in common with U.S. producers this year.

In fact, Canada and the U.S. have more in common than just a border. The two countries are also sharing a lot of hot, dry weather. Shaun Haney of RealAg is an agricultural journalist and broadcaster in Canada who says the longtime trading partners are in the same boat.

Shaun Haney of RealAg is an agricultural journalist and writer covering Canadian agriculture, which has been hit hard by drought. (Photo from YouTube.com)

“Absolutely yes,” he said on the phone from his office. “The drought of 2021 in Northern Ontario and the Western Canadian Prairies has been compared to the drought in 1988. This summer has been extremely hot and dry.

“It’s obviously hurt the crop conditions,” Haney added. “In some ways, it’s even more urgently impacted the grasslands and pastures, which is forcing producer discussions on the future of the Canadian cow herd after this fall, depending on what the level of cow cull will be.”

The drought isn’t just confined to 2021. As with many dry areas in the States, the drought stretches back to last fall. Haney noted that many Canadians were saying that “you don’t lose the crop in March.” However, they could have used moisture at that time, which they didn’t get.

“It was so dry that we’d used up a lot of our subsoil moisture last year,” he recalled. “We needed to replenish that moisture through the winter, and it didn’t happen. As we made our way into the growing season and the weeks passed, the rain just didn’t come.”

Severe drought is making things tough on Canadian agriculture. (Photo from globalnews.ca)

As the rain continued to hold off, the area listed on the Drought Monitor began to expand. Early in the year, the drought ran in a tight band along the U.S.-Canada border, especially in the Southern Prairies of Alberta, Saskatchewan, and Manitoba. At the same time, that drought also affected North Dakota and Montana early on in the U.S.

“As the weeks went by, the drought-impacted area continued to make its way further and further north,” Haney recalled. “It created a situation where the yields became more questionable on an increasing number of acres. The frustrating thing is some of those same fields started 2021 in great condition.”

The crops didn’t get the rain they needed for any consistent grain fill. Haney is located in Lethbridge, Alberta, and said a lot of the dryland in Canadian agriculture never had a chance. He described the 2021 Canadian growing season in one word: heartbreaking.

Crops hit by this year’s drought run the entire spectrum in Canada. Some crops handle adversity better than others, including chickpeas and lentils. However, Canadian farmers are especially concerned about the wheat and canola crops.

“I would say it’s even more so with canola,” Haney said. “From what I’ve heard, there are a lot of people harvesting some pretty light barley. But canola is the one where people are concerned they won’t have the yield. Canola is a fairly small seed, but it shouldn’t look like pepper.”

Canadian farmers do grow some soybean in Manitoba, where farmers may harvest bushels worth as little as $15. Producers also grow a little grain corn in Manitoba, as well as some in southern Alberta, that’s fed to livestock. Almost all of that corn is irrigated.

“There are some irrigated sugar beets in Alberta that are looking good as well,” he adds. “However, the list of struggling dryland crops is a long one.”

Haney says the one possible saving grace is good commodity prices. If prices were low during a drought like this, that would be the mother of all discouraging situations. He notes that if canola is around 20 dollars and you have ten bushels in the field, that’s 200 dollars an acre.

“It’s not a moneymaker on dry land, but it’s a lot better than a market with nine dollars,” he added. “This boils down to Mother Nature not cooperating with us, and it’s one of the variables that are out of our control.

“I can’t even imagine what it would have been like going through a drought like this in the 1930s and ‘40s when we weren’t in a minimum-till situation,” Haney said. “Thankfully, most of our fields are minimum or zero-tillage, which helps to conserve as much moisture as possible. It’s a good reminder of why we change our practices in Canadian agriculture out here on the prairies.”

Find out more about Shaun Haney and everything going on in Canadian agriculture at https://www.realagriculture.com.

August 11, 2021August 11, 2021

Drought has Utah farmer in “survival mode”

Drought to an average person likely means “it’s dry.” And that’s fair. However, what you may not realize is drought, to a farmer, might mean “we’re struggling to stay in business because of something we literally have no control over.” It’s understandably a situation that non-farm folks have a hard time relating to.

The National Association of Farm Broadcasting’s News Service and the American Farm Bureau Federation undertook a project this month to put a human face on the challenges of drought, especially in the Western United States. That area of the country has been clobbered by a long and intense spell of dry weather.

Tyson Roberts is a farmer from Layton, Utah, who’s seen the challenge firsthand because he’s living it right now. I jumped on the phone with him on Tuesday of this week for an interview about what it’s like to face a drought of this magnitude. While drought is a big topic of conversation in 2021, he said the dry spell stretches back to 2021.

“We got started with this last year,” he recalled while on the phone from his Utah farm. “A lot of people may not realize that.”

It wasn’t quite as bad last year as it is in 2021. The water available for Roberts’ crops was below normal levels in 2020, but they still grew “pretty much” all of the crops that they would in a normal year. This year has been markedly different.

“We are a vegetable operation here,” he said, “and we grow fresh market vegetables for farmer’s markets.

“When you think about a tradition row crop farm, the producer plants in the spring and harvests in the fall,” Roberts says. “We work a little differently: we’ll start planting different vegetables in the spring and continue through most of the summer and into August.”

Their typical planting schedule came to a sudden stop. Roberts, the sixth generation of the Roberts family to work the farm in Davis County, Utah, got to the middle of June and figured out they wouldn’t have enough water to sustain the crops they have growing and grow the additional crops they’d be planting through the month of July.

“We ended up putting all of our planters away around the first of July,” he recalled. “About 20 percent of our property remained unplanted. We fallowed it because there just isn’t enough water to grow the amount of produce we normally plant in a given year.”

Drought is making the lives of farmers miserable in 2021, especially in the Western United States. (Photo from foxnews.com)

As someone who doesn’t live on a farm, imagine having to give up 20 percent of your income due to circumstances you had no control over. I don’t know about you, but a 20 percent drop in income would likely throw me out of my house and into the street.

The drought hasn’t forced Roberts to destroy any crops, but it has forced him to leave some crops in the field because they’re not harvestable quality, which amounts to the same thing. He offered up his sweet corn crop as an example.

“About 2/3 of the top part of our fields are pretty good quality and should get us good yields,” he said. “However, on the bottom end, we haven’t had enough water for all of the other plants. I guess you’d say we couldn’t get the water all the way to the end of the row.

“We’ve lost a lot of yield and in quality,” Roberts added. “In addition to the unplanted ground, there’s also a portion of the planted crops that are unmarketable.”

Crop farmers get paid when they harvest crops. Can you imagine knowing ahead of time that the one check you get for harvesting your crops won’t pay your bills? That’s what farmers face every year. These are the people that grow our food. It’s a rough way to earn a living.

He sums up the situation on his farm rather succinctly: “We’re in survival mode right now,” he said grimly. “With the unplanted acres and the loss of yield, we’re just trying to stay afloat. And I think that’s fair to say for a lot of farmers around us and across the state, as well as throughout the Western U.S.”

So how do farmers like him find a way to keep moving forward and get through this?

“I serve on the Utah Farm Bureau Board of Directors, and we met last week to discuss how we can help keep our farmers in business,” he said. “Every state has received a fair amount of COVID assistance, which is some help. We’re looking at the best ways to help the livestock farmers, the crop farmers, and get them the help they need.

“We’re looking into government programs to help them stay in business,” Roberts added. “I hate to say it, but sometimes a company or a farm may need a little help staying afloat when they face the challenges that we have for nearly two years.”

Roberts and his wife, Danna, have six children who each help on the farm, and Tyson’s parents, Dix and Ruth, also operate the farm with him.

July 29, 2021July 29, 2021

Ag Economy Turnaround Came Quickly

Ag economy. Have two words ever been gloomier in rural America than they’ve been for the last several years? Well, we’ve had a bit of a turnaround, but my assignment was to find out not only the current state but what might be ahead in the future.

So, I gave Dave Widmar of Agricultural Economic Insights in West Lafayette, Indiana, a call to find out more about the ag economy. He has more than enough experience to make a rational judgment. Before launching out on his own, Dave was a researcher in the Economics Department at Purdue University, as well as the economist for the Kansas Department of Agriculture.

The first thing he told me was that the ag economy turned around quickly. “Not only is it a big difference from 2020 to 2021, but the turnaround also took place in a short period of time,” he said on the phone from his Indiana office. “Last summer, the outlook was very bleak, and it was hard to put together a list of positive things going on.

“Now, just past the midpoint of 2021, we have a very strong outlook with a long list of positive things going for us,” he added. “The biggest piece is higher commodity prices, which have really turned around.”

That turnaround didn’t start until last September, and it has played out quickly over the past several months. That rise in commodity prices has been especially good for corn and soybean producers.

While it’s not as true as it was earlier in 2021, another thing the ag economy and farmers were benefitting from was a low-cost environment. “Over the last six months, fertilizer went from about $9 an acre in the fall of 2020 to between $130 and $140 an acre today,” Widmar says. “Farmland values and cash rental rates have increased as well. But it’s important to recognize that last year and early in 2021, the lower cost structure helped profitability.”

Here’s the rest of the conversation: