Farmers see familiar scenario for ACREFARGO, N.D. — “When can you get out?” That was the first audience question for ag economist Dwight Aakre, who was offering perspective and projections on the Average Crop Revenue Election program, Feb 3 at the Northwest Farm Managers annual meeting in Fargo, N.D.
By: Mikkel Pates, Agweek
FARGO, N.D. — “When can you get out?”
That was the first audience question for ag economist Dwight Aakre, who was offering perspective and projections on the Average Crop Revenue Election program, Feb 3 at the Northwest Farm Managers annual meeting in Fargo, N.D.
Not everyone was satisfied with their results on the alternative farm program in 2009, but — like this year — predicting outcomes was difficult.
“Who would have thought we’re going to have a 25 percent increase in the wheat yield in North Dakota this year?” Aakre says.
Looking into the murky future is one of the chief purposes for winter farm meetings, and the Northwest Farm Managers event seems to be enjoying a resurgence in popularity, with hundreds attending an event that had dwindled significantly in the late 1980s and early 1990s.
Looking back, ahead
Speakers at the event often alluded to those uncertainties as they looked backward and forward, through and around the looking glass. Aakre, for example, says farmers figuring out whether ACRE will be a good deal have to realize that they’re still calculating those prices for 2009 based on data from marketing years that are only three or four months gone.
Aakre notes that while payment levels can’t fall more than 10 percent in a particular year, neither can they increase more than 10 percent.
“Next year, as I see it — barley, sunflower, small chickpeas and lentils probably are the most likely to yield a payment — kind of like this year,” Aakre says. “We said that last year, but last year was the best opportunity at getting to the ACRE program and getting out with a payment. I still think that’s right.”
Farmers can enroll up to June 1, 2010, and there are enrollment opportunities.
“Right now, I’m less enthusiastic about enrolling additional farms than I was a year ago. Unless the market prices really change from where the projections are for this year . . . it’s going to take a big swing in the state yield” for the state to trigger payments.
Aakre notes that four states had 56 percent of all the farms signed up in the ACRE program in 2009 — Iowa, Nebraska, Oklahoma and Texas.
“Oklahoma knew they were going to get the maximum this year, and they did,” Aakre says. “They got ACRE payments to make up for their losses in the (traditional direct and countercyclical) program for the next four years. And if you had a lot of sunflowers in Minnesota this year, you probably did the same.”
Brian Briggeman, an economist with the Federal Reserve Bank of Kansas City, Mo., talked about the uncertain economic times. He says that while the recession has dampened demand for meat products, especially, the increased rate of savings probably is a good thing for the economy in the long run.
“It’s a painful process getting through that,” Briggeman says.
The economist acknowledges that the Fed probably contributed to the economic meltdown by keeping interest rates too low, but he says the regulatory bodies that control financial markets also were to blame, as well as consumer/borrowers themselves.
Jerry Gulke, president of the Gulke Group Inc., of Rockford, Ill., was critical of Sen. Byron Dorgan, D-N.D., and others like him who Gulke says looked for scapegoats for the market problems faced by ethanol.
On the other hand, Gulke offered praise for Republicans like former Secretary of Agriculture Ed Schafer for resisting calls from the livestock sector to open up Conservation Reserve Program land for emergency haying, which would have had a negative effect on corn.
“Think of the mess we’d be in now if we’d opened up all of the CRP acres,” Gulke says.
Gulke says some livestock producers could have taken opportunities to hedge their crops to offset he price spikes in corn.