Bumper crop of farm stress: Toll mounts with late planting, low prices, rising costs and trade war
AMENIA, N.D. — Brandon Lindstrom studied business in college. After graduating, he sold insurance and then electronic medical records systems before succumbing to family tradition and his inner impulses.
He and his brother are the fourth generation of Lindstroms to farm near the Rush River in Cass County outside this tiny farming community 32 miles northwest of Fargo. He decided to follow in his forebears' footsteps when he realized he kept going back to help out on the farm during his vacations.
“Initially I was a little concerned about my income being reliant on the weather,” he said, his tractor and corn planter waiting in the background. “But I enjoy it.”
And lately the weather hasn’t been cooperating — Lindstrom and his fellow farmers around North Dakota and Minnesota are getting a late start at spring planting, delayed because of the cold and wet spring.
“It’s been hit and miss,” Lindstrom said. He and his brother, Erik, started planting their corn and soybeans on May 8, but are scrambling. When conditions are ideal, they can finish their planting in 10 days.
But the forecast — weather, once again — looks foreboding. More cool and wet weather is expected.
“Next week, it looks like rain every day, almost,” he said last week. Earlier in the day, his brother’s truck got stuck in a muddy field.
As of Sunday, May 12, only 11 percent of North Dakota’s corn crop had been planted, far behind the five-year average of 43 percent, according to a crop progress report from the U.S. Department of Agriculture. In Minnesota, corn planting is further along, but still seriously lagging: 21 percent has been planted, far behind the 65 percent five-year average.
Similar delays plague other crops in both states as well.
Josh Gackle, who farms near Kulm in LaMoure County, has a similar battle with nature on his hands. He’s planting wheat and barley, then will plant soybeans and corn.
“Racing to beat the clock,” he said. Usually by mid-May, he’d have half of his soybeans already planted. “It’s been a struggle,” he said. “Cold and wet,” with muddy fields. He is considering planting other varieties, but is worried about a shorter growing season hampering yields.
Terry Wehlander, who farms near Milnor in Sargent County, is dealing with soggy fields that aren’t drying out because of the lingering wet and cool spring.
“There’s more water than I’ve ever seen in my life,” he said, adding that he’s two or three weeks behind in his planting. “It’s less than ideal but we’re planting corn.”
Late planting places farmers at greater risk for lower yields. They might be forced to switch to varieties with lower yields, or even plant other crops. A shortened growing season also can result in fewer bushels per acre.
“Every day that goes by there’s a potential loss of yield,” Wehlander said. “We’re going to have to get a lot of growing-day units” — basically warm, sunny days — to push this along. We need some heat.”
Meanwhile, other deadlines loom. “We’re pushing up against the insurance deadline for planting corn,” he said. “It’s been a stressful spring.”
Lindstrom decided to switch careers, giving up his sales job to join the family farming business in 2013. Corn prices that year peaked at $7.41 per bushel, down from $8.31 in 2012, when crop prices crested after soaring for several years, fueled in part by the ethanol boom.
Crop prices have mostly fallen since then — a bushel of corn now sells for about $3.69 — subjecting farmers to a prolonged erosion of farm income, making it increasingly difficult to sustain operations.
“It was most of the way down when I started,” Lindstrom said, referring to the trend in crop prices. “I would say these prices are more normal, historically.”
Farmers shouldn’t count on being able to sell their corn for $7 per bushel, he added.
“I think we’ll be OK,” Lindstrom said. “Not fantastic prices, but it’s above break-even,” he said.
Given the financial squeeze, with production costs rising and crop prices chronically low, most farmers will not be able to break even, said Andy Swenson, a farm management specialist at North Dakota State University.
“You talk to producers and they’re scratching their heads,” he said. “The management option is basically plant and hope. Right now on paper, everything’s a loser.”
Last year, bumper crops helped many farmers turn a profit even with low prices, Swenson said. But a late spring planting season makes it more difficult to have yields big enough to overcome the low prices, said Swenson and other farm experts.
“We got by last year better than expected,” Swenson said. “But it is very concerning going into 2019.”
A “series of good years” from 2006 through 2012 allowed farmers to build up their financial balance sheets, a reserve that helped them weather the tough years that followed.
“That balance sheet has been eroding for a lot of folks,” Swenson said. “We’re in probably the riskiest situation I’ve seen in many years.”
Doug Goehring, the North Dakota agriculture commissioner, said farmers face the biggest financial challenges since he first won office in 2010.
Often overlooked, he said, is the strong dollar. That hurts farmers, who rely heavily on the export market, because it makes American products more expensive overseas.
“That’s thwarting all types of sales in the global economy,” Goehring said.
The trade war with China, which has resulted in tit-for-tat tariffs, has been especially difficult for soybean growers and pork producers. It exacerbates the problems caused by low commodity prices, rising production costs and the strong dollar, he said.
The trade disputes also created added uncertainty for farmers.
“It’s tough to put a crop in when you have no ability to predict where the markets are going to be,” said Goerhing, who operates a 2,000-acre, third-generation farm with his son near Menoken in south-central North Dakota.
Yet farmers, who have high fixed costs including land and equipment, can’t just leave their land idle to wait for profitable crop prices to return.
“Farmers feel trapped,” Goehring said. “It’s almost like a captive market.”
Five years of record crops, in the United States and abroad, have suppressed prices, he said.
Farm failures so far are well below the farm crisis of the 1980s, when falling crop prices coincided with skyrocketing interest rates, but more and more farmers are unable to keep their heads above water financially, Goehring said.
“Some of these are established farmers,” he said. “That’s what’s even more worrisome.”
Just last week, he learned of a “good-sized” farmer who has run into a financial wall.
“The bank just said we can’t go with you,” Goehring said. “We can’t write this operating loan. So he’s done.”
Unless things change, more and more farmers will be joining him, he said.
Despite the wet spring, farmers in North Dakota are in much better shape than their counterparts in the central Plains, where devastating flooding has been widespread, said Pete Hanebutt, director of public policy for the North Dakota Farm Bureau.
“We may be behind a little bit, but overall our farmers are running and that gives them a more positive attitude,” he said.
As for the dark shadow cast by the trade war, Hanebutt said most farmers believe the disputes ultimately will be resolved.
“The American farmer is optimism personified,” he said. “It seems our farmers are optimistic despite the challenges.”
Through “sharp pencil marketing,” farmers will decide which crops present the best options, with a wide spectrum of crops, including grains, pulse crops, sunflowers and canola.
“Our diversification will help us,” Hanebutt said. Faith that “some kind of a trade deal” is coming, meanwhile, offers hope. “That’s why they’re cautiously optimistic,” he said.
Mark Watne, president of North Dakota Farmers Union, offered a much more pessimistic appraisal of the situation confronting farmers, which he said has been exacerbated by policy blunders, including erosion of the farm bill and trade confrontations.
“It’s terrible,” he said. “It’s literally sad because we don’t have to be in this situation.”
Almost 94 percent of all crops grown in North Dakota leave the state, with many sales going abroad, underscoring farmers’ dependence on good trade relations and maintaining foreign markets.
“I’m taking some real serious calls” — bankruptcies, farmers quitting, suicides. “We’re slowly breaking farmers.”
Watne added: “When you’re reliant on a bumper crop, that’s not good. This is a real crisis. The only thing that’s not making this as bad as the ‘80s is the lower interest rates.”
Gackle, the farmer near Kulm, is planting his eighth crop this spring. He estimates that, with soybeans’ November price around $7.50 per bushel, or about $1.50 per bushel below break-even costs, farmers could lose between $50 to $100 per acre, depending upon their land and operating costs.
“We are well below break-even prices,” Gackle said. “It’s hard to see the silver lining right now.”
Given the lean times, farmers have done what they can to shave costs and gain efficiencies.
“I’m very attentive to details,” said Lindstrom of rural Cass County. “It kind of forces you to do the little things.”
The Lindstroms added bin storage at their farm to allow them to hold onto their soybeans in the hope of selling when prices rebound.
Similarly, they built a new machine shed a few years back, allowing them to make more on-farm machinery repairs.
“That’s one of the things we did when prices were good,” Lindstrom said.
“I’m not rolling in money,” he said. “We’ve been fortunate to have really good yields the last few years.”
Switching crops isn’t easy for Lindstrom and his brother. New crops would require new equipment.
“We’re set up for corn and soybeans,” he said. “I’m a farmer. I’m always rolling the dice.”